The news, , arrived at 5:05 p.m. on a Friday, with the subject line: Audrain Community Hospital, Paul Huemann鈥檚 workplace of 32 years, was letting workers go.
Word travels fast in a small town. Huemann鈥檚 wife, Kym, first heard the bad news in the car when a friend who鈥檇 gotten the letter, too, texted.
鈥淵our termination was not foreseeable,鈥� , dated Sept. 8 and signed Platinum Health Systems, adding that the firing was permanent 鈥渨ith no recourse鈥� and that the 鈥渕edical facility will be shuttered.鈥�
鈥淚 don鈥檛 know what my next steps are,鈥� said 52-year-old Huemann, who supervised the laboratory at the Audrain hospital.
The future for the Huemanns, hundreds of other workers, and thousands of patients in two small Missouri towns began to unravel long before that afternoon. The drama playing out in Paul Huemann鈥檚 hometown is familiar to many who live in rural America: Communities are so desperate to keep their hospital open that they鈥檙e willing to gamble on any buyer, including those backed by private equity.
Sometimes they lose.
Noble Health, a three-year-old private equity-backed startup, had acquired Audrain and nearby Callaway Community Hospital during the pandemic. In March, it suspended all hospital services and later furloughed 181 employees, show.
Noble 鈥� facing staggering debt, more than a dozen lawsuits, and at least two federal investigations 鈥� struck a deal to sell the hospitals in April to Platinum Neighbors, which is affiliated with Texas-based and Platinum Health Systems. In late June, Missouri officials to extend until Sept. 21 a deadline to reopen the hospitals. On Tuesday, Platinum officials told KHN that, 鈥渙n behalf of Noble,鈥� they asked Missouri regulators for an additional 30-day extension 鈥渋n an attempt to explore all alternatives for reopening these facilities,鈥� Ryann Gordon, Platinum鈥檚 director of marketing, said. 鈥淭he backpay and health benefits of the employees is of utmost importance.鈥�
Hours before the licensing deadline Wednesday, for a 90-day variance. Missouri regulations do not allow another extension within a year, said Lisa Cox, a spokesperson for the Missouri Department of Health and Senior Services. So the state 鈥渨orked with them鈥� and granted the request, she said.
Platinum said the hospitals need time to complete construction projects. Audrain鈥檚 鈥渆mergency room area鈥� has broken windows, and Callaway鈥檚 hospital needs 鈥渃ritical repair to the plumbing,鈥� according to the state approval letter. The hospitals can change ownership during the 90 days, Cox said.
Cory Countryman, president of Platinum Health Systems, confirmed the termination of the remaining hospital staff. 鈥淲e are working with multiple partners to reopen the hospitals,鈥� he said.
That could involve a new owner. One prospect is Owen Shuler, a Georgia-based entrepreneur, who said he is thinking about buying them. Shuler, who was reached by phone after he鈥檇 visited the rural communities, said, 鈥淚 love what I see.鈥�
鈥淚t鈥檚 heartbreaking as to what has occurred,鈥� said Shuler, whose companies include and . If he bought the hospitals, he said, he would do so as managing director of his new venture, CareONE Global. 鈥淚n terms of the due diligence, I do not like what I鈥檓 seeing and learning,鈥� he said. What he concluded from his review is that 鈥減rivate equity and venture capital need to be kept the heck out of health care.鈥�
On his LinkedIn profile, Shuler said he 鈥溾�� as well as expertise in 鈥渢elemedicine and healthcare services.鈥�
Shuler, who confirmed the hospitals were saddled with substantial debt 鈥� 鈥渋n the ballpark鈥� of $45 million to $50 million 鈥� said, 鈥淚 am not prepared to go on the record about business strategy quite yet.鈥� He said his approach would be 鈥渉olistic鈥� and include telehealth. Many industry leaders have argued telehealth is a way to bring high-quality medicine to rural communities that can鈥檛 afford, and don鈥檛 need, a full platoon of specialists on-site.
鈥淥ur target is acquiring hospitals in rural and disadvantaged areas and introducing our capabilities to them,鈥� Shuler said, adding that fixing the two 鈥渂asically broken鈥� Missouri hospitals from the bottom up would be 鈥渕uch easier than trying to go into a healthy system.鈥�
Still, it鈥檚 unclear whether Shuler or another buyer will come through and what it would take to reopen them after years of ownership instability and financial trouble.
Venture capital and private equity firm Nueterra Capital launched Noble in with executives who had never run a hospital, including Donald R. Peterson, a co-founder who prior to joining Noble had been accused of Medicare fraud. Peterson without admitting wrongdoing and in August 2019 agreed to be from Medicare, Medicaid, and all other federal health programs, according to the Health and Human Services Office of Inspector General.
Federal regulators did not block the acquisition in which Peterson was involved. 鈥淎ll ownership and managing control information is self-reported,鈥� said Centers for Medicare & Medicaid Services spokesperson Kristen Clemens.
It didn鈥檛 take long for problems to surface under Noble Health鈥檚 stewardship. Noble has accepted nearly $20 million in federal covid-19 relief funds, including $4.8 million from paycheck protection programs, according to public records.
