Monitor has launched a project examining the future of small hospital trusts.

The sector regulator’s economics department is creating a team which will initially look at evidence about the viability of these organisations, which generally run one district general hospital, and sometimes additional small sites.

HSJ understands the team will at a later stage look at what the evidence means for existing trusts.

Sources told HSJ the project would examine whether there was a minimum size for a hospital to be viable.

One senior figure said: “We are starting from scratch. Are smaller hospital trusts facing problems? What are they? And how can we resolve them in a way that means people don’t lose all of the services in their local hospital?”

The team will examine the evidence on economies of scale and on mergers, using past work of the Co-operation and Competition Panel, which was responsible for overseeing mergers and acquisitions until April, when it became part of Monitor.

This will allow a comparison between what applicant merger partners said could be achieved in savings and what has been delivered.

In an interview with HSJ at earlier this month Monitor chief executive David Bennett, speaking about small providers, said: “When we looked at the annual plans for foundation trusts [we saw that] those that were struggling most were district general hospitals.

“It’s not quite as simple as saying ‘it’s a scale issue’ [but] some quite big decisions get made on [the] basis [of trust size]. We need a better understanding of what is the minimum scale.”

There are 30 non-specialist hospital trusts with an annual turnover of less than £200m, 18 of which are foundation trusts. A further 67 have a turnover of between £200m and £400m, 43 of which are foundations.

HSJ understands some consultancies working on mergers and trust viability currently consider the minimum turnover for a non-specialist hospital to be viable to be £400m. This has increased from a previous assumption of around £200m as the pressure on NHS funding has increased in recent years.