Lee Regional Medical Center in Pennington Gap, Va., will close on Oct. 1, and hospital officials say the Affordable Care Act's payment cuts and Virginia's refusal to expand Medicaid are to blame, the Associated Press reports.
Wellmont Hospital System, which acquired the 70-year-old hospital in 2007, made the announcement on Wednesday. "We had certainly hoped Lee Regional could remain open as a hospital and continue serving the community, but the difficult realities facing our facility are too much to overcome," Fred Pelle, Lee Regional's interim president, said in a release.
Administrators blame the ACA's payment cuts, as well as the 2% across-the-board reduction in Medicare reimbursements stemming from sequestration. Reimbursements from federal and state programs account for 60% of the hospital's payments, Wellmont explained. State lawmakers' decision to forgo Medicaid expansion also influenced the decision, the hospital said.
"For months, Wellmont and other health systems in the region and across the country have outlined the consequences of these cuts on community health," Wellmont President and CEO Denny DeNarvaez said in the release, adding that the "national goal is to reduce costs and keep people out of the hospital. This is a noble initiative, but the cuts are hitting faster than struggling rural hospitals can respond."
At the same time, the hospital struggled with declining inpatient volumes as services shifted to outpatient settings. Overall, inpatient visits, observation patients, and ED visits declined 4.5%, 5.5%, and 4.5%, respectively, in the third quarter of fiscal year 2013, compared with the same period the year prior. Overall, financial losses for Lee Regional are estimated to total at least $4 million annually, says Wellmont's Jim Wozniak.
In addition, physicians who provided call coverage to Lee Regional notified hospital administrators that they would stop on Oct. 1. "Hospitals rely on physicians from the community for call coverage," said Pelle, adding, "When that coverage is no longer available,...[w]e cannot create the quality or environment of care the community needs and deserves without a reservoir of physician coverage."
Wellmont says patients in the community will be able to receive care at other Wellmont facilities, and the system has set up a hotline to field patient inquiries. The hospital's 140 employees also will receive severance pay and get support in finding a new position (AP/Washington Post, 9/12; Landen, Modern Healthcare, 9/11 [subscription required]).
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