I-70 Community Hospital shut its doors in February, taking with it dozens of jobs and lifesaving emergency care for the residents of Sweet Springs, Mo.
Small rural hospitals are always at risk of insolvency and closure. These communities look to entrepreneurs (usually nonmedical venture capitalists and/or other hospitals to absorb their hospital(s)
It was his "secret sauce," the rotund Miami entrepreneur would smilingly tell people in their no-stoplight towns. The money-making ventures he proposed sounded complicated, sure, but he said they would bring in enough cash to save their hospital and dozens, even hundreds, of good jobs in rural towns where gainful employment is hard to come by.
And, in town after town, the people believed him. He offered what they could not resist: hope, and the promise of survival.
Then a few major health insurance companies got suspicious, as did some government officials. How could Unionville, Mo? — a town of 1,790 — generate $92 million in hospital lab fees for blood and urine samples in just six months? Why had lab billings at a 25-bed hospital in Plymouth, N.C., nearly tripled to $32 million in the year after Perez's company took control?
At the height of his operation, Perez and his Miami-based management company, EmpowerHMS, helped oversee a rural empire encompassing 18 hospitals across eight states. Perez owned or co-owned 11 of those hospitals and was CEO of the companies that provided their management and billing services. Their website contains the slick marketing quotes of venture capitalists.
Desperate hospitals and desperate communities take desperate measures when a local isolated hospital may close. "Creative" revenue streams are an opportunistic measure to fund hospitals from sources including Medicare and private insurance companies.
This is not an unusual occurrence and has been seen previously.
The staggering collapse left hundreds of employees without jobs and many more owed months of back pay. Only in recent months did they learn that their medical coverage had been terminated because EmpowerHMS had stopped making payments, according to interviews and bankruptcy documents.
At some of the hospitals, EmpowerHMS stopped paying employee payroll taxes, Perez acknowledged in an interview. Some of the shuttered hospitals owe hundreds of thousands in property taxes, according to local officials.
How companies run by this Miami businessman and his associates were able to drive so many hospitals into the ground so quickly, devastating their communities, is a story about the fragility of health care in rural America and the types of money-making ventures that have flourished in legal gray areas of America's complicated medical system.
The scheme involved laboratory referrals to labs owned by Perez and his partners. It was a convoluted trail of self-referrals to companies owned by Perez.
The analysis found 80% of that money was flowing to laboratory companies, including some in which Byrns had a financial stake; another 6% to a Perez-controlled billing company; and a major portion to 33 out-of-state phlebotomists — blood draw specialists — they had put on the hospital payroll.
I-70 Community Hospital in Sweet Springs, Mo., is one of eight hospitals owned or managed by Miami businessman Jorge A. Perez that closed in recent years. Twelve Perez-affiliated hospitals are in bankruptcy.
"What was astounding to me was that the hospital was not better off during and after this lab activity," Galloway told KHN.
The reaction was explosive. Dozens of major insurers banded together to file lawsuits against Perez-affiliated hospitals in Missouri and other states, demanding hundreds of millions in restitution. The lawsuits, still ongoing, describe the lab-billing operation as a "widespread fraudulent scheme" that aimed to enrich Perez, some of his associates and affiliated companies, as well as participating labs.
The department of justice in Missouri is still investigating, however, the town of Unionville, MO is now without a hospital. Perhaps it could not be saved. However, there were other solutions to this challenge.
With the increasing use of health information technology and telemedicine, mobile ambulances and urgent care centers health care could still be present in Unionville, MO.
Multiple Hospitals Close in Wake of Fraud Allegations: Jorge A. Perez and his management company, EmpowerHMS, helped run an empire of rural hospitals. Now, 12 of them have entered bankruptcy and eight have closed their doors. So, what happened?
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