Rural Tennesseans who care about their healthcare are facing a two-pronged attack from the Tennessee Republican Party. First, some Republican legislators have for years refused to expand Medicaid. Data proves that Medicaid expansion would make Tennessee’s rural hospitals six times less likely to close. It would alleviate our opioid epidemic, and quite dramatically reduce Tennessee’s uninsured rate. But the Tennessee Republican Party doesn’t seem to care.

To make matters worse, for years, they’ve permitted ill-intended hospital corporations to purchase hospitals, prey upon existing programs intended to keep rural hospitals open, and drain rural Tennessee communities of the resources they need to stay afloat. 

Under current law, Tennessee Republican Attorney General Herbert Slatery is responsible for vetting potential hospital buyers and must sign off on all hospital purchases. 

Empower HMS, the company that mismanaged Lauderdale Community Hospital to the point of closure, owns 18 rural hospitals nationwide, which they used to run a fraudulent billing scam. Twelve of them have entered bankruptcy and eight have closed. Empower HMS is operated and partly owned by a Miami-based entrepreneur named Jorge Perez, who had not day of experience in hospital management before taking control of a small fleet of hospitals.

Here’s how the fraudulent billing scam worked:

Small rural hospitals with less than 25 beds are designated as “Critical Access” hospitals by the Center for Medicare and Medicaid. This designation gives them certain billing advantages, intended to assist them to remain open. These advantages include reimbursement rates for laboratory work at rates of up to 130% of the regular reimbursement.

EmpowerHMS specializes in buying “Critical Access” hospitals simply to take advantage of the reimbursement spike. They are accused of laundering laboratory work done elsewhere through the Critical Access Hospitals to gain the premium reimbursements. 

These outrageous billing numbers caused insurance companies to become suspicious. Lawsuits started piling up, reimbursements stopped flowing in, and Empower HMS’s hospitals –in the communities that needed them most — started closing.

In a lawsuit, Missouri Attorney General has accused them of billing $92 billion in six months through the hospital in Unionville, Missouri, a town of 1,800 population. Instead of following the Missouri Attorney General’s lead, Tennessee’s Republican Attorney General continues to allow our rural hospitals to be sold to disreputable corporations.

In Oneida, TN, another laboratory testing company formed Rennova for the purpose of acquiring the Big South Fork Medical Center. Big South Fork has been experiencing serious financial problems ever since. 

Then, in June 2018, Rennova bought Jamestown Regional Medical Center, which closed just a year later in June 2019 after the hospital failed to meet program standards required in order to treat Medicare patients. News reports revealed supply shortages, and employees charged that Rennova was withholding tax money from employees’ paychecks but failing to pay the IRS. Consequently, the Center For Medicare and Medicaid stopped paying for patients to be treated. 

In February of 2019, Rennova bought the hospital in Jellico, TN.

Rennova, whose Northern Irish CEO Seamus Lagan currently lives in the Bahamas, has been accused of running the same lab testing scam as Empower HMS. 

And this isn’t just happening in Tennessee. Dozens of rural communities across the country share an all too common story: Unknown, out-of-state companies buy rural hospitals, seemingly overnight, and make big promises to cut costs, improve services, and bolster local economies. Months down the road, financial mismanagement comes to light, followed by unpaid bills and workers, and eventually, a collapsed hospital — all within the span of a few months. What’s left is a community in shambles, faced with a massive economic void and no access to emergency care, often for the first time in decades.

Prior to buying to buying hospitals in Tennessee, Empower HMS and Rennova both had long records of financial mismanagement and little evidence pointing to any ability to stabilize rural hospitals. According to the Daily Beast, multiple executives and managing partners of Empower HMS have criminal records that include mail fraud, check forgery, and money laundering.

Why does Attorney General Slatery keep allowing bad actors to purchase and prey on vulnerable rural hospitals? The reason is because Tennessee’s majority party leadership views healthcare as a means for billion-dollar hospital corporations to extract money out of rural communities in any way possible, regardless of the damages to public health, local economies, and access to emergency services.

We know it doesn’t have to be this way. Earlier this year in Ripley, TN, Lauderdale Community Hospital closed following reports of fraud and a streak of unpaid bills and financial obligations such as taxes and employee health insurance. Because it is a Critical Access hospital, a federal judge seized the hospital and appointed a receiver, who then put the hospital in the hands of a responsible and well-intended third-party consulting firm. Now that the hospital’s bottom line is serving the community, instead of raking in cash, Lauderdale Community Hospital is currently stable and operating at a surplus.

Every closed or at-risk rural hospital faces a unique set of threats and circumstances, which means they will require their own unique set of solutions. But one thing is clear: Tennesseans deserve a Legislature where the interests of public health and rural communities outweigh corporate profits and powerful healthcare lobbyists.

We can start by expanding Medicaid and creating stronger vetting process of potential hospital buyers. But to truly reverse Tennessee’s healthcare woes, Slatery and Republican leaders in Tennessee must understand that healthcare and hospitals are an essential pillar of any healthy community that exists to serve the public good, and the public good should always come first.

Written by:
Trevon Sylvester & Randall Rice