Mr Johnson blamed management failure for poor patient treatment
A hospital's "appalling" emergency care resulted in patients dying needlessly, the NHS watchdog has said.
About 400 more people died at Stafford Hospital between 2005 and 2008 than would be expected, the Healthcare Commission said.
It said there were deficiencies at "virtually every stage" of emergency care and managers pursued targets to the detriment of patient care.
Health Secretary Alan Johnson has apologised and launched an inquiry.
One of the worst examples of care cited in the watchdog's report was the use of receptionists to carry out initial checks on patients.
Despite the trust stating chief executive Martin Yeates had resigned earlier this month, it has now been revealed he is suspended on full pay while an independent inquiry takes place.
Chairman Toni Brisby resigned earlier this month and has not received further remuneration, the trust said.
Mr Johnson said a review of Mid Staffordshire NHS Foundation Trust, which runs the hospital, would be carried out, focusing on the years 2002 to 2007.
He said there would also be an independent review of the trust's emergency care and he had asked the National Quality Board to ensure the early warning systems for underperformance across the whole NHS were working properly.
It is unacceptable that the pursuit of targets - not the safety of patients - was repeatedly prioritised
Mr Johnson said: "On behalf of the government and the NHS I would like to apologise to the patients and families of patients who have suffered because of the poor standards of care at Stafford Hospital.
"There was a complete failure of management to address serious problems and monitor performance. This led to a totally unacceptable failure to treat emergency patients safely and with dignity.
"Local patients will want absolute certainty that Stafford Hospital has been transformed since this investigation began."
The commission said that, while it was impossible to blame all of the the 400 extra deaths on the hospital's care, some patients would have died as a result.
Julie Bailiey: "Our relatives didn't stand a chance"
The investigation into the hospital, in Stafford, began in April 2008 after complaints from residents were backed up by statistics showing a high death rate.
The trust's initial claim that its method of collecting data was to blame was rejected by the watchdog.
Its report cited low staffing levels, inadequate nursing, lack of equipment, lack of leadership, poor training and ineffective systems for identifying when things went wrong.
It said that:
Unqualified receptionists carried out initial checks on patients arriving at the accident and emergency department
Heart monitors were turned off in the emergency assessment unit because nurses did not know how to use them
There were not enough nurses to provide proper care
The trust's management board did not routinely discuss the quality of care
Patients were "dumped" into a ward near A&E without nursing care so the four-hour A&E waiting time could be met
There was often no experienced surgeon in the hospital during the night
Eric Morton, interim chief executive, said lessons had been learned and that staffing levels had been increased.
Hospital boss Eric Morton: "I very much welcome the report"
The health secretary added: "The new leadership of the trust will respond to every request from relatives and carry out an independent review of their case notes. This will be an essential step to put relatives' minds at rest and to close this regrettable chapter in the hospital's past."
The commission's chairman Sir Ian Kennedy said: "This is a story of appalling standards of care and chaotic systems for looking after patients.
"There were inadequacies at almost every stage in the care of emergency patients.
"There is no doubt that patients will have suffered and some of them will have died as a result.
"Trusts must always put the safety of patients first. Targets or an application for foundation trust status do not lessen a board's responsibility to its patients' safety."
Sir Ian added that a surprise inspection of the hospital in recent weeks found the trust had improved but it would continue to be monitored.
'Definitive and damning'
Shadow Health Secretary Andrew Lansley said: "The public will be rightly shocked by the poor standards of care exposed at this hospital.
"It is unacceptable that the pursuit of targets - not the safety of patients - was repeatedly prioritised, alongside endless managerial change and a 'closed' culture, which failed to admit and deal with things going wrong."
It is galling for patients and patients' relatives and carers that their complaints were not believed
David Kidney, Stafford MP
Liberal Democrat Shadow Health Secretary, Norman Lamb, called for a "cultural change so that every part of this trust has open and transparent systems in place to ensure patient safety".
A spokesperson for The Patients Association said: "How can any patient have trust in the managers and systems that have allowed this disaster to run and run?
"It is not enough for the chairman and chief executive to take the fall for this."
David Kidney, Labour MP for Stafford, said the report was "both definitive and damning".
He added: "It is galling for patients and patients' relatives and carers that their complaints were not believed or were fobbed off with excuses and promises that the report shows were worthless.
"The commission's report shows that their testimony is verified, their judgements of what was wrong vindicated."
Bill Cash, Conservative MP for Stone, said: "There have been systemic failures in the organisation and I have asked for resolute action to be taken."
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