{"id":31878,"date":"2019-09-24T16:00:17","date_gmt":"2019-09-24T21:00:17","guid":{"rendered":"http:\/\/stateimpact.npr.org\/oklahoma\/?p=31878"},"modified":"2019-09-25T11:05:24","modified_gmt":"2019-09-25T16:05:24","slug":"the-collapse-of-a-hospital-empire-and-towns-left-in-the-wreckage","status":"publish","type":"post","link":"https:\/\/stateimpact.npr.org\/oklahoma\/2019\/09\/24\/the-collapse-of-a-hospital-empire-and-towns-left-in-the-wreckage\/","title":{"rendered":"The collapse of a hospital empire \u2014 and towns left in the wreckage"},"content":{"rendered":"<div id=\"attachment_31881\"  class=\"wp-caption module image aligncenter\" style=\"max-width: 1920px;\"><img decoding=\"async\" loading=\"lazy\" class=\"size-large wp-image-31881\" src=\"https:\/\/stateimpact.npr.org\/oklahoma\/files\/2019\/09\/perez-2-1920x1281.jpg\" alt=\"\" width=\"1920\" height=\"1281\" srcset=\"https:\/\/stateimpact.npr.org\/oklahoma\/files\/2019\/09\/perez-2-1920x1281.jpg 1920w, https:\/\/stateimpact.npr.org\/oklahoma\/files\/2019\/09\/perez-2-672x448.jpg 672w, https:\/\/stateimpact.npr.org\/oklahoma\/files\/2019\/09\/perez-2-768x513.jpg 768w, https:\/\/stateimpact.npr.org\/oklahoma\/files\/2019\/09\/perez-2-150x100.jpg 150w, https:\/\/stateimpact.npr.org\/oklahoma\/files\/2019\/09\/perez-2-300x200.jpg 300w, https:\/\/stateimpact.npr.org\/oklahoma\/files\/2019\/09\/perez-2-620x414.jpg 620w, https:\/\/stateimpact.npr.org\/oklahoma\/files\/2019\/09\/perez-2-1618x1080.jpg 1618w\" sizes=\"(max-width: 1920px) 100vw, 1920px\" \/><\/p>\n<p class=\"wp-media-credit\">Heidi de Marco \/ KHN<\/p>\n<p class=\"wp-caption-text\">I-70 Community Hospital in Sweet Springs, Mo., is one of eight hospitals owned or managed by Miami businessman Jorge A. Perez that closed in recent years. Twelve Perez-affiliated hospitals are in bankruptcy.<\/p>\n<\/div><p>SWEET SPRINGS, Mo. \u2014 The money was so good in the beginning, and it seemed it might gush forever, right through tiny country hospitals in Missouri, Oklahoma, Tennessee and into the coffers of companies controlled by Jorge A. Perez, his family and business partners.<!--more--><\/p><p>It was his \u201csecret sauce,\u201d the rotund Miami entrepreneur would smilingly tell people in their no-stoplight towns. The money-making ventures he proposed sounded complicated, sure, but he said they would bring in enough cash to save their hospital and dozens, even hundreds, of good jobs in rural towns where gainful employment is hard to come by.<\/p><p>And, in town after town, the people believed him. He offered what they could not resist: hope, and the <a href=\"https:\/\/www.prnewswire.com\/news-releases\/the-empower-group-sets-2018-goals-to-save-more-rural-hospitals-300594612.html\">promise of survival<\/a>.<\/p><p><iframe loading=\"lazy\" id=\"wpcom-iframe-2f4519916bb3286e32844b1fcd163064\" class=\"wpcom-protected-iframe\" src=\"https:\/\/embeds.kff.org\/protected-iframe\/2f4519916bb3286e32844b1fcd163064\" width=\"100%\" height=\"650\" frameborder=\"0\" scrolling=\"\"><\/iframe><\/p><p>Then a few major health insurance companies got suspicious, as did some government officials. How could Unionville, Mo. \u2014 a town of 1,790 \u2014 generate $92 million in hospital lab fees for blood and urine samples in just six months? Why had lab billings at a 25-bed hospital in Plymouth, N.C., <a href=\"http:\/\/gatehousenews.com\/ruralhospitals\/\">nearly tripled<\/a> to $32 million in the year after Perez\u2019s company took control?<\/p><p>The lab billings, insurers alleged, were simply fraudulent. Blue Cross Blue Shield and other insurers started filing lawsuits, stopped making reimbursements and shut off the spigot.<\/p><p>At the height of his operation, Perez and his Miami-based management company, EmpowerHMS, helped oversee a rural empire encompassing 18 hospitals across eight states. Perez owned or co-owned 11 of those hospitals and was CEO of the companies that provided their management and billing services. He was affiliated with companies that owned or managed the rest.