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.