In February 2020 Blue Mountains LHD sent out a consultation paper proposing a restructure of senior management at Blue Mountains, Springwood and Lithgow hospitals to stakeholders for their input.

According to a spokesperson for the Blue Mountains LHD, following the feedback received, the proposal in its current form will not be proceeding.

Rumours circulated that the MRI licence that Lithgow Hospital received in April 2019 would be lost, but according to Federal MP Andrew Gee, who fought hard for the licence, that wasn't the case.

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"Last year the Australian Government granted Lithgow Hospital an MRI license. The license was awarded on merit because of the clear need that was demonstrated," he said.

"While nobody from the Nepean Blue Mountains Local Health District has contacted me to say that they are not proceeding with an MRI licence for Lithgow, I have heard some rumours that they had thought about it."

Mr Gee said that considering the community fought long and hard for the licence it would be a "disgrace" if the Lithgow Health District bureaucracy went down that path.

"However, my understanding is that common sense has already prevailed and that they are going ahead with Lithgow's MRI machine," he said.

"The LHD should now publicly reassure the Lithgow community that this is the case."

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An MRI license means that Medicare rebates are available for MRI scans, and therefore allows more people to access them.

It's a condition of submitting an MRI license application that the NSW Government agrees to buy and house the MRI machine.

A Nepean Blue Mountains Local Health District spokesperson said they welcomed the Federal Government's announcement of an MRI licence for Lithgow Hospital last year, and investigations of how this MRI service can be best delivered are well underway.

"This is a complex project. A new MRI service requires the installation of an MRI machine, significant capital works to safely house the new equipment, and highly trained staff to run the new service," the spokesperson said.

"We will keep the community informed about the progress of this project."

The spokesperson said that an MRI service in Lithgow would mean patients would no longer need to travel outside the area for their scans.

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Councillor Cass Coleman said she had been made aware that residents were currently still travelling out of town for this service.

"We need to keep an eye on the restructure because it will be going ahead, just not in its current form and I am very concerned this particular licence will be lost if there is no follow through," he said.

Cr Wayne McAndrew said he was equally as concerned about the MRI machine.

"The functioning MRI department must be finalised by the end of the year and we are already in March so I'm getting worried because this was announced in April 2019 so I thought we would be closer to being done and dusted," he said.