The state's mental hospital in Morganton lost its accreditation last week, after a national group determined that the hospital did not meet safety standards.
The decision is a blow to Broughton Hospital, which had recently won back its ability to accept federal funds.
The Joint Commission pulled its accreditation on the basis of hospital conditions the group found in a mid-December investigation.
Broughton can receive federal money, but the loss of accreditation means the hospital may no longer be able to bill private insurance companies for patient care. It could hurt the hospital's efforts to recruit doctors, and Broughton may not be able to accept doctors and nurses into training programs.
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State Department of Health and Human Services officials said that they were disappointed by the decision but that they were confident they could win it back through another appeal or by asking the commission to take a fresh look at the hospital.
“If we were to be surveyed tomorrow, we'd be in good shape,” said Jim Osberg, the DHHS administrator in charge of state institutions.
Four of the state's mental hospitals have gotten in trouble with outside investigators in the past year. The only hospital that has not been cited for poor patient care or sloppy paperwork is Central Regional Hospital in Butner, which opened last month.
Cherry Hospital, the state mental hospital in Goldsboro, is being threatened with the loss of its federal funds. Investigators found that a man who died at the hospital in late April had not been given enough food and water and that staff failed to properly defuse a volatile situation involving a teenage patient with developmental disabilities.
The Joint Commission came in to review Broughton in December, a few months after the federal government disqualified the hospital from receiving federal money.
The commission found hanging hazards, poor infection controls and other problems.
The state appealed the preliminary denial but could only argue about conditions as they existed in December, Osberg said. The state could not make a case that the hospital had improved since the investigation.
The Joint Commission told the state last week that its appeal was denied.