Two hospital trusts are at the centre of a "rigourous review" over their inability to show they can repay loans.

They are among 17 nationwide which have been identified as being in difficulty at the end of 2006/07 financial year.

The Royal West Sussex NHS Trust, which runs St Richard's Hospital in Chichester, is reporting a surplus of more than £1 million but previous debts mean it still owes millions of pounds.

Surrey and Sussex Healthcare NHS Trust, which provides some services at Crawley Hospital, will also have its finances reviewed.

South East Coast Strategic Health Authority (SHA) has been told that any loans it gives the trusts in the would only be repaid over a very extended timescale.

Both trusts have run up huge debts in the past and have spent hundreds of thousands of pounds on expensive financial experts to get them back on track.

Recommendations for St Richard's have included axeing up to 200 posts, despite the trust spending almost £400,000 on consultants' fees.

The SHA is now working through a review process with St Richard's.

An SHA spokeswoman said: "The Royal West Sussex trust, like other trusts in this position, will need a tailor-made solution for its particular circumstances.

"The SHA and the trust are working closely together on the way forward and we expect to know what that will be later in the year."

NHS chief executive David Nicholson said: "The NHS overall has responded remarkably this year to our demand to put proper rigour into the overall financial management of the NHS and create a fair and transparent system of accounting and reporting.

"The overwhelming majority of trusts have seen improvements in their financial performance this year and there are many trusts that have really turned things around.

"As part of this new regime we have considered the cash needs of each trust in the country and replaced the old cash brokerage arrangements - where money was moved around the system in an unfair way and trusts who had underspent often had to bail out overspending trusts - with a new, transparent and responsible repayable loans system."

"Given the different nature of the problems in each NHS trust we expect the solution for each organisation to be individual and tailored to best deliver value for money, while maintaining standards of patient care to the community they serve.

"I have no doubt this will be a difficult and sometimes uncomfortable process for those trusts who are undergoing this process but our absolute priority is continuity of patient care and to ensure that we have to tackle the underlying problems in these trusts no matter how uncomfortable that may be."