4 Recent Hospital Closures, Layoffs Related to Reimbursement Woes

There will likely be more such announcements this year, as it is still only June.

  • Crotched Mountain Foundation is expected to cease operations of Crotched Mountain Specialty Hospital on Aug 31, Monadnock Ledger-Transcript reported. The move was made over costs (the organization would have expected to lose $4.8 million this year otherwise) and is likely to affect 130 staffers.

  • Walnut Hill Medical Center abruptly shuttered operations late last week, Modern Healthcare reported. The 100-bed independent hospital attributed the decision to a terminated Medicare provider agreement and is likely to affect 240 staffers.

  • East Texas Medical Center has decided to allow its lease for ETMC Trinity to expire, Longview News-Journal reported. The decision is likely to result in the hospital's closure and will affect 60 staffers. In addition, MedStar Washington Hospital Center will lay off 100 employees, citing financial challenges, Washington Business Journal reported.

Dive Insight:

These recent decisions are highlighting how hospitals are having a tough time making some budgets work — and making difficult decisions.

Hospitals are largely faced with declining admissions and high expenses, sometimes alongside flattening or declining reimbursement rates. Thus, smaller and niche hospitals such as Crotched Mountain Specialty Hospital and Walnut Hill Medical Center can find it hard to make ends meet. The grip of financial constraints sometimes don't allow smaller providers to much explore technology investments or value-based care program participation due to limited resources. Such investments could help with finances.

At great risk are rural hospitals. Since 2010, 79 rural hospitals have closed and, according to the National Rural Hospital Association, at least 600 are vulnerable and at risk of closing.

Larger systems, also faced with similar budget constraints, can be forced to cut back expenses. In a fixed cost environment, some of the more manipulable costs relate to personnel.

There will likely be more such announcements this year, as it is still only June.



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