Hospital’s woes not simple as a missed payroll

Hillsboro Community Hospital finds itself in a financial struggle, failing to make payroll. It ends up Hillsboro is not alone—and it appears its ownership is to blame.

Recently, the Kansas City Star reported that other rural hospitals in Kansas and Missouri failed to make payroll, putting employees in dire straits. The common denominator for all these hospitals is their owner, Empower.

A struggling parent

Empower is currently embroiled as a defendant in a lawsuit over a $90 million financial scheme. That lawsuit lists Hillsboro as one of the 10 rural hospitals in Kansas, Oklahoma and Missouri affected by the schemes.

One of the allegations is that Empower (and other defendants) ran a $90 million billing scheme that went directly into corporate pockets and not into the hospitals they own. According to the report as well as a copy of the lawsuit obtained by the Hillsboro Free Press, the billing tactics used the hospitals to submit claims for laboratory work performed mostly for drug detoxification and pain clinics. But none of the lab work was done by the hospitals or by care providers at the hospitals.

The 31-page lawsuit claims that Empower CEO Jorge Perez and his group misappropriated $2 million from 10 different hospitals, submitted false hospital reports to Medicare and Medicaid and pushed four hospitals into default on $29.3 million in loans, as well as several other allegations.

Empower did not provide a comment for this story.

Currently, Hillsboro Hospital lacks an acting CEO, following Marion Regier stepping down to retire in early November. Chief Nursing Officer Jessie Workman is the highest functioning official at the hospital.

“I don’t want anything that’s occurring financially with the hospital to be construed as poor management or operations based upon our hospital as an entity,” said Workman in an article in last week’s issue of the Free Press. “We are owned by a corporation called Empower HMS. ”

A difficult situation

The threat of insolvency or, in the worse-case scenario, a hospital closure would be a hard hit for Hillsboro, as the hospital is a large employer, and any closure or cut in service could affect response times for the city.

The position Hillsboro finds itself in is not uncommon for rural hospitals.

Part of the funding for hospitals like Hillsboro’s comes from reimbursements from Medicaid, but as it is set up now, 45 percent of all Medicaid claims comes from the state, while 55 percent comes from the federal government. Because of issues with state funds, the claims are sometimes not reimbursed or take a long time for reimbursement to come through.

The hospital also misses out on possible funds, as the State of Kansas has not expanded its Medicaid program through the Affordable Care Act.

A 2015 release from the Kansas Department of Health and Environment estimated that the hospital would have received approximately $104,000 annually had the program been expanded as has happened in 36 other states.

With rural hospitals struggling, Perez and company stepped in, purchasing 20 hospitals across Missouri, Kansas, Oklahoma and Florida, according to reporting conducted by National Public Radio. Now, he and his company stand accused of using the hospitals for illicit operations, and many of those hospitals sit in similar positions as Hillsboro.

Look for future issues of the Free Press, where we will look at the impact the hospital has on Hillsboro as well as possible outcomes for the current situation.

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