The health service "looks like a supertanker heading for an iceberg", the head of the NHS Confederation has warned.
Fears that cost-cutting will damage quality of care for patients are widespread among its members and the Government must be "braver" in its response, he added.
The criticism comes a day before GPs are due to strike over changes to their pensions .
The industrial action - the first since 1975 - underlines the strained relationship between the government and health workers at a time of major reform to the health service.
The NHS Confederation represents managers across the organisation.
Chief executive Mike Farrar outlined the financial challenge, ahead of its annual conference in Manchester.
A survey of the 252 chief executives and chairs of NHS organisations reveals almost half believe the financial squeeze on the NHS is "very serious" and 47% say this means quality of care will reduce over the next 12 months.
Mr Farrar said: "Despite huge efforts to maintain standards of patient care in the current financial year, healthcare leaders are deeply concerned about the storm clouds that are gathering around the NHS.
"Our survey shows that many NHS leaders see finances getting worse and that this is already having a growing impact on their patients.
"In response, they are cutting costs in the short term but they know that much more radical solutions are the only answer in the long run.
"Frankly, without action on the way we provide health and social care, the NHS looks like a supertanker heading for an iceberg. The danger is clearly in view and looming ever larger."
The NHS Confederation argues the Government must be braver in making radical changes such as closing hospitals and services to help keep costs down.
Mr Farrar added: "Politicians have consistently failed over many years at national and local level to put the long-term interests of their population's health above their short-term electoral interests.
"The NHS will get on and do its absolute utmost to make things work for patients. But we do not have the luxury of time if we are going to make the right changes to services.
"Health and social care leaders must come together now and speak about these issues with one loud, strong voice."
Mr Farrer will address the conference, as will Health Secretary Andrew Lansley.
Mr Lansley said: "We know that the NHS is performing extremely well for patients, with waiting times and hospital acquired infections low and patient experience of care high.
"But there are financial pressures; as nearly half of the respondents to the NHS Confederation's survey made clear, they are very serious but not the most they have experienced."