The east Kent hospitals trust is switching cleaning, catering and portering services to a new NHS-owned organisation.
Serco, which has provided many of the services since 2012, has agreed to terminate its contract a year early.
Some 850 of its staff plus 250 NHS workers in the estates, procurement and facilities services will unite to form a social enterprise firm.
The trust says the organisation – due to begin operating in the summer – will “further improve standards for patients” using hospitals in Canterbury, Margate, Ashford, Folkestone and Dover.
Chief Executive Susan Acott said: “Many of the staff transferring from Serco used to work directly for east Kent hospitals so it’s great they will be more closely connected to the trust again.
“This is a slightly different set up than some trusts in that most of the staff transferring into the new organisation are coming from the private sector.
“These teams are very proud to support the NHS and the care it gives its patients.
“Our aim is to have an organisation with a social purpose that is rooted in its local community and gives stability – the 25-year contract for east Kent will provide this stability for these crucial services.”
Both Serco and NHS staff will have their terms and conditions of employment maintained under TUPE law (Transfer of Undertakings (Protection of Employment)).
The new deal covers cleaning, catering, portering, retail, switchboard and staff accommodation for the trust.
Wendy Sinclair, Serco’s contract director, added: “We are very proud of what we have achieved in partnership with the trust in some challenging circumstances and pleased to be able to handover a safe and successful service.
“Working together, we have significantly improved the cleanliness and feel of east Kent hospitals and provided award-winning patient catering services.”
However, the Unite union says it will campaign to prevent the deal, describing as “privatisation by the back door”.
Regional officer Kathy Walters said: “This plan is a wolf in sheep’s clothing with the prime aim of cutting costs and eroding NHS workers’ pay, terms and conditions.
“Rather than bringing Serco workers back in-house, east Kent hospital bosses are seeking to avoid paying nationally agreed NHS pay rates by setting up an arms-length company and transferring long-serving direct employees into it.
“In the coming days we will be working with our partner trade unions to consult with members, patient groups and concerned members of the public on taking forward a campaign to stop what is effectively privatisation via the back door.”
The trust plans for the new company to begin trading on August 1.