A serious matter

There is a serious matter we must address.

While we argue and contemplate riverfront development options, express concern and frustration about our regional economy, respectfully attempt to maintain optimism about the future of the Fort Smith Regional Chamber of Commerce and watch with true optimism the continued growth and relevance of the University of Arkansas at Fort Smith, there is a community organization of vital importance struggling to remain an independent and viable community organization.

Sparks Regional Medical Center is a terrifically important piece of the foundation of health care in the Fort Smith region. The facilities, doctors, nurses and other staff of the hospital network have long ensured a competitive and dynamic health care environment for the more than 350,000 people in the larger regional market area. Sparks directly and indirectly employs more than 2,000 in the area — my estimation — and reported 2008 admissions of almost 13,000 patients.

And please know that addressing this serious matter is less about addressing and more about acknowledging it. There are no attempts at solutions contained herein. This is more a lamentation about the Sparks situation rather than any too-clever-by-half pontificating.

It is common knowledge that this venerable hospital is financially ill. In early February, Moody’s indicated the hospital had about 11 days of cash on hand as of Dec. 31. The hospital had 78 days of cash on hand as of June 30, 2007. Moody’s paints bankruptcy as a likelihood.

We could review here how the Sparks management of a decade or so ago negligently burned through more than $300 million in cash reserves, or how charity care of around $50 million a year cripples the hospital’s ability to generate positive cash flow, or how the complex issues of local, state and national health care are making it damn-near impossible for existing Sparks management to stop and reverse its financial deterioration.

But not a spit of that review would move forward the acknowledgement of the here and now. It was Jeff Johnston, CEO of St. Edward Mercy Medical Center, Sparks’ cross-town competitor, who noted in a recent interview with The City Wire that obsessing on what was and what happened and who did what to whom does nothing to solve health care issues now facing the Fort Smith region.

“I really don’t care about what happened in 1982” or any other time, Johnston said.

What we do and/or should care about is what happens next. Again, there are no solutions or definitive statements of direction included in what is to follow. This is merely an attempt to raise awareness of the situation and of possible outcomes.

COMMUNITY SUPPORT
Because Sparks is a community hospital with bonds issued by a public facilities board, there is the option for some form of pecuniary public support.

This is not likely.

Fort Smith Mayor Ray Baker has mentioned his desire to convene a health care forum, but this is a complicated issue that would require hard work and something much greater than superficial research and understanding. A simple proclamation that “Life is Worth Living in Fort Smith” and the sprinkling of rose petals won’t help. And with the Fort Smith Board of Directors unable to get a handle on financial issues — future Convention Center funding shortfall, for example — that pale in comparison to those of Sparks, don’t expect much leadership from the city.

The Sebastian County Quorum Court has not yet figured out a way to consistently obtain positive financial results from a golf course. It’s doubtful that body will want to tackle the Sparks issue.

There would be gleeful eating of crow in this space if either political body mentioned above negate my assessments.

EXTERNAL OPTIONS
There are numerous paths in Sparks’ future. What follows is a brief outline of a few of them, based on info from interviews with several people inside and outside the Sparks network who are familiar with various details of the situation.

First, let’s note that the hospital is not going to close its doors and push patients out of their rooms. If bankruptcy arises, the hospital will be placed into some form of receivership and will continue to operate.

Bankruptcy would not necessarily be a bad thing. Some speculate that hospital networks in and outside of Arkansas are waiting for a Sparks bankruptcy so they can buy Sparks’ assets after the Sparks’ debt — upwards of $53 million — has been extinguished or greatly mitigated. Little Rock-based Baptist Health is a potential acquirer of a post-bankruptcy Sparks.

Another option is that the hospital board and management find a way to tap new sources of financing while remaining 100% community owned. And Terrell Owens will be a humble and modest team player who never causes trouble for the Buffalo Bills.

More likely is some hybrid approach that blends outside investment and alters the ownership of Sparks. This could include Brentwood, Tenn.-based QHR (Quorum), the company now managing Sparks. (There is a conspiratorial rumor about QHR seeking to bankrupt Sparks so it can buy the hospital at a fire-sale price. While this scenario is not impossible, it finds little to no merit when considering the QHR history and business model.)

However, some suggest new investment would require a change in management, and could come with an option to acquire a majority ownership of Sparks at a future date. Such a clause would provide incentive for a new investor(s) to accomplish a financial turnaround.

“I think the community will be surprised by what is done” to save Sparks, noted a person familiar with the situation. This person, who possessed a refreshing and somewhat assuring amount of optimism, also suggested the next 60 days will reveal one or more of the surprises.

The optimism was infectious, possibly because it came into contact with my deep hopes that Sparks not only survives, but returns to a position of stability and strength. This region desperately needs and deserves a dynamic and diverse medical community.

This is a serious matter of which the socio-economic importance escapes nary a segment of this region.

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P.S.: If a sociologist or professor or whoever studies such things seeks a case study on the importance of board leadership, allow me to suggest the past and present of the Sparks board. Although the board is now comprised of souls actively engaged in the hospital’s affairs, such wasn’t always the case. Responsible board oversight, especially with an organization as important as a regional hospital network, requires much more than having a dozen or so regional business and civic leaders enjoying a nice lunch once a month, being pleasant and accommodating and never asking management tough questions about policy and finances.