It's been six months since researchers in China said they had identifieda novel coronavirus spreading in the city of Wuhan. Hope and desire for a vaccine to end the global devastation is growing with each passing week.
Almost every day, I hear people making plans around the eventual arrival of a coronavirus vaccine — office reopenings, rescheduled weddings, family reunions and international travel. In recent weeks, colleagues and friends have asked me with growing urgency: "When will we have a vaccine? Will it be any good?"
At the same time, other friends have been telling me, "When I hear that this is going to be the fastest vaccine developed ever, that doesn't make me feel good — it makes me feel nervous that they're going to cut corners."
These questions and concerns resonate with me. I, too, want a vaccine, but I want reassurance that it's truly safe and effective. So I talked to a dozen people in the vaccine world: scientists, pediatricians, pharmaceutical manufacturers, as well as staff at the National Institutes of Health and the Food and Drug Administration.
Let me tell you this up front: If you're imagining there'll be one golden day when a vaccine is approved and the pandemic will be over — Finally! We can all crowd into one another's living rooms and resume choir practice again — I'm afraid it won't be quite like that. But it will be the beginning of the end.
There's much to be hopeful about, and enormous challenges lie ahead. Let's dig in.
Scientists Are Optimistic About a COVID-19 Vaccine
Everyone I spoke to was optimistic that manufacturers would eventually develop a COVID-19 vaccine. This isn't just because there are so many scientists and pharmaceutical companies working on the endeavor, and so much money being poured into it, though that also raises the chance of success.
The goal of vaccine developers is to mimic a natural infection as closely as possible without getting a healthy individual sick. There are many ways to do this. You can give a person a weakened virus or a dead virus. You can also show the immune system just part of the virus. Many manufacturers are creating vaccines involving only the "spike protein," the part on the surface of the coronavirus that attaches to the human cell it is trying to enter. Once the immune system has learned what the spike protein looks like, when it encounters it again, as part of a real coronavirus, it should know how to defend itself.
Dr. John Mascola, director of the Vaccine Research Center at the NIH's National Institute of Allergy and Infectious Diseases, said he is hopeful because our natural immune system, when healthy, is capable of handling the infection. "Most of the time, people recover from COVID-19, because their immune system eventually clears the virus," he said. He contrasted the coronavirus to HIV, for which scientists so far have struggled to create an effective vaccine: "In HIV, the natural immune system is not effective and people get AIDS." In this virus's case, if we can mimic a natural infection closely enough, it's likely that a vaccine will work.
The Coronavirus Is Not the Flu. In This Case, That's Good News.
There are some vaccines that are extremely effective, like the MMR vaccine: One dose is about 93% effective at preventing measles; two doses (which is what's recommended) are about 97% effective.
Other vaccines aren't as perfect. The flu shot's effectiveness varies year to year. During the 2019-20 flu season, it was about 45% effective at preventing infections, according to the CDC. The year before, it was just 29% effective.
The experts I talked to said that the flu shot was an outlier because of the rapidly shifting nature of the influenza virus. Because of its frequent mutations, developers have to make each year's vaccine based on educated guesses on what strains of the flu virus will be circulating next year. Sometimes, they misjudge, resulting in a vaccine that doesn't exactly match up with the flu strains that are most prevalent the following season.
"Influenza changes year in, year out, and the people who get it tend to be extremes in age — elderly and children — so you don't tend to have as good an immune response," said Dr. Nicholas Kartsonis, infectious disease and vaccines clinical research lead for Merck, which has two COVID-19 vaccine candidates that it plans to start in human trials this year.
One lucky break COVID-19 vaccine developers have had is that this coronavirus hasn't mutated in any significant way so far, including, crucially, the part that is most visible to the immune system, that spike protein. So long as that remains true, the vaccine they make should match up with the virus that our bodies will encounter in the real world, meaning it'll likely work as intended. Given the stability seen so far in the coronavirus's genetic sequence, "I am hopeful that when we do develop a vaccine, it will provide long-term protection," Kartsonis said.
Even a Vaccine That's Not 100% Effective Could Be Good Enough
When vaccine manufacturers talk about "effective," there are two common definitions. One is preventing people from getting sick. The other is preventing people from getting infected at all. In the case of COVID-19, this could be a nontrivial difference.
We know now that many people infected with the coronavirus may be asymptomatic carriers, which means that they never feel sick or get symptoms like a cough or fever, even if they are, in fact, infected with the virus. So you can have a vaccine that is effective in that it prevents symptomatic COVID-19, but that doesn't mean it'll stop everyone from being infected.
Let's be clear: A vaccine that can significantly reduce sickness would be fantastic. If a vaccine can reduce the severity of COVID-19 so that it's far less deadly, decrease hospitalizations and minimize symptoms even for those who catch it, that's a win.
"In terms of what you'd expect for approval, it should at least be 50% efficacy against symptoms and 70% against moderate to severe disease, to keep you out of the hospital," said Dr. Paul Offit, director of the vaccine education center at the Children's Hospital of Philadelphia.
Even so, it's important not only to measure what the vaccine does, but also for politicians, health officials and journalists to clearly explain to the public exactly what it is that the vaccine is capable of doing. If it ends up that the first vaccine to go to market is "70% effective," we should be clear on whether it is 70% effective at reducing sickness or infection, so members of the public have the appropriate context and don't feel let down if they are vaccinated and still get a mild case of COVID-19.
Large Scale Trials Will Tell Us if the Vaccine Works
When experimental vaccines are tested, they usually go through three phases of clinical trials. The first phase is the smallest and focuses on safety, making sure that the product doesn't have any dangerous health effects. The second is a little larger, continuing to gather safety data while testing if the vaccine can induce an immune response, producing antibodies in participants. The third trial is the largest, and it needs to be big enough to confirm that the vaccine is actually effective in the real world.
Moderna Therapeutics is currently expected to be the first U.S. manufacturer to start a phase 3 trial. Candidates by AstraZeneca and Johnson & Johnson will follow, according to The Wall Street Journal. Moderna's trial is planned to begin in July and will enroll about 30,000 participants. Half will get the vaccine and half will get a placebo, according to Moderna's chief medical officer Dr. Tal Zaks. (I should disclose: Paul Sagan, chairman of ProPublica's board, is also one of Moderna's board members. That said, ProPublica's board members have no say in what reporters write about, nor do they know about articles before they are published.)
The participants will be tracked carefully throughout the study. If they have any symptoms related to COVID-19, they'll get tested to see if they have contracted the virus. The participants will also get blood drawn at regular intervals to get tested for antibodies, which will determine if they got infected but perhaps didn't know because they didn't develop symptoms.
"But wait!" you say. "Doesn't a vaccine also create antibodies? How can you tell by looking in a participant's blood whether the antibodies come from the vaccine or from an infection that the vaccine failed to prevent?" Excellent question.
At least for Moderna's vaccine trial, here's how they're going to tell the difference: Moderna's vaccine is what's known as an mRNA vaccine. Instead of using the actual virus or even a little bit of the virus, it uses a piece of genetic code, kind of like a recipe, that gives instructions for making the spike protein. Once injected into the arm and introduced into human cells, the cell's protein-making factories read the recipe and manufacture the spike protein, churning out copies for the immune system to check out. The immune system should then create antibodies that correspond to the spike protein, like a matching puzzle piece.
When you get infected by an actual coronavirus, however, there are more parts to it than just the spike protein. Your body will produce other antibodies that match up with other parts of the virus, including what's called the nucleoprotein, found inside the virus. We can also measure for those antibodies in a trial participant's blood, the NIH's Mascola explained. So if we find so-called NP antibodies, that means you've been infected for real, because there's no way you could induce NP antibodies from the vaccine alone.
The Moderna trial is designed to end when a predetermined number of people have gotten sick, according to Zaks. Then, the study investigators will count up the number of people that have gotten sick in the placebo arm and compare it with the vaccine arm. Hopefully, there will be far fewer in the vaccinated cohort.
There's one more question that a phase 3 trial cannot answer: How long will protection last? Right now, we don't even know if people who have gotten sick via natural infection have lifelong immunity. The only way to find out how long a vaccine's protection lasts will be to keep tracking study participants and whether their antibody levels drop over time. We may end up needing periodic booster shots. Truly, only time will tell.
Shortcuts Involve Trade-Offs
To give you a sense of what a blistering pace we are attempting to move at, consider that under normal circumstances, it typically takes 10 to 15 years to develop a vaccine. Creating the HPV vaccine was a 15-year journey from key research findings in 1991 until the vaccine was approved, initially for the prevention of cervical, vulvar and vaginal cancers, in 2006. Merck's Ebola vaccine, one of the fastest ever to be approved, still took about four years from start to finish, according to Kartsonis.
The speed of the phase 3 trials depends on the rate of infection wherever people are enrolled. If there is a huge outbreak going on, people in the placebo group will get sick at a high rate, and the trial may be over in a matter of a few months. If infection rates are very low, however, the trial could drag on for months on end. Moderna hasn't announced its trial sites yet, but it will have sites "well dispersed" in the U.S. and is considering international trials as well, according to a spokesman.
Among the many ways to shorten the vaccine development timeline, approving a treatment based on antibody data — without completing a phase 3 trial — could be contentious. This is why.
"There have been some European countries that wanted to be part of our trial, and we said: 'Look at your epidemiology, you're a victim of your own success — there's just not enough cases happening. It would take five years!'" Moderna's Zaks said. "So speed here is going to be enabled by what we anticipate is ongoing attack rates. We expect there will be infections amongst the participants on our trial."
Still, there have been discussions of some potential ways to speed up trials even more. One common proposal is to conduct what are known as challenge trials, in which vaccinated participants are deliberately "challenged" with the coronavirus to see if they get sick.
This idea was dismissed as unethical by some experts I interviewed. "We don't have a treatment — we can't guarantee to any volunteer that if we gave them a challenge with the actual virus, that it wouldn't make them very, very sick," said Dr. William Schaffner, professor of preventive medicine and infectious diseases at Vanderbilt Medicine. "That would make a lot of people very uneasy."
The other shortcoming of approving a vaccine via a challenge trial is that because of the inherently risky nature of giving participants a live virus, challenge trials are typically very small. "That diminishes the safety database, and you need a large safety database to give us comfort to communicate to the public that we think that this is a safe vaccine," Schaffner said.
Another potential would be to green light use of a vaccine based on expected benefit, if manufacturers can show it reliably generates levels of antibodies in study participants that are similar to those found in people who have been naturally infected. Not everyone is a fan of that idea — some experts I interviewed told me that immune responses aren't always predictive of a vaccine's real-world capabilities.
Children and Pregnant Women Won't Be First in Line
In the phase 3 trials currently being planned, the vaccines will be tested in adults. People over the age of 55 are being specifically recruited, and it's important to include them because the need for the vaccine in that demographic is particularly high.
One group that won't be in the initial set of phase 3 trials: children.
This is for two reasons. First, as a safety precaution, the NIH's Mascola explained. Traditionally, when running trials with an experimental vaccine or drug, developers make sure it's safe in adults before moving on to children. Second, for the COVID-19 vaccine specifically, the most acute need isn't in children.
This means that when the vaccine is first approved, it likely won't be available for those under 18, because it hasn't yet been studied in that population. However, Mascola said there are already discussions for how to run future trials for children. Moderna will eventually run trials in children, Zaks confirmed.
Another special population is pregnant women. They are also not going to be enrolled in the initial phase 3 trial for the Moderna vaccine, according to Zaks. But Mascola said that it's essential that that population eventually be studied. "If we're not able to immunize women of childbearing age, that excludes a large proportion of the population. There's a strong interest in getting those studies done," he said. "The FDA is encouraging companies/sponsors to include in their development plans studies that would provide data to support use of COVID-19 vaccines during pregnancy," the agency said in a statement.
The FDA added that it "strongly encourages the enrollment of populations most affected by COVID-19, specifically racial and ethnic minorities." African Americans have been disproportionately affected by the pandemic, contracting the virus and dying at higher rates.
Manufacturing 'At Risk' Is a Safe Time-Saver
One strategy that everyone agreed was a safe way to save a whole lot of time without any risk to human health is what's known as "manufacturing at risk." This is one of the key components of the U.S. government's Operation Warp Speed, which is supporting five candidates with billions of dollars of federal funding.
Typically, drugmakers will manufacture only enough doses for clinical trials and make sure the trials are successful before starting mass production. Manufacturing at risk means that developers will instead begin mass production at the same time as clinical trials, which means that if a vaccine fails in human trials, they'll have to throw away all the product they've made, wasting money and materials. But if a product is successful, it means that the minute its trial is completed, there'll be millions of doses ready to go.
Manufacturing at a massive scale is no simple task. "If we're going to immunize 300 million people in the U.S. — we don't even do that with the flu vaccine every year — we need a lot of glass vials, we have to make sure we have printing supplies and paper to make the labels and package inserts, we need stoppers for the vials, and they all need to be made to a very high standard. All this in addition to the raw materials to the vaccine itself," Schaffner said.
Pfizer and its partner, German company BioNTech, are planning to have a few million doses ready by the end of the year, and hundreds of millions of doses available in 2021, even though the first of their four vaccine candidates just began its first early-stage human trials in May. The companies are currently preparing manufacturing facilities in St. Louis, Andover, Massachusetts, and Kalamazoo, Michigan, as well as in Europe, according to Dr. Philip Dormitzer, Pfizer's vice president and chief scientific officer for viral vaccines.
Development Is the First Hurdle, Distribution Is the Next Challenge
On the day that a vaccine is approved, you'll find me jumping up and down in my apartment, cheering loudly enough to startle my neighbors. And then … I'll keep on washing my hands, wearing a mask and maintaining social distancing.
Why? Because I know that when a vaccine is first approved by the FDA, there won't be enough available for everyone who wants it. There will need to be a prioritization, with the vaccine given first to those who need it most: essential workers and the elderly. As a healthy adult who is fortunate to be able to work from home, I'll be nowhere near the front of the inoculation line.
Distribution is going to be a massive challenge. "There's a need to have in place a mechanism to ensure people who should get the vaccine get it," Dr. Walter Orenstein, associate director of Emory University's vaccine center, said. "We won't have 8 billion vaccines. So who should get priority, and how should it get delivered? We will need to remove barriers to access, including cost and distance."
In all likelihood, we'll have several vaccines that come to market and are in use at the same time, because of the unprecedented need to vaccinate so many people around the globe. No one company has the manufacturing capability to make it all.
There may also be differences in what works best for different countries and populations. Some of the vaccines will require cold shipping or storage. Some will require two doses (Moderna's is a two-dose vaccine, taken a month apart). All these variations will add to the complexity of delivery and distribution.
