The financial position has remained unhealthy over the past three years

The Strategic Health Authority (SHA) for the two counties has been warned "radical action" is required.

There are 30 health trusts within the Surrey and Sussex SHA, with a predicted budget deficit of �75m for the 2005/06 financial year.

The Audit Commission report urged them all to work towards financial recovery.

A "continuing failure" to reverse the problem was identified, although it was also recognised that recovery work was already under way in some areas.

We need to focus on what the good trusts are getting right Candy Morris, Surrey and Sussex Strategic Health Authority

District auditor Helen Thompson said: "We recognise that the financial position differs for individual NHS bodies, with some managing their finances well.

"However, our report will raise awareness of the health economy position and we encourage all organisations to review the recommendations in view of their own circumstances and devise action plans to address them."

The SHA said most of the budget deficit related to overspending by six of the 30 health organisations within Surrey and Sussex.

"We need to focus on what the good trusts are getting right... so that we can spread good practice across the whole area," said chief executive Candy Morris.

Ms Morris said the SHA was "very aware" of the financial crisis, but added that money-saving measures were being worked on - for example, using fewer expensive agency staff and reducing unnecessarily long hospital stays.

Weak management

The Audit Commission's Public Interest Report identified an "underlying financial deficit" within the health economy in Surrey and Sussex.

Services had been the victim of "weaknesses in financial management", it concluded.

And unless robust action was taken to reverse the financial problems, there was the possibility of an "adverse impact on services to patients" in the future.

Albert Reed, vice-chair of the Patient and Public Involvement Forum for the Surrey and Sussex Healthcare NHS Trust, said the trust was already being forced to send patients to other hospitals in order to meet six-month waiting lists.

He said he knew of one patient who was due to get a digital hearing aid in December 2004 but was now having to wait until the end of 2006.

The report will be discussed by the Surrey and Sussex SHA at a public meeting on 8 February.