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Private Hospital In Overland Park And Its Clinics Close, Citing Disruption Caused By COVID-19

Pinnacle Regional Hospital, formerly known as Blue Valley Hospital, filed for Chapter 11 bankruptcy protection in February.
Dan Margolies
KCUR 89.3
Pinnacle Regional Hospital, formerly known as Blue Valley Hospital, filed for Chapter 11 bankruptcy protection in February.

Pinnacle Regional Hospital in Overland Park, Kansas, and its satellite clinics have closed their doors and terminated almost all of their employees.

The privately owned hospital, which was formerly known as Blue Valley Hospital and specialized in spinal fusion surgery and procedures to help obese people lose weight, filed for Chapter 11 bankruptcy protection in February.

The hospital, located at 127th Street and Metcalf Avenue, had remained open after it filed for Chapter 11. But in a notice to employees on Friday, the Chapter 11 trustee said that “unforeseen and unexpected business circumstances, including the disruption to a wide range of surgeries and business operations created by the COVID-19 pandemic,” had led to the decision to shut it down.

Also shuttered were the Blue Valley Surgical Associates clinics in Overland Park; Kansas City, Missouri; Blue Springs, Missouri; Springfield, Missouri; Columbia, Missouri; and St. Louis, Missouri.

A handful of administrative employees will continue working, but the 100-plus doctors, nurses, therapists and other health workers at the hospital and clinics are expected to be laid off over the next two weeks.

Doug Palzer, the owner of Pinnacle Health Care System (the parent company of the hospital and clinics), could not be reached for comment. Pinnacle’s CEO, Joseph Conigliaro, did not return a call seeking comment.

In January, Pinnacle Health Care System shut down its other hospital in Boonville, Missouri, also called Pinnacle Regional Hospital. That occurred after state health regulators ordered the Boonville facility to overhaul its sterile processing procedures. Pinnacle Health Care System said the expense of doing so was prohibitive.

Palzer, a businessman who lives part of the year in Las Vegas, founded Blue Valley Hospital about 10 years ago. He changed its name to Pinnacle after he bought Cooper County Memorial Hospital in Boonville in 2018 and renamed it Pinnacle Regional Hospital. Both hospitals specialized in bariatric surgery – a procedure to help extremely obese people lose weight – and spinal surgery. The hospitals claimed to perform more than a third of all bariatric surgeries for Missouri Medicaid patients.

Palzer bought the Boonville hospital after the Centers for Medicare and Medicaid Services in 2018 stripped the Overland Park hospital of its Medicare certification, depriving it of a major source of revenue. The Centers for Medicare and Medicaid Services found that the Overland Park hospital did not “primarily engage” in providing inpatient services, which is a requirement for Medicare coverage. Hospitals must average at least two inpatients a day and an average length of stay of at least two nights to be eligible for Medicare reimbursement.

A KCUR investigation earlier this year found that two patients who underwent surgery at the Overland Park facility died in 2017 and 2018 after receiving high doses of fentanyl and oxycodone, respectively. Health inspectors later concluded that “fentanyl intoxication” and “oxycodone intoxication” likely contributed to the two men’s deaths, according to federal records obtained by KCUR.

The deaths came at a time when the hospital was in peril of losing its Medicare certification because it didn’t have a sufficient number of inpatients. A hospital staffer told inspectors in 2017 that it was performing “a lot of extra surgeries to get the numbers we needed,” according to inspection reports.

The families of both men have sued Pinnacle for negligence, but the bankruptcy and now the closure of the hospital may leave them without any assets to pursue if they prevail.

Dan Margolies is a senior reporter and editor at KCUR. You can reach him on Twitter @DanMargolies.

Copyright 2020 KCUR 89.3

Dan was born in Brooklyn, N.Y. and moved to Kansas City with his family when he was eight years old. He majored in philosophy at Washington University in St. Louis and holds law and journalism degrees from Boston University. He has been an avid public radio listener for as long as he can remember – which these days isn’t very long… Dan has been a two-time finalist in The Gerald Loeb Awards for Distinguished Business and Financial Journalism, and has won multiple regional awards for his legal and health care coverage. Dan doesn't have any hobbies as such, but devours one to three books a week, assiduously works The New York Times Crossword puzzle Thursdays through Sundays and, for physical exercise, tries to get in a couple of rounds of racquetball per week.