She says the province and the Thompson Regional Hospital District will spend $80 million on a new outpatient services building, medical teaching space and parking at the hospital.
Work is not expected to begin until late next year after the government works out a business plan.
The project is only the first phase of a master redevelopment plan for Royal Inland, which could also include a new emergency entrance and new surgical building.
In recent weeks, the government has also announced redevelopment plans for Royal Columbian Hospital in New Westminster and St. Paul's Hospital in Vancouver.
But in both those cases, there were no firm budgets or construction timelines, with the government saying business plans for the projects must be worked out first.