Hospitals across the State will be ordered to introduce a wide range of cost-saving measures by the Health Service Executive in coming weeks in an effort to rein in massive over-spending on their day-to-day budgets.
There has also been huge overspending of primary and community care budgets in the HSE in the first five months of the year.
Full details of the cost-cutting plans that will have to be introduced by hospitals are expected to emerge within days, but sources close to the HSE indicated to The Irish Times that these are likely to include cutting the use of agency staff in hospitals, the non-filling of vacant posts and a wide range of other so-called "value-for-money initiatives".
Minister for Health Mary Harney has indicated she will be meeting HSE chief executive Prof Brendan Drumm to discuss the matter.
Referring to the overspending in a written reply to a parliamentary question in the past few days, she said capital spending by the HSE is behind schedule but non-capital spending "is running ahead of budgeted spend".
She added: "I will be discussing corrective action with the CEO as a matter of urgency."
The precise figure by which the HSE has overspent so far this year was not available last night, but sources indicated that on the hospitals side alone it was at least €100 million.
In May Our Lady's Hospital for Sick Children in Crumlin, Dublin, was warned by the HSE it was facing a deficit of more than €16 million at the end of this year unless it curtailed spending.
But the hospital, in a letter of reply, said if it were to live within its budgetary allocation for 2007 - which it argued was completely inadequate - it would have to close wards, theatres and intensive care unit beds, leading to cancellation of planned surgery and waiting lists for children with cancer, which would be inappropriate.
The HSE has attributed part of the overspending to the 7½-week-long nurses' dispute. During the dispute Prof Drumm said it was costing the health service up to €3 million a week as it had to hire extra staff to deal with calls.
Donal Duffy, assistant general secretary of the Irish Hospital Consultants' Association, said last night he would be concerned if any of the cuts proposed by the HSE for hospitals across the State had the effect of reducing the number of front-line care staff because that would have a direct impact on patient care.