Franklin Regional Medical Center in Louisburg will hold a groundbreaking Friday for a new 13-bed geriatric psychiatric unit.

The $2.8 million facility will be adjacent to Franklin Regional's 70-bed hospital.

It will serve patients 55 and old in a five-county area, including Wake, and is expected to open in January.

“As our population ages, we will continue to see an increase in older patients suffering from mental health issues,” said Jody Morris, president of Franklin Regional Medical Center, in a statement.

“Our new unit will provide specialized treatment close to home so families and caregivers can be involved, and it represents our commitment to this hospital, this community, and the people of the greater Franklin region.”

Franklin Regional is one of 13 hospitals owned by Winston-Salem-based Novant Health in North Carolina, Virginia, South Carolina and Georgia.

Friday's event takes place at noon.

Novant Health, a Winston-Salem hospital chain eager to expand into the Triangle, has suffered a setback in that effort.

Novant last year won permission from state regulators to build a surgery center in Holly Springs, its first major foothold in this region. But Raleigh hospitals WakeMed and Rex Healthcare appealed the decision, contending that Novant used inaccurate information in its application.

An administrative law judge recently agreed. The judge, Donald Overby, recommended that Novant's project should be denied, in part because Novant's "financial projections are not credible, reliable or reasonable."

He also determined that WakeMed's proposal to add operating rooms at its Cary campus was superior and should be approved.

Three hospital systems will submit proposals with state regulators today, seeking permission to expand in Raleigh, Cary and Holly Springs.

WakeMed, Rex Healthcare and Novant Health will file so-called Certificate of Need applications, vying to win approval to add 101 new hospital beds that regulators have determined Wake County will need to keep up with increasing demand.

For patients, the expansions will provide additional medical services. For the hospitals, new inpatient beds provide an important source of future revenue. For this region, the projects will provide an economic boost, creating construction work during a slow time, and then long-term, relatively stable health-care jobs.

The bids are due this afternoon. State analysts will review the proposals during the next five months based on factors such as cost, quality of care and access to care.

The initial decision, expected in September, will likely be appealed by the losing hospitals and the legal brawl could drag on for years. 

A battle is brewing over 101 new hospital beds that state regulators say are needed to meet the surging demand for health care in Wake County.

The chance to add new beds, and capture more of this region's fast-growing medical market, has set off a scramble among this region's largest hospitals.

Raleigh-based Rex Healthcare and WakeMed will compete to win the beds for new facilities or expansions. Novant Health of Winston-Salem will submit another proposal to build a community hospital in Holly Springs, after a previous plan was denied.

The bids are due April 15 and analysts with the state's Certificate of Need office will review the proposals based on cost, projected use and other factors. The initial decision likely will be appealed, and the legal fight could drag well into next year.

But the lobbying campaign has already begun, as hospitals look to line up support among local politicians, patients, physicians and others.

The Triangle's three largest health systems have appealed a decision by state regulators that would allow a Winston-Salem chain to establish a foothold in Wake County's fast-growing medical market.

In July, regulators approved a plan by Novant Health to build a surgery center in Holly Springs with three operating rooms. Regulators also rejected applications by WakeMed, Rex Healthcare and Duke Raleigh Hospital to add the ORs at their facilities.

By appealing the ruling, the Raleigh hospitals are setting up a long legal fight that will postpone a final decision until at least next year.

The county's established health providers don't want to face a powerful new competitor on their home turf. Novant owns hospitals in the Triad and Charlotte markets, and has made it clear it wants to expand into this region.

Last week's decision by state regulators to award Novant Health three operating rooms for a new surgery center in Holly Springs is not sitting well with two hospital systems that submitted competing proposals.

Both WakeMed and Rex Healthcare say they are baffled by the decision to award the ORs to Novant.

WakeMed and Rex applied for all three of the ORs, while Duke Raleigh Hospital applied for two of the three.

"I think we had a better application and a better project at a lower capital cost than Novant, so we are very surprised by this decision," said Stan Taylor, WakeMed's vice president of corporate planning.

"We feel fairly strongly that this is not the right decision and that we have a high likelihood of being successful in appealing this decision if we choose to go that route."

WakeMed applied to have the operating rooms at its Cary hospital at the corner of Kildaire Farm and Tryon roads. The hospital currently has nine operating rooms at that location.

Rex applied to have two ORs at its new urgent care center in Holly Springs and one at its Raleigh campus.

Holly Springs, a fast-growing western Wake town that has been seeking a hospital, will get a surgery center instead.

State regulators today approved Novant Health’s application to build a surgery center with three operating rooms. It would be the first facility in Wake County for the Winston-Salem hospital chain.

Novant hopes this initial toehold will ultimately lead to the building of a new hospital in Holly Springs, said spokeswoman Kati Everett.

“We’re excited to be able to start honoring a commitment we made to folks several years ago,” she said.

Novant worked closely with Holly Springs officials on a previous proposal to build a $100 million community hospital in the town that would have included 41 beds and four operating rooms.

State regulators rejected the application last year, saying Novant didn't adequately demonstrate need for a hospital in Holly Springs, and that the project might not be cost-effective.

Novant Health of Winston-Salem will take over management of Franklin Regional Medical Center in Louisburg, as part of a restructuring of joint venture with Health Management Associates announced today.

In March 2008, Novant purchased a 27 percent ownership of seven Carolinas hospitals, including Franklin Regional, from HMA.

With the restructuring, Novant increases its ownership interest to 99 percent in Franklin Regional, located about 30 miles northeast of Raleigh.

The deal will allow Novant to become more involved in patient care, physician partnerships and community outreach, said Novant president Paul Wiles.

Novant recently lost a bid to build a community hospital in Holly Springs after its proposal was rejected by state regulators. The company has wanted to expand its foothold in the fast-growing Triangle health-care market.

The company owns 12 hospitals across the Carolinas, including Forsyth Medical Center in Winston-Salem and Presbyterian Hospital in Charlotte.