The last time a hospital closed in Maryland, Bill Clinton was president, Celine Dion was at the top of the music charts and Michael Jordan announced his retirement from basketball.
It was 1999 and Liberty Medical Center, New Children's Hospital and Church Hospital in Baltimore all shuttered their doors, blaming low occupancy, steep revenue declines and the challenge of competing as a small hospital.
Sixteen years later, Laurel Regional Hospital is ending its status as a full-service hospital — a move that has triggered outrage and protest from politicians, union leaders and residents.
"The whole situation has put a bad taste in people's mouths," said Laurel Mayor Craig A. Moe. "People are very frustrated. They are very concerned and don't know what is going on."
The dramatic changes at Laurel Regional, which has already shut the maternal and child health department, come as a new wave of hospital closures is hitting the country. Hospitals face increased revenue pressures from Obamacare, and in Maryland from a special agreement with federal government, pushing care out of hospitals and placing more focus on preventive medicine.
The average hospital occupancy rate declined from 64 percent to 60 percent nationwide from 2006 to 2013, according to the Medicare Payment Advisory Commission. There were 15 hospital openings and 25 hospital closures in 2013, yielding a loss of 1,000 hospital beds. Bed capacity is likely to continue declining as more treatment shifts to outpatient settings, the commission said.
Dimensions Healthcare, the private nonprofit organization that manages Laurel Regional, blamed revenue and patient declines for the changes. The hospital, which had 236 beds when fully operational, is losing $50,000 a day and expects an overall loss of $15 million to $20 million by the end of the current fiscal year.
The hospital also lost $15 million in state subsidies this year, said Erika Murray, spokeswoman for the Dimensions health system.
Dimensions, which also operates Prince George's Hospital in Cheverly and a stand-alone emergency facility in Bowie, said that the number of inpatient visits to Laurel Regional declined 30 percent in the past decade and that less than 10 percent of the people who live near the hospital even use it. The rest go elsewhere because of doctor referrals, personal preference or other reasons.
"We are trying to be self-sufficient and we want to be self-sufficient, but no business can survive that," Murray said.
Dimensions announced this summer that it would transition the hospital to a $24 million ambulatory care center with 30 inpatient beds and limited services by 2018. Now, mothers who show up will be checked in the emergency room for assessment and then sent to Prince George's Hospital. Some surgery beds have also been eliminated.
Plans for Laurel Regional have sparked resentment from some in the community; they say area residents will have to travel too far for care. Some were caught off guard by the decision and questioned whether Dimensions' management of the hospital was the real problem. Others wondered if Dimensions was cutting back at the Laurel hospital to focus on building a facility in conjunction with the University of Maryland Medical Center in Largo; an application is pending with the Maryland Health Care Commission.
Jennifer Epps, vice president of the 1199 SEIU United Healthcare Workers East labor union, which represents service workers at the Laurel hospital, said Dimensions always talked about financial problems at the Cheverly facility and never at Laurel. She was also concerned about job losses.
Murray said Dimensions has sent layoff notices to 105 employees. Of those, 61 percent took other jobs within the system.
"We want to figure out how to maintain a full-service hospital because the community needs one," Epps said.
Sparked by concerns from the community, a meeting was scheduled this month before state legislators; Dimensions will appear to discuss the reasons behind the closure. State legislation has also been submitted to make it harder for hospitals that receive public funding to unilaterally shut down.
The health system entered an agreement with Prince George's County and the state of Maryland several year ago to obtain a combined annual subsidy of $30 million to help operate the facilities. The aim was to help provide better health care in the county.
Sen. James Rosapepe, a Prince George's County Democrat, questioned whether Dimensions was the best operator for the hospital.
"Dimensions has said they can't run Laurel successfully," Rosapepe said. "That doesn't mean no one can run Laurel successfully."
Rosapepe said the hospital should explore options with other operators, such as BridgePoint Healthcare. The for-profit hospital operator, which has two hospitals in Washington, D.C., has approached Dimensions about buying the Laurel facility. Discussions were put on hold after 1199 SEIU and two local residents filed a lawsuit in Prince George's Circuit Court to seek a temporary restraining order that would prevent the drastic cutbacks at the hospital.
The lawsuit contended that Dimensions had violated a lease agreement and a resolution passed by Prince George's County Council, and could not unilaterally decide to eliminate beds or services. A judge recently ruled against the union and said discussions with BridgePoint could continue, Murray said.
BridgePoint did not return calls for comment. The union has not said whether it would appeal the decision.
Joshua Nemzoff, president of Nemzoff & Co., a New Hope, Pa.-based hospital acquisitions consulting firm, said he has represented clients that are also interested in buying the facility, but has been unable to strike a deal.
"They are losing tons of money, you would think if someone offered to take [the hospitals] off their hands the first thing they would think was, 'Thank you,'" Nemzoff said.
All the buyers had the same plans, he said: keep Laurel Regional as a hospital, expand another medical office site Dimensions operates in Bowie into a hospital and close the hospital center in Cheverly. He said there was room for two hospitals in the county, but that the Cheverly facility needed too much money for upgrades. Bowie and Laurel are good locations with room to expand, he said.
Nemzoff said Dimensions finds it difficult to make the correct business decision because officials don't want to upset patients, doctors, unions or politicians. "I think the political ramifications are too painful for them," he said.
Murray said Dimensions is making the decision that is best for business and the community.
"We want to stay in the community and keep the facility," Murray said. "But we also want to be profitable and do what best meets the needs of the community and the data we have says were are not meeting those needs right now."
Baltimore Sun reporter Meredith Cohn contributed to this article.