Reed Health issues third profits warning

The radical shake-up aimed at reducing the National Health Service's dependence on expensive private sector nursing agencies led to a third successive profit warning from Reed Health yesterday.

The radical shake-up aimed at reducing the National Health Service's dependence on expensive private sector nursing agencies led to a third successive profit warning from Reed Health yesterday.

The company, one of the UK's biggest suppliers of private nursing cover, has seen profits ebb as a result of the NHS's new in-house agencies and tough rules requiring private sector firms to carry out checks on the nurses they supply. Reed warned the cost of checking its nurses' training and documentation, plus the implementation of a new computer system, meant profits for the year to June will miss even the market's reduced forecasts.

David Fennell, Reed's chief executive, complained the new rules had skewed the playing field in favour of the NHS's in-house banks of temporary staff. "It is taking longer for us to get new branches open and to re-state our nurses' credentials when the rules set out 13 criteria per nurse, requiring up to 35 pieces of documentation, and when the NHS doesn't require all this of its own nurses," he said.

Reed shares, which are down two-fifths since the start of the year, fell 9 per cent to a new record low of 54p.

The health service scheme arranging in-house nursing cover, called NHS Professionals, has settled down after initial problems and has reduced demand for private sector cover.