Out-Law / Your Daily Need-To-Know

Out-Law News 3 min. read

Failing South London NHS trust should be dissolved, according to draft report


The loss-making NHS Trust which in July became the first to be put into the Regime for Unsustainable NHS Providers should be dissolved, according to its Special Administrator

In his draft report (87-page / 1.5MB PDF) into the future of South London Healthcare NHS Trust, the Department of Health's Matthew Kershaw proposes a "three-year transformation programme" made up of six elements, which could result in the reorganisation of essential services across seven hospitals in the south east. Members of the public will be encouraged to have their say on the proposals when a public consultation exercise begins on Friday.

"The recommendations are set in the context of the need to move towards a model of healthcare that ensures continued improvement in life expectancy and quality of life while addressing the challenges of an ageing population, the growth in the number of people with long term conditions and constrained levels of funding to the NHS," the draft report says. "Only through a response to all of these dimensions can safe, high quality, affordable health services be secured for the population of south east London in a sustainable way."

South London Healthcare was formed in 2009 by the merger of the Princess Royal University Hospital, Orpington, Queen Mary's Hospital in Sidcup and Woolwich's Queen Elizabeth Hospital. It inherited a large debt at the time of the merger, primarily due to construction costs relating to the buildings at Orpington and Woolwich. The trust has accumulated a £150m deficit over the last three years and is currently overspending by £1.3m each week, according to the Department of Health.

The Health Secretary was given the power to appoint a special administrator to review an NHS Trust if "appropriate in the interests of the health service" in 2009 under the Unsustainable Provider Regime. The administrator must comply with strict statutory time limits and consultation requirements when producing his report, the final version of which is due in January 2013.

Although the term 'Trust Special Administrator' is set out in the relevant legislation, Kershaw's role is distinct from that of a legal administrator. Insolvency legislation is not applicable to NHS Trusts.

Among the recommendations in his draft report, Kershaw stated that the Trust should be dissolved and other organisations take over the management of the hospitals and services it provides. This could see Queen Elizabeth Hospital absorbed into the nearby Lewisham Healthcare NHS Trust and Princess Royal University Hospital become part of King's College Hospital NHS Foundation Trust. However, if a King's College acquisition is not possible the report instead recommends a "procurement process" which could see the hospital taken over by another NHS provider or a provider from the "independent" or private sector.

The report also recommends that Queen Mary's hospital be restructured as a community health centre under the name of Bexley Health Campus, with underused buildings sold off to "maximise regeneration opportunities". The new facility should be taken over by the Oxleas NHS Trust and services – to include day case elective surgery, endoscopy and radiotherapy – provided by a "range of organisations".

To allow the transfer to go ahead, the report recommends that the Government "write off" the Trust's estimated £207m worth of debt. In addition, the Department of Health should provide "additional funds" to the local NHS in order to cover the excess costs of the PFI payments at Queen Elizabeth and Princess Royal University Hospitals "on an annual basis until the relevant contracts end".

Healthcare law expert Barry Francis of Pinsent Masons, the law firm behind Out-Law.com, said that the report made it clear that the new Special Administration regime was "capable of delivering clear proposals within a short timeframe" following its first use.

"Depending on execution, this should reassure those dealing with the NHS that orderly solutions to serious financial problems can be achieved," he said. "Doubtless a number of arrangements will have to be renegotiated and it will be interesting to see whether variations to the PFI contract will be sought. Inevitably we will see big changes but there have been big financial losses so a new solution to the delivery of healthcare needs in the south east has to be found."

Potentially allowing independent sector organisations to bid to manage the service at Princess Royal University Hospital, as indicated by the draft report, was an interesting extension of the ideas currently being implemented at Hinchingbrooke Hospital, Francis added. The Huntington hospital became the first to be run in its entirety by a non-state provider earlier this year.

"However, this may introduce delay into a process which seems to need urgent implementation and the recreation of certainty," he said.

We are processing your request. \n Thank you for your patience. An error occurred. This could be due to inactivity on the page - please try again.