SAN DIEGO—Scripps Health entered hospice care as the area's biggest hospice provider continues to scale down its operations under bankruptcy protection. The not-for-profit San Diego Hospice laid off about a third of its employees after disclosing last year that it faced uncertainty under an ongoing Medicare audit. On Feb. 4, the company filed for Chapter 11 bankruptcy in San Diego. The company has closed its 23-bed inpatient facility—the only one of its kind in California—pending the outcome of the reorganization. Scripps Health President and CEO Chris Van Gorder said in an interview that San Diego Hospice leaders encouraged the health system to begin providing hospice care in order to ensure continuity of care for the company's patients and the community. Van Gorder said Scripps has been San Diego hospice's biggest referral source. “We felt no need to replicate something that was working well in this community,” he said. With that changing rapidly, Scripps Health acquired a small company called Horizon Hospice to get a hospice license quickly. The system acquired all of the for-profit company's shares Feb. 4 and is working with the California Department of Public Health to convert the company to a not-for-profit organization and change the name, Van Gorder said. San Diego Hospice lost about $535,000 on revenue of $83 million in 2010, according to its most recent tax filing available. The company said in its bankruptcy petition that it owes about $9.8 million to the 20 creditors with the largest unsecured claims.