An eleventh-hour payment of $16,644 for delinquent utility bills averted a threatened cutoff of electricity at tiny Hillsboro Community Hospital in central Kansas.
The city, 50 miles north of Wichita and home to about 3,000 people, said in a brief news release that it gave notice to the hospital on Jan. 8 that it would shut off utilities effective at noon Friday. It received the payment in the morning.
“Accordingly, the presently noticed utility shut-off at the Hospital has been averted,” the release states. “It is the City’s ongoing desire to undertake reasonable steps to assist in keeping the Hospital open, while also being a good steward of the City’s finances and utility resources.”
Larry Paine, the city’s administrator, declined to comment, citing ongoing litigation in which the city is involved.
Earlier this week, Paine told KCUR that the hospital’s owner, North Kansas City-based EmpowerHMS, fell behind on three months of utility payments and had made no effort in recent weeks to communicate with the town.
“When we first started talking to them about the delinquency, they said, ‘You really have to wait until we get our Medicare payments in late January or February,’” Paine said, referring to officials at EmpowerHMS. “And then they sent us $12,000 and we haven’t heard from them since.”
That $12,000 check was returned for insufficient funds.
The 15-bed hospital had two patients as of Thursday. Had the lights been turned off, the hospital had plans to run on auxiliary power.
The hospital’s director of nursing could not be reached for comment.
The hospital is not out of the financial woods yet.
On Jan. 8, the Bank of Hays petitioned to foreclose on the hospital after it defaulted on a 2015 construction loan with an outstanding balance of nearly $10 million. The facility opened in 2017, replacing an older building.
The bank’s attorney in Wichita, Creath Pollak, declined to comment about the foreclosure petition. The petition also names the city and other defendants.
If the bank were to foreclose on the hospital, presumably it would continue running it until it found a buyer.
The hospital is one of about 20 rural hospitals, including several in Kansas and Missouri, acquired by EmpowerHMS in the last few years.
The company, which is headed by Miami resident Jorge Perez, has said its mission is to save distressed rural hospitals from closure.
To do that, it has billed insurers for lab tests run through some of the hospitals — even though few if any of the tests were for the hospitals’ own patients. The arrangement took advantage of the higher reimbursement rates so-called critical access hospitals receive.
But insurers began questioning the legality of the arrangement and, in some cases, sued to recover the money they paid for the lab tests.
As a result, EmpowerHMS has been late in meeting financial obligations, including utilities, rent and payroll, at several of its hospitals.
Hillsboro Community Hospital paid its employees late twice last month, as did three EmpowerHMS’ hospitals in Oklahoma, one in Tennessee and another in Arkansas.
Dan Margolies is a senior reporter and editor at KCUR. You can reach him on Twitter @DanMargolies.
