After receiving conditional approval near the conclusion of a regulatory process that lasted over two years, Universal Health Services has withdrawn its application to build a new psychiatric hospital in Wilsonville.

Universal had applied to construct a 100-bed hospital, but the state mandated that the amount be reduced to 60 beds and that 45% of the beds go to persons with a court determination of mental illness, who are placed in emergency custody or are awaiting a hearing for detention or diversion.

“We know that the need is great for high-quality mental health services in Oregon, and we were prepared to invest $50 million in building a brand new facility that would offer 250 full-time jobs and provide the much-needed care,” said Ron Escarda, the Universal Health Services group director for the Pacific Northwest, in a statement. “However, given conditions and limitations imposed that are untenable, we made the difficult decision to withdraw from the … process. We will continue to work with our community partners and remain committed to being part of the behavioral health solution in Oregon.”

The state granted approval in large part to address the persistent issue of mental health patients being placed in hospital emergency boarding rooms for extended periods of time because there isn’t anywhere else for them to go. However, it wanted to make sure Medicaid patients would not be rejected for care — which is why it added conditions to its approval.

Universal strongly objected to these and other conditions in a hearing, saying that they could jeopardize the financial viability of the project. After Universal received approval, Legacy Health requested a contested hearing so the application would have had to go through another process at the Oregon Office of Administrative Hearings before the Oregon Health Authority decision became final.

OHA spokesperson Jonathan Modie wrote via email that a representative from the corporation notified the state of its decision Friday, Feb. 18.