In 1998 the hospital, along with Memorial Hospital Bowmanville, North Durham Health Services, and Oshawa General Hospital, were placed under the administration of the Lakeridge Health Corporation, an amalgamation completed under the Common Sense Revolution of the Mike Harris administration. The government had created the Health Services Restructuring Committee and, under their recommendation, the Lakeridge Corporation was to place the town of Whitby under the service of Lakeridge Health Oshawa and would close Whitby General. However, the Ontario Ministry of Health and Long-Term Care reversed this decision in 2001 and allowed the complex to stay open, albeit not as a full-service hospital but a specialty clinic.
A July 2, 2007 electrical fire forced the clinic to cancel over 20 surgeries and move their 71 patients to Lakeridge Oshawa. The clinic has closed for repairs and will not open until autumn, causing Lakridge officials to fear a region-wide bed shortage when patient numbers increase in September.
A review of the current site found that as the building was created for Whitby in the 1960s, the current patient capacity would be unable to support the town's current population. In addition, to bring the building to healthcare and building codes, the review found that extensive renovations must be made to the building structure, interior structure, mechanical systems and upper levels.
The town of Whitby has therefore proposed a new hospital in the recently developed north Whitby, to service the town and north Oshawa. As a short-term solution, a February 2006 request for $17.5 million for the current location's infrastructure was submitted by the Lakeridge Corporation to the Ministry of Health.
In November 2007, Liberal health minister George Smitherman remarked that he was not committing himself to a new hospital in Whitby. He added that Whitby should seek funds for the hospital from MP Jim Flaherty, as it under was Flaherty that the hospital closed.