RALEIGH, N.C. — The Department of Health and Human Services will lose approximately $800,000 from its budget per month in Medicaid and Medicare receipts that are usually generated by patients at a Goldsboro mental health hospital that lost its provider status earlier this month.

That's according to Leza Wainwright, co-director of the Division of Mental Health, Developmental Disabilities and Substance Abuse Services, who says Cherry Hospital will remain open to those patients and that there will be no disruption of services to the community.

The hospital lost its Medicaid and Medicare provider status on Sept. 1 after a team of state employees working on behalf of the federal Centers for Medicare and Medicaid Services examined the hospital's operations and found the facility did not comply with patient health and safety standards.

Department officials say it is too early to determine when Cherry Hospital will be ready to reapply for federal funding.

"It's a significant strain on the budget, and we will have to look at what short-term operational changes we may have to make," Wainwright said.

Federal officials initially threatened to cut off the insurance reimbursements on Aug. 13, following the April 29 death of a Steven Sabock, 50, who was left unattended for more than 22 hours while staff members played cards and watched television.

"We had fixed the items identified in the Aug. 13 visit," Wainwright said. "What happened there were additional incidents while they were on site."

According to its 170-page report, CMS cited the hospital for, among other things, inadequate frontline staffing and insufficient training plans.

"It clearly gives the mental health system, as a whole, another black eye," said John Tote, with the Mental Health Association in North Carolina.

Cherry Hospital, which serves more than 2,700 people a year in 36 eastern counties, has come under scrutiny in recent months after a number of incidents involving staff.

A federal report found Sabock sat in the same room for four work shifts, ate nothing the day he died and had little food in the three days preceding his death. Workers were supposed to be closely monitoring his condition and might have forged documents that said they had.

The report also faulted the hospital for an incident where a physician punched a patient with developmental disabilities after the teen bit him.

Tote said he is concerned that the effects from Cherry Hospital losing its provider status could reach well beyond the Goldsboro facility.

"We could very well be at a tipping point within the system, if we're not careful," he said.

Wainwright agrees, saying the department has recognized such issues are systemic. She has hired Compass Group Inc., of Cincinnati, to serve as an independent management consultant to evaluate the operational and management structure of the hospital.

"At this point, the department has no choice but to step outside of the department and really call on folks to come in with an objective look at it so you don't have a fox-guarding-the henhouse kind of mentality," Tote said.

At a cost of about $90,000, a team of five consultants is expected to provide a detailed corrective action plan within the next 10 days.