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Southern District Health Board (DHB) deputy commissioner Richard Thomson said in Queenstown today he ''hopes'' building work will begin in the second quarter of next year.
A building consent would be lodged with the Queenstown Lakes District Council early in the new year.
The project would take about 18 months to complete.
Mr Thomson said detailed plans were now being fine-tuned in consultation with the hospital's clinical staff.
Announced 14 months ago, the upgrade includes the installation of a CT scanner and ultrasound services, a more than doubling in size of the emergency department, refurbishment of the maternity ward and other wards, and a telemedicine suite.
Developing concepts into detailed plans had been ''much harder than expected'', he said.
''First we had to find out whether this facility was going to be up to an upgrade.''
When asked about the DHB's long-term plans for Queenstown, Mr Thomson said a new hospital was ''not inevitable''.
Future facilities would have to be compatible with the new Dunedin Hospital, fit with a new primary care model now under study, and take account of technological change in the health sector.
''We need to think about this not as a building, but as a set of services.''