The Coast Hospital, Little Bay was established by the Board of Health in 1881. The Board of Health, the forerunner to the Department of Health was initially created to respond to the small-pox outbreak of 1881. In establishing the Coast Hospital as an isolation hospital and sanatorium the Board established the first government controlled hospital in New South Wales in the post-convict era. The subsequent administrative experience gained in administering this facility, empowered the Board of Health and the New South Wales Government in their negotiations with various charitable hospital boards into the twentieth century. The current system of hospital administration has evolved from the Board of Health's initial foray into the provision of hospital facilities at the Coast.
The location at Little Bay chosen for the hospital site and the buildings subsequently constructed reflected prevailing attitudes to health care. Fear of infectious diseases dictated that patients and contacts be geographically isolated from the general population. The initial isolation of the Coast Hospital led to the establishment of the first complete ambulance service in the Colony at the Coast and was the forerunner of services established throughout the country from the 1890's. The Coast Hospital became a centre for the treatment of infectious diseases. Nursing staff who had been trained at the Coast were highly valued because of their ability to distinguish between different types of rashes and their expertise in treating infectious cases. This was critical when cross infection could be a death sentence. Fresh ocean air was considered to be highly beneficial to the ill, consequently the hospital section was located on the southern headland of Little Bay where maximum exposure to the elements was assured. The influence of Florence Nightingale's views on hospital design were reflected in the pavilion design and the concern for adequate ventilation in the structures. The gradual reduction in isolation of the Coast Hospital, as Sydney expanded and transport facilities improved, resulted in a corresponding growth in demand for the services and expertise offered by the Coast. By 1929 it was the largest hospital in the state.
As the site at Little Bay has been in almost continual use as an infectious diseases hospital for 108 years, its medical, social and construction history provide valuable evidence of community attitudes to infectious disease and more generalised hospital care from the 1880's.