Leader Blues

Wednesday, March 25, 2009

TOP STORY >> Doctors say rent increase too high

By GARRICK FELDMAN
Leader publisher

Two medical practices — one in Jacksonville and the other in Cabot — could move because of a dispute over their rent, which has more than doubled this year.

Eleven doctors who have worked in Jacksonville for decades are considering moving their practice to Sherwood, where they’ve been offered lower rent. The Cabot doctors are younger and are thinking about building their own clinic.

The groups have severed their employee contract with North Metro, which led to the higher rents. Some doctors did not receive any pay in January and early February because of the split and had to wait for insurance reimbursements before they could draw a paycheck.

The two clinics — one next to the Jacksonville hospital on Braden Street, the other on West Main Street in Cabot — were affiliated with North Metro Medical Center but split from the hospital this year. Jacksonville owns the properties and told the doctors their rents would rise to reflect their fair-market value.

The rent jumped from $5 per square foot to $17 per square foot in Jacksonville, or $459,000 a year. The rent increased from $9 a square foot to $18 a square foot in Cabot, or $270,000 a year. But the higher rent includes maintenance and other services provided by the hospital, which the doctors used to pay for until this year because of the lower rent.

St. Vincent Medical Center/North in Sherwood has offered the Jacksonville doctors $14 a square foot, which would save them about $100,000 a year. They’re considering the offer because some of the doctors, after paying malpractice insurance, make just about that much a year.

The doctors in Cabot have offered Jacksonville $4.5 million for the clinic. The city says it’s worth $4.9 million. They’re thinking about building their own clinic if they can’t reach an agreement with Jacksonville.

The Jacksonville doctors have practiced in the area for decades and say they don’t want to abandon their patients, many of whom are on Medicare and may find it difficult to drive to Sherwood.

“We don’t want to, but we may have no choice,” Sharon Stephens, administrator for the medical groups, said about the possible move to Sherwood.

“We’d like to see the lease lowered and stay in Jacksonville,” Stephens said. “All are committed to staying together,” Stephens said.

The doctors are glad to take care of elderly patients, even though Medicare doesn’t cover their costs, Stephens said. They also offer care to military patients at cost, she said.

The doctors were told last March that their rent would be going up, so they sought an appraisal. Both appraisals were by Arkansas Appraisal.

But the doctors say the appraisal is unfair because it considers Jacksonville property as valuable as west Little Rock and Conway, where rents are about $20-$22 per square foot.

The Jacksonville clinic opened in June 1998. The Cabot clinic opened in February 1997. 
As of the end of 2008, the group no longer had an employee contract with North Metro.

But they “never received a dime” from the hospital, Stephens said.
The clinics are owned by the hospital and are under the authority of the hospital board.

The board is required by federal rules to charge a rent that aligns with the appraised value of a medical facility, explained Mayor Tommy Swaim, who is also the chairman of the hospital board. He says he is supportive of possible efforts by the doctors to get a second opinion about the value of the building.

“Nobody wants to pay any more rent than they have to, and we don’t want to make them pay any more, but the hospital is obligated to charge a rent that is based on fair-market value,” Swaim said. “The doctors are the backbone of the medical community, and we want to work with them, and that is what we are trying to do.”

The Jacksonville clinic has 60 employees in addition to the 11 doctors. The Cabot clinic has 30 employees in addition to the six doctors.

Nancy Dockter contributed to this report.