"Since I have gray hair, I'm trying to remind my colleagues that in previous distribution and prioritization schemes, flexibility is very important," Schaffner warned me. He has long worked with the Centers for Disease Control and Prevention's Advisory Committee on Immunization Practice, which reviews data on vaccines and gives recommendations on which populations they should be used for. He is now on the COVID-19 vaccine working group. "Adverse events will come up that have to become investigated. There will be bumps in the road. War plans are great, until the war starts. Then you will have to be flexible."
Safety Monitoring Doesn't End After Trials Are Over
Vaccinating 15,000 to 20,000 people before approval should give regulators a large pool of data to help them understand what side effects are to be expected and help ensure that the vaccines that go to market don't have any major safety issues.
But of course, 20,000 people isn't 20 million or 200 million or 2 billion people.
"When we have tens of thousands of people being evaluated, we can at least pick up safety signals for serious adverse events for the more frequent adverse events," Orenstein said. "Now for very rare events, if it's 1 per million, you're not going to catch that in clinical trials."
What everyone wants to avoid is a repeat of the mass immunization program following the swine flu outbreak at Fort Dix in 1976. After 45 million doses were distributed, the vaccine was found to be associated with increased cases of Guillain-Barré syndrome, which can cause paralysis and sometimes death. Even worse, there wasn't actually a pandemic — the program had been launched in fears that the swine flu virus circulating among recruits at Fort Dix would cause a catastrophic outbreak. In the end, there was no transmission across the U.S., and the vaccination program was canceled.
So there will need to be some sort of mechanism to track and monitor for rare safety events even after the vaccine goes on the market. There is already a program to do so, which is the Vaccine Adverse Event Reporting System, run by the CDC.
While it may be impossible for a phase 3 trial to catch a very rare potential side effect, Offit, of the Children's Hospital of Philadelphia, points out that "it's not a risk-free choice to not get the vaccine, if the virus is still circulating."
He added, "If the data were clear that in 20,000 people it appears to be safe and highly efficacious, then you should get the vaccine, because if you're choosing not to get a vaccine, you're choosing to risk getting a natural infection, which could be fatal."
The Trump administration's Operation Warp Speed has said it "aims to have substantial quantities of a safe and effective vaccine available for Americans by January 2021."
Experts I've spoken to have ranged in their optimism about that timeline. The NIH's Mascola said, "If a study is started in the summertime, it's possible that by the end of the year we'll have an answer."
Dr. Luciana Borio, former FDA acting chief scientist and current vice president at In-Q-Tel, a nonprofit strategic investment firm, concurred. "Depending on the results of the clinical trials, I think we might see some vaccine become available before the end of the year, but most people will have to wait for 2021."
Others were more cautious. Orenstein said he thinks there is a "real possibility" that we will have a vaccine by summer next year, "if everything goes well."
Vanderbilt's Schaffner said he prefers to avoid timelines altogether. "We're making the same mistake we made back in 2009 when we developed the H1N1 vaccine. We made the same statements and then it took more time than people anticipated, and when it finally came out, the media all said, 'It's a late vaccine!'
"So we overpromised and underdelivered in 2009, and we haven't learned that lesson. We are overpromising now, and I wish we wouldn't do that. I wish we would just say, 'We're working as hard as we can and we'll get it to you whenever it's finished, but we've got to do it right.' And that would be a much more solid message."
ProPublica deputy managing editor Charles Ornstein wanted to know why experts were wrong when they said U.S. hospitals would be overwhelmed by COVID-19 patients. Here's what he learned, including what hospitals can do before the next wave.
Many of the experts I talked to stressed that they wanted to see the phase 3 trials run to completion, however long they took.
Dr. Brit Trogen, a pediatrics resident at NYU Langone, said she worries about political pressures on developers. "I consider vaccines to be one of the greatest public health achievements of the past few centuries, and I know the consequences of undervaccinating, because I treat kids who are seriously ill with preventable illness," she said. "But I worry that at the first hint of something positive, politicians will swoop in and push for an early release beyond what the science allows."
Some also noted that vaccine hesitancy has been growingin the United States, thanks to a fervent anti-vaccination movement.
Dr. Peter Hotez, a vaccine scientist, professor and dean of the National School of Tropical Medicine at Baylor College of Medicine, said communication that focuses solely on speed "is very tone deaf to the fact that there's an aggressive anti-vax lobby that says that vaccines are rushed and aren't adequately tested for safety."
I brought these concerns to the FDA, as the agency will ultimately be the one to make the call on when there is sufficient data to approve a vaccine.
"We recognize that there are some that are concerned that 'rapid development' means that vaccine development steps are being skipped, but the FDA scientists will not cut corners in order to approve a vaccine," the agency responded. "The FDA will thoroughly evaluate the data submitted in support of a vaccine's safety and effectiveness, and will approve a vaccine for the prevention of COVID-19 only if the FDA determines that it is safe and effective for its intended use."
When I pause to really think about it, I am staggered by what an enormous undertaking is underway around the globe — and what lies ahead — to develop and distribute a COVID-19 vaccine to billions of people. There is so much at stake, both to give the world a vaccine as soon as possible, and also to not make any critical mistakes in the process. As I cheer on all of the developers, I hope that every country's leaders will let science and evidence guide decisions every step of the way.
I asked Zaks, of Moderna, what kind of pressure he felt, and he answered me in two ways. He said: "Every day and every minute counts." And then he told me this — that normally, when he works on vaccines, he never gets to meet the people that he's making the vaccine for. But this pandemic has been different. His future daughter-in-law is a second-year internal medicine resident in New York City, where the coronavirus has hit hard. "This one's personal," he said. "This one cuts close to home."
The prediction from New York Gov. Andrew Cuomo was grim.
In late March, as the number of COVID-19 cases was growing exponentially in the state, Cuomo said New York hospitals might need twice as many beds as they normally have. Otherwise there could be no space to treat patients seriously ill with the new coronavirus.
"We have 53,000 hospital beds available," Cuomo, a Democrat, said at a briefing on March 22. "Right now, the curve suggests we could need 110,000 hospital beds, and that is an obvious problem and that's what we're dealing with."
The governor required all hospitals to submit plans to increase their capacity by at least 50%, with a goal of doubling their bed count. Hospitals converted operating rooms into intensive care units, and at least one replaced the seats in a large auditorium with beds. The state worked with the federal government to open field hospitals around New York City, including a large one at the Jacob K. Javits Convention Center.
But when New York hit its peak in early April, fewer than 19,000 people were hospitalized with COVID-19. Some hospitals ran out of beds and were forced to transfer patients elsewhere. Other hospitals had to care for patients in rooms that had never been used for that purpose before. Supplies, medications and staff ran low. And, as The Wall Street Journal reported on Thursday, many New York hospitals were ill prepared and made a number of serious missteps.
All told, more than 30,000 New York state residents have died of COVID-19. It's a toll worse than any scourge in recent memory and way worse than the flu, but, overall, the health care system didn't run out of beds.
"All of those models were based on assumptions, then we were smacked in the face with reality," said Robyn Gershon, a clinical professor of epidemiology at the NYU School of Global Public Health, who was not involved in the models New York used. "We were working without situational awareness, which is a tenet in disaster preparedness and response. We simply did not have that."
Cuomo's office did not return emails seeking comment, but at a press briefing on April 10, the governor defended the models and those who created them. "In fairness to the experts, nobody has been here before. Nobody. So everyone is trying to figure it out the best they can," he said. "Second, the big variable was, what policies do you put in place? And the bigger variable was, does anybody listen to the policies you put in place?"
So, why were the projections so wrong? And how can political leaders and hospitals learn from the experience in the event there is a second wave of the coronavirus this year? Doctors, hospital officials and public health experts shared their perspectives.
The Models Overstated How Many People Would Need Hospital Care
The models used to calculate the number of people who would need hospitalization were based on assumptions that didn't prove out.
Early data from the U.S. Centers for Disease Control and Prevention suggested that for every person who died of COVID-19, more than 11 would be hospitalized. But that ratio was far too high and decreased markedly over time, said Dr. Christopher J.L. Murray, director of the Institute for Health Metrics and Evaluation at the University of Washington. IHME's earliest models on hospitalizations were based on that CDC data and predicted that many states would quickly run out of hospital beds.
A subsequent model, released in early April, assumed about seven hospitalizations per death, reducing the predicted surge. Currently, Murray said, the ratio is about four hospital admissions per death.
"Initially what was happening and probably what we saw in the CDC data is doctors were admitting anybody they thought had COVID," Murray said. "With time they started admitting only very sick people who needed oxygen or more aggressive care like mechanical ventilation."
A model created by the Harvard Global Health Institute made a different assumption that also turned out to be too high. Data from Wuhan, China, suggested that about 20% of those known to be infected with COVID-19 were hospitalized. Harvard's model, which ProPublica used to build a data visualization, assumed a hospitalization rate in the United States of 19% for those under 65 who were infected and 28.5% for those older than 65.
But in the U.S., that percentage proved much too high. Official hospitalization rates vary dramatically among states, from as low as 6% to more than 20%, according to data gathered from states by The COVID Tracking Project. (States with higher rates may not have an accurate tally of those infected because testing was so limited in the early weeks of the pandemic.) As testing increases and doctors learn how to treat coronavirus patients out of the hospital, the average hospitalization rate continues to drop.
New York state's testing showed that by mid-April, approximately 20% of the adult population in New York City had antibodies to COVID-19. Given the number hospitalized in the city and adjusting for the time needed for the body to produce antibodies, this means that the city's hospitalization rate was closer to 2%, said Dr. Nathaniel Hupert, an associate professor at Weill Cornell Medicine and co-director of the Cornell Institute for Disease and Disaster Preparedness.
Dr. Ashish Jha, director of the Harvard Global Health Institute, and his team also assumed that between 20% and 60% of the population would be infected with COVID-19 over six to 18 months. That was before stay-at-home orders took effect nationwide, which slowed the virus's spread. Outside of New York City, a far lower percentage of the population has been infected. Granted, we're not even six months into the pandemic.
A number of factors go into disease models, including the attack rate (the percentage of the entire population that eventually becomes infected), the symptomatic rate (how many people are going to show symptoms), the hospitalization rate for different age groups, the fraction of those hospitalized that will need intensive care and how much care they will need, as well as how the disease travels through the population over time (what is known as "the shape of the epidemic curve"), Hupert said.
Before mid-March, Hupert's best estimate of the impact of COVID-19 in New York state was that it would lead to a peak hospital occupancy of between 13,800 to 61,000 patients in both regular medical wards and intensive care. He shared his work with state officials.
David Muhlestein, chief strategy and chief research officer at Leavitt Partners, a health care consulting firm, said one takeaway from COVID-19 is that models can't try to predict too far into the future. His firm has created its own projection tool for hospital capacity that looks ahead three weeks, which Muhlestein said is most realistic given the available data.
"If we were held to our very initial projection of what was going to happen, everybody would be very wrong in every direction," he said.
Hospitals Proved Surprisingly Adept at Adding Beds
When calculating whether hospitals would run out of beds, experts used as their baseline the number of beds in use in each hospital, region and state. That makes sense in normal times because hospitals have to meet stringent rules before they are able to add regular beds or intensive care units.
But in the early weeks of the pandemic, state health departments waived many rules and hospitals responded by increasing their capacity, sometimes dramatically. "Just because you only have six ICU beds doesn't mean they will only have six ICU beds next week," Muhlestein said. "They can really ramp that up. That's one of the things we're learning."
Take Northwell Health, a chain of 17 acute-care hospitals in New York. Typically, the system has 4,000 beds, not including maternity beds, neonatal intensive care unit beds and psychiatric beds. The system grew to 6,000 beds within two weeks. At its peak, on April 7, the hospitals had about 5,500 patients, of which 3,425 had COVID-19.
The system erected tents, placed patients in lobbies and conference rooms, and its largest hospital, North Shore University Hospital, removed the chairs from its 300-seat auditorium and replaced them with a unit capable of treating about 50 patients. "We were pulling out all the stops at that point," Senior Vice President Terence Lynam said. "It was unclear if the trend was going to go the other way. We did not end up needing them all."
Northwell went from treating 49 COVID-19 inpatients on March 16 to 3,425 on April 7. "I don't think anybody had a clear handle on what the ceiling was going to be," Lynam said. As of Wednesday, the system was still caring for 367 COVID-19 patients in its hospitals.
As hospitals found ways to expand, government leaders worked with the Army Corps of Engineers to build dozens of field hospitals across the country, such as the one at the Javits Center. According to an analysis of federal spending by NPR, those efforts cost at least $660 million. "But nearly four months into the pandemic, most of these facilities haven't treated a single patient," NPR reported. As they began to come online, stay-at-home orders started producing results, with fewer positive cases and fewer hospitalizations.
Demand for Non-COVID-19 Care Plummeted More Than Expected
Hospitals across the country canceled elective surgeries, from hip replacements to kidney transplants. That greatly reduced the number of non-COVID-19 patients they had to treat. "We generated a lot more capacity by getting rid of elective procedures than any of us thought was possible," Harvard's Jha said.
Northwell canceled elective surgeries on March 16, and over the span of the next week and a half, its hospitals discharged several thousand patients in anticipation of the coming surge. "In retrospect, it was a wise move," Lynam said. "It just ballooned after that. If we had not discharged those patients in time, there would have been a severe bottleneck."
What's more, experts say, it's clear that some patients with true emergencies also stayed home. A recent report from the CDC said that emergency room visits dropped by 42% in the early weeks of the pandemic. In 2019, some 2.1 million people visited ERs each week from late March to late April. This year, that dropped to 1.2 million per week. That was especially true for children, women and people who live in the Northeast.
In New York City, emergency room visits for asthma practically ceased entirely at the peak, Cornell's Hupert said. "You wouldn't imagine that asthma would just disappear," he said. "Why did it go away? ... Nobody has seen anything like that."
Undoubtedly some people experienced heart attacks and strokes and didn't go to the hospital because they were fearful of getting COVID-19. "I didn't expect that," Jha said. A draft research paper available on a preprint server, before it is reviewed and published in an academic journal, found that heart disease deaths in Massachusetts were unchanged in the early weeks of the pandemic compared to the same period in 2019. What that may mean is that those people died at home.
The Coronavirus Attacked Every Region at a Different Pace
Some initial models forecast that COVID-19 would hit different regions in similar ways. That has not been the case. New York was hit hard early; California was not, at least initially.
In recent weeks, hospitals in Montgomery, Alabama, saw a lot of patients. Arizona's health director has told hospitals in the state to "fully activate" their emergency plans in light of a spike in cases there. The Washington Post reported on Tuesday that hospitalizations in at least nine states have been rising since Memorial Day.
