FAIRMONT, W.Va. -- Fairmont General Hospital made a deal with a W.Va. psychiatric hospital that will help protect its business and will drop a 2-year-old fight to stop Charleston-based Highland Hospital from opening a new mental health facility in Clarksburg.

Fairmont General President Robert Marquardt said the appeal will be withdrawn from Marion Circuit Court.

Highland wants to invest about $30 million to convert the former United Hospital Center into a 150-bed psychiatric facility that would employ nearly 250 people. Fairmont, which recently laid off 20 employees, said that would hurt its bottom line.

The W.Va. Health Care Authority granted a certificate of need to Highland Hospital in December, and the Office of Judges upheld the ruling in April. Fairmont then went to court.

But Marquardt said negotiations with the state have helped settle the dispute.

Fairmont will be designated a primary referral hospital for the William R. Sharpe Jr. Hospital in Weston. That means if the state needs to divert patients, it will call Fairmont first.

"We've been positioning ourselves as a preferred provider of the state for some time, and this agreement formalizes a relationship we've been building over the last several years,'' Marquardt said. "We're pretty happy campers today.''

Fairmont typically treats about 10 psychiatric patients a day and gets about 14 percent of the W.Va.'s mental health diversions, Marquardt said.

He'd predicted that Highland's opening could cut his patient load to two or three a day. Marquardt said that would have cost Fairmont an average of $2.5 million per year.