ACT Health Minister Katy Gallagher says the Government will struggle to make the necessary $200 million capital upgrades to Calvary Hospital, after the Little Company of Mary Health Care withdrew from negotiations to sell the public hospital.

Ms Gallagher announced yesterday the Little Company of Mary, which owns and operates the hospital on behalf of the ACT Government, had withdrawn from talks to sell the hospital to the Government for $77 million and buy Clare Holland House for $9 million, citing lack of support from the Catholic Church.

In particular, Canberra and Goulburn Archbishop Mark Coleridge, whose advice would be sought by the Vatican before endorsing the sale, had strongly opposed the sale of Calvary Hospital from the outset.

Ms Gallagher said today the Government would still need to make the $200 million capital investment into Calvary Hospital over six years, but without ownership of the hospital this would severely impact on the territory's budget.

"We are going to have to look at everything along the spectrum because we need to build a north-side hospital, obviously at this point in time the Government is not going to own it but it still requires the same kinds of injections of funds and it still needs to be ready on a timetable, it isn't going to wait,'' Ms Gallagher said.

"I don't know how to ensure that our budget can meet the financial challenges under the status quo. The status quo means we would need to spend around $30 million a year coming straight off our operating result. When you look at what we did in last year's budget our new expenditure didn't even come near $30 million.''

Ms Gallagher also rejected an ACT Greens proposal to compulsorily acquire the hospital.

"I think it's a crazy option... It would tie up 30 per cent of our public health system in the courts for the near future. We would expect that a matter like this would probably end up in the High Court and I don't think that's the best way forward. It would put the system into disarray and it wouldn't deliver the outcome we want, which is to deliver a new hospital within six years.''