The NHS in Wales will be more than£50m in debt by the end of the financial year and still facing extraordinary cost pressures, MPs have been told.
The NHS Confederation in Wales told the Commons Welsh affairs committee on Monday that ' on the latest estimates, the in-year deficit is some£20m which, taken with previous deficits, results in some£54m of accumulated debt'.
It also warned that 'significant cost pressures' next year could take the cumulative deficit to more than£100m.
Cost pressures identified include£15m for new drugs,£30m for primary care,£6m to meet the increased cost of blood and£10m for medical negligence claims, which are rising rapidly.
Welsh NHS Confederation director Richard Thomas told MPs it was also essential that this year's pay award, which he estimated would cost about£80m in Wales, should be fully funded.
'The final allocations to health authorities have not been made yet, but indications are that the wage award may only be part funded,' Mr Thomas said.
Asked whether services would be cut if the award was not fully funded, Mr Thomas replied: 'Yes'.
Deputy chair Jan Williams added: 'Of course there would be a reduction in jobs.'
The confederation's evidence mirrors a recent National Audit Office report on the finances of the NHS in Wales, which showed that for 1998-99 Welsh trusts are forecasting a deficit of£15.4m, while HAs are forecasting a deficit of£23.5m.
Committee chair Martyn Jones asked whether trusts and HAs took their duty to break even seriously, 'or is running a deficit seen as a good way of getting more money out of the government?'
Welsh confederation chair Ian Kelsall said health organisations took their duties seriously and blamed the problems on 'higher health needs in Wales' and 'structural problems', such as small hospitals, which were a drain on some trust finances.
Peter Stansbie, chief executive of Dyfed Powys HA, which is facing 'one of the biggest deficits' estimated at£15m, said: 'In an area like Dyfed Powys with a small population but four general hospitals and 22 community hospitals, you need recognition of that or you have to change the service.
'We are looking at how to move from making small cost improvements year-on-year, to real structural change. It is a challenge because we have seen how the public guards its hospitals.'
MPs were told that cash was needed earlier for 'winter pressures' and recurring funding was needed for waiting-list initiatives. Ms Williams argued that waiting list funding needed to increase to take account of pressure building up on outpatient waiting lists.
But the confederation argued that in future it would be better to concentrate on how long people wait rather than the length of the list.