The Sun Sets on Timberlands Healthcare

By Will Johnson
Messenger Reporter

HOUSTON COUNTY – The future of Timberlands Healthcare is in serious doubt after Little River Healthcare (LRH) announced today it would end its affiliation with the Houston County healthcare provider. LRH is the managing organization for Timberlands Healthcare in Crockett.

Unless a new healthcare management organization takes over by the end of next week, the move will result in the loss of nearly 200 jobs.

In a Thursday, June 22 phone conversation with LRH Co-Owner and Chief Legal Officer (CLO) Ryan Downton, the CLO confirmed the separation would occur at the end of June.

He explained the determining factor in the LRH decision was the struggle the company was having with collecting the money owed on insurance claims submitted to Blue Cross and Blue Shield.

“This is for the whole Little River Healthcare System. We have been in a situation where Blue Cross – for the last year or so – has not been paying us according to our contract. They have been delaying payment of claims and requesting medical records. Right now, there is $32 million in accounts receivable that’s more than two months old that they haven’t paid,” Downton said.

The CLO indicated when LRH took over the Crockett hospital the organization knew it “… cash flow negative for a long time. We knew that going in, but our other facilities were profitable. We were able to use them to cover the shortfall. With Blue Cross holding so much of our money for so long – in April we submitted 1,800 medical records to them. Two months later, they have only processed 108 out of the 1,800.”

The LRH frustration level with Blue Cross is high, Downton said.

“They told us we were off of medical records review as of May 16, but the money still hasn’t started coming in,” he explained.

“It killed us on cash flow,” the LRH executive said. “It got to the point with Crockett that we didn’t have the cash flow from other locations to cover the Crockett shortfall.”

Downton said the Houston County Hospital District (HCHD) Board of Directors had asked LRH to come up with a plan to cut losses after the board had been informed of the collection issue.

“In going through that, we came to the conclusion the patient volume just isn’t there in the town anymore. We brought in an orthopedic surgeon, a cardiologist, an urologist and we were hopeful the patient volume would come back to the hospital and it may have, if we had five years for it to happen. But, it just hasn’t come back fast enough to cover the expenses of running the place,” Downton said.

“We told a subset of the (HCHD) board yesterday that the Little River system can’t fund losses anymore,” he said. “As of the end of this month, we told the board we are in a position if they could fund the losses, we (LRH) could keep the hospital run

ning while they looked for another operator. Or, they could run it themselves.”

The CLO said the board is looking at its options but indicated whatever the chosen course of action turned out to be, it would be very difficult.

“This put us in a really difficult position. We wanted to give the board time to see if there was another alternative, but we also didn’t think it was fair for us to give them a heads up and not say anything to the employees. So today – we talked to them (the HCHD board) last night – we scheduled a meeting with the employees to tell them that we were out of money and we wouldn’t be able to continue operations past next week,” Downton said.

Timberlands also had trouble collecting payment from United Healthcare, Downton explained.

“The only contract they (United) were willing to offer was paying less than the cost to provide medical care, less than Medicare. We were not able to get a resolution with United. The state representative (Trent Ashby) and state senator (Robert Nichols) were really helpful and wrote them a letter to try and get United moving on it. Maybe that would have worked over time, but we just ran out of time,” he said.

“This is a tragedy for the community,” Downton said. “We feel terrible about this. There are a lot of good employees who are going to be out of a job. We wish it hadn’t come to this. My partner, our CEO (Jeff Madison), was just out there and said this was the hardest meeting he has ever had. It is a very emotional situation.”

“We want the community to know that we weren’t in there to do anything but our best to turn that hospital around and keep it going,” he said. “We reached the point where as much as we care about the community, we can’t keep providing what has become free health care because the insurance companies are not paying us the way they are supposed to.”

HCHD President Deborah Blackwell was also contacted about the situation facing Timberlands Healthcare.

“We were notified about this yesterday,” Blackwell said. “We may have had a few more hours of notice, but this is as new to us as it is to the employees. At this point, we have a special called meeting on Monday.”

Blackwell said the HCHD board is in the process of a proactive approach “… by trying to find a partner, but as this point, I’m not real optimistic.”

When asked what about the hospital’s current status, Blackwell gave a grim prognosis.

“They (LRH) have given the employees and the doctors notice they will no longer be paying them as of June 30. At that point, the hospital closes,” she said.

“This is bad for the entire community. It’s not just bad for the employees, but it’s also bad for the connected businesses. Mostly though, the community will not be able to get healthcare without having to drive 40 miles, at a minimum,” she said.

An emergency meeting of city, county, state and federal officials, along with representatives from EMS providers, was held at noon on Friday, June 23 to discuss the status of Timberlands Healthcare.

Timberlands CEO Jeff Perry provided an update to those present at the meeting and while he indicated the number of patients and services had increased at the facility, no definitive answers were given about the future of the hospital.

According to multiple sources, questions concerning severance packages for Timberlands’ employees, when services provided by LRH would end and whether the $32 million dispute with Blue Cross was a legal issue or a billing issue were left unanswered.

State Representative Trent Ashby was contacted about the developing situation in Crockett and he issued the following statement:

“The closure of the hospital in Crockett represents a tough blow to the residents of Houston County and the surrounding area. My office and I are certainly committed to working with all of the involved stakeholders to mitigate the loss of existing jobs and help move forward with a plan to increase access to healthcare in our area of the state.”

DETCOG Director Lonnie Hunt, who was present for the Friday meeting, was also contacted. Hunt said while he would do whatever he could to help the hospital survive, he explained DETCOG did not have access to any type of funding grants for healthcare providers.

“If there is a solution there,” he added, “it has to be spearheaded by the HCHD board because they are the people the citizens have elected to oversee the hospital. The whole community needs to try to get behind this and support it any way they can. The people on the HCHD board need to step up and find a solution anyway they can and if it requires community involvement, hopefully they can build that.”

As of press time, attempts to reach Blue Cross and Blue Shield for a comment about the payment of claims to LRH were unsuccessful.

Will Johnson may be contacted via e-mail at [email protected].