South London NHS Trusts pay Serco £15 million after they lose pathology service bid

Two South London hospitals have been forced to pay £15 million to a private company after it lost the bid to supply their pathology services.

Serco’s annual accounts revealed a £15 million payout from King’s College Hospital and Guy’s and St Thomas’ Hospital in May 2020.

The report says the company received the money as part of the transaction involved Serco exiting Viapath – the joint venture set up by the trusts and Serco to provide blood tests and other services in South East London.

Serco disposed of its share in Viapath last year after they lost a bid to supply pathology services to the area.

The trusts awarded the £2.2 billion contract to a German company called Synlab who will take over providing the services for the next 15 years.

The report claims that £11 million of the payout was for Serco’s share of net assets in the joint venture.

Serco was paid a further £2.9 million for profits that were previously thought to be irrecoverable. In addition, a loan of £1.2 million was recovered.

Viapath was formed in 2009 as a partnership between Serco and Guy’s and St Thomas’s Hospital, with King’s College Hospital joining later.

Pathology tests cover blood tests, and tests on urine, stools and bodily tissues and are used in 70% of all patient diagnoses.

A spokesman from Serco said: “The settlement on the exit from the Viapath joint venture last year was agreed by all parties and had a number of elements; including the repayment of a loan, share of cash reserves in the business and Serco’s share of the value of a specialist IT system which is proprietary to Viapath and part of the delivery of pathology services to Guy’s and St Thomas’s and King’s College Hospital NHS Foundation Trusts.

“Viapath’s ownership of the IT system were recognised as part of the tender process for the procurement of pathology services led by those Trusts, with the other bidders required to factor in the acquisition into their price.”

A spokesperson on behalf of Guy’s and St Thomas’ and King’s College Hospital NHS Foundation Trusts said: “In January 2020, following a 12-month clinical and financial evaluation, Guy’s and St Thomas’ and King’s College Hospital NHS Foundation Trusts identified SYNLAB UK and Ireland as their preferred new strategic partner for pathology services in south east London.

“In May 2020, in preparation for the transition to the new partnership, the Trusts made a change to the ownership structure of Viapath, the existing pathology provider, which was previously owned by the two Trusts and Serco. The two Trusts acquired Serco’s share in Viapath meaning that the joint venture was owned equally between the two NHS organisations, providing stability for Viapath during the transition period.

“The settlement on Serco’s exit from Viapath was agreed by all parties and was made up of a number of elements, including their share in Viapath’s assets.”