NHS Trust Faces Liquidation
June 26, 2012
The Fresh Outlook
South London Healthcare faces possible dissolution and closure of services under powers invoked by the health secretary Andrew Lansley today.
The trust, which serves over a million people and runs hospitals in Orpington, Sidcup and Woolwich, has accumulated £150m of debt over three years, which includes £69m in the last financial year alone. They continue to lose money at a rate of over £1m every week.
South London Healthcare, formed in 2009 when the three hospitals merged, began life with a huge burden of debt. New hospital buildings in Orpington and Woolwich had been funded via Private Finance Initiative (PFI), partnerships formed between private companies and public services to fund projects where money is not immediately available from the public purse. Repayment of PFIs is costing the trust £61m every year and will continue for another 20 years.
The Department of Health has served written notification of its intention to place the trust under the “unsustainable providers’ regime”, powers which were implemented by Labour in 2009 but never before invoked.
In a letter to the trust, Mr Lansley said: “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.” The trust has proved to be a drain on the financial resources of the NHS and Mr Lansley said he “cannot permit this to continue”.
The move could see administrators brought in to stabilise the finances of the trust and establish a viable plan for the future.
Chris Streather, chief executive of South London Healthcare said: “There is a huge gap in our financial plan in order for us to become viable in the long term and this intervention if it solves that problem which it is designed to do is absolutely welcome and will be helpful.”
A statement on the trust’s website today said: “In the meantime, we can reassure local patients and the public that our staff will continue to provide services as normal.”
It is feared today’s announcement is just the beginning, with up to 22 trusts said to be facing financial difficulties, six of them serious.
By Sarah Harper
[Image courtesy of University Hospitals Birmingham]