Tribal shares plunge after failure to tie up £300m NHS deal

Tribal Group, one of the pioneers of private sector involvement in education and the health service, has failed to consummate a £300m deal to run 10 clinics for the NHS.

The news knocked 24 per cent from Tribal shares yesterday and raised fears over the procurement process for the Government's new network of "treatment centres" to be run by the private sector.

Both sides said they had failed to reach commercial terms, despite Tribal having been named likely preferred bidder last September.

Henry Pitman, the chief executive of Tribal, said local health care trusts had changed their demands for the number and type of procedures which would be carried out by the centres. Tribal was not best placed to offer the increased number of operations requiring overnight stays, he said, within the financial terms the NHS demanded. The contract has gone instead to Capio Healthcare, which runs private hospitals.

Mr Pitman said: "The treatment centres programme is a complex initiative involving lots of different elements and a lot of different stakeholders. In this case, the whole nature of the contract changed."

The national network of treatment centres is a central plank of the Government's plans to improve NHS efficiency and cut waiting lists. Tribal yesterday said it had been named preferred bidder for a consolation contract worth £190m over five years to run five centres in the South-east.

City analysts have been excited by the potential profits available from the scheme, but there are concerns over the time it takes to finalise details with the public sector.

Tribal shares closed down 67.5p yesterday at 219p as analysts downgraded forecasts as a result of the contract disappointment and rising infrastructure spending over the next two years.