Green Valley's only hospital closes amid financial woes

The Santa Cruz Regional Valley Hospital closed down last week, after years of financial struggles. Located 30 miles south of Tucson, it was Green Valley’s only hospital.

The closure occurred after TMC HealthCare, a large healthcare provider in southern Arizona, backed out of acquiring the hospital last month.

TMC Health worked with the hospital on the acquisition for seven months before it decided to back out of the deal.

“After careful due diligence, the decision was made to not proceed with the acquisition of the hospital," said TMC Health in a statement. "We are working closely with management at Santa Cruz to identify appropriate placements for as many employees as possible. We continue to explore opportunities to provide needed medical services to the Green Valley community.”

According to the Santa Cruz Valley Regional Hospital's website, the 7-year-old hospital ceased all services at 12 p.m. Thursday. The 49-bed facility served Green Valley, Sahuarita, Nogales, Rio Rico, Tubac, Amado, Patagonia and Sonoita.

On June 20, a Worker Adjustment and Retraining Notification Act notice was issued stating that 315 employees would be affected by the closure.

WARN requires “employers to provide notice 60 days in advance of covered plant closings and covered mass layoffs,” according to the state’s Department of Economic Security website.

Closure was caused by a 'perfect storm' of events

Pima County District 4 Supervisor Steve Christy said there was a “perfect storm” of factors that contributed to the closing of the hospital from debt to lack of patients.

Christy said many residents chose to go to Tucson with its state-of-the-art medical facilities, and Sahuarita, which neighbors Green Valley and has an 18-bed medical center that opened in 2020.

Even residents in communities as far south as the border town of Nogales often preferred to travel to Tucson, said Olivia Ainza-Kramer, president of the Nogales-Santa Cruz County Chamber of Commerce.

“For Nogales and Rio Rico, our hospital is Holy Cross hospital, the services ... are very good and very good staff except that it's a small hospital. Whenever they (people) needed to be treated for something else that they couldn't treat here, they would be transferred to Tucson,” she said.

Representatives from the Carondelet Network, which runs Holy Cross did not respond to requests for comment.

The Arizona Daily Star reported on July 2, the hospital’s former CEO Stephen Harris said only about 15% of the people living in Green Valley used the hospital.

Another issue facing the Santa Cruz Valley Regional Hospital was mounting debt. The Daily Star’s article reported the hospital fell behind on repaying Medicare payments advanced to keep the hospital open during the pandemic.

Christy noted that with the recent downturn of the economy, the frequent change in leadership of the hospital, and the medical complex's complicated ownership structure, the decision of TMC Health to back out of the deal was no surprise.

According to Pima County GIS maps, multiple entities own different buildings and the land the hospital sits on.

Christy said the plan for TMC Health to take over the hospital was one last effort at saving the institution after years of financial issues and ownership changes. He called the closure “gut-wrenching” after the deal fell through.

Hospital has a turbulent past

The Arizona Republic reported in May 2020, that in 2018 Lateral Investment Management took over ownership and gave the hospital its current name after it emerged from Chapter 11 bankruptcy.

Then, during the COVID-19 pandemic, the state of Arizona gave Santa Cruz Valley Regional Hospital one-time funding of $3.6 million from the COVID-19 Crisis Contingency and Safety Net Fund in May 2020 after hospital leaders said they were on the brink of closure due to a drop in revenue during the first months of the pandemic.

Hospital leaders told The Daily Star the hospital, which leaders estimated cost $79 million to build, had experienced “turmoil and financial mismanagement” in its early days.

Before the facility was built the area did not have a hospital or emergency room, and residents had to travel about 30 minutes by car to get to an ER.

“It’s very sad because in 2015 it opened with such high hopes and great expectations,” Christy said. “It’s a beautiful facility. I think it's indicative of what many rural hospitals are experiencing right now.”

Christy said there has been no talk about what will become of the complex that housed the hospital.

Hospital administrators could not be reached for comment.

Coverage of southern Arizona on azcentral.com and in The Arizona Republic is funded by the nonprofit Report for America in association with The Republic.

Reach the reporter at sarah.lapidus@gannett.com.

This article originally appeared on Arizona Republic: Green Valley's only hospital closes amidst financial woes