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Friday, Aug. 22, 2014

Hospital board ready to hear two partnership proposals

Thursday, September 15, 2011

(Photo)
Tommy Barnhart of the Dixon Hughes accounting firm told the Fulton County Hospital Board, on Sept. 6, the hospital's financial situation raises concerns as to whether it has the resources to survive over the next 12 months.
Monday, Sept. 26 is the date Baxter Regional Medical Center and Ozark Medical Center have been invited to make their pitches to lease the Fulton County Hospital.

The Fulton County Hospital Board has provided financial records and other information the hospitals have requested, and both continue to show interest in leasing the financially troubled local hospital.

"One of them's pretty much got a proposal ready now," attorney Jim Short told the board during a special meeting on Sept. 6. "Both do it at the same time would be my recommendation. Give them a week or so and let them both present at the same time."

Rather than schedule another special meeting, the board discussed hearing the two hospitals' proposals at its next regular meeting on Sept. 26.

That would give the hospitals nearly three weeks to finalize their proposals.

"Anybody have any difficulty making that meeting?" asked board president Jerry Estes. "I really would like for the entire board to be here."

Hearing no objections, Sept. 26 was set to hear the hospital presentations.

Board members have been looking at spending and staff cuts to deal with mounting debt. Some have hoped to find a way to allow the facility to remain an independent hospital.

But Tommy Barnhart, of the Dixon Hughes accounting firm, did not give much hope that would be possible.

Barnhart and Jason Sanders, an associate, appeared at the special meeting to discuss the financial outlook and make recommendations concerning the hospital's future.

"What we need is a plan from the board, a financial plan for the sustainability of the hospital," Barnhart told the board.

After reviewing the hospital's $1.3 million dollar loss last fiscal year, its $600,000 in debts and its inability to borrow more money, Barnhart said the annual audit, which is being prepared, paints a bleak picture.

"The numbers, on the surface, don't look very good, as you obviously well know," said Barnhart. "The audit team (report)...may have what we call a "going concern" opinion on it, and the going concern opinion will simply say that we're not sure that...this hospital can be sustained in business for the next 12 months."

Barnhart said he knew the board was working hard to cut spending but added, "You cannot cut your way to prosperity."

Barnhart was commenting on staff cuts which department heads recommended, at the board's request.

"The staffing cuts...that were proposed...$369,000 in salaries and benefits. That really would net the hospital only $108,000 in positive cash flow or savings," Barnhart explained because, as salaries are eliminated, Medicare and Medicaid will reduce what they pay the hospital.

Barnhart supported controlling spending, but said cutting staff too deeply would "cut into the meat of potential patient quality and satisfaction."

"So what's the alternative? The alternative is, you have to grow. It's all based on volume. You have to look for ways to increase the volume of paying patients," Barnhart told the board.

According to Barnhart, Fulton County Hospital is not alone, as it faces a financial crisis. Nearly all of the nation's 2,000 small and rural hospitals are having trouble staying afloat, and the situation will, likely, only get worse, as state and federal governments cut Medicare and Medicaid reimbursements to deal with budget deficits.

"The trend is, most are finding they must partner with somebody, because it is getting increasingly difficult for small, rural hospitals to stand completely alone," said Barnhart.

As the local hospital seeks a partner, Barnhart listed some of the advantages of allowing a larger hospital to enter the picture:

*A financially stable partner would have access to capital, while Fulton County Hospital cannot currently borrow, and has limited cash flow.

*A larger hospital should be able to help recruit physicians to the hospital or, at least, share some of its staff physicians.

*A larger partner should have better purchasing power to help hold down costs for insurance, supplies and equipment.

*A partner should be able to provide management expertise to help the hospital deal with challenges.

Barnhart said there were many levels of partnership, ranging from sharing services to a lease agreement to a complete merger.

Barnhart added a larger partner will probably seek a line of control of at least 51 percent. That means it will want to appoint most of its board of governors, with the existing board serving in an advisory capacity.

Barnhart added, despite its problems, the Fulton County Hospital has some positives to offer, as it negotiates a partnership.

The hospital has earned the designation of being a critical care access hospital, a designation that carries some financial benefits when it comes to federal reimbursement.

In addition, a partner stands to gain some financial benefit by shifting some of its home office costs to a critical access hospital.

With an area population that needs the services of a hospital, Barnhart said there are opportunities for the Fulton County Hospital to increase its market share.

"I think you are an attractive market and have the opportunity to get back to some healthy, or reasonably healthy, financial condition," said Barnhart, ending on a positive note.

Dr. Griffin Arnold, who had requested to be placed on the agenda, followed the financial analysis, asking the board for a plan to stop physicians "from getting tired."

Arnold explained the morale of hospital employees is currently low, because of the prospect of job cuts and the general uncertainty over the hospital's future. But Arnold added the small staff puts a lot of extra pressure on physicians, as they work long hours in the emergency room, make rounds to see patients who have been admitted and tend to their clinic patients.

Arnold suggested more emergency room physicians are needed to free him and others doctors to concentrate on patient care.

Dr. Jim Bozeman, who runs the emergency room, said Dr. Adam Gray, an Izard County physician, has been assisting in the E-R, and a Jonesboro physician is going to take a trial shift to determine whether he is interested in regular emergency room duty.

Board member Danny Perryman urged physicians to keep admitting patients because "without admissions, no one is going to be here."

The Sept. 26 board meeting will be held in the hospital board room, beginning at 6:30 p.m.



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