A legal challenge by Circle Healthcare has derailed the procurement process for the Nottingham Treatment Centre, HSJ has learned.

Commissioners confirmed today that they will no longer award the £150m, three year contract as planned this year. Instead they will allow Circle to continue operating the centre for a further year. A new procurement process for after then will be launched later this year.

Nottingham Treatment Centre

Source: Circle

The Nottingham Treatment Centre has been run by Circle since 2008

Circle pulled out of the procurement in March and started legal action against Rushcliffe Clinical Commissioning Group, which is the lead commissioner for the treatment centre on behalf of all Nottinghamshire CCGs.

HSJ understands the dispute focuses on significant cost reductions and efficiencies built into the contract, which reduces its annual value to £50m a year. In 2017-18, the contract was valued at £67m for the year.

The current procurement process will be cancelled and will restart later this year for after July 2019 and an advert for potential bidders is due to be released in coming months.

HSJ understands Nottingham University Hospitals Trust also bid for the contract and has been informed of the CCGs’ decision.

Trust chief executive Tracy Taylor said: ”NUH put forward its strongest proposal for providing services in the treatment centre that will further improve patient experience, outcomes and value for money to the local community.

”Our commissioner has formally recognised the high quality and strength of NUH’s bid. Subsequently, NUH has regrettably been informed that following legal challenge from Circle, the commissioner has been unable to award the contract.”

She added: ”The legal challenge has been undertaken in private and therefore the reasons for this decision are not currently fully clear to us. NUH maintains a strong interest in the services outlined in the tender and is confident in its ability to provide high quality care and further improve these services for patients. We will be considering our approach to the future procurement process in due course.”

When Circle announced it was pulling out of the procurement it said it was doing so because of concerns that the contract did not provide a “sustainable basis” to deliver services. Company board members unanimously supported the decision to challenge the tender process.

Since then, the legal challenge has progressed behind closed doors and neither the CCGs nor Circle have released details.

Speaking on behalf of the CCGs, accountable officer Sam Walters said: “We want to ensure the continuity of services in the short term by removing the risks posed by the legal challenge.

“The new procurement process will give interested parties a further opportunity to consider the treatment centre delivery model. In no way is this a reflection of the quality of the bids received. Indeed, we will be encouraging those who have bid to date to maintain their interest in providing the service.”

A statement by Nottingham Circle’s clinical board said: “We welcome the decision of commissioners in Nottingham to terminate the current procurement process and extend Circle’s contract for the Nottingham Treatment Centre.

”We believe this decision is in the best interests of patients and staff. We look forward to working in constructive partnership with the entire Nottingham NHS system to continue to deliver the best care and outcomes for the people of Nottinghamshire.”

The Nottingham Treatment Centre offers a variety of elective services, including outpatients, surgery, diagnostic testing and pregnancy services. It opened in 2008 and has been continuously operated by Circle. Rushcliffe CCG set the term for the new contract at three years with a possible extension to five, valued at £50m a year.

Local critics have blamed the operation of the treatment centre by Circle for fragmenting care and destabilising services at NUH.

In 2015, the trust’s dermatology service collapsed when five consultants left rather than be transferred to the treatment centre.

However, Circle claimed its dermatology service was now one of the best in the country.