Dr. Mark Rupp, medical director of the Department of Infection Control and Epidemiology at the University of Nebraska Medical Center in Omaha, said his region hasn't seen a tidal wave like New York. "What we've seen is a rising tide, a steady increase in the number of cases." Initially that was associated with outbreaks at specific locations like meatpacking and food processing plants and to some degree long-term care facilities.
But since then, "it has just plateaued," he said. "That has me concerned. This is a time when I feel like we should be working as hard as we can to push these numbers as low as possible."
Rupp's hospital has been caring for 50 to 60 COVID-19 patients on any given day. The hospital has started to perform surgeries and procedures that had been on hold because "elective cases stay elective for only so long."
The hospital's general medical/surgical beds are 70% to 80% filled, and its ICU beds are 80% to 90% full. "We don't have a big cushion."
Even in New York City, the virus hit boroughs differently. Queens and the Bronx were hard hit; Manhattan, Brooklyn and Staten Island less so. "Maybe we can't even model a city as big as New York," Hupert said. "Each neighborhood seemed to have a different type of outbreak."
That needs further study but could be attributable to both social and demographic conditions and the type of jobs residents of the neighborhoods had, among other factors.
What We Can Learn From Coronavirus "Round One"
While hospitals were able to add beds more quickly than experts realized they could, some other resources were harder to come by. Masks, gowns and other personal protective equipment were tough to get. So were ventilators. Anesthesia agents and dialysis medications were in short supply. And every additional bed meant the need for more doctors, nurses and respiratory therapists.
In early February, before any cases were discovered in New York, Northwell purchased $5 million in PPE, ventilators and lab supplies just in case, Lynam said. "It turned out to be a wise move," he said. "What's clear is that you can never have enough."
Northwell has spent $42 million on PPE alone. "We were going through 10,000 N95 masks a day, just a crazy amount," he said. "One of the lessons learned is you have to stockpile the PPE. There's got to be a better procurement process in place."
If there's one thing the system could have done differently, Lynam said, it's bringing in more temporary nurses earlier. Northwell brought in 500 nurses from staffing agencies. "They came in a week later than they should have."
Dr. Robert Wachter, chair of the department of medicine at the University of California, San Francisco, agreed. "I've helped run services in hospitals for 25 years," he said. "I've probably given two minutes of thought to the notions of supply chains and PPE. You realize that is absolutely central to your preparedness. That's a lesson."
Experts and hospital leaders agree that everyone can do better if another wave hits. Here's what that entails:
Having testing readily available, as it now is, to more quickly spot a resurgence of the virus.
Stocking up now on PPE and other supplies. "We definitely have to stockpile PPE by the fall," Gershon of NYU said. "We have to. … [Hospitals and health departments] have to really get those contracts nailed down now. They should have been doing this, of course, all the time, but no one expected this kind of event."
Being able to quickly move personnel and equipment from one hot spot to the next.
Planning for how to care for those with other medical ailments but who are scared of contracting COVID-19. "We have to have some sort of a mechanism by which we can offer people assurance that if they come in, they won't get sick," Jha said. "We can't repeat in the fall what we just did in the spring. It's terrible for hospitals. It's terrible for patients."
Providing mental health resources for front-line caregivers who have been deeply affected by their work. The intensity of the work, combined with watching patients suffer and die alone, was immensely taxing.
Coming up with ways to allow visitors in the hospital. Wachter said the visitor bans in place at many hospitals, though well intentioned, may have backfired. "When all hell was breaking loose and we were just doing the best we could in the face of a tsunami, it was reasonable to just keep everybody out," he said. "We didn't fully understand how important that was for patients, how much it might be contributing to some people not coming in for care when they really should have."
Lynam of Northwell said he's worried about what lies ahead. "You look back on the 1918 Spanish flu and the majority of victims from that died in the second wave. … We don't know what's coming on the second wave. There may be some folks who say you're paranoid, but you've got to be prepared for the worst."
Gov. Michelle Lujan Grisham cited "significant, awful allegations" in a ProPublica and New Mexico In Depth story on a hospital where clinicians said pregnant Native women were singled out for COVID-19 testing and separated from newborns after delivery.
This article was first published on Sunday, June 14, 2020 in ProPublica.
New Mexico Gov. Michelle Lujan Grisham announced on Twitter Saturday that state officials would investigate allegations of racial profiling of pregnant Native American women at a top hospital in Albuquerque.
Lujan Grisham was reacting to a story published Saturday by New Mexico In Depth and ProPublica revealing that Lovelace Women’s Hospital had a secret policy for screening Native American women for coronavirus based on their appearance and home ZIP code, according to several clinicians who work there.
Described as racial profiling by medical ethicists, the policy resulted in some Native American women being separated from their newborns at birth as hospital staff waited for test results, according to the clinicians.
“These are significant, awful allegations and, if true, a disgusting and unforgivable violation of patient rights,” Lujan Grisham, a Democrat, wrote. “The state of New Mexico is investigating whether this constitutes a CMS violation and will unequivocally hold this hospital accountable.”
CMS, or the U.S. Centers for Medicare and Medicaid Services, regulates hospitals to ensure that all patients have access to medical care.
Described as racial profiling by medical ethicists, the policy resulted in some Native American women being separated from their newborns at birth as hospital staff waited for test results, according to the clinicians.
“These are significant, awful allegations and, if true, a disgusting and unforgivable violation of patient rights,” Lujan Grisham, a Democrat, wrote. “The state of New Mexico is investigating whether this constitutes a CMS violation and will unequivocally hold this hospital accountable.”
CMS, or the U.S. Centers for Medicare and Medicaid Services, regulates hospitals to ensure that all patients have access to medical care.
State Auditor Brian S. Colón also weighed in, with a Facebook post commenting that Lovelace “has some additional explaining to do.”
A Lovelace spokeswoman did not immediately respond to a voice message and email Saturday. In previous statements, Lovelace acknowledged screening patients by geographic area, but it said that such practices followed guidelines from the U.S. Centers for Disease Control and Prevention. It was not immediately clear whether the policy described by clinicians remained in place on Saturday.
The CDC doesn’t mention geography in its COVID-19 guidelines for pregnant women. It specifies that pregnant patients should be treated as people under investigation for COVID-19 only if they exhibit symptoms or have had recent high-risk contact with COVID-19 patients.
According to several Lovelace clinicians, when pregnant women showed up at the hospital who appeared to be Native American, staff members were instructed to compare the expectant mother’s home ZIP code against a list of Indian reservation ZIP codes maintained by the hospital, known informally as the “Pueblos List,” a reference to New Mexico’s Pueblo Indian tribes. If the pregnant woman’s ZIP code matched one on the list, she was designated as a “person under investigation” for COVID-19 and tested even if she did not have symptoms, the clinicians said.
Several Native American tribes in New Mexico have been hit hard by the coronavirus, recording some of the highest per capita rates of infection in the nation. But not all of the ZIP codes on the list are home to tribes with high prevalence of the disease.
Lovelace did not use rapid COVID-19 tests, so it took up to three days for results to come back. During that time, the hospital separated some asymptomatic mothers from their newborns as part of an effort to prevent transmission of the virus from mother to child. Other Albuquerque hospitals are using rapid tests and do not separate Native American mothers from newborn children.
Such separations deprive infants of close, immediate contact with their mothers that doctors recommend.
“We had no knowledge of this practice happening,” Tripp Stelnicki, Lujan Grisham’s communications director, said Saturday.
The state Health Department has contacted CMS to determine how to proceed, Stelnicki said.
“The intent is to find out what ... is going on,” Stelnicki said. “And if indeed, if this has happened, it is extremely disturbing, and to rectify the position if there were CMS violations, those will be pursued.”
Pregnant Native American women were singled out for COVID-19 testing based on their race and ZIP code, clinicians say. While awaiting results, some mothers were separated from their newborns, depriving them of the immediate contact doctors recommend.
This article was first published on Saturday, June 13, 2020 in ProPublica.
ALBUQUERQUE, N.M. — A prominent women’s hospital here has separated some Native American women from their newly born babies, the result of a practice designed to stop the spread of COVID-19 that clinicians and health care ethicists described as racial profiling.
Lovelace Women’s Hospital in Albuquerque implemented a secretive policy in recent months to conduct special coronavirus screenings for pregnant women, based on whether they appeared to be Native American, even if they had no symptoms or were otherwise at low risk for the disease, according to clinicians.
The hospital screens all arriving patients for COVID-19 with temperature checks and asks them whether they’ve been in contact with people who have the illness. But for soon-to-be moms who appeared to be Native American, there was an additional step, according to clinicians interviewed on the condition they not be named.
Hospital staff would compare the expectant mother’s ZIP code against a list of Indian reservation ZIP codes maintained by the hospital, known informally as the “Pueblos List,” a reference to New Mexico’s Pueblo Indian tribes. If the pregnant woman’s ZIP code matched one on the list, she was designated as a “person under investigation” for COVID-19, the clinicians said.
Lovelace does not use rapid COVID-19 tests, and babies were sometimes born before asymptomatic Native American mothers’ test results came back from the lab, a process that can take up to three days. As a result, the hospital separated Native American newborns from their asymptomatic mothers in at least a half-dozen cases, one clinician said.
Such separations deprive infants of close, immediate contact with their mothers that doctors recommend.
“I believe this policy is racial profiling,” one clinician said. “We seem to be applying a standard to Native Americans that isn’t applied to everybody else. We seem to be specifically picking out patients from Native communities as at-risk whether or not there are outbreaks at their specific pueblo or reservation.”
The Navajo Nation and several Pueblo tribes in New Mexico have recorded some of the highest per capita rates of COVID-19 infection in the nation. In response to the pandemic, the state has designated several counties as hot spots, including some that are home to tribes with large numbers of cases. But 10 of the ZIP codes on the Lovelace Pueblos List reviewed by New Mexico In Depth and ProPublica do not fall within those hot spot counties, nor do all tribes within those ZIP codes have a high rate of infection.
A Lovelace spokeswoman acknowledged screening patients by geography, but she would not confirm or deny the existence of a policy based on ZIP codes as described by staff. Lovelace, whose owner is Nashville, Tennessee-based Ardent Health Services, is Albuquerque’s largest privately owned hospital system.
“Part of our screening process includes identifying and testing patients who reside in high-risk areas such as nursing homes and regional hot spots of COVID-19 cases as recommended” by the Centers for Disease Control and Prevention, Lovelace spokeswoman Whitney Marquez wrote in a May 21 email.
But CDC guidelines for evaluating COVID-19 risk among pregnant patients do not mention geography or ZIP code of residence. The guidelines instead state that only pregnant patients with COVID-19 symptoms or recent high-risk contacts with COVID-19 patients should be treated as suspected cases.
“Regardless of pending test results, pregnant individuals who are asymptomatic at the time of admission and have no history of high-risk contact should not be considered to be suspected cases,” the CDC guidelines note.
In a follow-up email, Marquez said Lovelace’s residential geography screening applied to all patients: “Any patient admitted to the hospital for any reason from a designated hot spot region is tested for COVID-19 as a PUI (person under investigation), per CDC guidance.”
Marquez’s claim was disputed by several clinicians who work in the hospital. Only ZIP codes with significant populations of Native Americans appeared on the list. Patients who did not appear to be Native American were not subject to further screening based on the ZIP code list, they said.
The two other large hospitals in Albuquerque said they did not have a policy like the one described by clinicians at Lovelace. Mothers are not determined to be suspected COVID-19 cases based only on their home ZIP code or their appearance, officials at Presbyterian Hospital and the University of New Mexico Hospital said. Nor are asymptomatic mothers’ newborns separated for isolation pending test results at those other hospitals.
At Lovelace, only women who appear to be Native American were singled out for the additional examination, even if they showed no symptoms and had not been in contact with a person who has tested positive for the illness, clinicians said.
“This isn’t about where you live or if you live in a hot spot — it’s about whether someone thinks you look Native,” a clinician explained. “The only people for whom we’ve been told to check ZIP codes are patients who appear to be Native.”
Health care ethicists said the practice described by the clinicians raises troubling questions about bias, trust and informed patient consent.
Saskia Popescu, a senior infection prevention epidemiologist at George Mason University in Fairfax, Virginia, said such policy decisions wouldn’t make sense from an infection control or epidemiology perspective, and they could create or exacerbate trust issues toward health care among Native American patients.
“There is a lot of room for error and a lot of assumptions,” she noted. “You’re assuming their mailing address is where they live, and they’ve been exposed or not exposed based on where they live. It doesn’t match public health guidance.”
Popescu said she understood why the hospital might place someone under investigation if they came from high-risk settings like nursing homes, but she questioned how a case could be made for doing so based on a home ZIP code.
“I don’t really know how well you can make the case that if a mom is asymptomatic, if she is reporting no known exposures to sick people, how you can make the case for keeping that baby in the NICU, separated,” Popescu said.
The “Pueblos” List
A copy of the Lovelace list reviewed by New Mexico In Depth and ProPublica contains names of tribes next to each of 22 associated ZIP codes. Native Americans have a much higher COVID-19 rate overall than other populations in New Mexico, but most of the tribes on the list have a low prevalence of the illness. For instance, the ZIP code for Cochiti Pueblo had recorded zero cases as of Tuesday; the ZIP code for Picuris Pueblo had just one. An additional eight ZIP codes had 7 or fewer cases.
An internal communication reviewed by New Mexico In Depth and ProPublica suggests the intent was to include all Indian reservations on the ZIP code list. But if so, the list is inexplicably incomplete.
All 19 New Mexico Indian Pueblos and the Mescalero Apache tribe are named next to a ZIP code on the list, and the Navajo Nation is named next to five ZIP codes. (Several Pueblo Indian tribes share some ZIP codes.) But missing from the list are the Jicarilla Apache tribe and three outlying Navajo communities: To’hajiilee, Ramah and Alamo. Also missing are numerous ZIP codes in the northwest part of the state with significant Native populations — and COVID-19 outbreaks.
Marquez did not provide a list of “designated hot spot” regions or ZIP codes despite repeated requests, other than stating that New Mexico hot spot regions “have been determined by the New Mexico Department of Health.”
But the state defines COVID-19 geographic hot spots by county, not ZIP codes, spokesman David Morgan wrote in an email.
“Hospitals have the latitude to decide on who to test, but no testing decisions should be made arbitrarily solely on the basis of race or ethnicity,” State Epidemiologist Michael Landen wrote in an email Thursday.
