Tamara chief executive officer Annette Arthur said it was a decision that was devastating for everyone involved, but the unit had experienced delivery numbers of fewer than 180 per year during the past few years and that was too low for the staff to maintain their skills.

She told The Leader she believed a number of factors were behind this phenomenon, but, given the tough economic climate, many people ? particularly those in the age group having babies ? could not afford private health cover.

It was a situation that could worsen when means-testing of the private health insurance rebate was introduced in July, Ms Arthur said.

Attracting and retaining skilled staff in the area also means the unit often struggles to operate.

With 1.7 fulltime-equivalent paediatricians servicing both of the public and private hospitals in Tamworth, there have been times when there has been no paediatric cover for the hospital and so no deliveries could go ahead, a situation the hospital will once again face in June.

Ms Arthur said the hospital was only just able to staff the unit with midwives, with nine permanent part-timers and five casuals on the roster.

"I believe closing the unit will allow the midwifery services to combine and provide a better service from the base hospital, if there are employment opportunities there," Ms Arthur said.

While she acknowledged there were limited opportunities in Tamworth, she said the hospital would do whatever it could to help the staff find new jobs.

Obstetrician Dr Keith Hollebone, who practises at the hospital, said he believed it was a financial decision on the part of operator Ramsay Health Care.

"We're all incredibly upset about the situation," Dr Hollebone said, describing the unit as the best obstetric unit he had worked in.

While he will retire from private practice in June anyway, the other two obstetricians at Tamara will have no choice but to deliver babies at the public hospital after September.

But the availability of obstetric services will not change.

The move was also likely to put more strain on the already short-staffed public hospital maternity unit, Dr Hollebone said, unless the staff moved there.

A spokesman from Hunter New England Health said over the coming weeks, the health body would assess the situation and decide what measures might be put in place at Tamworth hospital.

Dr Hollebone said he expected the closure would act as a disincentive for obstetricians and midwives to come and practice in the area. The maternity unit will be transformed into a rehabilitation unit after it is closed.

Ms Arthur said the hospital felt the rehabilitation unit was needed in the community, given the public unit was always busy.

The hospital would also not be faced with the staffing issues, because it could attract staff or train its own to work in the unit.