Mr Millar said Mr Ryall had given him a good hearing and seemed well aware of Otago's situation.
In recent months, board members and staff have been expressing increasing concerns about the risks posed by substandard facilities.
One of the minister's concerns was that the board was still struggling with a deficit and the difficulty it would have paying capital charges for redeveloping Dunedin and Wakari hospitals, Mr Millar said.
Capital charges have to be paid out of the board's operating expenses.
The board expected a deficit of $12.6 million this year, more than $3 million over budget.
The board was also advised earlier in the year that its initial budget for next financial year, showing a deficit of $9.7 million, was too high.
Regional chief financial officer Robert Mackway-Jones said annual capital costs on $23.6 million would be $1.9 million and building depreciation would add another $960,000, making the total annual payments $2.8 million.
The case presented to the ministry offered several options, one of which was the $23.6 million option for transferring the acute mental health ward from Dunedin to Wakari Hospital and redeveloping the neonatal intensive care unit.
The full stage one of the master site project, which is designed to deal with overcrowding and substandard facilities on the Dunedin Hospital site by shifting some services to Wakari Hospital, would cost an estimated $38 million.
Mr Mackway-Jones said another option was do nothing and close areas where they become non-compliant, but this was not deemed feasible.
Mr Millar also clarified with Mr Ryall today he had said he did not want to be involved in a public brawl with him, rather than a pub brawl as reported in the ODT yesterday.
