The Mid North's biggest health infrastructure project in decades, a re-build of Bay of Islands Hospital at Kawakawa and construction of a new medical centre, is officially under way.

However, it's not just the scale of the project that sets it apart.

The redevelopment is also unusual in that it involves the Northland District Health Board and Ngati Hine Health Trust pooling resources to create a "one-stop shop" for health services in the Mid North.

Artist's impression of Te Hauora o Pukepuke Rau, Ngati Hine Health Trust's
Artist's impression of Te Hauora o Pukepuke Rau, Ngati Hine Health Trust's "wellness centre" being built on the Bay of Islands Hospital site.

The district health board is spending $9.9 million on a two-storey building with an accident and medical department, radiology and after-hours GP service on the ground floor and a 20-bed medical ward upstairs. Part of the rundown Bay of Islands Hospital complex has been demolished to make way for the new building while the rest will be refurbished.

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Adjoining the hospital Ngati Hine Health Trust will build an $8m "integrated whanau wellness centre" called Te Hauora o Pukepuke Rau, which will bring together the three GP practices in Kawakawa and Moerewa, community health, outpatient services, a pharmacy, dental surgery, tele-medicine and holistic healing.

Both the new hospital and the wellness centre will be accessed via the entrance to Te Hauora o Pukepuke Rau.

The project has been debated for many years but on Friday the site was blessed and the first sod was turned by health board chairwoman Sally Macauley and Ngati Hine Health Trust chairwoman Gwen Te Pania-Palmer. The pair used a 100-year-old spade borrowed from Dargaville Museum, a nod to the site's beginnings as a 12-bed hospital in 1911.

About 100 people turned out for the ceremony including medical staff, chaplains, college students, kuia and kaumatua. Work will start this month with the complex due to open in June 2018.

Clinical head Nigel Cane said there had been much discussion about whether the hospital should be redeveloped on the current site or elsewhere.

"But we came to the conclusion that this is where it should be and now we all need to get behind it."

Having a hospital linked to a primary health care centre was "the way of the future", Dr Cane added.

Mrs Te Pania-Palmer said the combined facility would offer the best care for all people of the Mid North. Te Hauora o Pukepuke Rau was far the health trust's biggest investment to date, easily eclipsing Te Mirumiru early childcare centre in 2012.

GP Graeme Fenton, who has clocked up 50 years as a doctor in Moerewa, said Ngati Hine had given the three solo GP practices in Kawakawa and Moerewa a way to come together, safeguarding the future of primary healthcare in the area.

"We're all working very closely together now. Without Ngati Hine this wouldn't have happened," he said.