Those realities, administrators said, include payment cuts stemming from the Patient Protection and Affordable Care Act, the additional 2% cut in Medicare reimbursements because of the federal sequester, and Virginia's delay in reaching a decision on Medicaid. Reimbursements from federal and state programs account for 60% of the hospital's payments, Wellmont reported.
“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. “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.”
The hospital has also struggled to adapt to broader healthcare trends. In April, Fitch Ratings noted that “like many hospitals, Wellmont has seen inpatient volumes decline as services have shifted to an outpatient setting, with Wellmont's operating performance slightly weaker in the six month interim due, in part, to the reduction in inpatient services.”
Overall, the system reported inpatient volumes down 4.5%, observation patients down 5.5%, and emergency room visits down 4.5% for the fiscal year to date when it released third quarter data for the period ended March 31, 2013 (PDF). Jim Wozniak, media relations coordinator for Wellmont, cited a drop in Lee Regional's average daily census of 19 a year ago to a current daily census of four.
Even with staffing adjustments to respond to the decline in volumes, Pelle said, financial losses for Lee Regional were estimated to be at least $4 million a year.
And to make matters worse, physicians who provided call coverage to Lee Regional notified hospital administrators that they would no longer be doing so as of Oct. 1.
“Hospitals rely on physicians from the community for call coverage,” Pelle said. “When that coverage is no longer available, no one can appropriately manage patient care in the hospital. We cannot create the quality or environment of care the community needs and deserves without a reservoir of physician coverage.”
Despite the closure of Lee Regional, Wellmont has assured patients that they will still be able to find care in the region through other nearby Wellmont facilities. The system has set up a helpline for county residents that will field general medical questions and provide assistance in scheduling services.
The 140 employees at the hospital will receive severance pay, and Pelle said they are working to help them locate new jobs.
Follow Rachel Landen on Twitter: @MHrlanden