East Cheshire NHS Trust has awarded a four year, single supplier framework contract to arvato to acquire and operate its HR service provider, Cheshire HR Service.
The Trust claims that the deal will deliver immediate cost savings and enable arvato to enhance the centre’s offerings.
The news comes shortly after arvato won a major seven year contract to operate the government’s first Independent Shared Service Centre, which will provide back office services to the Department for Transport and its executive agencies.
All 57 employees of Cheshire HR service, including its senior management team, will transfer to arvato on their current terms. The centre will continue to be led by Cheshire HR Service managing director Sally Campbell.
Cheshire HR Service was established in 2006 as a blueprint for NHS HR shared services. It has been run as an arm’s length organisation hosted by East Cheshire NHS Trust and generates annual revenues of £2m.
It is expected that the transition to arvato will be completed by April 2013.
“Cheshire HR Service has developed an excellent reputation for providing innovative, market leading HR services to East Cheshire NHS Trust and the wider NHS,” said John Wilbraham, Chief Executive, East Cheshire NHS Trust.
“The time is right to hand the HR Service over to a strategic commercial partner to take the service forward, leverage its success and ensure it reaches its full potential.”
He added: “Under arvato’s leadership Cheshire HR Service will enhance service offerings, drive efficiencies and deliver significant cost savings for East Cheshire NHS Trust underpinned by investment in technology.”
John O’Brien, research director at analyst house TechMarketView, said that although the revenues from the shared service centre aren’t substantial at the moment, arvato will use the deal to chase additional work within the NHS.
“Terms are undisclosed, but apparently the operation currently generates £2m in annual revenues. So it's not going to set fear racing among the competition or indeed current market leader Steria, which runs the established NHS Shared Business Service HR joint venture,” said O’Brien.
“However the deal includes a framework for arvato to compete for additional work from the NHS, local authorities and other health and social care bodies throughout the UK, including AQPs (Any Qualified Providers).”
He added: “So arvato will now be looking to grow its share of the NHS HR BPS market."