Bellbird Private Hospital at Blackburn, in the city's east, will be transformed into a public-operated centre to help 5700 Victorians each year go under the knife for planned surgery.
Eastern Health will take over the centre on October 10 and it will remain open amid construction to expand the facility to four operating theatres, a 10-bed day procedure unit and 43 inpatient beds.
"There is surgery plans to occur in that facility and the expansion from two theatres to four will not interrupt that," Premier Daniel Andrews told reporters on Thursday.
All 95 nurses, allied health professionals, technical and patient support staff working at the Blackburn site will be offered equivalent roles on "no less favourable" terms than their current pay deals.
The move will cost Victorians taxpayers about $140 million but is covered under the state government's previously announced $1.5 billion COVID catch-up plan strategy.
The Blackburn Public Surgical Centre will become the second repurposed private hospital dedicated to elective surgery, with another in Frankston to officially come under government control on September 22.
Once fully operational, the two sites are expected to deliver close to 15,000 surgeries each year.
It comes after quarterly health performance data, released on Saturday, revealed Victoria's wait list for urgent and non-urgent elective procedures fell from 88,920 to 87,275 over the past quarter.
While the overall figure dipped marginally, there were still an extra 21,000 Victorians waiting for elective surgery at the end of June than at the same time 12 months ago.
However, the number of elective surgery procedures completed in Victoria during the June quarter rose by 48 per cent compared to the March quarter.
Mr Andrews is confident his government will hits its target to carry out 240,000 surgeries each year by 2024 - up from 200,000 pre-pandemic - but acknowledged there is a "long way to go".
"We'll continue to deliver that comprehensive plan to get more patients through the system, to get the care that they need as fast as possible as close to home as possible," he said.
But opposition health spokeswoman Georgie Crozier said the Victorian government's plan amounted to taking over private hospitals to fill gaps in the public system.
"This is a socialist manoeuvre by a socialist government that is hell bent on taking over private health," she said.
"We need a robust private system and a robust public system."
Victoria reported 5500 new COVID-19 infections and a further 36 deaths on Thursday as hospital cases fell to 605, their lowest level in more than a month.
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