Buy and bust: After Platinum Health took control of Noble Sites, all hospitals

The news came at 5:05 p.m. Friday under Noble Health letterhead, with the subject line: “Urgent Notice.” Audrey Community Hospital, Paul Human’s workplace of 32 years, was letting go.

Word travels fast in a small town. Human’s wife, Kim, first heard the bad news in the car when a friend who received the letter, also texted.

In the letter, dated Sept. 8 and signed by Platinum Health Systems, “your termination was not foreseeable,” adding that the firing was permanent “with no recourse” and that “the medical facility will be closed.”

“I don’t know what my next steps are,” said Human, 52, who oversees the Audrey hospital’s laboratory.

A photo shows Paul Humane standing in front of the closed doors of Audrey Community Hospital.
Paul Human, a former laboratory supervisor at Audrey Community Hospital in Mexico, Missouri, was let go after the hospital’s parent company suddenly announced it was closing the facility.(Kim Human)

Long before that afternoon, the fate of Humans, hundreds of other workers and thousands of patients in two small Missouri towns began to unravel. The drama in Paul Human’s hometown is familiar to many who live in rural America: communities so desperate to keep their hospitals open that they’re willing to gamble with any buyer, including private equity.

Sometimes they lose.

Noble Health, a three-year-old private equity-backed startup, acquired Audrey and nearby Callaway Community Hospital during the pandemic. In March, it suspended all hospital services and later furloughed 181 employees, state records show.

Noble — facing staggering debts, more than a dozen lawsuits and at least two federal investigations — struck a deal in April to sell the hospitals to Texas-based Platinum Team Management and Platinum Neighbors, an affiliate of Platinum Health Systems. In late June, Platinum asked Missouri officials to extend the deadline for reopening hospitals to September 21. On Tuesday, Platinum officials told KHN that, “on behalf of Noble,” they asked Missouri regulators for an additional 30-day extension “in an effort to explore all options to reopen these facilities,” said Ryan Gordon, Platinum’s director of marketing. . “Employee backpay and health benefits are critical.”

Hours before the license deadline on Wednesday, Platinum submitted a request for a 90-day variance. Missouri regulations do not allow for one more extension within a year, said Lisa Cox, spokeswoman for the Missouri Department of Health and Senior Services. So the state “worked with them” and granted the request, he said.

Platinum said hospitals need time to complete construction projects. Audrain’s “emergency room area” has broken windows, and Callaway’s hospital needs “serious plumbing repairs,” according to the state’s approval letter. Hospitals can change ownership within 90 days, Cox said.

Corey Countryman, president of Platinum Health Systems, confirmed the rest of the hospital’s layoffs. “We are working with multiple partners to reopen the hospitals,” he said.

It may involve a new owner. One possibility is Wayne Schuler, a Georgia-based entrepreneur who said he’s considering buying them “I like what I see,” said Schuler, who was reached by phone after visiting rural communities.

“What happened is heartbreaking,” said Shuler, whose companies include Bankers Realty Corp. and Shuler Capital Corp. If he buys hospitals, he said, he will do so as managing director of his new venture, CareONE Global “In terms of due diligence, I don’t like what I’m seeing and learning,” he said. What he concluded from his review was that “private equity and venture capital should be kept out of healthcare.”

On his LinkedIn profile, Schuler said he “brings a lifetime of perspective from a family-owned skilled care business” as well as expertise “in telemedicine and healthcare services.”

“I’m not ready to go on the record about business strategy yet,” said Schuler, who confirmed that the hospitals were saddled with substantial debt — “in the ballpark” of $45 million to $50 million. He said his approach would be “comprehensive” and include telehealth. Many industry leaders have argued that telehealth is a way to bring high-quality medicine to rural communities that can’t afford, and don’t need, an entire platoon of on-site specialists.

“Our goal is to acquire hospitals in rural and underserved areas and introduce our capabilities to them,” Shuler said, adding that fixing Missouri’s two “basically broken” hospitals from the ground up “would be a lot easier than trying to go to a healthy system.” “

Still, it’s unclear whether Schuler or another buyer will come in and what it will take to reopen after years of ownership instability and financial problems.

Venture capital and private equity firm Nueterra Capital launched Nobel in December 2019 with executives who had never run a hospital, including Donald R. Peterson, along with a co-founder who was accused of Medicare fraud before joining Nobel. Peterson settled the case without admitting wrongdoing and in August 2019 agreed to be excluded from Medicare, Medicaid and all other federal health programs for five years, according to the inspector general of the Office of Health and Human Services.

Federal regulators did not block acquisitions Peterson was involved in. “All ownership and management control information is self-reported,” said Centers for Medicare and Medicaid Services spokeswoman Kristen Clemens.

