On Oct. 1, 2013, the day Wellmont Health System shuttered Lee County Regional Medical Center, access to health care became easier for pets than people.
“There is no doubt that people have passed away because there was no hospital here,” said Sheriff Gary Parsons. “We lose the golden hour in the amount of time that it takes to get them to another hospital in Big Stone or Kingsport.”
And that’s if one of the county’s too-few ambulance crews is nearby.
Lee County stretches 70 miles west from its border with Scott County before jutting into Tennessee and Kentucky and forming Virginia’s farthest southwest corner. Its claim of being “where Virginia begins” counters outsiders’ perception that Virginia ends in Roanoke. Jonesville, the county seat, is closer to eight other states’ capitals than it is to Richmond.
When the hospital closed, the forgotten part of Virginia was put to the test. Did the people of Lee County still have a political voice that carried beyond their borders?
The answer arrives later this year. The Lee County Hospital Authority will reopen a hospital its commissioners claim was closed for all the wrong reasons.
“What I think is a remarkable story is that communities moan and give up. The folks in Lee County stood up and said, ‘We’ll fix this,’ ” said U.S. Sen. Mark Warner.
A year before it closed, even patients had begun to suspect something ailed their hospital.
“Wellmont was saying they were losing money. They hired people to bring in and then put them somewhere else. There was a lot of double-talk,” Parsons said.
He served on a hospital board that acted as a liaison between ownership and the community. His tenure predated Wellmont’s presence in Lee County, and he was familiar with hospital financial statements. He believed the balance sheet would have shown a profit if Wellmont hadn’t subtracted a share of corporate overhead and debt.
Why else would Wellmont have pumped more than $2 million into emergency room renovations, a department that treated 17,000 patients a year?
The local board held little sway in running the hospital; members couldn’t even carry documents out of the meetings. Parsons tired of what he saw as poor decisions coming from Wellmont’s Kingsport, Tennessee, corporate suites. He resigned in 2012.
“People knew what was happening, and I didn’t want them thinking I had anything to do with it,” he said.
Meanwhile Dr. J. Scott Litton, an independent family physician and one of a handful of doctors who took after-hours hospital calls, was perplexed.
“Wellmont’s three employee physicians stopped taking calls,” he said. “I don’t know if that was their decision or Wellmont’s.”
Litton said the hospital didn’t pay doctors to be on call and then claimed it couldn’t get any to cover after hours.
“The reason I did it was I was able to care for my patients,” he said.
The local government opened Lee County Hospital more than 70 years ago on a hill above Pennington Gap. Patients had to cross, or sometimes wait, at the railroad tracks in order to reach it. In the early 1980s, a new building rose on the other side of town with easier access and room for 70 inpatients. An adjoining building of doctor suites followed, and an administrator hired to lead the enterprise away from the brink of financial collapse did so, only to later drive it over a fiscal cliff.
By the late 1990s, the hospital owed $15 million. Federal investigators figured out that the former administrator had illegally diverted $7.5 million. He and several others went to prison. The hospital slipped into bankruptcy court.
In 2001, for-profit Health Management Associates of Naples, Florida, bought it for $24.9 million, then flipped it six years later to the nonprofit Wellmont in a package deal. The price was not disclosed. Wellmont picked up Lee County, which some say it didn’t really want, and Mountain View Regional Medical Center in Norton, which it coveted. Now it could go head-to-head against its regional rival, Mountain State Health Alliance and its Norton Community Hospital.
Parsons said Wellmont began to change the hospital a few years ago and drove away Lee County residents who managed many of the departments.
By mid-2013 rumors circulated that Wellmont might close Lee’s hospital. County leaders pressed for a meeting. On Aug. 13, 2013, they gathered at the airport with their congressman, state senator, members of several local boards and Wellmont’s top managers.
Is Wellmont going to close Lee Regional Medical Center, the county contingent asked.
No, the Wellmont team answered. But it couldn’t continue to operate without cutting some services.
