The financially challenged 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, Matthew Kershaw, the Trust Special Administrator puts forward a three-year transformation programme of NHS services in South East London, recommending that South London Healthcare NHS Trust (“the Trust”) be dissolved and other organisations take over the management and delivery of the NHS services it currently provides.

The trust was formed in 2009 by the merger of three hospitals: Queen Elizabeth in Woolwich, The Princess Royal in Orpington and Queen Mary's in Sidcup. The trust’s financial difficulties have been compounded by its inability to pay the bills for its new buildings built under the Private Finance Initiative (PFI) and has resulted in accumulated debts of £150 million over the last three years.

A period of consultation on the recommendations contained in the draft report began on Friday 2 November until 13 December, during which patients, the public and other stakeholders, can give their views.

These are draft recommendations and Jeremy Hunt the Secretary of State will consider the Trust Special Administrator's final report, following consultation, before making a decision about the future of services in South East London in January 2013.

It should be noted that although reference is made to ”Trust Special Administrator”, Matthew Kershaw’s role is distinct from that of a legal administrator. Insolvency legislation is not applicable to NHS Trusts.

The recommended option for Queen Elizabeth Hospital is a merger with Lewisham Healthcare Trust that would see Lewisham’s A&E department closed. The report suggests that Oxleas Foundation Trust take over Queen Mary’s site which would then become Bexley Health Campus. The intention would be for hospital services to be reduced, so that it would only handle simple day cases, and it could be put out to tender. Unused assets and land should be sold to pay-off debts.

Kershaw stated that the “preferred” option for Princess Royal University Hospital, was for it to be acquired by King’s College Hospital Trust. However, there is an alternative option to “run a procurement process that would allow any provider from the NHS or independent sector to bid to run services on the site”.

“Taken together, this proposed set of actions should improve outcomes for patients, resolve the financial issues within the broadly, secure financial sustainability across the wider health economy”, Kershaw’s report stated. However, he does add that delivering this is a considerable task that will require strong leadership and implementation capacity.

Potentially allowing independent sector organisations to bid to manage the service at Princess Royal University Hospital, as indicated by the draft report, is interesting and an extension of the model currently being adopted at Hinchingbrooke Hospital. Thirty nine organisations expressed interest in running parts of the trust, including Circle, Care UK, Serco and Virgin Care. Kershaw confirmed nine bidders have made it through to the next stage. It is not known if any private providers were included.