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Astria Regional Medical Center Receives Authorization From Bankruptcy Court to Close

Astria Health | Wednesday, January 8, 2020

Media Release

For Immediate Release

Contact: Dawn R. O’Polka, Chief Communication Executive

Astria Health

509.837.1543 W 509.391.5072 C

dawn@astria.health

Astria Regional Medical Center

[Yakima, WA – January 08, 2020] Astria Health is preparing to emerge from Chapter 11 in early 2020 as lenders and investors have indicated interest in supporting Astria Health’s ongoing mission and are confident in Astria Health’s future plan to sustain healthcare for the entire Yakima Valley.

Astria Health received indications of interest from investors who acknowledge that Astria Sunnyside Hospital and Astria Toppenish Hospital are both valuable community and financial assets and are willing to refinance the debt associated with the hospitals.

However, it is with sadness that Astria Regional Medical Center (ARMC) today received authorization from the United States Bankruptcy Court for the Eastern District of Washington to begin the process of closing ARMC. This is not a decision that was made lightly, and Astria Health has made every effort to avoid it.

“It is with deep regret that we have to make this announcement,” said John M. Gallagher, President and CEO. “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. Closure is, therefore, necessary as no other feasible option is available. We want to assure our patients that Astria Health’s highest priority remains their care and we are working closely with other Astria Health Hospitals and with other local providers on their behalf.”

Inpatient services at Astria Regional Medical Center will begin winding down immediately, and it is anticipated that within approximately the next two weeks patient services will cease at the hospital. Astria Health has continued to fund substantial ongoing financial losses, but ultimately the hospital’s continued financial losses proved unsustainable. Since purchasing the Astria Regional Medical Center in late August 2017, ARMC has lost over $40M. Struggling hospital finances are not unique to ARMC, due in part to the nationwide shift in the healthcare delivery models from inpatient care to outpatient care. Astria sought lenders that would provide additional liquidity to ARMC, but were ultimately unsuccessful. Similarly, Astria Health has sought to sell ARMC or partner with nearby hospitals, all in an effort to continue providing healthcare to the community, and these paths were also not successful. Finally, Astria Health requested government assistance from the State of Washington, including intervention to save the hospital, but without success. Having exhausted all available alternatives, the closure of ARMC is unavoidable.

Astria Regional Medical Center has struggled with declining patient volumes and declining revenues for some time, and despite investigating various scenarios to sustain the hospital’s inpatient hospital services, ARMC was unable to develop a profitable model based upon patient needs. While Astria Health’s other hospitals collectively generate significant positive cash flow, funding ARMC’s continuing financial losses was placing too significant a financial drain on the overall organization. Continued funding of ARMC jeopardized the long-term sustainability of Astria Health and the region’s other healthcare facilities, including Astria Sunnyside Hospital and Astria Toppenish Hospital, as well as healthcare delivery for the Yakima Valley as a whole.

Astria Health is adapting its healthcare delivery model in the Upper Valley to an ambulatory care model and will continue to provide outpatient care to the Yakima area. As such, patients in the Upper Valley will be able to continue to access care in the Astria Health network through its ambulatory surgical center locations and Astria Health Centers. Both Primary Care and Specialty Care will be available and delivered through the Astria Ambulatory Surgical Center and Astria Health Medical Plaza in Yakima, along with other outpatient ambulatory services including Laboratory Services, Therapy Services, and Advanced

Imaging Services. Further, Astria Health will continue to deliver both inpatient hospital care and ambulatory care, outpatient and emergency care to the Yakima Valley at both the Astria Sunnyside Hospital and Astria Toppenish Hospital. The Astria Sunnyside Foundation is also not affected by this decision.

In Yakima, the following Astria Health ambulatory care and outpatient locations are not affected by the decision and will remain open during their regular business hours. Astria Health locations in Yakima include:

Astria Ambulatory Surgical Center

Astria Health Centers

Astria Plastic Surgery Center on Creekside Loop

Astria Home Health & Hospice

Astria Hearing & Speech Center

Astria Health will ensure Astria Regional Medical Center hospital patients are transitioned smoothly to either other Astria Health Hospitals or other facilities as appropriate.

Astria Regional Medical Center patients’ medical records will be made available by calling 509.576.3749, or faxing a request to 509.575-5244 or, over the next 30 days, through the Medical Records Department at the hospital located at 110 S. 9thAvenue, Yakima.

Astria Regional Medical Center employees have demonstrated their unwavering commitment to patient care during this difficult time and are valued members of the Astria Health family. As often as possible, Astria Regional Medical Center employees will be given consideration for positions within existing Astria Health Hospitals or other Astria Health facilities or assisted in finding new positions.