Management agreement with Baxter Health to provide longevity and sustainability to Fulton County Hospital
By Tammy Curtis, Managing Editor
“What you all have to understand is we are borrowing money to make payroll. A half a million dollars just to make it a month and that will still have to be paid back. We owe physicians, we owe therapists and services. We have unpaid debt. That is where we stand. We don’t have enough employees. We have two nurses working the job of 10 other nurses. They are worn out. Baxter can come in and will help provide staffing. They can help with these services and we can get this ARPA funding through the governor’s office that will help with the debt, the structural fiscal plan itself. If you read that you will see there is a lot of stuff going on with this building that needs repairs. We all understand that, and as a board and we are all in favor of this operating agreement.”
Trena Spears, Fulton County Hospital Board Secretary
Residents of Fulton County are all too aware of the damage the 2004 closure of the Eastern Ozarks Regional Hospital in Cherokee Village created for Sharp County residents seeking healthcare locally. From loss of healthcare provider to dire economic issues, the closure left a lasting sting within the county.
With ever escalating costs of all aspects of health care, it is not a surprise that rural hospitals have been struggling to keep their doors open for over two decades. Somehow one has managed, but just barely.
Last week the Fulton County Hospital Board of Directors (FCH) was faced with making a decision no one wants to make… to form a management agreement or close their doors for good. Chained doors, loss of jobs and, more importantly, local healthcare were the main things considered when the board agreed to enter into a temporary management agreement with Baxter Health and keep the hospital that has been a staple in the county since its 1963 opening.
Because FCH is one of the last county owned hospitals in the state, the decision had to be agreed upon first by the board and later, in a resolution drafted and passed by the quorum court. With time of the essence, Fulton County Judge Kenneth Crow set a special meeting July 31 to present the proposal to the public and allow residents of the county to understand the agreement and pass a resolution of support.
How did theimmediate need for amanagement plan come into play?
Arkansas District 23 State Senator Scott Flippo first spoke to the group about the dire straits the hospital was in as s result of lack of revenue. Governor Sarah Huckabee Sanders is the only person allowed by state statute to submit a letter to the legislature in support of federal American Rescue Plan Act (ARPA) funds being administered to health care facilities. He explained the legislature can then vote it up or down.
Huckabee-Sanders contacted Flippo on July 27 and authorized him to meet with the Fulton County Hospital board the following morning, July 28. She informed him she would not submit a letter of support for the Fulton County Hospital to receive the ARPA funding if the board did not agree with a merger proposition or management agreement.
The board met and discussed a proposal with Ron Peterson, Administrator for Baxter Health System, with whom Flippo said he has been in contact with about the issue for months. “Her [Governor’s] position has been from day one about wholesale transformational changes. She said that she wants to be talking about hospitals and what they are doing ten years after her administration ends. She doesn’t want to have a reoccurring conversation about the viability or sustainability of any hospital. Her administration has always been about long term viability,” he explained.
The senator said from his perspective he would like to be able to look anyone in the eye and know that the absolute plan for FCH along with Baxter healths cooperation is to not only keep the hospital open but to see improvements. By seeing such things as money being applied to its capital outlays, utilization of better equipment and services and eventually expand the services and create more health care options and jobs locally. “It is not just to keep the doors open. That should not be anybody’s baseline expectation, it should be to excel.” He spoke of his confidence in the agreement and working with the hospital because the county has a long time vested interest in keeping the hospital open and remaining a source of pride for the community.
FCH Board secretary speaks of the reality of the situation
FCH Board Secretary Trena Spears told the quorum court that they voted unanimously to move forward with a management agreement. The board signed the letter of intent following the July 28 meeting. She said the board’s plan is to sign an operational agreement with Baxter Health on or before Aug. 15 and set a timeline for Baxter Health to conduct due diligence analysis by Dec. 15. The agreement will then be taken to the Baxter Board for approval by Dec. 31. After the meeting the preliminary agreement was actually signed on Aug. 4 due to the requirement the agreement is met before federal funds can be allocated.
Spears minced no words in explaining the seriousness of the hospital’s situation and very real possibility of the board’s closure of the hospital if the agreement wasn’t met.
“We have worked diligently with the financials over the last year or so. Once we were privy to all the information, it was that there is no sustainability for Fulton County Hospital without Baxter’s help. So, then the governor came in and said she wanted sustainable, viable facilities throughout the state. We are not the only hospital that is going through these processes. We are one of the only county owned facilities in the state,” she said.
