Leadville hospital paid $169K for equipment it can't use at altitude, accepts bailout from county

LEADVILLE, Colo. — St. Vincent General Hospital District purchased equipment that was not properly rated for altitude, according to invoices obtained by 9NEWS and statements from hospital leadership.

The district reached an agreement with the Lake County Board of Commissioners to receive up to $480,000 from the county to help it meet its payroll obligations after the hospital announced in early December that it would not be able to make payroll.

Buying equipment not rated for altitude

As the hospital prepared to open a $26 million building in fall 2021, it purchased new medical equipment in June of that year. That included scoping equipment to diagnose stomach and intestine problems valued at $46,000 and $107,000 worth of colonoscopy equipment.

Interim hospital CEO John Gardner said the hospital later learned the equipment can't be used because the "leak testing equipment" for it cannot be validated for Leadville's altitude of 10,151 feet.

The CEO said because the gastroscope and colonoscopy equipment can’t be used, there’s no use for the $16,500 video processor the hospital also bought.

"When we’re at higher altitude, the pressure in the atmosphere is different. Because the pressure in the altitude is different, certain types of equipment can behave differently," said 9NEWS medical expert Dr. Payal Kohli. 

She said the equipment is critical for a hospital to function, but doctors won't use it if they can't be sure it works correctly and safely.

"If you can’t validate, you don’t assume, you don’t use. Because this is medical equipment that could do harm," Kohli said. "For any type of equipment that you’re placing inside somebody's body, like an endoscope or a gastroscope or a colonoscope, you really want to make sure that there’s no malfunctioning pieces."

When the issue was discovered – a year and more than 100 procedures later – Gardner said medical providers at the hospital stopped using the equipment and sent it back to the manufacturer for further tests. He said "it was a great relief" the manufacturer's test showed the equipment was leak-free. 

"Since then, the manufacturer has indicated that they believe that it is effective at Leadville’s altitude, but they will not validate it," Gardner said. "Without that validation, we are not willing to put our patients at risk."

He said St. Vincent has asked for the manufacturer, Olympus, to refund the purchase. A spokesperson for that company said it is in discussion with St. Vincent Health and hasn't received any request from the hospital to return the equipment.

"Medical facilities can use equipment through a wide range of altitude because automated equipment is designed to issue an error warning if sufficient conditions are not met," said Jennifer Bannan, public relations director for Olympus. "We can confirm that our most sensitive equipment previously in use at St. Vincent did not issue error warnings during the months in which it was used at the facility."

Gardner said there was no documentation suggesting that the hospital or the manufacturers explored any issues that might be caused by the altitude at the time of purchase.

"It is my understanding that St. Vincent Hospital elevation is the highest in the United States, and I doubt anyone even considered altitude could be a factor," he said. "We are seeking refunds from the manufacturer for this equipment since it is unusable."

Terms for accepting money from county

The district said it commits to implementing the actions requested in a county resolution giving it the money, "with a particular priority given to those actions that will promote financial transparency." The 18 conditions in the county's resolution are:

1. The board of directors will apologize in both a public meeting and in writing published to the residents and taxpayers of Lake County "for its failure to properly oversee the finances and management of the District." The board must also apologize to its staff and post recordings of the public meetings on its website.
2. The board will publicly provide a 90-day plan focused on financial sustainability and viability of the district, including services that will be eliminated, modified or added in the future.
3. The board will "aim to be the most financially transparent hospital in Colorado, publicly listing the cost to provide all services, including department budgets across all operations." The board must also maintain a high level of communication between staff and the Board of County Commissioners to update the financial status of the district.
4. The board will publicly post monthly the district's monthly revenues and expenses "in a manner digestible and accessible to laypersons."
5. The board will not make any more requests to the Board of County Commissioners for additional funding during the 2023 fiscal year.
6. The board is requested to commit in writing to the Board of County Commissioners that it will make a good-faith effort to repay all voluntary contributions made by the county to the district within one year.
7. The board is requested to commit to an immediate review of any and all assets that can be used to secure loans or liquidated to improve the district's cash position.
8. The board is requested to institute a policy at its next meeting that no investment will be made in medical or health care operations outside Lake County without first consulting the Board of County Commissioners.
9. The board is requested to initiate an evaluation of whether any senior staff materially failed in their professional responsibilities in a way that contributed to the district's financial issues.
10. The board is requested to commit to and initiate an evaluation of whether the district's former CEO and CFO engaged in potentially illegal conduct, and to pursue legal action if warranted.
11. The board is requested to commit to issuing a full Request for Proposal for audit, single audit and fiduciary audit evaluation for the prior four years, and publicly release the results within 18 months of Jan. 1, 2023.
12. The board is requested to publicly state, within the legal limits of confidential information or non-disclosure agreements, "whether in aggregate the severance payments to former senior staff in the last two years is greater than or less than the request for $480,000."
13. The board will work closely with county representatives to create an operating plan and budget for ambulance services to ensure it can "meet a realistic level of service in 2023, including contingency planning for the continuation of such services if the district declares bankruptcy or is unable to continue such operations."
14. The board will consider significant policy implementation to address necessary changes in the performance of senior leadership in the district and the way the board interacts, is informed and is empowered to raise concerns, demand answers and hold leaders accountable including board members.
15. The board will expand its hiring committee for new senior leadership to include representation from Lake County government, the Colorado Hospital Association and the Colorado Department of Health Care Policy and Financing.
16. The Board of County Commissioners requests that executive district staff be asked to defer all or a portion of their salaries until the district is able to make payroll without county contribution, to the extent allowed by applicable law and existing agreements.
17. The $480,000 will be used solely for meeting the district's payroll obligations.
18. The board commits to holding one or more joint work sessions with the Board of County Commissioners to discuss the implications for Lake County government and residents of the district's financial situation and the potential for filing a petition in bankruptcy.

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