Providence Health Care says a ventilation system has been installed to allow the ceremonies in which cedar, tobacco, sage and sweetgrass are burned in an abalone shell and wafted with an eagle feather.
In aboriginal culture, smudging ceremonies are thought to provide clarity and cleansing.
An open house on Friday will showcase the All Nations Sacred Space, featuring a Coast Salish-designed rug, semi-circular benches to represent a non-hierarchical environment and cedar-effect flooring.
The hospital has also hired a nurse whose mother was the first Cree woman to graduate from nursing school.
Aboriginal patients will be connected with elders as part of their health-care needs.