Skip to main content
Sister Publication Links
  • ESG: THE IMPLEMENTATION IMPERATIVE
Subscribe
  • Sign Up Free
  • Login
  • Subscribe
  • News
    • Current News
    • Providers
    • Insurance
    • Digital Health
    • Government
    • Finance
    • Technology
    • Safety & Quality
    • Transformation
    • People
    • Regional News
    • Digital Edition (Web Version)
    • Patients
    • Operations
    • Care Delivery
    • Payment
    • Midwest
    • Northeast
    • South
    • West
  • Unwell in America
  • Opinion
    • Bold Moves
    • Breaking Bias
    • Commentaries
    • Letters
    • Vital Signs Blog
    • From the Editor
  • Events & Awards
    • Awards
    • Conferences
    • Galas
    • Virtual Briefings
    • Webinars
    • Nominate/Eligibility
    • 100 Most Influential People
    • 50 Most Influential Clinical Executives
    • Best Places to Work in Healthcare
    • Excellence in Governance
    • Health Care Hall of Fame
    • Healthcare Marketing Impact Awards
    • Top 25 Emerging Leaders
    • Top 25 Innovators
    • Diversity in Healthcare
      • - Luminaries
      • - Top 25 Diversity Leaders
      • - Leaders to Watch
    • Women in Healthcare
      • - Luminaries
      • - Top 25 Women Leaders
      • - Women to Watch
    • Digital Health Transformation Summit
    • ESG: The Implementation Imperative Summit
    • Leadership Symposium
    • Social Determinants of Health Symposium
    • Women Leaders in Healthcare Conference
    • Best Places to Work Awards Gala
    • Health Care Hall of Fame Gala
    • Top 25 Diversity Leaders Gala
    • Top 25 Women Leaders Gala
    • - Hospital of the Future
    • - Value Based Care
    • - Hospital at Home
    • - Workplace of the Future
    • - Digital Health
    • - Future of Staffing
    • - Hospital of the Future (Fall)
  • Multimedia
    • Podcast - Beyond the Byline
    • Sponsored Podcast - Healthcare Insider
    • Video Series - The Check Up
    • Sponsored Video Series - One on One
  • Data Center
    • Data Center Home
    • Hospital Financials
    • Staffing & Compensation
    • Quality & Safety
    • Mergers & Acquisitions
    • Data Archive
    • Resource Guide: By the Numbers
    • Surveys
    • Data Points
  • MORE+
    • Contact Us
    • Advertise
    • Media Kit
    • Newsletters
    • Jobs
    • People on the Move
    • Reprints & Licensing
MENU
Breadcrumb
  1. Home
  2. Finance
July 01, 2013 01:00 AM

Chicago hospital to close in wake of fraud investigation

Andrew L. Wang and Kristen Schorsch, Crain's Chicago Business
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print

    Sacred Heart Hospital, the target of a federal fraud probe, is closing its doors, Crain's has confirmed.

    The West Side, for-profit hospital advised the Illinois Department of Public Health at 1:30 p.m today of the immediate closing, a department spokeswoman said.

    The facility had enlisted the help of prominent restructuring firm Alvarez & Marsal Holdings LLP to run operations. The New York-based firm was hired after owner and CEO Edward Novak, CFO Roy Payawal and four doctors were arrested in mid-April by federal investigators in connection with an alleged kickback scheme in which doctors were bribed to admit Medicare patients to the hospital.

    Executives of Alvarez & Marsal this morning gathered hospital employees together to announce that the hospital was closing and that its handful of inpatients would be transferred to nearby hospitals, according to people who attended the meeting. The hospital's outpatient clinics and home health services business also would be shut down, two of the sources said.

    The decision to close came after Medicare decided to suspend payments for 180 days, said Robert Wild, an attorney in the Chicago office of law firm Krieg DeVault LLP, which represents the hospital.

    An Alvarez & Marsal executive at the hospital declined to comment.

    Hiring a turnaround firm was a strong sign the hospital was being primed for sale.

    It is unclear what impact, if any, the closing may have on prospects to sell the 119-bed hospital at 3240 W. Franklin Blvd.

    Sacred Heart “is seeking a long-term solution and reviewing all available options, Mr. Wild said in an email.

    A state nurse surveyor is at Sacred Heart to ensure the safety of existing patients and their medical records, the public health department spokeswoman said. The state also will alert emergency care providers not to route patients to Sacred Heart, she said.

    Hospitals are required by Illinois law to give a 90-day notice before closing, and the closing must be approved by the Illinois Health Facilities and Services Review Board, which regulates health facilities.

    The abrupt closure is a compliance issue and will go before the board, said Courtney Avery, administrator of the facilities board.

