Campaigners had argued the board of West Hertfordshire Hospitals trust had not taken adequate account of public consultation and that the consultation was flawed. But on Friday, the High Court dismissed their case, opening the way for the trust to concentrate emergency services at Watford General Hospital and planned surgery at St Albans City Hospital.
Chief executive David Law said: 'We are very confident that the quality of services we can provide will improve substantially.'
The changes will enable the trust to make£11m of savings a year. It has a deficit of£11.4m from 2005-06.
Campaigners - who were ordered to pay 40 per cent of the trust's costs - are now planning to ask for permission to appeal.