Rotorua's QE Health is facing a financial crisis that could force it to close the 70-year-old hospital's intensive rehabilitation unit on December 21.
QE Health general manager Peter Sharplin said the not-for-profit company had been operating at a loss, which was no longer sustainable.
One option being considered is to close the multidisciplinary intensive rehabilitation (MIR) hospital, which is QE Health's core focus.
If that happens 30 of the company's 60 staff could lose their jobs before Christmas.
Mr Sharplin said staff were told of the situation on Thursday and were "gutted" but not surprised.
However, he said the Ministry of Health was reviewing the case as a matter of urgency and he was still optimistic a solution could be found to retain MIR, the only programme of its kind in New Zealand.
Mr Sharplin said the ministry was expected to report back in three or four weeks, but the QE Health board needed to make the call at its meeting on Monday whether to close on December 21, as it could not afford to operate over the holiday period unless it had a guarantee of more patients, and therefore more funding, for 2013.
Mr Sharplin said the hospital needed at least 500 MIR patients a year to break even. So far this year they had treated 370, which equated to a funding shortfall of about $900,000.
"The district health boards are structured with the incentive of doing everything within their own region," he said. "Most primary and secondary rehabilitation should be done in their own region but when you get to people that are not responding you need to have a national or regional tertiary centre and that traditionally is what we've provided."
However, he said district health boards were often unwilling to refer patients for treatment outside their region, and that needed to change for the MIR programme to be viable longer term.
He said as part of its review, the ministry had sought feedback from those health boards, which could prove crucial to the outcome.
Rotorua MP Todd McClay said he would give the board an update on Monday on the ministry's progress, but early indications were positive.
He said he was optimistic if the right case was put together more district health boards would see the value of the MIR service, thereby giving QE Health the assurance of treating 500 patients next year. He will therefore be asking the board to delay its decision.
"I will be asking the board to work with the ministry over the next three or four weeks before a final decision is made."
Mr Sharplin said "no stone had been left unturned" to keep MIR operating so regardless of the decision on Monday the board would continue to work with the ministry until the last possible moment. He said whatever happened it would not be the end of QE Health and its stand-alone services would continue.
"We have some really big plans in terms of what we want to do and that involves building a new health spa. The gymnasium is really starting to take off ... and in conjunction with Diabetes New Zealand we are going to set up New Zealand's first diabetes treatment gymnasium," he said. "There's a lot going on which is really good."