    Federal authorities allege that Mr. Novak, who acquired Sacred Heart in 1988, orchestrated a scheme that paid thousands of dollars a month to doctors in exchange for referrals that defrauded Medicare and Medicaid. One doctor, allegedly at Mr. Novak's behest, performed medically unnecessary tracheotomies on patients to bring in more revenue, the FBI says.

    Prior to the arrests, the hospital apparently was profitable, according to an affidavit filed in U.S. District Court in Chicago that was used to obtain search and arrest warrants.

    But the investigation had made doctors afraid to admit patients there, leaving only about a half-dozen beds filled, sources said.

    Sergio Acosta, a partner in law firm Hinshaw & Culbertson LLP, who represents Mr. Novak in the criminal case, declined to comment.

    "Sacred Heart Hospital to close" originally appeared in Crain's Chicago Business.

    Letter
    to the
    Editor

    Send us a letter

    Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.

    Recommended for You
    sutter_i.jpg
    Sutter Health lost $249M in 2022 in reversal of fortune
    money arrows decrease down 2
    Bon Secours Mercy Health's 2022 losses exceed $1 billion
    Most Popular
    1
    More healthcare organizations at risk of credit default, Moody's says
    2
    Centene fills out senior executive team with new president, COO
    3
    SCAN, CareOregon plan to merge into the HealthRight Group
    4
    Blue Cross Blue Shield of Michigan unveils big push that lets physicians take on risk, reap rewards
    5
    Bright Health weighs reverse stock split as delisting looms
    Sponsored Content
    Daily Finance Newsletter: Sign up to receive daily news and data that has a direct impact on the business and financing of healthcare.
    Get Newsletters

    Sign up for enewsletters and alerts to receive breaking news and in-depth coverage of healthcare events and trends, as they happen, right to your inbox.

    Subscribe Today
    MH Magazine Cover

    MH magazine offers content that sheds light on healthcare leaders’ complex choices and touch points—from strategy, governance, leadership development and finance to operations, clinical care, and marketing.

    Subscribe
    Connect with Us
    • LinkedIn
    • Twitter
    • Facebook
    • RSS

    Our Mission

    Modern Healthcare empowers industry leaders to succeed by providing unbiased reporting of the news, insights, analysis and data.

    Contact Us

    (877) 812-1581

    Email us

     

    Resources
    • Contact Us
    • Advertise with Us
    • Ad Choices Ad Choices
    • Sitemap
    Editorial Dept
    • Submission Guidelines
    • Code of Ethics
    • Awards
    • About Us
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Modern Healthcare
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • News
      • Current News
      • Providers
      • Insurance
      • Digital Health
      • Government
      • Finance
      • Technology
      • Safety & Quality
      • Transformation
        • Patients
        • Operations
        • Care Delivery
        • Payment
      • People
      • Regional News
        • Midwest
        • Northeast
        • South
        • West
      • Digital Edition (Web Version)
    • Unwell in America
    • Opinion
      • Bold Moves
      • Breaking Bias
      • Commentaries
      • Letters
      • Vital Signs Blog
      • From the Editor
    • Events & Awards
      • Awards
        • Nominate/Eligibility
        • 100 Most Influential People
        • 50 Most Influential Clinical Executives
        • Best Places to Work in Healthcare
        • Excellence in Governance
        • Health Care Hall of Fame
        • Healthcare Marketing Impact Awards
        • Top 25 Emerging Leaders
        • Top 25 Innovators
        • Diversity in Healthcare
          • - Luminaries
          • - Top 25 Diversity Leaders
          • - Leaders to Watch
        • Women in Healthcare
          • - Luminaries
          • - Top 25 Women Leaders
          • - Women to Watch
      • Conferences
        • Digital Health Transformation Summit
        • ESG: The Implementation Imperative Summit
        • Leadership Symposium
        • Social Determinants of Health Symposium
        • Women Leaders in Healthcare Conference
      • Galas
        • Best Places to Work Awards Gala
        • Health Care Hall of Fame Gala
        • Top 25 Diversity Leaders Gala
        • Top 25 Women Leaders Gala
      • Virtual Briefings
        • - Hospital of the Future
        • - Value Based Care
        • - Hospital at Home
        • - Workplace of the Future
        • - Digital Health
        • - Future of Staffing
        • - Hospital of the Future (Fall)
      • Webinars
    • Multimedia
      • Podcast - Beyond the Byline
      • Sponsored Podcast - Healthcare Insider
      • Video Series - The Check Up
      • Sponsored Video Series - One on One
    • Data Center
      • Data Center Home
      • Hospital Financials
      • Staffing & Compensation
      • Quality & Safety
      • Mergers & Acquisitions
      • Data Archive
      • Resource Guide: By the Numbers
      • Surveys
      • Data Points
    • MORE+
      • Contact Us
      • Advertise
      • Media Kit
      • Newsletters
      • Jobs
      • People on the Move
      • Reprints & Licensing