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A one-hospital town? OSF prepared to be Galesburg's sole healthcare provider amid Cottage closure

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Jane Carlson
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Tri States Public Radio
Amid the closure of Galesburg's Cottage Hospital, officials at OSF St. Mary Medical Center in Galesburg say they've been preparing for years to become the community's sole healthcare provider.

Galesburg has been a two-hospital town for more than a century.

Cottage Hospital opened its doors in 1893 and St. Mary’s Hospital followed suit in 1909.

Now many people are reeling and in shock after Cottage Hospital suspended operations on Jan. 8, days before it was set to lose Medicare funding because of numerous violations.

But the leader of the community’s other healthcare provider, now OSF St. Mary Medical Center, said OSF HealthCare has seen the writing on the wall for some time.

“We certainly were beginning to prepare ourselves more and more to become the sole healthcare provider for our community and the surrounding areas,” said Lisa DeKezel, President of OSF St. Mary Medical Center in Galesburg and OSF Holy Family Medical Center in Monmouth.

When DeKezel signed on to the job in late 2019, one of her top priorities was to build infrastructure and add services to be prepared.

That has remained a priority as OSF and other healthcare providers navigated  unexpected challenges, such as the COVID-19 pandemic, she said.

An influx of patients

Some of the red flags about the future of Cottage Hospital in recent years were loss of services and diminished staff.

DeKezel said in the last couple years there’s been a gradual influx of Cottage Hospital patients to OSF St. Mary Medical Center for intensive care, emergency care, surgeries, and other conditions requiring hospitalizations.

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Lisa DeKezel

That’s as Cottage made changes such as suspending its in-patient labor and delivery services and in-patient urology services in 2019, and as Cottage changed ownership and some of its longtime physicians left to establish independent practices at OSF in 2020.

Over the last six to nine months, as Cottage’s staffing levels plummeted and its ICU closed, the influx of patients to OSF quickened.

Even more recent developments mean OSF is preparing to take on even more of the community’s healthcare needs.

“We now will expect to begin to see moreso of a shift to our clinic side, our ambulatory side, and our outpatient setting,” DeKezel said.

Financial woes

Cottage Hospital was a standalone non-profit hospital until 2004, when it sold to Community Health Systems for $23.6 million.

The purchase price included much of the hospital’s debt at the time.

In 2015, Community Health Systems spun off some of its healthcare facilities, including Cottage Hospital and Cottage Clinics, into Quorum Health Corporation.

Quorum filed for chapter 11 bankruptcy in April 2020, claiming $373 million in assets and $1.3 billion in debts across its holdings.

In bankruptcy filings, Quorum claimed its “Galesburg entities” were losing between $400,000 and $1.6 million per month beginning in November 2018 – and lost more than $20 million in operating expenses in 2018 and 2019.

Quorum had been trying to sell Cottage for several years prior to declaring bankruptcy, according to filings.

In late April 2020, Cottage was sold to SBJ Group Inc. of Austin, Texas.

Bankruptcy filings state that “taking into consideration the over $20 million in operating losses of the Galesburg assets during 2018 and 2019, the parties settled on a purchase price of $1 million… plus the value of Galesburg’s net working capital at the close of the transaction,” which was estimated at around $800,000.

This was initially to be a cash purchase, but SBJ Group later changed its offer from an asset transaction to a purchase of the equity interests of Cottage, according to filings.

Cottage’s problems accelerate

Three members of Cottage Hospital’s board resigned in the fall of 2021, including its chairperson and vice chairperson.

Two longtime Cottage pediatricians also resigned, and would later be hired by OSF.

Following an investigation by health officials in mid-November, Cottage was put in immediate jeopardy of its Medicare program being terminated.

The initial investigation found the hospital’s governing board failed to ensure the safety of patients – primarily due to insufficient staffing.

Subsequent investigations in December showed the hospital also was not compliant with Medicare conditions regarding physical environment, patient rights and nursing services.

The hospital was notified by the Department of Health and Human Services it would lose Medicare and Medicaid payments on Jan. 14.

Meanwhile, four longtime Cottage physicians with a combined 190 years of experience retired at the end of the year.

On Jan. 3, Cottage CEO and owner Sanjay Sharma of SBJ Group filed for bankruptcy for the hospital’s clinics.  

A few days later, five Cottage surgeons and other medical staff were terminated.

A Cottage spokesperson confirmed on Jan. 7 the clinics would stay open but only family medicine and women’s health specialties would remain.

Then, on Jan. 8, the hospital suspended all other operations, posting signs to its doors that Cottage Hospital was temporarily closed.

Uncertainty about care

In the days following the closure, OSF began hearing from a number of patients who had established services and scheduled procedures with Cottage physicians and now have uncertainty about their care -- and their medical records.

“We are getting a lot of phone calls and we have a team that’s really working hard to be resourceful as far as helping to understand exactly what challenges they’re facing, what type of providers are they needing to connect with, what services are they needing, how do we help them navigate that,” DeKezel said.

DeKezel said OSF is well-positioned to be the sole provider in the Galesburg area and is hiring to meet the demand, including working to hire doctors and nurses that were terminated at Cottage.

“We know it’s important for people to continue to be able to work in their local communities and serve the patients they’ve loved and served for many years,” DeKezel said. “They’re loyal to their communities and we certainly want to make sure they continue to have the opportunity to do that.”

OSF also is seeing increased volumes in its Monmouth clinics and emergency department.

The emergency department in Monmouth is undergoing a $5.5 million renovation and expansion to be completed in 2022.

In Galesburg, OSF recently completed a full surgery department renovation and continues to add capacity.

But the timing makes all of this a challenge.

A perfect storm

DeKezel said it’s a perfect storm in healthcare right now with a massive COVID-19 surge, increased hospitalizations and well-documented nursing shortages across the country.

To add a local hospital closure on top of that makes the storm more severe in Galesburg, but DeKezel said OSF is equipped to handle it moving forward.

“There’s been a lot of strategy put in place over the past few years to prepare ourselves for this,” she said.

There are ways residents can help in not overwhelming a changing local healthcare system, however.

DeKezel said getting vaccinated, getting boosted and following all COVID-19 protocols will lessen the burden on limited healthcare resources.

In addition, residents should only use emergency departments for true life-threatening, emergency situations, and seek care with primary care providers, specialists or at PromptCare in other situations.

“The best thing people can do right now is to really take a pause and think about where the best place to present is,” DeKezel said.

Did Cottage follow protocols?

Tri States Public Radio asked the Illinois Department of Public Health on Jan. 10 if Cottage Hospital followed proper protocols in suspending operations and evacuating patients.

A spokesperson said IDPH reached out to Sharma, who confirmed the hospital closed around 9 p.m. on Jan. 8.

IDPH is now “assessing its next steps,” according to the spokesperson.

Cottage Hospital spokesperson Courtney Bibo declined to be interviewed.

A request for an interview with Sharma was also declined.

Tri States Public Radio produced this story.  TSPR relies on financial support from our readers and listeners in order to provide coverage of the issues that matter to west central Illinois, southeast Iowa, and northeast Missouri. As someone who values the content created by TSPR's news department please consider making a financial contribution.