Health Minister Shane Reti says $6 million allocated to Palmerston North Hospital's emergency department (ED) will help ease waiting times and improve patient care and safety.
The money comes from Health New Zealand baseline funding, and will go towards one of the country's most under-pressure EDs.
RNZ has asked Health NZ where the money was previously allocated.
Reti, who was in Palmerston North on Tuesday to announce the funding for the city's hospital, said it could now create an area for patients to wait for prescriptions or other follow-ups as they were discharged, freeing up hospital beds more quickly.
"Part of the $6m announced here today is that we will facilitate, along with the frontline clinicians and management, a discharge lounge to help with that patient flow for Palmerston North Hospital."
Unlike other similar-sized hospitals, Palmerston North did not have such a space, he said.
Also funded are staff for the new children's emergency department, created after $700,000 was fundraised by the Palmerston North Hospital Foundation, and new positions to help patients move through the hospital better.
Reti said the hospital fracture clinic would also treat more patients after-hours to cut waiting times for people with broken bones.
Palmerston North Hospital's 22-bed emergency department had long been under pressure due to high patient numbers of more than 3500 a month.
Reti said it was generally in the "lowest quartile" of hospitals for its rates of admitting, transferring or discharging patients from emergency departments, although it had improved lately.
Introduced in July, a government target said 95 percent of patients should move through an emergency department within six hours. In March, the average length of stay in Palmerston North Hospital's ED was 8 hours and 55 minutes, although in winter 2023 it peaked at more than 11 hours.
Medical professionals have long called for a new acute services block, and Reti said a "master plan" for a new design was the next "milestone" in that process. He expected such a plan to be ready early next year.
Dr David Prisk, emergency physician and the clinical lead of Palmerston North Hospital's ED, said the hospital needed a bigger space and he was encouraged to hear Tuesday's announcement.
He also welcomed the funding for staff at the new children's emergency department, saying children made up about 20 percent of people turning up at ED.
"It's one thing to have a new space open, but you have to staff it. I think having the resources now to actually staff this great new space is a really positive thing."