The centres aim to help drive down NHS waiting times

Anglo-Canadian, a joint British and Canadian company, was set to run three fast-track surgery centres in London, treating thousands of patients.

The Department of Health confirmed it had "deselected" the consortium as the preferred bidder for the centres.

It said it was talking to other firms, and the centres, along with 21 others, would still open on time in April 2005.

However, this the second company to pull out of negotiations to run the high-profile centres.

In February, British-based Mercury Health pulled out as the preferred bidder for a chain of 10 centres. Capio replaced them as the preferred company to run these DTCs.

Preferred bidders - September list Netcare UK (South Africa) Mercury Health Ltd (UK) Care UK Afrox (South Africa) Anglo Canadian (Canada) Nations Healthcare (USA) Birkdale Clinic (UK) New York Presbyterian (USA) Who are these companies? Q&A: Diagnostic & treatment centres

The diagnostic and treatment centres (DTCs) will carry out non-urgent surgery on NHS patients, such as knee, hip and cataract operations. Ministers hope they will help cut NHS waiting times.

The centres are set to cost �2 billion over the next five years, and were expected to be fully operational by 2005.

'No guarantee'

Health Service Journal says the Anglo-Canadian deal fell through because the consortium of companies from both Britain and Canada, was not offering a package that the Department of Health considered to be value for money.

It says that, unlike when Mercury Health pulled out of negotiations, there is no reserve preferred bidder for the London centres.

Anglo-Canadian, also known as GC7, and Mercury Health were on the list of overseas and UK-based companies which looked set to run the DTCs announced by the government last September.

One other British company and four from overseas were named.

But the government says these companies were never guaranteed to win the contracts.

In a statement, the Department of Health said: "Anglo-Canadian have been dropped as preferred bidder for the London chain of treatment centres because their package did not represent good value for money for taxpayers.

"However, the procurement process will remain on track and we are confident that the treatment centres covered by this contract will be in place in accordance with the original timescale, by next spring.

"We are in discussions with a number of providers who are keen to provide these services under this contract. No NHS patient will be inconvenienced by this move to secure better value for money for taxpayers."

But Former Health Secretary Frank Dobson, a campaigner against increasing private sector involvement in the NHS, said: "This shows that even when cherry-picking the easiest cases to deal with these foreign firms can't do it as cheaply as the NHS.

"The extra funds the government was going to pay them should be paid to NHS staff to do the work."

Over 20 NHS-managed DTCs are already in operation.

This new tranche of centres will be the first time that private firms will be involved.

Concerns

Under the government's plans, private firms will run 22 new treatment centres and two mobile units, which will offer ophthalmology services.

Birkdale Clinic, which is also British-based, will operate a centre at Daventry.

Nations Healthcare, a US-led consortium, is set to run two centres in Bradford and Burton while another US firm New York Presbyterian will run two centres in Stanmore and Somerset.

A South African company called Netcare UK has been named as the preferred bidder for a centre in Manchester and the two mobile ophthalmology units, which will travel around England.

Care UK Afrox, a partnership between a South African and British company, will operate three centres in Maidstone, Nottinghamshire and Plymouth.

Health unions have criticised the plan to bring in overseas firms to run the centres. There are also concerns that the centres will not provide value for money and will poach staff from NHS hospitals.