Referring to a map on the state Health Department’s online COVID-19 dashboard, Human Services Department spokeswoman Jodi McGinnis Porter listed the counties of San Juan, McKinley, Sandoval, Bernalillo and Doña Ana as state-designated hot spots.
Twelve of the 22 ZIP codes, which are home to 14 tribes on the list, have very few positive COVID-19 cases, according to publicly available Health Department data. Those ZIP codes are shaded green, or have no color, on the state data portal, signifying they have the lowest number of cases compared with other areas.
In other words, the Pueblos List contains low-risk ZIP code areas that include particular tribes but do not include other ZIP codes falling within counties deemed to be COVID-19 hot spots by the state — even those that contain large swaths of the heavily hit Navajo Nation.
Separating Babies
Usually, Lovelace officials announce new policies by emailing links to staff. But that was not done in this case. Instead, supervisors read the policy aloud at the beginning of each shift, clinicians said.
The verbal readings didn’t mention that Native American mothers had to provide informed consent to be tested or separated from their newborn, a clinician said. That ambiguity appears to have caused confusion among staff.
One clinician said that Native American mothers were given an opportunity to decline separation from their infants.
But another clinician said some staff did not know patients had an option to do so for several weeks in April and May. “I don’t believe that patients were given an opportunity to decline testing or separation from their babies,” that clinician said. “This is a violation of informed consent, which is a foundation of modern health care.”
Marquez, the hospital spokeswoman, disputed the claim. She said that Lovelace provides all patients suspected or confirmed of having COVID-19 with information about the risks of remaining with their newborns. “Some patient[s] opt to keep their baby with them,” she said.
At least part of the issue lies in the type of tests done to detect COVID-19. Several Albuquerque hospitals, including Presbyterian and the University of New Mexico, use new rapid COVID-19 tests that yield results as quickly as two hours.
Lovelace, however, uses slower tests. Marquez would not explain why Lovelace did not deploy more rapid tests.
Nicolle L. Gonzales, a Navajo nurse midwife who worked at Lovelace for two years, first heard about the ZIP code policy from a colleague at the hospital last month.
Gonzales, who founded and directs the Changing Woman Initiative, a Native American women-led health collaborative in Santa Fe, New Mexico, said informed consent is an important concern for Native American patients
“You know, if you’re a Native person in an all-white setting, how do you speak up for yourself?” she asked. “There is no way to measure whether you’re being racially profiled or racially excluded from a norm [of treatment] that’s happening or not happening with others.”
Several Lovelace clinicians voiced concern about newborn separations and delayed breastfeeding, which can reduce the odds of successful breastfeeding later on, denying health benefits to mothers and their babies. For babies, breastfeeding can benefit immune system and brain development. Mothers who breastfeed have lower risks of breast cancer.
“Unless there is a life-threatening issue, we do not take babies from their moms,” a clinician explained. “It is standard practice and policy for babies to be immediately put on the mother, before and during the cutting of the umbilical cord, and to leave them there for at least an hour.”
For some health care ethicists, the policy described by the Lovelace clinicians recalled the federal government’s long, troubling history of separating Native American infants from their mothers. For others, it appeared uncomfortably similar to the disparate treatments of minorities in previous epidemics.
“This raises the specter of the HIV/AIDS pandemic in the 1980s,” said Barbara Gurr, associate professor of women’s, gender and sexuality studies at University of Connecticut and author of “Reproductive Justice: The Politics of Healthcare for Native American Women.” Gurr recalled a fear-driven bias against Haitian immigrants and gay men as HIV/AIDS spread. “Certain people were understood to be the bearers of the disease, in this kind of contaminating way, right? I think we’re running the risk of doing it again in the COVID pandemic.”
Ethicists also worried about the lingering effects of a policy based on ZIP codes. It could deter Native Americans from seeking hospital obstetric care, said Ann Mongoven, associate director of health care ethics at the Markkula Center for Applied Ethics at Santa Clara University in California.
“There’s a real concern that this policy could discourage people who absolutely should have hospital births,” she said.
Bryant Furlow is a reporter for New Mexico In Depth.
TeamHealth, a medical staffing firm owned by private-equity giant Blackstone, charges multiples more than the cost of ER care. All the money left over after covering costs goes to the company, not the doctors who treated the patients.
This article was first published on Friday, June 12, 2020 in ProPublica.
In 2017, TeamHealth, the nation's largest staffing firm for ER doctors, sued a small insurance company in Texas over a few million dollars of disputed bills.
Over 2 1/2 years of litigation, the case has provided a rare look inside TeamHealth's own operations at a time when the company, owned by private-equity giant Blackstone, is under scrutiny for soaking patients with surprise medical bills and cutting doctors' pay amid the coronavirus pandemic.
Hundreds of pages of tax returns, depositions and other filings in state court in Houston show how TeamHealth marks up medical bills in order to boost profits for investors. (Some of the court records were marked confidential but were available for download on the public docket; they were subsequently sealed.)
TeamHealth declined to provide an interview with any of its executives. In a statement for this story, the company says it's fighting for doctors against insurance companies that are trying to underpay: "We work hard to negotiate with insurance companies on behalf of patients even as they unilaterally cancel contracts and attempt to drive physician compensation downward."
But the Texas court records contradict TeamHealth's claims that the point of its aggressive pricing is to protect doctors' pay. In fact, none of the additional money that TeamHealth wrings out of a bill goes back to the doctor who treated the patient.
Instead, the court records show, all the profit goes to TeamHealth.
Anatomy of an ER Bill
Two TeamHealth affiliates in Texas billed 7.7 times more than their actual costs of paying for clinicians and support services. The bulk of the charges were discounted or written off. About 10% of the money actually collected went to corporate profits.
"These companies put a white coat on and cloak themselves in the goodwill we rightly have toward medical professionals, but in practice, they behave like almost any other private equity-backed firm: Their desire is to make profit," said Zack Cooper, a Yale professor of health policy and economics who has researched TeamHealth's billing practices and isn't involved in the Texas lawsuit.
"In the market for emergency medicine, where patients can't choose where they go in advance of care, there's a real opportunity to take advantage of patients, and I think we're seeing that that's almost precisely what TeamHealth is doing, and it's wildly lucrative for the firm itself and its private equity investors."
Some of TeamHealth's own physicians say they're uncomfortable with the company's business practices.
"As an emergency medicine physician, I have absolutely no idea to whom or how much is billed in my name. I have no idea what is collected in my name," said a doctor working for TeamHealth who isn't involved in the Texas lawsuit and spoke to ProPublica on the condition of anonymity because the company prohibits its doctors from speaking publicly without permission.
"This is not what I signed up for and this isn't what most other ER docs signed up for. I went into medicine to lessen suffering, but as I understand more clearly my role as an employee of TeamHealth, I realize that I'm unintentionally worsening some patients' suffering."
Most ER doctors aren't employees of the hospital where they work. Historically they belonged to doctors' practice groups. In recent years, wealthy private investors have bought out those practice groups and consolidated them into massive nationwide staffing firms like TeamHealth and its largest competitor, KKR-owned Envision Healthcare.
These takeovers have affected patients, too, because the groups have gotten into payment disputes with their insurers. As a result, patients can receive huge medical bills even when they pick a hospital within their insurance plan's network, because the individual doctor working for a contractor like TeamHealth could be out of network. This practice, known as surprise billing, caught the attention of lawmakers who have spent months working on legislation.
TeamHealth said surprise bills are "rare and unintended," but with millions of patients, it has happened tens of thousands of times. The company has called surprise billing a "source of contracting negotiating leverage" to demand higher payments from insurers.
"Underneath this are patients who may well be charged outrageous amounts of money, but that's just not a core consideration," said Joshua Sharfstein, a professor of health policy and management at the Johns Hopkins Bloomberg School of Public Health. "The situation a lot of patients feel like they're in is they're collateral in this financial tug of war."
TeamHealth and Envision Healthcare have poured millions into political ads attacking surprise billing legislation. The companies have said they want to settle out-of-network bills through arbitration instead of using average local rates, as some lawmakers have proposed.
As an alternative to going after patients themselves, TeamHealth said it sues insurers to demand higher payments for out-of-network charges. The company has filed 38 such lawsuits since 2018.
In the Texas case, two TeamHealth affiliates that provide doctors and nurses to emergency rooms in the Houston and El Paso areas sued a small insurance company called Molina Healthcare. TeamHealth identified almost 5,000 out-of-network claims in 2016 and 2017 for which it billed $6.6 million and Molina paid $760,000. TeamHealth sent a letter demanding that Molina pay $2.3 million. Molina's lawyers viewed this as an admission that the original bill was far higher than even TeamHealth thought was fair.
The actual costs of medical services are not a factor in setting TeamHealth's prices, according to the deposition of Kent Bristow, a TeamHealth executive in charge of revenue. At some locations, TeamHealth's prices were higher than those of 95% of other providers and eight or nine times more than what Medicare would pay, according to Bristow's deposition.
Most of the two TeamHealth affiliates' charges were never actually collected, according to their tax returns and a deposition of the accountant who prepared them. For the years 2016 and 2017, the two affiliates billed a combined $1.9 billion, the tax returns show. But $1.1 billion, or 58%, was discounted according to negotiated deals with insurers. An additional $528 million was written off as bad debt that would never get repaid. So the combined revenue that the two affiliates actually received across the two years was $274.5 million, or about 14% of the amount initially billed, according to the tax returns.
The amount that TeamHealth charges doesn't determine how much TeamHealth pays its doctors who perform those services, the company's chief financial officer, David Jones, said in an October 2019 deposition. Instead, the doctors are paid a base compensation plus an incentive tied to how much work they do (which is not the same as the price billed for their services). For the two TeamHealth affiliates in the Molina case in 2016 and 2017, the company paid doctors a total of $170.5 million, or 62% of the net revenue, according to the tax returns. Other health care providers such as nurse practitioners and scribes received another $48.4 million.
Multiple private-equity-backed staffing companies have cut hours for thousands of emergency room doctors, physician assistants and nurse practitioners. That means there are fewer medical workers at a time in hospitals and they are receiving less pay.
The administrative services that TeamHealth provides — such as billing, printing and malpractice insurance — added up to $29.5 million, according to the tax returns.
After covering all those expenses, the amount of money left over — commonly called profit — was $26.1 million, about 10% of the two affiliates' net revenue in 2016 and 2017. (The accounting method that TeamHealth uses for its tax returns is different from how it prepares financial statements regulated by the Securities and Exchange Commission. Under the latter method, the tax returns note a total of $36.8 million for the two affiliates in 2016 and 2017. Because of these accounting variations, it's impossible to compare the figures on the TeamHealth affiliates' tax returns to profits reported by publicly traded health care companies.)
The TeamHealth executive in charge of the two affiliates said he assumed the profit would be shared with the doctors who did the work. "It would most likely go back to the providers," the executive, Lance Williams, said in a deposition. Under further questioning, he admitted, "Yeah, I'm not sure."
In fact, the entire leftover $26.1 million went to TeamHealth's "management fee." The management fee is not a fixed rate but rather everything that remains after covering costs, regardless of the amount, according to the CFO's deposition. "If the revenues exceed the expenses, that is essentially the management fee," Jones said.
In other words, out of the $1.6 billion that was originally billed but not collected, any additional dollar that TeamHealth managed to recover would be passed through to the corporate parent. The doctors would not see it.
Jones said doctors benefit from increasing collections because their incentive-based pay is adjusted over time. In addition, Bristow said the management fee is not the same as profit because there may be additional expenses at the corporate level.
"The economic benefits created by these practices, any profit, if you will, ultimately flows up to the TeamHealth entity," Ron Luke, a health economics expert hired by Molina, said in a deposition.
To establish this business model, TeamHealth had to find a way to deal with long-standing state laws that were specifically designed to protect the medical profession from becoming beholden to profit motives. These laws, known as the corporate practice of medicine doctrine, require doctors to work for themselves or other doctors, not lay people or corporations like TeamHealth. Court records in the Molina case show how TeamHealth's lawyers use shell entities to avoid directly employing doctors.
"TeamHealth monetizes this process by unilaterally setting charges and then billing patients and payors for those amounts and retaining all of the profits of the enterprise," Robert McNamara, a former president of the American Academy of Emergency Medicine, wrote in a memo as an expert witness against TeamHealth in the lawsuit. "The fees generated, billed, and retained by TeamHealth reflect the type of overt commercialization of the medical profession that the prohibition on the [corporate practice of medicine] is designed to prevent."
TeamHealth said its business arrangements comply with all laws and no court or agency has ever found otherwise. "TeamHealth's clinicians are supported by a world-class operating team that provides them with comprehensive practice management services that allow our clinicians to focus on the practice of medicine," the company said. Envision Healthcare also said it follows all local, state and federal laws and regulations.
State laws against the corporate practice of medicine date as far back as the 19th century, as doctors strove to distinguish themselves from quacks and snake oil salesmen. According to the American Medical Association, the laws are meant to prevent profit motives from influencing medical judgments — a recognition that corporations' devotion to shareholder value shouldn't mix with doctors' Hippocratic oath.
Another way to think about it is: Practicing medicine requires a license, and only a real human being can possibly have the education, training and character qualifications that licensing boards require.
Courts have scrutinized these arrangements for decades. No judge has ever ruled that TeamHealth or Envision Healthcare specifically violate state licensing rules. But such allegations have repeatedly cropped up in lawsuits involving the companies, some of which settled favorably to the other side, according to McNamara, who was consulted on many of the cases.
After the Blackstone Group acquired one of the nation's largest physician staffing firms in 2017, low-income patients faced far more aggressive debt collection lawsuits. They only stopped after ProPublica and MLK50 asked about it.
TeamHealth and Envision have themselves acknowledged that they operate on questionable legal ground. During periods when the companies were publicly traded, their investor disclosures highlighted the controversy surrounding their compliance with state licensing regimes. TeamHealth and Envision said they believed their business models were legal but recognized that prosecutors, regulators and judges could conclude otherwise. TeamHealth specifically cited "laws prohibiting general business corporations, such as us, from practicing medicine."
"While we believe that our operations and arrangements comply substantially with existing applicable laws relating to the corporate practice of medicine and fee splitting, we cannot assure you that our existing contractual arrangements, including restrictive covenant agreements with physicians, professional corporations and hospitals, will not be successfully challenged in certain states as unenforceable or as constituting the unlicensed practice of medicine or prohibited fee splitting," the company said in its 2015 annual report. "In this event, we could be subject to adverse judicial or administrative interpretations or to civil or criminal penalties, our contracts could be found to be legally invalid and unenforceable or we could be required to restructure our contractual arrangements with our affiliated provider groups."
