About 60 jobs could be lost at Banbury's Horton Hospital if the anticipated closure of the Sterile Unit goes ahead.
The unit is the latest in a series of Horton departments threatened by cutbacks imposed by the John Radcliffe Hospitals Trust which controls The Horton and three Oxford hospitals.
The unit is where surgical instruments are sterilised and packed.
Cllr George Parish, chairman of the Keep The Horton General Action Group -- which is fighting to prevent The Horton being downgraded from a general hospital to community hospital status -- said the ORH Trust was looking to centralise the unit. He said: "It is another service under threat, and could affect 60 jobs."
A spokesman for the trust admitted the service was under review, but that no changes would be in force until 2006. In the past few months, The Horton has lost its post mortem unit and the histology section of the pathology laboratory. The biggest threat to The Horton's viability as a general hospital, though, is the forecast change to children's care.
Last week, it was revealed that the Government and the ORH Trust were looking at schemes operating in other parts of the country -- particularly a trial at Bishop Auckland Hospital in County Durham where the children's ward is supervised by nurses instead of doctors.
Helen Peggs, of the ORH Trust said: "There will be no changes until 2006, and it will not be a service moving from Banbury to Oxford. If it happens, it will go to a central site in Thames Valley. We are looking at the costs and feasibility of having a central sterilisation unit for all hospitals."
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