The CEO of the firm operating two struggling East Tennessee hospitals says the closure last year of its third medical center created a financial setback from which they're still trying to recover.

Seamus Lagan, responding to queries posed by Sen. Marsha Blackburn, said Rennova Health Inc. is trying to get additional financial backing.

Nothing is guaranteed, however, he wrote.

Lagan said the closure of Jamestown Medical Center in Jamestown last summer created a "significant disruption" to their business plans.

"Had this disruption not happened we believe we would have secured access to adequate capital and could be in a much different financial position today," his letter to Blackburn states.

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"That said, we cannot change the history and can only endeavor to finish up ongoing discussions that we believe will realize significant and adequate capital for Rennova in the near future."

Seamus Lagan
Seamus Lagan: President, Chief Executive Officer, Interim Chief Financial Officer and Director
RennovaHealth

Lagan went on with this caution: "To be very clear, I cannot guarantee that we will succeed and I am not representing that we have any definitive agreement about to close, but we are in discussions with a number of parties and remain hopeful that we can successfully close an adequate funding arrangement in the near future to secure the future success of these hospitals."

Federal financial records show the Florida-based Rennova is suffering a significant lack of resources.

Rennova operates Big South Fork Medical Center in Oneida as well as Jellico Medical Center in Jellico.

10News has reported for about a year on problems at the firm's hospitals. Current and former employees say they've struggled to get resources to provide services.

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Big South Fork has had problems with staffing and payroll in recent months. The hospital’s former lab manager told 10News that staff was asked to work 24-hour shifts without pay and the hospital routinely ran out of supplies for critical lab tests.

Last week 10News reported that Big South Fork Medical Center was telling ambulance drivers to carry patients to other hospitals.

Blackburn, a Williamson County Republican, sent a letter Jan. 28 to Lagan demanding answers about the company's viability. She set a Feb. 11 deadline for a response.

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As of Wednesday morning, a Blackburn spokesman hadn't heard back from Rennova.

"As of this morning, Senator Blackburn has not received a response from Rennova," the statement reads. "It is disconcerting to see Rennova giving their supposed response to members of the media prior to ensuring a copy had been sent to Senator Blackburn.”

Tennessee Sen. Marsha Blackburn
Sen. Marsha Blackburn

The Independent Herald newspaper in Oneida reported passages late Tuesday from Lagan's letter.

Blackburn addressed concerns about Rennova's operations during a phone conference Tuesday with reporters. She also said she wanted to see how the company responded to her questions.

The senator asked Rennova if it was adequately capitalized to support its hospitals. She also asked what expertise it had to run its hospitals, and she asked if Jellico Medical Center and Big South Fork were compliant with federal Centers for Medicare & Medicaid Services conditions to operate.

Lagan replied that Rennova has "very capable expertise on the ground in Tennessee" and said it retains agreements with the federal government's Centers for Medicare & Medicaid Services conditions to operate.

The government terminated its agreement for CMS services with Jamestown last year, effectively forcing the hospital to close, Lagan said.

The CEO wrote it was "unfortunate" Blackburn was paying attention to Rennova in a negative context. He said the firm has provided "approximately $11 million in cash to our Tennessee hospitals and their employees and continues to provide cash on a monthly basis."

"We would welcome the opportunity to discuss the challenges we perceive to be a longer term risk to rural hospitals than a short term cash flow difficulty being experienced by a determined health care operation, to see if there are solutions that create a better and more stable health care platform," his letter states.