Health Minister Leo Varadkar said an action plan for the future of Portlaoise Hospital may reveal that some of its services are "not viable" for patient safety reasons.
Mr Varadkar said health services had been asked to produce a plan to make sure "the services that are viable are safe and are properly resourced...there may be services that are not viable".
He referred to the Hiqa warning that complex surgery should not be done in Portlaoise because of a lack of case-load.
"There is certainly surgery that can be done in Portlaoise, such as day surgery. But not surgery that is coming in off the street."
He said there are already ambulance by-pass protocols in place and if a child has a serious injury they are taken to another hospital.
"Portlaoise has a strong future as a hospital. There are a lot of things that it can do. What it has been asked to do for too long is too complex. It is not busy enough. It does not have the critical catchment area to justify that."
Some of the patient stories in the Hiqa report showed a lack of compassion and this was not a matter of money but "professional standards", he added.