<\/p><p>Now, with funding from the lab-billing venture dried up, 12 of the hospitals have entered bankruptcy and eight have closed their doors.<\/p><p>The staggering collapse left hundreds of employees without jobs and many more owed months of back pay. Only in recent months did they learn that their medical coverage had been terminated because EmpowerHMS had stopped making payments, according to interviews and <a href=\"https:\/\/www.documentcloud.org\/documents\/5977508-Hillsboro-Community-Hospital-Bankruptcy-Bank-of.html\">bankruptcy documents<\/a>.<\/p><p>At some of the hospitals, EmpowerHMS stopped paying employee payroll taxes, Perez acknowledged in an interview. Some of the shuttered hospitals owe hundreds of thousands in property taxes, according to local officials.<\/p><p>How companies run by this Miami businessman and his associates were able to drive so many hospitals into the ground so quickly, devastating their communities, is a story about the fragility of health care in rural America and the types of money-making ventures that have flourished in legal gray areas of America\u2019s complicated medical system.<\/p><p>Perez styled himself as a savior of rural hospitals. \u201cMy only fault is I tried everything in the world to save them,\u201d he told Kaiser Health News.<\/p><p>But for the townspeople left in the wreckage, the reality feels more sinister.<\/p><p>EmpowerHMS \u201cis like a curse word,\u201d said Tara Brewer, head of the Chamber of Commerce in Sweet Springs, Mo., where the I-70 Community Hospital closed in February, taking with it dozens of jobs and emergency care.<\/p><p>The town\u2019s mayor, Francis Vaught, put it more simply: \u201cWe were robbed.\u201d<\/p>\n<h4>Building An Empire On Promises<\/h4><p>Jorge Perez\u2019s company jet never seemed to take off on time.<\/p><p>Whether he was headed to Kansas, Missouri or Arkansas, Perez always was running late, said Scottie Collins, who joined the Empower team in 2017 with the expectation his Florida-based drug rehab program would be integrated into the burgeoning hospital group. It struck Collins as a luxury, given the flight crew charged by the hour, but neither Perez nor his entourage seemed concerned.<\/p><p>In September 2017, Perez and his team swooped into Fulton, Mo., days before the town\u2019s nearly 100-year-old hospital was set to close. Fulton Medical Center, with 140 staffers, was a major employer and the only hospital in Callaway County. The hospital had struggled for a quarter-century, escaping closure at least three times as the economic forces battering rural hospitals across America took their toll.<\/p>\n<div id=\"attachment_31886\"  class=\"wp-caption module image aligncenter\" style=\"max-width: 1920px;\"><img decoding=\"async\" loading=\"lazy\" class=\"size-large wp-image-31886\" src=\"https:\/\/stateimpact.npr.org\/oklahoma\/files\/2019\/09\/perez-24-1920x1281.jpg\" alt=\"\" width=\"1920\" height=\"1281\" srcset=\"https:\/\/stateimpact.npr.org\/oklahoma\/files\/2019\/09\/perez-24-1920x1281.jpg 1920w, https:\/\/stateimpact.npr.org\/oklahoma\/files\/2019\/09\/perez-24-672x448.jpg 672w, https:\/\/stateimpact.npr.org\/oklahoma\/files\/2019\/09\/perez-24-768x513.jpg 768w, https:\/\/stateimpact.npr.org\/oklahoma\/files\/2019\/09\/perez-24-150x100.jpg 150w, https:\/\/stateimpact.npr.org\/oklahoma\/files\/2019\/09\/perez-24-300x200.jpg 300w, https:\/\/stateimpact.npr.org\/oklahoma\/files\/2019\/09\/perez-24-620x414.jpg 620w, https:\/\/stateimpact.npr.org\/oklahoma\/files\/2019\/09\/perez-24-1618x1080.jpg 1618w\" sizes=\"(max-width: 1920px) 100vw, 1920px\" \/><\/p>\n<p class=\"wp-media-credit\">Heidi de Marco \/ KHN<\/p>\n<p class=\"wp-caption-text\">Jorge A. Perez and his team swooped into Fulton, Mo., in 2017, days before the town\u2019s nearly 100-year-old hospital was set to close. \u201cHe seemed to be a nice enough guy,\u201d says LeRoy Benton, Fulton\u2019s mayor at the time, \u201cand seemed to say the right things.