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Astria Regional Medical Center is pictured on Wednesday, Jan. 8, 2020 in Yakima, Wash. Astria Health announced in a news release Wednesday they are closing the center.

By the end of this month, the city of Yakima will no longer have two hospitals.

Astria Health is closing Astria Regional Medical Center, the organization said in a news release Wednesday.

The U.S. Bankruptcy Court Eastern District of Washington authorized the closure during a hearing Wednesday.

Officials said the decision was made after exhausting other options. The organization said it had lost more than $40 million since purchasing the hospital in late August 2017.

“It is with deep regret that we have to make this announcement,” John M. Gallagher, Astria Health president and CEO, said in a news release. “We have worked diligently to sustain the Astria Regional Medical Center hospital and to avoid closing it, but healthcare industry delivery models continue to shift from inpatient care to outpatient models and due to its continued operating losses, lenders have no interest in refinancing the debt associated with Astria Regional Medical Center.”

Astria Health said it would start winding down inpatient services at Astria Regional immediately and cease operations entirely within two weeks.

Astria’s two other hospitals in Toppenish and Sunnyside will remain open.

Astria Health will continue providing primary and ambulatory care in Yakima through its Astria Ambulatory Surgical Center, Astria Health Services, Astria Plastic Surgery Center, Astria Home Health & Hospice and Astria Hearing & Speech Center.

The organization will work with Astria Regional’s 463 employees to secure jobs elsewhere in the organization and will schedule job fairs for displaced employees, according to the information from the news release and in bankruptcy filings.

Closure plan

The organization outlined a closure plan to the U.S. Bankruptcy Court that will be rolled out over the next several days. Astria will begin moving patients to other facilities immediately, and various departments will cease operations over several days.

Susan Goodman, an attorney, appointed by the U.S. Bankruptcy Court to oversee Astria Health’s patient care, noted that Astria Regional, which has 214 beds, has been operating well below capacity. A Dec. 31 report identified patient levels at anywhere from the low 20s to low 50s.

Virginia Mason Memorial CEO Russ Myers said he has been speaking with Gallagher about coordinating care Astria Regional patients. Astria Health plans to transfer as many patients as possible to Toppenish and Sunnyside, but there will be patients who will need to remain in Yakima.

The critical area of concern is dealing with an expected surge of patients in Memorial's emergency room. Memorial has 36 emergency beds. On Monday, the hospital tried adding another eight beds and plans expand capacity soon, Myers said.

Memorial typically sees about 200 patients a day in its emergency department and treated upward of 330 patients in a single day within the last two weeks.

“This is a busy time of year because of the flu,” Myers said. “We had been experiencing (a surge in patients), so has Astria Regional. Increasing capacity in our emergency department, that’s our No. 1 (priority).”

Myers also anticipated an increase in its critical care patients.

Myers anticipates that given Astria Regional’s current patient levels, it should be able to handle any potential surge, but there will be conversations about how Memorial needs to respond long-term.

“It will be somewhat of a wait-and-see,” Myers said.

Emergency motion

Astria Health filed an emergency motion to close the hospital Friday, but it was under seal, which meant the filing was not available to the general public. The filing was unsealed Wednesday.

In the motion, Gallagher said that Astria Regional Medical Center had been operating at a loss even before Astria Health acquired it.

Astria Regional continued to operate with excess cash from Astria Health’s better-performing hospitals and was the “biggest drain” on debtor-in-possession financing it secured after filing for bankruptcy protection in May.

“(Astria Regional) has not improved operationally sufficiently to reach a break-even status, as it continues to require cash infusions on a weekly basis,” Gallagher said.

In its motion, Astria Health’s attorneys stated that Astria Regional hurt the organization’s ability to both secure financing to exit bankruptcy and sell its assets to potential bidders.

Only one potential buyer expressed interest in acquiring Astria Regional as part of its offer and for a considerably lower price than offers that did not include the hospital, the filing said.

Also, no lender who expressed interest in providing exit financing wanted to offer any loan against Astria Regional.

Astria Health outlined other factors that made closing the hospital necessary. They included the Department of Health’s approval to allow Memorial to perform an elective heart procedure that was previously only available locally at Astria Regional and a surge of nursing staff being recruited heavily by other employers in recent weeks, including Memorial.

“For all these reasons, (Astria Health) have concluded that ceasing operations at, and closing the Medical Center is the right decision,” the attorneys wrote in its motion.

Astria Health anticipates emerging from bankruptcy early this year.

Foundation

Sharon Miracle, president and CEO of the Yakima Valley Community Foundation, said Astria did not invite or include the foundation in any discussions about closing Astria Regional.

Legally, the foundation doesn't have any right to impact the closing, as it did in 2016, when the foundation sued for-profit Health Management Associates, former owner of Yakima Regional Medical and Cardiac Center.

"That expired with the last sale," Miracle said. "We looked at that a couple of years ago, when (Yakima Regional) started getting into financial trouble. There is no legal ability to do anything at this point."

She said the foundation would be interested in being a part of a community conversation.

“We need those facilities and the services,” she said. “I wish we could find a buyer.”

Tammy Ayer contributed to this article.


Earlier story: 

YAKIMA, Wash. — Astria Health will close Astria Regional Medical Center in Yakima, the organization announced in a news release Wednesday.

Astria said it has received authorization from the U.S. Bankruptcy Court Eastern District of Washington to start the closing process for the hospital in Yakima. The Yakima-based organization also operates hospitals in Toppenish and Sunnyside, along with a network of health clinics.

Astria Health said it will start winding down inpatient services immediately at the Yakima hospital and expects operations to cease within two weeks.

Astria Health said it expects to emerge from bankruptcy in early 2020, but that process could not include continued operation of Astria Regional. The organization said it has lost more than $40 million since purchasing the Yakima hospital in late August 2017.

“It is with deep regret that we have to make this announcement,” said John M. Gallagher, Astria Health president and CEO said in a news release. “We have worked diligently to sustain the Astria Regional Medical Center hospital and to avoid closing it, but healthcare industry delivery models continue to shift from inpatient care to outpatient models and due to its continued operating losses, lenders have no interest in refinancing the debt associated with Astria Regional Medical Center.”

This story will be updated.

Reach Mai Hoang at maihoang@yakimaherald.com or Twitter @maiphoang