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The Lee County Regional Medical Center in Pennington Gap was closed by Wellmont Health System in 2013.

The head of a Florida startup company selected to reopen the Lee County hospital is expected to attend a public meeting Thursday in Pennington Gap to address concerns that include a missed payroll by a hospital it manages.

Americore Health LLC in October signed a letter of intent with the Lee County Hospital Authority to develop a plan to reopen the shuttered facility, which has been closed since 2013. It has since made offers to purchase other hospitals around the country, including one in Pineville, Kentucky, just over the state line from Lee County.

Americore assumed management of the Pineville hospital, which failed to make payroll on June 9.

CEO Grant White said his company is not to blame.

“We’re an operator and not owner. We hope to be the owner. We’re doing the best we can,” he said. “Financially, we’re not responsible.”

White said that against his attorney’s advice, he secured a loan to cover the payroll within a few days, and is “working through it” to cover the next payroll due on Friday.

“When I’m the owner, we’ll put more money in and we won’t be sweating. Right now, I’m doing this out of the goodness of my heart,” he said.

Attorney Jeff Mitchell, who represents the hospital authority, said he heard a similar explanation and is satisfied that Americore wasn’t responsible.

“But my response is, making payroll is a binary event. You either make it or not, and when you are affiliated with an organization, whether it’s your fault or not, you are hurt by it,” Mitchell said.

Risky undertaking

Though the hospital commissioners are concerned, Mitchell said they understood the risk of partnering with an unknown startup.

“Reopening a closed rural hospital is by all accounts an amazingly difficult thing to do,” Mitchell said, noting that no one else in the country has succeeded at what Lee County is trying to do. “They had to find an option that is viable and to assess the risk of that option and to make the best judgment they can to get the hospital reopened.

“The easy thing was to stop and say it can’t be done. They continue to push and fight. There is a certain level of excitement in the strategies that Americore has laid out because it makes sense to people but it is tempered with the recognition of risk,” Mitchell said.

White said Americore intends to operate a critical access hospital that will only occupy a portion of the four-story, 75,000-square-foot building. He said the business plan calls other endeavors that include telehealth, substance abuse treatment and partnerships with the Department of Veterans Affairs and with prisons.

He declined to go into specifics or to talk about the source of the funding for the estimated $5 million to $8 million needed to equip and staff a hospital that would meet Virginia’s licensing requirements.

“At this point in time, Americore has access to capital from very high net worth individuals and institutions,” he said. “We have significant strategic partners that go 80 to 100 people deep — some of them more than that — all interested and active in helping this business grow.”

White declined to elaborate, and said Americore is a private company working with other private concerns and is under no obligation to disclose financial information.

Mitchell said Americore has given the authority a list of its pool of backers, but the authority does not know which of them would be involved in the Lee County deal. Mitchell said he expects to reach a final agreement soon.

Rural hospital closed

The authority does not have much time to act.

Wellmont Health System closed Lee County Regional Medical Center on Oct. 1, 2013, with little warning, saying that too few patients, a lack of consistent physician coverage and changes under the Affordable Care Act were causing it to lose millions of dollars.

The people and leaders of Lee County suspected that Wellmont orchestrated the financial losses by shifting patients and doctors to its other hospitals in far southwest Virginia and northeast Tennessee. The Lee County Board of Supervisors then created a hospital authority, but it was only after nearly two years of negotiations — and only after the authority proved to the state that the community needed a hospital — that Wellmont sold the building to the authority for $1.6 million.

The Virginia Department of Health granted what is called a Certificate of Public Need and set a reopening deadline of November 2016. With the signing of the Americore agreement, the authority gained a one-year extension to show substantial progress.

Should the authority lose the certificate, getting a new one issued might prove impossible since Wellmont and its regional competitor, Mount States Health Alliance, are seeking to merge. If regulators approve, the combined entity would have a legal monopoly in the region and could block future competition.

CEO ‘confident’

White thinks Americore can pull it off.

“Come hell or high water, collectively with the passion of Lee County, Americore and other people around the hospital right now, we’re going to get that place reopened and meet the deadline,” White said. “I’m 100 percent confident. I will do everything in my power to get it reopened, and I have a lot of partners behind me.”

Since inking the agreement with Lee County, Americore has entered into arrangements to purchase existing hospitals in Pennsylvania, Arkansas, Kentucky and California. It is also seeking to prevail in a bankruptcy court auction for Pioneer Community Hospital in Patrick County,

None of the deals has closed, and the California one collapsed quickly. The owners of that hospital claimed Americore failed to make good on a $500,000 bridge payment. White called the charge bogus and said his firm had just entered due diligence and was under no obligation to finance the distressed hospital before the deal closed.

Americore’s first purchase is scheduled to close in less than a week on a hospital in Arkansas. White declined to name the hospital, saying the deal has not been announced publicly.

White said he expects to close on the Kentucky hospital within the next two to three weeks and on the one in Ellwood City, Pennsylvania, by the end of July.

Trouble in Canada

Two years ago, White was in a similar position of juggling several deals simultaneously as CEO of the Canadian firm Quantum International. The company had sold subscription receipts to finance the purchase of a number of health companies in the United States. The deals collapsed by October 2015, and the company, which is traded on the Canadian Stock Exchange, issued a statement saying that it could not cover the return of its investors’ funds and that White was no longer its CEO.

White wouldn’t say if he was fired or resigned.

“Suffice it to say we had a difference in opinion on the future of the company and so we mutually parted ways,” he said.

He claims that the Quantum deals fell apart when the price of oil plunged and drove down the worth of the company’s stock, and that its transactions cannot be compared with his Americore venture.

“Those were significantly larger acquisitions in a public setting with access to capital driven by investment banks in capital conditions that changed significantly,” he said. Americore “is privately funded with small acquisitions. It does not move up and down with the stock market. We’re privately funded.”

One of the Quantum deals was for Palm Springs General Hospital in Florida.

Hospital attorney Marc Ganz said Quantum initially offered to buy the hospital and then asked to transfer it to a subsidiary that it created, IHS Hialeah, and transferred $1 million into escrow.

He said White presented the board with convincing financial documents, and IHS contracted with a Florida doctor, Angel Giraldez, to manage the hospital before the closing. He said White asked for an extension, saying that Canadian rules required Quantum to close on another deal first.

The deadline was extended and missed, Ganz said.

Then when Quantum’s deals collapsed and White was out, Palm Springs canceled the management agreement. Giraldez filed a civil suit against the hospital that remains unsettled.

White said he is not involved in that and has had no further deals with IHS or Giraldez.

“He got involved in lawsuits trying to stop things and I moved on with my life,” White said. “I knew I wanted to do health care. I truly believe in this integrated health model. I had built up a lot of strategic relationships, so with that I started piecing together this idea.”

That’s when he created Americore and said he started driving around the country with his daughter, looking at potential hospitals to purchase.

His first offer was to Lee County, and he said he is confident he has the people with the experience and financing needed to reopen the Lee County hospital.

He said even though it is far more difficult and expensive to open a hospital than to take over an existing one, he is committed to Lee County.

He said he and his daughter were at a meeting in Lee County last July when a woman said her best friend died because it took an hour and 15 minutes to get to an ER.

“That is something that could be easily cured,” White said. “I know I have a business model that could open the hospital and make it profitable. I’m 100 percent sure of that. So I looked at my daughter, who was crying over this story, and I said, ‘I’m going to get this place reopened.’”

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