Construction work began this week on the $10 million revamp.

Mr Fisher said the logistics of the 19th century building would make building work difficult, but he was confident the redevelopment would still be finished before Christmas.

Builders from Ballarat-based Nicholson Construction will undertake the on-site work, starting on Tuesday.

Mr Fisher said the upgrade was desperately needed. He said at the moment the hospital carried out about 1200 operations per year, but with the new surgery theatre it would be able to cater for more than 2000 operations.

Health Minister David Davis said the redevelopment would include the relocation and refurbishment of the accident and emergency department.

“This hospital has long been in need of an upgrade,” Mr Davis said. “The work will include a second emergency theatre to be used as a procedure room, a modern-day surgery ward and recovery area and an improved front entrance.”

Treasurer Kim Wells said the upgrade would drive economic activity in Castlemaine and was expected to create 36 new construction jobs.

“Not only will it dramatically improve patient care, but it will also drive economic activity and create local jobs,” he said.

Mr Fisher said plans were still being put to the board in terms of managing the impacts of a $246,000 budget reduction.

He said redeploying staff and getting employees to take their annual leave would be a key part of the strategy, to be implemented by the end of February.

Staff and patients have been advised that while the work is under way, access to the main building at Castlemaine Health will be via the front only.

Those wanting to attend medical appointments or make payments can use the one-hour parking outside the main building. Two disabled parking spaces and two on-call doctors’ parking spaces will also be available at the front of the building.