“We never got a chance to work with them on what the cuts would be,” said county administrator Dane Poe.
Less than a month later, with no warning, Wellmont announced that Lee Regional Medical Center would close by month’s end to avoid losing $4 million in the upcoming year. It offered three reasons: too few patients, lack of consistent physician coverage and the Affordable Care Act.
The locals weren’t fooled. They claim the first two reasons resulted from a crisis manufactured by Wellmont managers to shift doctors and patients to other hospitals in their network.
“They were transferring out people to pad the pockets of the mother ship — Holston Valley [in Kingsport],” said Supervisor Larry Mosley.
Many in Lee County believe their hospital and their health were sacrificed to improve the nonprofit’s bottom line because Wellmont was searching for a merger partner.
During the fiscal year covering the closing, Wellmont reported to the IRS that it made $22 million in profits, or half as much as the previous year. Its net assets, though, grew by $57 million, to $504 million. Wellmont CEO Margaret DeNarvaez was paid $1.1 million in compensation, the same amount Carilion Clinic paid Nancy Agee to run its Roanoke-based nonprofit health system, which takes in double Wellmont’s revenue.
Current Wellmont CEO Bart Hove agreed to an interview. Hove retired as CEO of Wellmont’s Bristol hospital in 2013 before Lee County closed. He returned to Wellmont in September 2014 after DeNarvaez left. He said he could not answer questions about events that occurred during the gap in his tenure, but he confirmed that Wellmont had been seeking a partner for several years to survive in an increasingly complex regulatory environment.
A Wellmont spokesman declined to answer questions that would establish a timeline of when it decided to close the hospital, and said its Sept. 11, 2013, news release “provides a comprehensive explanation of the reasons why our health system had to make this difficult and complex decision.”
“I was in my office in Gate City when I heard. It shocked me because we had been told it wasn’t on the table,” said Del. Terry Kilgore, R-Scott County. “Our phone and email were lit up with folks calling in. It was devastating to the county for health care concerns and to the hospital employees who had good-paying jobs.”
Without a hospital, all hope ended for courting new business or enticing older ones to expand.
Kilgore picked up the phone and placed a call across the aisle but close to home. Blacksburg attorney Jeff Mitchell answered. Mitchell’s family is to the Democratic Party and Tazewell County what Kilgore’s family is to the GOP and Scott County.
“Terry said, ‘I want you to talk to these people in Lee County and help them get their hospital back,’ ” Mitchell recalled. And, by the way, Kilgore told him, you might not get paid. Mitchell, who specializes in acquisitions and mergers, worked for former governors Gerald Baliles and Mark Warner, and possesses an enviable contact list. But he knew nothing about health care.
Tom Clarke did. On the day Wellmont announced the closing, Clarke was in Richmond meeting with cabinet officials to figure out how to structure a deal to buy Natural Bridge. Clark’s Kissito Healthcare was forming a new nonprofit to purchase the iconic limestone arch with the aim of protecting it in perpetuity.
“Everyone was talking, and I’d hear Lee County. Hospital. Pennington Gap. Truth of it is, I had no idea where Pennington Gap was. I don’t even know if I had heard about Lee. I asked them about it, and all these people, cabinet members, were deeply concerned that it closed without any notice,” Clarke said. “I’m a health care guy, so I’m like, wow, that really is unfortunate. But I think it’s part of what’s happening in America. This must be some small county with a couple thousand people who can’t sustain their hospital, probably losing millions of dollars each year.”
Thirty-five communities across the U.S. lost their hospitals that year.
Other than to Google “Pennington Gap,” Clarke gave it no more thought until he got a call a few months later from a consultant Mitchell had asked to go find him a health care partner.
By then none of the big or small hospital players was interested, save one: Wellmont’s regional competitor Mountain State Health Alliance. No way would Wellmont agree to that.
Clarke agreed to a meeting in Richmond. He entered the room thinking he’d lower their expectations, talk them down from a hospital to maybe an urgent care center, perhaps some nursing home beds.
