Yesterday, about 30 people gathered at the former Tapanui Hospital grounds on State Highway 90 for a ground-breaking ceremony.
West Otago Health Trust chairman Allister Body said $959,000 had been raised from room sponsorship and general fundraising - only $30,000 has come from outside the district.
Presbyterian Support Otago chief executive Gillian Bremner said she was happy to see a new health centre on the former hospital site.
''You wouldn't normally think a 14 bed rest-home would work in such a small community, but West Otago can make it work,'' she said.
In January, two Dunedin businesses - Cook Brothers Construction and Oakley Gray Architects - won the $2.4 million contract for the health centre.
Since then, the cost had increased to $2.6 million as $200,000 worth of variations had been added through the design development phase, Mr Body said.
The Clutha District Council handed over its $1 million contribution yesterday, and the West Otago Community Board gave the trust about $51,000 from the harvesting of a forestry block near Tapanui.
The grant to build a health centre is loan-funded, to be repaid by ratepayers in the West Otago Health service area over 25 years.
