13 rural hospitals in Virginia at risk of closure, new report finds

Thirteen of Virginia’s 36 rural hospitals are at risk of closure in a new report from the Virginia Joint Commission on Health Care, with five classified as at immediate risk of closure.

The report, released June 4, said the five hospitals classified as being at “immediate risk of closure” were Bon Secours Southampton Memorial Hospital in Franklin, Carilion Giles Community Hospital in Pearisburg, Carilion Tazewell Community Hospital in Tazewell, Sentara Halifax Regional Hospital in South Boston and VCU Health Tappahannock Hospital.

Sentara Health, for one, acknowledged challenges in running its South Boston hospital, but a spokesman said Monday the system has no plans to close the facility.

To identify hospitals at risk of closure, the state report relied on a methodology developed by the Center for Healthcare Quality and Payment Reform that evaluates operating margins and financial reserves. Hospitals with either negative operating margins or low net assets were classified as being at “risk of closure,” while hospitals with both negative operating margins and low net assets were classified as being at immediate risk of closure. The analysis identified 13 of Virginia’s 36 rural hospitals as falling into one of those categories.

“Rural hospitals in the commonwealth face growing risk of financial distress, service reduction and potential closure as they face challenges with low patient volumes, unfavorable payer mix, inadequate reimbursement, rising costs and persistent workforce shortages,” the report stated. “Federal payment adjustments and special rural designations help support some hospitals, but they do not fully solve the structural gap between costs and reimbursement.”

Since 2005, 108 rural hospitals have closed nationwide and 139 have eliminated inpatient services, according to the report, which says financial pressures are forcing many hospitals to scale back services and restructure operations.

“When this happens, communities face longer travel times, delayed access to care and the loss of an important economic anchor,” the report states.

Mayesha Alam, an associate staff attorney and health policy analyst with the joint commission, presented the report on rural hospitals at a Thursday commission meeting.

“Where do individuals go if somebody is suffering from a heart attack, or a woman is ready to deliver a baby? Some of these could be life-and-death situations,” said Democratic Sen. Barbara Favola, the commission’s chair.

“My answer to you is that they would go to the next-nearest facility,” Alam said. “For some areas throughout the commonwealth, that could be a long ways away.”

Favola added, “And in a wait, that may be deadly.”

Potential closure of Hiram Davis hospital

Meanwhile, the commission, a bipartisan group of state delegates and senators, is also deciding the fate of Petersburg’s Hiram Davis Medical Center, a state-run facility that the Virginia Department of Behavioral Health and Developmental Services has recommended closing. The department runs 12 facilities, including eight behavioral health facilities for adults and a psychiatric facility for children and adolescents.

Although the 52-year-old Hiram Davis facility is only partially occupied, and DBHDS officials say that the 23 patients who live there will have other places to move to, Del. Otto Wachsmann, a Republican who represents nearby Southampton, Sussex and Greensville counties in his district, expressed concern for Davis patients amid potential rural hospital closings.

“Just a few moments ago, our commission talked about how we’ve got the problem with some rural hospitals failing,” Wachsmann said during a Thursday commission meeting in Richmond. “If the state vacates this space and everybody is relocated to private [facilities], what happens if those private facilities where they’re placed may fail and close? What is the safety net for patients at that point in time?”

Daryl Washington, who was appointed DBHDS commissioner by Gov. Abigail Spanberger in January, said the department is building more room for patients at Southeastern Virginia Training Center in Chesapeake. He added that if the state continues operating Hiram Davis over the next six years, it will cost $285 million, while closing Hiram Davis and reinvesting that money will save the state $170 million.

Also, he noted, Hiram Davis’ HVAC system is in disrepair, and the medical center nearly had to be evacuated recently when the system was failing to regulate the temperature.

“That is my largest worry … is if the facility fails, we won’t be given the opportunity to have that thoughtful transition to the community,” Washington told legislators. “It will be an emergency evacuation, and that is kind of what keeps me up at night, quite frankly.”

Favola said she expects to “provide some guidance” at the July commission meeting regarding the legislators’ decision whether to shutter Hiram Davis.

