Key services are being moved out of the Norfolk and Norwich University Hospital to free up space in a bid to avoid a repeat of the winter capacity crisis.
As demand peaked the N&N saw ambulances queued outside A&E and patients being treated on makeshift wards - a scenario repeated across the country.
Now chief executive Mark Davies has announced action, with dialysis for those with kidney problems moving off the Colney site and into the community to make way for more beds.
It came as he admitted the hospital was full and he said he would like to see more services moved from the main building closer to people's homes.
He also appealed to the government to change a system where the hospital gets less money due to where it is.
At one point the N&N was the worst performing hospital in the country at accepting patients within target times.
And while improvements to the hospital's A&E department had meant they could see twice the number of patients compared to before, Mr Davies said: 'We've run out of capacity.'
He thanked staff for their hard work over the period.
But he rejected claims the hospital had been built too small, as he said it would have been impossible for planners at the time to envisage what the future of healthcare held.
He said one of the indicators of there not being enough space at the trust was the use of escalation beds, which are temporary wards opened only when the hospital is under pressure.
Because all beds were full over winter the N&N had been forced to turn its day procedures unit into an escalation ward.
'We did not get that right,' he said. 'We kept people safe but it was certainly not the environment you would want your mum, grandmother et cetera in.'
He added: 'So we plan to move renal dialysis into a community facility. It will not be on the hospital site and that means we can use that ward as an escalation ward.'
Around 32 new beds would be available on what is currently the Jack Pryor unit, but Mr Davies said he did not yet know where dialysis would be offered, as it would be a partnership with a private company.
But he said it would still be in Norwich and that in most other parts of the country patients were treated in the community, while in Norwich patients must go to the hospital three or four times a week.
He said: 'In some parts of the country people will let themselves in and do it themselves.'
Mr Davies said he would also be asking the government for help to address the hospital's money woes.
The trust finished the last financial year in a £27.3m deficit, although it had planned a £3.6m surplus.
Mr Davies said: 'We've been running a deficit for more than three years.'
But he said even if they made savings expected by regulators that would only be around £20m - when the hospital needed 'more than double that' to balance to books.
He said the private finance initiative deal the hospital was built under cost around £20m a year, and already he had asked regulators for support in paying that off.
But the other £20m could be recouped under the market forces factor (MFF) which calculated how much money the hospital got based on cost of living in Norwich.
'They said Norwich was one of the cheapest places in the country to live,' said Mr Davies. 'Which is certainly not my experience, and it means we have the third lowest MFF in the whole country.'
Mr Davies said the vast majority of their costs were on staff, where wages had to be the same across the NHS, so he called on the government to review the MFF.
He pointed to Addenbrooke's Hospital in Cambridge as an example as having a better MFF score - and therefore being handed more money - as the city had a higher cost of living.
But the services, staffing and population served would be similar to the N&N.
Mr Davies said he thought it was a 'reasonable request'.
He added: 'We want to balance the books, we don't want to live in deficit and we don't like being criticised for being overspent.'
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