HSHS To Close Wisconsin Hospitals, Health Centers Due To Financial Challenges

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Dive Brief:

• Hospital Sisters Health System will close two hospitals and some health centers in Western Wisconsin following prolonged financial stress, the nonprofit system said Monday.
• HSHS will close St. Joseph’s Hospital and Sacred Heart Hospital around the end of the first quarter this year. The system also plans to close all the medical centers it operates in the region in partnership with multispecialty group Prevea Health by April 21, according to a release.
• The closures, which will impact roughly 1,400 HSHS and Prevea employees, will fully exit the faith-based heath system from the Western Wisconsin region.

Dive Insight:

High labor and supply expenses, inflationary pressures and workforce challenges have battered nonprofit hospitals in the years following the outbreak of the coronavirus pandemic, and caused some systems to record their worst-ever operational years.

Although the sector showed signs of stabilization in 2023, financial challenges continued to plague nonprofit health systems. Analysts warned that elevated expenses could be the new normal for hospitals.

Rural hospitals have faced particularly acute operational challenges. Over 600 hospitals — or 30% of all rural facilities in the U.S. — were at risk of closing last year, according to an analysis by the Center for Healthcare Quality and Payment Reform.

HSHS executives said the decision to close the Chippewa Valley and Eau Claire sites stemmed from persistent operational and financial stress, after the health system struggled due to a “mismatch” in the supply and demand for local health services.

HSHS looked for a partner before deciding to close, according to management. Dealmaking is an increasingly common path for hospitals looking to avoid shutting their doors — nearly a third of hospital M&A was motivated by financial stress last year, according to Kaufman Hall.

“We closely considered all other options and sought strategic alternatives,” said Damond Boatwright, president and CEO of HSHS in a statement. “After an agreement with a suitable partner did not work out, it was determined that exiting the market is the only feasible path forward.”

The health system’s Sacred Heart and St. Joseph’s hospitals first joined forces with care provider Prevea in 2015, expanding Prevea’s footprint into Western Wisconsin. Following the closures, Prevea will still have partnerships with four HSHS hospitals, according to the provider’s website.

The closures follow a cybersecurity incident that affected both providers in August.