NHS Fife faces an overspend of up to £3.5 million this financial year, according to a report released to the health board on Tuesday.
In her annual statement, Chris Bowring, NHS Fife director of finance, said Fife’s balance for 2014/15 would finish in the red by a minimum of £2million.
Key pressures included the ongoing cost of using medical locums and nurse banks to fill long-term vacancies in acute services and the impact of new drugs to treat Hepatitis C and the continuing cost of Anti-TNF drugs for rheumatology.
The bill had also included higher premiums to the Clinical and Other Risks Insurance Scheme (CNORIS) - a national body which helps pay compensation in negligence cases.
Chris Bowring said: “As in previous years, we continue to implement a range of initiatives to reduce expenditure and enable savings to be made whilst maintaining the quality of care to patients.
He added: “Any overspend at the year end will be recovered from the board in subsequent years.”
Cllr Andrew Rodger, executive health spokesman and member of the NHS board, proposed closer networking between Fife, Edinburgh and Dundee.
And, if finances continued to be strained, a merger with Tayside could be the answer.
He said: “A lot of good networking is going on, especially in cancer and mental health, but we have to raise our game and we can do that by working ever closer with teaching hospitals.“