The $1 million project, funded through the NSW Government's Rural Infrastructure Fund, will involve a small extension to the hospital's theatre suite and refurbishment of the existing area.

The finished product will see a two-bed first stage recovery area and a secondary day stay with four additional chairs and one bed.

It will also include an anaesthetic bay, patient waiting room with toilet, patient change room, manager's office, staff tea rooms and change rooms.

Scone Hospital's Health Services Manager Judith Bernasconi said the upgrade will be an improvement for staff and patients and will create a more organised approach.

"When patients come to the hospital they will be admitted in the theatre day stay area, they'll have their procedure, then they'll go to recovery, then second stage recovery and then they'll go home," she said.

"They won't need to go to the wards, so everything will be done in the one area which is much nicer for the patient as there's an improvement in privacy.

"And it frees up beds in the wards depending on the number of patients.

"During winter when it's really busy it is hard sometimes trying to fit everyone in during the day so this will be an improvement."

With construction already underway, work on the project is expected to take approximately 26 weeks, so it is hoped the hospital will be back in its operating theatre and new recovery and day stay in early May 2020.

"During that time our theatres close, our last theatre list is the end of December, and after that we will be doing our theatre lists from Muswellbrook Hospital," Ms Bernasconi added.

Upper Hunter MP Michael Johnsen announced the tender for construction of the project to J&J Killalea Constructions last week.

He said J&J Killalea has carried out numerous projects for Hunter New England Local Health District over the past five years.

"Their past local projects have included staff accommodation buildings at Muswellbrook and Singleton hospitals, as well as children's ward upgrades in the lower Hunter at John Hunter Children's Hospital and the John Hunter Hospital birthing suite," Mr Johnsen said.

He said not only will the extension and refurbishment enable patients to recover and be monitored following day surgery adjacent to theatres, not in another area of the hospital, it also means the admission/discharge process will occur within one area of the hospital.