The Department of Health has drawn up a list of acute trusts that will be closed, merged or broken up because they will not survive under payment by results, HSJ has learned.

The list follows health secretary Patricia Hewitt's request earlier this year for strategic health authorities to find ways of salvaging acute trusts struggling under the government's new financial regime for the NHS.

HSJ understands that a number of the trusts on the draft list are likely to be merged with neighbouring foundation trusts, mirroring the take-over of Good Hope Hospital trust by Heart of England foundation trust last month.

A source close to Monitor, the foundation trust regulator, said that Sussex-based Frimley Park foundation trust was exploring whether it could merge with or take over the running of some services from the financially failing Surrey and Sussex Healthcare trust.

Other foundation trusts considering mergers include King's College Hospital, and Guy's and St Thomas' in London, which are understood to be examining whether a takeover of Sidcup's struggling Queen Mary's trust is feasible.

Ms Hewitt told HSJ last month that 'similar solutions might be available in some other situations where a foundation trust takes over services in financially failing organisations' (news, page 12, 29 March).

She added that there were a 'small number' of organisations whose debts were 'so big' that they would not be able to pay them back 'over any foreseeable length of time'. Ms Hewitt said that those trusts would need to be looked at individually to find solutions.

HSJ understands a few nominated trusts may still escape the shortlist after an assessment of their ability to repay debt.

The trusts set to be scaled down or dissolved had already been identified as weak for their use of resources in the Healthcare Commission's annual healthcheck ratings last year.

HSJ understands that many of them also feature on the Audit Commission's list of trusts identified as weak or of 'particular concern' for their financial performance, published last October.

A DoH spokesman said a 'small number of trusts have requested loans that haven't yet fully demonstrated their ability to repay them'. He said that the DoH was 'working closely with SHAs to identify long-term solutions in these areas'.

'There may be organisations in this category who can quickly provide the additional assurances to repay their loan under the conditions we have set out,' he said. 'Given the different nature of the problems in each NHS trust we expect the solution for each organisation to be individual.'

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