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Serco to withdraw from UK clinical services market

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Outsourcing giant Serco has announced plans to withdraw from the clinical health services market in the UK after making a multimillion pound loss on its NHS contracts.

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The move follows a review of the cost of delivering “improved service levels” and meeting the performance requirements of several existing contracts, the company said in a stock market statement.

“During the period, the group continued to monitor performance in the UK clinical health operations against which an onerous contract provision was made in the prior year and where the group’s intention is to withdraw from the UK clinical health market,” it said.

“The group has revised upwards the estimate of the costs of running the contracts to term, resulting in an additional non-cash exceptional charge of £3.9m in the period (year ended 31 December 2013: £17.6m).”

Serco’s planned withdrawal could influence significantly how other private firms view the prospect of bidding for contracts involving patient facing services. It also follows months of speculation about the outsourcing giant’s clinical operation.

The group had already made an early exit from its contracts to provide Cornwall’s out of hours services and clinical services to Braintree Community Hospital, the statement said.

A third “loss making” contract with Suffolk Community Health will end next year, after running its full term.

As reported in LGC’s sister title Health Service Journal, Serco announced in February it had signed a deal with another care firm, Bromley Healthcare, to help improve performance on the Suffolk contract.

A Serco spokeswoman told HSJ at the time that it was “committed to directly providing community care services”.

“Our commitment to the community healthcare market in the UK is undiminished,” she said.

Serco’s former managing director of health services Valerie Michie, who left the firm in April, has previously denied claims its £140m bid to run the Suffolk contract was unrealistic.

She told HSJ last December the company was “very glad to have to have the contract”.

Ms Michie said in the same interview that the firm planned to focus on two areas: community healthcare and non-patient facing services in acute settings.

She left Serco to become chief executive of the Huntercombe Group, a hospital and specialist care centre provider.

A spokesman for Serco said today it had made “a number of announcements regarding our future presence in the clinical services market”.

This included the disposals of the Braintree contract and occupational health services, and the early exit from the Cornwall out of hours contract.

The half year results statement confirmed this strategic direction.

“We are committed to the successful completion of our contract to provide community healthcare services in Suffolk, which runs until late 2015,” he said.

“We continue to engage in dialogue with Suffolk commissioners about their future commissioning intentions and will make a decision on whether to rebid in due course.”

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