Rich Businessmen Push Struggling Rural Hospitals to Embrace Controversial Practice

Residents of Surprise Valley, California this past week voted their approval for a Denver businessman to buy their small hospital, hoping that he can rescue it from almost certain closure, has reported.

The story of Surprise Valley Community Hospital reflects an “increasingly brutal environment for America’s rural hospitals, which are disappearing by the dozens amid declining populations, economic troubles, corporate consolidation and, sometimes, self-inflicted wounds,” according to the report.

Across the country in the past eight years, 83 of 2,375 rural hospitals have shut down, according to the

These hospitals, some of which have less than 25 beds, are often times remote and have been approached by potential buyers from outside the community who promise much but are then accused of often delivering little while lining their own pockets.

These often-times struggling rural hospitals are enticed by schemes that are legally murky, such as lab billing for faraway patients as a rescue plan, because they are so desperate to save their medical institutions in their small communities.

Outsiders “come in and promise the moon,” Jeanne Goldman, a retired businesswoman in Surprise Valley, told Kaiser Health News. “The [hospital’s] board is just so desperate with all the debt, and they pray this angel’s going to come along and fix it.”

The attempt to prevent such potentially fraudulent schemes are often complicated by the fact that rural hospital boards often do not have expertise in the health care business.

In the example of Surprise Valley Community Hospital, the board president is a rancher, while other board members own a local motel and a construction company.

Denver entrepreneur Beau Gertz promised to retain the hospital’s vital service while making it profitable by using it to bill insurers for lab tests regardless of where patients lived through telemedicine technology.

He sought to distinguish himself from other would-be buyers by describing his plan as completely legal and pledged in court documents to buy the bankrupt hospital for $4 million and cover its debts, insisting he had lined up a $4 billion New York company as a financial backer.

However, Kaiser Health News was unable to locate the company under the name Gertz cited and he did not respond to emails seeking clarification.

Eighty-three percent of voters in Surprise Valley approved the sale of the hospital to Gertz, choosing the possibility, however uncertain, of revival over almost certain closure.