Neil McKay, chief executive of the Leeds Teaching Hospitals NHS Trust, said that while the organisation's financial health would be "by no means the only criteria" on which its plans would be judged, the Department of Health would look closely at its long-term financial situation when deciding if they go ahead.
The trust wants to create a specialist children's and maternity hospital alongside diagnostic services for children at St James's University Hospital. Outline plans were approved earlier this year by Health Secretary John Reid, and the trust was given 15 months to develop them fully.
But it is in the midst of cutting costs to tackle its debts of more than 25m, a legacy of the merger of two of the city's health organisations in 1997/98, although this debt has been reduced.
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