The recommendation by Health New Zealand Te Whatu Ora (HNZ) officials to go ahead with the hospital on the former Cadbury factory site is understood to have been submitted in a paper to Health Minister Dr Shane Reti and Infrastructure Minister Chris Bishop.
In September, Dr Reti and Mr Bishop announced that rising costs meant they had instructed HNZ to review options of scaling back the planned new inpatient building or refurbishing the existing ward block.
The hospital build’s budget of $1.88 billion was increased this year from $1.59b, which the government said was necessary to meet cost pressures.
However, Mr Bishop said pricing for the rebuild had come in "several hundred million dollars over the budget of $1.88b", sparking the consideration of the two options.
It is unknown whether the recommended new inpatient building is smaller in scale than the one previously planned.
Refurbishment of the ward block was considered in 2017, but rapidly abandoned at that time in papers given to the government by construction experts.
Refurbishment would be more expensive than a new build and disruptive for medics and patients, the experts argued.
It is understood from several sources that HNZ’s head of infrastructure Blake Lepper - appointed in February this year to be the senior responsible officer for the hospital project after five years at the Infrastructure Commission - led this year’s reconsideration of the refurbishment option.
The responsibility for considering a scaled-back rebuild was delegated to Tony Lloyd, who was HNZ’s programme director for the hospital project, working under Mr Lepper.
Mr Lloyd was told to clear his desk last month for reasons that remain unclear. He had held the role for more than two years after the previous role-holder, Mike Barns, was also dismissed.
Mr Lloyd is now understood to have left HNZ.
There have also been multiple changes over the past seven years to committees set up to oversee the Dunedin hospital project. The current committee is headed by Rebecca Wark, who previously delivered health infrastructure for New South Wales.
Mr Lepper told the ODT that "initial advice" had been provided to ministers and "further discussions" were now under way as they worked to "determine appropriate next steps".
The process for determining the best option had included technical evaluation of the existing hospital and the new hospital site, health demand modelling for Dunedin and the wider region and assessments of "clinical functionality and patient need".
Further details about the project’s "specification and scope" were still being finalised.
He declined to comment on roles within HNZ, nor Mr Lloyd’s departure, nor when ministers might make a decision on the inpatient building.
Mr Bishop said recently a decision would be made "soon".
Internal government papers about the project’s progress have also been promised.
Piles for the new inpatient building are already in the ground on the Cadbury site.
The outpatient building - a significantly smaller part of the project - is mid-construction and anticipated to open in the third quarter of 2026.
Advocate for a new hospital and former cabinet minister Pete Hodgson, who previously led one of the project’s governance committees, slammed the time and money wasted on reconsidering refurbishment.
"Enthusiastic officials are entitled to look afresh at options, but the option of a refurbishment should never have been on the table in the first place and was a piece of nonsense."
A recommendation to go ahead with a new-build inpatient building was "common sense, but the devil [would] be in the detail".
A former senior HNZ official said it had been obvious for years that a refurbishment would mean spending "more for a worse result".
If a new build went ahead, it would be possible to save money by not fitting out some parts of it until they were needed, they said.
He and Mr Bishop were "incredibly frustrated by the challenges around delivering on the new Dunedin hospital" and his government would deliver it, he said.
