STRUCTURE: University Hospitals Bristol Foundation Trust and North Bristol Trust have agreed to work towards a merger, potentially creating an organisation with an annual turnover of almost £1 billion.

The agreement follows months of work by a project board set up to evaluate the benefits of a potential merger and will bring to an end years of speculation in the city.

University Hospitals’ board approved plans to pursue detailed plans for integration this afternoon following agreement by North Bristol’s board last week.

In a joint statement the trusts said they would be working towards “the establishment of a new single foundation trust with its own identity and vision” which could be in operation by the end of 2013.

In 2011-12 North Bristol had a turnover of around £519m while University Hospitals was expecting total income of £491m.

The statement said the project board, which saw nursing, medical and finance directors from each trust working closely together, had identified that one organisation would bring improvements by simplifying processes for patients moving between organisations.

The board also concluded a single organisation would help Bristol fulfil its academic potential as a major research and teaching centre as well as providing opportunities for workforce efficiencies and making it easier to implement planned service reconfigurations.

Both trusts will now produce business cases which must be approved by their boards.

A programme of service reconfiguration is already in place which aims to reduce duplication of services across the city. Under the plans breast and urology services will both pass from University Hospitals to North Bristol during 2012 while children’s services, paediatric burns and neurosciences will transfer from North Bristol to University Hospitals in 2013-14.

A spokesman for North Bristol said the organisation would be continuing with its foundation trust application as a fall-back option and in order to build up membership that would reflect the demographic of the merged organisation.

Its original ambition was to be authorised in October this year but the application still has not been passed by the Department of Health. The trust has had a difficult year with the botched implementation of a new patient record system, poor performance against the accident and emergency four-hour target and 18-week referral to treatment target, as well as changes in trust leadership.

The £450m-turnover trust’s most recent board papers describe its financial position as “extremely serious”, having already dipped into contingency resources earmarked for investment in change and restructuring of services over the next two years. The trust is due to move into a new £430m private finance initiative hospital in 2014.