U.S. Senator Marsha Blackburn is demanding answers from the Florida lab test company that bought three rural Tennessee hospitals in recent years only to close one and reportedly miss payroll at two others.
Blackburn cited local media reports that West Palm Beach-based Rennova Health has been late in paying employees at both Big South Fork Medical Center in Oneida, Tenn. and Jellico (Tenn.) Community Hospital. Rennova shuttered Jamestown (Tenn.) Regional Medical Center in June, just a year after purchasing the hospital.
In her letter to Rennova CEO Seamus Lagan, Blackburn questioned whether his company can truly run hospitals, given that its website describes it as a diagnostics and software supplier.
"Do you believe your company has the expertise to run a hospital?" she wrote. "If so, please explain."
Lagan did not respond to a request for comment. Calls to all three hospitals were not returned.
Blackburn, whose office said she was not available for comment, also asked whether Rennova is adequately capitalized to support one, two or three hospitals. The company lost $163 million in the nine months ended Sept. 30, 2019 on about $13 million in revenue, according to its latest financial report. Rennova also reported a total stockholders deficit of $68 million as of the same period.
Blackburn's third question was whether the Big South Fork and Jellico hospitals comply with the CMS' conditions of participation. The CMS cut off Medicare payments to the Jamestown hospital in June after an inspection revealed its pharmacy, supply and blood vendors had stopped delivering drugs due to lack of payment. Employees told inspectors Rennova had failed to deposit their Social Security payments even after collecting the money from their paychecks.
Blackburn's letter demands a response from Lagan by Feb. 11. Her office sent copies of the letter to Tennessee Governor Bill Lee, Tennessee's Attorney General, Herbert Slatery III, and Christi Grimm, Principal Deputy Inspector General for the U.S. Department of Health and Human Services.
In 2018, just before Rennova closed on its purchase of the Jamestown hospital, Lagan told Modern Healthcare the company's main revenue source, urine toxicology testing, was falling sharply, and that he viewed rural hospitals as a "much more predictable" business, despite research highlighting the challenges rural hospitals face.
