The company operating Eureka Springs Hospital has agreed to terminate its lease.
Allegiance Health Management of Shreveport, La., plans to vacate within six months, said Dr. John House, chairman of the Eureka Springs Hospital Commission.
For months, Allegiance and the commission have been at odds over the condition of the hospital. The commission contended the building was in a state of disrepair. Allegiance disagreed.
House said the commission was ready to go to court to seek a declaratory judgment against Allegiance for violating the terms of its lease, but that ended up not being necessary because Allegiance agreed to leave.
House said the hospital had two more years on its lease, which specifies payments of $15,000 a month.
"They agreed they want to terminate the lease and work on a rapid wrap-up of their operation there," said House. "They have agreed in principal but we don't have details in writing yet."
Michael Schulze, attorney for Allegiance, said a long legal battle wouldn't have been in the best interest of the hospital, and that's what's important.
"We're exchanging information and working out terms of Allegiance turning the keys over," he said.
Schulze sent a letter Monday to Megan Hargraves, attorney for the Hospital Commission, saying "It is our stated hope that this response will be received as the opening of a good faith dialogue between the parties to work cooperatively on the smooth, efficient and expeditious transition of Eureka Springs Hospital's operations from Allegiance to the commissioners."
House said the commission needs a few months to find a new management company, so commissioners are OK with Allegiance continuing to operate the facility during that time.
The conflict between the commission and Allegiance played out in the pages of Eureka Springs' two weekly newspapers -- the Lovely County Citizen and the Eureka Springs Independent.
"Because of this public spat, the revenue of the hospital is difficult to maintain," said Schulze. "I think people have probably started to wonder about the hospital and have a negative opinion about the quality of the care."
Schulze said the quality of care hasn't declined at the hospital.
INSPECTIONS
House said the commission hired an engineer to inspect the hospital and come up with a list of repairs needed.
Schulze said the report primarily noted minor things needing repair, and most were completed.
"Other things were legitimate, but we felt like they were a little more on the wear-and-tear side, related to the fact that the building was old," he said.
According to the June 14 inspection, the original two-story hospital was built in 1928 and a two-story addition was built in 1965. The critical-access hospital has 14 beds.
According to the report, inspector C. Curtis Shaw found 23 areas in which the hospital didn't meet building code requirements. One of those areas was fire sprinklers. There weren't enough of them in the newer building.
But a fire-sprinkler inspection report done July 11 found no deficiencies, according to an advertisement Allegiance published in the Lovely County Citizen on Aug. 22. The commission's inspection report "not only applied the wrong standards but was factually inaccurate," according to the ad.
"Under [Centers for Medicare and Medicaid Services] guidelines, fully sprinkled hospitals are not required until June, 2028," an Alliance engineer wrote in a response to the commission.
On Thursday, House said boards were falling off the older part of the hospital building, and the grass had grown so high at one point people couldn't see the hospital sign.
"That's the first I've ever heard this," said Schulze. "It's not in the report."
Schulze said Allegiance paid to upgrade much of the diagnostic equipment at the hospital.
House said Allegiance fell behind on a recent lease payment but made the payment the next month.
Schulze said that's the nature of small hospital management in the era of managed care. The ebb and flow of money from insurance companies isn't consistent.
"Allegiance has managed the hospital and has done well, as well as you could expect," said Schulze. "Sometimes relationships sour and sometimes it's time for a change. It's clear that the board had made up its mind that it wanted to change."
OTHER OPERATIONS
The Aug. 22 ad in the Lovely County Citizen cited the hospital's impact on the community.
"As a true community provider, the hospital under Allegiance has provided more than $10 million in health care services to patients financially unable to pay," according to the ad.
"From the outset, it must be noted that the hospital has been surveyed dozens of times over the past 12 years by both federal and state surveyors to ensure the building meets all life safety, fire and Medicare enrollment requirements," Allegiance said. "The hospital passed each and every survey."
A search of hospitalinspections.org shows an inspection of Eureka Springs Hospital in 2015 found two violations and an inspection in 2013 found three violations. Those were all the inspections for Eureka Springs Hospital listed on the website.
The Lovely County Citizen advertisement also notes the city's difficulty in finding a hospital operator to keep the facility open and running, as Allegiance has done for 12 years.
"In 2007, the commission approached leadership and begged Allegiance to take over the hospital," according to the ad. "The hospital was financially destitute, could not make payroll and the doors were on the verge of closing. ... There were multiple failed attempts by other management companies before Allegiance."
According to the advertisement, "saving rural hospitals is our passion."
A year ago, Allegiance managed three Arkansas hospitals.
In June, Conway Regional Health System took over operation of Dardanelle Community Hospital, which had been operated by Allegiance.
The 35-bed hospital, which did business as River Valley Medical Center, was in financial distress and $90,000 behind on its lease payments, according to a lawsuit filed by the Yell County board overseeing the hospital and terminated the lease with Allegiance.
In August, Jacksonville's North Metro Medical Center closed its emergency room and shifted its focus to caring for elderly psychiatric patients.
The facility's former address is now licensed to Freedom Behavioral Hospital of Central Arkansas, according to the Arkansas Department of Health.
According to Pulaski County real estate records, the Jacksonville facility is owned by Allegiance Hospital of North Little Rock LLC. The company had been operating it as an acute-care hospital before the change in August.
According to its website, ahmgt.com, Allegiance operates 12 other hospitals, primarily in Louisiana.
NW News on 11/03/2019