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For decades, a few groups have loudly sounded alarms about the endangerment of small-town hospitals, which have been shutting down services and closing their doors at an accelerating pace.
A few weeks after Elaine Tillman was murdered in her Lander, Wyoming, emergency room bed by a fellow psychiatric patient, a state health inspector showed up to interview staffers of the SageWest community hospital, ostensibly about their N95 mask supplies.
“I told him I had as much as the next guy, I guess,” remembers a nurse who worked at the hospital during the Thanksgiving 2020 attack and its aftermath. Like most rural hospitals, SageWest had 99 problems more urgent than its PPE supply. A day after Tillman’s assault, a COVID outbreak had sickened enough nurses to shut down their sister hospital in Riverton, but that was more a reflection of SageWest’s shortage of humans than masks. On paper, the hospital system had 141 beds between its two outlets in Fremont County, but never enough nurses to staff more than 35 or 40. So staffers had to work sick until their PCR test results came back from the state lab.
“And then he gets a little quieter and starts asking, you know, how long it takes the police to arrive if we called, do we have enough staff to watch potentially violent patients, and um, don’t we have any security guards around here?” the nurse continued.
“And I said, ‘No! We don’t have any security guards! Can you get us some?’ And he got sort of embarrassed and said, well no, I don’t have the authority to do anything like that. And I just thought, well that’s fantastic, so glad we’re all sitting here pretending we can change things.”
Seventeen months later, there are still no security guards at either SageWest facility, in Lander or Riverton. The ER still lacks any rooms with locking doors for more securely “holding” psychiatric patients, like the man with traumatic brain injury who abruptly jumped on Tillman’s bed and commenced gouging her eyeballs out of their sockets with his fingers. After the hospital calculated how much secure holding rooms would cost, its corporate parent nixed it. Hospital administration still allows minimally trained sitters to supervise two psychiatric holds at one time if they are “considered low risk for aggression.” Tillman’s assailant, inexplicably, was designated this way, despite the fact that the official report on the incident showed that his wife had brought him to the hospital after he had attacked and started choking her a few days before the murder.
Like most hospitals, and probably all for-profit rural hospitals in America, SageWest is unbearably understaffed most of the time. Moreover, the staff that shows up is unbearably underpaid, and conditions only ever seem to get worse.
What’s unique about Fremont County, Wyoming, is that, about four years ago, a retired gym teacher and a banker she’d met through her ophthalmologist got sick of pretending they could change things, and decided to actually try. A couple of weeks ago, the group the two women founded unveiled the fruits of their struggle: a $37 million low-interest USDA loan to build an old-school community hospital three miles east of SageWest Riverton, on a plot of land donated by the Eastern Shoshone, one of two Native American tribes comprising nearly a quarter of the county’s population. The hospital will have 14 beds, a 24-hour emergency room with a physician on the premises at all times, a maternity ward, a general surgeon, and an immediate goal of restoring the county’s health care infrastructure back to where it was in the latter Bush years.
It’s a far more radical agenda than it should be. Private equity firms like Apollo Global Management, which owns the SageWest hospitals, have mined tens of billions of dollars out of the health care system in recent years, efforts that have only intensified under the legal and public relations cover of the pandemic. At the same time, many small towns actually did grow more close-knit during the crisis, united by a shared sense of their own mortality and, in many cases, the increasingly appalling state of their health care infrastructure. Since 2020, major community movements have sprung up, from Riverton to Asheville, North Carolina, Yuma, Arizona, and Bradford, Pennsylvania, around the notion of restoring community control to hospitals that have been, or are in the process of being, converted into dingy ATMs for wealthy financiers.
For communities like Fremont County, where Apollo has already piled debt onto the balance sheet, sold off the real estate, and permanently axed major services like Riverton’s maternity ward and Lander’s psychiatric hospital, these groups face the daunting task of building a new hospital from scratch. But if a county that voted for Donald Trump by a 36-point margin can commit to a socialist project like a nonprofit community hospital, it’s probably a sign of something.
FOR DECADES NOW, a few groups like the University of North Carolina’s Sheps Center have loudly sounded alarms about the endangerment of small-town hospitals, which have been shutting down services and closing their doors at an accelerating pace for 15 or 20 years. The center currently lists 181 rural hospital closures since the beginning of 2005, concentrated in the Southeast but broadly spread across the country. But after 2020, a pandemic conspicuously distinguished by its voracious appetite for inpatient ICU beds began to expose the deadly legacy of the patterns it had documented.
