Sunderland Hospitals Trust warned over £17m deficit
Regulators have told the trust that runs hospitals in Sunderland to come up with a plan to tackle a predicted £17.8m black hole in its finances.
Monitor began an investigation into the trust after it warned it was likely to overspend significantly in 2015/16.
The regulator found there were "reasonable grounds" to suspect the trust had breached its licence in not doing enough to plan for the deficit.
The trust said it had recently incurred significant additional staff costs.
Monitor warned City Hospitals Sunderland that if a satisfactory financial recovery plan was not put in place quickly, some trust board members could be replaced.
A spokesman for the regulator said: "This trust provides crucial healthcare services to the population of Sunderland.
"It is vital that it resolves its financial problems so that it can continue to provide those services on a sustainable basis.
"Monitor will continue to scrutinise the trust's performance and may take further regulatory action if needed."
'Significant agency costs'
The trust provides services from Sunderland Royal Hospital, Sunderland Eye Infirmary and a number of outreach centres.
A trust spokesman said: "We have delivered savings of almost £35m in the last three years, however the reality is it is becoming increasingly difficult to identify additional cost savings.
"We have incurred significant additional costs as a result of investing in additional nursing posts on our wards, significant agency costs, as well as increased insurance premiums.
"At this stage we have not identified any job losses and hope this will not be required. However, if it is necessary, we would hope to be able to manage that through natural turnover."