Toughness and Taxation

James R. Teeter
President & CEO
Arkansas Hospital Association

There's a lot of truth, my friends, to the old saying that when the going gets tough, the tough get going - as in going to the voting booth to rescue their hospital. Several months ago, for example, the good citizens of Booneville voted by an 86% margin for a one-cent sales tax over the next five years, part of which will bring about $130,000 a year to the financially struggling Booneville Community Hospital. Hopefully, the tax will ensure a hospital presence in Booneville for the next several years, says Robert Bash, CEO.

A few weeks after the Booneville vote, 96% of the voters at McGehee-in the heart of the economically deprived Delta-voted in favor of a 1¢ sales tax to support the financially ailing McGehee Desha County Hospital, underscoring the important role the hospital plays in that southeastern Arkansas community.

Later, voters in Lawrence County overwhelmingly approved a five-year extension of a half-cent sales tax, which will keep Lawrence Memorial Hospital in Walnut Ridge alive for the foreseeable future. The tax will bring about $50,000 a month to the hospital.

More recently, voters in Paris have determined that the presence of North Logan Mercy Hospital is essential, and worth a sales tax increase they imposed upon themselves. And the same good judgement prevailed among the citizens of Ashdown where a sales tax increase was recently approved to help underwrite the operation of Little River Memorial Hospital!

Why are voters all across Arkansas being called upon to rescue their local hospitals? Hospital executives and boards of trustees say such votes are forced by the sting of the Balanced Budget Act passed by Congress in 1997. Certainly that was the case in Walnut Ridge, according to Lee Gentry, president of Lawrence Health Services which operates the hospital.

In 1998, the first year the BBA cuts were in place, Lawrence Memorial lost $400,000. Throughout 1999, the 38-bed hospital continued losing money. Losses from operating the emergency room, alone, were about $54,000 a month because of very expensive staffing requirements and a huge volume of unreimbursed care.

Gentry estimates that the ER, which sees about 700 patients a month, is responsible for saving 120 lives a year. Had the tax proposal failed and the facility closed, the loss would have been devastating, not only from a healthcare perspective but from an economic one, too, since the hospital is the third largest employer in Lawrence County.

All across America, emergency room care and hospitals are in critical condition. The disappearance of hospitals and overcrowding at those still open is proof that a decade of Washington cost cutting has created a crisis. In the past ten years, more than 500 hospitals have closed. And in states where they have a legal right to do so, many hospitals have shut down their emergency departments. Between 1988 and 1998, the nation lost 1,128 ERs!

In Arkansas, where 15 hospitals have closed in 15 years, audited financial reports show that at least 67% of our institutions suffered declining operating margins in 1999. Thirty-two percent of them lost money even after combining operating and non-operating income. Another 17% showed less than a 1% return.

Here in mid-year 2000, we still see a hospital field beset with red ink and declining fortunes. Total hospital margins in Arkansas and throughout America are at the lowest level in decades. The Lewin Group predicts that at the end of 2004, nearly 60% of hospitals will be paid less than the cost of caring for Medicare patients, severely jeopardizing access and quality of care.

The warning flags are flapping for all to see. Congress must-this year!-accept and enact the Medicare Payment Advisory Commission's recommendation to more than double Medicare's payments for inpatient services.

Arkansas Community Hospital Financial Indicators - Click Here for Chart

Arkansas Newsmakers and Newcomers

Craig R. Cudworth has been named CEO at DeQueen Regional Medical Center, succeeding Robert Deen, interim administrator since December. Cudworth, a former president of Eastern Oklahoma Medical Center in Poteau, served in various assignments for Quorum Health Resources, and was administrator at Riverside Medical Center in Franklinton, Louisiana.

Mark Bever has been named chief operating officer at Bates Medical Center in Bentonville, succeeding Donald Frederic. Bever was most recently COO at St. Mary's Hospital in Rogers, and served previously as associate director of nursing at Northwest Medical Center in Springdale, and vice president for patient care services at the Bentonville hospital.

Donald Frederic has been named COO at Northwest Health System in Springdale. Frederic was COO at Bates Medical Center in Bentonville for the past year. Prior to moving to Arkansas, he was CEO of Crossroads Community Hospital in Mount Vernon, Illinois.

