Andrew Lansley has formally dismissed the directors of an NHS Trust losing £1 million a week and imposed a new administrator in an attempt to turn the hospital’s fortunes around.
The move is likely to result in mergers, redundancies and the possible withdrawal of some services at the trust which runs Queen Mary's hospital in Sidcup, the Queen Elizabeth in Woolwich and the Princess Royal in Bromley.
The man chosen to lead the turn-around attempt is Matthew Kershaw, a former hospital chief executive in Salisbury who currently works as the national director for provider delivery at the Department of Health.
He will have to produce a draft plan for Parliament by October following which there will be a 30 day consultation with patients, staff and the public. The plan is due to be implemented at the start of next year.
Other NHS Trusts in difficultly will be watching the turnaround attempt closely. The Department of Health has warned that other hospitals could follow South London Healthcare into administration.
Mr Lansley acted after the trust ran up deficits of more than £150 million over the past three years.
Despite efforts to improve its financial performance, it is still thought to be on track to lose between £30 and £75 million a year for the next five years.
Mr Kershaw who used to work as chief executive of Salisbury NHS Foundation Trust, will take charge of the Trust on Monday July 16.
Mr Lansley said: “Past efforts have not succeeded in putting the South London Healthcare Trust on a sustainable path.
“The purpose of the trust special administrator is to ensure that services are high quality and to ensure a lasting clinical and financial solution.”
Mr Kershaw said that everyone had to accept that change was needed.
“Together we will need to think differently, be bold and accept that change needs to happen. The status quo is not sustainable.”
Foundation Trust Network (FTN) chief executive Sue Slipman said: “This is the first time a failure regime is being used on an NHS trust and the FTN sees it as a crucial test of how a key part of the new system will work.
“All eyes will be on the process which, if it works as intended, will resolve the situation swiftly and ensure there is minimum disruption to patient care while allowing services to be delivered more efficiently.
“The health service is under huge financial pressure and there is no doubt that there will have to be many more changes to make the savings needed to invest in new patterns of healthcare.”