Eureka Springs Hospital Commission responds to criticism, accusations

Several nonattorney City Council members have argued that the Commission lacks authority to lease the hospital facility to a for-profit entity. Alderman Ken Pownall has stated that "If the hospital has $1 million in the bank, the city should get back into the hospital business." Alderman Pownall has also accused the Commission of violating Arkansas law by not posting meeting locations or agendas.

Although current challenging economic conditions have resulted in the closure of local hospitals in other small Arkansas communities, Eureka Springs Hospital has remained open. The hospital is one of the largest employers in Eureka Springs and its continued existence is a vital part of our growing and vibrant community. Without the hospital, Eureka Springs would be less attractive as a tourist destination and as a place to live. Because of this, the Commission's foremost objective is to ensure the hospital's continued existence.

The hospital's facility is the oldest in Arkansas and, like many rural hospitals, does not meet building requirements applicable to new hospitals. If the hospital were to close -- even for a minute -- it would lose its license to operate in its current building. Even if a new facility were built, closure of the old facility prior to completion of a new facility would likely mean that the new facility could not obtain a "critical access" designation from the federal government. Such a designation is essential to the economic viability of even a brand new rural hospital.

Several years ago, the hospital was in dire economic shape and was on the verge of closure. The Commission (which consists of citizens who serve as unpaid volunteers) sought the advice of a professional hospital management company, which recommended that the Commission lease the hospital facility to Allegiance Health Management, the current lessee. The City Council unanimously approved the lease. The Commission also sought and obtained favorable advice from legal counsel experienced in healthcare transactions. Although certain City Council members have based their criticism on language from a 1947 statute pertaining to municipal hospitals, they completely ignore Ark. Code Ann. §14-265-103 (a 1961 statute), which states:

Any municipality...is authorized to...lease, contract concerning, or otherwise deal in...any land, buildings, improvements, or facilities of any and every nature whatever that can be used for hospitals, nursing homes, rest homes, or related facilities within or near the municipality...

The same City Council members also ignore Ark. Code Ann. §14-265-102, which states:

This chapter shall be liberally construed to accomplish its purposes and shall be the sole authority required for the accomplishment of its purposes. To that end, it shall not be necessary to comply with general provisions of other laws dealing with public facilities, their acquisition, construction, leasing, encumbering, or disposition.

Although the Commission determined that leasing the hospital facility to Allegiance was the most viable way to prevent the hospital's closure (and all of the negative consequences that would flow therefrom), the Allegiance lease does not absolve the Commission from its responsibility to ensure the continued existence of Eureka Springs Hospital. Like any lessee, Allegiance could cease to operate the hospital at any minute. Whether Allegiance elected not to renew its lease agreement or decided to walk away in the middle of the lease, the consequences would be the same: someone would have to ensure that the hospital remained in operation or it would close and could not reopen.

That "someone" is the Commission. Under Arkansas law, the Commission (and not the City Council) has "full and complete charge of the [hospital] building, with the power to handle it as the commissioners shall see fit and deem to be in the best interests of the city."

The Commission receives absolutely no public financial support. It does, however, have two revenue sources: the Commission receives money from its lease of the hospital facility to Allegiance, and the Commission receives money from the lease of its home health and hospice agency to another entity, LHC Group. Arkansas law provides that this money "...shall not be mingled with other funds of the city and shall be handled exclusively by the commissioners."

The money is crucial in the event that the Commission has to assume operation of the hospital. Doing so would require paying salaries for nearly 100 employees, maintaining a laboratory, an emergency department, radiology services, and the myriad of other things that comprise a functioning hospital.

As to the comments concerning the Commission's meetings, the Commission is happy to provide its meeting locations and agendas to anyone who requests, as is required under the Arkansas Freedom of Information Act. The Commission meets in various locations, depending on availability. The Commission's agenda is frequently revised immediately prior to meetings. Alderman Pownall has failed to cite any Arkansas law that requires the Commission to "post" its meeting locations or agendas.

The bottom line is that the Commission's actions are legal and necessary to ensure the continued presence of a hospital in Eureka Springs. While it is unfortunate that members of our City Council would make statements that are contrary to Arkansas law and that jeopardize one of our community's most important resources, the Commission will continue to do everything in its power to protect Eureka Springs Hospital.

-- MICHAEL MERRY

Chairman

On behalf of all members of the Eureka Springs Hospital Commission