The Department of Health’s head of provider development has questioned whether district general hospitals can survive within their present “organisational boundaries”.

Ian Dalton, who leads the DH’s drive to get every trust to foundation status, questioned whether all district generals could survive the £20bn NHS efficiency challenge and remain independent organisations.

In a speech to a Healthcare Financial Management Association conference last week, Mr Dalton said: “There are organisations that might need to change their form quite significantly” to both meet the efficiency challenge and become foundation trusts.

“As a district general hospital chief executive, I would be asking whether I could do this within my organisational boundaries, in quite a profound way,” he told delegates at the conference in Brighton. “I would be thinking about the use of capital assets and asking about flexibility and how to maximise it.”

Many smaller trusts have been earmarked for merger, including Ealing Hospital, Winchester and Eastleigh Healthcare and Trafford Healthcare.

Last week Trafford received bids to be taken over by University Hospital of South Manchester and Central Manchester University Hospitals foundation trusts. A decision is due within six weeks.

However, local media also reported last week that Somerset’s Weston Area Health Trust, which has a turnover of £90m, was pushing ahead with plans to become an autonomous foundation trust.

The district general hospital trusts yet to announce how they plan to gain foundation status include George Eliot Hospital in Warwickshire, which has a turnover of £108m and a savings target of 10 per cent this year, and the Princess Alexandra Hospital Trust in Essex, which also has a 10 per cent savings target on a turnover of £179m.

Meanwhile Poole Hospital, which already has foundation status, is in talks about merging with the neighbouring Royal Bournemouth and Christchurch Hospitals Foundation Trust.

There are 116 organisations awaiting Monitor authorisation to become foundation trusts.

Mr Dalton told the conference: “We absolutely expect the remaining trusts to move towards FT status and the vast majority will be authorised by April 2014. A small number will demonstrate a case that they will take longer.”

He gave no detail on the “new management arrangements”, announced in the government response to the NHS Future Forum, that are to be placed on trusts that miss the April 2014 deadline.

DH director of provider delivery Matthew Kershaw told HSJ these arrangements were still being worked on but could involve a different management team being brought in, possibly from the independent sector.