TeamHealth says the laws are outdated and unnecessary — as one of the company's senior lawyers called it in a deposition, "this arcane law we call the corporate practice of medicine that nobody needs."
Not all states have such laws. In Florida, for instance, TeamHealth employs doctors directly. In states that have laws against the corporate practice of medicine, TeamHealth has a workaround depending on the specific requirements in that state. Here's how it works for the affiliates involved in the Molina litigation, just two out of hundreds of equivalent arrangements around the country.
Doctors working for TeamHealth are technically independent contractors to a "professional association," or P.A. In order to comply with Texas law, the professional association is owned by a licensed physician. The professional association then contracts with TeamHealth subsidiaries to provide administrative services — such as billing, payroll and malpractice insurance — in exchange for payment.
These professional associations, however, are hardly independent. They're "owned" by an executive at TeamHealth, and the company has the power to remove and replace him at any time. For the two professional associations involved in the Molina case, when a new executive took over as "owner" in 2019, he said in a deposition that he couldn't remember how he "bought" the entities or if he ever paid anyone the $2 nominal price of their shares.
"Everything about your right to own, operate, and manage ACS and EST [the two professional associations] is dependent upon you staying in the good graces of the TeamHealth organization, correct?" Molina's lawyer asked in the deposition.
"Correct," the owner/executive, Lance Williams, said.
"And if you were fired for any reason, you would lose ownership of ACS and EST, lose the right to manage ACS and EST, correct?"
"Correct."
Williams also said there's no "black and white" separation between clinical and financial issues.
In sum, the contract between TeamHealth and the professional associations gives investors more control of the business than doctors, according to Chuck Pine, a financial investigator who specializes in examining shell companies to determine the real beneficial owners. Pine isn't involved in the Molina litigation.
Molina's lawyers called the arrangement "a sham to permit TeamHealth to unlawfully practice medicine by allowing it to in effect employ physicians in violation of state law."
TeamHealth countered that whether or not Molina's claims are right, they aren't enforceable through private litigation; only the state's attorney general could prosecute a corporation for practicing medicine without a license.
The judge rejected Molina's claims in an order that didn't explain her rationale. Other parts of the case are still pending.
TeamHealth has used the same argument to defeat other lawsuits. It puts opponents in a Catch-22: State licensing boards have no control over a corporation that might be practicing medicine without a license because the boards don't license corporations. The boards could theoretically punish the "owners" of the professional associations, but those doctors are not always licensed in the same state as the practice, and TeamHealth could always replace them with someone else.
The Texas attorney general's office didn't respond to requests for comment. McNamara said he's brought several cases to the attention of various state attorneys general, to no avail.
In scrambling to buy protective equipment for the coronavirus pandemic, federal agencies purchased up to $11 million worth of Chinese-made masks, often with little attention to manufacturing details or rapidly evolving regulatory guidance about safety or quality, a ProPublica review shows.
Some agencies cannot say who made their masks at a time when thousands of foreign-made respirators appeared on the market, some falsely claiming approval or certification by the Food and Drug Administration. Some agencies bought the masks, known as KN95s, from companies that share a U.S. representative with another firm recently accused of fraud by the Justice Department.
The contracts reflect the intense pressure federal agencies were under to procure protective equipment as the pandemic surfaced and rapidly spread in the U.S. Now, some experts worry that the products could remain in circulation long past the crisis and be used by unsuspecting federal employees who believe they have legitimate respirator masks.
Agencies have relaxed procurement standards, including granting many contracts without competitive bidding, and have been tripped up by shifting FDA standards, the flood of foreign companies entering the U.S. market and a limited domestic supply of respirators made for medical use.
"I'm so glad we didn't get involved in this KN95 market," said Andy Mitchell, a vice president at Mallory Safety and Supply, which supplies N95 masks. "This isn't right what's happening here."
ProPublica reported last month that the Indian Health Service had purchased $3 million of Chinese-made respirator masks from a company started by a former White House official, and that the masks did not meet FDA standards. A House of Representatives committee plansto hold a hearing on Thursday examining the IHS' response to the COVID-19 pandemic.
In scrambling to buy protective equipment for the coronavirus pandemic, federal agencies purchased up to $11 million worth of Chinese-made masks, often with little attention to manufacturing details or rapidly evolving regulatory guidance about safety or quality, a ProPublica review shows.
Some agencies cannot say who made their masks at a time when thousands of foreign-made respirators appeared on the market, some falsely claiming approval or certification by the Food and Drug Administration. Some agencies bought the masks, known as KN95s, from companies that share a U.S. representative with another firm recently accused of fraud by the Justice Department.
The contracts reflect the intense pressure federal agencies were under to procure protective equipment as the pandemic surfaced and rapidly spread in the U.S. Now, some experts worry that the products could remain in circulation long past the crisis and be used by unsuspecting federal employees who believe they have legitimate respirator masks.
Agencies have relaxed procurement standards, including granting many contracts without competitive bidding, and have been tripped up by shifting FDA standards, the flood of foreign companies entering the U.S. market and a limited domestic supply of respirators made for medical use.
"I'm so glad we didn't get involved in this KN95 market," said Andy Mitchell, a vice president at Mallory Safety and Supply, which supplies N95 masks. "This isn't right what's happening here."
ProPublica reported last month that the Indian Health Service had purchased $3 million of Chinese-made respirator masks from a company started by a former White House official, and that the masks did not meet FDA standards. A House of Representatives committeeplans to hold a hearing on Thursday examining the IHS' response to the COVID-19 pandemic.
ProPublica reviewed 21 contracts awarded by 11 federal agencies that specifically mentioned procuring KN95 masks, a Chinese version of N95 respirator masks. Five agencies — the Bureau of Prisons, the Department of Veterans Affairs, the U.S. Marshals Service, the U.S. Mint and the U.S. Forest Service — could not say who manufactured their masks or did not respond to questions. The total spent on the 21 contracts was more than $11 million, but some of the deals also involved other items such as ear loop face masks and hand sanitizer.
Foreign-made masks have come under increasing scrutiny from federal regulators. The FDA issued an emergency use authorization for some Chinese-made masks in health care settings in April, but it narrowed the authorization after some masks were found to let through far more particles than advertised.
In many cases, the agencies buying the masks are not directly involved in health care provision, and are thus beyond the scope of the FDA authorization, although the Indian Health Service and the National Institutes of Health were among the purchasers. Some agencies told ProPublica they would use the masks they purchased only in nonmedical settings, a recognition of the lesser protection they may provide.
But experts said the purchase of such products at all still poses a risk to employees. Dr. Meghan Dierks, a Harvard Medical School professor who previously worked at the FDA on medical device shortage issues, said she is concerned about "all of these potentially inferior products remaining in circulation, remaining on shelves" after the current crisis passes, whether used in medical or nonmedical settings.
"If you're in charge of procuring a product that you expect to confer some level of safety or protection to your workers, there's responsibility there for knowing what's the basic performance criteria and what's the regulatory authority in the United States that monitors this," Dierks said.
The FDA tightened its April emergency rules a month later, after testing by the Centers for Disease Control and Prevention revealed that some Chinese masks let in too many fine particles. Dozens of Chinese manufacturers that had initially appeared on an approved FDA list were removed, tripping up buyers who had purchased masks just weeks earlier.
Dr. Suzanne Schwartz, deputy director of the Office of Strategic Partnerships and Technology Innovation at the FDA's Center for Devices and Radiological Health, said the agency has "encouraged importers and distributors to do their own due diligence and take the appropriate steps to verify the product's authenticity prior to importing, particularly those products not authorized by the FDA."
Typically, the FDA moves slowly when issuing rules and regulations, but it quickened its pace during the pandemic, said Michael Abrams, a co-founder of Numerof & Associates, which advises hospitals, pharmaceutical companies, financial institutions and others on health care issues.
"They've been forced to make decisions that they sometimes need to go back on," he said. "Certainly that makes it more difficult for anyone who's relying on what these regulatory entities have to say."
That includes the rest of the federal government. On May 1, the Department of the Interior purchased $114,400 worth of KN95 masks from Red River Resources LLC, a California vendor. The manufacturer was Guangdong ZhiZhen Biological Medicine Co. Ltd., according to the agency.
"At the time of purchase, the respirators were on the list of approved products," Andrea Antunes, an Interior spokeswoman, wrote in an email. "Subsequently, they were removed from the approved list and will not be purchased again."
Antunes did not respond to questions about what the agency would do with the purchased masks.
The website of Guangdong ZhiZhen Biological Medicine displays a mask it labeled "FDA approved FFP2 KN95 Mask." Phone calls and emails sent to CCTC Service Inc., the company's U.S.-based agent, were not returned.
CCTC, based in Delaware, is named as the representative for nearly 1,600 devices listed with the FDA this year, including KN95 masks manufactured by two firms used by Zach Fuentes, a former White House deputy chief of staff, to fulfill the contract with the Indian Health Service.
In a federal court complaint filed June 5 against another Chinese mask manufacturer, King Year Printing and Packaging Co. Ltd., by the Justice Department, an FDA special agent said that there is "probable cause to believe CCTC is a fictitious corporation." FDA records list a residential address for the company, the complaint said, and the house's occupant and owners said they had no knowledge of or connection to CCTC. The Wall Street Journal first reported the federal complaint against King Year.
In the complaint, the government alleges that King Year falsely labeled its respirators with the logo of the National Institute for Occupational Safety and Health, which conducts medical device testing, and included "a test report showing compliance with the N95 standard despite the respirators not meeting the minimum standard for N95 respirators."
Since a national emergency was declared in the U.S. on March 13, more than 3,600 Chinese-made products categorized as "surgical respirators" have been listed with the FDA, a ProPublica analysis of government data shows. In all of 2019, the total number of surgical respirators registered with the FDA was five.
"There are a lot of people producing face masks who are not necessarily reputable suppliers or historic suppliers of this product," said Phil Farinelli, vice president at Government Scientific Source, a Northern Virginia supplier that sold KN95s to the National Institutes for Health. "I probably get 10 emails a day from people trying to sell me face masks from China."
The NIH, the agency responsible for public health research, signed a separate contract worth nearly $700,000 for respirator masks in March with Missouri-based Phoenix Textile Corp., federal data shows.
The original contract was for N95 masks, the agency said in a statement to ProPublica. But because those were unavailable, Phoenix Textile proposed KN95s as an alternative.
"When NIH received the order and learned that the masks were not FDA-approved, NIH tested the products using the FDA standards for respirators and the product had failed," the agency said.
NIH requested a refund for the masks it had already received, will not pay for any more and plans to return the masks to Phoenix Textile. Executives with Phoenix Textile did not respond to an email and voicemail requesting comment.
Tests of some imported respirator masks are finding that they often do not provide the level of protection they advertise. Evan Floyd, a professor at the University of Oklahoma's Health Sciences Center, has been testing the filtration capability of KN95 masks purchased by the state of Oklahoma and private businesses.
Around one-third of the approximately 70 brands he has tested thus far do not meet the 95% filtration standard, Floyd said.
Dr. John Howard, the director of NIOSH, said in an FDA webinar on Tuesday that the agency recently had tested over 130 international respirator models and found that more than half were "substandard."
The Indian Health Service purchased 4,000 KN95 masks manufactured by a Chinese firm, ZhangJiaGang ShineYa Sanitary Products Co. Ltd., in an April 9 contract, an IHS spokesman said. The contract is separate from the Fuentes deal. The masks were sent to the IHS office in Bemidji, Minnesota, which serves tribes in Illinois, Indiana, Michigan, Minnesota and Wisconsin.
Half of the masks are still in the Bemidji area office and "will not be distributed to health care personnel," an IHS spokesman said. The other 2,000 masks are being used by IHS environmental health officers "and are being used in non-health care settings," he said.
The company's listed U.S. agent, John Flair, did not respond to a request for comment. The U.S. vendor that supplied IHS with the masks, California-based West Coast Business Products Inc., also did not respond.
The U.S. Marshals Service purchased $77,500 worth of KN95 masks in April from Knock-Out Specialties, a Texas firm that recently began selling PPE. The masks were made in China and "the products or vendors have been registered or certified by FDA," said Drew J. Wade, a Marshals Service spokesman, in an email. They are being used in "non-medical, law enforcement situations."
But "registration" with the FDA does not mean that the FDA approves the manufacturer or its products, a fact prominently mentioned on the FDA website. FDA's registration and listing database serves merely to provide a public, central listing of companies that may sell certain medical equipment.
When asked to clarify if the masks were just registered with the FDA or had some further certification, Wade responded: "I'm not sure I can sufficiently answer that question at this time. USMS holds certificates that appeared to denote some sort of FDA approval."
John Bottone, the owner of Knock-Out Specialties, did not respond to a phone call and email seeking comment.
One agency that kept up with the FDA's shifting rules was the Department of Energy's National Nuclear Security Administration. In a contractwith a Georgia-based vendor, American Dream Builders, the agency purchased over $400,000 worth of KN95 masks. An NNSA spokeswoman identified the masks' manufacturer as "Guangzhou Powecom Labor Insurance Supplies Company LTD," which does appear on the FDA-approved list.
Another manufacturer was originally supposed to fulfill the order, spokeswoman Kate Hewitt said. But when the FDA updated its criteria and the original manufacturer fell off the approved list, the purchase order for the mask contract was modified on May 18 to change to "an FDA-approved manufacturer," Hewitt said.
The Federal Emergency Management Agency also appears to have purchased KN95 masks from Guangzhou Powecom, although FEMA provided ProPublica with a slightly different manufacturer name when asked abouta $4 million contract for KN95 masks it signed in May.
FEMA's vendor was Osirius Group, an automotive manufacturing firm based in Birmingham, Michigan. Timothy Smith, Osirius Group's CEO, said in an email that "they are the same company." Osirius' first shipment to FEMA was set to arrive this week.
Guangzhou Powecom and other firms with the FDA's endorsement are being inundated with orders, Smith said.
"The FDA list has become a bible of sorts and any one on that list gets overrun," he said via email. He said his firm has been doing business in China since 1992.
Our country's long history of structural racism stands at the center of why police brutality, COVID-19 and the opioid crisis are disproportionately killing black Americans, including in Chicago.
This article was first published on Friday, June 5, 2020 in ProPublica.
We had planned to write this week’s newsletter about a story we published examining a sharp increase in opioid overdoses in Cook County at the same time the death toll from the coronavirus pandemic continues to rise here. But the killing of George Floyd in Minneapolis and subsequent civil unrest have us thinking about what those seemingly separate crises have in common.
Opioid-related deaths, police brutality and COVID-19 are all disproportionately killing black Americans, including in Chicago.
