Yukon Premier Dennis Fentie says his government is going to build a new hospital in Watson Lake, scrapping its original plans to renovate the existing facility.

Until only a few months ago, the existing hospital was going to be renovated after crews finished building an adjacent multi-care facility.

But Fentie, the Yukon Party MLA for Watson Lake, said the government instead wants contractors to convert the partially completed multi-care facility into a brand new hospital.

"The original concept of a facility for seniors, attached to the hospital to provide multi-level care, simply will not work because of the condition of the existing hospital," Fentie said Thursday.

"Now we're going to convert that structure into the new hospital in Watson Lake. We are going to build an assisted-living facility for seniors, which is in progress now, and we're going to add housing for doctors."

Fentie said engineers had determined that renovating the old building would simply be too expensive. At the same time, turning the multi-care facility into a hospital won't come cheaply, either.

"Well, the estimate is around $25 million," he said. "But I want to emphasize, that's an estimate."

'Boondoggle from Day 1,' Liberal leader charges

The territorial government is accepting construction proposals on the new plan until the end of this month.

Opposition leaders have criticized the Watson Lake hospital project, since the initial construction contract was sole-sourced to a Yukon party supporter in Watson Lake.

"This has been a boondoggle from Day 1," said Liberal Opposition Leader Arthur Mitchell.

"Taxpayers should be outraged, not at the provision of good health care but at how ridiculously expensive it's become."

Fentie said the government has spent only $3 million on the project so far, but NDP Leader Todd Hardy said he believes it's about triple that.

"He's already spent $11 million or $12 million down there, and they don't even have the project complete. And he's starting on another one," Hardy said.

Both Hardy and Mitchell said they predict the project will cost more than $40 million before it's completed.