AZ Town Mulls Options After Hospital Closes

Financially struggling Cochise Regional Hospital, a 25-bed CAH in a town of 17,000, closed last month after the Centers for Medicare & Medicaid Services ended its provider agreement and shut off funding.

Douglas, AZ, a town of 17,000 souls nudged against the Mexican border, has become the latest small town in the United States to lose its hospital.

Financially struggling Cochise Regional Hospital, a 25-bed critical access hospital, was forced to shutter late last month after the Centers for Medicare & Medicaid Services ended its provider agreement and shut off funding.

CMS inspectors visited the hospital in March to address complaints about patient care. CMS provided a brief statement explaining the closure: "The most significant issue was the facility's failure to monitor an inpatient placed in a waiting room for 1.5 hours prior to transfer to another facility where the patient became unresponsive, had to have a breathing tube inserted, and ultimately died after being transferred to another hospital."

Harley Goldstein, is a Chicago-based attorney representing parent company People's Choice Hospital LLC, which bought the twice-bankrupt CRH in January, 2014. He says People's Choice was trying to correct the problems identified by state and federal inspectors when CMS withdrew the provider agreement. Read CMS's complaint, filed in US District Court for the District of Arizona.

"Cochise Regional Hospital aggressively sought not only to rectify the underlying issues, but also pursued a number of parallel tacks to avoid closing the hospital," Goldstein wrote in an email to response to my questions, "including filing of motion for a temporary restraining order in federal court to prevent Medicare and Medicaid from failing to provide coverage, contacting state and federal representatives, seeking remedies with the appropriate administrative agency, and negotiating extensively with the United States Attorney on behalf of the federal agencies to try to reinstate Medicare funding for going-forward patient care."

Despite those efforts, Goldstein says the hospital was denied a timely administrative appeal hearing and the U.S. Attorney's office refused to intervene.

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"Accordingly, although the hospital kept its Emergency Department and related services open as long as was economically feasible without continued Medicare coverage in order to serve the local community while the hospital sought to resolve the Medicare coverage matter through negotiations (and in hopes that the U.S. Attorney or the politicians would intervene and convince the appropriate regulatory folks to change their minds so the community was not left deprived of critical-access medical services), such efforts were in vain," Goldstein says. "Without the reinstatement of Medicare coverage to Cochise Regional Hospital, the hospital lacked the funds to continue to operate, and closed its doors permanently."

The closure means that Douglas residents and emergency services will have to travel to Bisbee, AZ, 27 miles due west to access the nearest hospital. It also means the loss of 70 healthcare jobs and makes difficult the city's efforts to recruit new providers and businesses.

By some counts, Cochise Regional Hospital is the 56th rural hospital to close in the past five years, and unfortunately it may not be the last. Rural hospitals already operating on hair-thin margins took a severe hit during the Great Recession. These hospitals generally care for a patient mix that is older, sicker and less-affluent than in urban areas. In addition, inpatient services are declining, as are Medicare reimbursements. It's even worse for rural hospitals in states that have refused to expand their Medicaid programs under the Affordable Care Act, which Arizona reluctantly agreed to do in 2014.

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Douglas Mayor Danny Ortega, Jr. calls CRH's closing a "tragedy" but not a surprise. CRH's financial and clinical problems were widely known and some sort of shake up was expected. Even before the closure, he says, many Douglas resident chose to get their care elsewhere.

In the short term, the town is making due with a quick care center for non-emergency care, and transporting acute cases to Copper Queen Community Hospital in Bisbee. Ortega says the town will likely have to spend more for EMT overtime, and contract ambulance services with private companies.

"Long term, we had a meeting with the healthcare providers last week and there is some interest in building an emergency room here in Douglas by Copper Queen and there are a couple of organizations that are interested in bringing a hospital into town, Ortega says. "It is sad that we lost a hospital, but it is encouraging that there is interest in our community by these providers."

Ortega says city officials are still trying to gauge the economic fallout.

"We lost 70 jobs from that hospital, and we are trying to develop a new port of entry and the associated infrastructure and jobs," he says. "It is very difficult to recruit not only citizens to your community, but new industry when there is not a hospital in your town."

The $4 million stand-alone emergency department proposed for the town by Copper Queen would not be a 24-hour facility, and Ortega says his constituents believe that Douglas needs a new hospital.

"There are enough government jobs and people with insurance in town to support a hospital," he says. "Bisbee is a town of 5,300 and they have a 15-bed hospital. We are triple that population and we have nothing at this time."

So far, Ortega says, local providers have rallied to the cause. "They're not talking about leaving," he says. "Quite the opposite; they're asking what do we need to do to get a hospital here. Many of our physicians live in town and they know we need a hospital."

"I am hoping that in the end we will have something better than what we had," the mayor says. "The hospital was 75- 80-years old. It was antiquated. Some of the facilities were grandfathered in. The people of Douglas deserve a more modern facility."

Asked if he had any advice for other small town leaders who may confront a hospital closure, Ortega says: "Just keep fighting. Hopefully you'll get what you need."