TASMANIA'S three health bodies will soon be merged into a single, statewide organisation based in Launceston.
The state government is set to announce the overhaul at the Tasmanian Health Conference today.
The amalgamation is forecast to save $21 million over the first four years by reducing waste, duplication and administrative costs.
Health Minister Michael Ferguson said after operating for two years, it was clear the three-THO model had failed.
Mr Ferguson said combining the three regional bodies into a single organisation, to be named the Tasmanian Health Service, was the first step in delivering co-ordinated health across the state.
The THS will begin operating in July next year.
Denison independent MHR Andrew Wilkie yesterday slammed the idea of basing the organisation in Launceston after hearing the government was considering the plan.
"To locate a single health organisation in Launceston would be parochialism gone mad," Mr Wilkie said.
"This is the Launceston mafia hijacking public health planning in Tasmania."
However, Mr Ferguson said basing the THS in Launceston would deliver a better balanced distribution of health bureaucracy across the state.
The Department of Health and Human Services and the state's major hospital are both located in Hobart.
Speculation of a possible merger between THO North, North-West and South has loomed large for more than a month following a series of scathing reports and allegations of nepotism within two of the organisations.
No current or former THO North staff have been embroiled in the allegations, and the organisation is the only one to have come close to meeting its targets.
Mr Ferguson said financial blowouts, leadership failures and bureaucratic duplication had become far too common under the current health system, and it was time for fundamental reform.
"Tasmanians have been let down by a system which is broken," Mr Ferguson said.
"We want to give Tasmanians a complete, statewide system which places the interests of patients back where they belong, at the forefront of every decision."
Individuals hospitals will retain their own management in the reforms.
Decision `ridiculous', says Wilkie: