A merger of two Bedfordshire hospitals avoids putting the Luton & Dunstable Hospital at a financial disadvantage, a meeting heard.
The link-up with Bedford Hospital is set for April 1, but changes will not happen overnight, Luton Borough Council's health and wellbeing board was told.
The L&D has been separately allowed capital spending of around £100m on its site, which it wants to modernise.
Labour Farley councillor Mahmood Hussain expressed concern about the L&D having to absorb Bedford Hospital's historic deficit.
He asked whether finances would be merged between the two hospitals and if services would shift from one site to the other?
Bedford Hospital's clinical service director Kandarp Thakkar explained: "On April 1, 2020, there is no planned change to services.
"There is an integration plan from that date for about two to three years taking a speciality at a time.
"Bedford has a deficit, not a major one," he said. "The ethos is a merger, but legally speaking it's an acquisition of Bedford by Luton.
"The acquiring hospital will take the benefits and the deficit."
Councillor Hussain said: "If a hospital is performing well, as Luton and Dunstable is, it will not get any extra funding.
"Only those that are not performing as well, such as Bedford, will get extra resources from the NHS.
"If you're a good performer you're punished, but if you're a bad performer you get extra resources.
"My concern would be we do not lose any funding under those circumstances which is supposed to come to Luton."
Mr Thakkar replied: "That is absolutely not the case. There is significant investment coming into Luton.
"Both estates need significant revamping. But as part of the merger the Luton site is getting £100m for redevelopment.
"There is no money allocated for the Bedford site at all. It's not so much one site being abandoned.
"It's the overall benefits merger brings to health funding in Bedfordshire.
"The most important of those responsibilities is to ensure safety on day one.
""The full business case is due in on December 2. It has been full steam ahead both for the merger as well as the redevelopment plans."
Luton Clinical Commissioning Group chief operating officer Nicky Poulain said: "It's about the opportunities we've got in Luton.
"Your point about the underlying deficit as an organisation that's taken at a higher level by NHS England and NHS Improvement.
"That's probably part of December 2's case because the Luton and Dunstable are not just going to take on someone debts without some underlying support from the regulators.
"It does not mean that Luton as a place is going to be somehow worse off by picking up a debt from Bedford.
"The regulators NHS England and NHS Improvement are now working with Bedfordshire, Luton and Milton Keynes as one system for funding.
"It's looking at that health system, so they will be holding all three hospitals and CCGs to account to manage that."
The council's chief executive Robin Porter asked if any savings get retained within the system to improve the service to patients.
Mr Thakkar said: "A big chunk of this is efficiencies across the patch.
"The biggest spend across hospitals at both sites is the medical workforce.
"We can use fewer agency and locum staff. As an organisation we can fill gaps better. We are able to share staff.
"There are a myriad of benefits. This merger, like alot of NHS mergers, is not about closing one site. It's not about wholesale cutting of staff.