Somewhat frustratingly, most experts have thus far mostly shied away from exploring either the effects of rural hospital extinction, or their causes. Rural Americans have suffered 33 percent higher COVID mortality rates than their urban counterparts in spite of roughly equivalent case counts, a disparity (when acknowledged) generally chalked up to vaccine hesitancy. Yet a close look at COVID death rate data shows that rural COVID deaths began outpacing urban ones in August 2020, long before vaccines were available. Common sense dictates that bed shortages are a factor, and rural nurses and doctors—along with the occasional media analysis—will dare to say it. But little academic research has pursued the matter.
Similarly, the rural hospital intelligentsia virtually never acknowledges the role corporate greed has played in those closures. A GAO analysis of rural hospital closures between 2013 and 2017 found that for-profit hospitals were more than three times as likely as nonprofits to close. Even nonprofits intersect with America’s corporate-dominated health care system. A nonprofit Washington state hospital that shuttered in 2020 filed a lawsuit blaming its hedge fund–controlled billing contractor Cerner for its 2019 bankruptcy; another hospital that shut in 2020 hired the same billing company two years earlier. A nonprofit Georgia hospital that closed the same year was owned by a nursing home chain that used hospitals as vehicles for collecting bonus payments from Medicaid. At least a dozen shuttered rural hospitals in Florida, Oklahoma, and Missouri had been controlled by a sprawling ring of urine testing fraudsters with private equity connections who were ultimately charged with illegally billing $1.4 billion to insurers and hospitals.
Private equity firms like Apollo Global Management, which owns the SageWest hospitals, have mined tens of billions of dollars out of the health care system in recent years.
Private equity has been tied to many closures. A study of the six most financially endangered hospitals in North Carolina listed three that were for-profit, including two that are (like SageWest) owned by Apollo. When Apollo acquired SageWest’s parent company, the former HCA spinoff LifePoint Health, in 2018, it only put about $600 million cash down, and financed the rest of the transaction by floating $5 billion in bonds, the interest payments on which suddenly consumed the LifePoint hospitals’ budget.
After that, SageWest permanently shut down its maternity ward in Riverton, followed by the direly needed psychiatric hospital in Lander. And it cut payroll enough that the Riverton blood bank badly failed a state inspection, losing its license to administer care involving blood. Over the years, the piece of hospital equipment getting the most use at SageWest was its helipad; according to county records, air ambulance transfers (which are also largely private equity–owned) multiplied in Fremont County from 155 in 2014 to 937 in 2019.
That’s when two retirees began the Save Our Riverton Hospital campaign, hosting periodic town hall meetings to hear about residents’ grievances with the hospital and writing a series of letters to local leadership and LifePoint’s Nashville-based CEO, demanding they reinvest in the facility or sell it. The public shaming achieved little. “[LifePoint] made it clear that what we wanted wasn’t part of their plans,” says hospital project co-founder Vivian Watkins. In September 2018, they learned that the CEO they’d been attempting to engage had been negotiating a $69.7 million golden parachute for himself with Apollo, at which point they concluded it was time to get an official second opinion. The group posted a call for donations on Facebook to raise $150,000 to commission a feasibility study from a Maine-based consultancy called Stroudwater Associates that has helped small hospitals fend off disinvestment. Within a few weeks, they had the money. Says Watkins, “That’s when we really realized the community was behind us 100 percent.”
Then in 2019, Apollo sold off the underlying real estate of the two SageWest facilities and eight other LifePoint hospitals to Alabama-based real estate investment trust Medical Properties Trust for $700 million. This meant that SageWest hospitals were suddenly stuck paying at least $6.5 million a year—MPT says it collects $9.14 million a year total from its Wyoming properties, including a Casper rehab facility that paid $2.6 million in 2018—just to rent the buildings they used to own.
By that point, SageWest had established itself as the most expensive hospital system in a singularly expensive state, charging private insurance an average of eight times Medicare reimbursement rates. LifePoint had a history of exploiting its monopoly status in other markets to command extreme markups, but some patients in Wyoming say the gouging intensified after the buyout, and a health insurance consultant to the Eastern Shoshone tribe claims that the Apollo acquisition coincided with a sevenfold hike in the tribe’s hospital bills. (One Rivertonian sent the hospital group a bill for more than $200,000 he’d received for a night at the Lander hospital after suffering a snake bite.) Not long after that, the tribe donated four acres of land it owned adjacent to the Riverton Walmart to Watkins’s group.
