During a meeting in Headington, the Oxford Campaign Against Foundation Hospitals was given overwhelming support by members of the public angry that the Nuffield Orthopaedic Centre was considering applying for foundation hospital status.
Members of the health workers' union, Unison, the Labour Party, the Green Party and the Socialist Alliance argued against the new scheme in front of the NOC's chief executive, Ed Macalister-Smith.
Foundation hospitals, planned to start next Spring, will have more freedom and be able to obtain money from the private sector. Local people will have more involvement in running them.
John Lister, of the Socialist Alliance and Health Emergency, said: "While foundation status appears to give back control to the public, in reality it doesn't.
"It will damage the fabric of the NHS, make it more fragmented and widen the gap between three star hospitals and the lower rated ones which are struggling with the resources they have."
His comments were echoed by Craig Simmons, a Green Party member of both Oxfordshire County Council and Oxford City Council.
He said: "I thought we already owned the NHS. By bringing in a members' council, surely that's reducing membership."
Members of the audience urged the campaign leaders to set up a march, as well as lobby councils to ensure they debate the initiative.
Former community health council member Bill MacKeith said: "I'm sure I talk for a huge proportion of the public when I say I was shocked when this policy was foisted upon us.
"The results will be disastrous. It's important to resist this backward step to splitting up the health service."
Mr Macalister-Smith said the NOC would consult the public until Friday, November 21.
He denied the initiative would make the hospital less accountable, because the members' council would be able to elect non-executive members and the chairman of the hospital board.
He said: "This will significantly increase the accountability of the hospital to local people."
The meeting voted 21 to five against the NOC becoming a foundation hospital, and everyone was urged to a go to the NOC board meeting, on Monday, December 8, when members would decide whether to apply for status.
An online petition was also launched, at www.nofoundation.org.uk.
NOC managers will hold their own public meeting at Cheney School, in Headington, on Wednesday, November 12, at 6pm.