Citing low occupancy and ongoing financial losses, trustees at the Windemere Nursing and Rehabilitation Center announced Wednesday that the independent living facility at the Island’s only nursing home will be closed.

Situated on the Martha’s Vineyard Hospital campus, Windemere operates three units, two with skilled nursing home care and a third as independent living, where residents have their own living spaces but share common rooms and activities. Windemere has no assisted living facility. Despite receiving high rankings, the independent living unit on the first floor has failed to attract residents, nursing home and hospital leaders said. Currently the 13-bed unit has just three residents.

“It’s a very tough decision and has not come without a lot of hand-wringing and concern,” hospital president and chief executive officer Joe Woodin said, speaking to the Gazette by phone Wednesday. Windemere operates as a nonprofit corporation in partnership with the nonprofit hospital, an affiliate of Partners Health Care in Boston.

The nursing home is currently losing $750,000 to $1 million a year, losses that are covered by the hospital.

A six-month time frame for closing the independent living unit at Windemere was outlined in a press release, but Mr. Woodin said it may take more or less time, spending on a variety of factors. “These are the first steps,” he said. He emphasized that the nursing home is working with the three residents and their families to help them relocate.

Staff at the hospital and Windemere were informed of the plans early this week, Mr. Woodin said.

Windemere has struggled with deep financial losses since it opened in 1994, a successor to the old long-term care unit at the hospital. Nursing homes operate under a different reimbursement structure than hospitals. According to the press release, two years ago the nursing home began to suffer severe systemic financial losses, and funds were transferred from the hospital to develop a plan for sustainability. A three-part action plan called for improving the occupancy in all units, improving the staffing model by reducing the need for expensive traveling nurses and aides to fill vacancies, and petitioning the state to update the reimbursement formula under Medicaid. About 85 per cent of the residents at Windemere are on Medicaid (Mass Health).

Parts of the plan were successful, and the two skilled nursing units are now full. But the independent living unit has continued to suffer large losses and low residency. And Mr. Woodin said repeated attempts to work with elected officials and others at the state level to adjust the rate structure for Windemere have been unsuccessful. The rate reimbursements have not been changed for a decade and are still based on costs from 2007.

“It’s been extraordinarily challenging,” Mr. Woodin said. “Because of our compassion and mission, we are not always obsessed with the bottom line. We do get awards and we’ve been recognized for our tremendous quality . . . still, at the end of the day you have to be careful about how much money you can lose. We have low volume and have spent many years trying to work this out. But it’s not financially viable . . . a census of three for a 13-bed unit — literally you can’t afford that. And it’s not providing an appropriate experience for the residents.”

Once the unit is closed, he said plans call for the hospital to rent the space from Windemere, which will help with the bottom line at the nursing home.

Mr. Woodin, who came to the Vineyard last year from a rural health care facility in Vermont, said having a nursing home adjacent to the hospital is a sound concept. “There are tremendous benefits for both clinical access, camaraderie with clinicians, the look and feel of being less isolated,” he said. “This model where you have a community hospital and an attached nursing home is a desirable model.”

He also confirmed that Windemere administrator Ken Chisholm recently left his post. Mr. Chisholm had also worked in human resources at the hospital.

He said Marie Zadeh, a longtime nursing director at Windemere, is currently undergoing training to become a licensed administrator. Once her training is complete, she will be promoted to the top job, he said.

“In the end we are going to have a very experienced clinical administrative leader,” he said.