ALBANY — Albany Medical Center requested state approval Thursday for a $360 million, six-story expansion project that would increase bed capacity by 116 beds and help accommodate increased admissions.

“Our expansion project, which will take several years to complete, is absolutely vital to our institution’s ability to meet the needs of area residents seeking the most advanced medical and surgical care available,” said James J. Barba, Albany Med’s president and chief executive officer.

The new building would be built in front of the current patient tower facing the corner of New Scotland and Myrtle avenues. If approved by the state, construction would begin in November 2009 and would be complete by 2012.

The proposed six-story complex would include new adult and neonatal intensive care units and new operating rooms and recovery rooms. The patient rooms will be private, reflecting a new national trend toward private rooms.

The expansion would increase the hospital’s licensed bed capacity from 631 to 747 — allowing the hospital to meet a projected 30 percent increase in patient population expected during the next decade.

From 2001 to 2007, admissions to Albany Med increased 27 percent, from 24,300 to more than 31,000.

Transfers from other hospitals to Albany Med increased during this same period by more than 80 percent.

“By the time the project is completed, admissions to the hospital are expected to rise to more than 40,000 a year and the planned expanded facility is being designed to meet that higher anticipated case load,” said Barba.

Barba said plans for a major expansion when many hospitals are contracting in size may “seem counter intuitive,” but he called it necessary and right.

“It’s true that just last year the state Berger Commission recommended the closing of some hospitals and contraction of services of others,” said Barba. “But the economic and regulatory actions that cause downsizing at some facilities do not decrease regional needs. The result is that places like Albany Medical Center must grow to fill the gaps.”

A state Department of Health spokeswoman said Albany Med must submit an application for certificate of need, and this has not yet been received.

“We are planning to meet with them soon to discuss the certificate of need process,” said DOH spokeswoman Claire Pospisil.

Four criteria are used to review the applications: public need, financial feasibility, character and competence, and construction.

“It’s difficult to comment on Albany Medical Center because we haven’t received the application,” said Pospisil, who also would not comment on how the planned expansion fits in with the Berger Commission’s recommendations.

Albany Med has re-opened 82 beds over the last five years that it closed during the height of the nursing shortage. It is now at 617 beds and expects to be close to its certified operating capacity of 631 by the end of the year.

Critical care units are operating at capacity and last year the hospital had to deny 300 requests to transfer patients into Albany Med.

Last month alone, the hospital had to deny 98 transfers, according to Barba.

The expansion will mean residents will no longer worry that they cannot be transferred to or cared for at Albany Med, he said.

The level of growth is expected to continue for the next decade at about 3 percent per year, according to Barba.

It’s the result of a population increase in the Capital Region, closing of other hospitals and the fact that baby boomers will be requiring more health care.

The initial plan calls for a six-story building; four more could be built on top of it in the future if needed.

The expansion also includes a second glass-enclosed pedestrian bridge that will cross New Scotland Avenue and connect to a 1,750 space parking garage that will be constructed by the medical center on the grounds of the Veterans Administration Hospital under a separate project.

To finance the project, the hospital will borrow $300 million and try to raise $50 million in donations, according to Barba.

He said the hospital is operating with an estimated 1 to 2 percent profit, but this is not enough of a margin to fund any part of this expansion.

Dr. Steven M. Frisch, executive vice president for integrated delivery systems and hospital systems general director, said as some other hospitals constrict serves they offer, Albany Med must be prepared to play a greater role.

He said Albany Med, like hospitals around the country, has been faced with a nursing shortage that was particularly bad five to six years ago.

Since then, the hospital has aggressively been recruiting nurses domestically and internationally and Frisch said he’s confident the hospital can recruit 200 nurses a year to meet increased admissions.

Mayor Jerry Jennings, who was at the announcement Thursday, said the expansion plan complements the city’s vision for Park South: the expansion of a world class medical facility and the renaissance of a neighborhood.

Senate Majority Leader Joseph L. Bruno said: “This expansion is great news for the patients who rely on the vital programs provided here as well as the positive impact that it will have on the local economy.” Last month, Bruno, R-Brunswick, had cited Albany Med as an example of the region’s economic strength as the facility made plans to hire nearly 300 people this year.

CHANGING ECONOMICS

The economic picture has changed at Albany Med — in 2000 it froze hiring for more than 200 positions as it faced a $17.5 million deficit.

In 2001 the deficit was $7.5 million.

But Albany Med has had five consecutive years of modest surplus operations (generally averaging less than 2 percent).

In 2007, the surplus was $14 million and the overall operating budget was about $685 million.

Greg McGarry, spokesman at Albany Med, said a number of things were done that resulted in surpluses. The institution downsized its faculty practice by 98 positions and entered into contractual arrangements with physicians as community physician providers.

They provided services at the medical center, but were no longer full time staff on the payroll. The hospital came up with a new business model for some services and instituted global budgeting — a more centralized approach to budgeting for the entire institution. Previously, departments had their own budgets.

There was also aggressive physician and nursing recruitment, which allowed the hospital to open more beds and generate more revenue.

And the Pillars Campaign raised $130 million, mostly for endowment purposes.

Meanwhile, more hospitals are transferring patients to Albany Med. This growth had been occurring for several years before the Berger Commission was even formed, according to McGarry.