He changed his mind when he met the players. Mitchell was working on spec. Kilgore seemed to genuinely want to help. Most of all he was impressed with Sonny Martin, a former bank president and patriarch of Lee County. Clarke agreed to pitch in without pay.
They hatched a plan. Kilgore would push through legislation to allow Lee County supervisors to create a hospital authority whose members would then buy their hospital from a reluctant seller. Martin steered the authority and remains its chairman, though he has taken ill. Unable to get medical care in Lee County, he’s now staying in North Carolina.
No matter how difficult negotiations became, Lee County supervisors and hospital authority commissioners vowed to say only nice things about Wellmont in public. That determination required periodic renewal when talks stymied. Authority members once flirted with an idea of loading up all the church buses and driving to Kingsport to picket outside Wellmont’s headquarters.
They resisted the temptation. But they knew the buses would jam U.S. 58. Their people had already spoken.
Wellmont would not give the hospital building to the authority unless commissioners could demonstrate people needed it. And Virginia would not grant a Certificate of Public Need unless the authority had a building.
Mitchell crafted an agreement with Wellmont that said it would donate the building once the authority obtained the certificate. The authority commissioners drummed up public support and presented Virginia’s Department of Health with 10,370 signatures, representing nearly half the 25,000 people living in Lee County. Then on Oct. 8, 2014, 400 residents packed the Lee High School auditorium in Jonesville for the type of public hearing that usually draws next to no one.
Their voices, captured on tapes from the hearing, spoke of how many owed their lives to quick treatment at the local hospital.
“We have heard documented cases of people dying while waiting for an ambulance,” said one.
“Every day I see ambulances running up and down the road bringing the citizens of Lee County to other counties. I pull over and pray they make it on time,” said another.
One supervisor hobbled to the mic, a cast on one leg. She developed blood clots from her injury, she said. As she stood there, she didn’t know whether one would break loose and if she’d have time to make it to Big Stone or Norton or Kingsport.
Or whether there would be an ambulance ready to take her.
Even non-emergency medical care is now a burden.
“It’s pretty sad when we can take our dogs and cats to get an X-ray in 30 minutes and it takes us the better part of a day,” one said.
The hardships continue. Patients go off for tests, come home, only to find they need to turn around and go back for more.
Litton’s waiting room is packed with patients needing wounds stitched or bones set. Sometimes they wait all night until he opens in the morning because they don’t have a ride to Big Stone.
At the Ham Robert Lee Nursing and Rehabilitation Home, care became more complicated for the 110 residents who no longer can take a quick trip down the hill for hospital treatments. The nursing home now has a mobile lab that arrives periodically, but residents who need quick lab work or X-rays or a blood transfusion must be driven 30 minutes away.
A federal maximum security prison in Lee County also has had to adjust. Last month, during the hospital authority meeting, a riot broke out. Parsons, Litton and another doctor on the board abruptly left. Eight injured inmates were driven to hospitals outside Lee County. In the past, they’d have been brought to a secure wing at the local hospital.
Economic development prospects withered. With 140 jobs, the hospital was one of the county’s largest employers, behind Wal-Mart, the prison and the school system.
“It’s tough enough to bring people into our industrial park,” said Michael James with the county’s Industrial Development Authority. “There’s zero chance without a hospital. If you don’t have a hospital, it just screams ghost town.”
The Virginia Department of Health was convinced. There is a need in Lee County for a critical access hospital.
Donations poured into the Lee County Hospital Authority. First from the IDA, the farm bureau, Pennington Gap Town Council, then the civic groups. If residents needed to wash cars and bake cookies to get their hospital, they’d do it.
But if the hospital were to open, could the authority keep it going?
“The former CEO created a phony crisis to show Lee County was losing all this money,” said authority Vice Chairman Ronnie Montgomery. “On paper you can show anything you want. … If you aren’t counting the interest payment and depreciation, it was making money. That’s why we say it will go.”
