Devon Primary Care Trust is shutting beds to help save £15m.
But GPs at Honiton Surgery say they are dismayed by the cuts which they say come at the worst time of the year.
But the PCT says it must return to financial balance and the measures are only short term and there will be no loss of service.
'Winter pressures'
The town's hospital looks after a population with high numbers of elderly people but now has seven fewer beds in which to care for them.
Dr Paul Barber, a GP in the town, says the closures are worrying.
"Our concern is that at a time of winter pressures we're seeing the closure of seven of our beds and an observation bed," he said.
"It's going to mean frail and elderly patients admitted as emergencies are going to have to travel to the RD&E [Royal Devon and Exeter Hospital] and their relatives will find it much more difficult to visit them than they would do locally."
Devon Primary Care Trust is temporarily closing 100 community hospital beds on top of 100 already closed earlier in the year, and is also shutting minor injuries units overnight to help avoid a £15m overspend.
The PCT says it has already made savings of £1.3m.
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