Calvary Health Care will invest $100 million into a new private hospital adjacent to Launceston General Hospital.
Fairfax Media revealed in January that Calvary wanted to relocate closer to public services and had made an unsolicited bid proposal to the Coordinator-General last year.
The new hospital is intended to replace St Luke’s and St Vincent’s hospitals in the city.
Health Minister Michael Ferguson said a location within the future health precinct will be selected and future plans bedded down over the next nine months.
“This process will ... ensure that it meets the needs of both parties and future plans, and also ensuring that the co-location ultimately improves the services and health outcomes for both public and private patients alike,” he said.
“Calvary has previously publicly indicated that the proposal includes a range of services, including palliative care, which is important for so many individuals and their families in the North.”
Mr Ferguson said specialists and the hospital community had been consulted on the plan and had expressed support, saying it could improve recruitment and specialist retention issues.
Opposition spokesman Scott Bacon said Labor had backed the co-location proposal, announcing its own policy on the matter during the election campaign.
A co-located public and private hospital set up at the LGH was found to have potential in 2010, when a feasibility study process was started.