San Antonio-based Laurel Ridge Treatment Center, a 330-bed behavioral health facility owned by King of Prussia, Pa.-based Universal Health Services, will lay off approximately 648 employees weeks after CMS terminated its Medicare provider agreement.
CMS terminated the facility’s Medicare agreement April 30 after determining it failed to substantially comply with Medicare and Medicaid health and safety participation requirements, according to the April 15 notice from the agency. In response, the treatment center filed a civil complaint in the U.S. District Court for the Western District of Texas to prevent HHS from “taking this action imminently.” The court denied the temporary restraining order and preliminary injunction.
Termination of a Medicare provider agreement means Medicare will no longer reimburse the facility for newly admitted patients, and Medicaid funding may also be affected. CMS recently terminated Chicago-based Weiss Memorial Hospital’s participation in the Medicare program. The hospital ceased inpatient services and closed its emergency room Aug. 8.
The Texas facility said the layoffs are expected to take effect June 26, affected workers were notified April 27, according to a WARN notice letter filed with the Texas Workforce Commission.
A UHS spokesperson said in a statement shared with Becker’s that “CMS recently notified Laurel Ridge that its Medicare provider agreement will be terminated effective April 30, 2026. We are deeply disappointed by this outcome and recognize the significant impact it will have on our dedicated team members and the communities we serve. As a result of this regulatory action, we must implement a workforce reduction. Support resources are being provided to impacted employees during this transition period, including career fairs.”
At the Becker's 11th Annual IT + Revenue Cycle Conference: The Future of AI & Digital Health, taking place September 14–17 in Chicago, healthcare executives and digital leaders from across the country will come together to explore how AI, interoperability, cybersecurity, and revenue cycle innovation are transforming care delivery, strengthening financial performance, and driving the next era of digital health. Apply for complimentary registration now.