That brutal trend became clear as we began reporting on overdoses after getting a tip that the number of opioid-related fatalities was up this year. We analyzed death records from the Cook County Medical Examiner’s Office and found a stunning increase: More than twice as many people have died or are suspected to have died from opioids so far this year than this time last year.
As with so many stories we’ve both reported, it was impossible to not see the disparities. More than half of the dead were African Americans, many of them from Chicago’s West or South sides.
Kathleen Kane-Willis, a researcher with the Chicago Urban League who has written about the impact of opioids on African Americans, told us black drug users have higher overdose mortality rates for many of the same reasons that they’re more likely to die from COVID-19: higher rates of poverty, less access to effective medical treatment, more underlying health conditions.
The underlying causes driving Chicago’s opioid crisis and COVID-19 are sadly relevant to the national conversations we’re all having now about police violence and racial inequity.
Our colleague Mick Dumke likes to remind us that police brutality and disparate enforcement in black communities are symptoms of broader inequities and white supremacy. Our country’s long history of structural racism — and the segregation, disinvestment, loss of job opportunities and chronic stress that come with it — stands at the center.
This is what we’re thinking about as we consider Floyd’s death and the ensuing protests, and decide on a reporting path for ourselves as a news organization. Here are some of the recent stories we’re reading that are helping us get to the heart of these issues and offer context on how we got to this point.
This week, WBEZ and City Bureau partnered to report on modern-day redlining, as banks have invested more in a single white Chicago neighborhood than all of the city’s black neighborhoods combined.
Chicago magazine had an interesting piece on how one elected official in suburban Evanston was able to do something that had been a political non-starter for decades: pass legislation approving reparations for African Americans.
Last fall, our colleague Logan Jaffewrote about so-called sundown towns, focusing on one community in southern Illinois with a lengthy history of racism where many black people continue to feel unwelcome.
Black lives are being lost to COVID-19 at twice the rate of others. For protesters we talked to, that’s one more reason to be on the street. “If it’s not police beating us up, it’s us dying in a hospital from the pandemic,” one said.
This article was first published on Friday, June 5, 2020 in ProPublica.
WASHINGTON — On Tuesday, when he decided to protest, William Smith, 27, used a red marker to write a message on the back of a flattened cardboard box: “Kill Racism, Not Me.”
As he stood alone, somber, he thought about George Floyd, a fellow black man whom he’d watched die on video as a Minneapolis cop kneeled on his neck eight days earlier. “Seeing the life leave his body was finally the last straw that broke the camel’s back for me,” he said.
But he also thought about people he knew, a handful of them, who died after catching the new coronavirus. “They were living in impoverished areas. Couldn’t get proper treatment. Lived in crowded conditions, so social distancing was hard to do. And they were still forced to go to work and be put in harm’s way.”
When speaking out against the loss of black lives, it is tough to separate those who die at the hands of police from those who die in a pandemic that has laid bare the structural racism baked into the American health system. Floyd himself had tested positive for the coronavirus. Eighteen black protesters interviewed by ProPublica were well aware that black lives were being lost to the virus at more than twice the rate of others, and that societal barriers have compounded for generations to put them at higher risk.
It was fueling their desire to protest and their anxiety about joining the crowd. But they flocked to the White House on Tuesday afternoon, one day after peaceful protesters there were tear-gassed so that President Donald Trump could hold up a bible for a photo op at St. John’s Episcopal Church. There were tanks on the streets, along with a battalion of federal agents, military troops and police. Many of the protesters said they were willing to sacrifice their bodies, either to violence or the virus, to be heard.
In front of the White House stood Caleb Jordan, who turns 21 on Saturday. He showed up with an overstuffed backpack to make sure his 62-year-old grandmother, Carolyn Jackson, had enough water to drink and a hoodie to protect her arms in case of violence. “I don’t know what I would do if anything happened to her,” he said. Some people had on masks. Some did not. Some pulled their masks down to talk or breathe. “I’m not comfortable with that,” he said. She’s got a chronic lung condition, and he had been so worried about her catching the coronavirus in the past few months that he wouldn’t hug her. But then she mentioned that she drove by the protests on Sunday, and immediately he asked, “Why didn’t you take me?”
He had been losing sleep over what he was seeing in social media and on TV, having nightmares in which he was fighting a “real-Jim-Crow-looking white guy in a white button-down shirt, black tie, sleeves rolled up.” His mom told him he was fighting racism. “It’s like obstacle after obstacle,” he said. “If it’s not police beating us up, it’s us dying in a hospital from the pandemic. I’m tired of being tired. I’m so tired, I can’t sleep.” It was something he continued thinking about until he couldn’t help himself, sending a text at 3 a.m. asking his grandmother if they could attend together. “I thought about it and said, ‘This is a teachable moment,’ ” she recalled.
So Jackson took the day off from her job as an accountant at a hospice organization and put on some peace sign earrings and a T-shirt from the 20th anniversary of the Million Man March. On the car ride into the city, her grandson asked about her struggles with race. She explained what it’s like being a professional black woman with over 30 years experience who still feels overlooked for opportunities because of questions about her qualifications. Her awareness of being treated differently dates back to how her white paternal grandmother favored her lighter-skinned cousins. She found solace in her black maternal grandmother, who would comb her hair while she sat between her legs. Jackson wants her grandson to feel that kind of comfort from her.
That desire extends to her mission to help the black community understand palliative care is an option that can offer dignity and support at the end of life. “Because when people hear hospice, their hands go up and they say, ‘I don’t want to hear it.’” She’s also heard that resistance when it comes to getting tested for the coronavirus; she has gotten tested twice and plans to get tested again. She feared being exposed on Tuesday, but being here with her grandson was too important to miss. “We internalized a lot with my generation,” she said, “but I think it’s important for him to see this.”
N.W.A.’s “Fuck Tha Police” blared from a nearby speaker outside St. John’s Episcopal Church until an interfaith group of men and women bowed their heads and began to pray. Among them was Timothy Freeman, pastor at Trinity African Methodist Episcopal Zion Church, who wore a brightly colored kente cloth-inspired mask, its vibrant yellows and reds standing in stark contrast to his ministerial black suit and white clerical collar.
Freeman, 42, knows eight people who have been diagnosed with the virus; one died. For two weeks, a sick friend had a fever and could barely move from fatigue but refused to get tested, running through all the scenarios of what might happen if he had it: What if he wound up isolated in an ICU with no one to advocate at his bedside? Another sick friend worried an ambulance would take him to a hospital that he didn’t trust. These conversations, the pastor said, are always infused with an awareness of the medical system’s record of neglect and abuse of black people, from dismissing their pain to using their bodies for research without consent. The virus has forced this all top of mind.
A licensed occupational therapist for 19 years who spent a decade managing a skilled rehab facility, Freeman said he has seen racial disparities in health care firsthand and that access to adequate insurance coverage is crucial. “I have seen diagnostic tests not performed … and hospitalizations cut extremely short — or not happen at all — because of insurance.” COVID-19 is affecting black and brown people in disproportionate numbers, “and not just because we’re black and brown, but because of the social and economic conditions people are forced to live in,” he said.
“All of it comes together. What happened with George Floyd publicized to the world the experience that we live,” he said. “It’s a conglomeration of everything.”
A block away from the prayer group, Elizabeth Tsehai, 53, drove slowly in her BMW SUV, honking her horn, as federal agents in riot gear began to march past the crowd just behind her. She had a Black Lives Matter T-shirt displayed on the dashboard and a bike rack on the top of her car that she joked made her look like the “caricature of a soccer mom.”
She stopped her car on the road and remained there as protesters to her left took a knee. There was some heckling from the crowd but no one was in anybody’s face. A Secret Service agent warned her to move. Her response: “Arrest me. I can’t breathe!” Agents then pulled her from her car and to the ground and handcuffed her. “I didn’t resist because I know they just arrest you for resisting arrest,” she said. “But the minute they pulled me up on my feet, I was talking all kinds of trash.”
Her car was left unlocked in the middle of the street, where it was protected by protesters. She was questioned and released. She said agents told her they were afraid she was going to hit protesters because people have been using their cars as weapons. They told her to move it and leave. The Secret Service did not respond to questions about this incident.
“Ordinarily, I would not get involved,” Tsehai said. But George Floyd’s death was enraging, as were “all of the things that came before it.”
All of the things.
How a white nurse looked her up and down when she arrived at the hospital to give birth to her son and sneered, “Can we help you?”
How her brothers, who live in Minneapolis, recount being pulled over by police for driving while black.
How a black man couldn’t watch birds in Central Park last week without having the police called on him.
“The pandemic is hitting black people hard and exposing these structural inequalities,” she said. “Then on top of that, you get Amy Cooper … weaponizing her white privilege at a time when he might end up in jail, where infection is rife.
“But when they manhandled protesters who were peaceful, that was a bridge too far,” said Tsehai, who grew up in Ethiopia under an authoritarian regime during a period known as Red Terror. She didn’t know life without a curfew until she moved to the United States to attend Georgetown University 35 years ago.
“Moments like this are quite unusual,” she said. They can also inspire change, a message she shared with her children, ages 12 and 14, when recounting her ordeal with them. “I want these children to live in a different world. It’s not enough to read about it and get outraged and talk about it at the dinner table. Silence makes you complicit.”
Rural Oklahoma communities are desperate to protect their vulnerable hospitals and hand the reins to management companies that say they're turnaround experts. Instead some companies failed the hospitals, bled them dry and expedited their demise.
This article was first published on Thursday, June 4, 2020 in ProPublica.
By Brianna Bailey, The Frontier
It was the sort of miracle cure that the board of a rural Oklahoma hospital on the verge of closure had dreamed about: A newly formed management company promised access to wealthy investors eager to infuse millions of dollars.
The company, Alliance Health Southwest Oklahoma, secured an up to $1 million annual contract in July 2017 to manage the Mangum Regional Medical Center after agreeing to provide all necessary financial resources until the 18-bed hospital brought in enough money from patient services to pay its own bills.
But about a month later, hospital board members were summoned to an emergency meeting.
Early one morning in August 2017, Alliance's CEO Frank Avignone told hospital board members that his company, which had boasted of access to up to $255 million from well-heeled 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. If board members didn't agree, paying nurses and other health care workers would be a "slight miracle," Avignone said, according to an audio recording of the meeting that was obtained by The Frontier and ProPublica.
"There were supposed to be so many millions available," Staci Goode, chairwoman of the hospital board, said during the meeting, asking what happened to the promises made just weeks earlier.
Investors needed to see an improvement in the hospital's finances before committing their money, Avignone replied.
"We're in a bad spot right now with our investors just like you are," he said. "We're out over our skis a little bit."
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, according to interviews with town leaders and court records obtained by The Frontier and ProPublica.
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.
An investigation by The Frontier and ProPublica found that some private management companies hired to save the most vulnerable hospitals in rural Oklahoma have instead failed them, bled them dry and expedited their demise.
It starts like this: Rural communities desperate to protect their hospitals hand the reins to management companies that portray themselves as turnaround experts and vow to invest millions of dollars.
Those companies are often hired without background checks or any requirement that they have experience running hospitals. They operate under nearly nonexistent state and local regulations with little oversight from volunteer governing boards. After they extract hefty monthly fees, they sometimes cut ties and leave rural communities scrambling.
In Mangum, a prairie town of 2,800 people in southwestern Oklahoma, the hospital is fighting several ongoing lawsuits stemming from Alliance's management. It also has filed its own litigation, accusing Alliance of fraud and of siphoning away millions of dollars from the hospital. Alliance disputes the allegations and is countersuing to collect $1 million in management fees it claims the hospital still owes for its services.
Leaders from the Oklahoma towns of Seiling and Pauls Valley, who relied on Alliance's assurances that it could revive their hospitals, similarly accuse the company of making lofty promises and leaving them deeper in debt.
Alliance's failure to produce promised investments for the Pauls Valley Regional Medical Center made it harder for the hospital to escape the debt it had incurred under its previous management company, said Jocelyn Rushing, the town's mayor. The hospital closed in October 2018 under Alliance's management.
"What I can tell you is that Frank is a smooth talker, and he definitely knows how to play the media to his side," Rushing said, referring to Avignone. "And he left Pauls Valley high and dry."
Avignone denies wrongdoing. He said leaders in Mangum and other small towns have no experience running hospitals and don't understand enough about the industry to appreciate the work done by his management company.
"At the end of the day, we did save the hospital but, you know, no good deed goes unpunished," Avignone said of Mangum. "The local municipality decided they didn't want us and called us crooks and ran us out of town."
In the end, Avignone said, his company did the best it could given the economic pressures facing rural hospitals.
"Vulture Capitalists"
Across the country, rural hospitals struggle under crushing financial realities. They are more dependent on Medicare and Medicaid, which generally provide lower reimbursement rates than private insurance companies. They also treat higher percentages of uninsured patients and struggle to recruit doctors and nurses. And they have millions of dollars in costs for basic maintenance and repairs that are often deferred for years because of razor-thin profit margins.
A study released in February by the Chartis Center for Rural Health estimates that about 450 rural hospitals across the country are vulnerable to closure.
The challenges are magnified in states like Oklahoma that have opted against expanding Medicaid for the working poor, as encouraged under the Affordable Care Act, hospital advocates and researchers say.
On June 30, Oklahoma voters will decide whether to expand Medicaid through a constitutional amendment. The state's Republican leadership has previously blocked expansion, but a petition drive supported by the Oklahoma Hospital Association landed the question on the primary ballot.
"Clearly, had these hospitals not been in such a precarious situation, these companies wouldn't even be in the picture," said Patti Davis, president of the hospital association.
Last year, the hospital association released guidance urging local officials to carefully assess the financial standing of management companies by requesting records that include tax returns and audited financial statements. The records, which offer a glimpse into a company's liabilities and assets, are not required under state law, but the association said refusing to produce them can be a red flag.
The guidance came as multiple rural hospitals struggled under the control of Missouri-based EmpowerHMS. One Oklahoma hospital run by the company closed in 2018 and four more entered bankruptcy in 2019.
Empower had boasted of its ability to increase revenue by entering into deals with outside toxicology laboratories that allowed flailing rural hospitals to bill at higher rates for blood and urine tests performed elsewhere. But insurance companies soon flagged ballooning laboratory bills as possible fraud and the U.S. Department of Justice launched a criminal investigation. It's not clear if the investigation is still ongoing. Empower has denied allegations of wrongdoing in response to a federal lawsuit filed by insurance companies.
The vast financial challenges facing rural hospitals can make it difficult to determine how much strain resulted from the management companies. A recent federal report found that hospitals owned by for-profit companies have a particularly high closure rate. Such hospitals represented 11% of rural medical facilities but 36% of closures from 2013 through 2017, according to a 2018 report from the U.S. Government Accountability Office.
