By the time Alliance Health Southwest Oklahoma took over operation of the 18-bed hospital in the small town of Mangum, Okla., in July 2017, the company's CEO, Frank Avignone, said the hospital's largest commercial insurers had canceled their contracts. Medicare had cut off payments and was clawing back $2.7 million for claims the agency determined it shouldn't have paid under the hospital's former management.
The previous operator, Little River Healthcare, Rockdale, Texas, had taken over the hospital's operations in 2016 under a deal with its former operator, Blackhawk, which appears to be connected to Little River, sharing personnel. City officials sued both companies, arguing the transfer breached Blackhawk's lease agreement on the city-owned facility and urged a judge to force them to leave, but not until a new provider could be brought in.
During Little River's short time as operator, outpatient lab charges grew from $8.4 million in 2015 to $45.2 million in 2016, or 53% of total charges in the latter year.
The Mangum hospital, formerly known as Quartz Mountain Medical Center, is among dozens of rural hospitals whose lab charges have spiked in recent years, several of which had a connection to Little River.
Insurers and public officials have accused hospitals of entering lab test arrangements in which they agree to bill for high volumes of tests or expensive tests that sometimes were performed elsewhere, a pattern that fits in Mangum.
"I would say the consensus in the town was that it wasn't being run like a hospital, I'll put it that way," said Corry Kendall, attorney for the city of Mangum. "It just didn't seem like they carried out hospital services."
Little River's CEO, Jeff Madison, declined to comment. "As a general policy, we do not comment on our financial information publicly," he wrote in an email.
Today, Avignone said the hospital still gets calls from people asking about lab test bills. "We still have people calling that facility from Maryland, New York and Maine saying, 'Hey, why do I have a bill for thousands—and in at least one case tens of thousands—of dollars from you guys? I've never even been to your facility before.'"