\u201d<\/p>\n<\/div><p>At what was supposed to have been a farewell potluck for the facility\u2019s staff, Perez appeared, announcing that he\u2019d just bought the hospital and was keeping it open, according to <a href=\"https:\/\/www.npr.org\/sections\/health-shots\/2018\/07\/03\/617876814\/vulnerable-rural-hospitals-face-tough-decisions-on-questionable-billing-schemes\">media reports<\/a>. From the podium, he delivered what had become his standard pitch in small towns across the Midwest: He saw a community desperately fighting to keep its hospital, and he would help them win.<\/p><p>\u201cHe seemed to be a nice enough guy,\u201d said LeRoy Benton, Fulton\u2019s mayor at the time, \u201cand seemed to say the right things.\u201d<\/p><p>If the communities he wooed had the time or capacity to look deeper, they might have seen a red flag: Perez had no experience managing hospitals. Trained as an electrical engineer, Perez helped his father run a medical billing company in Miami that served doctors and hospitals. He repeatedly saw rural hospitals closing, he said, and felt moved to save them.<\/p><p>In 2015, Perez partnered with a company run by a Chicago-based emergency room physician, Dr. Seth Guterman, to take over the Campbellton-Graceville Hospital in Graceville, a town of 2,200 people in the Florida Panhandle.<\/p><p>Perez told <a href=\"http:\/\/www.jacksoncountytimes.net\/local-news\/item\/6099-consider-campbellton-graceville-hospital-saved.html?fb_comment_id=839064309501508_839469702794302\">the local paper<\/a> the new ownership group would invest $2 million and reduce costs by 30%. \u201cConsider Campbellton-Graceville Hospital SAVED,\u201d enthused the Jackson County Times.<\/p><p>A year later, he invested in a struggling hospital in Williston, Fla., and with partner David Byrns landed a management contract for Putnam County Memorial in Unionville, Mo. In 2017, Perez formed a partnership with Paul Nusbaum, a former secretary of health and human resources in West Virginia, and acquired controlling interest in 10 hospitals in Oklahoma, Kansas, Missouri, Tennessee and North Carolina, swallowing them whole.<\/p><p>\u201cWhen you rescue a hospital, you rescue a community\u201d was <a href=\"https:\/\/www.documentcloud.org\/documents\/6225098-EmpowerHMS-Tweet-10-5-18.html\">his mantra<\/a> on social media.<\/p>\n<div id=\"attachment_31888\"  class=\"wp-caption module image aligncenter\" style=\"max-width: 1084px;\"><img decoding=\"async\" loading=\"lazy\" class=\"size-full wp-image-31888\" src=\"https:\/\/stateimpact.npr.org\/oklahoma\/files\/2019\/09\/Perez_KCUR.jpg\" alt=\"\" width=\"1084\" height=\"813\" srcset=\"https:\/\/stateimpact.npr.org\/oklahoma\/files\/2019\/09\/Perez_KCUR.jpg 1084w, https:\/\/stateimpact.npr.org\/oklahoma\/files\/2019\/09\/Perez_KCUR-672x504.jpg 672w, https:\/\/stateimpact.npr.org\/oklahoma\/files\/2019\/09\/Perez_KCUR-768x576.jpg 768w, https:\/\/stateimpact.npr.org\/oklahoma\/files\/2019\/09\/Perez_KCUR-150x113.jpg 150w, https:\/\/stateimpact.npr.org\/oklahoma\/files\/2019\/09\/Perez_KCUR-300x225.jpg 300w, https:\/\/stateimpact.npr.org\/oklahoma\/files\/2019\/09\/Perez_KCUR-620x465.jpg 620w, https:\/\/stateimpact.npr.org\/oklahoma\/files\/2019\/09\/Perez_KCUR-1044x783.jpg 1044w, https:\/\/stateimpact.npr.org\/oklahoma\/files\/2019\/09\/Perez_KCUR-632x474.jpg 632w, https:\/\/stateimpact.npr.org\/oklahoma\/files\/2019\/09\/Perez_KCUR-536x402.jpg 536w\" sizes=\"(max-width: 1084px) 100vw, 1084px\" \/><\/p>\n<p class=\"wp-media-credit\">Dan Margolies \/ KCUR, Kansas City Public Media<\/p>\n<p class=\"wp-caption-text\">In an interview, EmpowerHMS CEO Jorge A. Perez was adamant he has operated in the best interests of the communities he sought to serve. If anything, he said, the townspeople should thank him, because he gave their dying hospitals \u201ctwo to three years of life.