Work has started on building new wards and clinics at Chesterfield Royal Hospital in Derbyshire.
The improvements are costing nearly £6m.
The three wards will provide 60 extra beds to cope with the increasing number of patients needing emergency care.
People with conditions such as asthma, pneumonia or patients who have suffered strokes will be treated in the new units.
As well as the wards there will be two new clinics and new training facilities.
It is the biggest development on the site since the late 1980s.
All the work should be complete by 2005 and is being paid for by the Department of Health.