I found the solution on a Manhattan GMAT forum. I'm pasting it here for your easy reference:

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if you say 'on the basis of x', that is usually taken as an acknowledgment that x has actually occurred. so choice a makes it sound as if building large new hospitals successfully avoids duplicating facilities. that's not true, of course: the thrust of the sentence is that the new hospitals are duplicates, and that's the problem.

choice e correctly expresses the idea: the duplication of facilities is something to be avoided. the other message - that the new hospitals are guilty of such duplication - is implicit, but at least it isn't wrongly expressed (as in choice a).

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Disclaimer: This solution was provided by Manhattan GMAT Staff on the company's forum site. This is not my original solution.