The Government announced today that the $1.47 billion project had completed a "value management exercise" to get a $200m budget increase under control.
Savings of $90 million were identified, with all coming in the larger inpatient building.
There will now be 398 beds, 23 fewer than the 421 beds identified in the hospital's final business case.
Operating theatres have also been cut, from 28 to 26, while the three MRI scanners have been reduced to two and the PET CT scanner will be installed later.
The one link bridge between the inpatient and outpatient buildings will also not go ahead.
Space has been set aside to increase beds by 12 and add two operating theatres and another MRI scanner.
The Government has added $110 million to the project to make up the shortfall between savings and the budget escalation.
Dean Fraser, Ngāi Tahu’s Dunedin Hospital Build Executive Steering Group member, said it was disappointing the original design would not be going ahead.
Te Whatu Ora Chief of Infrastructure and Investment Jeremy Holman said the budget pressure made it necessary to modify the hospital's design.
“Dunedin Hospital clinicians and service designers were consulted on proposed amendments to the plans and were a big part of us reaching the updated design that meant we could save $90 million of the projected $200 million escalation," Te Whatu Ora Chief of Infrastructure and Investment Jeremy Holman said.
“We did this by focusing on how we could reduce any impact on key clinical services while considering design efficiencies,” said Mr Holman.
Dunedin Mayor Jules Radich said the announcement delivered certainty for the project.
“It’s a bit of an early Christmas present for us all. This much-needed facility will be a key part of our city for decades to come, and it’s pleasing to see the Government has been working hard to deliver on its promises for our residents."
Enabling work is starting January 2023 for the inpatient building with main construction expected to start in the first quarter of 2024. Construction completion is expected in 2029.
There is no change to design for the 5 storey outpatient building which is on track to be delivered in late 2025.
"It's highly cynical for it [today's announcement] to be dumped on the people of the south just five days before Christmas," Woodhouse said.
"This has been a live issue for months and the [Health] Minister [Andrew Little] has spent that time denying there were cuts being contemplated. The minister owns this because he said there would be no cuts to capacity without them going across his desk first and obviously cabinet would have had to approve the extra funding, but it doesn't go anywhere near the needs of the new hospital."
The government was risking further budget blowouts and cuts, Woodhouse said.
"The biggest cost pressure on this project is delay. They have got to get on with this, but most of all they have got to build the hospital that the south deserves."
- ODT Online/additional reporting RNZ