Stephen L. Mansfield, administrator and chief executive of Baptist Memorial Hospital East in Memphis, has been named president and chief executive officer of St. Vincent Health System in Little Rock. Mansfield, a native Tennessean, joined Baptist Memorial Health Care Corporation (BMHCC), which operates Baptist Memorial Hospital East in 1977. Over the years he has administered the corporation's home health services, three of its hospitals, and its regional facilities. Among the hospitals under Mansfield's administration have been BMHCC's Arkansas hospitals in Blytheville, Forrest City, and Osceola. At St. Vincent, Mansfield will succeed Diana Hueter who resigned from the position several months ago.

Michael Aureli is executive director of Arkansas Hospice, a new 40-bed inpatient hospice in North Little Rock. The Arkansas Hospital Association board of directors February 11 approved the facility as an institutional member.

Michael R. Winn has been named medical center director of VA Medical Center in Fayetteville effective May 1. Winn replaced Mark A. Enderle, M.D., acting medical center director.

Scott R. Gordon has been named executive vice president and chief operating officer at Arkansas Children's Hospital (ACH) in Little Rock. Gordon has been associated with ACH since 1986, serving as senior vice president for business development. Prior to his move to ACH, he was executive director of Rivendell Children and Youth Center in Benton, and Commissioner of Youth Services for the state of Arkansas.

Two former Arkansas hospital CEOs were honored April 25 by the Washington Regional Medical Foundation for outstanding health leadership. Hugh D. Means, retired CEO of Northwest Health System received an Eagle Award. Michael D. DeBoer was named recipient of the foundation's first ever Vision Award established to recognize those who have exhibited outstanding vision for Washington Regional Medical System. Currently president and CEO of Baptist Health in Montgomery, Alabama, DeBoer was president and CEO of WRMS from 1988 to 1994. Confined to a wheelchair by illness, DeBoer accepted the award accompanied onstage by family members.

David Deaton has been named CEO of Little River Memorial Hospital in Ashdown, succeding Judy Adams who resigned effective June 1. Deaton is a former assistant administer at Baxter Regional Medical Center in Mountain Home.

AHA Suggests Continued Benefit Arkansas Provisions

The Arkansas Hospital Association has recommended that the Arkansas Department of Human Services retain certain provisions of the Benefit Arkansas program after the program's May 31 cancellation.

AHA vice president Don Adams wrote DHS deputy director John Selig, saying that Benefit Arkansas-Medicaid's mental health managed care plan for the under-21 population-allowed hospitals to participate equitably with other mental health providers.

Before Benefit Arkansas went into effect, hospitals were limited to providing inpatient psychiatric services only. After May 31, Medicaid will revert to the pre-Benefit Arkansas fee-for-service system for paying providers. The AHA recommended:

• That the any willing provider concept found in the Benefit Arkansas plan be continued.
• That the level playing field among providers be continued, with hospitals keeping the right to provide a full array of mental health services, e. g., inpatient, outpatient, partial day treatment, etc.
• That hospitals be allowed to continue being paid for provision of mental health services delivered by licensed qualified mental health professionals other than physicians.
• That hospitals be paid for the provision of mental health services at rates equal to those paid to community mental health centers and other providers.

Calendar

• June 1, 21, AudioNet
  Health Insurance Portability and Accountability Act
• June 5, AudioNet
  Bloodborne Pathogens: New Rules Affecting Safety Syringes and Medical Devices
• June 7, Little Rock
  Compliance Forum
• June 13, 14, 23
  Ambulatory Payment Classification Workshop
• June 14-16, Chateau on the Lake, Branson, Missouri
  Arkansas Hospital Administrators Forum Summer Management Conference
• June 20, AudioNet
  Medication Errors
• June 23, Little Rock
  Arkansas Healthcare Human Resources Association
• July 11, AudioNet
  APC Institute: Ambulatory Surgery Documentation
• July 14, Hot Springs
  Arkansas Organization for Nurse Executives
• August 3-4, Hot Springs
  Healthcare Financial Management Association
• August 10, Little Rock
  JCAHO Hospital Accreditation Survey Preparation
• August 11, Little Rock
  Environment of Care Standards
• September 8-10, Nashville
  Joint Leadership Conference (Trustees, CEOs, Physicians)
• September 13, Little Rock
  Compliance Forum
• September 22, Little Rock
  Arkansas Society for Social Work Leadership in Health Care
• October 9-12, Hot Springs
  Arkansas Hospital Association 70th Annual Meeting and Trade Show