A heritage-listed former Townsville school will be converted into a $55 million private hospital, over objections from another private hospital operator.

Queensland planning and environment court Judge Tracy Fantin this week dismissed an appeal by Mater Health North Queensland against the development, ruling the new hospital was in the public interest.

The former Townsville West State School building will be converted into a 22-bed private hospital. Credit:Google Maps

Judge Fantin delivered her judgment in Cairns after a protracted hearing in November last year, finding the development application had "substantial merit".

"Planning appeals involving heritage buildings or new hospitals are relatively uncommon. This one involves both," she said.