Yet saw evidence that the new owners were skimping on services 鈥� failing to pay for and stock surgical supplies and drugs. In Callaway, state inspectors determined that . Former workers provided KHN bills and pay stubs they said showed for employee health, dental, vision, and life insurance benefits.
After employees filed complaints about surprise medical bills, the Department of Labor鈥檚 Employee Benefits Security Administration launched an investigation in early March, according to a and obtained by KHN. The department confirmed a second investigation by another one of its divisions, Wage and Hour, into Noble鈥檚 management of its Audrain hospital and clinic.
In April, Noble struck a deal to sell both hospitals for $2 and a stock transfer to Platinum, which assumed all liabilities, . to state regulators about the hospitals鈥� operating licenses, Platinum said, 鈥淲e are requesting this continuance as Noble Health stock has been transferred to Platinum Medical Management.鈥�
While visiting the hospitals in April, Countryman told employees it was a 鈥減riority鈥� to pay the back wages Noble owed them.
Neither Noble nor Platinum made good on that in the months since, employees contend. In addition to the federal investigations, nine wage claims 鈥� the largest for $355,000 鈥� have been filed against Noble in Kansas, according to through a Kansas Open Records Act request.
By early August, others were recognizing the employee complaints. Principal, which provided dental and vision care coverage, to workers saying it would not demand that any worker repay benefits the insurer covered after Noble stopped sending premiums for employee coverage. 鈥淭his situation is not typical,鈥� wrote Principal spokesperson Ashley Miller in an email.
Huemann, as laboratory supervisor, was among the workers who weren鈥檛 furloughed in the spring. They reported for work every day in the hopes that the Audrain hospital would reopen. Huemann checked reagents and kept machines operational even as money for supplies was tight.
鈥淲e couldn鈥檛 get anything,鈥� Huemann said, 鈥渟o we were living with what we had.鈥�
Huemann, who provided pay stubs to KHN, said he received a paycheck from Noble in late March. He said he did not receive another paycheck until late May. He received regular paychecks in June and early July. But his second July check, under Platinum, was a week late. His final paycheck arrived Aug. 8 and was also late.
His last seven checks came from three companies. They were all on Platinum鈥檚 watch: Initially Platinum Neighbors issued the checks, then Callaway County Community Hospital, and finally Noble Health Audrain Inc.
鈥淓veryone cashed their check as soon as they got it,鈥� Huemann said. 鈥淭here are so many red flags. But you know, we鈥檙e at their mercy, we have no control, and we鈥檙e still thankful they are saving us.鈥�
The check stubs also show the hospital鈥檚 operators deducted $1,385 in total from Huemann鈥檚 pay for insurance. The medical insurance was supposed to be with Blue Cross and Blue Shield of Texas, but Huemann said he never received a card and could not confirm coverage.
鈥淚 called four or five times on different days,鈥� he said. 鈥淭hey could never find me no matter how they looked me up, with Social Security or date of birth, or anything.鈥�
Countryman referred all financial questions to Platinum鈥檚 corporate offices. Ryan Cole, chief executive of Platinum Team, did not directly respond to calls and emails seeking comment.
Some doctors left town as the upheaval swallowed the hospitals.
Others, such as family medicine doctor Diane Jacobi and her nurse practitioner, Regina Hill, joined MU Health Care, affiliated with the University of Missouri, in Mexico, Missouri, the 11,000-person town where Audrain Community Hospital is located.
Jacobi said her patients want local care. 鈥淚 don鈥檛 know if you鈥檙e a mama, but if you鈥檙e in labor, the idea that you have to spend 45 minutes in a car on the way to the hospital is nerve-wracking,鈥� she said. 鈥淚t鈥檚 safer if you have care.鈥�
Lou Leonatti, an attorney who lives in Mexico, said he feels so strongly that the community needs a hospital and emergency care that he provided loans last year to Noble so the company could meet payroll. Leonatti鈥檚 personal $60,000 loan, with an interest rate of about 3%, was due in January but, he said, remains unpaid.
Leonatti helped start Project Sunrise, a local economic development group. If a new agreement is not reached, he said, 鈥渨e would like to have a Plan B available.鈥�
Peterson, Noble鈥檚 failed effort to turn around the two Missouri hospitals, seems to have found his Plan B in Dubai. 鈥淚鈥檓 sitting in the Emirates Air lounge in Dubai marveling at the experience being afforded me at the tender age of 68,鈥� . 鈥淚鈥檒l be in Riyadh for the next week finishing up due diligence on launching a new business there.鈥�
The post made Tonya Linthacum, a nurse practitioner who worked at Audrain鈥檚 cancer screening center for more than two decades, furious. She said that he 鈥渄estroyed a lot of people鈥檚 lives and livelihoods,鈥� adding that 鈥渢o have someone dupe you like that鈥� and 鈥済oing on with no consequences. It鈥檚 just not the way the world is supposed to be.鈥�
Peterson declined to comment.
(Kaiser Health News) is a national newsroom that produces in-depth journalism about health issues. Together with Policy Analysis and Polling, KHN is one of the three major operating programs at (Kaiser Family Foundation). KFF is an endowed nonprofit organization providing information on health issues to the nation.
