HOSPITAL bosses have warned that beds, clinics and possibly staff will have to go in a desperate battle to curb overspending.

Yesterday Russell Hart, the recently-appointed chairman of North Tees and Hartlepool Hospitals NHS Trust, told journalists he wanted to see the philosophy of super-efficient car-maker Toyota adopted by the cash-strapped trust.

But Mr Hart promised that the trust would continue to provide "clinical excellence and patient safety" despite the cuts.

The package of cuts, which includes bed closures, reduced staffing, increased car parking charges and possible redundancies, was the trust board's answer to a critical "public interest notice" from its auditors, Deloitte and Touche.

In a report presented to yesterday's North Tees and Hartlepool trust board, audit spokesman David Wikinson said the trust's financial situation was "extremely serious."

The auditors say they expect it to run up a £15.5m deficit for the year ending on March 31.

While acknowledging efforts by the 827-bed trust to tackle overspending, Mr Wilkinson said that, without agreement of a recovery plan, it was "in real and imminent danger of breaking its statutory break-even duty".

The auditors said the board should ensure "greater focus is placed on financial issues".

The report calls on the trust to finalise a realistic and achievable recovery plan to return it to a break-even position by 2008.

Bosses at the split-site trust, which runs the university hospitals of North Tees and Hartlepool, believe they are on course to reduce the deficit for this year by £2m through a number of measures, including a recruitment freeze.

Next year, the aim is to save £10.4m as part of a three-year plan to break even.

Chief executive Ian Dalton, who took over in October, said the savings were "a huge testament to the support of the nursing and medical staff".

About 100 jobs have already gone at the trust through non-replacement and natural wastage, but Mr Dalton said: "We are desperately committed to avoiding making people redundant."

Other savings could come from closing little-used clinics in the community, getting rid of out-of-date buildings, centralising some services and contracting out others.

Mr Dalton said he hoped a decision on implementing the controversial "Darzi plan" - which could radically change the services provided at both trust hospitals - would be taken soon.