Taranaki District Health Board says it has no option but to cut costs, as the status quo can't be maintained.
The board has released a consultation document which outlines changes to health services in South Taranaki.
The plans involve boosting spending on community and primary care services by $700,000 - but spending $1.8 million less at Hawera hospital.
Mayor mayor fears the district will end up with a day clinic in place of a fully functioning hospital.
The DHB says the aim is to provide the best services possible, within what it can afford.
The first in a series of public meetings was held in Waverley on Wednesday night. Consultation runs until 4 August.