Private provider Bupa and social enterprise CSH Surrey have pulled out of a £235m contract to run musculoskeletal services in West Sussex.

The joint venture said it made the decision because an impact assessment concluded that Western Sussex Hospitals Foundation Trust’s financial position would be harmed if it lost MSK services.

Following strong criticism from the trust and the public, auditor PwC was commissioned by the trust and Coastal West Sussex Clinical Commissioning Group to complete an impact assessment into the effect the loss of these services would have on the trust.

The auditors concluded last month that the “cumulative impact of loss of MSK services” would result in the trust falling into deficit over the next five years.

Western Sussex Hospitals had warned that the loss of the contract could destabilise its trauma services.

The contract had been awarded to the joint venture in September but had not been signed. The parties had also failed to agree the terms of the contract and there was no draft contract in place. The service was due to start in April.

The auditors said: “There is a considerable amount of work to be completed by all parties if the new contract is to be signed and commence on time.”

In a statement, Bupa CSH said the conclusions of the impact assessment had led them to decide that they would not be able to deliver the new service without “either compromising on the quality of care or destabilising other local services”.

Peter Lock and Jo Pritchard from Bupa CSH said: “Our priority was to provide high quality and better coordinated care for local patients, and we have worked hard with the CCG to try and find a solution.

“However, the recent impact assessment means we cannot deliver the model we proposed without either compromising on the quality of care or destabilising other services.

“This is disappointing, but we fully support the CCG’s vision to improve MSK care in Coastal West Sussex. We acknowledge that transforming local health systems in these challenging times is extremely difficult for commissioners who want to introduce new care models.

“We remain committed to working in partnership with the NHS and the public sector to deliver high quality health and care services.”

Katie Armstrong, Coastal West Sussex CCG clinical chief officer, said the group was “disappointed” but “understands and accepts, the Bupa CSH position”. 

She added: “This procurement has always had one key driver, improving the care for patients with musculoskeletal problems in coastal West Sussex. Bupa CSH’s bid was very strong, they echo our patient values and would have been a good partner to work with in Coastal West Sussex.

“The CCG remains committed to improving outcomes for our MSK patients, we need time to discuss the options with our board but expect to be able to outline our next steps shortly.”