South London Healthcare NHS Trust Faces Administration And Bankruptcy

NHS Hospital Trust First In Country To Face Bankruptcy
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A hospital trust will be the first in the country to be put under that the control of a special administrator after losing £1 million a week.

South London Healthcare NHS Trust is to be put in special measures as Health Secretary Andrew Lansley seeks to turn around its dire finances.

The trust, which runs three hospitals, has been criticised over standards of care and has run up deficits of more than £150 million over the past three years.

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

Its chief executive 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.

The trust runs Queen Mary's in Sidcup, the Queen Elizabeth in Woolwich and the Princess Royal University Hospital in Bromley. It released a statement this evening reassuring patients that services would continue 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 £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".

Other NHS trusts that are trying to improve their financial situation may also face being put in special measures if they do not make progress quickly enough.

The source close to Mr Lansley said Labour brought 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 than 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.

"Our staff have worked hard for patients and in spite of significant 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."

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.

"When taking over a trust, it is important that the administrator looks beyond hospital care to consider primary and community care in order to make sure services are placed back on a financially sustainable footing."