Neonatal care in the UK has been organised through ’Managed clinical networks’ (MCN’s) since 2004 so that service improves and care can be provided locally. Yet over a six month period in 2006/07, neonatal units were shut to new admissions for an average of 24 days, and one in ten units exceeded its capacity for intensive care for more than 50 days. The North Central London Perinatal Network (NCLPN), one of the 5 networks in London, consists of six hospitals, including UCLH. The pressure on neonatal units in the NCLPN is growing very fast, in particular at UCLH, where the rejection of admission of neonates from neonatal intensive care unit (NICU) and high dependency unit (HDU) is now very high due to capacity shortage. We apply a loss network model with overflow based on a continuous time Markov chain for capacity planning problem of a perinatal network, with specific application to the NCLPN. We derive expressions for overflow and rejection probabilities for each neonatal unit of the network. Results obtained with the model are very close to those observed for the UCLH. They also show that a substantial number of intensive care cots are required to keep rejection level low. Using the model, decisions on number of cots can be made for specific levels of admission rejection probabilities for each level of care at each neonatal unit of the network and specific levels of overflow to temporary care.