Up to 40 hospitals will fail by 2013 without radical reform of their working practices, a report has warned.
Britain could face a £5 billion bill to rescue the Trusts unless the NHS adopts more innovative and "factory-style" working, the think-tank Reform has claimed.
The report, produced by Professor Paul Corrigan, Tony Blair's former special adviser on health, and healthcare business expert Caroline Mitchell, argues that "the old model and concept of the hospital is failing".
It said: "NHS hospitals currently try to be all things to all people and deliver every healthcare service to everyone. To achieve scale we will need to close down under-performing units so that activity can be concentrated in centres of excellence.
"By applying the lessons from assembly lines, aviation and service industries, managers can introduce a 'factory' mode of production offering streamlined 'value added processes' for patients."
Other pressures on hospitals, such as an ageing population and managing care for the long-term ill, could be provided remotely by using so-called Telehealth technology where the patient is monitored by telephone or webcam. The same systems can be used to provide "virtual clinics" where a consultant and patient could be hundreds of miles apart.
Prof Corrigan added: "Unless something drastic happens to the nation's NHS hospitals, we predict that by 2013 the Government will have to find an extra £5 billion to secure the continuation of all hospitals. As a proportion of the overall NHS budget, this does not seem to be unmanageable but for other Government departments, this is a significant amount of money. It is difficult to see any Chancellor simply giving the NHS that quantum of money to spend on inefficiency.
"The root cause of the problem is that acute hospitals are sick and need to heal themselves. To thrive in the present and future environment they need to focus on a radical change - on overall transformation. They need to focus on developing a successful business model and not try to be everything to everyone."
Reacting to the report, Health minister Simon Burns said: "Few now deny the NHS must change to meet future challenges. But we believe the NHS should be the opposite of a factory-style operation and instead offer patients high quality, tailored care.
"That is why our plans give freedom and control to doctors and nurses, puts patients at the heart of everything it does, and safeguards the future of our health service."