Response from health systems

At Bon Secours Southampton Memorial Hospital, operating margins fell to negative 29% in 2024, the worst among the seven hospitals identified as facing the greatest risk of financial distress or closure. Patient days declined from 6,606 in fiscal 2015 to 2,445 in fiscal 2024, while inpatient surgical procedures fell from 441 to 67 and annual deliveries dropped from 144 to zero over the same period.

“The challenges facing rural healthcare are not new,” said a Bon Secours spokesperson. “In recent years, however, those headwinds have intensified. We are continually monitoring this shifting landscape and remain committed to addressing these challenges thoughtfully and responsibly, with the goal of preserving access to care for the communities we serve. Our doors remain open, and we continue to deliver safe, high-quality care to the patients and families in the communities we serve.”

Sentara Halifax Regional Hospital reported a $19.1 million operating loss in 2024. The report found that physician recruitment challenges since 2015 resulted in the closure of neurology, obstetrics, ear, nose and throat (ENT), and urology services. It noted that staffing challenges have also made it difficult to maintain around-the-clock orthopedic coverage. Between 2015 and 2024, the report said the hospital transitioned from a higher-capacity, full-service inpatient facility to a significantly smaller operation with reduced inpatient volume, diminished surgical activity and the gradual loss of its obstetric program.

“Ensuring access to quality care for the communities we serve remains our highest priority,” Sentara spokesperson Mike Kafka said in a statement. “We will continue to serve the communities who rely on us, advocate for those without a voice and work alongside state and federal leaders, nonprofit partners, and fellow health systems to navigate the road ahead.”

Kafka said there are no plans to close Sentara Halifax Regional Hospital.

“In fact, in January, Sentara Halifax Regional Hospital marked a major milestone in the construction of its new hospital with a traditional topping off ceremony celebrating the placement of the final steel beam atop the new structure which is being built to meet the needs of the community for decades to come,” he said.

At Carilion Giles Community Hospital and Carilion Tazewell Community Hospital, the report identified workforce shortages, inflationary pressures, payer mix imbalance and demographic decline as the most consistent drivers of financial strain. It also noted that more than 70% of services in the communities served by the hospitals are provided to Medicare and Medicaid patients.

At VCU Health Tappahannock Hospital, the report attributed service disruptions to medical staff shortages during the facility’s transition from Riverside Health System to VCU Health, which contributed to declines in inpatient volume. Patient days fell to a low of 1,530 in fiscal 2022 before rebounding to 6,505 by fiscal 2024, while total surgical procedures declined from 3,887 in fiscal 2015 to 1,094 in fiscal 2024. The report also noted that approximately 85% of the hospital’s inpatient payer mix consists of Medicare and Medicaid patients and identified chemotherapy infusion, ICU-level care and speech therapy as service lines placing the greatest strain on the organization.

VCU Health and Carilion did not immediately return requests for comment.

State Sen. Tammy Mulchi, R-District 9, whose district includes Halifax County, said she takes concerns about the financial condition of rural hospitals seriously but noted that the JCHC report may not reflect the full financial position of hospitals that are part of larger health systems.

Mulchi pointed to Sentara’s ongoing investment in a new facility for Halifax Regional Hospital as evidence of the health system’s long-term commitment to the region.

“I am encouraged by Sentara’s clear commitment that it will continue serving our community and by the significant investment being made in the construction of a new hospital facility designed to meet the needs of this region for decades to come,” Mulchi said in an email.

She said policymakers should work closely with hospitals and local communities to develop solutions tailored to the unique challenges facing rural providers.

The eight hospitals classified as being at risk of closure were:

• Ballad Health Dickenson Community Hospital in Clintwood
• Ballad Health Smyth County Community Hospital in Marion
• Bath Community Hospital in Hot Springs
• Bon Secours Rappahannock General Hospital in Kilmarnock
• Bon Secours Southern Virginia Medical Center in Emporia
• Duke Lifepoint Twin County Regional Hospital in Galax
• HCA LewisGale Hospital Pulaski in Pulaski
• VCU Health Community Memorial Hospital in South Hill

Virginia Business Deputy Editor Kate Andrews contributed to this story.