The government should not force underperforming hospitals to merge together because such strategies simply create larger failing NHS organisations, a report suggests.

Think-tank Reform said it is possible to develop a better hospital from a failing one but this should not be done through mergers.

The report, produced by Paul Corrigan, Tony Blair’s former special adviser on health, said that up to 30 troubled NHS hospitals should be taken over by other successful hospitals or by private sector providers.

South London Health Care Trust, the first in the country to be put into special administration for being on the brink of bankruptcy, was formed in 2009 by the merger of three hospital trusts.

The research, which examined case studies and published research, argues: “It is possible to develop a better hospital from the core of a failing one, but this will only be achieved by a profound and systemic change to the structure of the hospital.

“And the surest way of achieving this, learning from recent NHS history, is not a merger of equals, but the process whereby a very successful hospital takes over a failing one.”

The report argues that takeovers only work when the acquiring organisation changes the business model and the working practices of the staff.

Professor Corrigan said: “Sooner or later, the government is going to have to acknowledge both the clinical and economic case for radical change amongst NHS hospitals. The sooner it does so, the easier for local change to be pursued with a prospect of success.”

Mike Farrar, NHS Confederation chief executive, said: “We should use the expertise we have within the system to help address the financial challenges faced by local services. We need to move quickly to ensure these financial pressures don’t overcome us.

“But this is only one side of the coin. Addressing the problems some trusts are facing will require more than mergers and takeovers. The whole system has to work, not just its individual parts.

“The reality is that many of these trusts face significant financial problems because of the way local services are designed, not simply because of poor management. To really tackle the problem we need a fundamental redesign of the way services are provided.”

Health minister Lord Howe said: “We need to focus on the most important issue of all - patients getting the sustainable, high quality services they need. There isn’t a one-size fits all answer to this problem.

“Each NHS Trust will need a tailored solution and different levels of support. In some cases that could involve private sector expertise, but in others the NHS itself will be the best solution.

“We are working closely on this basis with the Trusts we have identified as having problems to ensure they can provide high quality services for their patients in future.”