A Cautionary Tale of Rural Healthcare and a Peek Inside a Health System Board Meeting

by James C. Sherlock

Revised 12 April at 1:34 PM

I ran across a fascinating story buried deep in a massive Centers for Medicare/Medicaid Services (CMS) database on Ambulatory Surgical Center (ASC) inspection reports.

The report I will share with you is a cautionary tale both of rural healthcare and of the way hospitals view and treat ASCs, even when they own them. The ASC in this case is in Virginia, the hospital that owns it is in West Virginia.

Nobody told the Virginia Department of Health or Medicare, which license and certify it respectively. This is the story of a VDH surprise inspection at the end of November 2020.  It was indeed a surprise – to the inspectors.  The ASC was closed, and had been closed a long time.

But it revealed a great deal about rural hospitals, ASCs and the business calculations of integrated health systems.

It also revealed that antitrust law is not always in the forefront of the decision trees of the boards of non-profit health systems.


The Bluefield Virginia/West Virginia micropolitan area has 107,000 people. All but 10,000 0f them live in West Virginia.  Bluefield VA, Bluefield WV and Princeton WV are within that area.

Tazewell County Va., of which Bluefield is the northernmost town, has no full service hospital.  The county is home to about 50,000 people.

The closest Virginia “hospital” to Bluefield is Carilion’s Tazewell Community Hospital.

The Carilion facility in Tazewell, however, is not a full service general hospital.  It specializes in emergency medicine and diagnostic imagery.

The closest full service Virginia hospital to Bluefield and much of Tazewell County is Carilion Regional Medical Center in Roanoke, two hours from Bluefield.

The tale unfolded in three quick steps.

  1. In October of 2019 Princeton Community Hospital (PCH) in Princeton, W.Va., purchased Bluefield (WV) Regional Medical Center (BRMC) and Bluefield (VA) Ambulatory Surgical Center (ASC) from Community Health Systems (CHS) of Tennessee. CHS was selling because it was selling every rural hospital it could to raise cash to avoid bankruptcy.  I do not know what PCH paid. PCH announced before the acquisition that they planned to expand services at BRMC.  Presumably they told the state of West Virginia the same tale.
  2. In November of 2019, the board of PCH said goodbye to its CEO six weeks after the BRMC acquisition closed.  The board of PCH announced in a press release that the action was a “mutually agreed upon decision by the PCHA Board of Directors and the current CEO, Mr. Jeffrey Lilley, to separate their relationship. This decision was accomplished in a special, scheduled board meeting on November 12.”
  3. On July 30, 2020, 10 months after the acquisition, PCH shut BRMC except for emergency facilities.  They in a press release blamed the hospital shutdown on COVID.

But why did the Board of PCH make the purchase, fire its own CEO the next month, and shut the BRMC down 10 months later?

Did the PCH board find out things it hadn’t known about the financial state and general viability of the BRMC between the acquisition and the “mutually agreed upon decision” to let the PCH CEO go?

Or did it buy BMRC, only 14 miles but nearly 30 minutes from PCH because of the mountain roads, with the plan to shut it down in order to consolidate regional healthcare business in Princeton?


But on to the ASC, which is in Virginia.  We know pretty much everything about that Board decision.  The ASC in Bluefield Virginia was already closed when PCH bought it.

VDH sent a team to inspect that ASC in late November of 2020 for CMS that filed the report summarized below.

The Inspection

  1.  A surprise ASC inspection was held in late November 2020 by the Virginia Department of Health.  It was indeed a surprise, especially to the inspectors.  They found the place closed, and it had been closed for a long time.  The inspectors reported the obvious.  “Due to the systemic nature of this deficiency, the facility’s Governing Body failed to substantially comply with §416.25 Basic Requirements, the Conditions for Coverage for Ambulatory Surgical Centers.”  Good call.
  2. The inspectors then, with the authority of the Virginia Department of Health, the licensing government agency, demanded records of Princeton Board meetings that referred to the ASC.  I send my sincere congratulations to the inspection team for the outstanding follow-up.  They performed a major service in doing so, especially for a chronically understaffed organization.

The July 2020 PCH Board Meeting – discussions of the Bluefield ASC

The transcript of the board meeting (portions below) showed that COVID had nothing to do with keeping the ASC closed. Keeping prices high and wanting to keep the nurses in Princeton rather than have them return to Bluefield where they wanted to work were the reasons.

The surveyor requested a copy of all Board of Directors Meeting Minutes which addressed the ASC since 10/01/19.  Those minutes provided the following evidence:

  • “The projected costs of improvements ($110,000), and a quote for consulting services ($110,000) to reopen the ASC, for a total of $220,600 excluding personnel costs.
  • “The need for purchasing new computers and printers for the ASC.
  • “The concern that many of the hospital’s RNs (Registered Nurses) came to the community hospital after the closure of the regional hospital, and “many” had stated they would “go back” causing concerns that if they opened the ASC they “may end up losing our own staff and setting us back.”
  • “Reimbursement in [sic] only 50%. An eye case in the hospital is $2,000 at the surgery center it will only be $1,000.”
  • “The concern that a key surgeon for the ASC only wanted to do cases “2 days a week,…What happens to the staff on the other days,…We cannot pay nurses for 3 days of not working OR cases.”
  • “Other physicians have already said they want to do cases at the surgery center, but that will cost us money on each case because the reimbursement is significantly less.”
  • “We need to try to protect our market share and be careful how we utilize that building.”

“The minutes provided no evidence that concerns related to the COVID-19 virus, the availability of staff for the ASC, or the availability of PPE for the ASC were discussed in this meeting. The minutes provided no evidence that reopening of the ASC was voted on, or that a decision was made in regards to the ASC’s closed status.”

The issue isn’t whether Bluefield Regional Medical Center and the Bluefield ASC should have closed for lack of volume or for lack of nurses. I have no idea.

But we do now know that when the acquisition was approved by the State of West Virginia and the FTC let it happen, the acquirer, WVU Medical System campus in Princeton WV, told all including Bluefield residents that they planned to expand the services at Bluefield.

PCH closed it 10 months later.

They blamed COVID in the hospital closing press release.  But they also had refused multiple requests from doctors to let them lease or buy the ASC.

The transcripts of the meeting of the Board of Princeton Community Hospital above appear to provide rare compelled evidence of likely violations of federal antitrust law with regards to the ASC.

The way PCH went about the acquisition, misrepresenting a plan to expand services to gain approval of the purchase and then closing the Bluefield hospital 10 months later, is at least unethical but but they would pass it off as incompetence at the front end and COVID at the back end.

Refusing to lease, sell or even notify the VDH or Medicare that the ASC was closed is another matter.  It was likely illegal.  WVU Princeton Community Hospital created a regional monopoly with the acquisition and then utilized the monopoly to block competition by failing to notify the government that the ASC was closed.

If the Board had done so, which was its obligation, the Richmond COPN bureaucracy would have crossed it off its list and opened up the area for another ASC.  Which local doctors wished to establish.