CLYDE — Officials with Haywood Regional Medical Center are weighing their options after the federal government cut the hospital’s Medicare and Medicaid funding last week and two major health-insurance providers terminated their coverage there.

The government’s suspension of payments to the center was prompted by an inspection that found potentially dangerous problems in how drugs were administered. The funding accounts for 68 percent of HRMC’s total revenue.

Blue Cross and Blue Shield of North Carolina announced last Friday that the hospital agreed to end its coverage by the network, effective last Saturday, while the hospital attempts to fix its problems. Crescent, a nonprofit organization that contracts physician services for employers, also suspended HRMC from its network.

Hospital President David Rice stepped down Feb. 25 and Shirley Harris, the hospital’s vice president over nursing, also resigned.

The 170-bed center is Haywood County’s third-largest employer, with 900 workers.

Meanwhile, consulting firm Compass Group is sending temporary managers to run the facility while the hospital’s board develops a plan to fix the problems that led to the funding loss.

At a meeting last Thursday, interim CEO Alton Byers said the problems were caused by the incompetency of some contract nurses. He noted that the hospital is no longer using the same agency to provide nursing services.

According to the government report on the hospital, inspectors found that the hospital’s governing body failed to provide adequate oversight to ensure medicines were being properly administered.

There were problems with transcription of medication orders, dose calculations, timely administration of medications, communication with physicians about medication administration variances and pharmacy oversight of medication administration.

The hospital has enough money in reserves to stay open at least two months without Medicare and Medicaid funding, the hospital’s board chairwoman, Dr. Nancy Freeman, said last Thursday.

That will not be enough to stay open, however, if it takes six months to get the hospital’s funding reauthorized, as it has in similar cases.

HRMC’s problems stretch back to last year. The hospital’s finances were weakened by an overall loss of $1.9 million because of increased operating costs, including labor, drug and medical supply, and contract services.

Then, last November, the state investigation that ultimately led to the federal funding cutoff was triggered by a doctor’s complaints about mistakes and negligence in patient care. Dr. Aloha Bryson, who is suing her contract employer, PrimeDoc, on the grounds that it forced her to resign after she blew the whistle on the hospital’s problems, detailed the alleged errors in a letter sent to the hospital’s board and county leaders.

Among Bryson’s charges was that a 37-year-old Medicare patient who died at HRMC did not receive a critical medicine infusing. The hospital was not cited for that death, but the investigation led state inspectors to uncover numerous other problems.