‘Perfect storm’: Why Teton Valley Health Care chose to lay off staff, close infusion clinic

DRIGGS — Facing difficult decisions as state and federal funding stalls, Teton Valley Health Care administrators made the decision to lay off dozens of employees and close an infusion clinic.

In all, 26 employees were laid off on Jan. 22 following a “perfect storm” of financial troubles for the company, said Nancy Osmundson, Teton Valley Health Care’s chief public relations officer.

The hospital’s biggest issue, she said, has been maintaining rainy-day funds to cover unexpected costs.

“With managing expenses — watching expenses throughout the organization, really trying to cut where we can — while preserving our quality of patient care … (It) was making a dent,” Osmundson said. “But then over the last, I guess, three months of fall… There were just numerous factors that kind of hit at once with us and ate up what cash we did have very quickly.”

She said one factor affecting the hospital was the takeback from Medicare and Medicaid, which required the hospital to repay $1.2 million to the programs after it made more money than expected.

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Another factor affecting the hospital late last year was the low patient volume. Osmundson said Teton Valley Hospital sees roughly 50,000 patient visits annually, and typically sees a spike in visits during the ski season. This year, however, likely due to the lack of snowfall in the area, she said the hospital is seeing 75% fewer visits.

The third major factor Osmundson pointed to is the federal government’s consideration of further cuts to Medicaid reimbursement. She said back in September, Medicaid reimbursements were cut by 4% and there are plans to extend those cuts further.

“It’s just this perfect storm of a lot of things,” Osmundson said.

The Big Beautiful Bill and cuts to funding

Teton Valley Health Care administrators were looking forward to possible support from the Rural Health Transformation Program, which stemmed from the passage of the One Big Beautiful Bill, aimed to support rural hospitals.

The funding program is estimated to provide Idaho with nearly $930 million over the next five years to aid rural hospitals, according to the Idaho Capital Sun.

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“It was initially a lot of excitement around this: ‘This is just what rural hospitals need, and thank God the feds are paying attention,” Osmundson said.

But after a meeting with county commissioners, who had recently returned from a visit with colleagues in Washington, D.C., Osmundson says administrators grew hesitant about how much funding the hospital may actually get.

“At this point, we’re now seeing that suburban and urban hospitals are going to be able to get these funds, even universities,” she said, meaning there will be less money to go around.

“I doubt we’re going to see much, if any, of it coming to our hospital,” Osmundson said.

Whatever funding Teton Valley Hospital receives, Osmundson said she doesn’t expect it to arrive until at least the fall of 2026.

Another financial component that is hurting the hospital was a COVID-19-era piece of legislation called the Coronavirus Aid, Relief, and Economic Security Act. Osmundson said about $2 million of that federal funding is tied up by the IRS and hasn’t been released to the hospital.

“Having that in the bank would be buffering us at this time, but we can’t get it released,” she said. “When there are four or five (financial issues) hitting you at one time, it absorbs what cash we have very quickly.”

Future of health services and impacts

Teton Valley’s grim financial situation is not a case of mismanagement, Osmundson says, but rather a reflection of the state of rural health care in Idaho.

“Right now, I think it is tough for all rural health care across the country,” she said.

Osmundson, who is also in charge of fundraising, said Teton Valley administrators decided to close the infusion clinic in part because of the high cost of the medications its patients need.

For now, the hospital will continue to see current infusion patients, but they will eventually be transferred to other locations. It’s a move that won’t be easy for those patients, Osmundson says, as there aren’t many treatment options close by.

The two closest locations are Jackson Hole, Wyoming, an hour away, and Idaho Falls, an hour and 15 minutes away.

If financial conditions do not improve, Osmundson said Teton Valley may even have to close its hospital — which could happen as early as this year. That decision, she said, would be a burden on the whole community.

“The closest hospital is a minimum of 45 minutes away, in good weather. In bad weather, our roads close all the time,” she said. “There are many times throughout the winter when helicopters can’t fly.”

“It is a very fair statement — not a dramatic statement — to say, if this hospital closes, lives will be lost,” Osmundson added.

However, she is choosing to stay optimistic for now. Her hope is that the recent layoffs and other changes will help Teton Valley buy time for financial conditions to improve.

“Having been in this world of philanthropy for rural hospitals for a long time, I feel like what the communities need to understand is that rural health care has got to change,” Osmundson said. “We’ve got to have the expectation that, moving forward, at least for our community, health care is going to have to look different.”

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