An increase in uninsured patients, cutbacks in federal programs such as Medicaid and an exodus of doctors relocating or retiring have left Crittenden Regional Hospital in West Memphis facing $30 million in debt.
Hospital administrators are asking for help in the form of a sales tax. Crittenden County voters will cast ballots on a 1 percent sales tax on June 24 that, if approved, would be collected for five years and generate about $30 million before ending in 2019.
If the tax measure fails, Crittenden Regional Hospital Chief Executive Officer Gene Cashman said, the medical facility would likely close.
"It's a very critical time," Cashman said. "Without a tax, the hospital will lose its ability to operate."
Crittenden County already collects a 1.75 percent sales tax.
Crittenden County Judge Woody Wheeless said Quorum Court members have not publicly supported or opposed the tax. He said he is unaware of any organized opposition to the tax.
"There's a need for a hospital in our county," Wheeless said. "But if we pass a tax, the total tax in Marion will be over 10 cents a dollar. Ninety-nine percent say they need a hospital, but they also say they don't have much more money to give."
It's a growing trend in Arkansas, said Paul Cunningham, executive vice president at the Arkansas Hospital Association. More than 20 hospitals in the state are receiving funds from sales taxes or property taxes, he said.
In Arkansas County, Stuttgart voters approved a 1 percent sales tax in March that will help fund the Baptist Health Medical Center there. Hospital administrator Terry Arnstuz said the hospital had lost about $1.2 million in 2013 because of Medicare cutbacks.
Voters in Sharp County turned down a 0.5 percent countywide sales tax in March that would have funded the construction and operation of a new hospital near Cherokee Village. Eastern Ozarks Regional Health Systems closed in 2004 because of a lack of funding, and investors have looked at reopening the facility since then.
"Hospitals have absorbed heavy cuts," Cunningham said. "If you look at hospitals, 25 percent are doing OK with a profit margin above 3 percent. Thirty percent were between under 3 percent to zero, and 45 percent have a significant margin of loss."
He said federal cuts in medical reimbursements average about $2.5 billion a year for hospitals in Arkansas.
"It is a tough time," he said. "We are working with delegates about this. We cannot absorb any more cuts. You can't operate with less money like that."
Cashman said if Crittenden County voters approve the tax, the 150-bed hospital will use the revenue to recruit more physicians. Currently, the hospital employs 420 physicians and staff workers.
In 2008, several "key" physicians at Crittenden Regional Hospital either retired or went to other hospitals. Having key doctors and specialists is the only way the hospital can make revenue, he said.
"At Crittenden, 78 percent of our patient mix relies on Medicaid or Medicare," Cashman said. "And we're providing uncompensated care to noninsured patients at two times the national average. So, we have limited access to capital.
"We need to have a tax to allow us to get our balance sheet in order."
The hospital also intends to use tax revenue to upgrade its emergency room, to expand medical services at its Marion facility and to market the hospital.
Wheeless said, "it would be devastating to our area for any type of recruitment if we didn't have one [a hospital].
"But people might not want to pay the extra tax," he said. "The economy hasn't recovered in this area, and if we keep raising taxes, business will be saying we're driving people across the river [to Memphis] to shop."
Wheeless said losing the hospital would devastate the county of 50,000 people.
"They have to have the tax money to recruit doctors," he said of the hospital. "We have to have the hospital to help recruit new business and growth."
State Desk on 05/19/2014