The foundation stone of the facility was laid in 1916 following a long and hard fight over many years to raise the funds to build a public hospital.

The hospital was named after local landholder William Arlington Wilson, who donated the land on which it sits. It replaced a smaller facility run by the Benevolent Society, which had opened in 1861.

But soon the original stones will fall to make way for a brand new facility to be built on the site of the existing hospital as part of a multi-million dollar state government project to upgrade facilities across rural NSW.

Following a long process of community consultation, the project reached planning approval in September 2019 and this week another milestone was reached with the construction contract awarded to J. Hutchinson Pty. Ltd.

Chair of the Murrurundi Local Health Committee Dinah Norton said there have been a mixture of feelings throughout the community, however she sees the project as a positive for the town.

As someone who has lived in Murrurundi her whole life she said she has watched banks close and seen opportunities for local youth disappear.

"We have been so close to losing our hospital over the years that I'm just happy to see us getting something for a change instead of losing it in our community," she said.

"There are still some people who feel some of the old hospital should have been retained, but all the way through the consultation process, opinions have been sought.

"Going ahead with the brand new facility, we would like to incorporate historical information in a nice way so that people can come in to that new facility but still feel the links back to the past.

"Whether that be through photos, through preserving foundation stone or through plaques and the preservation of the time capsule which was buried in the rose garden on the hospital's 100^th anniversary."

The redeveloped hospital will include an inpatient service, 24 hour a day emergency service, primary and ambulatory care facilities, an ambulance bay and staff accommodation.

The inpatient unit will include four single rooms with private en-suites and a four bed ward that can be used as a flexible space.

The plans also include a new courtyard which will likely become a place of sentimental value with arrangements in place for some of the foundation stone from the old hospital to be incorporated into its landscaping.

The idea of including a hallway or a wall with photos from the past is also a popular one within the community.

"The public are quite welcome to suggest ideas, it's just that people need to come forward to work with the committee and the infrastructure team to make some sound suggestions," Mrs Norton said.

"It would be nice if we could get a group of like-minded people together who know some of the history of the hospital and would like to have an input into exactly what we keep and how we display it in the facility.

"There's nurses in the area that have worked there for a lot of years and there are a lot of memories there, so it would be lovely to get it all together and present it to the public when everything comes together."

With main works to begin early next year, the redevelopment project is forecast to be complete in 2021.

The new Murrurundi Wilson Memorial Hospital will retain its name and will remain graded as a hospital and won't be downgraded to a Multi Purpose Service.