State says the money has already gone to other applicants; Freeman says the award couldn’t follow the hospital to a new owner
FORT SCOTT, Kan. — Freeman Health System has declined a $2.5 million state grant that was to bring MRI services to Bourbon County, citing a letter of intent to explore selling Freeman Fort Scott Hospital to Kansas Renewal Institute.
The Kansas Department of Health and Environment said Monday that Freeman notified the agency Sept. 29 that it was turning down the award, which came through the Kansas Rural Health Transformation Program’s Rural Emergency Hospital Conversion/Transformative Capital Investment Program. The money has since been redirected to other hospitals.
“This allowed KDHE to reallocate those funds to applicants from the RFA waitlist whose proposals scored highly in the original review but could not be funded in the initial round of selections,” Jill Bronaugh, KDHE communications director, said in an email to the Monitor. She said drawing from the waitlist lets the agency deploy the funds quickly using proposals that have already been vetted.
KDHE did not say which applicants received the reallocated money.
Freeman confirmed the decision in a statement Monday, tying it to the nonbinding letter of intent it signed with KRI, announced Sept. 21, to explore KRI taking over the hospital.
“During this process, the Kansas Department of Health and Environment advised that the award could not be transferred to another organization, even in the event of a change in ownership,” Kevin McClintock, Freeman media relations coordinator, said in the statement.
Freeman notified the state it was declining the grant eight days after the letter of intent was announced.
“While Freeman will not move forward with the 2026 award, we remain committed to supporting healthcare initiatives in the region and have offered to assist KRI with a future application for a similar grant should they choose to pursue the opportunity during a subsequent RHTP funding cycle,” the statement said.
KRI did not respond to a request for comment by press time.
The $2,502,999 award, announced in May, was one of 17 grants KDHE made from a pool of 73 applications, totaling $29.1 million statewide. Freeman’s was the fourth-largest in Kansas. In June, Freeman told the Monitor the money was restricted to purchasing and installing a new MRI machine, associated equipment and renovation of the existing MRI room, and could not be used for operations or other expenses.
At the time, Anita Walden, chief administrative officer of Freeman Fort Scott Hospital Inc., called the grant “a significant investment in the future of healthcare in Fort Scott, Bourbon County, and the surrounding region.”
The grant money came from a $221 million allocation Kansas received from the Centers for Medicare and Medicaid Services under the federal Rural Health Transformation Program, created by H.R. 1 to provide $50 billion over five years for rural health infrastructure.
The decision comes as ownership of the hospital building and of KRI has changed. Records filed with the Bourbon County Register of Deeds show the building at 401 Woodland Hills Blvd. was sold Aug. 26 to 401 Woodland Hills KS Realty LLC, with New York developer David E. Marx signing a $17.5 million mortgage as manager of both that company and KRI.
KRI confirmed Oct. 16 that it had changed ownership and said it intends to pursue “additional mental health and hospital service lines” at the building.
Freeman reopened the Fort Scott hospital in September 2025, after it had been closed for nearly two years, with a six-bed emergency department and a 10-bed acute care unit.
