A cottage hospital in Gloucestershire is proposing to close all of its beds by Christmas and lose a third of its staff after a cut in funding.
Tetbury hospital will stop taking inpatients and provide only limited services like x-rays and physiotherapy.
Cotswold and Vale Primary Care Trust (PCT) is withdrawing funding for the hospital's six consultant beds in an attempt to claw back a £5m overspend.
Hospital trustees said the remaining five GP beds would no longer be viable.
Trustees' chairman, Simon Preston, said it was not possible to meet the cost of the six beds for the elderly that the PCT had previously paid for.
"This meant that we couldn't support the other five beds, because a five-bed hospital just wouldn't work.
"So regretfully we had to say that we would make a number of the staff redundant by the end of the year."
President of the Tetbury Women's Institute, Judith Randall, who is also a part time nurse at the hospital, said: "It has a knock-on effect.
"With the ageing population of Tetbury, it means an increased load for volunteer bureau."
Copies of the report detailing why changes are needed and how the hospital might look in the future are being delivered to households in and around Tetbury this week.
Throughout October, there will be various opportunities for people to have their say on the issue.