Raised efficiency assumptions could have an impact on small and medium sized trusts’ ability to provide good quality patient care, Monitor has warned.

It came as the regulator confirmed it is to investigate the challenges faced by small hospitals across the country.

HSJ revealed in June it would be investigating the challenges faced by smaller district general hospitals with an income of £300m or less.

The financial situation of Mid Staffordshire Foundation Trust, which was at the centre of the care crisis subject to a public inquiry, is said to mirror that of many smaller district general hospitals across England.

The trust was put into special administration after it was deemed to be “financially and clinically unsustainable”.

The administrators recommended the trust should be dissolved and have recently been given more time to submit their final report to the health regulator.

Monitor is now planning to examine whether small, non-specialist, district general hospitals are facing difficulties in delivering high quality, sustainable services.

Monitor chief executive David Bennett said: “We have an important job to do in making sure that the whole sector works in the best interests of patients and understanding the pressures on small hospitals is an important part of that job.

“Smaller acute providers are an integral part of the NHS and we want to know more about the pressures they face.”

Monitor regulator and NHS England jointly announced earlier this month that efficiency assumptions would be raised from 1.5 per cent to 1.9 per cent in 2014-15.

The regulator’s board papers for October state that “small and medium sized acute foundation trusts were the worst performing with EBITDA [earnings before interest, taxes, depreciation, and amortisation - basic measure of earnings against costs] margins of 3.3 per cent and 4.1 per cent respectively”.

The papers state that board members “considered the implications that deficits and efficiency assumptions could have on trusts’ ability to provide good quality patient care”.