The state's decision on the location of 41 new hospital beds in Wake County came as a blow to supporters of a proposed hospital in Holly Springs.  State officials say there was not enough support for the project.  Still, the fight may not be over.

In a report released this week by the N.C. Division of Health Service Regulation, state analysts explained their decision to award all of the acute care beds to WakeMed. The county's largest hospital system plans to use the beds to construct a women's hospital on its North Raleigh campus to serve northern Wake and southern Franklin counties.

Reviewers said WakeMed's application "adequately documents the need the population to be served has for the proposed acute care beds," while competing applications from Rex Healthcare and Novant Health (applying as Holly Springs Hospital) "failed to adequately document the need" for their proposals.

According to state policy, each of the applicants has 30 days to appeal the decision.

Rex Healthcare, which had hoped to use 26 of the beds for maternity care, wasted no time in issuing a response. Hospital spokesperson Melody Hunter-Pillion told NBC-17 News January 28 that the hospital "absolutely intends to appeal." In a news release, hospital officials stated:

"Since 2004, Rex's obstetrics volume has increased more than 30 percent - from 5,173 patients in fiscal year 2004 to 6,757 in fiscal year 2008, and the growth trend is expected to continue."

However, state regulators found that Rex's projected utilization of OB beds was "overstated and not reasonable," saying state demographic projections for population growth were "well below" the numbers Rex had used in its application.

Despite its months-long campaign to build a hospital in Holly Springs, Novant Health was more measured in its response. In a statement Thursday, Novant administrators said:

"We are disappointed and disagree with the State's findings. At this time we are exploring our options and working on our next steps. We'll take the next 30 days to determine how we shall proceed."

Novant waged a grassroots effort in southern Wake County for its bid to build a full-service hospital. But state regulators said the proposal failed to show enough local physician support, saying:

"12 of the 23 letters are from physicians who practice in Durham (Durham County). Of the 11 remaining physician letters, eight are from family medicine physicians who practice in Cary and three are from family medicine physicians who practice in Wake Forest in northern Wake County. The application does not contain any physician letters of support from Wake County surgeons or obstetricians."

An appeal process could take as much as a year to complete.  WakeMed CEO Bill Atkinson told NBC 17 that WakeMed's proposed completion date of 2011 takes potential delays, such as appeals, into account.