Radical proposals for reorganising Welsh health services 'envisage' splitting existing trusts in two.

A report published by think-tank the Nuffield Trust argues that trusts' clinical and 'hotel' functions should be separated, so clinical directorates can concentrate on their 'core function - to provide healthcare'.

Further, the Nuffield report says that trusts could become 'virtual' organisations, managing networks of care with their own budgets.

Public health functions could be built into the networks, while hotel functions 'could be linked across existing hospitals, mirroring the locations of clinical activity.'

'The NHS in Wales is currently overdrawn to the tune of£70-£80m. Without apportioning any blame, one could say that the present system has not coped particularly well,' the report argues in defence of its ideas.

The report, a collaboration between Jane Davidson, Welsh Assembly deputy presiding officer, Steve Monaghan, Bro Taf health authority consultant in public health medicine, and Dr David Bainton, University of Wales senior lecturer in public health medicine, looks at challenges facing the Welsh Assembly.

'We anticipate the assembly starting cautiously,' the report says. 'It will inherit a series of constraints on activity. Tighter political accountability will make unpopular decisions more difficult, its funding capacity will be constrained.' But it argues the assembly has 'real political opportunities' to introduce change.

Freeing the Dragon: new opportunities to improve the health of the Welsh people. The Nuffield Trust, 59 New Cavendish Street, London

W1M 7RD.£10.