26 Jun 2012

NHS trust could go into administration

South London Healthcare NHS trust is being put into special measures by Health Secretary Andrew Lansley amid mounting debts and losses of £1m per week.

Health Secretary Andrew Lansley (Getty)

South London Healthcare NHS Trust will be 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 runs Queen Mary’s in Sidcup, the Queen Elizabeth in Woolwich and the Princess Royal University Hospital in Bromley. It has been criticised over standards of care and has run up deficits of more than £150m over the past three years.

Despite efforts to improve its financial performance, it is still thought to be on track to lose between £30m and £75m a year for the next five years.

Its chief executive was informed 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.

‘Long-standing challenges’

Heath Secretary Andrew Lansley wrote to the trust: “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.”

£61m annual interest

In a statement, the trust 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.

“Our staff have worked hard for patients and in spite of signficant financial issues, we are extremely proud that we now have among the lowest mortality and infection rates in the country.

“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.”

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 2009 and by two PFI deals that are now costing £61m 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.

Spending squeeze

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 beginning to grasp the nettle on some of these difficult issues.”

Chief executive of the health think-tank the King’s Fund, Chris Ham, said: “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.

“It remains to be seen what action is taken in South London, but the priority must be to maintain continuity of essential services for patients.”