Health Care

Another Kansas hospital run by troubled North KC-based firm can’t pay its employees

A $90 million billing scheme reached a 10-hospital group, lawsuit says

Missouri's auditor highlighted questionable billing practices at a rural Missouri hospital. Now, a Mission Hills couple has sued, alleging the scheme had spread.
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Missouri's auditor highlighted questionable billing practices at a rural Missouri hospital. Now, a Mission Hills couple has sued, alleging the scheme had spread.

Another Kansas hospital run by North Kansas City-based EmpowerHMS is reporting serious financial trouble.

Employees at Horton Community Hospital in northeast Kansas said they didn’t receive their paychecks Friday and have been dipping into their own pockets for weeks to buy supplies.

It’s the latest in a months-long string of similar cash flow problems for EmpowerHMS, which until recently managed 14 rural hospitals across Kansas, Missouri and five other states.

Last month a judge granted a request by the city of Hillsboro, north of Wichita, to remove Empower as its hospital’s operator, “citing the irreparable harm” likely to occur if Empower stayed on. The cities of Prague, Okla., and Ripley, Tenn., have filed similar legal petitions.

Empower CEO Jorge Perez, who is facing a federal lawsuit over lab billing practices, has remained largely silent as the financial and legal troubles have unfolded. He again did not respond to an email requesting comment Monday.

Jorge Perez.jpg
Jorge Perez spoke at a presentation last year in Fulton, Mo., after a change in ownership of Fulton Medical Center. Jenny Gray Fulton Sun

Mike Murtha, a spokesman for a rural hospital advocacy group affiliated with Perez, said in December that Empower’s cash flow issues were temporary.

But Krissy Torkelson, the top nurse at Horton Community Hospital, told the Topeka Capital-Journal that in addition to missing payroll last week, Empower had failed to purchase enough supplies and failed to keep the electric and trash bills paid.

In addition to the 15-bed hospital in Horton, Empower still manages a facility in Oswego, Kan., and two Missouri hospitals in Fulton and Sweet Springs. State officials have said they’re monitoring the situation.

Empower’s headquarters is at 1700 Swift St., but most of its staff works in Miami.

The company bills itself as a savior of rural hospitals, which are facing financial headwinds nationwide. But Perez and other Empower leaders are under investigation in Missouri for a billing operation they allegedly ran through Putnam County Memorial Hospital in Unionville, which is no longer affiliated with them.

Rural critical-access hospitals get paid more for performing the same tests as free-standing labs. Missouri state Auditor Nicole Galloway said lab revenue rose astronomically at Putnam County after another Perez-affiliated company took over. Her office questioned whether the hospital possibly could have performed all the tests, or whether it was being used as a shell to funnel bills through.

Perez was also an executive in a company accused of running a similar scheme in Florida, at a hospital that went bankrupt. A pending lawsuit brought by a Mission Hills couple with an investment stake in 10 of the Empower hospitals alleges that he and others wanted to use those hospitals as lab billing shells as well.

Perez and the other defendants say the suit is baseless and have disputed Galloway’s findings.

But the controversy has taken a toll, with Blue Cross and Blue Shield of Oklahoma excluding several Empower hospitals from its network last year due to lab billing concerns.

The remaining EmpowerHMS hospitals are:

In Kansas: Horton Community Hospital and Oswego Community Hospital.

In Missouri: Fulton Medical Center and I-70 Community Hospital.

In Oklahoma: Prague Community Hospital, Fairfax Community Hospital, Haskell County Community Hospital, Drumright Regional Hospital, Latimer County General.

Elsewhere: Lauderdale Community Hospital (Tennessee), DeQueen Medical Center (Arkansas), Washington County Hospital (North Carolina), Regional General Hospital Williston (Florida).

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Kansas City Star health reporter Andy Marso was part of a Pulitzer Prize-finalist team at The Star and previously won state and regional awards at the Topeka Capital-Journal and Kansas Health Institute News Service. He has written two books, including one about his near-fatal bout with meningitis.


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