Rural communities where hospitals are struggling are often willing to hand over their medical centers to outside investors. Some are willing to sell their hospitals for near nothing to companies that promise to keep them running.

Megan Jeringer/AFP via Getty Images

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Megan Jeringer/AFP via Getty Images

Rural communities where hospitals are struggling are often willing to hand over their medical centers to outside investors. Some are willing to sell their hospitals for near nothing to companies that promise to keep them running.

Megan Jeringer/AFP via Getty Images

Erin, Tennessee — Kyle Kopech takes a tour through the run-down hospital his boss is buying out, pointing out what he calls the relics of poor management left by the operator’s revolving door.

For example, a hospital in this town of 1,700, about a 90-minute drive northwest of Nashville, has an X-ray machine that cannot be repaired.

“The system was very old and used floppy disks,” said 23-year-old Kopec, marveling at the curvy black rectangle that barely had enough memory to hold a single digital photo. . “I’ve never actually seen a floppy disk in use. I’ve seen one at the Smithsonian Institution.”

It makes sense to expose the dilapidated condition of these rural hospitals — the company Kopec works for, Braden Health, has promised to continue operating as a health center to serve the community, earning millions of dollars. You’re buying a dollar’s worth of buildings for almost nothing. Braden believes he can run them more effectively and profitably than his previous owners.

The hospital Braden Health is taking over is located in one of the worst locations in the state, with one of the worst local hospital closures. Tennessee has experienced 16 closures since her 2010, second only to much more populous Texas, which has experienced at least 21 closures.

Local governments that own these facilities are beginning to realize that very few companies are interested in buying them, regardless of their level of experience. And those who are willing to pay rather don’t want to pay a lot.

Braden Health’s Kyle Kopec has a sample of diagnostic images left over from the abandoned hospital they’re taking over. They have to figure out what to do with old medical records piled up in boxes. (KHN’s Blake Farmer)

(KHN’s Blake Farmer)/(KHN’s Blake Farmer)

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Braden Health’s Kyle Kopec has a sample of diagnostic images left over from the abandoned hospital they’re taking over. They have to figure out what to do with old medical records piled up in boxes. (KHN’s Blake Farmer)

(KHN’s Blake Farmer)/(KHN’s Blake Farmer)

“It’s really hard to negotiate terms of force when you’re in a pinch, even when your head is in the water,” says the Chartis Center for Municipality, which closely tracks local hospitals in distress. Rural Health director Michael Topchik said.

At this point, Topchik said, big health systems have already acquired or partnered with the least problematic hospitals. The remaining hospitals are those taken over by other potential buyers. Making a profit in a small rural hospital with a majority of elderly and low-income patients can be difficult. Some operators who have taken over rural hospitals have gotten into trouble with insurance companies and even law enforcement due to shady billing practices.

“We can make a profit,” said Topchik. “But it’s going to take an awful lot of time to get there.”

Dr. Beau Braden, who runs Braden Health, used some of her savings and inheritance to get into the hospital purchasing business in 2020. An emergency room doctor and addiction expert, he previously attempted to build a hospital on his property in Southwest Florida. A large rural clinic on Ave Maria. After encountering regulatory roadblocks, he went to Tennessee, seeing more opportunities to reopen the hospital.

“Many people don’t want to put their time, energy and energy into a small hospital with fewer than 25 beds. said Braden. “We found that rural hospitals had a huge need and not many people had the time to focus on that.”

With 40 employees at Braden Health’s headquarters, Kopec is Braden’s second-in-line chief compliance officer. He had never worked in a hospital before leading the hospital buyout frenzy at Braden Health.

Dr. Beau Braden (left) and Kyle Kopec talk to staff gathered at the nurses station at Houston County Community Hospital in Erin, Tennessee. Braden Health bought the facility for him for $20,000. Here is his 2016 ambulance with 180,000 miles. (KHN’s Blake Farmer)

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Dr. Beau Braden (left) and Kyle Kopec talk to staff gathered at the nurses station at Houston County Community Hospital in Erin, Tennessee. Braden Health bought the facility for him for $20,000. Here is his 2016 ambulance with 180,000 miles. (KHN’s Blake Farmer)

(KHN’s Blake Farmer)/(KHN’s Blake Farmer)

Braden Health is a privately held limited liability company incorporated in the State of North Carolina, so we don’t have to disclose many of our financial numbers. However, in a certificate of necessity application outlining why the health care facility should be allowed to operate, Braden stated that he had $2 million in monthly revenue from the one hospital he operated in Lexington, Tennessee. and the balance sheet showed him more than $7.5 million in cash-on. hand.

