North Yorkshire County Council had hoped to build a ground-breaking £20m community health and care centre, which would house services from the threatened Lambert Community Hospital in Thirsk.
The centre would have housed “an enhanced and extended” health centre and GPs’ surgery.
The project would have been paid for by the authority and the NHS, however health chiefs have announced they have pulled out – backing instead a £5mn extra care housing scheme for older people.
Councillor Gareth Dadd, who represents Thirsk on North Yorkshire county council, told the Yorkshire Post of his “devastation”.
He said: “The plans had massive public support and the NHS has now told us that they can’t proceed.
“The reasons they gave were involving the time scale, and they got nervous about the cost – even though they knew about the cost from the beginning.
“I am devastated for the people of Thirsk and the surrounding areas.
“They are losing out in a once in a lifetime opportunity which would have secured a flagship scheme for future generations – although I have to say the extra care plan is very much welcomed.
“I have just never felt so distraught, and I think the local NHS have let down the people.”
He added: “It is very, very sad indeed.”
Places for residents at the extra care development will increase from 40 to more than 50.
The home will be on the site of Cherry Garth, the county council’s older people’s home in Chapel Street and the new building will also include a replacement community library.
Dr Vicky Pleydell, local GP and the shadow accountable officer for the Hambleton, Richmondshire and Whitby Clinical Commissioning Group (CCG), said: “We are disappointed that our research has shown that investing in this scheme is neither clinically appropriate, nor financially viable for the CCG.
“Before making any decisions about what services will be offered, we are going to talk to local people in Thirsk about what health services they require and complete a more detailed clinical needs assessment and evaluation.
“We aim to strengthen community services and help keep people in their own homes, with the appropriate support, for as long as possible.”
Care services are becoming an increasingly serious issue for North Yorkshire, with its rapidly ageing population.
The extra care home will be developed in conjunction with Housing 21, a national specialist housing association, and regeneration firm Keepmoat – using some of a £2.1m Government affordable housing grant.
The county council has spent £14.7m on 15 extra care housing schemes in places such as Scarborough, Stokesley, Ripon, Bainbridge to Selby so far. Five more are in the pipeline.
Extra care sets out to let older people maintain their independence, with round-the-clock care and support. On-site facilities include restaurants, libraries and other resources.
However, the council admitted being “disappointed” with the outcome.
Clare Wood, executive member for health and adult services, said: “Naturally we are very disappointed, but we are delighted that the development of Cherry Garth into state-of-the-art extra care accommodation for older people will go ahead as planned.
“The council remains committed to providing the very best facilities possible for the people of Thirsk and Sowerby.”
Ms Wood added that the authority intends to provide 30 more extra care housing schemes in the county over the next eight years.