Clayton — Hundreds of people gathered to watch Johnston Memorial Hospital break ground on a $39 million medical center June 19 in Clayton.

JMH is seeking the state’s permission to move 27 inpatient beds from the hospital in Smithfield to the Clayton facility, which will be built on N.C. 42 West near Amelia Church Road.

Hospital and town officials dug shovels into the dirt to mark the process that began three years ago with talks between County Commissioners.

“We are blessed with a phenomenal medical staff,” said JMH CEO Kevin Rogols. “When you look at a hospital of our size, when you look at a county of our size, we have some of the best practitioners and some of the best physicians. You can’t find a finer medical staff in other counties than we have within our organization.”

Work began on the 110,423-square-foot facility in May and construction on the outpatient facility is expected to wrap up in July 2009. The inpatient facility and a $61 million, five-story inpatient tower is scheduled to open one year later. Expanding the medical center in Clayton will eliminate the need to remodel the main building in Smithfield.

In the meantime, the U.S. Department of Housing and Urban Development has agreed to underwrite a $137 million loan from Bank of America to finance the two projects. To pay for the proposed Clayton hospital expansion, JMH will seek an additional $28 million in financing through HUD.

The state heard JMH’s request to move inpatient beds at a public hearing for a certificate of need Friday.

Rogols, Sammy Jackson, chairman of JMH’s Board of Commissioners and Dr. Kerry Chandler, vice chief of staff for JMH, presented the request to Michael McKillip, project analyst for the N.C. Department of Health and Human Services.

A few others spoke in support of the request, including Clayton Town Councilman Bob Ahlert. A member of the council for 10 years, Ahlert said the medical center was needed now more than ever. A recent study indicated the town’s population could grow to 100,000 when the town is fully developed.

“With the past growth and more importantly, the growth to come, Johnston Memorial Hospital proposing to relocate 27 acute-care beds to this site makes sense,” Ahlert said.

“The need is abundantly clear.”

The state is expected to make a decision about JMH’s request in September.