The Mississippi Division of Medicaid filed papers Wednesday asking a bankruptcy court for permission to withhold a scheduled roughly $2.4 million payment to Greenwood Leflore Hospital. But hospital officials say a missed payment could force the struggling facility to close by June 30 and derail a proposed agreement for the University of Mississippi Medical Center to take over its operations.
In a motion filed in federal district court the same day in a separate case, Greenwood Leflore Hospital asked a judge to order the Division of Medicaid to make the June payment as scheduled or for the case to be sent back to chancery court. The hospital’s attorneys argued the agency is seeking to bypass a chancery court order in March that forced the division to temporarily stop collecting money owed by the hospital.
Attorneys warned if the 25-bed hospital, which has faced serious financial challenges since the onset of the COVID-19 pandemic, does not receive the payment, it will collapse before it can finalize an agreement with UMMC and irreparably harm people who depend on the facility for healthcare services. The hospital, which is owned by the city of Greenwood and Leflore County, expects to complete the agreement by Aug. 1, according to a Wednesday court filing.
“The Division of Medicaid has lost sight of the fact this hospital is maintaining access to physician clinics, emergency room, inpatient and surgical care for the residents of the Central Delta region of the state,” Gary Marchand, a consultant advising the hospital’s board and former interim CEO, said in a written statement to Mississippi Today. “We have no other words.”
The Division of Medicaid wrote in a court filing that the hospital owes “somewhere in the neighborhood of $10 million” and contended it has the right to withhold the money because the chancery court’s order applied only to those tied to 2024 supplemental payments and does not prevent the agency from withholding the payments for the current year.
Matt Westerfield, a spokesperson for the Division of Medicaid, declined to comment, saying it would be inappropriate to do so during litigation.
On Thursday, the board for the Institutions of Higher Learning, which governs Mississippi’s public universities, approved the proposed transfer of Greenwood Leflore Hospital to UMMC.
“UMMC intends to utilize the facility to expand healthcare services and create additional training opportunities for students, residents and fellows in a community hospital setting,” said John Pearce, the agency’s senior associate commissioner for finance.
UMMC declined to comment.
Greenwood Leflore Hospital’s financial challenges have intensified this year. To stabilize its operations, the hospital in April laid off 86 staff members, closed clinics and filed for bankruptcy. Hospital and local officials said the changes were intended to ensure the hospital can continue to provide healthcare while it negotiated the possibility of a large health system taking over its services.
On June 7, the hospital filed a bankruptcy court document outlining a plan for the donation of its operations and facilities to UMMC, the state’s only academic medical center. Under the proposal, UMMC will not be considered a successor to the Greenwood hospital and cannot be held liable for debts not covered by the agreement.
In a court filing, Greenwood Leflore Hospital wrote the transfer of its operations to UMMC is the only viable option to continue providing quality healthcare to Leflore County and the surrounding areas of the Delta.
“The economic and regulatory headwinds adversely affecting all community hospitals are insurmountable impediments that in the judgement of the Board of Commissioners and senior management of GLH, make GLH’s long-term viability unsustainable,” a June 7 filing states.
The bankruptcy judge would have to confirm the plan before it could take effect.
The Wednesday court filings escalate an ongoing dispute between the state agency and the Greenwood public hospital over how quickly the hospital must repay debts that stem from a program designed to supplement hospitals’ low Medicaid reimbursements.
The payments, which began in 2024, initially provided a financial boost to the hospital. But they were later recalculated using updated patient volume data as part of a routine process that found the initial amount of funding was too high. That discrepancy occurred because state officials did not account for declining patient volumes after the hospital closed its labor and delivery and intensive care units in 2022.
In June 2025, Medicaid notified the hospital it would recoup $5.5 million from the hospital’s 2024 payments.
Hospital officials have repeatedly warned that the debt repayment could force the facility to close, prompting a Hinds County chancery judge in March to direct the division to temporarily suspend collection efforts.
In its Wednesday filing in bankruptcy court, Medicaid said it would continue reimbursing the hospital for routine medical claims. It also said that if the court orders payments to continue, strict safeguards should be put in place to dictate how the funds are spent. Attorneys said the hospital should only be allowed to use the money for expenses necessary to “literally ‘keep the doors open.’”
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