Clarke commissioned a feasibility study. Though the hospital would lose about $1 million the first year, projected revenue would exceed expenses by $101,000 beginning in the second year.
Now all they needed was the building.
“There were people inside Wellmont who never believed the people of Lee County would make it this far,” said Mitchell. And by November 2014, Wellmont’s board was no longer willing to donate the building without a stipulation.
Lee patients were going to Lonesome Pine Hospital in Big Stone Gap, another Wellmont facility, for routine emergencies and tests. To protect its competitive advantage, Wellmont wanted the authority to promise it would never bring in a competitor to run the Lee County hospital.
Without the electronic medical record system and doctors another health system could provide, the authority could not afford to open and run the hospital.
Wellmont had abandoned Lee County, Clarke reasoned. Wellmont had a moral, if not legal, obligation to let the county succeed without limiting its options.
The authority decided to buy the building free and clear. Months dragged out haggling over a sales price. Eventually they settled on $1.6 million. Mosley said county supervisors voted to lend the authority taxpayer money because they weren’t willing to wait while the authority sought financing. They worried the terms would again change.
But there’s still a hitch.
The authority cannot sell or partner with any other health system without giving Wellmont the right to first refuse to do the same thing for the same payment.
“Welmont paid a pretty penny for the facility. The asset expense stays on our books,” Hove said. “We wanted to cooperate while protecting ongoing business.”
Mitchell thinks there’s a loophole. The hospital authority will own and operate the building but will craft an alliance for an experienced health system to offer services. Talks are underway now with Mountain State.
“We have already started offering them guidance,” said Mark Leonard, CEO of Mountain State’s Norton Community Hospital.
Hove said Wellmont would read carefully through any deal between the authority and a competitor. But Mountain State might not remain Wellmont’s fiercest competitor for long: The two are in negotiations to merge.
“It’s like if Virginia and Virginia Tech decided to field one football team. It was that big of a rivalry,” Kilgore said. The Lee County contingent can’t claim credit for prompting the merger, but they did nudge it by helping to raise public support for keeping local hospitals in local hands rather than allow an outside conglomerate.
Kilgore found a way to wiggle around a Virginia law that prevents health care competitors from joining forces by advancing legislation that carves an exception only in southwestern Virginia.
With the property and a partner, Lee County’s leaders went to Washington, D.C., in June to begin to seek the approvals necessary to get paid for treating patients.
Warner pulled together regulatory officials along with U.S. Sen. Tim Kaine, D-Va., and U.S. Rep. Morgan Griffith, R-Salem.
“It’s a real chicken-and-egg scenario,” Griffith said. Without federal provider numbers, the new hospital can’t bill Medicare and Medicaid for services. And without first providing services, it can’t get the numbers.
Mountain State’s Leonard said they bring experience in navigating the processes for accreditation, certification and licenses, all needed to push through the red tape. Later this year, Lee County will open an urgent care center to treat patients at night and on weekends. Once that’s established, they can establish an emergency room and have diagnostic and imaging services — and again become a hospital.
It will differ from most community hospitals as it will open as a critical access hospital. That designation carries limitations, such as no more than 25 inpatients at a time, but it also brings the benefit of a larger reimbursement from Medicare.
Mountain State will help the authority with staffing, possibly bringing in specialists. Meanwhile, the authority is seeking $12 million in government and foundation grants to reopen a building that was stripped of all hospital furnishings.
Commissioners plan to have the hospital running in early 2016.
Warner said the bureaucratic process won’t block them.
“I asked the federal regulators for their personal numbers to stay in regular contact,” he said. Lee County will still need to meet all the criteria, but applications won’t wait on desks for months only to get rejected on technicalities.
“The folks in Lee County aren’t giving up, and I’m not going to give up on them,” Warner said.
Authority commissioner Montgomery said everyone is anxious. “I had two people ask me at lunch today and one when I went to the courthouse this morning, When are we opening the hospital?”