Doctors warned officials that scaling down plans for the new Dunedin hospital at an advanced stage of the design risked leaving it in a "clinically precarious state" - just two days before the government announced its cutbacks to the project.

Documents released under the Official Information Act and seen by RNZ show the group leading the design sent a strongly worded memo which argued that cutting costs at this point was unlikely to save a meaningful amount, yet it would compromise clinical services.

The memo, written by clinical transformational group executive chair Dr Sheila Barnett and its deputy chair Professor Patrick Manning, stated the existing New Dunedin Hospital (NDH) design followed "a seven-year process of continued refinement, peer review and clinical scrutiny".

The result, it argued, was "a robustly interrogated design of high clinical and operational functionality" and any proposed changes - such as retro-fitting existing, older buildings, staged delivery or moving inpatient services to a separate site - "would compromise this".

The advisory group also denied the hospital was too big or complex, arguing its size and services reflected the needs of both the district and the region.

"The NDH's size and complexity are appropriate for the tertiary services it provides to the whole of urban and rural Southland, Otago and, increasingly, South Canterbury; the ageing population; its geographical isolation from other tertiary centres; and the expected 50-year-plus life of the building."

The group also warned that making changes at the latter stage of the project was unlikely to save much money, and more likely to add cost.

"The project is now midway through detailed design and piling is almost complete. This would suggest that the cost of change will be high (eg relifting a building, programme delay and redesign costs) and the potential savings low."

Barnett and Manning sent their memo to officials, including ministerial advisers, on 24 September.

On 26 September the government announced the project needed to be reduced or done in stages.

Two days later, Health Minister Shane Reti and Infrastructure Minister Chris Bishop announced the government would either scale back the project at the former Cadbury's site or retro-fit the existing hospital at a budget of $1.88 billion.

If this was not done, they warned, the cost could hit $3 billion.

Health NZ head of infrastructure delivery Blake Lepper said the health agency recognised the challenges that came with a reduced budget but needed to "work within our means to deliver this project".

It was still working with the clinician team, he added.

"Throughout this process we have, and continue to, engage closely with the Clinical Transformation Group to ensure that we can provide high-quality hospital facilities that are fit-for-purpose for the community."

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