\u201d<\/p>\n<\/div><p>People describe Perez as genial and courteous \u2014 \u201cEverybody that knows me says I have a big heart,\u201d he said of himself. But his inner circle included some people with questionable backgrounds.<\/p><p>One of Empower\u2019s top executives, <a href=\"https:\/\/www.documentcloud.org\/documents\/5954456-J-T-Lander-Sentencing-FBI-Press-Release-2-5-2010.html\">J.T. Lander<\/a>, had done time in federal prison after being convicted in 2009 of mail fraud and money laundering while serving as county attorney for Florida\u2019s Dixie County. Byrns\u2019 <a href=\"https:\/\/www.documentcloud.org\/documents\/6224019-David-Byrns-Booking-Card-9-21-15.html\">criminal record<\/a> includes an arrest for check forgery at a Louisiana hospital he managed. (Byrns returned the money, and criminal charges were dropped.)<\/p><p>Neither Byrns nor Lander responded to a request for comment; a woman who answered Nusbaum\u2019s phone said he was unavailable for comment.<\/p><p>Fernando Barroso, who worked as an assistant controller for EmpowerHMS in 2018, said the company\u2019s financial systems were a mess, even as it wrestled with massive debt accumulated through rapid-fire hospital acquisitions.<\/p><p>\u201cI\u2019ve been an accountant for a long time and I thought I\u2019d seen everything, but I\u2019d never seen anything like this,\u201d Barroso said. \u201cIt was total disorder.\u201d<\/p>\n<h4>A Lucrative Venture<\/h4><p>To generate income for foundering hospitals, Jorge Perez took advantage of federal health care regulations that allow some rural hospitals to bill for laboratory tests at substantially higher rates than other providers. The goal is to keep hospitals that provide vital care in remote areas afloat, by paying generously for the relatively small number of tests needed in such locations.<\/p><p>But several of the Perez-affiliated hospitals established lab programs that reached well beyond the hospital doors. They contracted with outside labs, in other cities and states, to draw and process blood and urine tests for thousands of people who never set foot in the hospital. Insurers were billed using the higher rates afforded the rural hospitals, and the contractors got a portion of the proceeds.<\/p><p>In recent years, Perez and a handful of other rural hospital owners who have established similar operations have defended the billing setup as in alignment with federal regulations. But among some medical finance experts, it\u2019s considered legally murky and has resulted in allegations of fraud involving owners in several states.<\/p><p>What is not in dispute is that the strategy can be lucrative. At 14-bed Putnam County Memorial alone, the lab-billing operation generated nearly $120 million in payments to outside vendors in the first six months of 2017, according to internal documents obtained by Kaiser Health News. And a chunk of those payments \u2014 nearly $80 million in lab-related charges \u2014 went to Perez-affiliated companies, according to the documents.<\/p>\n<div id=\"attachment_31885\"  class=\"wp-caption module image aligncenter\" style=\"max-width: 1920px;\"><img decoding=\"async\" loading=\"lazy\" class=\"size-large wp-image-31885\" src=\"https:\/\/stateimpact.npr.org\/oklahoma\/files\/2019\/09\/perez-8-1920x1282.jpg\" alt=\"\" width=\"1920\" height=\"1282\" srcset=\"https:\/\/stateimpact.npr.org\/oklahoma\/files\/2019\/09\/perez-8-1920x1282.jpg 1920w, https:\/\/stateimpact.npr.org\/oklahoma\/files\/2019\/09\/perez-8-672x449.jpg 672w, https:\/\/stateimpact.npr.org\/oklahoma\/files\/2019\/09\/perez-8-768x513.jpg 768w, https:\/\/stateimpact.npr.org\/oklahoma\/files\/2019\/09\/perez-8-150x100.jpg 