JoCo hospital cites pandemic in closing. But its problems began long before COVID-19
Overland Park-based Pinnacle Health Care Systems has ended all patient care and put dozens of healthcare providers and staff out of work as it struggles through a Chapter 11 bankruptcy reorganization.
In a notice on Friday, bankruptcy trustee James Overcash said 125 employees of the company would lose work for at least the next 14 days. It’s unclear whether the layoffs will be permanent or temporary.
Pinnacle specializes in weight loss surgeries and spine and pain issues. Before an abrupt closure in January, it operated the only hospital in Boonville, Missouri. Pinnacle also has a hospital in Overland Park and operates Blue Valley Surgical Associates, which has several locations in Kansas and Missouri.
The company filed for bankruptcy protection on Feb. 12, announcing plans to maintain patient care throughout the court process. But since then, hospitals and healthcare providers across the country have canceled many elective surgeries and put off patient visits in efforts to slow the spread of the coronavirus and maintain supplies.
Overcash wrote last week that the ongoing pandemic has disrupted “a wide range of surgeries and business operations,” limiting the company’s ability to bring in revenue.
But the problems at the company date back well before the pandemic.
Pinnacle closed the Boonville hospital in January, less than two years after it purchased what was then known as the Cooper County Memorial Hospital in October 2018. That hospital had already ceased laboratory testing and days before it closed was ordered to stop performing surgeries after a routine inspection found that the hospital’s sterilization room had problems with pressure, temperature and humidity.
In Overland Park, Pinnacle Regional Hospital recently employed about a dozen doctors at 12850 Metcalf Ave. Formerly known as Blue Valley Hospital, that facility has has had its own run-ins with regulatory agencies.
In 2018, the Centers for Medicare and Medicaid Services pulled its certification, which deprived it of Medicare reimbursements — a move the hospital said could cripple it financially.
CMS made the decision after an inspection found the facility didn’t treat enough patients and wasn’t performing enough surgeries that require long stays to qualify for the higher Medicare reimbursements it had been receiving as an inpatient hospital.
In April 2018, the hospital sued the federal government in an attempt to prevent the loss of its Medicare funding. A U.S. District judge dismissed the lawsuit later in 2018.
Pinnacle is a privately held company owned by Douglas Palzer. Neither he nor any other employees could be reached by phone on Tuesday.
In an email to employees in January, Palzer said he had personally invested about $4 million into the hospital company over the previous six months to make payroll and keep the doors open. He said he would continue to do whatever he could to keep the company operating.
But Pinnacle still struggled to pay workers on time. And employees in Kansas and Missouri claim the company for months had been deducting insurance premiums from their bi-monthly paychecks without paying their insurance carrier. That left employees, under the impression they had health insurance, with piles of denied claims. Two nurses filed a class action lawsuit in January against the company over the issue.
In January, Palzer said the bankruptcy protection would allow management to cover operating expenses, while negotiating with vendors and banks to decrease expenses in the future.
“Now is the time to increase surgical volume, increase and improve cash collections and concentrate on determining what service and facility changes may be needed,” the owner wrote.
But last week, CEO Joseph Conigliaro notified employees that the company was suspending all patient services.
“Unfortunately, this will impact the employment of a large number of people and we are currently in the process of notifying all individuals whose employment will end today,” he said in an email, sent at 4:47 p.m. Friday.
The company will keep some administrative positions intact, but most workers were let go.
“If we are given the opportunity to ramp back up into patient care, we will reach back out to you to see if you are interested and available to return to Pinnacle,” Conigliaro wrote.
