A sick elderly woman who presented to Liverpool Hospital was forced to lie on a park bench and wait for help because there were no beds available.
The 78-year-old's family is outraged over of treatment, describing conditions at the hospital as "third world".
Meanwhile, 14 public hospitals on the NSW north coast are set to lose a total of 86 beds, a leaked health service directive shows.
A memo from the North Coast Area Health Service's chief has ordered hospitals to each cut six to eight beds, which are only to be used in extreme circumstances and will not be funded or staffed.
Hospitals to receive the direction include Coffs Harbour, Grafton, Lismore, Port Macquarie and Tweed, The Sunday Telegraph reports.
In the memo, the area's health chief executive Chris Crawford warned hospital managers who failed to minimise use of "surge beds" would be viewed as "not satisfactory".
But the NSW Nurses Association, which says the hospitals are operating at full capacity, is challenging the order.
"There is not a hospital on the north coast that can spare any beds - this is outrageous," Association acting general secretary Judith Kiejda said.
Doctors say they did all they could to help her but Shadow Health Minister Jillian Skinner says the NSW State Government must step in.
“This is a government that’s closed over two and a half thousand hospital beds and makes a big deal about opening 250 beds.”
“This is the reason why we have patients waiting in emergency departments because they can’t access to beds to be admitted to,” she said.