In 1870 Paterson was gazetted colonial surgeon with responsibility for the Lunatic Asylum, the Adelaide Gaol and the country hospitals. He resigned in 1895 because of failing health. The Observer of January 11, 1902, described him as an authority on insanity in all its phases. He kept in touch with the progress of mental science in other countries and often provided expert evidence in the criminal court.
Dr Paterson was a prominent member of the Central Board of Health, the Medical Board, and the Australian branch of the British Medical Association. When he retired from government service he continued in private practice in a limited capacity from his Carrington Street residence Springhill Lodge, designed by Edward John Woods.
In 1913 the YWCA bought Springhill Lodge to use as hostel accommodation. It decided to buy such a residence “within one tram section of the city”. The Blue Triangle of June 1929 stated that “The choice fell on the residence of the late Dr. Paterson, in Carrington Street, a fine house, modern, standing in an acre of ground, with a garden and tennis court. The cost of the house and grounds was £4,500, and a wing was added, consisting of 25 single and double bedrooms, bathrooms and box room, with wide balconies for sleeping out. The cost of this wing seemed prohibitive, but thanks to the generosity of Dr. J.C. Verco, who promised £1,000 if the buildings were opened free of debt, the wing ... [would be] built.”
The additional hostel-type accommodation provided at the rear resulted in minimal impairment to the original residence, which in 1984 was subdivided into flats.