Plans for a new £360 million West Midlands hospital have hit a stumbling block after regional health bosses called for a land purchase to be postponed.

The new 700-bed hospital to replace Sandwell General in West Bromwich and City Hospital in Winson Green, Birmingham, is due to open in late 2014.

NHS West Midlands, the strategic health authority, has called for Sandwell and West Birmingham NHS Trust to postpone its purchase of a 17-acre site at Grove Lane, Smethwick, until the overall business case is approved.

A report by Richard Kirby, the trust's strategy director, said "the project plan will have to be revised" to accommodate the SHA's request.

However, Mr Kirby insisted yesterday that the project remained on schedule and they were not expecting "any significant delays".

Last week residents and stakeholders were invited to comment on the proposals for the eight-storey hospital, which is to be funded through a private finance initiative with a 30-year "mortgage". Parts of the existing sites will be kept as community hospitals.

Trust bosses aim to submit a planning application to Sandwell Borough Council in April, and hope the business case, land sale and planning permission will all be granted by early 2009.

However, in his report to board members, Mr Kirby warned of a possible delay and that the sale of the Grove Lane site cannot go ahead until a Land Business Case has been approved.

"The issue of approving the Land Business Case in advance of the Overall Business Case has been raised by the SHA and it has been proposed that the LBC approval be delayed until the affordability section of the OBC can be produced," it read. To achieve this and keep OBC approval timescales in place, the project plan will have to be revised and so further feedback is being sought."

The report adds that this represents "a risk to the current timescale" for the project.

It adds: "There are two issues - One: Securing the land on which we want to build and, Two: Determine that we can afford to run the hospital once its capital costs have been met.

"The issue to buying the land is whether we can do so before determining that the scheme is financially robust.

"We just need to make sure we're not taking any unnecessary risks with public money.

"But getting this all in the right order is proving to be more complicated than we had originally anticipated.

"This is a big development, it's a complicated process, but so far we've not come across anything that would compromise the existing 2014 completion date. It's just taking us a bit longer than we thought."

His report urges the board to note that "the New Acute Hospital project plan is being reviewed and that the current position with the LBC represents a risk to the timetable".

After yesterday's board meeting, Mr Kirby said: "There were some questions, including whether this would cause any major delays, and I said that at the moment we're not expecting any although there maybe one or two elements which may take a little longer.

"This is partly due to looking at our contingency plans, to ensure there's a Plan B if something does go wrong and what happens in such an event."