"We would welcome a discussion on this matter as a matter of urgency," Dunedin Mayor Aaron Hawkins wrote in a letter to Health Minister Andrew Little.
"It is inevitable that costs will increase, but that’s no excuse to cut back on the public health services the Otago region deserves, and what we understand has been signed off in the detailed business case that has been before Cabinet."
The Otago Daily Times reported earlier this month beds, operating theatres and possibly entire wards could be dropped from the design of the new Dunedin Hospital’s inpatient ward.
Escalating construction costs and inflationary pressures had placed an already stretched budget under further pressure.
One source told the ODT cost-cutting proposals included dropping more than 50 beds from a hospital complex at present planned to contain 421 beds overall, and also that some of the 16-21 planned operating theatres could be scrapped or partly built.
Mr Little has said every major building project in the hospital system had been asked to look carefully at its costs.
"In relation to the new Dunedin Hospital, I have received no advice about proposed changes to the scope or scale of that project."
Mr Hawkins has said significant cost-cutting proposals could lead to protests.
In his letter, he seemed to discourage a fixation on costs.
"Given the length of the gestation period to date, are the demand forecasts still fit for purpose?
"Do they account for the current population growth trajectories of not just Dunedin but the wider Otago region this facility will service?"
Mr Hawkins said he was sure the minister was "as surprised as we were" to read rumours of the hospital being scaled back.
"As I’ve said, this is all just rumour at this point, and so we are seeking your categorical reassurance that these suggestions are off the table."
The Cabinet approved the final detailed business case for the new hospital in April last year at a total value of $1.47 billion.
In June, Mr Little told Radio New Zealand the "current budget is based on current cost expectations, but this is a project that has six years ahead of it and cost escalations are a fact of life".
Dunedin National list MP Michael Woodhouse has said he is worried about Treasury officials getting their way and the Government should build the hospital it had promised.
"We know what we need.
"It has been clearly articulated ... and for them to suggest that beds could be taken out of that hospital in the face of a growing and ageing population is absolutely outrageous."
