The Greater Western Area Health Service, which covers 108 hospitals, owes more than $23 million to creditors, forcing many to stop supplying food and medical equipment.

NSW Health says it intends reducing this debt to $10 million by the end of tomorrow, but admits the state's area health services will still owe $117.5 million in unpaid bills.

But the situation is likely to deteriorate. The Government confirmed last night that a PricewaterhouseCoopers report last month showed this year's health budget would blow out by $900 million by March unless urgent action was taken.

The report said a $600 million blowout was expected on top of a $300 million shortfall announced in September.

Visiting medical officers at Dubbo will decide this weekend whether to withdraw their services, a move that could force up to 150,000 people to seek specialist treatment in Sydney, putting extra strain on an already overworked hospital system.

"It is dangerous here and we are losing the will to continue," a surgeon, Dean Fisher, told the Herald yesterday.

He said most specialists at the hospital had not been paid in six weeks and operating theatre staff were still regularly without basic supplies such as gloves.

"As of Monday we have no urologist and cardiac patients are already sent to Sydney because there is one cardiologist who flies in once a month. Eight clinicians, including surgeons, psychiatrists, physicians, anaesthetists and locums, are flown in every month at huge cost to the health service because nobody wants to work here."

The Medical Staff Council, run by 15 Dubbo doctors, passed a unanimous vote of no confidence in the hospital's management three months ago but Dr Fisher said "nothing had changed".

"Nobody is ever held accountable for this mess."

The chief executive of the area health service, Claire Blizard, conceded yesterday she was ashamed to walk Dubbo's streets, knowing many small businesses were owed thousands.

"I am embarrassed by it, but I am very confident we will get over the hump. Some people ask us to pay them within seven days. The reality is we just can't do that but we are trying to pay the smaller businesses because they have a very different cash flow problem to the larger creditors."

Dr Blizard said finance staff were being taught to prioritise bills for vital services.

After a damning report by the Auditor-General in 2006, the then health minister John Hatzistergos, insisted area health service chief executives would be held accountable for unpaid bills.

But since then, the situation has worsened and the Herald has heard numerous complaints. The owners of a Dubbo meat company, owed $30,000 for four months, say they rang the creditor hotline repeatedly but were only paid after media exposed their plight. And a Goulburn greengrocer stopped taking orders when overdue bills reached $30,000.

The Director-General of NSW Health, Debora Picone, said the health service had made improvements since it was ordered in June to pay its creditors, but spiralling costs and recruitment problems had made it difficult to get debts under control. "I don't expect the area health service to turn things around overnight but they have already reduced the number of creditors by 50 per cent and we are headed in the right direction."

Ms Picone said the health service had reduced its administrators by 17 per cent and increased frontline staff by up to 29 per cent in the past year.

But Dr Fisher questioned the figures. "Where are these extra doctors and nurses? I haven't seen them. All the doctors and nurses here are exhausted from double shifts and being on call. And if we quit, who suffers? Joe in the street, that's who."

with Louise Hall and Andrew Clennell WHO OWES WHAT

NSW Health owes $117.5 million to creditors

Children's Hospital at Westmead $4.5m  

Greater Southern Area Health Service $22m  

Greater Western AHS $10m  

Hunter New England AHS $0  

North Coast AHS $9m  

South East Sydney Illawarra AHS $24m  

Sydney South West AHS $0

North Sydney Central Coast AHS $22m

Sydney West AHS $26m