150w, https:\/\/stateimpact.npr.org\/oklahoma\/files\/2019\/09\/perez-8-300x200.jpg 300w, https:\/\/stateimpact.npr.org\/oklahoma\/files\/2019\/09\/perez-8-620x414.jpg 620w, https:\/\/stateimpact.npr.org\/oklahoma\/files\/2019\/09\/perez-8-1618x1080.jpg 1618w\" sizes=\"(max-width: 1920px) 100vw, 1920px\" \/><\/p>\n<p class=\"wp-media-credit\">Heidi de Marco \/ KHN<\/p>\n<p class=\"wp-caption-text\">Lewis Bybee, a retired veterinarian and I-70 Community Hospital board member, and his wife, Janice, on their porch in Sweet Springs, Mo. \u201cAll he did was take from us,\u201d Lewis says of Jorge A. Perez.<\/p>\n<\/div><p>In interviews, multiple employees said they had no idea what Empower did with the money their hospitals earned, since the facilities seemed perpetually starved for cash.<\/p><p>Melva Price Lilley, an X-ray technician at Washington County Hospital in Plymouth, N.C., recalled regularly being short of supplies. \u201cSometimes we wouldn\u2019t have soap to bathe patients,\u201d Lilley said. \u201cWe didn\u2019t have any crackers, orange juice. We didn\u2019t have enough staff at night to run a code.\u201d<\/p><p>\u201cThey never invested any money in our hospital,\u201d she said. \u201cYou have to go on top of the roof to adjust the heat or air conditioning with a broomstick.\u201d<\/p><p>Perez had taken control of the regional hospital in Drumright, Okla., in 2017 promising brighter days, said Tracy Byers, hospital CEO at the time. Instead, he said, the bills quickly piled up.<\/p><p>\u201cI would dread Mondays as that\u2019s when all the certified letters would start showing up in the mail,\u201d Byers said. \u201cTypically, by Thursday and Friday, you\u2019d have an idea of what bills you could pay, if any.\u201d<\/p><p>Even as the hospitals struggled, Perez, on his own and through Empower-affiliated companies, was investing in real estate in 2016 and 2017, buying up nine South Florida properties that totaled more than $3.7 million, including three condos on Key Largo, according to property records.<\/p><p>In an interview, Perez maintained that the Florida properties were bought with earnings from unrelated software companies. He declined to get into details about his finances. \u201cThe little I have left I need to preserve and protect,\u201d he said. \u201cI\u2019m as broke today as anybody out there.\u201d<\/p>\n<div id=\"attachment_31884\"  class=\"wp-caption module image aligncenter\" style=\"max-width: 1920px;\"><img decoding=\"async\" loading=\"lazy\" class=\"size-large wp-image-31884\" src=\"https:\/\/stateimpact.npr.org\/oklahoma\/files\/2019\/09\/perez-14-1920x1282.jpg\" alt=\"\" width=\"1920\" height=\"1282\" srcset=\"https:\/\/stateimpact.npr.org\/oklahoma\/files\/2019\/09\/perez-14-1920x1282.jpg 1920w, https:\/\/stateimpact.npr.org\/oklahoma\/files\/2019\/09\/perez-14-672x449.jpg 672w, https:\/\/stateimpact.npr.org\/oklahoma\/files\/2019\/09\/perez-14-768x513.jpg 768w, https:\/\/stateimpact.npr.org\/oklahoma\/files\/2019\/09\/perez-14-150x100.jpg 150w, https:\/\/stateimpact.npr.org\/oklahoma\/files\/2019\/09\/perez-14-300x200.jpg 300w, https:\/\/stateimpact.npr.org\/oklahoma\/files\/2019\/09\/perez-14-620x414.jpg 620w, https:\/\/stateimpact.npr.org\/oklahoma\/files\/2019\/09\/perez-14-1618x1080.jpg 1618w\" sizes=\"(max-width: 1920px) 100vw, 1920px\" \/><\/p>\n<p class=\"wp-media-credit\">Heidi de Marco \/ KHN<\/p>\n<p class=\"wp-caption-text\">Sweet Springs Mayor Francis Vaught is among the local officials who feel a sense of betrayal since the closure of I-70 Community Hospital. \u201cWe were robbed,\u201d he says.<\/p>\n<\/div>\n<h4>Fallout From A Damning Report<\/h4><p>In August 2017, Missouri State Auditor Nicole Galloway delivered a stunning blow.