Just weeks after the damning findings of a parliamentary inquiry into the NSW rural health system, Trangie could lose Dr Ashraf Labib, who has provided care to the community for about 16 years.

Narromine Shire Council mayor Craig Davies said last month after much negotiation with the Western NSW LHD, Dr Labib had agreed to sign a contract similar to previous years.

However, this week Cr Davies revealed the new contract bore no resemblance to what he had agreed to.

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"He simply asked his contract be renewed in a similar manner to last year and the year before, and he's not asking for anything more, and that was agreed to," Cr Davies said.

"Now all of a sudden he's being asked to take a far less attractive outcome, and he's not happy about it.

"It is a ludicrous situation when you have a doctor in a town, who has been there for years, but the health department takes action that is likely to see him leave."

In a statement provided to the Daily Liberal on Saturday, a spokesperson from the Western NSW LHD confirmed Dr Labib's current contract as a General Practitioner Visiting Medical Officer providing services four days a week to the Trangie Multipurpose Service ends on June 30 this year.

However the spokesperson indicated that the health district had no intention of ending Dr Labib's employment and are continuing to actively engage in discussions regarding a new contract.

Cr Davies said he was meeting with the health district and Dr Labib soon to try and come to an "amicable resolution".

Released earlier last month, the NSW parliament's rural health inquiry found that the system which "in some instances is in crisis", is rife with staff shortages, inequity, staff bullying, and other major problems.

The report, tabled in state parliament in May, was the result of a year-long inquiry receiving 720 submissions and 15 hearings.

As a result of the findings, the upper house report made 44 recommendations, including an urgent review of the rural workforce and funding arrangements, along with better engagement with rural communities.

The breakdown in contract negotiations to keep Trangie's only doctor has Cr Davies questioning if the state government has learnt anything.

"We're just confounded, we're confused, we're sick of the content," Cr Davies said.

"We just want our doctor to be given the same contract that he's operated on for the last few years to keep the doctor in town.

"And is that more than a community should be asking for?"

Cr Davies however is concerned about the loss of skill and knowledge if Dr Labib were to leave the small community and the service replaced with locum doctors or Telehealth.

"We've got 18 elderly people living at the hospital. Who's going to give them the continuity of health that's being delivered currently?," Cr Davies said.

"We've got 50 people aged over 90 in the town, including a centenarian. Who's going to continue to give them the continuity of service that they've had?

"Who knows their backgrounds and medical histories like our local doctor of 22 years?"

If a resolution for Dr Labib couldn't be reached, Cr Davies said would be making an "urgent" trip to Sydney to meet with Regional Health Minister Bronnie Taylor.

"The government needs to start understanding that country people deserve a much better level of service," he said.

"Be it health, be it education, be it in the way that the Department of Planning treat rural and regional projects, in the same manner that they treat Double Bay or Manly."