The move is likely to force Los Angeles County to close the long-troubled public hospital, give it to someone else to run or turn it into a clinic, as officials have repeatedly acknowledged.
During a lengthy meeting, federal inspectors told King/Drew officials that the hospital still did not meet minimum patient-care standards.
King/Drew has been out of compliance with federal guidelines since January 2004, when it was first cited for serious lapses in care that had injured and killed patients.
During the latest inspection, the hospital failed nine of the government's 23 conditions for federal funding, according to a letter from the U.S. Centers for Medicare and Medicaid Services that was hand-delivered Friday to King/Drew's administrator.
Federal regulators identified problems in nursing, pharmacy, infection control, surgical services, rehabilitation services, quality control, patients' rights and the hospital's governing body and physical plant.
In fact, inspectors found more problems in the supposedly reformed King/Drew than they had at any time in the last three years. Some of the life-threatening lapses cited were nearly identical to those found in the past.
For instance, the letter said, "there were no appropriately trained and competent staff, on the 3E unit, assigned to watch the heart monitors of seriously ill patients who required cardiorespiratory monitoring. This is especially troublesome, because previously documented cases showed that patients died when nurses at King/Drew failed to heed heart monitor warnings."
Staff members also admitted to inspectors that they had hit a patient's morphine pump at least five times to deliver additional sedation, even though the device is intended only to be used by patients. The inspectors called this "a very unsafe practice that can lead to over-sedation, respiratory depression or even death," the letter says.
"Termination of the Medicare provider agreement is final," the letter states in underlined text.
It was unclear Friday night whether or how the hospital might continue to operate. The decision means that King/Drew, as currently configured, cannot continue to receive crucial federal funding for Medicare and Medi-Cal patients.
County health officials said their lawyers have called an emergency closed-door meeting of the Board of Supervisors on Monday to discuss the hospital's future. Supervisors could not be reached for comment late Friday.
In a statement, county health officials said they were still analyzing the agency's decision.
"The department is committed to finding ways to provide the community access to essential medical services," said Dr. Bruce Chernof, director of the county Department of Health Services.
The federal government has threatened to pull its funding from King/Drew at least three times before, but it has repeatedly granted reprieves after county officials pledged reforms, including training and disciplinary action for problem employees. In June, the agency said King/Drew would not be given additional chances if it failed a final, top-to-bottom inspection, which was unannounced and took place July 31 to Aug. 10.
The federal action marks a striking failure for the Board of Supervisors, which has spent tens of millions of dollars trying to fix the hospital in the last three years and has been harshly criticized for ignoring King/Drew's mounting problems.
Jim Lott, executive vice president of the Hospital Assn. of Southern California, said the county's only choice now is to hand the hospital "lock, stock and barrel" to a private hospital chain and accede to whatever demands that provider makes.
"They have no choice if they want to keep it going," said Lott, who served as vice chairman of a now-disbanded King/Drew advisory committee. "The county can't afford to come up with $200 million to $300 million to provide King/Drew the money that's going to be lost as a result of this.
"I think the community is going to be absolutely unglued — absolutely unglued — over this," he added.