She went on to explain it was the only option for the hospital due to the need for immediate funding to even keep the doors open.
“What you all have to understand is we are borrowing money to make payroll. A half a million dollars just to make it a month and that will still have to be paid back. We owe physicians, we owe therapists and services. We have unpaid debt. That is where we stand. We don’t have enough employees. We have two nurses working the job of 10 other nurses. They are worn out. Baxter can come in and help provide staffing, they can help with these services and we can get this ARPA funding through the governor’s office that will help with the debt, the structural fiscal plan itself. If you read that you will see there is a lot of stuff going on with this building that needs repairs . We all understand that as a board and we are all in favor of this operating agreement,”
Spear was asked if the board realizes what the agreement could mean long term to the hospital. She said it was just as new to Baxter Health as it was to them. She explained FCH were literally at the eleventh hour and thinking they had no set deadline to apply for ARPA funding when the deadline was made known.
“When Governor Huckabee- Sanders got involved through Flippo and State Representative Trey Steimel, it was only the day before the meeting. This was our option and Monday was the application deadline. If you want your $2.6 million and they want their $5 million this is what you have to do,” Spear explained.
While she said they were left with no choice, the governor’s stipulation makes sense. “We need this relationship to continue. We have been doing it, just not through the operational management under Baxter to some extent. It is working as Dr. Cochan pointed out. We have two hospitalists who are helping with our patients and trying to help keep our census up. But, we need help in all these other areas. The board, not just me, feels like this is how it is going to get accomplished … through this operational agreement,” she said.
While Spears explained they do not have all the answers, she said that is why they are taking the time to get the agreement in place. They will then have 180 days to enter into some sort of operational management agreement. “Baxter is hoping to be here for 10-20 years or more but they can’t say with certainty what that looks like either, they don’t know it anymore than you or I.” She continued telling the audience and court that the board knows that Baxter’s intentions are sincere . “We believe this is what it is going to take otherwise we can just put a chain on the door. I have been there. Dr. Cochan has been there. We were at Eastern Arkansas Regional when we went to work and there were chains on the door. This can happen here tomorrow because we don’t have the ability to support ourselves. The board is all in favor.”
A doctor’s point of view of the need for the agreement
Dr. Chris Cochran, an internal medical physician who has worked with the hospital in an ancillary role since 2012 explained while the hospital was able to expand their role without help at some point during the term, that time was coming to end.
“The hospital has been keeping its head above the water for a lot of years.” He said that himself and a recent influx of men from Baxter doing impatient care. “We are amazingly still open. We are that close to having to put chains on the doors and I don’t want that because I have got to have a place to work.” He said he can’t wait to see all the things that can be brought to the hospital from Baxter Health with their management team.
He said he has been working with Bryan Barnett, Baxter’s Business Development Director and that they have been able to bring in expensive equipment to the hospital from Baxter Health they could not have otherwise afforded. This has helped expand their services.
Dr. Cochran said the hospital does not have the staff to do the procedures. He is backed up until November.
FCH Administrator speaks of long term fiscal issues
FCH Administrator Curren Everett, explained the fiscal distress the hospital has been under has been occurring for many years. “I have been there for five years and we have had it rough. Back during Covid, we got $3 million and that helped us out. We are short handed in every field and can’t get help. This is something that is really needed for this county. We are not going to lose the hospital, we are just going to do more with it.” Everett asked that the quorum court support the board’s vote and explained the ambulance service will remain and Baxter Health can help expand their services.
He said if the quorum court passes the resolution the FCH board will be there because the group from Baxter Health will answer to them for six months as they work together to work out a long term lease program.
How do we know Baxter Health will stay and not close the hospital as others have after mergers?
Baxter Health President and Chief Executive Officer Ron Peterson, who has been with the hospital for 16 years, explained this was not the first time they have approached FCH about a merger or management agreement. While they lost a previous attempt to Ozarks Healthcare, Peterson said, “Even though we weren’t chosen at that time, we felt we should still continue to support Fulton County Hospital. Healthcare should be provided as close to home as possible. We want to provide as much service as we can here and grow as many services as we can to support and grow the healthcare here in Fulton County.”
Peterson said the employees whom he has visited with at FCH have asked why Baxter Health is interested. Fulton County is located near Baxter County and each year FCH sends approximately 700 inpatients to them for advanced care and services they cannot provide. Without FCH, Peterson said their hospital would not have as many come. “We believe it will be a win, win and more people will come.”
