what does this mean???

It doesn't necessarily mean that they close. It simply means that they have lost their funding from medicare/medicaid. They can stay open, however if they treat medicare/medicaid patients, either the patients have to pay or the hospital loses money on them.

They may very well end up closing if they lose the patient base or lose enough money. I think they might be able to work to fix the problems that caused them to fail and have another survey to become accredited with provisions again.

Effectively, yes, it can close the hospital. The surveyors don't shut down a hospital directly. I worked in one hospital that apparently at one point they lost their accredidation but stayed open and in three years regained it. But they had outside funding.

What often happens:

Medicare/medicaid stops paying. That's a huge loss of income for any hospital. Often when private insurances see that, they will also stop paying for that particular hospital. So the hospital only gets income from self-payers, and there aren't many of them around. So there's no money coming in or not near enough to pay to keep the facility open.

My facility is facing the same possiblity very soon, and I keep hearing from staff who don't want to improve their practice "we always pass. They never fail hospitals." I should show them your post.

Hospitals can be "sanctioned" by CMS for either failing to meet their COPs (Conditions of Participation) on a regular survey or due to an investigation. Investigations can be triggered by an individual complaint (pt, family, physician, nurse, etc) or problems with accounting/reimbursement. Serious breaches of the rules can not only result in suspension of reimbursement, but also some huge fines, especially if there has been some sort of accounting skullduggery.

For most hospitals, it is very difficult to survive without federal reimbursement because this makes up about half of the total revenue. Unless the facility is part of a larger hospital system that can support them - loss of federal funds may mean closing the doors.