In-patient wards in older adults are to be moved from Sheffield's dedicated mental health hospital.
Sheffield Heath & Social Care NHS Foundation Trust chiefs confirmed services will be moving from the Michael Carlisle Centre in Nether Edge to the Longley Centre on the grounds of the Northern General Hospital.
Bosses said previous work transforming mental health services in Sheffield has seen a move away from lengthy stays in hospital with more people being treated.
The Trust needs to find £1.6m in savings and bosses have already said they are in the process of selling some of its buildings to raise cash.
A 'long-term plan' developed by managers aims for the Trust to have 'three good buildings' to operate services from.
Michael Carlisle Centre has two adult acute in-patient wards and one older adult acute in-patient ward on site as well as a range of community clinical services.
But NHS chiefs said there are 'no current plans' to relocate the community services.
The future of the Michael Carlisle Centre is still in some doubt as bosses said they 'may' undertake a so-called 'options appraisal' to balance the 'cost of the site and the opportunity cost it offers against the complexity of the site' after the in-patient wards are transferred.
But deputy chief executive Clive Clarke said: "I would like to reiterate that no decision has, as yet, been taken about the future use of the Michael Carlisle Centre once the in-patient wards move to the Longley Centre which is scheduled to occur towards the end of 2020 or beginning of 2021. No decision has been taken to close the site.
“We have taken the decision to move towards a single site location for all our adult and older adult acute in-patient wards. We have been working closely with service users, carers, staff and other partners to develop plans for our new adult acute in-patient unit at the Longley Centre with the aim of having a modern, healing environment which will support the well being of service users and staff.
“Locating our adult and older adult acute in-patient wards on the Longley Centre site will also help us to support the physical health needs of our service users due to its close proximity to the Northern General Hospital."