Ascension Texas to reopen shuttered Little River facilities

(Story updated at 6:20 p.m. ET)

Numerous former Little River Healthcare clinics that were shuttered in early December amid the embattled provider's bankruptcy proceedings will reopen early next week.

Ascension Texas announced Friday it has purchased the assets of medical providers and clinic locations that were affiliated with Rockdale, Texas-based Little River and plans to reopen the facilities on Jan. 8. The facilities' closures, along with those of Little River's two hospitals, created chaotic situations as medical appointments were canceled and dozens of physicians were unable to meet with patients.

As part of the deal, 25 former Little River physicians, nine advanced practice providers and 70 staff members will join Ascension Medical Group, said Craig Cordola, CEO of Ascension Texas. The deal includes specialty and primary-care clinics across Central Texas, including a former Little River clinic in Temple, Texas, that had been known as King's Daughters Clinic. The specialties include orthopedics, internal medicine and family medicine, he said. Ascension Texas includes the Seton Healthcare Family and Providence Healthcare Network.

The deal does not include Little River's shuttered critical-access hospital in Rockdale and acute-care hospital in Cameron, both of which closed in early December along with the other facilities after Little River's lender declined to provide requested funding during bankruptcy.

Cordola said the purchase price was a very small fixed-asset purchase; basically the furniture and some of the equipment in the buildings. He said the practice group has been in existence for 90 years. When it closed in December, hundreds of thousands of patients didn't have access to their physicians, Cordola said.

"These are really good providers, good physicians, a nice multispecialty practice," he said, "and so we were excited to be able to step in and partner with them to essentially reopen that practice and connect back with those patients and families that have counted on them for so many years."

Dr. Jamie Callas, who court records show was formerly Little River's chief medical officer, is now chief medical officer of the Ascension Medical Group Temple-Georgetown. In a statement, he said King's Daughters Clinic has provided 92 years of care, and Ascension's acquisition allows its physicians to continue providing medical care in the community.

A Modern Healthcare investigation found Little River was likely billing insurers for extremely high volumes of lab tests that may not have been performed for their patients or even in their facilities. Critical-access hospitals, such as the one that closed in Rockdale, get paid more for such services than other types of hospitals. Court records show major insurers like UnitedHealthcare and Aetna are now trying to claw back millions of dollars they paid for lab tests, citing the improper lab billing scheme.

Also on Friday, Ascension announced that it signed a letter of intent for Allegan Healthcare Group to join Ascension Michigan.

The independent, not-for-profit Allegan Healthcare Group includes the 25-bed critical-access hospital Allegan General Hospital, Allegan Professional Health Services and Allegan General Hospital Foundation. The system has 17 employed primary-care physicians and an ambulatory network covering Allegan and Van Buren counties in Michigan.

Allegan General reported an operating loss of $3.2 million on operating revenue of $44.3 million in 2017, down from $24,508 operating income on $46.1 million operating revenue in 2016, according to Modern Healthcare Metrics. Its operating profit fell from 0.05% in 2016 to negative 7.15% in 2017.

Allegan General has the third-highest market share in its area behind Bronson Methodist Hospital and the market-leader Ascension Borgess Hospital, Modern Healthcare Metrics data show.

Ascension Michigan operates 15 hospitals in the state, including Borgess in Kalamazoo, which is about 30 miles from Allegan.

Ascension Michigan went through rounds of layoffs last year as it looked to cut costs amid dwindling reimbursement levels, fewer inpatient admissions, tougher regulatory requirements, and demands from patients and employers for lower-cost care.

Acute discharges from Ascension Michigan hospitals decreased 1.7% from 2017 to 2018 while acute patient days fell 5.2%.

The entire organization reported an operating income of $104.8 million on operating revenue of $23.16 billion in 2018, down from $552.7 million operating income on $22.71 billion operating revenue in 2017.

Alex Kacik contributed to this report.