The analysis of the early years of the NHS market found that while 17 per cent of the first wave of trusts did not meet the target in 1991/92, by the following year the proportion had risen to 47 per cent.
The second wave of trusts 'did little better' according to The Fourth Newchurch Guide to NHS Trusts 1994, with 27 per cent failing to achieve the target - a return on capital of at least 6 per cent - in their first year.
Philip Hunt, director of the National Association of Health Authorities and Trusts, associate publishers of the guide, said: 'There is not much point having a market in the NHS which is competitive unless it is recognised that some will do better than others. Trusts are having to get involved in mergers. I think we are moving away from the structure of a district general hospital for every 200,000 of the population.
'Advances in technology, clinical safety and the training of junior doctors all suggest we will see smaller numbers of specialist units where excellence is concentrated. I don't know if the local general hospital will survive in its present form.'
The guide analysed financial returns of 157 of the first trusts to be established and found that 18 had 'severe liquidity problems'.
There are about 400 trusts with incomes ranging from pounds 15m to pounds 230m and from this month they are responsible for pounds 17bn worth of health care, 7 per cent of total government spending.
At the beginning of April hospital and community trusts represented 90 per cent of all hospital units.
Kingsley Manning, managing director of Newchurch and Company, business advisers, said the speed of the changes had taken policy-makers and managers by surprise. 'The pace of the changes has been staggering. Over 1 million employees have been transferred to new management structures. A robust system can absorb a small number of relative failures.'
Mr Manning forsees more trusts merging as their viability is fully tested in the NHS market. The report identifies 20 mergers or 'reconfigurations' to date.
The Fourth Newchurch Guide to NHS Trusts 1994; NAHAT, Birmingham Research Park, Vincent Drive, Birmingham B15 2SQ; pounds 275 ( pounds 25 NAHAT members).Reuse content