In November, the board dropped 50 beds across its services for the summer months, in a bid to trim $15.6 million from health services to meet a $9 million deficit.
However, hospitals throughout Otago and Southland are now almost at capacity and some patients are being shuffled around wards as staff deal with a seasonal increase in admissions.
Southland Hospital, in Invercargill, reported earlier this week it was at 93% capacity, and Dunedin Hospital's occupancy was ''in the early 90s''.
Association of Salaried Medical Specialists executive director Ian Powell said the board's decision to cut 50 beds was foolish.
''The capacity issue confronting the Southern District Health Board highlights the folly of the earlier decision to cut bed numbers, which was done purely and simply for financial reasons.''
New Zealand Public Service Association national secretary Richard Wagstaff said he was not surprised the southern region's hospitals were running so close to capacity.
''It's predictable that this is happening.
''Funding is short across the country. Administrators are struggling to make ends meet.
''It underscores that despite the headlines and policies, the district health boards are very focused on their budgets,'' he said.
New Zealand Nurses Organisation professional nursing adviser Lorraine Ritchie defended the board's decision, saying it was normal for public hospitals to cut bed numbers during the summer period, because it was a time when hospitals were generally quieter. She said nursing staff had not reported any concerns about the situation.
''Patient numbers can move up and down really quickly. Staff are flexible and are moved around accordingly.
''The decision is a normal business decision. As long as it doesn't impact on patient or staff safety, we don't have concerns about it.''
However, she said if the board did not reinstate the beds in a couple of months, NZNO would have to review its thoughts on the situation.
Southern District Health Board nursing and midwifery executive director Leanne Samuel said bed capacity in Southern DHB hospitals was constantly changing, with Dunedin Hospital at 88.4% occupancy yesterday at 1.30pm and Southland Hospital at 83.6% occupancy.
''We have dealt with some seasonal peaks, but these have all been managed.
''We continue to work with the primary sector to ensure that patients are being treated in the right place and at the right time.''