It didn’t take long for problems to arise under Noble Health’s stewardship. According to public records, Noble received about $20 million in federal Covid-19 relief funds, including $4.8 million in the Paycheck Protection Program.

Yet doctors, nurses and patients saw evidence that the new owners were skimping on services — failing to pay for and stock surgical supplies and drugs. In Callaway, state inspectors determined that hospital conditions put patients at risk. Former employees who provided KHN with bills and pay stubs said Noble also stopped paying for employees’ health, dental, vision and life insurance benefits.

After employees filed complaints about surprise medical bills, the Department of Labor’s Employee Benefits Security Administration opened an investigation in early March, according to a letter sent to the company and obtained by KHN. The department confirmed a second investigation by another of its divisions, Wage and Hour, under Nobel’s management of its Audrey Hospital and Clinic.

In April, Noble entered into an agreement to sell both hospitals for $2 and transfer one stock to Platinum, which assumed all liabilities under the agreement. In a June 22 letter to state regulators about the hospital’s operating license, Platinum said, “We are requesting this continuance because Noble Health stock has been transferred to Platinum Medical Management.”

During a visit to the hospital in April, Countryman told staff that paying the salary owed to Noble was a “priority”.

Neither Noble nor Platinum fared well in the months that followed, employees claimed. In addition to the federal investigation, nine wage claims — the largest for $355,000 — have been filed against Noble in Kansas, according to information provided through a Kansas Open Records Act request.

By early August, others were acknowledging the employee’s complaints. Principal, which provides dental and vision care coverage, sent letters to employees saying it would not demand that Noble employees pay the covered insurer’s benefits after it stopped paying premiums for the coverage. “This situation is not common,” chief spokeswoman Ashley Miller wrote in an email.

Human, as a laboratory supervisor, was among the workers who were not given spring leave. They reported to work every day hoping that Audrey Hospital would reopen. Humans tested the reagents and kept the machines running despite tight money for supplies.

“We couldn’t get anything,” Human said, “so we lived with what we had.”

Human, who provided pay stubs to KHN, said he received a paycheck from Noble in late March. He said he didn’t get another paycheck until the end of May. He received regular paychecks in June and early July. But his second July check, under Platinum, was delayed by a week. His final paycheck arrived on August 8 and was late.

His last seven checks came from three companies. They were all on platinum watch: initially Platinum Neighbors issued the check, then Callaway County Community Hospital and finally Noble Health Audrey Inc.

“Everybody cashed their check as soon as they got it,” Human said. “There are so many red flags. But you know, we’re at their mercy, we have no control, and we’re still grateful that they’re protecting us.”

Check stubs also show hospital operators deducted a total of $1,385 from Human’s pay for insurance. Medical insurance was supposed to be with Blue Cross and Blue Shield of Texas, but Human said he never received a card and couldn’t confirm coverage.

He said, I called four-five times on different days. “No matter how they looked at me, they couldn’t find me by Social Security or date of birth or anything.”

Countryman directs all financial questions to Platinum’s corporate office. Ryan Cole, Platinum Team’s chief executive, did not immediately respond to calls and emails seeking comment.

Some doctors left the city as the upheaval engulfed hospitals.

Others, such as family medicine doctor Diane Jacoby and her nurse practitioner, Regina Hill, have joined MU Health Care, affiliated with the University of Missouri, in Mexico, Missouri, the 11,000-person town where Audrain Community Hospital is located.

Jacoby said his patients want local care. “I don’t know if you’re a mom, but if you’re in labor, the idea of ​​spending 45 minutes in a car on the way to the hospital is nerve-wracking,” she said. “It’s safe if you care.”

Lou Leonati, an attorney who lives in Mexico, said he felt so strongly that the community needed a hospital and urgent care that he gave Noble a loan last year so the company could meet payroll. Leonatti’s personal $60,000 loan, with an interest rate of about 3%, was due in January but, he said, remains unpaid.

Leonati helped start Project Sunrise, a local economic development group. If a new deal isn’t reached, he said, “we want to have a Plan B available.”

Peterson, who helped launch Nobel’s failed effort to turn around two Missouri hospitals, seems to have found his Plan B in Dubai. “I’m sitting in the Emirates Air Lounge in Dubai marveling at the experience I’ve been given at 68,” he wrote on LinkedIn. “I will be in Riyadh next week to complete due diligence to launch a new business there.”

The post outraged Tonya Linthacum, a nurse practitioner who has worked at Audrey’s cancer screening center for more than two decades. He said he had “destroyed a lot of people’s lives and livelihoods,” adding that “someone would cheat you like that” and “carry on with no consequences. This is not the way the world is supposed to be.”

Peterson declined to comment.

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