The Royal Cornwall Hospital Trust (RCHT) has pulled out of a programme that would have seen it share services, including IT, with other healthcare organisations and the local council in a partnership with BT.
The shared service was a scaled down plan form the original proposal that would have seen broader outsourcing of services. In December 2012, councillors voted for a much-reduced privatisation option covering Cornwall's IT department and a joint venture with BT and regional health bodies to develop a telehealth hub.
The decision to pull out was announced by RCHT CEO Lezli Boswell. She said the decision was made following changes to the scope of the project and consideration of legal advice.
"The Trust will now pursue alternative options for developing our IT and health records services to meet future staff and patient needs," said Boswell.
Cornwall’s plan has already led to the overthrow of former council leader Alec Robertson, after councillors felt the decision was bypassing the full council by going straight to cabinet.
Conservative Robertson lost a confidence vote 63 to 49 over the originally proposed outsourcing deal, under which BT or CSC were to provide services such as libraries, benefits, payroll and IT services. He tried to implement the changes with limited discussion in the Cornwall Council cabinet alone.
The man behind the Cornwall Council plan is former CEO Kevin Lavery, who will become CEO of Wellington City Council in New Zealand in March.
More on council outsourcing plans
Troubled council outsourcing projects
Cornwall Council is not alone in facing challenges to plans to outsource services.
Barnet Council’s plan to outsource services has been delayed and could face a judicial review after 67-year-old disabled resident Maria Nash brought a case against the programme known as "One Barnet".
On 19 March 2013, a senior judge will receive an application from Nash’s legal representatives, who argue the council did not properly consult citizens.
As part of the One Barnet programme, services including human resources, payroll and IT will transfer to Capita in a £320m contract. In total, One Barnet will see the council spend £1bn on a variety of outsourcing services.
In December 2012, the Conservative-run council’s cabinet approved the multi-million outsourcing deal with Capita, which the council claims will save more than £100m in 10 years.
Cornwall Council said it is disappointed. "We will now need to consider the implications of this decision with our other health partners before deciding what course of action is to be taken," it said in a statement.