Watkins credits the pandemic for injecting urgency into the group’s mission. A family doctor involved in the hospital project named Eric Ridgway says he had multiple patients who died of COVID-19 waiting for a hospital bed to open up; the fall of 2020 and late summer of 2021 were particularly rough. A registered nurse who had to admit her aging father for COVID at SageWest Riverton says his care was abysmal even though she was personally close to most of the nurses working there. “They just don’t have the resources to succeed,” she told me. Meanwhile, those who ultimately found beds out of state likely had a far lower chance of surviving: A recent study of ICU patients with COVID found that patients transferred from rural critical access hospitals were almost twice as likely to die there as urban patients.
Tillman’s death was another tipping point, especially for anyone who had worked at the hospitals, according to an accountant involved in the project. “Obviously no one could have known it was going to happen, and yet everyone felt like something like this was going to happen.” By Christmas, the group had raised another half million dollars.
The group hoped initially that they would find some provision in the colossal CARES Act, which dumped at least $1.5 billion in bailouts on LifePoint, to fund their efforts, but there was nothing to fund health care startups in the legislation. Stroudwater advised Watkins to instead apply for an obscure loan program founded by the U.S. Department of Agriculture to subsidize a grab bag of public-works expenditures. The agency was impressed enough with the feasibility study that it waived half of the cash down payment it would require for the loan to close in January 2021, but it would take another 15 months for formal approval.
In the meantime, public attention to the project inspired concerned citizens from other small towns to begin contacting Watkins for advice. She is now “mentoring” one other town she isn’t ready to name.
Watkins says Riverton has a few major advantages most health care deserts don’t. The first is an absence of a state Certificate of Need commission, a vexing bureaucracy governing health care capital investments in most states that invariably favors the interests of existing hospitals over the promises of new ones. Watkins says their project would be dead in the water if the state hadn’t repealed its CON commission in the late 1980s.
Riverton’s second big advantage is its “payor mix,” industry-speak for who picks up the tab when patients are admitted. Despite a median household income of just over $50,000, Fremont County is uniquely well insured, in part because a large proportion of its sickest and most impoverished residents are Native Americans whose tribes contract with private insurers to cover their health care costs. More than half of SageWest’s patients have private insurance, and with no competition for their business, the two hospitals were very profitable, according to a former hospital executive familiar with the hospitals’ finances. Indeed, two former nurses say they were told by a SageWest accountant that the system was the most profitable in LifePoint.
And yet, as Watkins points out, Fremont County’s generous insurance plans did nothing to deter LifePoint or Apollo from endlessly slashing payroll, starving the hospitals of direly needed capital expenditures, or refusing to take seriously any of their pleas to reinvest in the county. “They will tell you communities like ours aren’t big or wealthy enough to ‘support’ a real hospital,” says a former hospital executive involved in the Riverton effort who did not want their name publicly associated with the group. “But the numbers simply don’t bear that out.”
Those numbers are, as with all things involving private equity, somewhat elusive. Last year, Apollo sold LifePoint to … another Apollo fund, then bought a chain of long-term hospitals owned by a duo of private equity firms with which Apollo often does business, then spun off SageWest and 16 other LifePoint hospitals with the long-term hospitals into a new chain called ScionHealth. The rumor around Fremont County is that Apollo spun off SageWest into Scion to dodge liability for the Tillman murder, over which her children sued LifePoint last year for wrongful death; earlier this month, they filed an amended complaint removing LifePoint as a defendant, while reserving the right to add it back pending discovery.
Whatever the case, the hospitals have generated extraordinary profits for Apollo. While the financial giant says its private equity investments returned a modest 6.9 percent in 2020, the LifePoint “sale” netted $2.6 billion on top of the $700 million booked on the sale-leaseback. Apollo says it invested $975 million total in the hospital chain and kept the sale-leaseback proceeds on the company’s balance sheet (where they can now be tapped by the new Apollo fund’s investors); even so, that’s a 164 percent return in just over two years.
Back in Riverton, the hospital group is now busy revising a proposal to create a new sales tax to fund the cash portion of the new hospital’s financing. The Fremont County Board of Commissioners struck down the idea last year, but told the project’s boosters to resubmit the idea once their USDA application had been approved.
One Lander commissioner quoted in the newspaper saying he couldn’t square the tax plan with his “conservative roots” got thoroughly lambasted by fellow conservatives on a Riverton Facebook group, one of whom wrote an epic letter to the local newspaper accusing the official of “lame virtue signaling” and praising the virtues of competition before concluding that a “rooted conservative” would understand that the “preservation of life” was more important than profits.
The letter concludes: “There is no economic viability without health.”
