Staffing levels within the NHS will have to be cut if the government wants to bring NHS finances in England under control, the King's Fund think tank has said.
It says the government should be honest about NHS spending plans at a time when patient demand is rising.
It comes days before a major initiative by the NHS to control spending.
The Department of Health said the government wanted to make the NHS the safest healthcare system in the world.
This is an important week for the financing of the health service in England, says BBC health editor Hugh Pym.
The NHS leadership is set to unveil plans to get hospitals and other trusts to stick to agreed spending limits.
In the last financial year, trusts ran up a collective deficit of £2.4bn - and the aim is to cut that figure significantly.
But the King's Fund warns that if the government wants to balance the health service books, then staffing levels will have to be reduced and waiting time targets relaxed, so patient care could be compromised.
Helen McKenna, senior policy adviser at the King's Fund and one of the authors of the report, said: "Politicians need to be honest with the public about what the NHS can offer with the funding allocated to it.
"It is no longer credible to argue that the NHS can continue to meet increasing demand for services, deliver current standards of care and stay within its budget. This is widely understood within the NHS and now needs to be debated with the public.
"There are no easy choices, but it would be disastrous to adopt a mindset that fails to acknowledge the serious state of the NHS in England today."
A Department of Health spokesman said the NHS is "performing well and delivering safer, more compassionate care".
"We know some providers are under financial pressure caused by big rises in demand and our ageing population, but are investing an extra £10bn a year by 2020 to deliver the NHS's own plan for the future."
"High quality care and good financial management go hand in hand and we are determined to make the NHS the safest healthcare system in the world, delivering a 7-day NHS."