Oamaru Hospital is reducing its bed numbers by 20 percent because of cuts to funding.
The hospital currently provides 30 rural inpatient and assessment beds but from 4 April these will be cut to 24.
Waitaki District Health Services chief executive Robert Gonzales said that was because the Southern District Health Board had indicated it wanted to cut funding for the hospital by 10 percent by the 2017, 2018 financial year.
The Health Service has had no increase in funding to match inflation for the past two years, he said.
Services will have to be reviewed and possibly scaled down to meet costs.