THE trust that runs Croydon University Hospital expects to post a £14.5 million deficit in the current financial year - in part to hire more doctors and nurses.
More than £3 million of that overspend will go towards extra staff and training in the hope of driving up standards.
Croydon Health Services believes the cash can be recouped when improved care leads to more patients and increased funding.
Gavin Barwell MP said the approach was "overwhelmingly the right decision" for the future of the hospital.
Unison, the public sector trade union, applauded the trust for "risking going further into deficit to protect frontline services".
Extra staff accounts for under half of the trust's predicted operational deficit of £8.8 million.
It has also emerged the new Purley War Memorial Hospital is expected to be valued £5.6 million less than the £11 million it cost to redevelop, bringing the trust's total deficit for 2013/14 to a projected £14.5 million.
This follows three straight years in which the trust posted a surplus and news of Croydon Clinical Commissioning Group's predicted £20 million deficit.
Azara Mukhtar, interim director of finance, said a "significant" investment was being made to improve care.
"Patients and staff have told us what more can be done to improve the quality of care and this is an absolute priority for the year ahead," she said.
"Making these investments will help ensure patients receive the best possible care wherever they are treated."
The £3 million investment includes £720,000 to maintain the rapid access, triage and treatment function in the hospital's A&E department.
Some £650,000 will be spent to recruit consultants and acute doctors to staff A&E and other medical specialities in hope of creating a high-quality, 24-hour, seven-day-a-week service.
Around £540,000 will be used to hire more midwives and £377,000 on doctors and nurses for overnight care for inpatients at the trust.
The trust will also spend £1.1 million on more nurses for all wards, to make it less reliant on healthcare assistants.
Other projects include improvements to the building, new facilities and equipment.
Standards must be improved at the hospital if it is to achieve Foundation status, which leads to greater independence, by the deadline of 2014.
Trusts which do not reach this level face being merged with those that do.
While standards of care are a key criteria in this process – and staffing levels have been a key concern raised about the hospital in recent years – financial viability is also an important factor, meaning the trust's strategy is not without risk.
Unison regional officer Michael Walker said: "We know what happens when cuts to frontline nursing and medical staff are carried out without clinical concern, and therefore we welcome the decision to risk going further into deficit to protect frontline services."
Croydon Central MP Gavin Barwell is firmly behind the trust's plan.
"This is the right decision, overwhelmingly so," he said.
"There has been an issue with the consistency of the quality of care for a long time.
"The hospital has been operating with too few consultants and below the required level of midwives.
"There have not been enough nurses or healthcare assistants and the number of bank (agency) staff has been very high.
"If you put these things right then you go a long way to improving quality. Hopefully that means a lot more patients will be happy to be treated there."
He added: "It's not without its risks. They have to deliver quality of care and a surplus.
"In the medium term, the hospital will have to show it is financially viable.
"But at the moment the fundamental problem is the level and consistency of care."
