Up to 40 hospitals will fail by 2013 without radical reform of their working practices, a report said today.

Britain could face a £5bn bill to rescue the trusts unless the NHS adopts more innovative and “factory-style” working, the think tank Reform has claimed.

The report, produced by Professor Paul Corrigan, Tony Blair’s former special advisor on health, and healthcare business expert Caroline Mitchel,l argues that “the old model and concept of the hospital is failing”.

It said: “NHS hospitals currently try to be all things to all people and deliver every healthcare service to everyone.

“To achieve scale we will need to close down under-performing units so that activity can be concentrated in centres of excellence.

“By applying the lessons from assembly lines, aviation and service industries, managers can introduce a ‘factory’ mode of production offering streamlined ‘value added processes’ for patients.”

Other pressures on hospitals, such as an ageing population and managing care for the long-term ill, could be provided remotely by using so-called Telehealth technology where the patient is monitored by telephone or webcam.

The same systems can be used to provide “virtual clinics” where a consultant and patient could be hundreds of miles apart.

Professor Corrigan added: “Unless something drastic happens to the nation’s NHS hospitals, we predict that by 2013 the government will have to find an extra £5bn to secure the continuation of all hospitals.

“As a proportion of the overall NHS budget, this does not seem to be unmanageable but for other government departments, this is a significant amount of money.

“It is difficult to see any chancellor simply giving the NHS that quantum of money to spend on inefficiency.

“The root cause of the problem is that acute hospitals are sick and need to heal themselves.

“To thrive in the present and future environment they need to focus on a radical change - on overall transformation.

“They need to focus on developing a successful business model and not try to be everything to everyone.”

The report claims up to 30 acute hospital trusts currently have little hope of becoming foundation trusts because of the state of their finances.

The authors also believe a further 10 foundation trusts may struggle to maintain their status over the coming years.

“This means that in the coming years a minimum of 40 hospitals will have to go through a fairly radical transformation process because their current clinical and economic model is not sustainable,” the report said.