On the 26th June, the South London Healthcare National Health Service (NHS) Trust was placed under the control of a special administrator in an effort to save it from financial collapse. The Health Secretary, Andrew Lansley, made the decision to place the South London Trust into the unsustainable providers regime (Regime) in an attempt to turn around its finance.
NHS Trusts are responsible for providing medical services on behalf of the NHS in England and Wales. They are, in effect, public sector corporations headed by a board of executive and non-executive directors, and many are now prompting government action to save them from financial difficulty.
The South London Trust 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. Mr. Lansley's decision to place the South London Trust under the Regime, which was introduced by the former Labour government but up until now had never been used, makes the South London Trust the first in the country to be placed under the control of a special administrator. The administrator will take over the Trust's board and recommend measures to the Health Secretary to attempt to put the Trust's finances back to a more viable level.
This comes with the news that the Barking, Havering and Redbridge NHS Trust could shortly become the second Trust to be placed under the Regime. The north-east London Trust needs to find nearly £50m this year for its private financing initiative (PFI) deal agreed in January 2004, despite being offered grants from a £1.5bn Department of Health pot designed to help those NHS Trusts in financial difficulty meet their PFI costs without cutting services to patients.
PFI is a way of creating a "public-private partnership" by funding public infrastructure projects with private capital. The initiative was originally developed due to an increased need for accountability and efficiency in public spending, but there are now signs that PFI costs may be causing crippling financial damage to some NHS Trusts.
The Health Secretary has emphasised that the problems facing the struggling NHS Trusts are not entirely due to their own financial mismanagement. He points to how the South London Trust can trace the roots of its financial difficulties back to a £2.5bn PFI signed by the last Labour government, which is now costing the Trust £61m per year (or14.4% of its total income). PFI contracts are putting the relevant NHS Trusts under enormous amounts of pressure to balance their books. PFI contracts cost the taxpayer more than £8bn in 2011-12, and are expected to cost approximately £250bn over the next three decades. However, PFI forms only part of the problem, with other factors such as the current economic climate and the increasing pressure from Government initiatives to curb public spending also being major contributors.
It is believed that up to 7 NHS Trusts may require additional financial assistance in the coming years