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Serco to make £17.6m losses on NHS contracts

Serco has revealed to investors that it will lose almost £18 million on three of its NHS contracts.
The outsourcing firm has made provisions for losses in its Braintree and Cornwall contracts, which were cancelled early.
It has also made provisions for losses in its third contract for services in Suffolk. The company claims it will take longer to deliver the operational efficiencies it hoped for, despite saying in May 2013 that it expected to make a profit on the three-year, £140 million contract for community services.
A company notice to investors published by the London Stock Exchange in March 2014 said: “Provisions for estimated losses in future years on the Suffolk and Cornwall contracts, together with provisions against the underlying assets of the Braintree contract, led to a non-cash exceptional charge of £17.6 million in the year.”
Serco’s GP out-of-hours services contract in Cornwall was attacked last July by the Commons public accounts committee as “substandard”. The company stood accused of manipulating performance data, and having unsafe staff levels.
The contract ended three months early in December 2013, and Serco said it would withdraw entirely from out-of-hours provision.
It also cancelled the contract to manage Braintree Community Hospital early because it didn’t receive the number of patient referrals it predicted. Control passed back over to Mid Essex Hospital Services NHS Trust in March 2014.
Valerie Michie, managing director of Serco’s healthcare business (pictured), said: “Where we have made mistakes we have learned from them, we will continue to learn from them, and we will deliver against our promises. We had to take the difficult decision to end these two contracts early, but this does not undermine our commitment to the healthcare market, which is undiminished.”

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Posted on: 10/04/2014

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