Once boasting three hospitals in the northern Cumberland Plateau region with ambitious plans of building a rural health care model in the region, Rennova Health is now down to just one: Big South Fork Medical Center.
Jellico Medical Center — formerly Jellico Community Hospital — closed Monday, less than a week after Jellico’s city council voted to default on the property.
Jamestown Regional Medical Center has been closed for going on two years after the federal Centers for Medicare and Medicaid Services terminated its contract with the hospital due to multiple deficiencies.
Jellico Mayor Dwight Osborne told Knoxville’s WVLT-TV on Tuesday that he had issued a 30-day notice to Rennova in December, due to overdue bills and payments. The City of Jellico leased the hospital facility to Rennova for $1 per year, but the contract required Rennova to pay for equipment upkeep and building maintenance — something the Florida-based firm had allegedly failed to do.
Osborne told the Knoxville TV station that Jellico Medical Center had not admitted a patient since November.
In a statement, Rennova said that it closed the Jellico hospital because it “is no longer viable” for the company “to consider the financial support or investment needed for Jellico hospital” due to repercussions from the city council’s decision to default on the property.
Jellico hopes to find another operator for the city-owned hospital facility.
While Rennova leased the health care facility in Jellico, it owns the hospitals in Oneida and Jamestown. It purchased the Oneida facility from Pioneer Health Services while the Mississippi-based firm was in the throes of bankruptcy. Scott County sold the hospital to Pioneer.
Rennova Health was a diagnostics technology firm making its first foray into hospital management when it purchased the Scott County hospital from Pioneer. With the purchase, it created a new rural hospital arm of the company, and quickly added a second hospital in Jamestown, then the third in Jellico.
While Rennova reopened the Oneida hospital, which had been closed by Pioneer as it entered Chapter 11 bankruptcy proceedings, the Jamestown and Jellico hospitals were open when Rennova acquired them. In both instances, their owners were looking to off-load hospitals that were said to be struggling financially.
Rennova believed that by establishing multiple medical centers under one ownership umbrella, it could make all of them financially viable. All three have struggled at times, with Big South Fork Medical Center seeing employees occasionally have to wait for their paychecks, deal with shortages of supplies, and even occasionally enter periods of diversion, though the hospital has never closed since Rennova opened it. The Jamestown hospital ran up significant debt and deficiencies accumulated, finally leading CMS to sever its billing Medicaid and Medicare billing status and forcing it to close.
At the time the struggles in Jamestown were unfolding and struggles in Oneida were coming to light, the belief was that once the newly-acquired Jellico hospital could begin billing and become viable, Rennova’s cash flow would improve and help the company shore up its operations in Oneida. There have also been promises made that the Jamestown hospital will eventually reopen.
In September, Rennova’s CEO, Seamus Lagan, said that reopening the hospital in Jamestown remained at the forefront of the company’s plans, but would require millions of dollars that the firm didn’t have. He also revealed that Rennova would not have survived the early months of the coronavirus pandemic without federal assistance.
“Our business model works with three plus facilities,” Lagan told WBIR-TV last fall.
Now, however, Rennova is down to just one hospital: Big South Fork Medical Center.