2023 The Al Neuharth Innovation in Investigative Journalism Award, Medium Newsroom finalist

Buy and Bust

About the Project

KHN senior correspondent Sarah Jane Tribble got an intriguing tip: Donald R. Peterson was back in health care. He had been charged with Medicare fraud and though he did not admit wrongdoing, he agreed in a 2019 settlement to stay out of Medicare, Medicaid, and all federal health care programs for five years.

In summer 2021, Tribble heard that Peterson and other executives had created Noble Health, a private equity-backed startup, and were looking for hospitals to buy. They persuaded officials in Fort Scott, Kansas, to pay them $1 million to study the feasibility of reopening the local hospital.

Tribble wondered: How could someone who was banned from federal programs be involved in such a venture? She pulled that thread and what unraveled was “Buy and Bust: When Private Equity Comes for Rural Hospitals,” the first story in a remarkable run of reporting that tracked the real-time collapse of two rural Missouri hospitals and culminated in revelatory answers to that first question.

Within months of his settlement, Peterson became one of two directors of Noble Health, which bought Callaway Community Hospital in Fulton, Missouri, and a short time later acquired nearby Audrain Community Hospital.

Under Noble’s ownership, the struggling hospitals sank, according to local, state, and federal documents, as well as dozens of interviews with community leaders, health officials, and frustrated corporate executives and hospital workers who provided KHN with internal records.

What Tribble uncovered was this:
– Noble received Medicare and Medicaid payments plus nearly $20 million in federal covid relief money.

– The hospitals’ owners quit paying their bills, including those for contract nurses and lab work for covid tests, according to lawsuits. And staff members reported that they went without basic supplies like anesthesia and bandages.

– State inspectors, coordinating with federal regulators, found 135 pages of deficiencies that put “patients at risk for their health and safety.”

– Noble stopped paying its employees’ health, dental, vision, and life insurance benefits, workers said. Employee complaints triggered two federal investigations.

– As the businesses foundered, Noble secured nearly $10 million in risky and unconventional financing that carried interest rates as high as 50%.