NHS Direct has confirmed it is seeking to pull out of all 11 of its contracts to provide NHS 111 as they have proved “financially unsustainable”.

HSJ revealed in June that NHS Direct was losing more than £1.5m a month on its NHS 111 contracts and was likely to exit the market by the end of the year.

Earlier this month the organisation – which has the status of an NHS trust – confirmed it was pulling out of contracts in Cornwall and North Essex.

In its annual report for 2012-13 chief executive Nick Chapman confirmed NHS Direct was seeking to withdraw from the remaining nine contracts. These include the West Midlands, North West, South East London and Somerset and account for about one third of England by population.

The annual report said although the board had agreed to bid for contracts at a cost of between £7 and £8 per call it was “now clear that the trust is not able to provide the 111 service within this lower cost range”. NHS Direct operated at a cost of closer to £20 per call.

“It is clear from the work done so far that it is financially unsustainable for the trust to continue to provide the 111 service within the agreed cost envelope,” the report said.

“The ongoing discussions [with commissioners] are now aimed at agreeing a plan for the managed exit of NHS Direct from the 111 contracts.”

NHS Direct will continue to provide a range of web, mobile and telephone health information services, with its contracts total value amounting to £30m, including a contract to deliver online health and symptom checkers in Australia.

The report said further discussions would be required “to agree whether the trust can continue as a viable organisation running these services”.

Mr Chapman said: “We will continue to provide a safe and reliable NHS 111 service to our patients until alternative arrangements can be made by commissioners.

“Whatever the outcome of the discussions on the future, patients will remain the central focus of our efforts, together with protecting our staff who work on NHS 111 to ensure that the service will continue to benefit from their skills and experience.”

The report also confirmed NHS Direct has agreed £79m of funding from the Department of Health to cover the cost ofdecommissioning the former 0845 health advice line. This is less than the £144m worst case scenario originally predicted if all staff were made redundant.

Of the 2,109 individuals on the payroll in 2012-13, 617 were made redundant. Only 250 transferred to other NHS 111 providers in areas where NHS Direct was unsuccessful in winning the contract.

NHS Direct also had to bear redundancy costs for a further 630 staff who transferred to NHS Direct from GP out-of-hours providers whose call handling facilities were replaced by NHS 111. A spokeswoman for NHS Direct said many of these staff had contracts for less than the minimum number of hours NHS Direct requires staff to work or lived too far away from the call centres to be kept on.