The use of the 2006 failure regime to tackle the problems at South London Healthcare Trust is intended by government as a signal to some NHS organisations with financial problems that they are living on borrowed time.

It does not, however, necessarily indicate the political willingness to back the kind of radical action within healthcare economies that many believe is necessary.

The government knew it had to act on South London or risk losing credibility. All commissioners and providers were watching to see whether the bailout culture of the past would continue.

But the most pertinent question is what will result from the decision. The service view is that SLHT’s problems stem from a structural mismatch between supply and the services required by the population.Its proponents claim it is a historic issue - the aggregated product of countless unaligned investment decisions and short-term fixes, made worse by two private finance initiative deals.

They conclude the trust’s problems cannot be unpicked from those of the healthcare economy as a whole and that significant service reconfiguration must result. In short, that over-provision must be tackled and services, for example, not simply broken up and parcelled out to other providers.

But do not assume that all in government share this analysis. There is a strong view that the majority of SLHT’s problems stem from poor management - rather than service closure - and that what is needed is a new broom to drive efficiencies, particularly those affecting the workforce and estate, and deliver relatively undisruptive service redesign.

Blame for the private finance initiative deals can be laid at the door of the last government, so a bailout is easy to propose for that part of the problem.

What might a “management” solution look like? There is already briefing that parts of SLHT will be brought under the wing of foundation trusts, probably Oxleas and/or King’s Health Partners.

However, there is significant government appetite to secure some private sector input into determining the solution for all failing trusts, not just South London.

A “simulation study” carried out by NHS London posited an idea of failing trusts having clinical services run by an NHS organisation, while everything else was managed by a private sector partner. It is more likely this kind of solution will emerge, rather than a more straightforward management franchise to the private sector.

What the government will seek to avoid is any hospital closures, even if some of the “hospitals” left are simply buildings with an NHS badge, housing a collection of community and primary care services.

But what does the decision mean for other struggling trusts without rescue plans already in place? The next to come under the spotlight is likely to be Barking, Havering and Redbridge University Hospitals Trust, which has a financial problem almost as big as SLHT’s and a poorer clinical record.

The managements of Surrey and Sussex Healthcare Trust, Mid Yorkshire Hospitals Trust and Mid Essex Hospital Services Trust must also be looking over their shoulders. Then there is the question of what “failure” mechanism might be used. Monitor is developing its own “continuity of service regime”, but it is not clear when and if this will supplant the 2006 model.

This part of the question about how such major problems will be tackled in the future - when the government has taken a step back and clinical commissioning groups and health and wellbeing boards are calling the shots along with the NHS Commissioning Board, Monitor and the Care Quality Commission.

All those involved admit agreeing a shared plan among so many parties will be a challenge, which is why, as Sally Gainsbury suggests, the proposed academic health science networks could prove to be a useful Plan B for major service redesign.