A former private hospital will be demolished to make way for a $64-million private hospital at Kew in a partnership between Centuria and a doctor-led joint venture with Medibank.

The former Cotham Private Hospital at 209 Cotham Road was sold to apartment builder Hamton in 2018, reportedly for about $10 million, however, the property remained undeveloped.

Hamton executive chairman Paul Hameister said he was disappointed not to have realised the vision for the unique block, but Centuria had put forward a "compelling" offer.

“Hamton is able to operate with an agility that allows us to consider and capitalise when exceptional return opportunities present themselves,” Hameister said.

Centuria Healthcare is in the process of acquiring the four-storey former hospital on a 2245sq m corner block, 8km east of Melbourne’s CBD for $20 million. The proposed short-stay hospital would provide no-gap treatments to eligible patients.

“We are delighted to partner with the joint venture doctors and Medibank to develop and own the real estate delivering this new short-stay surgical facility,” Centuria Healthcare managing director Andrew Hemming said.

“This is a transformative project that can change the landscape of the healthcare sector and we are pleased to be the real estate partner for this forward-thinking project.”

More than 40 specialist doctors have formed a joint venture with Medibank to deliver the private hospital. Centuria Healthcare would develop and retain ownership of the property, with the joint venture committing to a long-term lease of 15 years.

Plans for the new short-stay hospital include four operating theatres and a procedure room, 30 beds, radiology, an infusion chemotherapy clinic and 90 basement car park spaces.

The facility is expected to provide services including orthopaedics, ear, nose and throat (ENT), vascular, plastics, general surgery, urology, gastroenterology, anaesthetics, oncology, and radiology.

“The project is central to Centuria Healthcare’s strategy to partner with top-tier operators backed by secure lease covenants,” Hemming said.

“We are focused on providing modern healthcare real estate investments across Australia and currently have $1 billion worth of these assets under management.”

Spokesman for the investing doctors Professor Michael Grigg said it was a “significant investment in Australian healthcare”.

“We are committed to delivering short-stay models of care where clinically appropriate, across many surgery types, with reduced or no gaps for eligible patients,” he said.

“We are proud to partner with Medibank and Centuria in this new facility where doctors will have much greater input into the operation of the hospital.”

Medibank group executive healthcare and strategy Dr Andrew Wilson said this was a step in the right direction in addressing affordability in the private health system and Medibank would be supporting the doctor-led initiative.

The sale is expected to be completed in the second quarter of 2021 with work to commence once demolition and development plans are approved.