The closure of a psychiatric hospital could be a 'warning sign' that specialist mental health services across the country are at risk, campaigners fear.

South West London and St George's Mental Health trust decided last week to close Henderson Hospital because of reduced referrals and insufficient income.

The Department of Health had funded the hospital, in Sutton, until last April, when local primary care trusts took responsibility.

Its closure has sparked calls for a return to national or regional funding of specialist mental health services. Paul Farmer, chief executive of charity Mind, said: 'This particular sector is in a very vulnerable economy. Commissioning very specialist mental health services can often fall into the too-difficult box. It wouldn't surprise me if this was a warning sign for other specialist services.'

Mental Health Foundation chief executive Andrew McCulloch said it was 'ludicrous' for PCTs to commission specialist services as they lacked the knowledge and national focus required for the task.

However, Stuart Bell, chief executive of South London and Maudsley foundation trust, which runs several specialist services including the national psychosis unit, said: 'Any service that purports to have specialist status has to accept that the specialism will be eroded over time unless they stay at the cutting edge.

'An arrangement that protects them too much removes the incentive to keep improving.'

In a statement, South West London and St George's chief executive Peter Houghton said: 'This decision reflects the reduction in funded referrals and income from commissioners, and the expectation that this reduction will continue.'