A $90 million billing scheme reached a 10-hospital group, lawsuit says
Hospitals that until recently were run by North Kansas City-based EmpowerHMS continued to fall like dominoes Friday.
The Missouri Department of Health and Senior Services said the I-70 Community Hospital in Sweet Springs had taken the unusual step of voluntarily suspending its license, in the latest blow to the chain that was led by Jorge A. Perez, a Miami resident accused of using rural hospitals for a lab billing scheme.
Health department director Randall Williams said Friday that the hospital was “out of regulatory compliance,” and the 90-day voluntary suspension would take effect at 7 p.m.
“While access to health care is important, safety of patients has to be the top priority,” Williams said. “The hospital’s action today supports our commitment to keep people safe.”
The closing of the 15-bed hospital comes one day after its CEO, Jennifer McCutcheon, told The Star that the facility was “doing really well.”
It also comes one day after another former Empower facility, Oswego Community Hospital, closed its doors for good. In addition, a TV station in North Carolina reported late Thursday that a former Empower facility in that state was also closing temporarily as county officials seek answers from hospital management.
At one point Empower managed 14 rural hospitals across seven states, including three in Kansas and two in Missouri, out of its office at 1700 Swift St.
But in addition to shouldering financial burdens that plague rural hospitals across the country, especially in states that haven’t expanded Medicaid, Empower also had to shoulder the fallout from the lab billing controversy, which caused some insurance companies to take its hospitals out of network.
Signs of serious trouble began with the October closure of Latimer County General Hospital in Oklahoma.
About two months later, reports of late paychecks, unpaid utility bills and other financial woes emerged at the remaining Empower facilities.
The I-70 Community Hospital is two years behind on property taxes and owes about $370,000. Its lab has been closed for weeks following the departure of its director, though McCutcheon said the hospital was in the process of hiring another one.
Over the last few months, Empower’s presence in North Kansas City has been minimal — most of its employees, including Perez, were based in Miami. Now Empower may be gone entirely.
Documents filed with the federal Securities and Exchange Commission show that on Jan. 7, Perez entered into an agreement with Miami-based iHealthcare. He gave iHealthcare 10-year management contracts for Empower’s remaining hospitals in exchange for millions of dollars in “success fees.”
The documents also show that Perez will stay involved in the management of the facilities, running them in partnership with iHealthcare, whose leadership team includes several other Empower executives.
The deal was announced on Feb. 6.
The hospitals included in the agreement were:
DeQueen Medical Center (Ark.), Fulton Medical Center (Mo.), Regional General Hospital (Fla.), Drumright Regional Hospital (Okla.), Fairfax Community Hospital (Okla.), Haskell County Community Hospital (Okla.), Hillsboro Community Hospital (Kan.), Horton Community Hospital (Kan.), I-70 Community Hospital (Mo.), Lauderdale Community Hospital (Tenn.), Oswego Community Hospital (Kan.), Prague Community Hospital (Okla.), Washington County Hospital (N.C.).
It’s unclear how much of the success fees Perez will ultimately collect. The SEC documents say that they’re pro-rated if any of the facilities close or are put in receivership before the 10 years are up.
Some already had, even before the most recent closures.
On Jan. 18, a Kansas judge approved Hillsboro’s request to remove Empower as the operator of its hospital and install a temporary receiver until another manager can be found. According to local news reports, Fulton Medical Center is under new management, Lauderdale Community Hospital and Prague Community Hospital have also filed for receiverships and DeQueen Medical Center is in danger of closing.