The Southern District Health Board has agreed to spend about $1.7 million fixing the leaks in the main seven-storey clinical services building at Dunedin Hospital.
The urgent repairs are needed to stop rainwater leaking into the operating suites mainly from perished exterior windows. An internal report for the Southern DHB board said the leaks posed an unacceptable clinical risk.
At a closed-door meeting on Thursday, the board agreed to spend up to $1.75 million to fix leaks by the end of the year.
The DHB's executive director of finance, Peter Beirne, said the repairs are a big job.
"The scaffolding alone is a significant cost and while we're scaffolding the building we think it's worth sealing up other parts of the building itself as well as the windows - exterior cladding to ensure that building is watertight."
Mr Beirne said the repairs are a significant cost for a board in deficit, but will have to accommodated in the 2015 budget.
Ian Powell, the executive director of the Association of Salaried Medical Specialists, said the DHB should not have put off maintenance work for so long.
"If you delay things that need to be done on your basic maintenance, it ends up costing you more down the track - and this is a case in point. If there was to be a patient disaster as a consequence of this, then it may well be that the costs are even greater."
Mr Powell said Dunedin Hospital's problems stem from chronic Government underfunding.