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Dunedin Hospital could be partly rebuilt on land owned by the University of Otago and become part of a university health precinct under a potential land swap.
The university has confirmed it is willing to consider a land swap, whereby it would own the clinical services building.
The Dunedin City Council confirmed it has earmarked the Frederick St car park as a potential part of the plan.
The university owns land in the Fraser building block, and on two other sides of the hospital campus.
If approved by the Government, it could remove the logistical headache of building on a cramped clinical site.
The hospital rebuild is likely to involve a new clinical services building, and renovation of the ward block.
The ODT understands the ward block has become a more pressing consideration in the overall redevelopment, and it appears the provisional $300 million budget could go up.
Health sciences pro-vice-chancellor Peter Crampton would not identify a preferred land swap site, saying there was more than one. It would need to be close to the ward block.
"It would be extremely challenging to rebuild a clinical services block on the same site as an existing fully functional and working clinical services block," Prof Crampton said.
He was reluctant to discuss details with the Otago Daily Times, saying the university wanted to have as many site options as possible, but was not trying to pre-empt any decisions.
Otago University chief operating officer Stephen Willis said there was immense potential for the city if the institutions worked together.
"Dunedin has an opportunity for this to be a bit of a jewel, the potential for integration between the central business district, the hospital, and the university campus."
"You’ve got a lot of the infrastructure here; it’s just a case of some fine-tuning and linking it.
"There’s no doubt that the opportunity that exists here in Dunedin is what other countries are trying to replicate," Mr Willis said.
He said a land swap agreement would probably be more complicated than a straight swap.
"We’re very much open to working with the other precinct partners to get mutual benefits for all."
Dunedin-based National list MP Michael Woodhouse said he supported the central-city location of the main hospital.
"For a couple of reasons, I foresee the hospital continuing to be exactly where it is.
"We’ve made that very strong commitment that while we’re in power, the Dunedin School of Medicine isn’t going anywhere.
"While the main hospital [ward] block is looking a bit tired, I don’t believe there’s a case for knocking it over and rebuilding it," Mr Woodhouse said.
He could not comment on specific proposals for sites or land swaps.
The "practical reality" was that "you can’t run a university hospital away from the university".
The Wakari Hospital site would be considered, but Mr Woodhouse could not envisage it being chosen for the rebuild.
The new hospital would be different because health was changing, not because the area’s health system was being downgraded.
"Southern citizens are conditioned to be suspicious of any change when it comes to their health services, and we’ve had a long history of having to defend them in the face of risks to them."
Dunedin would retain a high-level hospital despite that being inefficient in strict financial terms.
"Because we are relatively low population but we still need tertiary services because of our wide geographical span . . . there will be a little bit of inefficiency, to use a financial term."
He acknowledged repeated delays in the rebuild timeframe and said there was "no mood" for further delay, but the process would take years.
Ministry of Health director of critical projects Michael Hundleby said the ministry was open to land swaps as part of the rebuild process.
"I would want to see what the options were."
Mr Hundleby said the redevelopment would cost "at least $300 million".
Mr Hundleby said building on the existing clinical site was possible, as it had been done in other places even where space was very tight.
A business case was to have been put before the Cabinet last year, but the date has been pushed back repeatedly, and the process only started properly when the Government appointed a rebuild partnership group last year.
The first business case will go to the Cabinet next year, followed by a detailed one in 2018. DCC chief executive Sue Bidrose confirmed the council had earmarked the 3195sq m car park in Frederick St for possible hospital-related use.
"We are aware that it might be important, and that’s why we’re having discussions with them to make sure that we don’t do anything that rules out any use for the site," she said.