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Thursday, Apr. 28, 2016

Hospital board debates OMC management agreement

Thursday, December 22, 2011

Fulton County Hospital Board Chairman Bill Pace smiles on Dec. 15, after a sometimes contentious discussion led to approval of a three year proposal for Ozarks Medical Center to manage the local hospital. OMCexecutive Kim Thompson, right, has served as interim administrator since October. Photo by Richard Irby
After managing the Fulton County Hospital for 60 days without charge, as promised, the agreement was just days from expiring when the hospital Board of Governors met in special session on Thursday, Dec. 15, to consider a three year management agreement which had been under negotiation.

"We are looking at everything we can find to save money," Interim Administrator Kim Thompson told the board as it discussed the revised management proposal.

Responding to questions, Thompson indicated that Fulton County Hospital may be able to cut employee health insurance expenditures by $210,000 a year by joining OMC coverage. She added, by using OMC purchasing plans, the cost of medical and office supplies should drop by almost half. Renegotiating contracts with private insurance companies could bring in 500,000 by improving reimbursement rates.

Under the management proposal, OMC will begin charging a $10,000 a month management fee, will recruit a hospital administrator and implement changes to save money and cut spending.

The management proposal did cause some concern by some board members, however.

One change added puts new pressure on the board to close the deal in which the LHC Group, which runs North Arkansas HealthCare, will pay $1.7 million dollars to buy the hospital's home health care license.

The money is badly needed to give the hospital some financial breathing room, but the original Dec. 1 closing date was missed and it now appears it will be March before the funds are received.

$150,000 of the health license sale is to be set aside to cover OMC's monthly management fee.

Because of delays in obtaining the money and the possibility the sale could fall through, OMC has placed an "out clause" in its management contract, saying, "in the event the reserve funds are not fully met within three months of the commencement date (of the management agreement), the manager reserves the right to unilaterally terminate the agreement."

"So they are giving us three months to get that sold (the home health license), and I think some pressure needs to be put on some attorneys to get this moving. We've been dealing with this since September," Chairman Bill Pace told the board.

Board member Danny Perryman said he had spoken to the LHC executive he dealt with in pursing the license sale, and expressed his frustration at attorneys dragging out the sale.

"...and he said, 'I can assure you that we are just as anxious to close it (the license sale) as you are," said Perryman.

Thompson said a revised license sale agreement has been received from LHC and the hospital's attorney is preparing a response to it. "So we're seeing a little movement, which is a good thing," said Thompson.

Thompson assured the board OMC felt it needed the clause about the right to terminate the agreement if license funds so the wait for its fee is not "open ended," but OMC remains committed to managing the hospital.

Board member Jerry Blevins objected to another clause that says, if the board terminates OMC, it will collect the $150,000, or the remaining balance of the reserve fund, at termination.

"I do have a problem, upon termination, of rewarding somebody that didn't do a good job," Blevins said. "I can see no other reason for us to be loose from them, other than that reason."

Chairman Pace responded that OMC has probably already spent $150,000 during the 60-day interim management, and it is reasonable for it to expect to recover some of its investment if terminated.

Board member John Ed Welch expressed concern that, under the management agreement, the board has little or no input as to who OMC hires as administrator.

Dr. Jim Bozeman agreed with Welch.

"We would really like to have someone who has experience managing a critical care access hospital, because reimbursement is totally different from other hospitals. I would hate to rubber stamp this without having some input," Bozeman said.

Another big discussion resulted when it was revealed that Thompson met with physicians earlier in the day to discuss a money saving change in the emergency room.

Thompson suggested that, rather than having a doctor on duty 24-hours a day, local doctors could be on call from home during late night to early morning hours, when the E-R is not typically busy.

Thompson said physicians can legally be on call from home, as long as they can get to the hospital within 30-minutes of being needed.

Dr. Bozeman told the board he, Dr. Griffin Arnold and Dr. Rebecca Phillips, who all live in the area, "are going to discuss this and see if we can come up with some type of solution to reduce the (ER) cost...at least temporarily until we can get on our feet, but I don't know that it's (home-on-call) going to work."

John Ed Welch pointed out the hospital used an overnight doctor-on-call system for many years, and, while it is not ideal, it may again be necessary.

"The problem is, you can have it (an emergency room doctor) 24-7 and not have a hospital here after a year or two because we can't afford it," Welch said. Welch said the hospital's priority should be providing 100-stable jobs "in perpetuity," even it it means cutting 50-or more jobs in the short term.

Thompson said, while other reduced staffing during slack periods is being considered, OMC will maintain the same standard of care it uses at its West Plains hospital.

"We're not asking this hospital to do anything that we're not doing at Ozarks Medical Center, and still provide very good care," Thompson told the board.

Thompson added during the discussion that the hospital needs "every percentage we can find (in savings), right now, because we are cash strapped, and any $1.7 million is not going to do it...a lot of that is already committed."

Board member Sue Hertzog sought to bring the discussion to a close by saying, "It seems to me like, if we are going to let OMC do the managing, why are we tearing our hair out? Let them tear their hair out (over management decisions)."

Board member Perryman followed with a motion to accept the management agreement with OMC and Hertzog seconded the motion.

Hertzog then voted for the motion, but Welch hesitated when called, indicating he still felt that the board needed some say in hiring an administrator.

Perryman said the management agreement is not perfect, but rejecting OMC's offer would force the hospital to remain independent with large debt and little cash.

At Chairman Pace's suggestion, Perryman amended his original motion by saying, "I move that we accept the proposal, contingent on an amendment to the effect that the administrator (hired) meets board approval."

That motion passed with Perryman, Hertzog, Bozeman and Welch voting yes, and Blevins and Darrell Zimmer voting no.

In a follow-up discussion, Perryman expressed confidence in OMC, saying the board had no alternative but to give it a chance to turn the hospital around.

"They've been here two months and said they'd be here free (of charge) and have. Whatever oversight they've had I know that all cost," said Perryman. "We do not have the expertise as a board to run this hospital...We do not have the expertise to hire an administrator, we've proved that."

"If we voted against it (the management agreement), where will we be?" Hertzog added.

At its meeting on Monday, Dec. 19, the Ozarks Medical Center Board of Directors voted its formal approval of the management agreement with the Fulton County Hospital, allowing the partnership to continue.

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