The government has been praised for beginning to “grasp the nettle” on downgrading hospital services in troubled health economies.

The judgment from the NHS Confederation came after health secretary Andrew Lansley took the unprecedented step of moving a hospital trust towards administration and NHS North West London announced large-scale reconfiguration proposals.

On Monday, South London Healthcare Trust’s senior management team was summoned to meet NHS deputy chief executive David Flory. The managers were given a letter from Mr Lansley saying he had taken the first step towards installing a “special administrator”.

If Mr Lansley decides to formally appoint an administrator under the National Health Service Act 2006 he must lay a decision notice in front of Parliament before it rises for the summer.

The administrator must then produce a draft report on what to do with the trust within 10 weeks, although this would still be subject to a formal consultation.

Once the administrator has made their report on the trust, the health secretary can consult on dissolving the organisation and transferring staff to other bodies, or closing services.

South London recorded a £65m deficit in 2011-12 on a turnover of £438m, and HSJ has discovered the trust’s initial plan for 2012-13 was for a deficit at least as big again. Chris Streather, chief executive of the trust since it was formed from three separate organisations in 2009, announced his departure two weeks ago.

In his letter to Dr Streather, Mr Lansley said he recognised that not all of the trust‘s problems were of its own making.

Mr Lansley added: “Nonetheless, there must be a point when these problems, however they have arisen, are tackled. I believe we are almost at this point.”

Earlier on Monday, NHS North West London’s board confirmed its preferred option for a service reconfiguration, unveiling a plan that would see three hospitals lose their accident and emergency departments. As HSJ predicted in March, A&Es would be lost at Ealing, Central Middlesex and Charing Cross hospitals. Local opposition is already mobilising.

The cluster of eight primary care trusts plans to reduce hospital activity across north-west London to 70 per cent of what it is now.

If NHS London approves the proposals at its board meeting today, a consultation will begin next week and run for 14 weeks.

Earlier this month it was revealed that five of the eight directors at Barking, Havering and Redbridge University Hospitals, another of London’s most troubled trusts, would be leaving.

In his speech to the NHS Confederation annual conference last week, NHS chief executive Sir David Nicholson praised London’s leadership and urged politicians to be bolder on service reconfiguration.

A source close to Mr Lansley said the South London Healthcare move was intended to send a message to unsustainable NHS organisations that they cannot “continue to provide poor services or rely on bailouts from other parts of the NHS”.

King’s Fund chief executive Chris Ham said Monday’s announcement was “an important signal of intent from ministers”.

“For some hospitals, the usual solutions, such as appointing a new management team or merging with another provider, will not solve their problems,” he said. “Governments have ducked these issues for too long.”

NHS Confederation deputy chief executive David Stout said “short term fixes for struggling trusts are no longer possible” and “more decisive action” was required to maintain services and balance books during the spending squeeze.

“We welcome the secretary of state’s actions as a sign that the government is beginning to grasp the nettle on some of these difficult issues,” he said.

The news comes after NHS London’s chief executive revealed to HSJ that she had wanted a more radical solution to the problems in south-east London when the trust was formed in 2009.

Dame Ruth Carnall said managers were placed under “very, very intensive political pressure” when deciding on reconfigurations and in the creation of South London Healthcare Trust this had led to a “compromise” when a more thorough solution had been sought.

She added that the result of a simulation exercise NHS London had run this March had shown that a south east London-wide solution was needed to the trust’s problems.

North West England is another region looking at a major hospital reconfiguration.

Commissioners in Greater Manchester are aiming to consult the public in spring next year about reducing the number of A&Es, with a proposal to downgrade Trafford Hospital expected this year.

HSJ can also reveal that the DH has been working on a major project on the naming and definition of accident and emergency departments. The report will be hugely influential in guiding the future configuration of emergency services, HSJ has been told.

A Freedom of Information Act request showed GP lead on quality, innovation, productivity and prevention Sir John Oldham and DH head of urgent and emergency care Nick Hall gave a presentation on the project to strategic health authority cluster directors in April.