Thubbo AMS chief executive officer Cecil See confirmed the board delivered the news on Thursday night and he had spent most of Friday morning informing the remaining staff of the decision.

Mr See said he was saddened by the closure; he held concerns for the service's 8000 clients and the small team who helped deliver its locally-based Indigenous programs.

"We did leave a GP service that we recommend on our notices that we've had to put up at Thubbo," he said.

"Clients will just have to go to another GP service... it's disappointing."

The Deparment of Health and Ageing said it had no choice but to declare the AMS insolvent because of "significant ongoing compliance issues".

A department spokesperson said it was committed to doing what it could to maintain indigenous health services at Dubbo.

Health and Ageing has started talks with AMS board members and the NSW Aboriginal Health and Medical Research Council to discuss options for ongoing patient care for Indigenous people in Dubbo.

Parkes Federal MP Mark Coulton urged the government to act swiftly to ensure local Indigenous health services were uncompromised any further by the closure of the AMS.

Despite being plagued by management problems, Mr Coulton said Indigenous Health Minister Warren Snowdon should not use internal issues with the AMS as a reason to shut the service down.

"There are cases where other AMS services have come in and taken over operations... I think the government needs to consider an alternative, such as Wellington, to step in and oversee operations at the Thubbo AMS."

reid.jermyn@ruralpress.com