The investigation by the office of ombudsman Marc-Andre Dowd revealed numerous shortcomings at the hospital, including infrequent monitoring of patients' vital signs post-surgery.
Health Minister Jason Copping says the clinic is to be built by the middle of next year to reduce a backlog of orthopedic operations in and around the capital.
The government says the changes offer more flexibility around licensing requirements and harmonize pharmacy requirements with the Health Professions Act.