Since acquiring its Lexington hospital in 2020, Braden Health has signed deals with three other or failed hospitals and is considering buying at least 10 hospitals, mostly in Tennessee and North Carolina. increase. Braden Health’s strategy is to build a mini-network to share staff and supplies.

At Erin’s hospital, much of the facility’s equipment is older than Kopec’s. And he said the use of outdated technology is causing Medicare to charge hospitals with lower payments.

Kopec said on the way out to the roof that the attic has an amateur radio system that doesn’t appear to be used much. He wanted to show that his hulking HVAC system can only be controlled from a rusty side panel accessed by a ladder. The emergency room underneath has never been used. During a recent renovation that took place before it was owned by Braden Health, it had design flaws, including its doors being too narrow for stretchers.

The old operating room temporarily houses an ER while Braden Health begins new renovations. The Tennessee Attorney General, who must approve the sale of public hospitals to private investors, signed the law in July.

To prevent the hospital from closing in 2013, Houston County purchased the hospital for $2.4 million and collected local taxes to help operate it. “We didn’t have a business in the hospital business,” Mayor James Bridges said. not.”

Even the most experienced companies, such as large corporate hospital chains based in Nashville, are exiting the smaller hospital business.

In the community we have seen unqualified managers come and go. In Decatur County, where Braden Health also took over a local hospital, his former CEO was indicted on larceny charges pending. And the Tennessee Attorney General has determined that the hospital has helped jeopardize the finances of the entire county.

“You’re looking for someone who knows what to do and who you think can solve the problem,” said Lori Brasher, a member of the Decatur County Economic Development Commission. “And I was not disappointed once, but I was disappointed many times.”

Brasher said he has more faith in Braden Health and has concrete plans to reopen, but an unresolved insurance claim from a burst water pipe that flooded the hospital wing Due to this, the timing is delayed.

Local residents still struggle to satisfy the sticker price of $100 for a property valued at $1.4 million by a local tax assessor. I won tax breaks for pledging to invest $2 million.

A Houston County hospital is valued at $4.1 million by a real estate appraiser. However, the final sale price was only $20,000. This was not the price of land or buildings. Kopec said the amount was his 2016 ambulance amount of 180,000 miles and is considered the only equipment worth remaining.

A deal with Braden Health to take over a closed hospital in Heywood County, Tennessee, worth $4.6 million, was an equally symbolic payment. All in all, Braden Health is getting real estate worth more than $10 million for less than the price of an appendectomy.

Kopec said the value of each property is inherently negative given that hospitals require significant investment to comply with medical standards and, according to the company’s purchase agreement, must be operated as hospitals. If not, the hospital will go back to the county.

Most of the funding to restore these facilities comes directly from Braden, who believes people overestimate the value of the hospital his company is taking over.

“If you look honestly at the many deals that are going on with rural hospitals and the amount of debt that’s tied to them, there’s not a lot of value out there,” he said. , paid off $2.3 million in debt with Medicare for Houston County Hospital.

He said he had no secret sauce in his mind, except that small hospitals require just as much diligence as big medical centers. We want to improve our technology in how we limit nurse staffing when business is slowing down, how we monitor medical supplies inventory and reduce waste.

That’s a tough order. Braden said he could understand the skepticism, even from hospital employees. can.

Still, Kopech hopped through the halls of Erin Hospital, greeting nurses and administrative staff by name, with confidence befitting her age and experience. Rural hospitals need expertise, he says, to anyone who will listen.

“They aren’t the most complicated things in the world,” Kopech said. “But if you don’t know exactly how to run them, you just run them straight to the ground.”

This article is from partnerships including Nashville Public Radio and KHN.

KHN (Kaiser Health News) is a national newsroom that produces in-depth journalism on health issues. KHN is one of his three major operational programs in the United States, along with policy analysis and polling KFFMore (Kaiser Family Foundation). KFF is a donated non-profit organization that provides information on health issues to the public.