Promises to Rural Hospital, Broken

June 5, 2020 by Christen Aldrich

Filed under Communication, For Employers

Last modified June 8, 2020

The news article by ProPublica highlights the abuse of power Alliance Health Southwest Oklahoma had on a small, rural hospital named Mangum Regional Medical Center. This newly formed management company promised access to wealthy investors eager to infuse millions of dollars into the small, 18-bed hospital. It was the sort of miracle the hospital board members were looking for.

But about a month later, the board members were summoned to an emergency meeting. Alliance’s CEO Frank Avignone told hospital board members that his company, which had boasted of access to up to $255 million from investors, was out of money. Alliance needed a line of credit, and the bank required the board’s permission to use the hospital’s incoming payments as collateral. Exasperated, Mangum’s hospital board approved the line of credit.

Over the next year and a half, Alliance borrowed millions of dollars from the bank. The company paid itself and businesses tied to its partners a significant chunk of the money and then used $4 million from Medicare to help pay down the line of credit. Mangum’s hospital board fired Alliance in December 2018, and then the bank that provided the line of credit to Alliance is suing the hospital for $1.8 million that has yet to be paid. 

Financial pressures have forced the closures of 130 rural hospitals across the country in the past decade, leaving communities grasping for solutions to avoid losing health care in areas with the most need. Rural health experts fear many more won’t survive the coronavirus pandemic.

Alliance Health Southwest Oklahoma is no longer operating. Avignone is now the CEO of Affinity Health Partners. The company operates the Washington Regional Medical Center in Plymouth, North Carolina, which entered bankruptcy in 2019 after the collapse of its former operator, EmpowerHMS.

Corry Kendall, Mangum’s city attorney, said he’s happy Alliance is no longer managing hospitals in Oklahoma, but he warned that the town’s experience should encourage rural communities across the country to be more vigilant as they consider hiring for-profit companies.

“I’m hoping other communities elsewhere won’t make the same pitfalls, fall in the same traps and mistakes, have the same lapses of judgment, the same blind hope that we had,” Kendall said.

Share this

Related Articles

                                Leave a Comment