Around 200 nurses at Barnsley Hospital could see their pay cut if a proposed regrading of posts goes ahead.
A survey showed there were too many nurses working at a high level in the hospital and not enough providing hands-on care, a spokeswoman said.
Hospital chiefs said redundancies were "extremely unlikely".
They said the move was not about saving cash but improving the strength of the workforce. Staff have until 14 June to comment on the plans.
Nursing director Juliette Greenwood said: "This is about having the right mix of nurses on a team which needs different skills and knowledge.
"What we've found is our current nursing workforce doesn't have the right balance to best meet our patients' needs - and that's about high-quality direct care when and where the patient needs it."
The plans suggest a shift in the numbers of nursing posts at higher bands to more middle grades.
A spokeswoman confirmed that meant some nurses would have to take a pay cut, although their pay would be protected for a length of time yet to be determined.
The hospital stressed redundancies were extremely unlikely. If any surplus posts arise, staff over 50 will be offered voluntary early retirement and any staff under 50 who want to take voluntary redundancy packages will be able to.
The hospital is negotiating its funding for 2006/07 with Barnsley Primary Care Trust but is expecting to see a £6m shortfall this year.
That shortfall will be addressed later in the year but if the extra cash cannot be found elsewhere, options will include job losses or ward closures, the spokeswoman added.
The hospital employs around 2,500 people. In the last three years it has taken on more than 260 extra staff.