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Pauls Valley hospital likely to stay closed unless donor puts up $5 million

Pauls Valley Regional Medical Center, which turned to crowdfunding to stay open, closed its doors last week. [The Oklahoman archives]
Pauls Valley Regional Medical Center, which turned to crowdfunding to stay open, closed its doors last week. [The Oklahoman archives]

Oklahoma City — PAULS VALLEY — Unless a charity with $5 million on its hands steps in immediately, a financially troubled rural hospital in Pauls Valley likely will close down for good, its operator said Monday.

Pauls Valley Regional Medical Center closed its doors on Friday. Frank Avignone, the CEO of Alliance Health Partners, said the company's plan required $5 million to keep the hospital running until a permanent owner could step in. The Pauls Valley Hospital Authority brought Alliance in this summer for a rescue attempt.

Efforts to raise that money through donations through Facebook and GoFundMe yielded a few hundred thousand dollars, Avignone said.

“Not even a drop in the bucket,” he said.

The city of Pauls Valley committed $361,000 to keep the hospital running a bit longer last month, but that wasn't enough to change its financial trajectory. Employees didn't get their final paycheck, Avignone said, and his company is out about $500,000 it lent to keep the hospital afloat.

On Tuesday, the hospital will notify the Centers for Medicare and Medicaid Services that it's shutting down. In some ways, that's a formality, because the hospital already closed its doors, but it also would make reopening a new hospital in the same location more difficult.

The Centers for Medicare and Medicaid Services licenses hospitals so they can get paid through Medicare and Medicaid. A new operator would have to start the process over again and might have to invest in bringing “grandfathered” parts of the building up to new standards. It likely would be no more expensive to build a new hospital, Avignone said, but it's not clear that anyone will want to do that in Pauls Valley, a town of only about 6,000 people.

The closest hospitals are in Purcell and Sulphur. Both are about a half-hour drive away, with typical traffic.

The hospital has about $600,000 in the bank, Avignone said, but can't use it because of a lawsuit by its former management company. NewLight Healthcare, a Texas company that ran the hospital from 2013 until early July, claims the hospital owes it $2.3 million for management fees and loans that were never repaid.

The hospital was in bankruptcy when NewLight took it over in 2013. The citizens of Pauls Valley approved a half-cent sales tax in 2014 to help fund it, but it wasn't enough. NewLight agreed to loan the hospital $1 million in 2016 and deferred about $1.3 million in management fees until April, when the Pauls Valley Hospital Authority told NewLight the hospital was likely to shut down unless a buyer stepped in.

The hospital sued NewLight for $2 million in August, claiming it had failed to maintain a workable budget and follow federal rules. NewLight denied the allegations and filed its own lawsuit. The hospital authority had asked Oklahoma Western District Judge Joe Heaton to prevent NewLight from collecting hospital revenues until the case ends, because the hospital would be forced to close.

Heaton denied the request, saying that NewLight had established it had the right to the money, and delaying could leave it with nothing.

In a statement, NewLight offered its “deepest sympathies” to the community and highlighted its work during the hospital's bankruptcy.

“NewLight loaned and advanced the hospital millions of dollars and, even after it was no longer managing the hospital, continued to work with the new management in an attempt to keep the hospital open,” the statement said. “It is unfortunate that Alliance Healthcare Partners, the new manager, in conjunction with the Pauls Valley Hospital Authority, were unable to develop a viable business plan that would allow for continued operations.”

Even if NewLight relented now and allowed the hospital to start getting paid for any services it performs, it would likely be too late, Avignone said. He estimated the hospital total debts exceed $11 million, making it unattractive for banks, venture capital firms and anyone hoping to turn a profit.

“It's too high a risk for them,” he said.

Meg Wingerter

Meg Wingerter has covered health at The Oklahoman since July 2017. Previously, she lived in Topeka, Kansas, and worked at Kansas News Service and The Topeka Capital-Journal, where she earned awards for business coverage. She graduated from... Read more ›