The special administrators appointed to Mid Staffordshire Foundation Trust have recommended the organisation is dissolved and its maternity service closed.
Stafford Hospital is expected to become part of University Hospital of North Staffordshire Trust, while Cannock Hospital will become part of the Royal Wolverhampton Trust.
The plans drawn up by administrators back the retention of accident and emergency services between 8am and 10pm at Stafford Hospital, the hours they currently operate.
The most serious A&E patients will be taken straight to University Hospital of North Staffordshire.
Other proposals include downgrading Stafford’s critical care unit, it losing some emergency surgery and no longer admitting seriously ill children. It would also lose its maternity unit.
The document released today makes no mention of when the delivery of babies will cease at Mid Staffordshire but it anticipates the changes proposed will be in place by the end of 2017-18. The maternity unit currently delivers 1,800 babies a year.
The recommendations are among the 14 made by the Ernst and Young team appointed in April when Mid Staffordshire became the first foundation trust to be placed in the failure regime brought in under the 2012 Health and Social Care Act.
This meant it was judged to be not be “clinically or financially sustainable” in the long term.
The £150m-turnover Mid Staffordshire is predicting a deficit of £20.2m in the current financial year.
Savings measures outlined by the trust special administrators included £11.6m from “reducing executive management and back office functions”, £8.6m from “a reduction in various clinical and ward costs that are no longer required” and £10.4m in “general cost improvements”.
They anticipate reducing spending on temporary staff by £6.2m and making £4m by renting out part of the trust’s Cannock Chase site.
The administrators also pointed out the trust’s overheads are 18% above the NHS average.
The report added that even if all this is achieved by 2017-18 the trust will be running at a deficit of £8.2m.
The proposals will now go to a public consultation, which will end on 1 October. They will then be assessed by the foundation trust regulator Monitor and a final decision made by the health secretary.
Unite national officer for health Barrie Brown said: “The hard work of the health professionals and staff has greatly contributed to the substantial progress that the hospital has made.
“It is due to their efforts that it looks likely that many of the services for the local population will remain based at Stafford.”
He added: “One note of caution is the possible impact on neighbouring trusts at Wolverhampton and Stoke which may have to pick-up some of Stafford’s services, such as neonatal services and paediatric inpatient services.”
Sara Gorton, Unison deputy head of health, said: “Staff have worked hard to turn around the hospital and it now has one of the best performing A&E departments in the country, and there is a solid case for it to remain open.
“We are pleased that the administrators have not made any snap decisions and have set aside time for a full consultation. With such a long lead in time they need to be aware of the danger that uncertainty for staff and patients may lead to erosion of the service before time, as people leave for more secure employment.”
Paul Vaughan, regional director of the Royal College of Nursing in the West Midlands, said: “We will be urging our members to engage in the consultation process to ensure their views are heard about what they think the impact of the recommendations will be if they are implemented.”
Are you able to Speak Out Safely? Sign our petition to put pressure on your trust to support an open and transparent NHS.