“Baxter Healthcare has clinics in Mammoth Spring and throughout the county. Other facilities don’t have clinics here and their interest isn’t in Fulton County in the way that Baxter Health is,” Everett explained and said the FCH board will maintain control for the time being and Baxter will attend their meetings.
What about the ambulance service?
Justice Albert Roork asked Peterson about the fate of the Fulton County Ambulance Service through the agreement. “We are going to look at everything regarding the ambulance services and expand those,” Peterson explained, saying Baxter plans to make it more efficient.
Judge favors agreement
To end the discussion before reading the resolution Judge Crow said, “I personally believe the demand for healthcare in Fulton County is going to increase. If the hospital were to close that would put undue pressure on Baxter County Hospital, White River and Ozark. The indicators that I have is that our county is growing by the fact our other counties are losing veteran population. We gained 60 to our population last year.”
The judge went on to explain that the goal of the agreement is to promote longterm sustainability to the hospital with the assistance of the ARPA funding as a means to transition and move forward with the partnership.
After the agreement is in place, the management of the day-to-day operations will be overseen by an administrator who is selected by Baxter Health, something that was done just days after the meeting.
The resources will provide management support of the FCH. When the 180 days is up and due diligence is realized by Baxter a long term plan to provide healthcare and growth for the county will be outlined.
Several Justices talked before voting on the agreement. The main concern was the county’s liability without a written contract in place and not simply a letter of intent. ]
Among the discussion was the reality that if they opted not to enter into the agreement whether there as another way for the hospital to remain open.
Clarification of the plan
Administrator Everett said he has spoken with staff about some confusion and wished to clarify that Baxter is asking for an initial six month management period and after that they will visit with the board for a long term plan. This will likely be a lease for the hospital. Everett said they had to go in with them or they wouldn’t received the $7.5 to $8.5 million in ARPA funding for either hospital
The court voted to pass the resolution to enter into the preliminary management agreement as the deadline for filing was July 31.
The possibility of the FCH receiving ARPA funding was known for about six weeks. The criteria was not received until July 20 with at the July 31 deadline.
Peterson explained Baxter just asked FCH for a joint agreement and felt that the letter of intent would satisfy the deadline obligation. He said the state won’t release funding until an actual contractual management agreement is signed but will begin on Aug. 15 or the day it is signed.
“We would like to start to do two things. We would like to start managing it to get on the right track and do due diligence and realize what is owed and out there and develop a strategic long term plan. That is why we did a six month period, to give us time to gain the knowledge of the hospitals processes and changes needed.”
Peterson used an example of streaming the FCH Accounts Receivables’s to allow revenue to flow more quickly into the hospital.
Spears then explained that time is of the essence because the hospital is going to be forced to have to borrow more money for expenses.
How will it work?
Baxter will write the contract and changes or negotiations can may be made until an agreement is reached.
The hospital’s upkeep is partially funded by a dedicated half cent sales tax that was passed by voters in 1989. A bond is due to expire in 2025. The county will maintain ownership of the hospital and lease it to Baxter Health.
The FCH has a six decade history in the county as it was built on land donated by some of the first doctors to practice within the facility, Doctors Carl Arnold and David Ducker in 1961.
Baxter Health issued the following statement on Aug. 4 about the management agreement.
“Fulton County Judge Kenneth Crow announced Fri. Aug. 4 that the Fulton County Hospital has signed a management agreement with Baxter Health thanks in part to the American Rescue Plan Act (ARPA) funding under the discretion of Governor Sarah Huckabee Sanders. “The governor has made incentives for Baxter to partner with us and provide the management expertise to stabilize our hospital and grow the services for our citizens.”
The Arkansas Department of Finance and Administration recently hired consultants Alvarez and Marsha Public Sector Services LLC to assist legislators in prioritizing hospitals requests for the funding.
“The data obtained confirmed what has long been known to the board that the inflation and staffing challenges from Covid 19 have left the FCH in a “dire financial position with limits on cash, increasing debt and at risk for closure,” the release states.
“Baxter Health has presented a preliminary plan for sustainability to the Fulton County Hospital Board of Directors. The management agreement will allow Baxter Health to immediately begin management of operations, financial management and day to day operations. This will also allow Baxter Health the remainder of the year to complete a due diligence analysis into the specifics of a long term agreement,” said Anthony Reed, newly appointed Interim Fulton County Hospital Administrator.
Peterson went on to say that, ”Baxter Health has been a strong supporter of Fulton County Hospital for many years and is excited to partner for sustainability and begin exploring what new services we can offer to the wonderful people of Fulton County. “