Struggling hospitals can be good business for companies seeking to turn a quick profit, said Tom Getzen, professor emeritus of risk, insurance and health management at Temple University.
"What you've got is management companies that are vulture capitalists," Getzen said. "These are organizations that know that entities that are in difficulty probably would never be profitable but can have their assets stripped out and can therefore make money. It's important to recognize that troubled company management is actually a very profitable business."
As the coronavirus threatens to further hamstring rural hospitals, forcing them to cancel lucrative elective procedures and purchase additional medical supplies, concerns grow that more communities will fall prey to promises of magical turnarounds.
"You have these communities that are desperate, and they are willing to sign a deal with the devil," said Casey Murdock, a Republican state senator whose district includes nine of Oklahoma's more than 80 rural hospitals. "These companies strip the hospital down, make all they can make and move on to the next one."
"The Company Was Founded on a 1 a.m. Phone Call"
Alliance Health Southwest Oklahoma formed four days before the company signed a contract to manage the Mangum hospital.
In fact, Avignone, a co-owner of Praxeo Health, a Dallas-based laboratory services company, had never run a hospital.
But with help from Larry Troxell, a well-known Oklahoma hospital manager, as well as a company providing surgery services in Mangum, Alliance persuaded board members that it could provide a breadth of financial resources that no other company could.
"The company was founded on a 1 a.m. phone call," said Avignone, adding that a former business partner called to tell him the hospital would close the following day without assistance. Avignone didn't name the former partner.
This was not Mangum's first experience with a management company. In June 2017, right before it struck the deal with Alliance, the town had wrested control of the hospital from Little River Healthcare, a now-defunct company that filed for bankruptcy the following year.
In order to take over the operating license for the hospital, the governing board, which at the time was Mangum's city commission, had to absorb $2.1 million of debt accrued by the previous operators.
Town leaders didn't have money to run the hospital, but they knew that its closure would leave about 80 employees without jobs. Residents would have to travel at least 25 miles to get to the nearest emergency room if the hospital closed.
That's when they turned to Avignone.
Two months before the town took charge of the hospital, Troxell reached out to Avignone for help. The two had met in 2014 at Medical University of South Carolina while pursuing doctoral degrees in health administration. According to Troxell, who served as the interim CEO for the Mangum hospital during the transition, Avignone called him two years later to say he had a group of investors interested in buying hospitals.
Troxell was an investor in Greenfield Resources, a company that claimed to have developed new technology to treat wastewater. Greenfield, Praxeo Health and Alliance Management Group, owned by Darrell Parke, later partnered to form Alliance Health Southwest Oklahoma. Troxell said that while he invested in Greenfield, he had no ownership stake in any of the companies.
After Alliance was hired, it quickly became apparent that Avignone didn't have the money he had promised, said Troxell, who remained at the Mangum hospital working as an administrator. He said he went without pay in Mangum and used his personal credit card to purchase supplies.
Alliance did not respond to questions about his claim.
"The only thing I can tell you about Frank is he misled me. He misled everybody," said Troxell, now the CEO of a rural hospital in Texas. "And I believe that he had partners that had money that could bring it to the table at Mangum. And he didn't do it."
"I'm So Angry"
Tammy Sandifer never had a hard time trusting people until she accepted a job as a lab technician at the Pauls Valley Regional Medical Center, about 60 miles south of Oklahoma City.
In November 2017, Sandifer moved her family from Mississippi to Oklahoma on the assurance that the town's 64-bed hospital was financially stable.
Wearing a crisp white lab coat and medical scrubs, Avignone, who isn't a doctor, rubbed his face as he announced that the hospital was immediately closing its doors.
"You can only live on borrowed time for so long," Avignone told employees.
The hospital closed on Oct. 12, 2018. Five days later, Sandifer was diagnosed with cancer.
A mother of two and the primary breadwinner in her family, Sandifer had learned just weeks earlier that she didn't have health insurance.
The hospital had been deducting $566 from Sandifer's paycheck for health benefits for her family of four. An additional $70 a month was pulled from her paycheck for a supplemental cancer policy.
NewLight Healthcare, a different management company, was running the hospital when Sandifer was hired. It had missed payments for the self-funded employee health insurance plan, even as money continued to be deducted from workers' paychecks, according to interviews and a May 2018 letter from the hospital's health benefits administrator.
Alliance Health Southwest Oklahoma took charge of the hospital in July 2018. The company made some payments but never caught up.
The money to pay for insurance just wasn't available because "the previous manager let all of that lapse," Avignone said, referring to NewLight.
NewLight Healthcare did not answer detailed questions from The Frontier and ProPublica about the lapse in insurance payments at Pauls Valley, but it said in a statement that the company "consistently worked alongside community leaders, providers, state associations, and other leaders to attempt to create new models and programs that will improve the business climate for rural hospitals."
The company added that rural hospitals will continue suffering until government leaders provide additional funding.
Under Alliance, the hospital also stopped paying payroll taxes, according to city leaders who provided The Frontier and ProPublica with a spreadsheet indicating how much the hospital owed employees after the closure.
"None of the payroll taxes were being paid. Nothing — state, federal — nothing," said James Frizell, the city manager for Pauls Valley. "How do you do that? How do you with a good conscience even think about doing that?"
At least seven rural hospitals in Oklahoma run by management companies stopped paying workers' wages or failed to pay for health insurance benefits in 2018 and 2019, The Frontier and ProPublica found.
In the past year, the Oklahoma Department of Labor awarded more than $1 million in unpaid wages, benefits and damages to workers at rural hospitals that have either closed or experienced financial distress. But the agency doesn't have the power to enforce the judgments or make employers pay workers.
"It's been disappointing to see the number of claims this past year that we've had to investigate," said Don Schooler, general counsel for the Labor Department. "We recognize it has affected entire communities and huge, huge portions of the state."
Since the money had already been pulled from her paycheck, Sandifer spent weeks trying to gather enough to purchase health insurance through the federal exchange under the Affordable Care Act.
Sandifer said she signed up the first week in October but had to wait until November for the plan to take effect. She now pays $700 a month for an individual plan.
The lapse in insurance coverage meant Sandifer had to wait a month to start treatment at MD Anderson Cancer Center in Houston.
By then, Sandifer had to have a portion of her pancreas removed. She said a tumor on her pancreas grew from about the size of a nickel to a silver dollar during the time spent waiting for treatment.
Since her surgery, the cancer has spread to her liver and her spine. She is undergoing clinical trials, hoping for good news.
Sandifer, who returned to Mississippi to be close to her family, said she can't help but feel betrayed.
"I had uprooted my entire family and trusted that everything was the way it was supposed to be because that's what they told me to my face," Sandifer said. "The fact that somebody could just look me in my eye and just lie, you know a baldfaced lie, I'm so angry but probably hurt more than anything."
Millions at Stake but No Written Contract
The experience of Pauls Valley and Mangum illustrate the consequences of nearly nonexistent state regulations and little oversight from local governing boards.
The state has few laws that govern hospital management companies, and those that exist are rarely enforced.
In Oklahoma, a management company can either own the license to operate a hospital or it can run a hospital for which a local government or nonprofit organization holds the license. Under state law, the owner of a hospital license must be "of reputable and responsible character."
State officials could not provide The Frontier and ProPublica with clear criteria for disqualification and were unable to identify any companies that were denied an operating license. They said such information was confidential.
Even the lax state regulations that exist don't apply to management companies running hospitals owned by Oklahoma towns and counties.Eight nurses are the overwhelming majority of employees who remain at Haskell County Community Hospital in Oklahoma. The future of the 25-bed hospital, which has been whittled down to operating only an emergency room since 2019, is increasingly grim.
In such cases, local governing boards are responsible for vetting companies and providing oversight. Many such towns hire management companies on little more than their word that they can reverse spiraling finances.
"No matter how much money you give these small towns, they're going to hire a management company," said T.J. Marti, a Republican state representative from Tulsa who supports legislation that would encourage nonprofit health care chains to take on management of rural hospitals. "They don't understand how health care works, and the management company literally takes every penny they can out of the hospital and reinvests nothing."
The Mangum hospital board didn't ask for proof that Alliance had the money it promised or get in writing how much investors were willing to commit. It approved a line of credit in Alliance's name but did not require that the company have board authorization when withdrawing money.
By comparison, the town of Seiling also approved a line of credit but insisted on keeping tight control over how the money would be spent. The hospital kept the line of credit in its name and required a vote of the board to withdraw money.
In Pauls Valley, the governing board handed control to Alliance on little more than a handshake. City leaders say no written contract exists despite minutes from a July 2018 meeting indicating that the hospital board approved a management agreement with Alliance.
"Unfortunately, most of it was implied," Frizell said.
NewLight loaned the hospital more than $1 million, charging it 9.75% interest annually. The hospital also owed the company for management fees that had been deferred.
By April 2018, the hospital owed NewLight more than $2 million, according to the company. Ready to cash out, the company cut ties with Pauls Valley and enforced a lien on the hospital's incoming payments, which meant it would be paid before employees and bills for medical supplies.
As town leaders scrambled to find a buyer for the hospital, a representative from Alliance contacted them to pitch the company's services. Alliance would manage the Pauls Valley hospital with the goal of eventually buying it.
"Frank Avignone, he comes and sells us a song and dance," Frizell said. "That he could infuse $1 million immediately in the hospital and $4 or $5 million in 90 days. That sounded good."
The multimillion-dollar investment never arrived.
Two months after taking over, Avignone instead sought to raise money by appealing to celebrities on social media.
"My friends and I that work at Pauls Valley Hospital in Oklahoma are reaching out to all the Hollywood stars to ask for your help in saving our little hospital," Avignone posted on the Facebook pages of television host Ellen DeGeneres and movie director Steven Spielberg in September 2018.
"The hospital has been in danger of closing for some time and we need help just getting the word out," Avignone wrote on country music star Shania Twain's Facebook page.
In a more personal Facebook plea to Darius Rucker, the lead singer of Hootie & the Blowfish, Avignone said: "Believe it or not you and I went to USC (University of South Carolina) at the same time! Now I find myself in a different part of the world trying to save a little country hospital in Pauls Valley Oklahoma."
"Little hospitals like this all over the country are in danger and I can only save one at a time," he wrote in the post. "So far my team and I have saved two others but right now I need help getting the word out about this one."
In an interview with The Frontier, Avignone said his plan to save the Pauls Valley hospital was pinned on his ability to tap the funding stream he discovered in Mangum. He wanted to obtain a line of credit by using the hospital's incoming payments as collateral. But Avignone said the plan was thwarted when he learned that NewLight had a stranglehold on the hospital's assets.
The Frontier and ProPublica requested any written contracts or agreements between the hospital and Alliance stipulating payments or promises and all financial records for the hospital. The city provided partial financial records but said many of the records were either lost or never existed.
Former Pauls Valley Mayor Gary Alfred said he knows the city should have done more to document Alliance's promises. But, he said, the town was desperate to save its hospital.
"If somebody comes in under the guise that they're going to provide for the hospital, that's not a stone you want to leave unturned," Alfred said.
"He's That Smooth"
In the year and a half that Alliance managed the Mangum hospital, the company and other businesses run by its owners were paid more than $3 million.
Alliance collected more than $1.2 million in fees and reimbursements, financial records show. Some employees were also reimbursed for expenses that included mileage to travel to the other two hospitals that the company managed in Oklahoma.
Mangum officials claim in litigation that Alliance lied about the hospital's financial position, skirting a provision in its contract that required the company to wait until all other financial obligations were met before collecting its management fee. Board members said that because they trusted the company's expertise, they relied on such representations when approving several payments they now dispute.
Praxeo Health, the laboratory services company co-owned by Avignone, was paid more than $350,000, records show. Avignone says the company was owed money after it paid employees in July 2017.
Two other companies, Medsurg Consulting and Surgery Center of Altus, which the Mangum hospital board says were co-owned by Darrell Parke, a partner in Alliance, collected $1.7 million, according to records.
Records show Parke signed contracts on behalf of both Medsurg and Surgery Center of Altus. Medsurg is registered in Oklahoma under Parke's name. While Surgery Center of Altus is registered under the name of a law firm, a contract Parke signed with Mangum lists him as a member of the company's ownership.
An attorney for Parke said his client denies the Mangum hospital board's claims. He declined to answer detailed questions from The Frontier and ProPublica.
In a May phone call, Avignone said he and his company were "being unfairly crucified by a lot of people." He also declined to answer detailed questions, saying instead that he would forward them to his attorneys, who would respond to The Frontier and ProPublica. They did not.
Mangum's hospital board fired Alliance in December 2018. In a letter severing its relationship with Alliance, the board said the company repeatedly breached its management agreement, citing a decision to use a $4 million cost reimbursement from the federal government to pay down the line of credit without the board's consent. It also highlighted payments to companies owned by Alliance's partners. Alliance never disclosed that its members were financially connected to some of those businesses, the board alleges in court documents.
A month later, the board voted to allow its attorneys to report Alliance to state and federal law enforcement. A formal complaint was never filed. Instead, the hospital board opted to sue Alliance.
"He's the greatest con man of all time," said Corry Kendall, Mangum's city attorney. "He would convince you that despite what all the paperwork says and what all the documents say and all the anecdotes say, that he's right. He's that smooth, and you want to believe that because he is one of those people that you want to believe."
Making matters worse, it turns out that Medicare had overpaid the hospital based on flawed calculations, reimbursing it for a full year of costs instead of for the partial year that it was owed. The hospital board currently projects it will have to repay the federal government about $3.5 million, which will likely have to be returned with 10.25% interest, according to the current management.
The bank that provided the line of credit to Alliance is suing the hospital for $1.8 million that has yet to be paid. And Surgery Center of Altus and Medsurg Consulting are suing the hospital, seeking the return of medical equipment and alleging about $1 million in damages. Both lawsuits are ongoing. The hospital has returned some equipment, according to court documents, but disputes that it owes the companies any money.
"I understand where they were coming from, but nobody stole any money from that hospital," Avignone said in an interview in October 2019. "Every dime went back into that hospital. We did everything that we could, as good stewards of municipal money, to make sure that that hospital not only stayed open but grew."
"Blind Hope"
The Mangum hospital is again out of money. And, once again, the town has pinned its turnaround hopes on a for-profit company: Oklahoma-based Cohesive Healthcare Management and Consulting.
Barry Smith, Cohesive's chief executive officer, said he believes a turnaround is possible but cautioned that the hospital can't afford any more lawsuits. A prolonged outbreak of the coronavirus could also further strain finances, he said.
