A shake-up of rural practice funding in Otago and Southland classed practices according to distance from a main hospital.
Centres such as Gore, Wanaka and Queenstown were deemed rural because of their distance from Dunedin Hospital or Southland Hospital.
Outram, less than 35km from Dunedin Hospital, missed out.
The Outram practice, owned by Mosgiel Health Centre, will lose about $19,000 annually once transitional funding runs out in a couple of years.
Practice manager Kathryn Tohill said Mosgiel bought the practice to ''to support the community ... because otherwise it probably would have closed''.
As a result of the centre losing funding, fees for its 1650 patients might have to rise.
Practice GP Dr Robert Morton was concerned, not just because of the funding loss but because rural status recognised the area's isolation.
The Outram practice nurses receive St John paramedic training.
''If you're driving up that road and you crash your car and somebody's got to come and look after you until the helicopter arrives and there is no doctor - this is life and death stuff.''
There were also Otago Central Rail Trail injuries to deal with, he said.
''Where on earth did they decide what is rural New Zealand?
"Rural New Zealand is not Queenstown. We are covering a colossal hinterland - we cover up to Hyde, down to Waihola, down to Taieri Mouth.
''What are these people on about, classifying it as non-rural?'' Dr Morton said.
Oamaru had a secondary-care level hospital, but the ''bizarre formula'' classed the town as rural. Winton, in Southland, also missed out, and that was not fair either, he said.
''Our little town [Outram] way out here with a great big rural population is regarded as not rural. It's absolutely nutty.''
Although the formula had been overseen by the local rural service alliance team, Dr Morton believed the decision was made in Wellington.
Seven practices did not agree to the model, and 31 practices did, so the proposal got the 75% of practices it needed.
The model allocated about $4.2 million of funding for rural general practices.
