Staff morale is the top concern for NHS trust finance directors and two thirds of hospitals are concerned about staying in budget, a report from The King's Fund has warned.
Hospitals and other NHS providers overspent their 2014/15 budgets by over £800m despite an extra £900m being provided from the Treasury to help balance budgets.
Staff morale remains the top concern and less than half (45%) of trusts felt confident they would achieve productivity targets for 2015/16.
Productivity gain targets were thought to be at risk of not being met % by 75% of NHS trusts and 68% of clinical commissioning groups.
The majority (60%) of finance directors of NHS trusts said they were dependent on drawing down reserves or additional funding for 2014/15.
The number of delayed transfers of care has risen by over 20% in the first quarter of 2014 compared to the same quarter in 2013.
Richard Murray, director of policy at The King's Fund, said: "The health service enters the new financial year facing some of the biggest financial and performance challenges in its recent history.
"If last year was the most difficult for some time, this year promises to be much worse, with little confidence that the alarming deterioration in NHS finances can be arrested.
"Looking further ahead, while there is still significant scope to improve productivity in the NHS, efficiencies are becoming harder to generate and there is considerable scepticism that the £22bn in productivity improvements outlined in the NHS five year forward view can be achieved."