York Hospital bosses are estimating saving £16.6 million by April 2011 as they prepare for one of their "most financially challenging ever" years, a top-level meeting will hear on Wednesday.

Finance will be one of the topics on the agenda at a York Hospitals NHS Trust board meeting tomorrow - and bosses have drawn up a five-year estimate for how much money will need to be saved.

The severely debt-ridden Selby and York Primary Care Trust (PCT) is currently preparing its own financial recovery plan aimed at saving £23 million over the next year - with fewer hospital referrals on the cards.

A hospital board report said: "The financial year 2006/7 promises to be one of the most challenging ever for the trust, as the financial pressure being experienced by our local PCTs, particularly our main commissioner, the Selby and York PCT, is reflected across the NHS at large.

"The trust is involved in difficult discussions with PCT colleagues about the impact their financial recovery plan will have on the income of this and neighbouring hospitals.

"Although these are not complete, it is clear the Selby and York PCT intends to seek significant reductions in activity flowing to the hospital and, hence, our income."

The hospital has already announced it will not fill 200 vacancies over the next year in a move it expects will save £2.5 million.

The Press revealed yesterday bed cuts were also looming under a review currently taking place.

Director of finance Patrick Crowley, pictured, explained the finance plan - drawn up for the hospital's foundation status application - was divided into different areas where reduced business would mean savings were necessary.

The plan estimates reduced business from the PCT will mean savings of almost £4 million for the hospital over the next five years - of which almost £1.7 million would hit this year.

The hospital must also cut spending under Government pressure to make multi-million pound efficiency savings - in line with other NHS organisations.

Further savings will be made because of treatment which is now being done at York's new Capio centre.

Director of nursing Mike Proctor said there could be further bed cuts and vacancy freezes, along with possible management savings, over the next five years as the hospital continues to streamline spending.

"We're entering a really challenging period, and a period of some uncertainty," he said. "It's absolutely vital during this period that the hospital trust manages its own costs effectively. We continue to work with our PCT colleagues to deal with the underlying financial problem that affects the whole local health economy."

Updated: 10:02 Tuesday, April 25, 2006