As the Osawatomie State Hospital ramps up renovations to avoid losing $26 million in federal funding, it will be forced to transfer or discharge patients and may freeze admissions, a Kansas agency said Tuesday.

Federal regulators have threatened to cut off Medicare and Medicaid funding if the hospital does not improve its facilities and medical practices after inspectors found it to be 25 percent overcapacity and in sub-standard condition in October.

The Kansas Department for Aging and Disability Services has since pledged to ease overcrowding and spend $3 million making the facility’s beds, ceilings and bathroom fixtures safer to avoid losing the funds, which comprise about one-fourth of its budget.

Gina Meier-Hummel, KDADS’ commissioner for community services programs, said that the work to make the hospital’s ceilings safer will be the most costly and disruptive, forcing the hospital to limit patient population to 146 until the works are complete in October.

The hospital normally has a capacity of 206 and limits its population to 167 patients. It is now working to identify which of its patients are stable enough to release or transfer to assisted living, nursing homes or other community mental health facilities, Meier-Hummel said.

But, those facilities don’t offer the same level of care and not all have the resources to take on the added patients, said Rick Cagan, Kansas executive director of mental health advocacy group National Alliance on Mental Illness.

“They’re weak compared to regular nursing facilities and certainly weak compared to Osawatomie in terms of the availability of active treatment,” Cagan said.

Meier-Hummel said that the community facilities can apply for grants to help with the new patients.

KDADS spokeswoman Angela de Rocha said the Osawatomie State Hospital is only discharging and transferring stable patients who entered the hospital voluntarily, the average stay for which is 26 days.

“We’re not kicking anyone to the curb,” she said.

Cagan said that the move will add more strain to the state’s mental health system, however, “where demand is already exceeding supply on a number of fronts.”