The planned Tasman Private Hospital project in New Town, Hobart, Tasmania, has been called off due to 'cost pressures', reported ABC News.

This project, which was set to accommodate seven operating theatres, 26 overnight beds, and related medical services, received approval from Hobart City Council in 2021.

However, costs related to the project have spiralled from the original estimate of A$60m ($38.26m).

In a letter, developer Nexus Hospitals cited more than doubling of construction costs since 2021 and interest rate hikes over the last year as key reasons for abandoning the project.

The site prepared for the project will be sold off, with Nexus presently having no plans for another health facility.

The developer was quoted as saying: "As a result, any consideration to a future hospital development would require a comprehensive redesign on a different site."

Nexus also said that it assessed several options to resolve the project’s challenges and succeeded in addressing "some of the cost pressures", though these efforts proved inadequate in restoring the project’s “financial viability”.

The developer will now refocus on its other operations, including continuing operations of the Hobart Day Surgery.

Australian Medical Association vice-president Annette Barratt said: “While this wouldn't have a direct effect on the public sector, it would allow the public sector to have more beds for outsourcing.

“Already most of our public ophthalmic procedures are done in the south as outsourced so this would have given us additional beds and also additional beds with the capacity for overnight stays for frail people which is not something that's easily obtained in the current situation, so yes it would have been of benefit for that sector.”