SAN QUENTIN (CBS 5) – Healthcare for prisoners in California used to be so bad that a judge ruled it was unconstitutional and put a federal receiver in charge of fixing it.

That was 7 years ago. There’s been a lot of improvement since, most recently, a brand new prison medical facility was constructed in Stockton. It’s billed as a money saver, but some question whether lack of care has turned into Cadillac care.

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One of the state’s biggest construction projects is about to wrap up – 40 buildings, 400 acres, one billion taxpayer dollars.

Department of Corrections Secretary Matt Cate said the plan is to streamline healthcare for an aging prison population.

“We will take the sickest patients at the existing prisons, and we will move those to one centralized location,” Cate said.

Eventually 1,700 of the state’s sickest prisoners, including mental health and Alzheimer’s patients, will be housed at the Stockton facility. The project is expected to create thousands of jobs and boost one of the state’s most depressed local economies. But we’ve seen this supposedly cost-effective scenario before.

A two-year-old $136-million medical facility at San Quentin State Prison, was a big waste of money, according to a San Quentin employee who asked not to be identified.

“Anything that requires anything above stitches, the inmates get sent out,” he told us.

It’s what we discovered earlier this year: Despite having 14 doctors on staff, 12 of them board certified physician and surgeons making over $200,000 a year, San Quentin still send prisoners out for medical care. Inmates from San Quentin were referred out to local hospitals almost 5,500 times in 2011 alone.

We found some, including death row inmates, were even spending the night at a sleep clinic at Doctors Medical Center in San Pablo, all on the taxpayer dime.

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“It’s a free ride. You get a room with a TV. You get to watch the ball game, see the pretty nurses,” said the guard.

The Stockton Healthcare facility will also be sending its inmate patients out to local hospitals.

“It’s the same as San Quentin except 20 times, 30 times bigger,” said the guard.

So why would a brand new billion dollar facility that boasts of providing healthcare “in a more cost effective and efficient manner” still have to send inmates out for treatment? Well, technically, it’s not a hospital.

“It’s a skilled nursing facility,” said Nancy Kincaid with the federal Receiver’s office, which, under court order, is still the agency providing medical care for California prisoners. “They are not licensed for surgery, they are not licensed for these specialty cares and treatments. Certainly, if they need medical care they will have to go out,” she said.

In fact, nearby San Joaquin General is already preparing for the onslaught – A 25 bed unit has been converted to provide security.

“It’s not a boondoggle,” said Kincaid. “The bottom line is it would cost even more to try to build a hospital.”

But even the state’s prison chief admits the new facility may do nothing to reduce the state’s prison healthcare budget, which has doubled over the last decade to $1.8 billion this year.

“The reason the state agreed to build the healthcare facility to begin with was not to cut costs,” said Secretary Cate. “The reason we decided we had to build it is because we have to keep providing better and better care until the courts say that its enough. At one point the receivership wanted to build 7 of those, and recommended it be a billion dollars apiece. And so to have an agreement to build only one seems like a bargain.”

The judge in the prison healthcare lawsuit is beginning to phase out the receivership. Just last week he allowed the state to take over control of the Stockton facility. It’s scheduled to open sometime next year.

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