<\/p><p>A <a href=\"https:\/\/app.auditor.mo.gov\/Repository\/Press\/2017074829206.pdf\">routine audit<\/a> of Putnam County Memorial had uncovered questionable financial dealings. From December 2016 to May 2017, Perez and Byrns\u2019 company, Hospital Partners, had managed to generate $92 million from lab tests run through Putnam. By comparison, hospital revenue totaled $7.5 million in fiscal year 2016, according to the audit.<\/p><p>The analysis found 80% of that money was flowing to laboratory companies, including some in which Byrns had a financial stake; another 6% to a Perez-controlled billing company; and a major portion to 33 out-of-state phlebotomists \u2014 blood draw specialists \u2014 they had put on the hospital payroll.<\/p><p>\u201cWhat was astounding to me was that the hospital was not better off during and after this lab activity,\u201d Galloway told KHN.<\/p><p>The reaction was explosive. Dozens of major insurers banded together to <a href=\"https:\/\/www.documentcloud.org\/documents\/6226394-RightChoice-v-Hospital-Partners-Et-Al-Third.html\">file lawsuits<\/a> against Perez-affiliated hospitals in Missouri and other states, demanding hundreds of millions in restitution. The <a href=\"https:\/\/www.documentcloud.org\/documents\/6152556-Blue-Cross-Blue-Shield-Georgia-v-Aaron-Durall.html\">lawsuits<\/a>, still ongoing, describe the lab-billing operation as a \u201cwidespread fraudulent scheme\u201d that aimed to enrich Perez, some of his associates and affiliated companies, as well as participating labs.<\/p>\n<div id=\"attachment_31883\"  class=\"wp-caption module image aligncenter\" style=\"max-width: 1920px;\"><img decoding=\"async\" loading=\"lazy\" class=\"size-large wp-image-31883\" src=\"https:\/\/stateimpact.npr.org\/oklahoma\/files\/2019\/09\/perez-18-1920x1281.jpg\" alt=\"\" width=\"1920\" height=\"1281\" srcset=\"https:\/\/stateimpact.npr.org\/oklahoma\/files\/2019\/09\/perez-18-1920x1281.jpg 1920w, https:\/\/stateimpact.npr.org\/oklahoma\/files\/2019\/09\/perez-18-672x449.jpg 672w, https:\/\/stateimpact.npr.org\/oklahoma\/files\/2019\/09\/perez-18-768x513.jpg 768w, https:\/\/stateimpact.npr.org\/oklahoma\/files\/2019\/09\/perez-18-150x100.jpg 150w, https:\/\/stateimpact.npr.org\/oklahoma\/files\/2019\/09\/perez-18-300x200.jpg 300w, https:\/\/stateimpact.npr.org\/oklahoma\/files\/2019\/09\/perez-18-620x414.jpg 620w, https:\/\/stateimpact.npr.org\/oklahoma\/files\/2019\/09\/perez-18-1618x1080.jpg 1618w\" sizes=\"(max-width: 1920px) 100vw, 1920px\" \/><\/p>\n<p class=\"wp-media-credit\">Heidi de Marco \/ KHN<\/p>\n<p class=\"wp-caption-text\">Tara Brewer, head of the Sweet Springs Chamber of Commerce, with her children, Keegan, 15, and Kendall, 13, and dog, Sawyer. Brewer worries Sweet Springs won\u2019t survive the closure of I-70 Community Hospital. \u201cWhat is it that we\u2019re going to have for our kids?\u201d she asks.<\/p>\n<\/div><p>In court documents, Perez has denied wrongdoing and asked for dismissal based on questions of jurisdiction, among other issues. In an interview, he said his billing setup was \u201cdone according to Medicare and state guidelines.\u201d He added: \u201cI\u2019m still waiting [to see] where we\u2019ve done anything wrong.\u201d<\/p><p>Legal or not, as public scrutiny intensified, the revenue generated by lab tests slowed to a trickle. <a href=\"https:\/\/oklahoman.com\/article\/5583451\/blue-cross-rural-hospitals-leaving-network-had-questionable-practices\">Blue Cross Blue Shield of Oklahoma<\/a> dropped four Perez-affiliated hospitals from its network, cutting off a crucial source of funding. Lenders took Perez and his partners to court to force them out of other hospitals.<\/p><p>Across the Midwest, employees were living the fallout. In hospital after hospital, paychecks came late \u2014 and then not at all, according to employee interviews and <a href=\"https:\/\/www.documentcloud.org\/documents\/5977511-Lauderdale-Community-Hospital-Bankruptcy.html\">bankruptcy court<\/a> documents. Doctors quit. Vendors stopped delivering vital supplies.