Debt-ridden hospitals and health trusts in the West Midlands are set to run up a combined deficit of £74 million, the Department of Health has admitted.
It will be the second consecutive financial year that Midland health services have accumulated massive debts, after they went into the red by £116 million in 2005/06.
But while many hospitals have clawed themselves back into the black through job losses, fears have grown of cuts in GP and community services as primary care trusts have found themselves struggling.
The PCTs commission hospital services and pay for GPs and clinics, but some are now overspending partly as a result of having to bail out others. The forecasts, published yesterday, are based on the organisations' performances six months into the 2006/07 financial year.
The figures also revealed that across Britain as a whole, hospitals are making redundancy payments of £70 million following the loss of thousands of jobs.
In the Midlands, PCTs predicted to end the year in debt include: Worcestershire (will end year £16.2 million in debt); Coventry Teaching PCT (£10.5 million); South Western Staffordshire (£4.9 million); Shropshire (£4 million); East and North Birmingham (£3 million); South Birmingham (£1.9 million).
The only hospital trust still in serious trouble is South Warwickshire General Hospitals Trust, with hospitals in Warwick and Stratford-upon-Avon. It will end the financial year with a deficit of £12 million, according to the forecast. Many hospitals which ran up massive debts last year are now expected to balance their books.
City Hospital in Birmingham overspent by £5.7 million last year, but will break even this year after axing 566 posts.
University Hospital of North Staffordshire, which operates hospitals in Stoke and ran up debts of £15 million, will also break even, after losing 1,000 posts.
And Worcestershire Acute Hospitals NHS Trust, which lost more than 600 staff at three hospitals, will break even despite going £4.9 million in the red last year.
The NHS as a whole will break even in the West Midlands because the region's Strategic Health Authority has held back £65 million to offset the deficits, and a few trusts are expected to end the year with small surpluses.
Responding to the figures, Paul Bates, chief executive of Worcestershire Primary Care Trust, said the trust had lost funding of £22 million this year. He said: "We are fore-casting a deficit of £16 million in 2006/07 and this is the subject of urgent discussions with colleagues at West Midlands Strategic Health Authority."
The Department of Health report predicted health trusts nationwide would run up total deficits of £1.1 billion - almost as high as last year's figure of £1.3 billion.
This will be offset by surpluses from trusts which underspend and money held in reserve by the Department of Health and the Strategic Health Authorities.
But the NHS could still end the year £94 million over budget.
David Nicholson, chief executive of the NHS, said: "We remain on track to deliver net financial balance across the NHS. However I do not underestimate how difficult this will be, and I know NHS organisations are doing all that they can."
Conservative shadow Health Minister Stephen O'Brien said: "Despite their warm words and promises, not to mention extra millions spent on turnaround consultants, Labour are failing to solve the NHS cash crisis."