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The Old Hospital
I took a walk with my dog Snow Bear this afternoon, and we walked past the old hospital. Not the oldest hospital in town, mind you, which was built in 1918 and is now used as a shelter for battered women. I walked past a second hospital that was built in 1956 for the princely sum of $260,000 and contained 32 “modern” beds. This second hospital was remodeled and updated and served well until it was ignominiously abandoned in 2017 because it was said to be cheaper to build a new hospital than to upgrade the old one.
But as I walked around the grounds of the old hospital, I pondered whether it had really been cheaper to build a new hospital. Today we have a brand spanking new Community Hospital with 15 beds that cost $11.4 million to build. But the new Community Hospital has a troubled and expensive history that goes beyond the mere cost of construction.
The new hospital was financed and managed by a specialist hospital management group that promised to make it a marvel of modern efficiency. But the hospital management group borrowed the money to build it, while the city guaranteed the construction bonds (cue ominous music). Next, the hospital management group sold a controlling stake in its company to a Florida company, Empower HMS, which promised to make it really profitable. (I suspect this sale of shares was already planned at the time the new hospital was built.) Empower bought 18 rural hospitals in total.
Empower had a scheme to make money. Since rural, critical-access hospitals are reimbursed more for lab tests by Medicare and insurance companies, Empower started billing for thousands and thousands of lab tests in its rural hospitals—lab tests that were never done. This worked great until the Missouri state auditor looked into why a little hospital in Putnam, Mo., also owned by Empower, was billing the state for so many lab tests. By January 2019, Empower was bankrupt and all its hospitals, including ours, were placed in receivership. Jorge Perez, the scoundrel who owned Empower, was arrested for Medicare fraud.
Our city hired excellent lawyers and managed to get our hospital extricated from the general bankruptcy case and moved to a separate case. Most of the other rural hospitals owned by Empower were closed, but ours managed to survive because the city found a new ownership/management company for the hospital. However, the city had to issue its own bonds to pay off the $9.6 million balance on the construction loan, which is not a small sum for our city. During the year that this process took, the city council, mayor, and city manager were almost exclusively occupied with the hospital business. Not only were the legal fees high, but other city businesses barely got attention. And residents will be paying interest on and redeeming bonds for years to come.
Once the new management company took over, the local doctors and nurses were summarily dismissed. One doctor had grown up in the town and came back to practice here. The others moved here when they took jobs at the hospital. They lived in town, shopped at the local stores, and attended the local churches. They knew their patients, and their patients knew them. To replace them, the management company hired doctors from Wichita with fancy specialties. These doctors drive an hour each way to come to work. If you go to see the doctor now, they recommend gobs and gobs of medical tests and prescriptions. Instead of billing for fake lab tests, the new management company bills for lots of real but unnecessary tests. Now we have technically better medical care, but it’s not really “care” anymore. Your care is a financial transaction between the hospital management company and the insurance company, and your needs and wants have little to do with the money changing hands.
But the costs don’t end there. Remember that old hospital building my dog and I walked around this afternoon? It stands empty. Originally, it was to become a nursing school for the local college, but the local college decided not to add nursing to its offerings. Then it was to be remodeled into low-income housing, but the grants didn’t work out. Then there was the idea to make it into office space or a small business incubator. During the Covid panic, the college used it to quarantine its infected students.
But what to do with it? It would be expensive to demolish (asbestos and all that), and there is still some hope that it might be used for something. It is still a good building, after all. Seven years later, the city is maintaining the building and paying utilities to keep it from deteriorating inside.
Another problem with the new hospital is its distance from the local nursing home. Unlike the old one, which was physically connected to the nursing home, the new hospital is 2.3 miles away on the other side of town. Before, if an elderly person were sick, he could be wheeled down the hall, through the double doors, and into the hospital. Now, it takes an ambulance ride, which is stressful and expensive for the elderly patient to drive to the new hospital. And in an emergency, it takes time to summon an ambulance and transport the patient from the nursing home. So the quality of medical care for our nursing home residents has diminished while its cost has increased.
Was it a good decision to close the old hospital and build a new one? It’s hard to say. But it is safe to say that the old hospital board and the city leadership did not consider all the costs involved. They were babes in the woods who were taken advantage of by a corrupt hospital management company. They foolishly agreed to guarantee the construction loan for a for-profit company. They had to hire expensive out-of-town lawyers to save the new hospital from bankruptcy. They didn’t consider the intangibles connected with the quality of care at a new hospital. And they didn’t have a firm plan in place for the old building.
