Serco stripped of sterilising contract at Australian hospital

Serco has been stripped of work sterilising equipment at a hospital in Australia, adding to a run of botched contracts by the outsourcing provider.

Kim Hames, Western Australia health minister, removed the company from its role on Monday after blood and tissue was found on sterilised equipment at the Fiona Stanley hospital in Perth, which opened last year. He also announced a further review into clinical healthcare at the hospital.

Serco, which retains the bulk of a £850m, 10-year contract to provide non-clinical services at the hospital, had already received two breach notices for its sterilisation services.

It will continue to provide catering and cleaning, as well as procuring and maintaining hospital assets, including medical equipment.

Mr Hames's decision will come as a blow to Serco and its chief executive, Rupert Soames, who has been struggling to repair the business after a series of botched UK government contracts wiped nearly £3.5bn off the company's value and cost his predecessor his job.

On Friday, Serco said that it had won shareholder approval for a £555m rights issue that it hopes will "set it back on track".

Paul Mahoney, managing director of justice, community and health at Serco Asia Pacific, said that the decision to take the work in-house was "disappointing".

"We are fully committed to the success of Fiona Stanley Hospital and will remain focused on delivering high standards of performance across all of the 24 non-clinical services for which we are contracted," he said.

Serco had to pay the UK government millions of pounds last year after being referred to the Serious Fraud Office for tagging criminals who were already dead or in prison.

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Despite this, healthcare has been a growing market for Serco, which runs pathology laboratories in a joint venture with two London hospitals, and support services at hospitals in the UK including Derriford hospital in Plymouth.

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