Leader Blues

Tuesday, December 09, 2008

TOP STORY > >Hospital could be sold in days

Leader staff writer

Officials are hoping to seal a deal for the sale of the North Metro Regional Hospital facility possibly by the end of this week, certainly by the end of the year, to preserve it as an acute-care provider for Jacksonville and surrounding areas.

Financial losses in the millions in recent years are forcing the city to sell the facility. Negotiations are under way with Allegiance Health Management, a firm based in Shreveport, La.

“Negotiations have been going on every day for weeks. Our goal is to have something final no later than December 31,” said
Mayor Tommy Swaim, who also serves as chairman of the hospital’s board of directors.

With the sale, the hospital would no longer be a private, not-for-profit entity with 501(c)3, tax-exempt status. It would become a private, corporate entity. Access to emergency services, however, would be unchanged, Swaim believes.

“Hospitals with emergency care have to see people with emergencies – that is true with all hospitals,” Swaim said. “I don’t see any changes in how the emergency room operates, unless there is an after-hours clinic.”

The opening of an after-hours clinic to provide urgent care for conditions such as colds, flu, and other non-emergency medical needs, is “still on the table” as part of the deal with Allegiance, he said.

The after-hours clinic would not be a free clinic, but a place to come to get medical services during hours when business offices are closed, diverting those patients from the hospital’s busy emergency department.

Brig. General Rowayne Schatz, top commander at Little Rock Air Force Base, said in an interview Monday that the base relies on the hospital.

“North Metro is the closest emergency-room facility,” the general said. “We don’t have an ER in the base clinic. We rely on them for medical services in our local community, to provide an emergency room and in-patient services.

“We do send several of our airmen and their families to North Metro and they’ve been a good provider for us and we’ve been monitoring their situation as a customer,” he said. “But we have no sway.”

If North Metro fails to get an operating agreement or sale, base personnel would have to use another facility, he said.

The last year that the hospital operated in the black was 2003-04, when it closed the fiscal year June 30, 2004 with a $652,000 positive income. The next year, net income slipped to the other side of the ledger with a $98,000 loss. In 2005-06, losses totaled $804,000, then jumped to $3 million in 2006-07. The 2007-08 fiscal year closed out with a net negative income of $2.38 million.

Much of North Metro’s losses are attributable to uncompensated and charity care, as well as the low reimbursement level for Medicaid and Medicare patients.

The federal Emergency Medical Treatment and Labor Act mandates that any hospital that gets Medicare and Medicaid funding – and essentially all do – must provide a medical screening and treatment if necessary for anyone who comes to the emergency room, regardless of their ability to pay.

“Hospitals treat according to their capability and stabilize for transfer,” Paul Cunningham, senior vice president for Arkansas Hospital Association, said.

Once a patient’s condition is stabilized, the hopital’s legal obligation is fulfilled. For a patient who seeks emergency care at a hospital and then finds he needs further services for a serious medical condition, “most hospitals through their social workers will try to find where a patient can get the services he needs,” Cunningham said.

As part of the purchase, Allegiance Health Management has agreed to pay the appraised price of the North Metro facility or existing bond debt, whichever is more. After review of a preliminary appraisal, city and hospital officials asked Allegiance to go back to have a “re-look at some issues,” Swaim said. A revised appraisal is expected “any day now.”

Swaim was reluctant to disclose any more specifics about what is on the table with Allegiance because of a promise by city officials to not publicize any details until a deal is finalized.

“Otherwise, they could back out of a deal if they wanted to,” Swaim said. “They don’t want this information getting out to their competitors.”

As for the fate of the current hospital’s chief executive officer, Scott Landrum, and interim chief financial officer Cal Brummund, Swaim said that they may or may not stay on at North Metro once an agreement is reached.

“That’s for them to work out with the new management company,” Swaim said.

Landrum, Cal Brummund, and Allegiance Health Management were not available for comment.