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Based on review of accounting records and interviews, the facility's Governing Body failed to provide financial resources to meet the facility's daily operational needs.

Refer to A-0073.

Based on review of accounting records, review of a facility communication, review of a loan application, and interviews, the facility's Governing Body failed to provide financial resources to meet the facility's financial responsibilities.

The findings included:

Review of the facility's Vendor Aging Report dated 5/13/19 revealed the facility owed 216 vendors a total of $4,111,179.95. Further review revealed the following indebtedness (not all in encompassing):
1. The facility currently owed the laboratory vendor (Seimens) $83,795.
2. The facility currently owed the blood bank vendor (Blood Assurance) $15,618.
3. The facility currently owed the pharmaceutical vendor (Cardinal Health).
4. The facility currently owed the Intravenous (IV) fluid vendor (Baxter) $937.
5. The facility currently owed the skin graft vendor (Mimedx) $25,500.
6. The facility currently owed the accounts receivable billing vendor (Computer Programs and Systems) $241,315.
7. The facility currently owed the primary medical supply provider (Owens and Minor) $26,550.
8. The facility currently owed the postage meter vendor (Pitney Bowes) $3,519.
9. The facility currently owed the electricity company (Volunteer Electric Cooperative) $3,762.
10. The facility currently owed the contracted wound care and hyperbaric treatment center (Diversified Clinical Services) $401,560.
11. The facility currently owed the contracted emergency department physicians' vendor (EMCARE) $398,681.
12. The facility currently owed the hospital's previous owner (CHSPSC) $450,090 for billing services from June 2018 to December 2018.

Review of the facility's payment plans dated 5/14/19 revealed the facility had sent up a payment plan for 6 suppliers with the following terms:
1. Cardinal Pharmacy $25,000 weekly (currently owed $180,895); last payment was 4/20/19.
2. EMCARE $35,000, the Emergency Department physicians group, monthly (currently owed $398,681); last payment was $33,500 on 4/8/19 ($1500.00 less than the agreement) and the next payment due was due 5/14/19.
3. Shared Medical Services, the facility's mobile Magnetic Resonance Imaging (MRI) vendor, $18,000 monthly (currently owed $99,690); there was no documentation of the date or the amount of last payment.
4. Blood Assurance, the facility's blood bank vendor, $3,500 weekly (currently owed $15,618); last payment was made 5/4/19 (10 days ago).
5. Crothall Laundry Service a "...[amount due]...varies..." due monthly (currently owed $33,533); last payment on 5/3/19 of $4,895.
6. City of Jamestown, the facility's gas and water utilities vendor, $10,000 bi-weekly (currently owed $25,536); last payment on 4/8/19.

Review of a facility e-mail communication between the Corporate Chief Executive Officer (CEO) and the Facility Administrator dated 5/14/19 at 8:31 AM revealed the facility received a bridge loan in the amount of $500,000.00. Further review revealed "...it is a term [of agreement] sheet only and does not guarantee funding. That won't be guaranteed until completion of the definitive agreements from underwriting which are in the process of being prepared..." Continued review of the e-mail exchange dated 5/14/19 at 9:26 AM revealed "...received the $500K [thousand] on Friday [5/10/19]...to cover payroll related matters..."

Interview with the Facility's Controller on 5/14/19 at 8:10 AM, in the administrative conference room, revealed on 4/30/19 the local utility company turned electrical power off in the facility's purchasing department and clinic offices due to the hospital's failure to pay the utility bill. Continued interview revealed the power was turned back on 5/2/19 after the hospital paid the utility company $33,201.50. Further interview revealed the facility had applied for two loans; a bridge loan for $500,000 and another loan for $30,000,000. Continued interview revealed "...the bridge loan is for sure; the $30 million is still in underwriting..." Further interview revealed the facility owed the Internal Revenue Service (IRS) for income taxes and facility corporate officers had met with IRS representatives on 5/7/19 and had worked out a payment plan for the income taxes owed.

Interview with the Chief Nursing Officer (CNO) on 5/14/19 at 8:20 AM, in the administrative conference room, revealed two physicians had removed themselves from the hospital's medical staff and no longer admitted patients to the facility. Further interview revealed Physician #1 no longer admitted patients as of 4/30/19 and Physician #2 no longer admitted patients as of 5/1/19.

Interview with Licensed Practical Nurse (LPN) #1 on 5/14/19 at 8:25 AM, in the Nursing Supervisor's office, revealed income taxes had been withheld from each paycheck and she was told by the Internal Revenue Service (IRS) that no income tax withholdings had been on her behalf by the facility.

Interview with LPN #2 on 5/14/19 at 8:50 AM, in the Nurse Supervisor's office, revealed LPN #2 had money withheld from her paycheck each pay period by the facility for Social Security taxes and when she checked her online Social Security account she found no withholdings had been paid into her account since June 2018.

Interview with the Laboratory Director on 5/14/19 at 9:10 AM, in the Laboratory Director's office, revealed the laboratory was out of reagents required to perform laboratory test for Myoglobin Levels (test for proteins in the blood) and Vancomycin Levels (measurement of the amount of the antibiotic Vancomycin in the blood). Further interview revealed the laboratory supply vendor (Seimens) was not delivering any supplies to the hospital due to lack of payment. Continued interview revealed the blood bank vendor (Blood Assurance) routinely delivers each Friday and now requires payment on delivery. Further interview revealed no delivery was made last Friday (5/10/19) because payment was not made.

Telephone interview with Phlebotomist #1 on 5/14/19 at 9:15 AM revealed she had attempted to start withdrawing Social Security payments the previous week and was told by the Social Security staff that she had no social security payments made since June 2017. Further interview revealed she had money withheld out of each paycheck for Social Security withholdings.

