Bingley hospital will not close until services are guaranteed to continue elsewhere in the town, said a health director.
And a three-month consultation period about plans to build a new, one-stop health centre, which will house all of the town's GPs and other facilities, will take place at the end of summer.
David Riley, director of corporate development for Airedale Primary Care Trust, told the Eldwick and Gilstead Neighbourhood Forum that Airedale NHS Trust wanted to close the Fernbank Drive hospital.
It was part of a huge shake-up in health care to try to address a shortfall of about £2 million.
He said health care provision provided in the hospital was expensive to run and it would cost about £350,000 to renovate the 112-year-old building.
Doctors' surgeries in the Bingley area are overcrowded and a new health centre offering a variety of services could help to attract more GPs, who are put off by smaller practices.
Mr Riley said: "We have been approached by GPs in the area who want to work in a more integrated way. We are happy for Bingley Hospital to close, but not to close all the services in Bingley too. We want to redesign them so they are more efficient."
Mr Riley said local agencies, members of the public, MPs and councillors had already been involved in discussions about the issue.
But Councillor Chris Greaves (Con, Rombalds) said: "The PCT has not contacted me at all.
"For something as important as this all ward councillors should be consulted. I think they could afford some stamps despite the deficit."
Mr Riley replied that councillors had been involved through Bradford Council's overview and scrutiny committee meetings.
Protesters collected more than 4,500 signatures on a petition to make sure Bingley does not lose vital health services between the hospital closing and the new centre being built.
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