What Would Happen If South London NHS Trust Went Bust?

Andy Thornley
By Andy Thornley Last edited 78 months ago
What Would Happen If South London NHS Trust Went Bust?

South London NHS Trust — the organisation formed by the merger of Queen Mary's Sidcup NHS Trust, Queen Elizabeth Hospital NHS Trust and Bromley Hospitals NHS Trust — was informed last night that it will be placed in ‘special measures’. It will be the first NHS Trust in the country to have such measures imposed on it, effectively the same as placing it in administration.

But how could this happen? Hospitals get money from the government. So surely they can’t go bust?

Both right and wrong.

Diagram showing hierarchy of the NHS

There is a certain hierarchy to the NHS (which as you might have read in the press, is going through somewhat of a change at the moment).

At the top comes the Department of Health, headed up by Health Secretary Andrew Lansley MP.

Underneath this come the soon-to-be-abolished Strategic Health Authorities. These are the organisations which are charged with implementing policy on a regional level including  ‘implementing fiscal policy’.

Underneath this, you have the also soon-to-be-abolished Primary Care Trusts. Their job is to spend the health budget by commissioning (buying in) services. These services can be anything from physiotherapy to breast screening and can be commissioned from both NHS and private providers. This creates what is known as a ‘health economy’ and Trusts like South London — which is a hospital Trust — can bid to the Primary Care trusts to provide these services. South London NHS Trust is currently £150m in debt and losing around £1m per week.

So it’s going bust because of privatisation?

Not really.

A few years ago, waiting times were terrible. Patients could wait many months from the time they were referred by their GP until they actually saw a specialist. One of the previous government’s pledges was to reduce waiting times down to 18 weeks. In order to build extra capacity for this, many hospital Trusts either outsourced some routine operations to other providers (some in the private sector), but more importantly, others built brand-spanking new hospitals on credit. You might have heard it being referred to as PFI – Private Finance Initiative. It works a bit like a mortgage. The build of the hospital is funded by the private sector, and the Trust pays this off with an annual fee. The only problem is that some Trusts are beginning to find that the amount they are paying off their mortgage is taking them in to the red. There are over 100 PFI schemes in the NHS.

So PFI was bad?

Not entirely. Some PFI schemes have been successful and have enabled patients have access to nice new hospitals, which unsurprisingly are cleaner than non-PFI hospitals. It also helped to achieve the lowest NHS waiting times since records began. However, some have been branded as ‘unaffordable’. Overall the scheme has been neither a complete failure nor a universal success within the health service.

So what happens now?

Officially, the hospital has been given notice that it will be placed in an ‘unsustainable providers regime’, or special measures to the non-robots amongst us. This means that an external administrator will be placed in charge. This will relieve the non-executive Directors — critical friends who hold the executives to account — of their duties. The move also means that executives, such as the Finance Director, will also no longer sit on the Board for the Trust. The administrator will then look at ways to make the financial situation more sustainable. There has also been a suggestion that no further cash from other NHS organisations will be used to bail out South London NHS Trust.

Are residents of South London going to find Greek-style austerity in their local NHS?

An ambulance drives with flashing blue lights

Who knows! In a statement, the hospital Trust said they have entered in to discussions with the Department of Health and added "in the meantime we can reassure local patients and the public that our staff will continue to provide services as normal."

However, if no further cash is available from either other NHS organisations or central government, it is hard to imagine how this would not affect the way that care is provided. It is likely that this will manifest itself in a re-structure of services, but it is too early to speculate on how that would look.

How long will it take then?

According to the BBC, there would need to be a formal consultation before the Trust was broken up. The timescale for this is:

  • Under section 65 of the National Health Service Act 2009, the health secretary can appoint a special administrator to review an NHS trust.
  • To do so, the health secretary must first alert the trust and regional health bosses of his intention and consult with them. This is the stage that has been reached with South London Healthcare.
  • When and if an order is made, the health secretary must explain to Parliament why an administrator is being brought in.
  • The administrator is then given five working days to start.
  • Within 45 working days the administrator must provide the health secretary with a draft report setting out what should be done. This must be published.
  • There must then be a consultation period of 30 working days - which must start within five days of the report being published.
  • Once that is over, the administrator has 15 working days in which to produce a final report, which again must be published.

Can this same situation happen to any other NHS Trusts in London?

Possibly. The ability to put a Trust in special measures was introduced by the last government but never used until now. The decision to appoint an administrator is unprecedented and will be a shot across the bow for other struggling Trusts such as Barking, Havering and Redbridge University Hospital Trust. They too are struggling after PFI deals to build Queen’s hospital in Romford, but crucially; they are struggling in a clinical aspect too. They will be closely tracking what happens south of  the river and the result that it has on the Trust’s finances and ability to deliver care.

Image of ambulance by kenjonbro from the Londonist Flickr Pool.

Last Updated 26 June 2012