StoneBridge Healthcare Makes Bid to Acquire Care New England Health System

https://www.prnewswire.com/news-releases/stonebridge-healthcare-makes-bid-to-acquire-care-new-england-health-system-301187518.html

StoneBridge Healthcare Makes Bid to Acquire Care New England Health System

Letter of Intent offered to acquire Rhode Island-based Care New England Health System

StoneBridge Healthcare, LLC (StoneBridge), an innovative company formed to buy, save and turn around distressed hospitals in the cities and suburbs of America, today announced it has presented a Letter of Intent (LOI) to purchase Rhode Island-based Care New England Health System. StoneBridge would make a significant investment in order to financially stabilize Care New England to allow the health system to continue its mission to transform the future of health care for the communities it serves.

“Care New England Health System has provided outstanding care to its patients for many years, and StoneBridge Healthcare is committed to the continuation of this high standard of care in Rhode Island,” said Joshua Nemzoff, Chief Executive Officer, StoneBridge Healthcare. “We believe that StoneBridge Healthcare is in a strong position to help Care New England to continue delivering cutting-edge care to the communities it serves for years to come.”

StoneBridge has offered a transaction value of $550 million with a purchase price of $250 million and a $300 million investment in capital improvements over six years to further transform the health system. The offer that StoneBridge has submitted includes a provision that will fully fund the employee’s pension plan at closing – a plan that is currently underfunded by more than $125 million. Care New England hospitals include the following: Butler Hospital, Kent Hospital, Women & Infants Hospital of Rhode Island, Care New England Medical Group, the VNA of Care New England, The Providence Center, and a certified accountable care organization (ACO) Integra.

“As the cost of care has risen and the COVID-19 pandemic has placed a tremendous strain on health systems across the nation, StoneBridge Healthcare is ready to assist Care New England during these challenging times to continue delivering an outstanding continuum of care to the region,” Nemzoff added. “StoneBridge Healthcare has the expertise and financial resources needed to help lead Care New England to a promising future.”

The LOI is not binding, and a Definitive Agreement would be finalized in a short period of time once comprehensive due diligence is performed. StoneBridge is a privately-owned company capitalized through a multi-layered composite finance group that includes nationally known debt and equity sources.

Earlier this year, StoneBridge submitted an offer to acquire the Erlanger Heath System in Tennessee for a transaction value of $475 million. StoneBridge is actively pursuing discussions related to this transaction, which is a system of similar size to Care New England and has also been devastated by the impact of the COVID-19 pandemic.

About StoneBridge Healthcare
StoneBridge Healthcare is an innovative company formed to buy, save and turn around deeply distressed hospitals in the cities and suburbs of America. StoneBridge is capitalized through a multi-layered composite finance group that includes nationally known debt and equity sources. The company features a nationally recognized team of experts in healthcare operations, finance, acquisitions and turnarounds.

Our decades of experience, our financial investment and our commitment to expand primary care into the urban areas we serve make our company the only one of its kind. StoneBridge Healthcare plans to purchase and turn around acute care hospitals that are in significant economic distress and could otherwise be forced to close. StoneBridge will identify and buy hospitals that can be saved, and then work urgently to make sure these hospitals survive and succeed.

StoneBridge is committed to responding to the healthcare needs of the urban markets it operates in through an initiative that is known as “The Mission Project.” Using the hospitals it acquires as a base of operations, StoneBridge will bring much-needed services into the community. StoneBridge will listen to and work with local groups to understand the gaps in community care – and then put money and time into offering clinics or other life-changing help. The solutions may look different in each market, but the commitment will be consistent. The hospitals can provide the doctors, nurses, pharmacies, kitchens and vehicles to bring care and support to people where they live. For more information please visit: stonebridgehealthcare.com.

