A long-time employee (17yrs) has been rude, short and defensive with her peers, supervisors and patients for most of her tenure. Her poor behavior continues on a weekly basis and most recently she has been disrespectful of me as her supervisor. I am the practice manager and 9/12 she was demoted from a supervisory role, which I have assumed along with my managerial responsibilities. Her performance reviews have mentioned her verbal mistreatment of the above with improvement demonstrated only for a short period following the review. When confronted about her behavior she expresses her surprise and denies the behavior. How could this be remedied?

I would be direct.. and specifically mention several instances if you are able... and explain how and why those examples were not acceptable behaviour. But I would also add that her long service has been acknoledged and while she is appreciated... behaviour of this type can't be allowed to continue as its detrimental to the workplace. Keep it honest... respectful... but firm.

Others might offer different and maybe better suggestions.

This this appears to be allowed for all of her years there, I would discuss this with upper management.

1. was this the reason she was demoted ? If so what do the official records shows.

2. Assuming upper management allows you authority to do so.
Sit them down, go over all past write ups and warnings. They are issued a writtten warning, in regard to this according to company rules and policy.

If the demotion was already a warning, then further action would be taken, according to company rules,