<\/p><p>At Haskell County Community Hospital in Stigler, Okla., former laboratory supervisor Shawna Smith recalled an alarming shortage of antibiotics and IV catheters as early as October 2018. By January 2019, she said, employees weren\u2019t getting paid. The Ladies Auxiliary set up a fund for employees who couldn\u2019t pay their utility bills. One resident brought packages of hamburger and bison for every employee.<\/p><p>About two hours west, the local middle school in Prague, Okla., held a drive to collect toilet paper and cleaning supplies for Prague Community Hospital. A veterinary clinic delivered medical essentials. Still, supplies fell so low, said City Manager Jim Greff, that the hospital had to stop admitting patients.<\/p><p>At Drumright Regional Hospital, Human Resources Director Allyson Lunsford said they ran out of oxygen and blood. By December, she said, they were so far behind on bills that the company that rented them hospital beds came to repossess them \u2014 despite patients still using them.<\/p>\n<h4>A Sense Of Betrayal<\/h4><p>By March 2019, seven Perez-affiliated hospitals had closed. And as bankruptcy proceedings unfolded at those and others, employees got more devastating news, according to interviews and <a href=\"https:\/\/www.documentcloud.org\/documents\/5977508-Hillsboro-Community-Hospital-Bankruptcy-Bank-of.html\">trustee reports<\/a>: Along with missing paychecks, the company had stopped funding their health insurance; their medical and dental policies had been discontinued.<\/p><p>Perez said in an interview that the hospitals were not making enough money to cover their expenses and debt. He said he faced constant pressure about which bills to pay.<\/p><p>\u201cI had a whole executive team of experts, and they made decisions \u2014 we all made decisions \u2014 of what needed to be paid so we can live another day,\u201d Perez said. \u201cDo we pay the medication? Do we pay the pharmacy stuff? Do we pay the doctors? Do we pay the nurse?\u201d<\/p><p>\u201cWe felt at that moment we were going to be able to pull out of it in a month or two,\u201d he said of the missed payroll taxes. \u201cHindsight on that looks bad.\u201d<\/p><p>In February, the I-70 Community Hospital in Sweet Springs became one of the latest Empower hospitals to shut its doors, leaving its red-lettered \u201cEmergency\u201d sign shrouded in a white sheet. It marks a searing loss for a town where the last dentist recently closed shop and multiple storefronts sit abandoned.<\/p>\n<div id=\"attachment_31887\"  class=\"wp-caption module image aligncenter\" style=\"max-width: 5962px;\"><img decoding=\"async\" loading=\"lazy\" class=\"wp-image-31887 size-full\" src=\"https:\/\/stateimpact.npr.org\/oklahoma\/files\/2019\/09\/perez-23.jpg\" alt=\"\" width=\"5962\" height=\"3979\" srcset=\"https:\/\/stateimpact.npr.org\/oklahoma\/files\/2019\/09\/perez-23.jpg 5962w, https:\/\/stateimpact.npr.org\/oklahoma\/files\/2019\/09\/perez-23-1920x1281.jpg 1920w, https:\/\/stateimpact.npr.org\/oklahoma\/files\/2019\/09\/perez-23-672x448.jpg 672w, https:\/\/stateimpact.npr.org\/oklahoma\/files\/2019\/09\/perez-23-768x513.jpg 768w, https:\/\/stateimpact.npr.org\/oklahoma\/files\/2019\/09\/perez-23-150x100.jpg 150w, https:\/\/stateimpact.npr.org\/oklahoma\/files\/2019\/09\/perez-23-300x200.jpg 300w, https:\/\/stateimpact.npr.org\/oklahoma\/files\/2019\/09\/perez-23-620x414.jpg 620w, https:\/\/stateimpact.npr.org\/oklahoma\/files\/2019\/09\/perez-23-1618x1080.jpg 1618w\" sizes=\"(max-width: 5962px) 100vw, 5962px\" \/><\/p>\n<p class=\"wp-media-credit\">Heidi de Marco \/ KHN<\/p>\n<p class=\"wp-caption-text\">Like many rural towns, Sweet Springs faces economic challenges. The hospital closed owing $300,000 in unpaid property taxes, says the county assessor.