Oct. 3 Special Meeting
At a special meeting on Oct. 3, the board accepted a Letter of Intent from the LHC Group to buy the hospital's home health license for $1.7 million.
The board discussed paying off its debts and maxed out line of credit with the money.
After an executive session to discuss personnel issues, Dr. Jim Bozeman made a motion regarding cost cutting.
"I move that we put the cost cutting measures into effect that were suggested by our department heads," Bozeman proposed.
The board did not elaborate on the motion, which was unanimously approved. It had asked department heads for recommendations on staff cuts, however.
At a Sept. 26 meeting, Tommy Barnhart, of the Dixon Hughes accounting firm, indicated department heads had proposed staff cuts that would reduce payroll by $369,000. So it appears a major layoff is on the horizon.
After the Sept. 29 decision not to pursue a partnership with Baxter Regional, Board Chairman Jerry Estes, who first proposed seeking a partnership with a larger hospital, resigned from the board.
Vice-Chairman Bill Pace is now serving as Chairman.
County Judge Charles Willett has named John Ed Welch to fill the vacancy created by Estes' resignation. That appointment must be approved by Quorum Court before Welch can serve.
On Sept. 29, the hospital board held a special meeting to discuss the proposal Baxter Regional made two days earlier, but there was no real discussion of the offer.
After then board chairman Jerry Estes called the meeting to order, board member Danny Perryman said, "I'd move that we remain independent, and that any and all prior proposals be declared null and void.
The motion was seconded by Jerry Blevins, after it was amended to, "We reject the proposal from Baxter Regional."
Board member Bozeman said a possible influx of cash from the sale of the hospital's home health license has not been finalized, and a decision on the Baxter Regional proposal did not have to be made immediately.
"We know changes have to be made. We know they are going to be tough decisions," said Bozeman. "We just don't have to make a decision, at this point. We don't have to accept or reject anything, at this point."
The motion to reject Baxter Regional's proposal went to a vote, however, when no further board comments were offered.
The Baxter Regional management offer was rejected by a five to one margin, with only Sue Hertzog voting against the motion.
After the vote, Hertzog and Perryman immediately left the meeting, while other members stayed to go through a list of questions and comments that came out of a meeting of hospital department heads on Sept. 27.
Many of the questions were about Baxter Regional's management proposal, including whether Baxter Regional nurses would be assigned to Fulton County Hospital to replace current nursing staff.
Specific questions about Baxter Regional's proposal were deemed "moot" by the board, since it had rejected the offer.
One question from the department head meeting asked whether the ambulance service could be made a corporation, separate from the hospital.
Jennifer Perryman, who attended the meeting, explained that ambulance service director Tim Hodges had raised the issue.
"Tim had mentioned that a lot of facilities do independent (ambulance service) because there is a way to capture higher reimbursement (from insurance companies and Medicare). Tim Hodges is gathering more information," said Perryman.
If the Baxter Regional offer was rejected, department heads asked if an outside company could be hired to help with hospital management, physician recruitment and other needs.
Dr. Bozeman responded that Baxter or Ozarks Regional Medical Centers may still be willing to help the Fulton County Hospital, and physician recruitment is especially important, since two local doctors are 65 years old and will have to be replaced, "at some point down the road."
Another department head question was, "Can physicians be addressed for lack of utilization of Fulton County Hospital?"
Bozeman replied, "Yes, that can still happen."
The department heads also indicated suggestions to address hospital problems, made by the hospital's accounting firm, QHR, a private hospital management company, and Baxter Regional, should be considered and acted upon.
"We got a lot of good information through this process we are going through," Bozeman said, "and it's up to us to implement as many of those things as we deem appropriate."
Baxter Regional had indicated it would cut hospital staff, because hiring had increased, while patient volume had declined.
It also proposed cutting the Mammoth Spring ambulance base from 24 hours a day to 12 hours, because the ambulance service is losing about $150,000 a year.
Baxter Regional proposed to manage Fulton County Hospital for two years, for a fee of $15,000 a month, plus the salary of a CEO. After two years, it would have begun paying a fee to lease the hospital.
It indicated it would keep existing services and work to reduce hospital debt, upgrade computer systems to meet new federal requirements and add new services to increase revenue.
Some board members appeared concerned that, if the management agreement was ever terminated, the hospital would have to pay Baxter Regional for improvements it made to the hospital.
Baxter Regional's attorney explained such a clause was necessary to protect it from being terminated, after making investments and returning the hospital to profitability.
In making Baxter Regional's proposal, CEO Ron Peterson told the board, "Health care is a hard, tough industry to be in and the only way, I believe, to make it is to work together...so that we can all succeed."
In voting against a partnership with Baxter Regional, the hospital board rejected the advice of companies it consulted about its financial and operational problems. Dixon Hughes, the hospital's accounting firm, the QHR hospital management firm and Baxter Regional all stated, in appearances before the board, that very few small, rural hospitals can continue to survive independently in a tough economic environment, with more Medicaid and Medicare reimbursement cuts on the way.
One ray of hope the board is counting on is the unexpected offer from LHC, a company which currently pays the hospital $5,000 a month to lease the hospital's home health license, to operate its own home health agency.
LHC, a Louisiana based company that operates North Arkansas Homecare out of Salem, has issued a letter of intent to buy the license for $1.7 million dollars.
"That money would give us some breathing room," said board member Blevins, after the vote to remain independent. "It seemed like Baxter wanted us to pay them to take it (the hospital) over. We have to try to make it on our own."
Board member Bill Pace agreed the $1.7 million dollars would allow the hospital to catch up on bills, and give it time to rethink its future.
"But, when you owe a million, the money's going to go like that," said Pace, snapping his fingers.
According to Pace, "We need outside professional help. Health care is too complicated these days. We can't do it on our own."
One citizen called the hospital crisis "a wakeup call" for employees and the entire community. She said the hospital needs to make drastic changes and, if the license sale goes through, the money the hospital will receive will give it some time to develop a plan for the future.
Even though Baxter Regional's proposal is off the table, hospital employees remain on edge, worried about the security of their jobs.
"We're all on pins and needles," said one employee. "We're trying to concentrate on our jobs, but it's hard because no one knows who will be next (to be laid off)."
The board vote to implement "cost cutting measures" only increases the fear and uncertainty.