Administration Warning For NHS Trust

An NHS hospital trust losing £1m a week has been put into administration in a last effort to save it from collapse.

Health Secretary Andrew Lansley brought in the measures to try to turn around the dire finances of South London Healthcare NHS Trust.

It will be the first in the country to be placed under the control of a special administrator tasked with putting it on a viable footing.

The trust runs three hospitals and has run up deficits of more than £150m over the past three years. It is thought to be on course to lose between £150m and £375m by 2017.

Its chief executive was informed on Monday 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.

Hospitals run by the trust include Queen Mary's in Sidcup, the Queen Elizabeth in Woolwich and the Princess Royal in Bromley.  

The trust released a statement 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 private finance initiative (PFI) deals that are now costing £61m a year in interest payments.

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.

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.

South London Healthcare NHS 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."