- Pauls Valley Hospital Authority owes millions to an Austin, Texas-based management firm that operated the rural Oklahoma hospital until this past July. A temporary restraining order has been lifted and the hospital now needs to pay its lingering debts to NewLight Healthcare. The firm alleges it's owed more than $2.8 million, according to a lawsuit filed in federal court in the Western District of Oklahoma.
- The problem is that the hospital can't afford to pay its debt and maintain payroll. The hospital's newest CEO Frank Avignone has turned to the community, asking them to open their wallets to keep the facility open.
- If the hospital closes, patients will have to travel at least 30 minutes to another acute-care facility, Avignone said on the GoFundMe page. By Wednesday morning, the donations totaled slightly more than $3,000, barely a dent in the $2 million goal.
Pauls Valley is not alone in its struggle to stay off life support.
At least 88 rural hospitals have closed since 2010, according to the North Carolina Rural Health Research program.
That figure has fallen in recent years to 13 in 2016 and 8 in 2017. So far in 2018, there have been 5 hospital closures, according to the data tallied by university's Sheps Center.
Other factors are putting pressure on rural hospitals as well. Those in states that have not expanded Medicaid, like Oklahoma, face margin pressure that is more acute than peers in other expansion states, according to a report from Health Affairs.
Rural hospitals tend to have a payer mix that heavily relies on Medicaid and Medicare. These facilities, like many hospitals, have to contend with declining admissions as they try to turn a profit without a large base of commercially insured patients.
Nonprofit hospitals experienced more credit downgrades in 2017 than the year prior, according to a report from Moody's. The rating agency also downgraded its review of the sector from stable to negative.
But Avignone said mismanagement by the previous operators has played a role in the decline of Pauls Valley. Avignone told Healthcare Dive the firm "managed the hospital into the train wreck it's in."
A lawsuit filed in Aug. 26 details a falling out between the hospital owner and the previous operator and the battle over assets.
The owner, Pauls Valley Hospital Authority, alleges the previous group, NewLight HealthCare, "utterly failed in their performance to the point of the Hospital's near financial failure and now seek to strip the Hospital of its near-cash assets on their way out the door."
The judge lifted a temporary restraining order on Sept. 12, essentially granting NewLight access to the cash it says it is owed.
NewLight alleges in a counterclaim that it had agreed to forgo its monthly management fees from the authority temporarily. NewLight said it agreed to put off collecting what it was owed to allow the authority to "shore up its finances."
This meant NewLight was "foregoing payment" of its fees, reimbursement of expenses, and was now covering the salary, travel, expenses, and benefits of the hospital CEO.
The authority then went back to NewLight twice to secure a loan to address cash flow problems, the counterclaim alleges.
The defendants claim that they have not been paid by the authority since January 2016.
Prior to NewLight taking over operations, the hospital had filed for Chapter 9 Bankruptcy in 2013.
Avignone said he's hopeful the hospital can remain open. But he said he's concerned for other municipal-owned hospitals run by lay officials who know very little about the industry and make deals with third-parties.