Washington Regional Medical Center, a 25-bed critical access hospital in northeastern North Carolina, has once again filed for bankruptcy. The hospital in Plymouth is in debt to utility companies, health care service vendors and regional governmental bodies.
The trouble Washington Regional finds itself in is a kind of trouble that many rural hospitals face. Finding a way out of their debt — which adds up to millions of dollars — will ensure that the county’s residents don’t lose what little health care services they have.
Washington Regional will remain open despite the bankruptcy, Frank Avignone, CEO of the hospital’s parent company, Affinity Health Partners, told Carolina Public Press. Its Oct. 29 Chapter 11 filing won’t impact staff or patients — actually, the hospital is expanding services and hiring doctors, according to Avignone.
“We are simply restructuring our current debts,” Avignone said.
“We’ve run into a couple of vendors who don’t want to negotiate, so we’ve asked the courts to step in and help us get those debts negotiated and paid. Everyone is going to get paid. Nobody is going to get screwed.”
The hospital owes more than $300,000 to Dominion Energy for its utility bills. It also owes money to General Electric, as well as a number of its vendors, including the company that handles the hospital’s pharmaceutical operations. The full list of creditors includes more than 70 companies and organizations. Its debt to the Washington County Tax Office, for example, exceeds $150,000.
Affinity Health Partners purchased the Washington County hospital after a catastrophic 2019 bankruptcy that led to liquidation under its previous owners. By the end of the year, patients were back on the hospital floor.
So how did finances spiral out of control again, leading to the new bankruptcy?
First, the hospital experienced a failure of its electronic medical record system in 2022.
“That started a whole landslide of financial issues,” Avignone said. “It kept us from getting paid on any of our claims for almost six months because they were trapped inside a vendor’s software. We are pursuing litigation with that vendor.”
Then in 2023, Martin General Hospital in adjacent Martin County closed its doors, bringing more patients through the doors of Washington Regional.
Since the closure, emergency room visitation at Washington Regional has increased from 450 patients per month to more than 600 per month, according to Avignone. The number of patients on the hospital floor has tripled, from between three and four to between eight and 12.
In 2024, one of the hospital’s biggest customers, United Healthcare, experienced a severe data breach: the protected health information of at least 100 million people was compromised in a ransomware attack. Washington Regional Medical Center — along with many hospitals across the country — could not securely access patient’s insurance and billing information for months.
Avignone brought billing back in-house as a way to save money and have greater control on claims, but it wasn’t enough to avoid bankruptcy.
“By addressing its financial challenges now, the hospital is poised to emerge as an even stronger health care system, better equipped to provide top-tier medical care and able to uphold its mission of serving the health and well-being of the community,” reads a statement from the hospital.
Bankruptcy and rural hospital woes
The financial woes of Washington Regional Medical Center are not unique among the state’s rural hospitals, according to Lucky Xue, director of Eastern Carolina University’s Center for Healthcare Management Systems.
“Rural hospitals today face a great deal of uncertainty, and in recent years we have seen increasing numbers of closures,” Xue told CPP.
“They have difficulties collecting money from low-income patients. They have staffing issues. Plus, the pandemic impacted many rural hospital’s financial performance for the worse. Transportation issues result in many no-show appointments. It’s hard for these hospitals to run themselves without government support. With the transition of the president, many are not sure about next year.”
Avignone recognizes the difficulty of the market too.
“The hospital market is a tough place to be,” he said. “Especially for a small rural hospital in Eastern North Carolina.”
Rural hospitals usually have higher percentages of Medicare/Medicaid patients, and they tend to lose money on those patients — the government programs often pay less than the actual cost of providing care. Rural Americans are also generally older and sicker than their urban counterparts.
“We are a tiny county of about 10,000 people,” Washington County manager Curtis Potter told CPP.
“The hospital is a critical anchor point for our health care needs as well as our economy. It is one of the largest private employers in the county, and certainly one of the highest-paying.”
If the hospital were to stop functioning for any period of time, Potter said, the ripple effect would be devastating.
Residents would have to travel further distances to seek care in a rural county where transportation is the top barrier to health care access. More pressure would mount on the county’s emergency medical services, as they would be forced to transport patients out of the county. The county’s EMS has already stepped in to serve adjacent Tyrell County, according to Potter.
“I don’t think it is any secret that small, rural hospitals are dying slowly all across America, and definitely in North Carolina,” Potter said. “Everyone in rural areas is concerned about the viability of our hospitals. Of course, we are worried.”
Company promises advances, despite setback
Still, Washington Regional Medical Center is expanding, particularly in the realm of women’s health.
“We’ve added women’s health as a new service line,” Avignone said. “Doctor Bora Duruman is joining us as an OBGYN so that we can take care of the female population here in Eastern North Carolina, which is underserved in many areas.”
The hospital also opened a clinic in Williamston to directly serve residents of Martin County who lost their hospital in 2023.
Last month, Washington Regional announced a new partnership with South Carolina’s Shriners Children’s Hospital to offer telehealth care to northeastern North Carolina’s youth.
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