Cost saving drove change to Nelson Hospital plans
The shift in approach for the long-awaited Nelson Hospital redevelopment was driven by a need to cut costs, a newly released document reveals.
But, while the new plan will save money, how much remains secret under the veil of commercial sensitivity.
Health New Zealand Te Whatu Ora has released a briefing provided to Health Minister Simeon Brown in April, a month before details of updated plans for the redevelopment were announced through the May Budget.
The document stated: “a revised approach for the redevelopment of Nelson Hospital has been undertaken in response to the higher reassessed total cost. This revised approach will result in a lower overall cost.”
The previous Labour Government had a $1.1 billion plan to redevelop Nelson Hospital by building a large new acute services building with 255 beds, including a new ED. That plan was approved by Cabinet in 2023.
But, the National-led Government shelved it in favour of a series of smaller new buildings to be built in a phased approach.
The shift in approach was first confirmed in May 2024, when Health NZ head of infrastructure delivery Blake Lepper said the plan now involved a phased approach for prioritised builds, that “bring forward the required health service benefits” and meet “the market capacity for construction”.
In May 2025, the redevelopment, including a new 128-bed inpatient building, was confirmed in the Budget, with Brown announcing that a new building – which would have 41 more beds than the current capacity – was expected to be built by 2029, two years earlier than planned.
The hospital’s two ageing main buildings would be refurbished and seismically strengthened, and a new energy centre would house critical infrastructure.
The new document shows the the cost of Labour’s plan was fully reassessed in November 2024, showing an increased price above the planned $1.1b – though the final amount is redacted.
The new preferred approach “reduces costs … and delivers benefits sooner”, the briefing said.
Asked to clarify the timeline, Health NZ head of infrastructure planning & investment Aaron Matthews said work to “explore alternative options began in 2023, with local clinical and operational teams engaged early in 2024”, with the final decision made in April 2025.
“The change in redevelopment approach was announced publicly in May 2024, based on the initial cost estimates and strategic considerations available at that time. The formal reassessment in November 2024 validated the need for a revised approach.”
The decision to adopt a phased approach was driven by a combination of factors, “including the imperative to improve clinical outcomes and ensure cost-effectiveness”, he said.
“This approach follows the Building Hospitals Better framework which focuses on delivering fit-for-purpose facilities that meet nationally standardised clinical demand modelling in the timeliest manner.”
Lessons from Dunedin and Christchurch hospitals supported the shift to a phased approach, he said.
“This strategy mitigates risks related to cost increases and project delays and better matches the construction market’s capacity.”
But Nelson MP, Labour’s Rachel Boyack, said National was cutting back the rebuild.
“Christopher Luxon promised to rebuild Nelson Hospital, instead he has downgraded Labour’s plans for a full rebuild of this critical health facility.
“Nelson has an ageing and growing population, and National’s plan fails to provide the health facilities that our community so desperately needs… They chose to cut taxes and cut health funding, leading to cuts to critical projects like the rebuild of Nelson Hospital. The Nelson community deserves better.”
However, Brown said they were getting the job done.
“As minister of health, my priority is ensuring all New Zealanders have access to timely, quality healthcare. That includes the people of Nelson.
“Labour promised to deliver the Nelson Hospital Redevelopment at the 2020 election, committing to start the project during the last term of Parliament. Not only did construction never begin, they also quietly re-scoped the project without telling the people of Nelson.
“We’re getting on with the job, working with senior clinicians to ensure the hospital will deliver the services Nelson needs.”
Last Saturday, Brown announced that enabling works had begun, including drone and site surveying, and the installation of new modular buildings to accommodate staff as they relocate to free up space for the new inpatient building.
Main construction is expected to start at the end of next year.
Nelson would also be one of the first hospitals to receive a modular temporary inpatient unit to alleviate bed pressure through the rebuild, Brown said.
The $11 million Emergency Department expansion is expected to be completed in early 2026.
By Warren Gamble, Nelson Mail
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