Systems of public administration and consultation have been impaired by financial stress among PFI hospitals. Instead of seeking contract renegotiation, the government has elected instead to activate a failure or bankruptcy regime to deal with the crisis in hospital finances. Drawn up in 2006 by the Labour government but not used until 2012, the regime allows the government to appoint a special administrator to develop a financial recovery programme or to close the hospital. The special administrator has extensive powers, is not part of the health service and is not bound by public consultation rules that apply to other service reconfigurations. As a result, hospitals put into special administration may be closed in as little as 19 weeks.
The financially driven special administrator system is chaotic and ad hoc. Last Autumn, the Department of Health was unable to explain to the House of Commons Public Accounts Committee how it proposed to deal with financial failure in individual hospitals and could not reassure the committee that "financial problems would not damage either the quality of care or equality of access to all citizens, wherever they live." Nor could it explain when trusts would be placed in special administration or exactly how the process would work.
In March 2012, the government introduced new legislation in effect abolishing the NHS in England by abolishing the duty on the Health Minister to secure and provide comprehensive care for all residents throughout England. It also gave new powers to NHS hospitals to raise up to half their income from private patients and enter into an increasing number of Public Private partnerships, a policy which is reflected in the reforms to PFI.