The new hospital certainly seemed wonderful when it opened seven years ago. But as I explained to Snow Bear on our walk around the grounds, some hard and expensive lessons have been administered in those seven years.
Published in Healthcare
It seems pretty clear if they just left things as they were your medical services would have been fine.
We had a similar situation. Everyone was complaining about the elementary school. They said it was structurally un-sound. So, they built a new school. What did they do with the old one, tear it down? Nope. They made minimal repairs and moved the town library and police station into it. Now we have to pay for both buildings.
Change isn’t always good.
My late father was an MD, a general practitioner that served patients in a couple small towns – so much of this story resonates with me as to the state of medical care today. The two hospitals the he and his collegues had admitting privileges to, that he donated to for improvements, are now abandoned/defunct. The new palatial hospitals built over cornfields, out of the town where they served generations of people. We spend so much more but I truly reject the assertion that care is better than it used to be.
Terrific post.
I’m so sorry to read about this story. There are so many victims that were caught up in this mess.
My dad was a GP in a small town for many years. He was destroyed when this same phenomenon struck our hospital and community.
It struck every small or mid-sized town and hospital in America.
It was part of the first major campaign of the left to destroy our American institution of medicine and replace it with one controlled by centralized government and politicized institutions working cooperatively to serve the aims of the political class.
It succeeded in every case: every community, every hospital, every previously independent American provider of medical care.
I’m so sorry, Mark .
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I’m surprised how many of you have similar stories.
All that is important to these “hospital management” outfits is that the lobby must look like it was built for the Sultan of Arabia. Marble floors, vaulted ceilings.
Meanwhile in progressive states across the nation, there exist new “Standards of Care” dictates that basically tell the employees of such places that the ER team must not diagnose any who arrive. They may offer testing and then, even though the error rate on the tests can be quite high, the med team will send you home. Even with such a simple to diagnose situation as a rupturing appendix. Because the test told them the appendix looked fine.
One reason that little is being done to rectify any of the problems we face in terms of hospital care is that those who are affluent and are aware now go off to Spain or Thailand to get their care over there. The people who rub shoulders with our major politicians have solved the problem with health care for themselves, so they don’t make much noise about the problem.
Over the last ten years, various TV news magazine shows have offered a peek into what goes with health care in the more exotic locales. First of all, if you have a medical complaint, overseas you have same day testing at the foreign hospital. The test results are made available much quicker than here in the US.
Quite often depending on what the initial examining team of doctors think might be other afflictions plaguing the individual, tests for those possible conditions are ordered up as well.
If after a surgery,you need re-hab, the location of the re-hab facility is right there on that hospital campus. Same with nursing homes. There is little of the run-around people face here in the USA.
In the USA, patients hear: “We don’t have the ability to do that test here at our hospital but we can get the test scheduled for you for next week. And you’ll get the test at a facility 12 miles from here. Then you will need to talk to your doctor or the specialist and if surgery is advised, you might be back here within 3 weeks.” (Cancer and heart patients fare much better but the rest of us do not.)
On top of the excellent and sensibly managed health care people get overseas, the price is so little compared to US prices. With the difference in price, the person can easily afford the air trip over to that country and spend two weeks at a luxury hotel and a spa on the beach.
American hospital personnel at ER’s can find out that someone is diabetic. But depending on which hospital franchise is operating the hospital, if this discovery is made on the weekends, there might not be any hopes of getting the insulin until the next morning at a local pharmacy!
There is often political gain from building something new instead of maintaining the old in good condition and prolonging its life. A politician can brag about building a new hospital or a new school, but it doesn’t get as many votes if he says that we put a new roof on the old building that will extend its life a couple decades for a fraction of the cost.
A former client was heavily involved in a prominent university. He occasionally muttered about how much easier it was to raise donations of millions of dollars for a new building than it was to raise $50,000 to rehabilitate the HVAC system in an existing building.
I suspect that if the HVAC is to be renovated, then the hospital’s day-to-day management might suggest whoever handled the matter 10 years earlier. The Board of Directors would then look stupid or corrupt if they tried to up the project to $125K and bring in the cousin of the head of that board to handle it.
But with a new hospital there will be always oodles of ways for nepotism, kickbacks and for the “occasional” suspect expense of “cost of tile in the supply closets” when those closets would never ever have tile installed.