Harrison Medical Center is bailing out of building its planned cancer care center on 10th Avenue, blaming a slumping economy that has resulted in heavy losses for the hospital.

“When you lose $35 million in the market your abilty to finance capital needs for the future changes,” Tom Kruse, vice president of strategy and business development, said Wednesday.

Kruse, who was addressing the Poulsbo City Council Wednesday, said the hospital instead plans to lease about 12,000 square feet in a building in the College Marketplace area owned by a group of doctors who intended to work with the hospital on the 10th Avenue property.

The new primary care focus would also offer office space to specialists from Kitsap and beyond.

“The reality is we don’t have $14 million right now to build this project and we don’t foresee a time in the near future that we will,” Kruse said.

Beyond the slumping economy, Kruse cited increased competition from in the local cancer care market and the national discussion over health care convinced the hospital’s board of directors to change direction.

Kruse said he would update the council as the hospital decides its course.

“We’ll let you know and keep you involved in that discussion,” he said.

Another factor that made the expansion no longer viable was the amount of money Harrison lost in the stock market, he said.

“Instead of sitting around and waiting on a plan that may never be viable, we decided to go in a different diretion,” Kruse said.

Peninsula Cancer Center, with a linear accelerator, was opened by two doctors who had practiced in Seattle, beating Harrison in bringing the technology to Poulsbo.