The Mildura Base Public Hospital says it is "completely at capacity" and some elective surgeries may be delayed after an internal emergency was declared.
Hospital chief executive Terry Welch said the hospital called a code yellow after capacity issues reached a peak on Wednesday night.
"Every bed in the hospital was taken, the emergency department was full to overflowing into the waiting room," he said.
"It got to the point where ... we had to turn the recovery bay in our theatre into a ward last night to meet capacity."
COVID not to blame
Mr Welch earlier in the week said the hospital had been affected by a rise in influenza and COVID-19 cases in the community, forcing about 60 staff to be out of action due to illness.
However, he said the decision to call a code yellow was not based on illness or staff shortages.
"This is not one that we would pin on COVID or influenza," he said.
"It's people needing surgery, all the traditional injuries."
He said the past week, particularly the past 36 hours, had him very concerned about capacity and how it could be managed.
Emergency department 'inadequate'
The hospital - opened in 2000 by private hospital operator Ramsay Health Care - has been repeatedly criticised for not being large enough to serve Mildura and surrounds.
The state opposition committed earlier this year to building a new $750 million hospital in Mildura if elected.
Mildura MP Ali Cupper said the pandemic had exposed the hospital's inadequately sized emergency department and a critical shortage of general practitioners in the region.
"Because people can't see GPs, they're getting sicker than they need to be and they're presenting at the hospital," she said.
She said there were already a lot of people getting sick with the flu and COVID despite it only being the start of the flu season.
"It's deeply unsettling. It's awful."
Elective surgery disrupted
Mr Welch said the hospital still had capacity to manage acute cases appearing at the emergency department and care for patients would not be compromised.
"Elective surgery, I suspect there will be some disruption for a couple of days," he said.
"We want to continue to do scopes and procedures which don't require overnight stay."
Mr Welch said Mildura's isolated position in north-west Victoria made it "impossible" to divert other emergencies and ambulances to other hospitals.
He did not speculate on how long the "code yellow" could be in place.
"We're talking to the department overnight and today about potential strategies to transfer where we can."
He said every contingency the hospital had was used.
"We've got through the night okay," he said.
