In an interview at his Kansas City offices, Perez dismissed concerns about the lab billing arrangement, saying he runs similar programs at some of his other hospitals. Has called for a federal investigation into the billing arrangements, and the Missouri Attorney General's office confirmed in a statement that it's actively investigating the matter as well. In a press release announcing the audit, Galloway stated that she had turned her findings over to criminal authorities. LLC was paid $11.8 million by the hospital between November 2016 and March 2017. Galloway noted in the audit that, during the same time period, Putnam Memorial contracted with a billing company that received 6 percent of the revenue generated by the lab program.Ī public records request showed Florida-based software and billings company Empower H.I.S. There's another way that Perez and Byrn's companies profited from their relationship with the hospital. "Based on our review of hospital accounts, the vast majority of laboratory billings are for out-of-state lab activity for individuals who are not patients of hospital physicians," Galloway wrote in the audit.Ī public records request of the hospital revealed that between November 2016 and March 2017, Putnam County Memorial paid for over $26 million to Hospital Laboratory Partners alone. It noted that 80 percent of the revenue did not stay in the hospital's coffers: It went to private lab companies -some with ties to Perez-such as Hospital Laboratory Partners. The audit questioned the propriety of the lab billings at Putnam. "The hospital can charge whatever," Barnhart says. The reference lab will bill the hospital at a negotiated rate, and then the hospital turns around and bills the patient's insurance. "It's a common practice," says Tommy Barnhart, a health care consultant who focuses on rural health. But some tests are sent to specialized reference laboratories. Many hospitals have in-house laboratories to test specimens, such as blood or urine samples. This new lab company started billing insurers for tests through Putnam County Memorial hospital. Within days of Hospital Partners' takeover of Putnam County Memorial, a completely separate company with ties to Byrns and Perez - Hospital Laboratory Partners - was incorporated in Florida, according to the auditor's report andĬlaims in court records. Here's how the hospital's new management appear to have managed its turnaround, according to documents and hospital and court records NPR obtained: "It appears that Putnam County Memorial Hospital is being used as a shell company for questionable lab activity that's occurring across the country," Galloway said in an interview after releasing the audit.Īccording to Galloway's report, Putnam hospital had started acting as a reference lab, and billing insurance for tests, including many performed elsewhere. By comparison, the audit reported, the hospital had generated just $7.5 million the year before.īut little of that revenue was staying with the hospital, according to Missouri auditor Nicole In six months, Putnam Memorial generated $92 million in revenue. The new management had dramatic effects on the hospital's finances, according to a report from the Missouri state auditor. David Byrns, co-owner of Hospital Partners, became Putnam County Memorial's CEO. Then in September 2016, Florida-based management company, Hospital Partners Inc., which Perez co-owns, took over operation of the hospital. It had scrambled back from the brink of bankruptcy in 2011, but budgets were still tight. had struggled to stay in business for several years. Putnam County Memorial hospital, a 25-bed critical access hospital, in Unionville, Mo. Two and half hours drive north of Fulton, another Missouri rural hospital was nearing closure when one of Perez's companies stepped in. "Part of our secret sauce is that we will bring in new services that didn't exist before," Perez said in an interview following the event in Fulton last September.īut an investigation by NPR and its reporting partners uncovered a pattern of controversial business practices by management companies with ties to Perez, which can lead to big profits for the management companies, but high risks for vulnerable hospitals. A serial entrepreneur with a background in IT, he's known for coming in to rural hospitals on the brink of closure with a promise to turn them around. By the end of this year, he says, he wants to own 50 of them. He and his business partners own or manage nearly 20 rural hospitals in Missouri, Kansas, Oklahoma, Florida and elsewhere. Yet despite their typically slim operating margins, Perez has been buying them. KBIA/Side Effects Public Media Jorge Perez addresses a crowded city council chambers in Fulton, Mo., after being introduced as the new owner of the town's hospital.
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