Hospital commission hires consulting firm for transition

Tuesday, November 19, 2019

By Samantha Jones

The Eureka Springs Hospital Commission is gearing up for Allegiance Health Management’s exit.

At a workshop on Saturday, Nov. 9, the commission considered applicants to help the hospital make the transition between management companies. Chairman John House said the commission’s job was to find a person or company to help the hospital over the next six months. The commission sent a letter to Allegiance terminating the lease agreement in October, House said, and Allegiance has six months to vacate the hospital.

House recalled when the commission first started working with Allegiance in 2007, saying the commission was desperate to find a company to take over. That’s because Eureka Springs Hospital has a critical access designation, House said, and the hospital will lose that designation if the doors close even for a short period of time.

“The commission more or less went with the first and only company that expressed interest in running the hospital,” House said. “[Allegiance] did an adequate job for a while, but it didn’t take long until we got into a lawsuit with them.”

The commission voted Oct. 21 to seek a declaratory judgment as advised by legal counsel after hearing that Allegiance wanted to leave the facility by the end of October. The commission agreed to hire a hospital consultant at the same meeting. On Saturday, House said the commission received a few applications for the position including hospital administrator Stace Holland and Alliance Management Group, a company based in Oklahoma.

“[Holland] does say he has been transitioning hospitals for more than 10 years,” House said. “He says if we do go with a company to take this position, he’d request we consider him as CEO.”

The commission received a few other applications, but representatives from Alliance Management Group were the only applicants to come to the workshop. Alliance representative Darrell Parke introduced himself to the commission, saying he has a master’s degree in psychology and hospital administration. He’s part of a four-person team, Parke said, including Ryan Capshew, Mark Stearns and John Parigi. Parigi could not make it to the workshop.

“We’re a group, so you’ll get all four of us,” Parke said. “We understand the importance of what you’re doing, because critical access is what we do. I’ve managed a few critical access facilities.”

Parke said the hospital is in a “peculiar situation” he has seen many times before.

“You’re in a transition period where a lot of things have to happen very quickly,” Parke said.

Parke said his group would work on several different aspects of transitioning the hospital at once. That’s the benefit of having a team work for you, he said. One of the first things the group would do, Parke said, is communicate with the commission’s legal counsel to get the ball rolling on transferring the ownership of the hospital back to the hospital commission. Parke said he’s optimistic that the hospital can regain ownership of the facility while maintaining the critical access designation.

“Not only do we want to bring to you what we find, we want to educate you as well,” Parke said. “We’re big on helping develop a hospital trust authority so if we leave you know how to run the hospital.”

Parke said the group would work hard to make sure hospital employees stay where they are.

“That’s the asset. Everything else is secondary,” Parke said. “They’re frightened. They’re nervous. They don’t know what’s going on.”

Parke said it takes a strong management team and a strong physician base to keep the hospital running. Alliance would work with co-management agreements, Parke said, to bring more physicians and services back to the hospital. Capshew said co-management agreements are the way to go.

“The co-management plan partners and aligns the positions with the goals of the hospital that are quality based,” Capshew said, “so they have a say in what’s going on.”

Parke described how it works, saying the management service will have agreements with providers that go to the cost report and the money comes right back to the hospital.

“It increases the expenses of the hospital, so you get a higher reimbursement,” Parke said. “It’s basically a pass-through.”

House asked if the group is prepared to work with the commission after the six months is up.

“We’re prepared for six months and beyond,” Parke said.

Commissioner Barbara Dicks said she wasn’t sure the group could start bringing physicians back to the hospital while Allegiance still has a lease agreement in place and Parke said he didn’t agree with that. It’s important for the group to start looking over cost reports and preparing paperwork for the change of ownership in advance, Parke said.

“If Allegiance is on that cost report, that means you’re probably in for a fight,” Parke said.

Having all that information on how Allegiance has run the hospital, Parke said, would help Alliance and the commission broker a deal to make Allegiance’s exit as smooth as possible. In the meantime, Parke said, the hospital must keep seeing patients.

“We don’t want to stop seeing patients,” Dicks said. “We want to get to a point that Allegiance leaves and we are still there.”

“Right, but we want to do all this at the same time,” Parke said. “There’s a number of things happening. We’ll be negotiating swing bed. We’ll also be negotiating in-patient services with the idea that Allegiance will be gone.”

After the Alliance presentation, the commission moved on to hold a special called meeting. House said Alliance “blew everyone out of the water” but he’s concerned that the company doesn’t have an online presence.

“But the one thing they did do that none of the others did is they showed me how much I don’t know,” House said.

“That was impressive to me, too,” said commissioner Michael Merry.

Alliance is asking to be paid $40,000 a month with expenses. Merry said he thinks that’s reasonable.

“Their salary is just remarkably affordable considering it’s a team of four people,” Merry said.

Dicks moved to approve Alliance as the commission’s first choice for a consultant and Holland as a second choice. The commission voted unanimously to do so and House agreed to secure Alliance’s services. The commission asked House to negotiate the terms with Alliance, including a cap on attorney fees and expenses.

“We’ve just made a big step today,” House said. “I think the community is going to start seeing changes right away.”

The commission’s next regular meeting is scheduled for 6 p.m. Monday, Nov. 18, at the ECHO community room.

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