Construction of the facility began late last month and was expected to be completed next June.
Once it was completed, the modern, stand-alone facility for surgical and cancer services would ensured the hospital's future was a sustainable one, he said.
It would also provide a new base for the provision of gastroscopy, colonoscopy, ophthalmology and other procedures, which were becoming ''increasingly important'' to an ageing population in Otago and Southland.
''Without doubt this initiative represents an opportunity for a sea-change for Mercy Hospital, not only in the manner in which service delivery will be undertaken but also its future sustainability in the provision of both existing and future surgical and cancer services.''
The facility would have two day procedure rooms and recovery areas, consultation and staff facilities, as well as providing a new home for the existing Mercy Cancer Care unit, among other features, he said.
It would also help support modern surgical techniques, backed by ''state-of-the-art'' equipment, and provide greater flexibility.
