The scheme represents a significant investment in NHS Orkney by the Scottish Government and will be delivered by Robertson Capital Projects in Kirkwall.
The company, who will design and develop the new building, will be responsible for the ongoing running of the centre for 25 years. Work is underway to finalise the detailed design until Financial Close is reached in late autumn.
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Cathie Cowan, Chief Executive of NHS Orkney, said: "This is a significant day for NHS Orkney. The investment by the Scottish Government further enables us to transform the care and services that we deliver.
"This new facility is a key part of our ambitious programme to transform care and services, which to date has seen investment in primary and community care, the establishment of a small high dependency unit, a consultant led staffing model and a CT scanner to support service repatriation."
Health Secretary Shona Robison added: "I am delighted that the full business case for the new Hospital and Healthcare facility has been approved. This more than £60 million project will provide a significant boost to the local economy during the construction phase, and once complete the hospital and healthcare facility will transform the way services are provided on the islands."
(LM/MH)
