The most financially troubled hospital trust in England could effectively be allowed go bankrupt and see its work redistributed between the independent sector and other trusts.

HSJ understands that the “unmanaged market” scenario is among the radical options that could be modelled for South London Healthcare Trust, whose £70m predicted year-end deficit is the biggest of any trust in England.

NHS London is considering what would happen in 2012-13 if the “Department of Health stop[s] providing cash support towards a deficit”, a tender document seen by HSJ reveals. “This may show certain sites have to be closed with activity dispersed to other NHS/independent sector provider sites across the cluster and beyond.”

The document reveals the solutions identified could be applied to other trusts with multiple problems in reaching foundation trust status.

Others options the strategic health authority wants modelled include acquisition of the trust or parts of it by a “joint venture between private sector and a foundation trust”. Or a “short to medium term” management franchise.

South London is a £459m-turnover organisation with three sites, two A&Es and was created from a three-way merger in April 2009.

It covers a population of 850,000 and the long-term financial model for the trust shows it is “not financially viable in 2016-17”.

If the joint venture option with the private sector was pursued or a private company was selected to run the management franchise it would dwarf the only private franchise currently operating, Circle’s deal to run £102m-turnover Hinchingbrooke Healthcare in Cambridgeshire.

The NHS London document said: “To date there have been a lack of incentives for foundation trusts to help the NHS trusts that have the greatest problems.

“The ultimate objective of the study is to establish a clinically and financially viable organisational form for the trust and to use this experience as a platform for potential foundation trust solutions for other trusts with complex tripartite formal agreements [agreements on how they will reach foundation trust status]”.

NHS London is due to meet its chosen partner for the modelling work on Friday morning to agree which scenarios the trust should be tested for.

The supplier will have to submit their final report by 15 March, to be signed off by 23 March, the NHS London document said.

South London was last month confirmed as one of the seven hospital organisations nationally that would need access to a £1.5bn Treasury-approved fund to meet its private finance initiative costs over the life of the contract. It is expected to need £21m in 2012-13.

The trust has modelled three options for Queen Mary’s Hospital in Sidcup, the document said. These include closing the site – a move that would save £12m a year.