South London Healthcare NHS Trust put into 'administration' as another 20 trusts face serious financial difficulties

South London Healthcare NHS Trust put into 'administration' as another 20 trusts face serious financial difficulties

South London Healthcare NHS Trust, which was losing £1 million a week, yesterday became the first in the country to be put under the control of a special administrator tasked with putting it on a viable footing.

The trust which runs Queen Mary's Hospital in Sidcup, the Queen Elizabeth Hospital in Woolwich and the Princess Royal University Hospital in Bromley is likely to face cuts to services and jobs in an attempt to reduce costs.

Department Health sources suggested it was possible that other hospitals could follow South London into administration.

Those at greatest risk are understood to be Barking, Havering and Redbridge University Hospitals NHS Trust and Surrey and Sussex Healthcare NHS Trust.

Four trusts, including South London, require bailouts because their PFI deals are unsustainable, while others may have to reconfigure their services which could lead to the merging of services and job cuts.

It is also possible that some hospitals co uld be taken over by new management.

Earlier this year the private healthcare group Circle took over

Hinchingbrooke Hospital in Cambridgeshire which had historic debts of more that £40 million.

Circle says it is confident that it can turn the trust around and is known to be keen to take on other NHS operations.

The chief executive of South London was informed last night that the trust is likely to be put into the “unsustainable providers regime” which was introduced by the last Labour government but never before used.

Mr Lansley sent a letter as the first step in the legal process towards installing a special administrator using the powers.

The administrator will take over the board and recommend measures to the Health Secretary to put the trust's finances on a sustainable basis.

Sources close to Mr Lansley said long-standing difficulties had been made worse by Labour's merger of the three hospitals' smaller trusts in April 200 9 and by two PFI deals that are now costing £61 million a year in interest.

They said the hospital's deficit last year - covered by money from elsewhere in the NHS budget - was equivalent to the salaries of 1,200 nurses or 200 hip replacements a week.

In his letter Mr Lansley wrote: “I recognise that South London Healthcare NHS Trust faces deep and long-standing challenges, some of which are not of its own making.

“Nonetheless, there must be a point when these problems, however they have arisen, are tackled. I believe we are almost at this point.

“I have sought to provide NHS organisations with the help and support they need to provide these high quality, sustainable services to their patients, which South London Healthcare NHS Trust stands to benefit from.

“However, even after this support has been provided, your organisation still expects to be in need of significant financial resources from other parts of the NHS and I cannot permit this to continue. That is why I am considering using these powers.”

He acknowledged the move would be "unsettling for staff" but said the measures were necessary to ensure hospital services in south east London had "a sustainable future".

The source close to Mr Lansley said Labour took the south London trust to "the brink of bankruptcy".

"Labour turned a blind eye to these problems for years. They burdened it with two unaffordable PFIs worth £61 million a year and they crippled the organisation with debt from the beginning," the source said.

"The standard of care that patients receive at the hospital trust is not good enough, although there have been some improvements in recent months.

"It is crucial that those improvements are not put at risk by the challenge of finding the huge savings that the trust needs to make."

The trust pointed out that it had one of the lowest mortality rates in England and infection rates three times lower tha n the national average.

In a statement, it said: "We have entered into discussions with the Department of Health and NHS London on the best future for the trust and our priority, and that of others involved, is to make sure that our longstanding and well-known financial issues are resolved.

“We expect these discussions to come to a conclusion in the second week in July when a decision will be taken by the Secretary of State.

“In the meantime we can reassure local patients and the public that our staff will continue to provide services as normal.”

NHS Confederation deputy chief executive David Stout said: “NHS leaders have made it clear that short term fixes for struggling trusts are no longer possible. More decisive action is going to be needed to help the NHS maintain services and stay in financial balance during this unprecedented spending squeeze.

“We welcome the secretary of state's actions as a sign that the Government is beginnin g to grasp the nettle on some of these difficult issues.”

The King's Fund chief executive Chris Ham told the BBC: “South London Healthcare NHS Trust is one of a small number of hospitals facing serious financial challenges. For some of these hospitals, the usual solutions, such as appointing a new management team or merging with another provider, will not solve their problems.

“Governments have ducked these issues for too long so this announcement is an important signal of intent from ministers.”