New modelling shows clinicians are planning for close to 900 Covid-19 cases a week across Otago and Southland in a worst-case scenario.
The Southern District Health Board will discuss the modelling and its preparations at a board meeting on Tuesday.
The worst-case scenario envisaged roughly 40 people in hospital each week, with up to four of them in intensive care.
In a report, chief executive Chris Fleming said the level of hospitalisation would be challenging under such a scenario, even though at least 95 percent of all cases would be managed in the community by primary care providers.
It was crucial to prepare for living with Covid-19 in the Southern region, and understand the impact it could have on public health, primary care, kaupapa Māori providers and other support agencies, he said.
"It is therefore vital that whilst robust hospital plans must be in place, primary and community settings, transport arrangements, and psycho-social/ welfare arrangements are as critically important."
He confirmed planning had started which was being led by Quality and Clinical Governance Solutions director Dr Hywel Lloyd, and was now being coordinated at a local, regional and national level.
"Modelling has been undertaken at a national level with various vaccination rate levels being considered, however, now that the government has indicated a move into the new traffic light system when New Zealand gets to a 90 percent double vaccination level this is a good indicator for the scenarios we need to consider," Fleming said.
"The numbers are concerning and we must plan for the worst-case scenario."
Positive community cases have been confirmed in Blenheim and Christchurch in recent days, and parts of Macraes mine in East Otago were closed for deep cleaning earlier this week after a site contractor's partner was identified as a close contact.
A steering group and a governance group were being created to tackle the issue and would meet regularly.
"This is the biggest single risk for both our organisation and our community.
"If the endemic is not managed effectively, the health system will be placed under more and more strain and access to planned care will be jeopardised.
"It is important to recognise that whilst people view planned care as deferrable, when deferred it does have direct impact on many people's quality of life, reduction of pain, and long-term health prognosis.
"We cannot simply cancel this activity to manage; we must optimise how both Covid patients are cared for and maximise business as usual including planned and preventative care."
Fleming considered it vitally important to ensure every part of the Southern community had the highest possible vaccination rates.
"Despite our amazing results Māori, Pacific Island, and lower socio-economic parts of our society continue to lag behind.
"The vaccination team are doubling down on efforts and working in partnership with people within the community to ensure every avenue is explored and creative ways of getting the vaccine out are pursued."