The CEO of Rennova Health on Tuesday defended the receipt of federal coronavirus relief funds for Jamestown Regional Medical Center, which closed nearly a year ago.
WBIR-TV in Knoxville first reported earlier this week that Rennova Health, which owns the shuttered Jamestown facility, received $121,722 from the U.S. Dept. of Health & Human Services in the form of coronavirus aid for the hospital. That revelation brought sharp rebuke from lawmakers, including U.S. Sen. Marsha Blackburn (R-Tenn.), and the U.S. Dept. of Health & Human Services subsequently said the company will be forced to repay those funds.
In a statement on Thursday, Rennova CEO Seamus Lagan confirmed the receipt of Covid-19 relief funds for the Jamestown facility, saying he was unaware of the formula used by HHS to determine how much money the hospital would receive.
“While the hospital remains closed there are ongoing plans to reopen the hospital and there are employees retained as part of that plan,” Lagan said. “We are unsure on the metrics used to calculate the amount received but we believe and endeavor to ensure the money has been used in accordance with the guidelines and terms of such relief.”
As part of the CARES Act that was passed by Congress and signed into law by President Donald J. Trump last month, $10 billion was made available to fund grants for rural hospitals impacted by the coronavirus pandemic. Most hospitals have been adversely impacted by the virus outbreak, which came as rural hospitals in particular were already struggling.
In an SEC filing last week, Rennova disclosed that it had received a total of $7.4 million in CARES Act funding. The Florida-based company owns Big South Fork Medical Center in Oneida, and Jellico Community Hospital in northern Campbell County. The company stated in that federal filing that it did not know if or when it would receive additional funding, but pointed out that aid to rural hospitals remains a centerpiece of the federal government’s coronavirus response plan.
Although the SEC filing did not state how the company was spending the funds, except to say that the funds are required to be spent for specific purposes outlined by HHS, the hospitals in Oneida and Jellico have paid off outstanding debts in recent weeks.
Rennova has come under fire for unpaid federal taxes, which has resulted in liens against its facilities. Late payroll issuance has also been a common topic in recent months.
In Thursday’s statement, Lagan — the Irish businessman who led Rennova from its status as a provider of diagnostics in the health care industry into the rural hospital business with the purchase of the Scott County hospital out of bankruptcy two years ago — said that all 2020 taxes owed by Rennova have been paid, “and discussions are ongoing and constructive as repayment of any older outstanding taxes is facilitated by Rennova.”
Additionally, Lagan said, “We are not aware of any money owed to any nurse or employee that worked at any of our facilities and our payroll department is confident they have not made any errors in this matter, nor have they had any errors reported to them from anyone.”
Lagan went on to say that the coronavirus relief funds made available to hospitals as part of the CARES Act has saved health care providers from collapsing amid the pandemic.
“The ongoing pandemic has created a very difficult financial environment for rural hospitals with reduced revenues and increased costs,” he said. “The need for health care services in rural communities is unquestionable and appreciation must be shown to those workers on the front line who accept the increased risk to their own well-being to come to work and receive and care for patients in the current environment. While unfortunate that it took such a serious event, the pandemic has highlighted the importance of, and financial pressures in the rural health care sector and will likely lead to a new appreciation and support to ensure these services remain and grow to meet the needs of an increasing aging population in rural America.”
While Lagan has previously said that Jamestown Regional Medical Center will reopen, he reaffirmed those plans on Thursday.
“We look forward to reopening this facility and while no plans are yet confirmed will consider reopening the ER as a first step if we can be certain we will get paid for the services we provide,” he said. “That is something that is outside of the control of the company.”
Lagan did not expand on that statement, but was likely referring to the company’s status with the federal Centers for Medicare & Medicaid Services (CMS). The hospital closed in June 2019 after CMS revoked its Medicare/Medicaid provider agreement due to deficiencies — mounting financial woes, primarily — at the Jamestown hospital. The hospital has since been recommended for reinstatement of its Medicare/Medicaid provider agreement, which it needs in order to be reimbursed for services provided to beneficiaries of those federally-backed plans — which make up the bulk of the hospital’s patient base.
The Rennova CEO recapped how his company purchased the hospitals in Oneida and Jellico and the investments it had made in the local communities. The Oneida hospital was closed when Rennova purchased it from the flailing Pioneer Health Services of Magee, Miss., while the owner of the Jellico hospital had made known its intent to close the Campbell County facility.
“Our investments have created or saved approximately 300 direct or indirect jobs in these communities, and while the Jamestown hospital closure was unfortunate and we continue to believe was avoidable, we are committed and look forward to reopening this facility with a new management team as soon as practical and permissible by the relevant agencies to permit payment for services to be received.
“We remain confident that a small cluster of rural hospitals creates many synergies and efficiencies that will permit the longer term success of the operations.”