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From Layoffs to Closure: The Fate of One California Hospital After Medicare Contract Termination

Analysis  |  By Jasmyne Ray  
   April 24, 2024

CMS found Stanislaus Surgical Hospital to be out of compliance with Medicare and Medicaid program requirements.

Since being found out of compliance with the requirements for Medicare and Medicaid in February, the fate of Stanislaus Surgical Hospital has gone from bad to worse.

On April 11, CMS issued a notice to the 23-bed short-stay Modesto, California hospital terminating its Medicare Provider Agreement, effective April 30. A complaint validation survey conducted found the hospital was out of compliance with a number of the Medicare Conditions of Participation, including nursing staff, pharmaceutical services, and surgical services.

With the termination of the agreement, the hospital won’t receive any payments from Medicare and Medicaid programs for care provided to patients admitted after April 30. Payment for care provided to patients admitted before the termination date would have been available for up to 30 days afterward.

According to a local news publication, the hospital has notified Stanislaus County officials that it will most likely close on April 30 for an “undetermined time,” with employees being laid off between April 29 and May 1. A statement from the hospital added that it is challenging the CMS’ decision to terminate its provider agreement.

Rather than closing the hospital, Mani Grewal, chairman of the Stanislaus County Board of Supervisors, told a local news publication that CMS should give the hospital some latitude to get in compliance with the Medicare standards.

“If there are some things they need to fix, there is an intermediary process where they can help them get through some of those violations,” he said. “We feel that is a better position than shutting them down, especially when we are low on healthcare services in the county.”

Jasmyne Ray is the revenue cycle editor at HealthLeaders. 


After initially looking at layoffs, the Stanislaus Surgical Hospital will most likely be closing for an “undetermined time” on April 30.

The hospital was out of compliance with many of the program’s conditions of participation, including surgical services.

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