A MASSIVE £20 million of spending cuts need to be made annually by Worcestershire Acute Hospitals NHS Trust, it announced this week.

The organisation, which has three main sites - including Kidderminster Hospital - is undertaking a comprehensive review of services and is also paying a private consultancy firm around £80,000 to find ways of cutting spending or earning cash in order to meet its statutory duty to break even each year.

Job losses have not been ruled out as an option, as the trust's chairman, Michael O'Riordan, and chief executive, John Rostill, told the Shuttle/Times & News the consultants commissioned had been given no restrictions and would start with a "blank sheet of paper".

Mr Rostill explained the trust had balanced its books for 2004-05 but had used technical accountancy procedures which could not be repeated and so had to find ways of making sustainable savings.

He said the trust currently received financial support from organisations other than commissioning bodies but this was unlikely to be received this year and would definitely end in 2006-07. The current budget is £225 million.

Mr O'Riordan said in a statement statement issued yesterday: "To break even in 2006-7 we either need to obtain extra funding (which we know is not going to be forthcoming) or, like any other organisation where costs exceed income, steps have to be taken to reduce expenditure.

"We have therefore embarked on a major clinical service review to identify the future size and shape of safe, affordable, high quality secondary care services."

News of the trust's financial position came on the day bosses learned it had been awarded just one out of a possible three stars in the Healthcare Commisssion's annual ratings - placing it in the bottom 28 per cent of NHS trusts.

Inspectors found that outpatient waiting times and admission times for A&E were too long but Mr Rostill said these had improved dramatically in recent months.

He added he was disappointed the trust had not achieved two stars as staff had made a "huge effort" to balance the books and faced more difficulties in the future.

Describing the trust's financial position as "hugely challenging", he said, however, that staff were optimistic and hoped to save expenditure on cancelled operations by increasing activity at Kidderminster Hospital's treatment centre.

He explained the facility had carried out a "hugely successful" pilot scheme on Monday, when it opened its operating theatres for three sessions, enabling a surgeon who started work at 7am to complete nine procedures by lunch. He said such schemes could be repeated.

Referring to last year's accounts, he added: "Who would have thought that we'd have gone from £12.8 million overspend to balancing the books in 12 months?

"But we have run out of one-offs, so we're looking for sustainable, continued savings and that's the challenge."

He said it was hoped the consultants would complete their study by the end of September and extensive public consultation would follow. Implementation of any changes should begin early next year.