The proposals to end consultant-led maternity and paediatric services at the Friarage Hospital in Northallerton have led to widespread protests, backed by Richmond Conservative MP William Hague.
County councillors and Mr Hague had requested a full review but this has been rejected by Health Secretary Jeremy Hunt following advice from the Independent Review Panel.
The Panel concluded that a “consultant-led service is demonstrably not viable.”
Richmondshire Council leader John Blackie said he was “extremely disappointed” by the news.
He said the “elephant in the room” was the need for financial savings.
“The Government said front-line services were sacrosanct - but obviously not here in Richmondshire.”
Coun Blackie said an application for a judicial review of the consultation process, which he believes was flawed, was still an option.
“There will be discussions with legal representatives over whether there is a case for the consultation process being flawed.”
Mr Hague was “very disappointed” by the Panel’s decision to reject a review.
“I supported North Yorkshire County Council’s decision to refer the matter to the Department of Health and I have made strong representations about this issue which affects many people in my constituency.
“It is very important now that the Hambleton, Richmondshire and Whitby CCG reassures people that the Friarage will remain an excellent provider of healthcare for people in the area.
“I call on them to provide a thorough and detailed plan of the future of services at the Friarage to demonstrate their commitment to the hospital and to the people of Hambleton and Richmondshire.
“And it is vital that the assurances given by Darlington Memorial Hospital that it can safely manage an increase in deliveries as a result of the changes at the Friarage are made cast-iron. My constituents have come to expect an outstanding level of service at the Friarage and they must be reassured that this will be maintained at Darlington.”
County councillor Jim Clark, whose scrutiny of health committee requested a review, said: “I am extremely disappointed with this outcome as I felt confident that we have put forward a strong case for him (Jeremy Hunt) to instruct the Panel to carry out a full and independent review.”
Coun Clark said he would now look to ensure a smooth transition to a midwife-led unit and short-stay paediatric assessment unit at the Friarage.
Vicky Pleydell, chief clinical officer at Hambleton, Richmondshire & Whitby Clinical Commissioning Group, said the proposals had the backing of doctors and midwives.
“We hope that people who have had concerns about these plans will be reassured by the Secretary of State’s decision based on independent clinical advice, and are now confident that this is absolutely the right thing to do.
“This change is supported by all of the local doctors and midwives and we know this will provide safer, better services for local mothers and children which will last into the future.
“The CCG will now look to implement these new services with South Tees NHS Foundation Trust from October 2014.”