Parkridge Medical Center drops appeal against Erlanger

Parkridge Medical Center is seen on Wednesday, Mar. 11, 2015, in Chattanooga, Tenn. The hospital has plans for a $62 million expansion.

Parkridge Medical Center has dropped its appeal of a state agency's decision to allow Erlanger Health System to build a new 88-bed behavioral health hospital in Chattanooga.

The state Health Services and Development Agency decided in August that Erlanger had proved there was a need for the new hospital, granting the healthcare system the required Certificate of Need. But officials at Parkridge, which operates two mental health facilities of its own in Chattanooga, had argued that there were sufficient beds available to meet demand, and filed an appeal of the state agency's action.

Parkridge spokeswoman Agnes Richmond confirmed that the appeal has been withdrawn.

The new hospital is a joint venture between Erlanger and Nashville-based Acadia Healthcare, and will be a for-profit venture, while Erlanger is a non-profit facility. Acadia, based in Franklin, Tennessee, is one of the nation's largest operators of mental health facilities, with more than 16,000 beds in the U.S. and Great Britain.

Erlanger's new facility will be built near the intersection of Holtzclaw and Citigo avenues at an estimated cost of $25 million.

The hospital is expected to employ about 200 staffers.

Erlanger officials said construction on the new facility is expected to begin in May.