Small hospitals should continue to play an “important role” in the NHS, Monitor has indicated after a new study found “no evidence” of poorer quality clinical performance when compared with larger providers.

This is the conclusion of the foundation trust regulator’s review of the performance of all acute trusts with fewer than 700 beds, usually associated with incomes of less than £300m.

Monitor’s findings were based on an analysis of data related to patient experience, clinical effectiveness and safety.

“On some [of these] measures larger providers seem to perform better than smaller ones, but on other measures the reverse was true or there was no relationship,” the report stated.

The regulator’s report Facing the Future: Smaller Acute Providers did however discover evidence that smaller hospitals may be more financially challenged.

According to one measure of trust income, average earnings as a proportion of operating value have been lower and have fallen faster for smaller providers over the past five years.

While size was identified in the research as just one of the explanations for variations in financial performance, the link between the two appeared to be strengthening, the study indicated.

This link could be driven by a “trend towards more intensive staffing models” in the wake of the Francis inquiry, the report added.

Larger trusts were able to benefit from economies of scale not available to their smaller counterparts.

The consolidation of specialist care in fewer, larger centres, and the move to deliver more care in out of hospital settings could also be hitting smaller acute providers that were unable to reduce costs.  

The NHS could respond to these challenges by coming up with “creative ways” to address these challenges of scale.

The regulator suggested that providers could address this by sharing staff between trusts; the use of new technology; and the building of networks between smaller hospitals and major centres.

Services could also be re-designed to work differently with community providers to deliver better out of hospital care, and co-locating with primary, community and social care could be part of the solution.

Monitor chief executive David Bennett said that, with the right support, smaller hospitals could “continue to play an important role in the nation’s health service”.

“Bigger isn’t always better, and just merging or taking a ‘one size fits all’ approach to local health services is not the answer,” he added.

Sivakumar Anandaciva, head of analysis at the Foundation Trust Network, said Monitor’s report showed the relationship between the size and financial and clinical performance was “complex”.