DOJ charges execs, others with elaborate $1.4B billing scheme using rural hospitals

https://www.healthcaredive.com/news/doj-charges-execs-others-with-elaborate-14b-billing-scheme-using-rural-h/580785/

Office of Attorney Recruitment & Management | Department of Justice

Dive Brief:

  • The U.S. Department of Justice is charging 10 defendants for an “elaborate” pass-through billing scheme that used small rural hospitals across three states as shells to submit fraudulent claims for laboratory testing to commercial insurers, jacking up reimbursement.
  • The defendants, including hospital executives, lab owners and recruiters, billed private payers roughly $1.4 billion from November 2015 to February 2018 for pricey lab testing, reaping $400 million.
  • The four rural hospitals used in the scheme are: Cambellton-Graceville Hospital, a 25-bed rural facility in Florida; Regional General Hospital of Williston, a 40-bed hospital in Florida; Chestatee Regional Hospital, a 49-bed facility in Georgia; and Putnam County Memorial Hospital, a 25-bed hospital in Missouri. Only Putnam emerged from the scheme relatively unscathed: Chestatee was sold to a health system that plans to replace it with a newer facility, Cambellton-Graceville closed in 2017 and RGH of Williston was sold for $100 to an accounting firm earlier this month.

Dive Insight:

The indictment, filed in the Middle District of Florida and unsealed Monday, alleges the 10 defendants, using management companies they owned, would take over rural hospitals often struggling financially. They would then bill commercial payers for millions of dollars for pricey urine analysis drug tests and blood tests through the rural hospitals, though the tests were normally conducted at outside labs, and launder the money to hide their trail and distribute proceeds.

The rural hospitals had negotiated rates with commercial insurers for higher reimbursement for tests than if they’d been run at an outside labs, so the facilities were used as a shell for fraudulent billing for often medically unnecessary tests, the indictment alleges.

The defendants, aged 34 to 60, would get urine and other samples by paying kickbacks to recruiters and healthcare providers, like sober homes and substance abuse treatment centers.

Screening urine tests, to determine the presence or absence of a substance in a patient’s system, is generally inexpensive and simple — it can be done at a substance abuse facility, a doctor’s office or a lab. But confirmatory tests, to identify concentration of a drug, are more precise and sensitive and have to be done at a sophisticated lab.

As such they’re more expensive and are typically reimbursed at higher rates than screening urine tests. None of the rural hospitals had the capacity to conduct confirmatory tests, or blood tests, on a large scale, but frequently billed in-network insurers, including CVS Health-owned Aetna, Florida Blue and Blue Cross Blue Shield of Georgia, for the service from 2015 to 2018, the indictment says.

Rural hospitals are facing unprecedented financial stress amid the pandemic, but have been fighting to keep their doors open for years against shrinking reimbursement and lowering patient volume. That can give bad actors an opportunity to come in and assume control.

One of the defendants, Jorge Perez, 60, owns a Miami-based hospital operator called Empower, which has seen many of its facilities fail after insurers refused to pay for suspect billing. Half of rural hospital bankruptcies last year were affiliated with Empower, which controlled 18 hospitals across eight states at the height of the operation. Over the past two years, 12 of the hospitals have declared bankruptcy. Eight have closed, leaving their rural communities without healthcare and a source of jobs.

“Schemes that exploit rural hospitals are particularly egregious as they can undermine access to care in underserved communities,” Thomas South, a deputy assistant inspector general in the Office of Personnel Management Office of Inspector General, said in a statement.

 

 

 

 

 

These Hospitals Pinned Their Hopes on Private Management Companies. Now They’re Deeper in Debt.

https://www.propublica.org/article/these-hospitals-pinned-their-hopes-on-private-management-companies-now-theyre-deeper-in-debt?utm_source=ActiveCampaign&utm_medium=email&utm_content=Does+the+US+Spend+Too+Much+on+Police%3F&utm_campaign=TFT+Newsletter+06042020

At least 13 hospitals in Oklahoma have closed or experienced added financial distress under the management of private companies. Some companies charged hefty management fees, promising to infuse millions of dollars that never materialized.

Revenues soared at some rural hospitals after management companies introduced laboratory services programs, but those gains quickly vanished when insurers accused them of gaming reimbursement rates and halted payments. Some companies charged hefty management fees, promising to infuse millions of dollars but never investing. In other cases, companies simply didn’t have the hospital management experience they trumpeted.

Click on link above for examples of rural hospitals that pinned their hopes on private management companies that left them deeper in debt. They are based on interviews, public records and financial information from the Centers for Medicare and Medicaid Services and the American Hospital Directory.