Two Illinois hospitals that are part of Reno, Nev.-based American Healthcare Systems are on “bypass” status — meaning ambulances are being sent to other facilities — amid payroll delays. The Illinois Department of Public Health is coordinating with area hospitals in case patients need to be transferred, a spokesperson for the department said in a Nov. 9 statement shared with Becker’s.
Granite City, Ill.-based Gateway Regional Medical Center funded its payroll Nov. 6 and as of 8 p.m. Central Time, Waukegan, Ill.-based Vista East Medical Center’s payroll was being processed, with funds expected to reach employees that evening, Evelina Sarian, COO of AHS, said in a statement shared with Becker’s.
Becker’s has followed up with Ms. Sarian to confirm that Vista East employees received their pay.
“No other hospitals in our system are experiencing payroll delays,” Ms. Sarian said. “We recognize that employees and their families depend on timely pay, and we take that responsibility seriously. We regret the concern this has caused our Vista East employees and are focused on completing the process this evening.”
The payroll challenges come after AHS founder, CEO and Chairman Mike Sarian, PhD, and his wife, Ms. Sarian, provided a personal $1 million loan to cover the cash flow issues that delayed payroll for more than 600 Gateway Regional employees in early August. Employees received their paper checks July 31 but were asked to not cash them until the end of the workday Aug. 3.
Dr. Sarian faces lawsuits in Nevada and Florida, the latter of which also involves hospitals in California, alleging he diverted millions of dollars from hospital operating accounts, shifted funds among facilities and used corporate money for personal expenses. AHS shareholders Faisal Gill and Aramais Paronyan, MD, voted in March to remove Dr. Sarian as CEO due to financial fraud suspicion, but a judge ruled Aug. 3 that Dr. Sarian could remain CEO of AHS, according to court documents obtained by Becker’s.
“Missing payroll is completely unacceptable and irresponsible – for hardworking physicians, nurses, employees and most critically – patients,” the IDPH spokesperson said. “Gateway and Vista are private, for-profit hospitals whose operations and finances are managed by American Healthcare Systems. Their lack of communication, transparency, and responsible financial management and contingency planning is extremely concerning.”
While Illinois can not take over the management or immediate closure of a private-side hospital, IDPH is working with local hospitals in case patients need to be transferred. The department has also notified the Illinois Department of Labor and the Illinois Department of Employment Security about the missed payroll at both hospitals, is regularly meeting with leadership at both hospitals about contingency planning for patient care and is coordinating with federal CMS on ongoing oversight.
Affected employees have one year to file a complaint with the Illinois Department of Labor regarding the missed pay and up to 10 years to sue over unpaid wages, the IDPH spokesperson said.
