Dunderdale says the money for the Corner Brook facility will be included in the province's 2013 budget.
The next phase of the project will see the finalization of the design for the 260 bed hospital complex.
It will include an acute care centre, a separate long-term care facility, in-patient mental health services and a hostel.
The government says it will issue a request for proposal for a design by July.
Construction is expected to begin in 2015.