The $2.9 million Shellharbour Hospital upgrade should include specialist services to treat the region's 5000 people who are battling eating disorders, according to Labor MP Anna Watson.
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And the services should be on a par with the facilities in the Hunter region.
Ms Watson has long called for better services and worked to draw attention to the inadequacies of the region's eating disorder support services.
She was touched by the story of Fairy Meadow woman Rebekah McAlinden who in the past two years has had eight admissions to Sydney hospitals and now travels weekly to the city for psychiatric and dietitian appointments.
Ms Watson has urged NSW Minister for Mental Health Pru Goward to take action.
"Since my election ... I have been very concerned by the lack of treatment services available to people suffering eating disorders in the Illawarra region," she wrote on July 17.
"Whilst I welcome the state-wide plan to address eating disorders and the development of a regional services plan, it must include the establishment of treatment services which are comparable to treatment services available in the Hunter region," she said.
"There are up to 5000 young people with an eating disorder living in the Illawarra. I am sure you would agree that they should be able to access treatment services in the region where they live."
Ms Watson urged the minister to ensure that the local eating disorder services plan under development for the Illawarra reflected this need. She told the Mercury that as part of the state government's redevelopment at Shellharbour, there should be room for eating disorder treatment facilities.
"I would argue comparable services that are enjoyed right now at John Hunter Hospital and Fletcher House in the Hunter could be established at Shellharbour Hospital," she said.
The government has allocated $2.9 million in the next financial year to start the redevelopment.
A spokeswoman for Ms Goward said the minister acknowledges the concerns of residents and has invited Ms Watson to meet with her to discuss the issue.