The 'topping-out' ceremony is an ancient practice traditionally held by builders once the last beam is placed atop a structure.

It can be traced back to the Scandinavian religious rite of placing a tree at the highest point of a new building to appease the tree-dwelling spirits.

Parliamentary Secretary for the Illawarra Gareth Ward said the $50 million project was on track to be complete by the end of the year, with the facility expected to be fully operational by 2020.

"It's an opportunity to celebrate an important milestone, with builders reaching the highest point of the project," he said.

"I'm so pleased to see the 120-bed facility coming to fruition, it's the culmination of a lot of hard work by myself, the health district and IRT."

The facility is being redeveloped under a public-private partnership, with the NSW Government contributing $33.8 million and the balance coming from IRT Group.

It will include a hospital with inpatient and aged care services, an urgent primary care centre, ambulatory care and clinical and non-clinical support services.

The co-located 60-suite residential aged care centre will be operated by IRT.

"Hospitals are no longer big white buildings with red crosses on them," Mr Ward said.

"They're the services that each community needs based on the essence and flavour of each community.

"There's an ageing population in the northern Illawarra, so this is the perfect location for this type of facility.

"By sharing resources like this between an established provider like IRT and the health district, it means the community gets better care."

NSW Labor recently revealed it would match the state government's commitment to Bulli and Shellharbour hospital upgrades if successful in the March state election.

However Mr Ward said their announcement was too little, too late.

"It's almost comical to make those commitments after the projects have already started," he said.