Holy Cross Hospital on the Southwest Side of Chicago needs to fix patient safety issues or the federal government will stop paying the hospital for elderly patients on Medicare health insurance.

The Centers for Medicare & Medicaid Services, a federal agency that regulates and reimburses hospitals for treatment they provide, alerted Holy Cross to the potential significant penalty in an Aug. 25 letter obtained by WBEZ.

“We have determined that the deficiencies are so serious they constitute an immediate threat to patient health and safety,” Anna Olson, a CMS branch manager in Chicago, wrote to Holy Cross chief administrator Donnica Austin-Cathey.

Holy Cross is part of Sinai Health System and mainly serves low-income and elderly people of color. The hospital has one of the busiest emergency departments in the city, state records show.

The move could be a blow to access for elderly people who are especially vulnerable to getting COVID-19. In Chicago, 80% of the nearly 3,000 people who have died of the new coronavirus have been 60 or older, according to the city’s public health department. (Medicare insures people who are 65 and older).

The restrictions would also hurt Holy Cross’ bottom line. The hospital is heavily dependent on government funding. Medicare makes up about one-third of the hospital’s annual revenue, according to the most recent state records. The majority of Holy Cross’ revenue comes from Medicaid government insurance for low-income and disabled people, which typically reimburses hospitals less than what it costs to treat patients

The community hospital, located in the Chicago Lawn neighborhood, failed to find and remove “ligature risks” on the Adult Behavioral Health Unit that patients could use to harm themselves, according to a CMS inspection report.

Ligature risks include door frames and hinges. They’re anything that could be used to attach to a cord or a rope, for example, that someone could use to hang or strangle themselves, the inspection report said.

On a tour of the adult behavioral health unit, investigators saw eight patient rooms with beds where patients could be restrained, the inspection report said. There were four steel rings attached on both sides of the beds that could be used as attachment points for restraints. Investigators also saw two bathroom doors with separated and protruding hinges, the report said.

Holy Cross “failed to ensure that patient rights were protected,” the report said. “This has the potential to affect the safety of the 17 psychiatric patients on census as of 08/19/2020 and any future psychiatric patients who become suicidal.”

In an interview with investigators, the executive director of the hospital’s adult behavioral health unit said, “It is not safe to have patients in these identified ligature risk rooms. … I am not sure why the staff did not identify these ligature risks during their environmental rounds.”

The inspection report also revealed that a patient who was diagnosed with paranoid delusion grabbed a nurse’s hospital badge and left through a stairwell. Employees didn’t follow protocol to find the patient.

Holy Cross must quickly outline to CMS how it plans to fix the “deficiencies,” or else be terminated from Medicare.

In an emailed statement, a Holy Cross spokesman said the hospital is addressing all the concerns highlighted during the recent investigation.

“Our leadership team is taking this matter seriously and is pulling together an improvement plan to immediately course correct the identified areas of improvement,” the spokesman wrote.

“We want to be clear in stating that Holy Cross Hospital is not closing,” he wrote.

Kristen Schorsch covers public health on WBEZ’s government and politics desk. Follow her @kschorsch.