Fierce exclusive: Tales of an accidental hospital CEO

When I dine with Jerry Seelig, it's usually to enjoy some foodie oasis in or around Los Angeles. But when I sat down with him for breakfast last week, it was to deconstruct his recently concluded odyssey as an accidental hospital CEO.

Seelig is a patient care ombudsman (PCO). Courts appoint him to work with a hospital or nursing home when it files for bankruptcy protection to ensure that the continuity and quality of care doesn't deteriorate in tandem with the provider's financial situation. He plies his trade all over the western U.S.

Last year, Seelig was appointed PCO for Nye Regional Medical Center. It's located in the remote mining town of Tonopah, Nevada, best known as being adjacent to the infamous Area 51 where the U.S. military puts top-secret aircraft through its paces. The hospital had filed for bankruptcy in late 2013 and was in danger of closing, leaving the community without another acute care facility for at least 100 miles in pretty much every direction.

That isolation led in part to Seelig being named the hospital's Responsible Executive--a bankruptcy term that is the legal equivalent of a CEO--about four months after he became its PCO. The area's leaders were impressed with his transparency in reporting patient care woes at the hospital, and given there were not a lot of experienced hospital executives willing to come in and take over, Seelig accepted the job. He'd commute to the hospital, flying into Las Vegas from Los Angeles and then making a 200-mile drive to Tonopah.

Aside from his PCO work, Seelig has had no experience as a hospital manager. You could call him a doctor, but given that's in reference to a Ph.D he earned from the University of Chicago in social work, that doesn't hold much weight in a patient ward.

Despite its isolation, Tonopah's demographics should have been promising for any hospital. Along with the presence of mining companies and the military, a Spanish conglomerate was building a solar farm in the area, so there is an abundance of well-educated and well-paid residents. Three-quarters of would-be patients walk into Nye County's doors with insurance, and Nevada's decision to expand Medicaid pretty much covered the rest.

Nevertheless, Seelig told me Nye Regional may have been in the worst shape of any hospital he's ever seen. Records--particularly an August 2013 report by state inspectors that he shared with me--tend to bear this out. Eight patient records pulled at random didn't have nursing plans. The laboratory was barely functioning--at least 80 patients who should have received blood count tests never had them because reagents weren't available. That prompted at least one child to be transported by air ambulance to another facility in order to undergo proper testing-- literally a $40,000 solution to a $3 problem. There was no pharmacist because he hadn't been paid, and drugs in the pharmacy weren't secured.

The hospital's finances were in equal disarray. The state inspection report indicated Nye County had no budget, and that its governing board had not met since at least 2010. Employee checks had bounced. Other records indicated that the hospital owed the Internal Revenue Service more than $400,000 in payroll taxes.

"There was no ledger. There was no aging of accounts. There was no nothing," Seelig said. When he took over, to the best of his knowledge there was $16,000 in the bank and a $100,000 payroll that had to be met twice a month.

Court records and media reports suggest much of Nye Regional's disarray may be placed at the feet of Vincent Scoccia, an osteopath who purchased the hospital in 1999 from Nye County. For many years, Seelig told me it functioned well, but it began to go into a steep decline in recent years. Records also show that Scoccia created a series of LLCs, non-profits and other corporate entities that performed work peripheral to the hospital, such as operating an air ambulance company, providing housing to its physician assistants and other tasks.

Talitha Gray Kozlowski, the attorney who represented Nye County, said at a hearing late last year that Scoccia used a sham board of directors who did whatever he wished with the hospital. Documents filed by Gray Kozlowski in the bankruptcy case indicated that Scoccia not only reconstituted the board at his whim, he wrote checks from the hospital accounts to himself, including one for $76,000 just before Seelig took over. She strongly suggested in those documents that the actions constituted theft.

Scoccia, who now practices in Texas, was not immediately available for comment. His attorney, James Greene, did not respond to a request seeking comment.

The county sued Scoccia to regain control of the hospital. Late last year he agreed to pay hospital's controlling company, PrimeCare Nevada, $500,000 over the next decade. The payments are secured with a trust deed against property owned by Scoccia's father.

Although the community had become distrustful of the way the hospital had been managed, it was willing to give the new regime a chance.

"People were so desperate to reinvent this hospital and bring it back to delivery quality healthcare," Seelig said. "I've never seen people forgive and move on as rapidly as they did in this town."

Seelig chose not to remake the hospital alone. He recruited a longtime nurse with extensive experience running rural hospitals (many such facilities are run by nurses), another clinical expert he works with on a regular basis, and Nye Regional's longtime former chief financial officer, among others.

It took several weeks to reconstruct accounts aging to determine that the hospital had closer to $60,000 in the bank than $16,000, and the situation gradually improved from there. The patient census improved dramatically in the months after Seelig took over, and the hospital eventually emerged from bankruptcy. The facility was pared from 44 beds to 12, and Seelig said the hospital is well into the process of receiving designation as a Critical Access Hospital, which would help secure it additional funding. Nye County may also reconstitute a hospital district that lapsed after the facility was sold in the 1990s in order to provide it ongoing tax revenue.

Having finished his work, Seelig was replaced in February by Wayne Allen, who served as an interim CEO at Mendocino Coast District Hospital in Northern California, another facility where Seelig served as CPO.

Not everything is perfect at Nye Regional. Last month, the hospital suspended payments to some vendors and stretched out payments to its doctors to as much as 120 days. In an interview with Nevada Public Radio, Allen said he didn't expect current revenue to support the hospital's infrastructure, and that the district tax would be crucial for it to continue operating.

But Seelig stands by the vast improvement in clinical care at the hospital and the stabilization of its finances-- the alternative would have been that it shut down, which has not happened.

"Clinically speaking, it's about as good as you can get in the middle of nowhere," he told me. And that's no accident. -- Ron (@Fiercehealth)

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