Interview with the CNO on 5/14/19 at 9:35 AM, in the administrative conference room, revealed "...things aren't any better...been talking about loans since he [Interim Administrator] got here [January 2019]...no money coming in..."

Interview with the Pharmacy Director on 5/14/19 at 9:40 AM, in the pharmacy supply room, revealed the facility routinely had drug deliveries each week day, but had not had a delivery of drugs or intravenous (IV) fluids since 4/25/19 (19 days earlier). Further interview revealed the vendors (Cardinal and Baxter) would not delivery due to lack of payment.

Interview with LPN #3 on 5/14/19 at 10:30 AM, in the Emergency Department (ED), revealed Social Security taxes had been withheld from her paychecks and when she looked at her online Social Security account no withholdings were noted since June 2019.

Interview with Registered Nurse (RN) #1 on 5/14/19 at 10:35 AM, in the ED, revealed Social Security taxes were withheld from his paychecks and when he checked his online Social Security account no payments were listed since June 2018.

Interview with the Program Director for the Jamestown Regional Medical Center Wound Care and Hyperbaric Center (Diversified Clinical Services) provider on 5/14/19 at 10:40 AM, in her office, revealed the company was independent from the hospital, but was located inside the hospital. Further interview revealed the company had a contractual agreement with the hospital to provide wound care and hyperbaric treatments to inpatients and outpatients. Continued interview revealed Diversified Clinical Services (DCS) had not received any payments for the treatments it had provided since Rennova (corporate owner) took ownership of the hospital in June 2018. Further interview revealed DCS was currently owed $401,560 by the hospital and Rennova's corporate office will not respond to emails, letters, or telephone calls from DCS. Continued interview revealed the hospital was supposed to provide supplies for the wound care treatments, but had not provided any supplies. Further interview revealed the wound center was currently using only one of its two treatment rooms due to a lack of supplies to operate both rooms. Continued interview revealed the wound center was unable to do skin grafts because the facility failed to pay the graft vendor (Mimedx). Further interview revealed the graft vendor notified the wound center on 1/2/19 that all graft orders were on hold until payment was made. Continued interview revealed the hospital had not discussed any payment plan or arrangement with the wound care center.

Interview with Physician #1 on 5/14/19 at 11:30 AM, in his office, revealed he had been on staff at the hospital for many years and had recently (uncertain of date) removed himself from the medical staff and no longer admitted any of his patients to the hospital. Continued interview revealed the physician felt the conditions at the hospital related to staffing, supplies, and equipment were unsafe for his patients and he would no longer admit patients there. Further interview revealed the hospital currently owed him approximately $8,000 to $9,000 for providing on-call services. Continued interview revealed prior to him removing himself from the hospital staff, the patient census at the hospital was 12 and when he attempted to admit another patient he was told the hospital did not have enough nurses available for 13 patients and he had to transfer the patient to another hospital located out of town. Further interview revealed the hospital recently had its electricity turned off due to lack of payment and many vendors refused to deliver supplies due to lack of payment. Continued interview revealed the facility's accounts payable vendor billing was owed back payments and had stopped submitting billing for the hospital because of lack of payment. Further interview revealed the facility had too many practices that were questionable and he was uncomfortable admitting patients there anymore.

Interview with the Chief Executive Officer (CEO) on 5/14/19 at 2:45 PM, in the Administration Conference Room, revealed "...Rennova filed all quarterly taxes with the IRS on time, but did not send any payments...[corporate] met with IRS on 5/8/19 and I was told by our CFO [Chief Financial Officer] that he had reached an agreement with the IRS and Social Security for payments...the first payment was made to the IRS on 5/7/19...corporate is meeting with the IRS again on 5/20/19..."
Further interview confirmed the facility had obtained a "...bridge loan..." for $500,000 and had applied for another loan for $30,000,000 to pay off all debts at this hospital and two other hospitals owned by Rennova. Continued interview confirmed the $500,000 bridge loan had been received, but the $30,000,000 was currently pending approval by the underwriters.

Interview with the Director of Materials Management (DOMM) on 5/14/19 at 3:00 PM, in her office, revealed her department and the storage room was without electricity on 4/30/19 from 8:04 AM until 5/2/19 at 1:10 PM due to non-payment. Further interview revealed the facility routinely received deliveries of medical supplies twice each week, but currently had not had a delivery since 4/29/19 due to vendors not being paid. Continued interview revealed the facility's primary vendor (Owens and Minor) had placed all their current orders on hold until payment was made. Further interview revealed the facility was unable to post mail because their postage meter was down due non-payment to their postage vendor (Pitney Bowes). Continued interview revealed the facility's par stock (inventory) was out of the following items:
1. Chest Tube size 24 French (size) and 28 French
2. Alcohol prep pads
3. Adult Lumbar Puncture Trays
4. Medium sized arm sling
5. Large sized arm sling
6. D sized batteries.
7. Blue, green, and yellow Vacutainers (blood specimen containers)
8. Revital Disinfectant
9. Butterfly Sets 23 gauge (short needle)
10. Xeroform dressings
11. Iodoform gauze dressings
12. 20 inch and 12 inch knee braces
13. Large posterior leg splint
14. Salem sump (used for suctioning) tubes 16 French
15. Huber needles
16. Dermabond dressings
Further interview revealed the supplies were usually restocked daily.

Interview with the CNO on 5/14/19 at 2:53 PM, in the conference room, revealed all of the facility board members had resigned by the end of the previous week.


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