The NHS' efficiency drive is already beginning to damage hospital waiting times, according to the King's Fund thinktank.
Its research found the need to achieve £20 billion of efficiency savings was increasing the difficulty of managing demand for services, meeting targets and maintaining quality.
Nearly 15% of hospital inpatients waited over the 18-week period the Labour government had made its target for treatment in February 2011 - the highest level for nearly three years.
Patients waiting over four hours in accident and emergency was up to its highest level since 2004/05, but the proportion of patients waiting more than six weeks for diagnostic services fell back in February.
"This report will provide a regular health check on the state of the NHS as it comes to terms with the new financial climate and implements the government's reforms," King's Fund chief economist John Appleby said.
"It highlights significant concern among NHS finance directors - who are well placed to report on the stresses in the system - about the prospects for the year ahead.
"With hospital waiting times rising, the NHS faces a considerable challenge in maintaining performance as the financial squeeze begins to bite."
The first instalment of the report found that nearly half of its panel identified ward closures and cuts in services as among the main ways of meeting productivity targets in their area.
Shadow health secretary John Healey said the report showed the NHS was slipping backwards.
"Front-line staff and managers are massively distracted by David Cameron's top-down reorganisation of the health service, and the signs of strain are now there for all to see," he commented.
"So much for Mr Cameron's pledge to 'protect' the NHS."
David Flory, deputy chief executive of the NHS, said the health service had had a good year in spite of last year's "exceptionally cold winter".
He pointed out that average waiting times remained low and broadly stable and that the NHS had a healthy financial surplus "in line with its plans".
Mr Flory added: "Despite continued good performance, the NHS is still facing pressure from growing demand and will do so for many years to come.
"This particular snapshot shows that the NHS must maintain its focus on waiting times and improving patient outcomes, while dealing with the extra demands on the service.
"Under the government's modernisation plans, patient choice and transparent information will increasingly drive improved performance in the NHS."
Health secretary Andrew Lansley's proposed reforms of the NHS, which would create a market dynamic based on GP consortia being handed the bulk of commissioning powers, remain deeply uncertain, however.
Massive opposition from NHS workers, culminating in a no-confidence vote in Mr Lansley from the Royal College of Nursing earlier this month, has forced ministers to pause the health and social care bill's progress through the Commons as the government embarks on a 'listening exercise'.
Yesterday's talks with representatives of the Foundation Trust Network at Downing Street focused on improving accountability within the NHS, the Department of Health said. The government wants all NHS trusts to become foundation trusts by 2014.
"This listening exercise is a genuine opportunity to pause, reflect and improve our plans for the NHS and I'm impressed at the level of enthusiasm from all those wanting to get involved," Mr Lansley said.