A London Hospital Trust is on the brink of going to administration after failing to get control over its finances and stacking up a deficit of more than £150 million in just three years.
The South London Hospital Trust, which runs three hospitals - Queen Mary's in Sidcup, The Princess Royal Hospital in Bromley and the Queen Elizabeth in Woolwich - is facing special measures after it emerged it stands to lose up to £75 million a year for the next five years, according to various media reports.
The Trust could become the first to be put into an 'Unsustainable Providers Regime', under which an administrator would be put in charge of operations, after Health Secretary Andrew Lansley sent its chief executive a letter warning of the possibility.
"I recognise that South London Healthcare NHS Trust faces deep and long-standing challenges, some of which are not of its own making. Nonetheless, there must be a point when these problems, however they have arisen, are tackled. I believe we are almost at this point," Lansley reportedly said.
A £2.5 billion private finance initiative (PFI) deal OK'd by the Labour government for hospitals in Bromley and Woolwich is taking the blame for being the root of the problem, as it costs the Trust about £61 million a year in interest, according to ITV News.
But despite support to help address its financial woes in recent years, Lansley writes "your organisation still expects to be in need of significant financial resources from other parts of the NHS and I cannot permit this to continue. That is why I am considering using these powers".
In an emailed statement, a spokesperson for the Department of Health said there are "longstanding problems at South London Healthcare NHS Trust and they must not be allowed to compromise patient care in the future".
£1.3 million a week into the red
Adding to its already sizeable debt of £150 million, the Trust is "generating further debt at a rate of £1.3 million every week and has required repeated financial support from the taxpayer - money which should be spent on imporving patient care".
"That situation cannot be allowed to continue, which is why we are considering options for how the Trust is managed in the future," the DH said.
The best way forward for the organisation is yet to be decided, but according to BBC News a rescue deal for the Trust, under which the taxpayer would assume responsibility for the PFI contract, could be under ministerial consideration.