The trust special administrator this morning issued his draft report into the first organisation to face the NHS’s failure regime, recommending the trust is broken up.

Special administrator Matthew Kershaw recommended South London Healthcare Trust is split into three parts, in a move that would see accident and emergency services downgraded at neighbouring Lewisham Healthcare Trust’s main existing site.

Mr Kershaw was appointed special administrator after then health secretary Andrew Lansley in June made South London the first organisation to be subject to the failure regime.

The failure regime is widely expected to be used at other trusts and in July HSJ reported that the measure was also being considered for Mid Yorkshire Hospitals Trust.

There will now be a 30-day consultation into the draft document Mr Kershaw has produced before a final report is made to health secretary Jeremy Hunt, who will then have until early February to make a decision on the trust’s future.

The draft report recommends South London Healthcare Trust’s Queen Elizabeth Hospital in Greenwich is merged with Lewisham Healthcare Trust and that the Queen Mary Hospital in Bexley is turned into a “health campus” owned by Oxleas Foundation Trust.

It said the combined Greenwich-Lewisham trust should have only one full A&E - at the Greenwich site, which has a large private finance initiative contract. Lewisham Hospital’s A&E would therefore be downgraded.

Mr Kershaw said the “preferred option” for South London’s third site in Bromley was for it to be merged with King’s College Hospital Foundation Trust. However, he suggests a another possible option of a procurement exercise being run to decide who should manage the Bromley site, keeping alive private providers’ hopes of them running part of the trust as a franchise.

He added that Dartford and Gravesham Trust would run day case surgery work in Bexley for a year on an interim basis while a procurement exercise was run.

South London Healthcare ended 2011-12 with a deficit of £69m.

Mr Kershaw received expressions of interest from 39 organisations about running parts of the trust, although HSJ understands none wanted to take on the entire organisation.

He this morning confirmed nine bids were taken forward for more detailed consideration, although he would not name them, citing commercial confidentiality.


Key numbers from the report:

Operating costs have declined by £69.2m from 2009-10 to 2012-13, while revenue has declined £32.1m over the same period.

The “cost improvement programme opportunity” for the trust is £43m, “based on a risk assessed proportion of the total potential productivity opportunity (£79m)”.

The report said: “It is recommended that the Department of Health writes off the debt associated with the accumulation of deficits at SLHT, By March 2013 this is estimated to be £207m.”

Nearly a third of the £62m potential savings the trust describes come from medical productivity. The document said: “The trust has the lowest income per consultant in its peer group, a very high ratio of junior doctors to consultant staff and high use of locum and agency staff.” If the trust was as efficienct as the best performing trusts it could lose 140 doctors from its total of 862 whole-time equivalents.


HSJ reported at the start of this month that these included East Kent Hospitals University Foundation Trust, King’s College Hospital Foundation Trust, Dartford and Gravesham Trust and Lewisham Healthcare Trust.

Virgin Care, Circle, Care UK, Capita and Serco also bid but it is not known if any were taken forward to the second stage.

The draft report criticised South London’s previous management for not tackling “key strategic challenges such as overall medical productivity”.

It added: “This is demonstrated by the high number of low value cost improvement programmes.”

The draft report has recommended options very similar to those set out in a ‘simulation exercise’ run by NHS London in February.

This saw King’s College, Oxleas and Lewisham involved in modelling different scenarios for South London Healthcare Trust.

One of these was for a foundation trust takeover of one or more of the sites and another involving a “joint venture” between the private sector and an FT of the kind now mooted for the Bexley site.

Speaking at a press conference this morning Mr Kershaw would not rule out job cuts and the trust is already signed up to reducing its workforce by five per cent by March 2016.

A document from the simulation exercise in February said: “Around 60 per cent of total expenditure is attributed to staff pay bill; including temporary bank and agency spend. The current make-up of the workforce is predominantly female (80.54 per cent). Part-time employees equate to 31.4 per cent of the workforce.

“The trust is currently forecasting workforce numbers based on a year on year reduction of five per cent over next five years i.e. from 5,838 whole time equivalents in March 2012 to 4,755 in March 2016.

“Recent benchmarking intelligence that identified that SLHT has a larger workforce with higher than average bandings than comparable trusts.”