Campaigners in Stroud, Gloucestershire, are threatening legal action to stop the transfer of NHS services to an unaccountable “community interest company”.
Health bosses in the county want to give the new firm nine hospitals and a variety of community services.
But Caroline Molloy of Stroud Against the Cuts has warned that the group will seek a judicial review unless the plans are halted.
“We have been advised that NHS Gloucestershire is acting unlawfully,” she said.
“It cannot just hand over all its NHS Primary Care Trust services to an unaccountable ‘social enterprise’ or ‘community interest company’.
“It must either keep the NHS services itself, or have a proper process that would allow services to be provided by another NHS body.
Around 500 people joined a demonstration in Stroud against the plans on Saturday of last week.
For more information go to www.stroudagainstcuts.co.uk