Health Minister Eddie Teare says he is faced with difficult choices after the government announced it would lose ?90 million in the next financial year, under the VAT agreement with the United Kingdom.
This year's departmental budgets planned for a break-even scenario, where the amount of cash raised by the government would match the amount of spending.
But after yesterday's Tynwald debate about the end of the reciprocal healthcare agreement, Mr Teare said it was difficult to see how the DHSS could avoid financial cuts.
Mr Teare told Manx Radio some work had already been done which could help the department avoid slashing services:
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