Virgin Group has effectively put on hold its ambitious plans to take over and run GP surgeries, casting doubt on the prospects for private involvement in primary care.
Mark Adams, who is to step down as Virgin Healthcare chief executive, blamed its problems on the economic downturn. Plans to take over a surgery in Swindon next year, previously the company's most-developed project, have been dropped.
Virgin said it remained "very committed" to entering the sector and would review the situation when the economy improved. The firm proposed to leave GPs on standard contracts. It would take control of non-clinical work and offer private services such as laser eye surgery and dentistry at the surgeries.
Mr Adams said: "When you involve private healthcare and you have an economy that is this gloomy, it makes sense to step back."
He said his model had not been shown to fail: "Until you test something you cannot determine success or failure. I came on board to build a large business. In terms of another year of slow growth it does not make sense for the team to carry an expensive chief executive."
But primary care representatives said the withdrawal affirmed doubts about Virgin's business model.
GP and National Association of Primary Care chair James Kingsland said: "General practice is part of a fixed contract for a fixed service. The only way GPs can make a profit is by managing expenses. The margins are relatively small."
Royal College of GPs chair Steve Field said: "I am not surprised they are having second thoughts about coming into primary care. When you look at the detail of the proposal I don't see what the benefit is [to GPs]."
Other independent sector primary care providers said the difficult economic climate was not affecting their business plans. A spokesperson for established provider Assura said: "There has been no change to our strategy. We are developing joint ventures with GPs, which involves considerable investment and resource."
NHS Partners Network director David Worskett said: "We are not getting any real indication there is a shortage of investment. I think it is more a case of people feeling their way into the market, which for most of them is new territory."
A Department of Health spokesperson said: "We are seeing great interest from all sectors of the market in running these services."