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St. Alexius vendors say they're owed nearly $800k. ‘We are not a bank,’ one says

St. Alexius vendors say they're owed nearly $800k. ‘We are not a bank,’ one says

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Financial shortcomings leave future of St. Alexius uncertain

Afternoon traffic rolls by outside of the St. Alexius Hospital on South Broadway on Tuesday, Jan. 28, 2020, in St. Louis. The hospital filed for bankruptcy in December, delaying payroll for its employees. Photo by Lexi Browning,

ST. LOUIS — Connie Woemmel was on vacation when she heard: St. Alexius Hospital needed ceiling renovations.

Woemmel, the owner and president of Woemmel Plastering, wasn’t concerned when the hospital didn’t pay for the work right away. The roughly 11-employee company in St. Louis’ Cheltenham neighborhood had been working at St. Alexius for decades without incident.

“There was no reason to believe they weren’t going to pay,” said her husband, Mark Woemmel, who is the company’s project coordinator.

Today, about a year later, they say they are still owed the full amount: $75,577.50.

St. Alexius, a 190-bed south St. Louis institution, is in financial straits.

Last year, hospital management company Americore Holdings bought it out of bankruptcy, and then went bankrupt itself. In the past year alone, at least six businesses have filed lawsuits, claiming they are collectively owed nearly $800,000 for services and supplies they provided to the hospital. Over the summer, a federal inspector found a document on site that listed millions of dollars owed to various hospital vendors.

The U.S. Trustee’s office, which oversees bankruptcy cases, said Americore CEO Grant White “grossly mismanaged” his business and “has not operated the hospitals in a manner that is consistent with public safety and welfare,” according to court filings. The FBI raided White’s personal residence and one of his hospitals over two days in late January.

White did not respond to multiple requests for comment.

But the story of St. Alexius’ financial struggles isn’t just about White and his company, which has owned at least four other troubled U.S. hospitals over the past three years. Hospitals like St. Alexius, which serve far more low-income patients than most, have been struggling nationwide for years.

“The entities that insure those patients just don’t pay nearly as well,” said John Romley, a health economist at the University of Southern California’s Schaeffer Center for Health Policy and Economics. “And so these hospitals struggle.”

At least 30 U.S. hospitals entered bankruptcy in 2019, according to the news service Bloomberg, about one-half of 1% of the more than 6,100 hospitals in the U.S., according to the American Hospital Association. And rural hospital closures have been on an uptick over the past decade: There were at least 19 last year, compared with just 10 in 2009.

Many of these hospitals, like St. Alexius, serve a higher portion of uninsured patients, and patients who rely on Medicare and Medicaid.

Hospitals also are contending with the trend toward performing outpatient procedures and surgeries, meaning people stay in the hospital for shorter periods of time.

Closures are more common in states like Missouri, which haven’t expanded Medicaid eligibility, according to a 2018 Government Accountability Office report.

“This is definitely a broader problem than just St. Alexius,” said Karen Joynt Maddox, assistant professor at the Washington University School of Medicine and co-director of the school’s Center for Health Economics and Policy. “We are seeing it across the country.”

117 delinquent accounts

St. Alexius Hospital was founded in 1869 by the Catholic order of Alexian Brothers. Today it has a main hospital and senior care center at 3933 South Broadway, and another campus at 2639 Miami Street, which houses the Lutheran School of Nursing, among other services.

The hospital is no stranger to financial troubles — it had negative profit margins in 2015, 2016 and 2017, according to the St. Louis Area Business Health Coalition — and has been sold multiple times in the past decade.

The previous owner, Florida-based Promise Healthcare Group, filed for bankruptcy in 2018. The bankruptcy court authorized Promise to sell its ownership stake in the hospital to Americore in January 2019.

But it didn’t take long for Americore to run into trouble, too.

In June and July 2019, an inspector for the Centers for Medicare and Medicaid Services made an unannounced site visit to St. Alexius and found that the facility failed to “have adequate supply of food, medical supplies and equipment readily available,” according to a report.

The inspector found an undated list at the hospital of 117 vendors with delinquent accounts. The report included 12 of those vendors and the amounts they were owed, ranging from $775 owed to a pest control company to $602,715.33 to AYA Healthcare Inc. While it’s unclear when those debts accumulated, the report said the list totaled more than $5.6 million.

The report says the failure to pay vendors “resulted in the withdrawal of services that were critical for continued day-to-day operations of the facility.”

An unannounced revisit in the fall found the deficiencies corrected, according to a CMS spokesperson.

Thomas Saggio, the hospital’s chief nursing officer, said the hospital is in good standing with CMS.

“We have nothing that is critical to day-to-day operations that has been removed,” he told the Post-Dispatch last month.

He later added that the hospital can make payroll, and patients have food and necessary supplies.

Still, in the past year alone, a painting company, an emergency services staffing company, an addiction services provider, a technology services provider and a physical therapy company have all claimed in court that they are owed money by St. Alexius.

In the largest of these claims, O’Fallon, Illinois-based staffing company Midwest Emergency Department Services filed court documents in June saying it was owed more than $596,000 by St. Alexius.

'This hurt us'

On Dec. 31, St. Alexius Hospital and Americore Health filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Eastern District of Kentucky.

The bankruptcy case includes three other facilities either owned or formerly owned by Americore:

• Izard County Medical center, in northern Arkansas, a critical access medical center Americore purchased in 2017.

• Ellwood City Medical Center, in Pennsylvania, which reportedly shut down in December 2019 after failing to comply with state Health Department requirements. The facility failed to pay wages, unemployment taxes and pension contributions to its employees, according to documents filed by the state attorney general.

• Pineville Medical Center, in Kentucky, which failed to fund the employee health plan with money that was withheld from payroll, according to a class action complaint filed in June. The defendants have denied the allegations in the class action case, which was automatically stayed after Americore filed for bankruptcy.

Saggio, St. Alexius chief nursing officer, declined to comment on the vendor lawsuits. He added on Thursday that vendors have been informed of the bankruptcy filing, and should follow the process of legally filing for claims.

But suppliers feel left in the lurch.

The Woemmels, of the plastering company, invoiced the hospital in March 2019. In July they heard from an administrative assistant at St. Alexius, who wrote in an email that they would receive $10,000 per month, but the Woemmels say that never happened.

In November, the Woemmels filed a suit against the hospital in St. Louis Circuit Court. Just weeks later, St. Alexius filed for bankruptcy, putting their case — along with many of the others — on hold.

“We’ve never had anything like this happen to us before,” Connie Woemmel said.

Others are owed money, but haven’t sued.

Alban Scientific Inc. began supplying St. Alexius Hospital last spring with gloves, soaps, paper towels and disposable shirts and pants for patients. The hospital paid by check.

Then four of the checks bounced, said Ted Wright, president and owner of the five-employee South Broadway supplier.

“This hurt us,” he said. “We’re committed to helping St. Alexius, but our business is not a charity, and we are not a bank.”

Wright’s business has been paid back some of the money over time, but he says he is still owed $30,000.

Today, Wright still supplies the hospital.

But now he requires payment up front.

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