The trust that runs the two main hospitals in Shropshire submitted its business case for the county's "hospital transformation" plans in October last year – but it has now emerged that the proposal was sent back for extra work.
Shrewsbury & Telford Hospitals NHS Trust (SaTH) was given £312m for the reorganisation of Royal Shrewsbury Hospital and Princess Royal Hospital (PRH) in Telford in 2018.
But, due to inflationary costs, it is understood that the proposal submitted to the NHS for the same work is now valued at more than £500 million.
After receiving the business case the NHS has asked SaTH to go back and add an option that is valued at the original amount of £312m.
Edward Argar, Minister of State for Health, said he expected the amended business case to be submitted by the end of March.
It is understood that it will still include the more expensive option – as well as one that meets the £312m funding.
The development has raised fears of further delays for the plans, and the potential that the trust will not be able to complete the reorganisation of its hospitals as planned.
Under the proposals Shrewsbury would become home to the county's only 24-hour A&E, and would also take over consultant-led women and children's services from Telford.
Telford would become the centre for planned care and would also have an "A&E Local", although the details of what that would comprise have not been fully revealed.
It is the latest blow for the project which has faced multiple delays, including a challenge from Telford & Wrekin Council which is opposed to the loss of services from the borough's only hospital.
Responding to a question from Shrewsbury and Atcham MP Daniel Kawczynski, Mr Argar said the business case had not been received by the government because "it did not pass NHS England and NHS Improvement’s fundamental criteria review".
He added: "On October 28, 2021, NHS England and NHS Improvement received the SOC (strategic outline business case) from the Shrewsbury and Telford Hospitals NHS Trust and determined that it required further work and provide an option compliant with the £312 million allocation."
Mr Kawczynski said he was concerned at the latest delay, and said work on the project needed to start as soon as possible.
He said: "This is yet another slip in the dateline and the situation at the hospitals is getting more difficult every day."
He added: "A lack of Telford and Shropshire being able to take a decision on this has led to the situation where we are now seeing a genuine impact on our hospitals in terms of A&E provision. This is an issue that has to be flagged up at every opportunity.
"We will use any opportunity we can in the House of Commons to keep up the pressure in any way we can.
"If this was replicated across the UK the country would come to a complete standstill."
Ludlow MP, Philip Dunne, said the county's MPs would be meeting to discuss the matter with NHS bosses on Friday.
He said: "The Shropshire MPs have scheduled a meeting with NHS leaders on Friday and will be discussing the latest state of the Future Fit programme as we normally would.
"We will in particular be seeking to understand what the nature of te further work that has been required is, and how long they expect it to take."
He added: "We secured the £312m capital, that needs to be deployed as rapidly as possible, we need to start getting on with it."
A spokesman for The Shrewsbury and Telford Hospital NHS Trust said: “We are continuing to work closely and collaboratively with NHSEI and our local health system partners on the iterative review and approval process.
"We’ve already addressed the vast majority of the questions raised through the initial feedback and are continuing to explore how the outputs of the extensive public consultation and current national standards can be best met with the funding that will be made available.”