The future of Moretonhampstead Hospital appears to have been secured after new working practices slashed running costs by £100,000 in the first six months.

The fate of the community hospital was thrown into question last September when the Mid-Devon NHS Primary Care Trust announced a review of services in the Okehampton and Moretonhampstead areas.

Faced with a financial crisis, the PCT had to shave £200,000 a year off the area's budget, generating fears that the hospital could close. Friends of the hospital, who raised £500,000 for its refurbishment in the 1990s, promised the trust 'one hell of a fight' if that was the case.

But now the trust has recognised the benefits brought about by new arrangements in which hospital staff and GPs work more closely together.

The hospital has also started to offer services such as blood transfusions which were previously only available at Exeter's RD & E Hospital. None of the community hospital's nine beds have been closed as they are proving cheaper than acute beds in general hospital and trust spokesman, Nick Pearson, said the future was looking bright.

'Because of the hard work put in by staff and GPs we have saved £100,000, which puts us firmly on target for reaching our overall savings of £200,000,' he said.

'That is very good news for patients and very good news for staff. It's also encouraging for the future of the hospital.' Mr Pearson added that the hospital could continue to expand its range of services, a move which would achieve several goals at once. 'Offering more services locally is of benefit to local people and it's also good for the local NHS economy as it provides better value,' he said.

'Primary care is all about delivering services locally so why not deliver it? That is the question we've been pondering.' According to the trust, the new arrangements have the backing of staff and GPs and will be assessed again once they have been running for a year.

'I would encourage people to find out what's available at Moretonhampstead Hospital as the more they use it the better value it becomes,' said Mr Pearson.