A debt-ridden hospital trust on Teesside has admitted it needs to consider the future of a maternity unit and find ways to save money.
There has been a freeze on recruitment at the hospital
On Tuesday, the Audit Commission revealed South Tees NHS Trust was in the red to the tune of £21m.
The trust's chief executive, Simon Pleydell, said cutbacks would be made without patients being affected.
But he did admit that the future of Guisborough Maternity Unit was being considered because of "low usage".
The maternity unit was closed temporarily in November 2002 because of a shortage of midwives, and Redcar and Cleveland Council now fears it could be axed.
Mr Pleydell, who also runs James Cook University Hospital in Middlesbrough and the Friarage Hospital in Northallerton, said: "Our focus will now be on reducing staff and work costs by 5% and we will be considering how we use agency staff without reducing the quality of patient care.
Back on track
"We are also looking into how we deliver maternity services for the entire population because of the low usage of the unit."
Councillor Valerie Halton, Redcar and Cleveland Council's cabinet member for health and social care, said closing the unit would be a terrible decision.
She said: "We must accept that there will be financial arguments for and against the maternity unit's closure.
"But closure would represent a terrible decision for our community.
"We would urge the trust to be as frank and as open with the public as they can because it will not be easy to win an argument that recommends closure."
The audit report revealed the trust overspent by £9m in 2004/5 and that it owes £12m. It is also forecasting a £10m deficit in 2005/6.
District Auditor Lynne Snowball said the trust would have to save £66m over the next three years to get back on track.