Yeah, I think you have to keep the original wings (red in the map below). You could convert the building into a number of things, but I don't think residential would be ideal. The current ER/ambulance area could become a plaza (white), as well as the current main entrance.
Everything else could be demolished. Then you could add a modern extension to the back of the building (light blue), for whatever the use. And there's also space for 5 or 6 residential towers, which could have pretty hefty podiums.
Quick map I made to explain: