The Southland District Health Board is being accused of betraying doctors and trying to privatise Queenstown's public hospital by stealth.
A spokesperson for the Association of Salaried Medical Specialists, Ian Powell, says the board is consulting on management options at Lakes District Hospital, but has not consulted adequately with doctors.
The association believes privatisation would lead to fewer services, the loss of doctors and a poorer standard of care.
Dr Powell says the obligations are laid down in contracts and health sector agreements.
"They've actually got an obligation to enhance clinical leadership, not go in the opposite direction, and in fact it's the Government's own policy to enhance clinical leadership in district health boards.
"Clinical leadership can only be enhanced if it's genuine, if it's substantive and if it's over the core issues, and it's not a lip service thing."
Southland DHB chief executive Brian Rousseau says he disagrees with the association's position and plans to meet with its representatives.
