Instead, Cabinet has decided to support redevelopment of the Royal Hobart Hospital resuming at its Liverpool Street site.
The private development proposal for a hospital, hotel and war museum complex on the Cenotaph is now up in the air.
Proponent Dean Coleman said the greenfield project was not given a fair hearing and said he was stunned by the decision.
Mr Coleman said the proponents would not be giving up and he now hoped “people power” would see the decision overturned.
“The Royal Hobart Hospital has serviced the Hobart community and the Tasmanian community for well over 100 years now, and done a magnificent job, but it’s landlocked,” he said.
“It’s full of concrete cancer, it’s got a significant amount of asbestos in there. We’re just quite amazed.”
He called on the Government to reveal the cost of the Royal’s revamp, saying he believed it was blowing out to $700 million which would deliver a partially upgraded hospital and not improve healthcare.
The CenoTas proposal included a 500-bed hospital costing $780 million, a 120-bed “medi-hotel”, a building for consulting suites and infrastructure supporting the precinct.
Mr Coleman wanted the Government to explain how the Royal’s taskforce could not consider his model when the costs were so close.
The Royal Hobart Hospital redevelopment is set to resume early next year and finish in September 2018.
The Tasmanian branch of the Australian Medical Association had backed the Cenotaph option.
But branch president and Associate Professor Tim Greenaway said the Government should be given a chance to explain its decision.
“I can only presume that ultimately it has come down to money, and that Treasury analysis has found that the greenfields site was unaffordable,” he said.
The Nursing and Midwifery Federation’s Neroli Ellis warned continuing the Royal’s redevelopment could risk patient care.
“The Royal is running at 100 per cent capacity, it really is under the pump on a daily basis and constantly flexes up additional beds,” she said.
“That ability to flex will be removed during this rebuild period so we may see a potential for patients waiting longer in the emergency department for beds.”
The Government will outline its reasons for staying with the Royal’s revamp later today.