PROVIDENCE – Citing a growing demand for its services, Butler Hospital wants to build a $16.2 million, two-story facility on its East Side campus with an expanded intake area and 26 new inpatient beds.

The project requires approval through the R.I. Department of Health’s certificate of need process, and Butler filed a letter of intent, the first document, in late November. In a news release on Monday, the hospital said it plans to file its full CON application in January.

The building would open in June 2012. First-year operating costs are estimated at $6.9 million.

By that year, Butler’s letter of intent says, Rhode Island’s need for adult inpatient beds is expected to have grown by 51 to 64 beds, still more than the hospital is seeking.

“Our goal … is to construct a new patient care facility that will meet the community’s increased need for acute inpatient beds in an environment that is patient-centered and welcoming,” said Dr. Patricia Ryan Recupero, president and chief executive officer, in a statement.

As modest as the planned expansion may seem, it’s big for Butler, which currently has 117 beds and has reallocated some of its resources in the last two years to meet the increased demand.

In fact, Butler officials said, the construction plan grew out of talks with the state about obtaining a variance on the hospital’s licensed bed capacity to meet patient needs. The state granted the variance but asked Butler to submit a CON if demand kept growing.

Both Butler and Bradley Hospital – the children’s psychiatric facility – have been operating at or above their licensed capacity for years, Butler officials noted. Bradley is completing a $31.1 million expansion and upgrade that included a 44,000-square-foot addition opened in April. But Butler has been serving ever-more patients in its existing buildings.

Just in 2009, patient volume grew 9.7 percent, Butler officials said. And as medical hospitals have tried to move away from boarding psychiatric patients in their emergency departments, the pressure has mounted on Butler’s intake facility.

The first floor of the new building would be dedicated to Patient Assessment Services, as that unit is called. Just greater than 17,000 square feet, it will be more than twice the size of the current PAS, with 11 evaluation and exam rooms, a separate secured waiting area for highly acute patients, and greater privacy for patients and families.

“Our existing patient assessment facility was built in 1978 when patient volume was far less,” said Dr. Susan Szulewski, PAS chief. “In 2009, 11,400 people were evaluated or admitted through PAS. With that kind of volume, the existing facility no longer meets patients’ needs and does not provide adequate space for staff to deliver the high level of care we provide.”

The new space also will reduce patients’ waits before being evaluated and/or admitted, Butler officials said. And upstairs will be a new 17,900-square-foot inpatient unit, with private and semi-private rooms.

It’s not entirely clear why demand for inpatient psychiatric services is rising so much. Butler’s letter of intent only cites two reasons: the medical hospitals’ challenges with psychiatric cases and a projected growth in the targeted adult population in the next 10 years.

The document outlines a plan to finance 57 percent of the cost of the addition with tax-exempt bonds, and the rest with equity. In the news release, Butler said it plans to raise some of the money from donors.

Recupero was out of town and unavailable for an interview.