Mount Sinai Beth Israel Hospital, on 16th Street in Manhattan.

In a dramatic sign of the inpatient-hospital over-capacity challenge, New York City-based Mount Sinai Health System will close 856-bed Mount Sinai Beth Israel  Hospital and replace it with a 70-bed facility.

Mount Sinai said less than  “60 percent of the hospital’s beds are occupied, on average, and patient volume at the financially troubled hospital has decreased by double digits since 2012,” Becker’s Hospital Review reported.

Beth Israel and its affiliates have lost hundreds of millions of dollars over the past few years. In  2015’s first nine months, the teaching hospital had  an $85.6 million loss, which exceeded a budgeted loss of $75.6 million.

The system will invest $500 million to replace Mount Sinai Beth Israel with the smaller facility, two blocks from the current campus. Funds will also be used to expand primary, specialty, behavioral and outpatient surgery services.

The plan to transform Beth Israel will take four years, during which the current hospital will remain open.