North East Herts MP Sir Oliver Heald wrote to the primary care minister to discuss the future of hospital services in Royston.
The former Royston Hospital site is under threat of closure, with plans to use the proceeds to enhance the town's existing health centre.
Campaigners have argued that the health centre building is not fit for purpose, and it would be better to turn the hospital site into a health and social care hub for the town.
The hospital still operates some outpatient services - including Royston and District Community Transport and physiotherapy - which would have to be relocated to the health centre.
Primary care minister Neil O'Brien wrote to Sir Oliver: "NHS Property Services is the current owner of Royston Hospital, which was opened in 1924, on the site of the former cottage hospital.
"The Cambridge and Peterborough Integrated Care Board (ICB) has recently engaged NHSPS to assist them in the development of its Estates Strategy, which was approved at its meeting on March 10.
"The strategy is available at www.cpics.org.uk/estates-strategy. This Estates Strategy identifies that Royston Hospital is currently poorly utilised and is no longer considered fit for purpose."
He explained that Hertfordshire Community Services intend to move services out of the hospital, leaving the site "substantially vacant and potentially surplus to requirements".
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He added: "With the need to expand general medical services in the town, an opportunity exists to dispose of the hospital site and recycle capital into reconfiguring and upgrading what is a 1970s health centre, to provided expanded flexible health care provision for the town."
Sir Oliver said: "Royston needs a state of the art health centre with diagnostics so that our two main GP practices can work together effectively.
"It is not clear from this answer what the future holds for Royston and I will continue to press the case.
"I am asking the Hertfordshire Community Services to explain where they intend to move all the services which are currently in the hospital.
"We have always argued that the Royston Hospital site is the best place for an effective Royston health hub."
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