A Hinds County Chancery judge on Wednesday ordered the Mississippi Division of Medicaid to temporarily stop collecting money owed by Greenwood Leflore Hospital after the hospital said resuming the recoupments would likely force the Delta hospital to close.
The public hospital and Mississippi Medicaid have been locked in a dispute since last summer about how quickly the hospital must repay the debt, which stems from a state program designed to help struggling hospitals. Under the order from Judge J. Dewayne Thomas, the state must pause the recoupments while the hospital’s case proceeds in court, as long as the hospital posts a $50,000 cash bond within 30 days.
The program, designed to supplement low Medicaid reimbursements, initially provided a financial boost to Greenwood Leflore Hospital, which has struggled for years to stay open. But the payments were later recalculated using updated patient volume data as a part of a routine process that found the 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 a Thursday email to Mississippi Today, Gary Marchand, the hospital’s former interim CEO who now serves as a consultant for the Greenwood Leflore Hospital’s board, said the hospital appreciates the court’s understanding of “the financial crises” created by the repayments.
The Division of Medicaid did not respond to a request for comment.
If the Division of Medicaid were to resume the recoupments — previously scheduled to begin again in March — it would have dire consequences for the hospital, Marchand said in a March 6 court filing.
“GLH’s financial viability will be harmed to the extent that it will be unable to meet its financial obligations, which will likely lead to closure absent extraordinary action,” Marchand wrote.
The Division of Medicaid notified the hospital in June of 2025 it would recoup $5.5 million. Hospital leaders warned the agency in September that the proposed repayment schedule of $900,000 a quarter — with about $2 million already recovered that summer — would severely strain the long-struggling hospital.
In December, both parties agreed to pause the repayments until March to give the hospital time to secure a bond. But Marchand wrote March 6 that the hospital had in good faith exhausted all reasonable efforts to obtain a bond, including working with 10 surety companies through two agents and negotiating directly with the Division of Medicaid. Surety companies are specialized financial institutions that issue bonds to guarantee that a business will fulfill contractual obligations to another party.
Marchand said the hospital is exploring options to sell, lease or transfer the facility to a larger health care system. If the recoupments resume, “the likelihood of successfully completing these negotiations will be irreparably harmed,” he said, pointing to the importance of staff remaining at the facility and the continued maintenance of property and equipment.
Mississippi Today previously reported that Greenwood Leflore Hospital and its owners signed a letter of intent in February to discuss a possible transaction in which the hospital would contribute all land, facilities, assets and operations to the University of Mississippi Medical Center, the state’s only academic medical center, or its affiliate. The proposed donation would include clinics, ancillary facilities and physician practices, and it would give UMMC full authority and control over the hospital.
The hospital needs four to six months to complete negotiations pertaining to the lease, sale or transfer of the hospital, and for the repayments to be paused during that time, Marchand said.
In recent weeks, state lawmakers have also sought to pave the way for a possible transfer of the hospital.
State lawmakers hurried Senate Bill 3230 through the legislative process to allow the public hospital to file for bankruptcy, passing it out of both chambers March 6 and sending it to the governor’s desk. This step will allow another entity to take over, Sen. Rita Parks, a Republican from Corinth and chair of the Local and Private Committee, told fellow lawmakers.
“We do have another hospital that is waiting at the door to come in,” Parks said.
