Three Kansas hospitals are among six hospitals as soon as run by using a North Kansas City-primarily based business enterprise which have filed for Chapter 11 bankruptcy protection.

Two of the 3, Horton Community Hospital and Oswego Community Hospital, have closed in a previous couple of weeks. The 0.33, Hillsboro Community Hospital, remains open underneath the auspices of a courtroom-ordered receivership.

A spokesman for Kansas Attorney General Derek Schmidt said final week that his workplace is accomplishing ongoing research into Horton Community Hospital, however, he declined to provide information.


All six bankrupt hospitals at one time had been operated by using EmpowerHMS, which bought up ill rural hospitals in Kansas, Missouri and other states with the intention of turning them around. Empower until these days changed into based in North Kansas City, but its office on 1700 Swift Avenue appears to have been vacated.

The other three Empower-run hospitals that declared Chapter 11 financial disaster – Drumright Regional Hospital, Fairfax Community Hospital, and Haskell County Community Hospital – are in Oklahoma.

A seventh Empower medical institution, Washington County Hospital in Plymouth, North Carolina, become the problem of an involuntary financial ruin petition introduced with the aid of 3 lenders final month.

Two other hospitals in Missouri once operated by Empower have also run into a hassle.

I-70 Community Hospital in Sweet Springs, Missouri, a 15-bed facility, voluntarily shut down the final month. The sanatorium stated it deliberate to reopen, but federal regulators have reduced off its participation in Medicare, commonly a loss of life knell for small hospitals.

And Fulton Medical Center in Fulton, Missouri, a 37-mattress facility, became positioned under new management more than a month in the past after it overlooked payroll and defaulted on its bills.

Nearly all of the hospitals in Empower’s solid, more than a dozen in all, have encountered similar monetary problems.

Hillsboro Community Hospital sought bankruptcy safety in Kansas remaining week. The other 5 hospitals filed their petitions in North Carolina on Sunday.

It’s now not clear why the petitions have been filed in North Carolina. The North Carolina bankruptcy attorney representing the hospitals did no longer go back cellphone calls seeking remark.

Also uncertain is whether the financial disaster filings on behalf of the now-shuttered Horton and Oswego hospitals are meant to get them reopened or simply mechanisms for erasing their money owed.

A Chapter Eleven bankruptcy usually includes the reorganization of an enterprise’s commercial enterprise affairs by way of restructuring its debts and obligations. However, Chapter eleven can also be used as a car to liquidate an organization.

Kansas City financial disaster lawyer Bruce Strauss, who represents Hillsboro Community Hospital, said he become retained with the aid of the hospital’s receiver, Cohesive Healthcare Management + Consulting LLC, with the purpose of retaining the health facility up and jogging.

“It’s an effort to try and store a network sanatorium, an urgent care facility,” Strauss stated.

Cohesive Healthcare become appointed in January to run Hillsboro after the health center defaulted on a $9.6 million mortgage from Bank of Hays and the bank foreclosed.

Strauss stated he knew nothing about the alternative bankruptcy filings in North Carolina.

Lab billing scheme

Bankruptcy court docket files indicate that Health Acquisition Company LLC of Kansas City owns an 80 percent interest within the hospitals and HMC/CAH Consolidated Inc., additionally of Kansas City, owns 20 percent.

Health Acquisition Company, like Empower, is controlled via Florida resident Jorge Perez, who couldn’t be reached for a remark.

Last year, the owners of HMC/CAH, James and Phyllis Shaffer of Mission Hills, Kansas, sued Health Acquisition Company, alleging it fraudulently took over a majority hobby in the hospitals. The couple claimed Health Acquisition Company then put in vicinity an unlawful lab billing scheme designed to pump up the hospitals’ sales and to complement Perez and other defendants named within the lawsuit.

The various financial disaster filings could block the Shaffers from taking motion in opposition to the hospitals but no longer towards Perez and the other defendants.

“There would not be any direct impact at the lawsuit,” C. Brooks Wood, the Shaffers’ legal professional, said.

The Shaffers’ allegations are just like the ones laid out in a scathing  August 2017 audit of Putnam County Memorial Hospital in Unionville, Missouri, which an agency tied to Perez took over in past due 2016.

The report on the 15-mattress health center by Missouri Auditor Nicole Galloway discovered the sanatorium had billed out greater than $90 million for lab assessments in a be counted of months after Perez and his associates took control.

The scheme took benefit of the more favorable reimbursement costs for crucial get right of entry to hospitals, a federal designation meant to strengthen the finances of small rural hospitals like Putnam Memorial and the other hospitals received by means of Perez.

In a 2017 interview with KCUR and KBIA, Perez insisted the preparations had been flawlessly felony, however other fitness care experts have wondered their legality.

Perez is now not concerned with Putnam County Memorial Hospital;  the medical institution’s trustees ousted his possession institution in early 2018. Perez later sued the sanatorium and Galloway, claiming the clinic’s movement changed into illegal and Galloway had overstepped her bounds in auditing a privately owned facility. (Although the medical institution became privately owned, Putnam County electorate authorized greater than $7.6 million in general responsibility bonds in 2012 to refinance preceding revenue bonds and renovate a part of the health facility.)

The lawsuit is pending, despite the fact that there has been no pastime in the case given that June 2018, court docket facts show.

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