Acute trust takes over treatment centre after £53m pay off to private company

An “undesirable” payment of £53m (€61m; $81m) to a private company to withdraw from an underperforming independent sector treatment centre (ISTC) highlights the risk of commercial organisations winning NHS contracts, the BMA has said.

Clinicenta, which is owned by property support services company Carillion, will be paid £53m to hand over the Lister surgicentre in Stevenage to East and North Hertfordshire NHS Trust, the local acute trust where it is sited.

The bulk of the money, £46m, represents the cost of purchasing the building and equipment but the deal includes £3m compensation to the company for ending the contract early. An additional £4m will be paid for what the Department of Health describes as other costs that Clinicenta will incur in ending the deal. Referrals to the centre fell after it failed to meet several key standards in an inspection by the NHS regulator, the Care Quality Commission, earlier this year.

A Department of Health spokesperson said, “The contract with Clinicenta was standard for ISTCs at the time it was signed. The centre was introduced to help reduce waiting times for elective work via increased capacity and improved efficiency… The contract contains minimum volume guarantees, which means that Clinicenta is paid for a minimum level of activity even it does not conduct it.”

It is likely that those inactivity payments—costing up to £1m a month—would have been triggered because of the fall in referrals. The Department of Health said, “Regretfully, there has been a loss of confidence in the service due to poor performance that has resulted in a fall in referrals. This has been exacerbated by local awareness that the CQC, following inspections, had declared the service non-compliant with certain standards.”

The prospect of ongoing monthly payments for underactivity prompted the decision to pay the company £7m to walk away from the contract.

The department spokesperson added, “Though undesirable, a payment of £3m to Clinicenta to secure their agreement to the termination of the contract will result in the least costly option for the taxpayer.”

Ministers argue that the contract was signed under the previous Labour government, but the BMA said that the case should be a warning against contracting out clinical services.

A BMA spokesman said, “The decision to transfer management of the Lister surgicentre highlights the risks involved in opening up the NHS to competition and awarding contracts to commercial organisations.”

Under the agreement, which followed talks between the company, the Department of Health, East and North Hertfordshire Clinical Commissioning Group, and NHS England, the local acute trust will assume management of the centre within weeks.

The local clinical commissioning group, NHS England, and the Department of Health will each contribute to the payment—although neither the CCG nor the department could confirm how the figure would be split.

Mike Hobbs, managing director of Clinicenta, said, “We have started a consultation process with staff to explain the impact of the proposed changes. This will support a timely and smooth transfer of services.”

Carillion confirmed that neither it nor its subsidiaries managed any other clinical or patient services.