In 1871, the Union purchased a 24-acre site on the slopes of Birch Hill and Starring Hill at Dearnley. The following year, building work began on a large new workhouse.
The new workhouse, designed by George Woodhouse and Edward Potts, was originally intended to accommodate 632 inmates but by its eventual opening in November 1877, various extensions had increased the capacity to 847, including 29 officers. The total cost of the buildings and land was £85,000. The building was officially opened by the Mayor of Rochdale, Alderman T Schofield, on Wednesday 19th December 1877. Around seventy guests attended the ceremony which was followed by a tour of the premises and dinner at 3pm. Afterwards there were long speeches and a performance by the Orpheus Glee Club.
In 1902, a 172-bed infirmary was built at the north of the workhouse. It had a central administration block with male and female ward pavilions to each side.
During the First World War, part of the site was taken over by the military who also erected tents in the grounds.
In 1930, control of the site passed to Rochdale County Borough, with the Poor Law Institution being run by the Public Assistance Committee and the Hospital being run by the Health Committee. With the inauguration of the National Health Service in 1948, the site became a single hospital known as Birch Hill. Now run by Rochdale Healthcare NHS Trust, many of the original buildings are still in use. The former imbecile and infirmary blocks at the east of the site are believed to be scheduled for replacement.