What happens when an organisation overspends? Prior to the Health and Social Care Act 2012, some suspected that strategic health authorities managed away deficits by providing hidden bailouts. How common these were is not easy to tell (the National Audit Office did look and the picture was rather more complicated). But many shared the view that the lack of a clear and transparent regime for managing financial failure blunted incentives to improve and allowed fundamentally unsustainable organisations to stagger on.
In the reformed NHS, a clearer framework was introduced whereby organisations in difficulty got a chance to return to financial good health but if not, administrators would be brought in to take over the organisation with a tight timetable for producing a plan. This is the trust special administration regime as enacted first at South London Healthcare Trust and then at Mid Staffordshire Foundation Trust.