The Southland District Health Board yesterday approved extra staff for the Lakes District Hospital at Frankton after being told patients and staff are at risk because of increased demand for services.
Board chairman Paul Menzies said the board "reluctantly" accepted the recommendation to hire more staff.
"It was a difficult decision because it's not sustainable at that level. We are spending money we don't have," he said.
Mr Menzies said it would cost at least $300,000 to have two more doctors and an additional nurse on duty seven days a week during peak times.
The money would come from a "capital fund wash-up and the rest from savings".
Minister of Health Tony Ryall had told the board it had to break even within the next three years.
"We are struggling to do that and we will struggle further with less money available," Mr Menzies said.
The additional staff would be employed as a short-term solution until June 2010 while an alternative "model of care" was developed.
Board members had spoken out against the recommendation but recognised staff needed to be supported.
The extra staff would not solve the problem of people going to hospital when they could have been treated by a GP, he said.
The report says more than 66% of cases at the hospital were non-urgent and could be managed by primary care providers.
Wakatipu Health Trust spokeswoman Maria Cole said the board had to be mindful of patient and staff safety but also had to balance its books.
"Our fear is that [the extra staff] is not financially sustainable.
At some point in time there will be significant risk of cuts to the service," she said.
A new model of care was urgently needed to make the levels of care sustainable.
The report says the number of patients at the hospital's assessment and stabilisation service had grown from 1577 in 2002-03 to 5813 last year and was expected to exceed 7000 this year.
"The staff at LDH report that the volume and complexity of work is creating clinical risk for the patients and potential health and safety risks for the staff," it says.
The hospital has six doctors at present.
Cranleigh Health has been commissioned by Otago and Southland health boards to provide a hospital capacity review.
The report said cost escalations at Lakes District Health were "clearly unsustainable."
It posted a $3.6 million deficit last year and is forecasting a $2.8 million loss this year.
