Christmas has come early for the Capital District Health Authority after the province announced it will be replacing an old Halifax hospital.

Health Minister Maureen MacDonald announced the province will spend about $1-million for a study to look at a design and costs for a new hospital, or for an addition to an existing one.

The Centennial Building, which is the main part of the Victoria General Hospital, is set to be demolished under the new plan. The 44-year-old building has been plagued by leaks, water quality problems and other environmental concerns for years.

"The government is funding the planning and design to move toward phase one of major infrastructure upgrades to Capital Health," says MacDonald.

Capital Health District CEO Chris Power says he is thrilled about the government's promise to replace the aging hospital.

"Without exaggeration, Christmas has come early for us at Capital Health," says Power.

While more specific details about the move haven't been released, a likely spot for a new or expanded hospital is at the Halifax Infirmary site.

Vacant land now sits next to the Queen Elizabeth II Health Sciences Centre, after the old Queen Elizabeth High School was torn down and Power says that when the Queen Elizabeth II Health Sciences Centre was built 20 years ago, it was designed so five additional floors could be added if needed.

"It makes sense for use to look to that site, where we have the space and proper footings put in," says Power.

Dr. Drew Bethune, a thoracic surgeon at Capital Health, says it is important to have all tertiary or specialty care in one hospital instead of two, which is the case now. He says the new plan will help create a more comfortable and suitable environment for health care.

"To have our two tertiary care institutions several blocks apart is a real problem in delivering efficient medical care," says Dr. Bethune. "We are very happy to be moving in the right direction. A well-thought-out plan for buildings that meet our patients' needs will get us to where we need to be, while using our tax dollars wisely."

It's not clear when the Centennial Building will be torn down, but the province says it will issue a request for proposals next month for the study.

With files from CTV Atlantic's Rick Grant