WAILUKU » The state has approved a California company's plan to build a new hospital in West Maui.

Newport Hospital Corp. intends to build a $45 million critical access hospital with 25 acute-care beds and a 40-bed skilled nursing facility in Lahaina.

Ronald Terry, State Health Planning and Development Agency administrator, faxed the decision to developer Brian Hoyle and Newport Hospital Friday.

“;We're ecstatic. We're overjoyed,”; Hoyle said Sunday morning. He said he aims to have the new hospital ready two years from now.

The decision came about two years after the same state agency rejected a proposal by another group to build a 150-bed acute care community hospital in Kihei.

The agency said the proposed Malulani Health and Medical Center would have duplicated services already provided by Maui Memorial Medical Center, the island's primary acute-care facility.

The agency was concerned Malulani — which was to have only acute-care beds — would compete with Maui Memorial for scarce resources and threaten to drag down the overall quality of health care in Maui County.

That rejection of Malulani's proposal was met with an emotional outcry on Maui, where some residents had long complained Maui Memorial offered poor quality health care and was incapable of serving the island's growing population.

They argued a new hospital should be built to offer residents an alternative.

Terry's approval of the Lahaina hospital wasn't a big surprise because three advisory panels had already endorsed the project.

The decision will become final within 10 working days of Friday if no one files for a public hearing to reconsider the decision.

The only critical testimony at three public meetings held by advisory panels came from surgeon Dr. Peter Galpin. He was concerned the general public would consider the Lahaina hospital a “;definitive care”; facility when it wouldn't be.

Hoyle said his next step would be to obtain zoning approval for construction.

He also needs to work out details with Maui Memorial officials about procedures involving patient care. He said Maui Memorial would continue to be the primary acute-care facility for the island.

Hoyle is aiming to complete construction in March 2012. “;If I could it do faster, I will,”; he said.

West Maui Improvement Foundation President Joe Pluta said he was still “;floating”; after hearing the news.

“;It's like the impossible has been made possible,”; he said.

Pluta, who also serves as president of the West Maui Taxpayers Association, has lobbied for 10 years to get a hospital built in his area.

Project supporters noted the lack of a West Maui hospital has sometimes resulted in tragic outcomes for residents having to travel about 35 miles — or up to an hour or more in traffic — to get to Maui Memorial.