The proposed development at Bradeney Care Home in Worfield near Bridgnorth will also see dozens of new jobs created.
It will replace previous plans for a brain injuries centre at the site which will not now go ahead due to changes in the NHS spending programme.
The planned centre will provided 20 beds for residents with complicated dementia needs.
Bradeney House owner Les Jones said the project would mean a jobs boost for the local building trade, medical and care industries when it is completed.
Mr Jones said: "We have just gone back to the the planners with our proposals for 20 high dependency dementia beds. I think it will be a great thing for the area because some people are having to leave the Bridgnorth area to find suitable dementia care accommodation.
"We are still a growing business.
"We are going to be providing jobs for local people and for builders too depending on the the Covid-19 situation. I would love to get the building work started by next spring.
"We are going to demolish a five-bedroom house which is within the grounds to make way for the unit. It will probably take about 12 months to complete.
"Most of the people who will live here, will be those who have complicated forms of the condition.
"It will cost around £2.8m to £3m to develop which will depend on the prevailing conditions. We'll be looking to create new jobs for nurses, carers and cleaners.
"At the moment we employ over 200 people and the increase will take us up to about 250. We have great staff here who work together."
Bradeney House comprises a care home and 14 retirement bungalows.
Last year the home unveiled a pavilion with a craft room, a large function room, a kitchen, as well as underfloor heating built at a cost of £1m to provide space for activities for the whole Worfield community.
Previous plans for a £2.5 million brain injury rehabilitation centre creating up to 20 jobs at the premises was granted planning permission by Shropshire Council in 2017, but that project has now been dropped.