<\/p>\n<\/div><p>The closure left $300,000 in unpaid property taxes that could have been spent on schools, according to the county assessor. Mayor Vaught said the town lost dozens of jobs. Medical equipment bought with money raised at hot dog fundraisers sits unused.<\/p><p>Brewer, the Chamber of Commerce head, worries Sweet Springs won\u2019t survive the hit. \u201cWhat is it that we\u2019re going to have for our kids?\u201d she asked.<\/p><p>It\u2019s not clear what recourse the towns have. Bankruptcy court documents indicate the Department of Justice is investigating Perez\u2019s companies, though DOJ officials would not comment. Perez has not been criminally charged, but federal prosecutors recently indicted one of his associates.<\/p><p>On July 9, Kyle Marcotte, owner of a Jacksonville Beach, Fla., addiction treatment center <a href=\"https:\/\/www.justice.gov\/opa\/pr\/substance-abuse-treatment-center-owner-pleads-guilty-57-million-money-laundering-conspiracy\">pleaded guilty<\/a> for his part in a $57 million lab-billing scheme involving two Perez-affiliated hospitals, including Campbellton-Graceville. Marcotte admitted cooperating with unnamed hospital managers to provide urine samples from his patients for lab testing that was billed through the rural hospitals and, in exchange, getting a cut of the proceeds. His sentencing has yet to be scheduled.<\/p><p>Perez, who still lives in Miami, said the company jet has been sold and he is turning his attention to software development. He told KHN he is losing sleep over the possibility he could go to jail but was adamant he has operated in the best interests of the communities he sought to serve. If anything, he said, the townspeople should thank him, because he gave their dying hospitals \u201ctwo to three years of life.\u201d<\/p><p>\u201cI wanted to see if I could save these rural hospitals in America,\u201d Perez said. \u201cI\u2019m that kind of person.\u201d<\/p><p>This <a href=\"https:\/\/khn.org\">KHN<\/a> story first published on\u00a0<a href=\"http:\/\/www.californiahealthline.org\/\">California Healthline<\/a>, a service of the <a href=\"http:\/\/www.chcf.org\/\">California Health Care Foundation<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>How companies run by a Miami businessman and his associates were able to drive so many hospitals into the ground so quickly, devastating their communities, is a story about the fragility of health care in rural America and the types of money-making ventures that have flourished in legal gray areas of America\u2019s complicated medical system.<\/p>\n","protected":false},"author":199,"featured_media":31880,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[23],"tags":[1148,322,1147],"acf":[],"_links":{"self":[{"href":"https:\/\/stateimpact.npr.org\/oklahoma\/wp-json\/wp\/v2\/posts\/31878"}],"collection":[{"href":"https:\/\/stateimpact.npr.org\/oklahoma\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/stateimpact.npr.org\/oklahoma\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/stateimpact.npr.org\/oklahoma\/wp-json\/wp\/v2\/users\/199"}],"replies":[{"embeddable":true,"href":"https:\/\/stateimpact.npr.org\/oklahoma\/wp-json\/wp\/v2\/comments?post=31878"}],"version-history":[{"count":14,"href":"https:\/\/stateimpact.npr.org\/oklahoma\/wp-json\/wp\/v2\/posts\/31878\/revisions"}],"predecessor-version":[{"id":31916,"href":"https:\/\/stateimpact.npr.org\/oklahoma\/wp-json\/wp\/v2\/posts\/31878\/revisions\/31916"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/stateimpact.npr.org\/oklahoma\/wp-json\/wp\/v2\/media\/31880"}],"wp:attachment":[{"href":"https:\/\/stateimpact.npr.org\/oklahoma\/wp-json\/wp\/v2\/media?parent=31878"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/stateimpact.npr.org\/oklahoma\/wp-json\/wp\/v2\/categories?post=31878"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/stateimpact.npr.org\/oklahoma\/wp-json\/wp\/v2\/tags?post=31878"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}