"When you have a huge hole, it just takes a very long time to dig out of," Smith said.
At the end of March, Mangum owed Cohesive $6.7 million in unpaid management fees and payroll expenses for the hospital's medical staff. The company absorbed many of the hospital's costs after it took over from Alliance.
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.
In December, Affinity announced it couldn't come up with the money to pay hospital employees. Avignone blamed billing problems and a delay in funds from Medicare. The hospital later received a loan to cover payroll.
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.
Revenues soared at some rural hospitals after management companies introduced laboratory services, until insurers accused them of gaming reimbursements.
This article was first published on Thursday, June 4, 2020 in ProPublica.
By Brianna Bailey, The Frontier
At least 13 hospitals in Oklahoma have closed or experienced added financial distress under the management of private companies. These companies sold themselves to rural communities in Oklahoma and other states as turnaround specialists.
Revenues soared at some rural hospitals after management companies introduced laboratory services programs, but those gains quickly vanished when insurers accused them of gaming reimbursement rates and halted payments. Some companies charged hefty management fees, promising to infuse millions of dollars but never investing. In other cases, companies simply didn't have the hospital management experience they trumpeted.
Below are examples of rural hospitals that pinned their hopes on private management companies that left them deeper in debt. They are based on interviews, public records and financial information from the Centers for Medicare and Medicaid Services and the American Hospital Directory.
Rural Oklahoma communities are desperate to protect their vulnerable hospitals and hand the reins to management companies that say they're turnaround experts. Instead some companies failed the hospitals, bled them dry and expedited their demise.
Memorial Hospital of Texas County
Location: Guymon in Oklahoma's Panhandle
Number of hospital beds: 25
Status: Open. Currently managed by a chief executive officer hired by the hospital board.
Financial status in 2019:
Total assets, including real estate, cash on hand, investments and inventory: $4.5 million
Total liabilities, including mortgages and other loans, payroll costs and money owed to vendors: $5.9 million
Net income: -$331,493
Management history and finances: The county-owned hospital has cycled through four management companies in the past eight years. Oklahoma City-based Synergic Resource Partners, the most recent management company, failed to meet the emergency needs of patients, according to a 2018 investigation by the Oklahoma State Department of Health. The investigation found instances in which patients were not given critical life-saving medications, including antivenom for snake bites and a common clot-busting drug used to treat stroke patients. Synergic Resource Partners began managing the hospital in October 2017, but it took full control of operations in April 2018. In March 2019, Doug Swim, the company's CEO, sent a series of emails to the hospital board saying he would close the facility if the board didn't agree to take back ownership. One email asked the hospital board to sign a new $60,000 monthly management agreement with the company. Fearing Swim would close the hospital, the governing board filed a lawsuit in April 2019. The board settled with the company and regained control of the hospital the same month.
Company response: Swim declined an interview request. He said he would only answer questions if The Frontier and ProPublica granted him anonymity. The news organizations declined.
Latimer County General Hospital
Location: Wilburton in southeast Oklahoma
Number of hospital beds: 33
Status: Closed in October 2018.
Financial status in 2017:
Total assets: $10.9 million
Total liabilities: $1 million
Net income: -$580,400
Management history and finances: In September 2018, Blue Cross Blue Shield of Oklahoma dropped the hospital from its network, citing allegations of billing fraud involving its management company. The hospital was run by the now-defunct Missouri-based EmpowerHMS. When Latimer closed a month later, the hospital owed more than $1 million in unpaid payroll taxes and outstanding vendor invoices, former Chairman Danny Baldwin said.
Company response: Attempts to reach a representative for the company and for Empower were unsuccessful. Empower has denied allegations of wrongdoing in response to a federal lawsuit filed by insurance companies.
Pauls Valley Regional Medical Center
Location: Pauls Valley, about 60 miles south of Oklahoma City
Number of hospital beds: 64
Status: Closed in October 2018
Financial status in 2018:
Total assets: $6.6 million
Total: $14.4 million
Net income: -$8.1 million
Management history and finances: The governing board gave Alliance Health Southwest Oklahoma control of the hospital in July 2018. Officials say no written contract exists. Alliance pledged to invest millions of dollars with a plan to eventually purchase the hospital, according to town leaders. The board believed the investment from Alliance would help the hospital pay its debt to the former management company, NewLight Healthcare, giving it a chance to start fresh. The multimillion-dollar investment never arrived.
Company response: Frank Avignone, CEO of the now-defunct Alliance Health Partners Southwest Oklahoma, said he planned to seek a bank loan and use the hospital's future payments as collateral. But Avignone said he was unable to secure financing because of the lien that the prior management company had placed on the incoming payments.
Seiling Regional Medical Center
Location: Seiling in northwest Oklahoma
Number of hospital beds: 18
Status: Open. The hospital is currently managed by Shawnee, Oklahoma-based Cohesive Healthcare Management and Consulting.
Financial status in 2019:
Total assets: $1.2 million
Total: $2.7 million
Net income: -$85,956
Management history and finances: Town leaders say the hospital's former management firm Alliance Health Southwest Oklahoma entered into contracts and paid for services that were not approved by the board. The company hired an accounting firm for nearly $100,000 despite stating that it had a financial expert on staff that would be available as part of its contract with the town. It signed a five-year pharmacy services contract for up to $4,500 a month, plus the cost of drugs. And it entered into another contract for medical billing software that town leaders say they didn't approve. Officials in Seiling said they learned of the contracts when bills began appearing on the hospital's monthly financial reports. Seiling ended its relationship with Alliance in February 2019. Cohesive Healthcare has since taken over management of the hospital.
Company response: Alliance Health Southwest Oklahoma did not respond to written questions about its management of the Seiling hospital. The company has denied any wrongdoing in its management of three Oklahoma hospitals.
Sayre Community Hospital
Location: Sayre in western Oklahoma
Number of hospital beds: 31
Status: Closed in August 2018.
Financial status: Financial information is not available for the hospital.
Management history and finances: The chronically troubled hospital, which closed in 2016, was revived the following year by SMH Acquisition, an Oklahoma-based management company. It continued to struggle financially. The company failed to pay at least three employees' health and dental insurance premiums despite deducting them from paychecks, according to a ruling on wage claims by the Oklahoma Department of Labor. The hospital landed in court for unpaid bills and was sold to pay creditors in May 2018. Another management company, Synergic Resource Partners, purchased the hospital only to abruptly close the facility three months later.
Company response: In an email, Robert Hicks, the owner of SMH Acquisition, said that despite the Oklahoma Department of Labor ruling that his company was responsible for unpaid insurance, he was no longer in charge of the hospital at the time. Swim, the CEO of Synergic Resource Partners, declined interview requests. Swim said he would only answer The Frontier and ProPublica's questions on the condition of anonymity. The news organizations declined.
Mangum Regional Medical Center
Location: Mangum in southwest Oklahoma
Number of hospital beds: 18
Status: Open. The hospital is currently managed by Cohesive Healthcare Management and Consulting.
Financial status in 2018:
Total assets: $5.8 million
Total liabilities: $11.3 million
Net income: -$1.8 million
Management history and finances: Officials in the town of Mangum allege in an ongoing lawsuit that Alliance Health Southwest Oklahoma enriched itself and other companies controlled by its owners at the hospital's expense. The town's hospital board fired Alliance in December 2018. In a letter severing the relationship, the board said the company repeatedly breached its management agreement, citing a decision to use a $4 million cost reimbursement from the federal government to pay down the line of credit without the board's consent. It highlighted payments to companies owned by Alliance's partners. The hospital now owes Medicare a projected $3.5 million and is being sued by a bank for $1.8 million to repay the line of credit. The lawsuit is also ongoing. Cohesive Healthcare has since taken over management of the hospital.
Company response: Alliance Health Southwest Oklahoma has denied wronging. Avignone, the company's CEO, said Alliance saved the hospital from closing.
Carnegie Tri-County Municipal Hospital
Location: Carnegie in western Oklahoma
Number of hospital beds: 17
Status: Open. The hospital is currently managed by Cohesive Healthcare Management and Consulting.
Financial status in 2019:
Total assets: $7.2 million
Total liabilities: $20.6 million
Net income: $2.4 million.
Management history and financial situation: The Carnegie hospital board and the Oklahoma City-based First Physicians Capital Group cut ties in 2017. That year, state inspectors found violations of patient care so severe that they determined the facility no longer met the minimum requirements to receive Medicare payments. Violations included a lack of security and monitoring for psychiatric patients in the emergency room and failing to provide adequate nursing staff. Cohesive Healthcare has since taken over management of the hospital.
Company response: First Physicians did not respond to interview requests.
Newman Memorial Hospital
Location: Shattuck in northwest Oklahoma
Number of hospital beds: 25
Status: Open. The hospital board hired a full-time CEO instead of another private management company.
Financial status in 2018:
Total assets: $11.9 million
Total liabilities: $10.9 million
Net income: -$3 million
Management history and financial situation: Under Illinois-based People's Choice Hospital, a management company, Newman Memorial falsely claimed that it was performing a large number of blood and urine tests to collect more than $21 million in payments, according to allegations made by the insurer Aetna in an ongoing federal lawsuit. Between January 2016 and April 2017, the hospital billed the insurer for thousands of samples tested at laboratories in other parts of the country, the lawsuit claims. The strategy allowed the hospital to collect $2,250 per test instead of the standard $120 that the insurer would normally pay larger facilities. The town's hospital board fired People's Choice in 2017 and sued the company for fraud and breach of contract because of the lab billing. The company and the hospital settled out of court in 2018. The terms of the settlement were not made public.
Company response: Attempts to reach a representative for People's Choice were unsuccessful. In response to the lawsuit, the company denied the allegations from Aetna, stating that it saved the hospital from bankruptcy.
Cimarron Memorial Hospital
Location: Boise City in Oklahoma's Panhandle
Number of hospital beds: 25
Status: Open. The hospital board hired a full-time CEO instead of another private management company.
Financial status in 2018:
Total assets: $1.2 million
Total liabilities: $3 million
Net income: -$493,157
Management history and financial situation: Austin, Texas-based NewLight Healthcare ran the hospital for about a decade before deciding in January to end its relationship with the county. In 2017, the hospital increased lab testing to bring in more money, but the insurers questioned a high volume of charges and halted payments. To save money, the hospital stopped providing health insurance for nurses and other employees in December 2018. The hospital owed NewLight more than $1 million from deferred management fees as of February 2020. It has since paid its debt to the company, according to hospital officials.
Company response: NewLight Healthcare did not answer detailed questions from The Frontier and ProPublica. Instead, it responded with a statement: "NewLight Healthcare, LLC has consistently worked alongside community leaders, providers, state associations, and other leaders to attempt to create new models and programs that will improve the business climate for rural hospitals. Ultimately, in order to maintain quality rural healthcare, leaders in government will need to make additional funding sources available to rural hospitals."
Haskell County Community Hospital
Location: Stigler in southeast Oklahoma
Number of beds: 25
Status: Open. The hospital is currently managed by Indiana-based Boa Vida Healthcare.
Financial status in 2019:
Total assets: $6.3 million
Total liabilities: $3.8 million
Net income: -$2.4 million
Management history and financial situation: The hospital laid off about 85% of its staff last year, leaving it with only eight nurses, who double as the cleaning crew. The cuts were part of an effort to make the hospital more appealing to buyers. Haskell County was among four Oklahoma hospitals that entered bankruptcy in 2019 after insurance companies stopped reimbursing for laboratory tests that they alleged were part of a billing scheme conceived by EmpowerHMS, the management company that ran the hospitals. Blue Cross Blue Shield of Oklahoma booted Empower hospitals from its network in 2018 after allegations of fraud against the company. While under the management of Empower, the hospital stopped paying employee salaries and health benefits, according to testimony at a state hearing in November 2019. During the hearing, Haskell hospital employees questioned why no one was held responsible for their lost wages, benefits and money that was supposed to be paid into employee retirement plans.
Company response: Attempts to reach a representative for Empower were unsuccessful. The company has denied allegations of wrongdoing in its response to a federal lawsuit filed by insurance companies.
Drumright Regional Hospital
Location: Drumright in northeast Oklahoma
Number of beds: 15
Status: Open. The hospital is currently managed by Missouri-based Rural Hospital Group.
Financial status in 2018:
Total assets: $12.1 million
Total liabilities: $13.7 million
Net income: -$821,484
Management history and financial situation: In February 2019, a state court judge appointed a representative to oversee spending at the hospital. The hospital, one of four in Oklahoma that filed for bankruptcy in 2019 under the management of EmpowerHMS, lacked money to purchase medicine and supplies. It was getting toilet paper from the local Fire Department, according to court documents. Insurers flagged increased laboratory for blood and urine tests as possible fraud at Empower hospitals.
Company response: Attempts to reach a representative for Empower were unsuccessful. The company has denied allegations of wrongdoing in its response to a federal lawsuit filed by insurance companies.
Fairfax Community Hospital
Location: Fairfax in northeast Oklahoma
Number of beds: 15
Status: Open. The hospital is currently managed by First Physicians Capital Group.
Financial status in 2019:
Total assets: $1.2 million
Total liabilities: $3.6 million
Net income: -$6.7 million
Management history and financial situation: After the hospital entered bankruptcy in March 2019, a skeleton crew of nurses worked without pay to staff the emergency room, according to Donna Renfro, the former chief nursing officer. Not doing so could have put the hospital at risk of losing its operating license under state law. The hospital, one of four in Oklahoma run by EmpowerHMS, ran out of money after insurance companies accused the company of fraud. Empower sought reimbursements for blood and urine tests that were not performed at the hospitals the company managed, insurance companies allege in a federal lawsuit.
Company response: Attempts to reach a representative for the Empower group were unsuccessful. The company has denied allegations of wrongdoing in its response to a federal lawsuit filed by insurance companies.
Prague Community Hospital
Location: Prague in eastern Oklahoma
Number of hospital beds: 25
Status: Open. The hospital is currently managed by Cohesive Healthcare Management and Consulting.
Financial status in 2019:
Total assets: $8.2 million
Total liabilities: $3.7 million
Net income: -$812,868
Management history and financial situation: The hospital was forced to rely on food donations to feed its patients in January 2019 after Empower stopped paying its bills, according to news reports. The hospital and three others in Oklahoma run by Empower entered bankruptcy in 2019 when insurers accused the company of a lab billing scheme that charged for blood and urine tests performed elsewhere. Cohesive Healthcare has since taken over management of the hospital.
Company response: Attempts to reach a representative for the company were unsuccessful. The company has denied allegations of wrongdoing in its response to a federal lawsuit filed by insurance companies.