Two hospitals could be privatised at struggling South London NHS trust

http://www.guardian.co.uk/society/2012/oct/29/hospitals-privatisation-south-london-nhs

Version 0 of 1.

Two hospitals could be privatised and another will lose its accident and emergency department in the first test of the government's determination to deal with bankrupt NHS trusts, it has been revealed.

Plans for South London NHS trust were outlined on Monday morning by the special administrator Matthew Kershaw. He said that without action the trust, already losing £1m a week, would accumulate a deficit of more than £240m by the end of 2015.

South London, with an annual spend of £440m, runs three hospitals – Queen Mary's in Sidcup, Princess Royal in Bromley and Queen Elizabeth in Greenwich – serving a population of a million people in the capital and employing 6,000 people.

The review, drafted by Kershaw and which private consultants were paid £2m to work on, could see Princess Royal, built in 2003 using the private finance initiative with 525 beds, offered to a private company – although the special administrator said his "preferred option" was that it be taken over by King's College hospital.

Kershaw said: "King's are very keen to do so but we can get other benefits from the independent sector … and absolutely there's a choice in the report."

The other big change is that Queen Mary's would be taken over by the mental health trust and land sold off to pay off debts. The hospital service would be reduced to cope with only simple day cases – no longer offering hip or knee replacement surgery. The hospital service could then be put out to tender.

It is understood Circle, which runs Hinchingbrooke NHS hospital, Serco and Virgin have expressed interest in the hospitals as have NHS organisations such as Guy's and St Thomas's.

Changes of this magnitude mean a knock-on effect for other hospitals in the local area.

The accident and emergency department at a hospital nearby in Lewisham will be closed as part of the plans for South London NHS Trust.

Kershaw said: "The current design of services and the economy of the local health system are not safely tenable" in the long term.

He said he could not make promises on jobs. The deficit in South London will be £65m this year, with a third of this made up from PFI payments which the taxpayer will have to carry on paying. Another £34m, the report says, could be saved from medical and nursing pay. "The trust has the lowest income per consultant in its peer group, a very high ratio of junior doctors to consultant staff and high use of locum and agency staff," the report warns.

Mike Farrar of the NHS Confederation said the plans were "credible and well thought out". On the private finance initiative Farrar added: "South London is a good example of a trust where it would be simplistic to saddle PFI schemes with the blame for all of the problem. To get to the real issues you have to dig deeper."

The proposals are out to public consultation, with Jeremy Hunt, the health secretary, making a decision early in the new year.

Experts said the proposals were controversial. Responding to the recommendations made by the special administrator, Anna Dixon, director of policy at the King's Fund thinktank, said: "South London Healthcare's problems are complex and longstanding – the proposed solutions recommend very significant change. While the recommendations will undoubtedly be controversial and tough to implement, radical redesign of health services is needed in many parts of the country."

Outside the building where the press conference launching the report was held, protesters held up placards saying: "Save our local NHS hospitals." One told the Guardian: "Residents do not want NHS local hospitals to be provided by profit-making companies. We don't want Virgin or Serco or anybody else but the NHS."