More details released on sale of Sparks Hospital

Following the announcement that Sparks Health System is being sold to Alpharetta, Ga.-based Jackson Healthcare, The City Wire was granted an interview with Jackson Hospital Affiliates President Gary Bell, Sparks Board Chairman Judy Boreham, Sparks board member John Taylor and Sparks Health System President Ted Woodrell.

The City Wire also contacted area business and civic officials to seek their comment on the pending sale of an institution so tightly linked to the history of Fort Smith.

COMMENTS FROM SPARKS, JACKSON OFFICIALS
• Sparks now employs about 2,300 and about 115 medical providers, including 98 physicians.

• The deal will require the $62 million in public bonds and associated bond servicing fees to be extinguished. The bonds were facilitated for a nonprofit organization through a public facilities board. Any acquisition of a nonprofit by a for-profit requires the public indebtedness to be cleared.

• Everything but the Sparks philanthropic foundation is being sold to Jackson Healthcare. Taylor said the foundation will likely have to make “amendments” to its bylaws, but would still be a “valuable” player in helping with regional health care needs.

• There will not be a name change. (Really? Did you really think a company would walk away from 122 years of a branded name? The City Wire didn’t even ask the question.)

• Jackson Healthcare, the company buying Sparks, does not now own a hospital. It does own 10 companies that provide services to hospitals, including doctor and staff recruitment (Jackson & Coker, a physician recruitment company in business for more than 30 years), and a company that specializes in information technology improvements for hospitals and clinics.

• The Sparks transaction will be the 52nd hospital acquisition with which Bell has been involved. Bell, the president of the Jackson subsidiary that will operate Sparks, was asked why the company didn’t wait to buy Sparks until after the hospital filed for bankruptcy and cleared some of the debt. Bell said the assets that make the hospital work are the people. A bankruptcy diminishes the value of a hospital’s brand and the quality of people it can retain. But he did acknowledge that the timing — Sparks’ struggling finances combined with Jackson’s interest in expanding the business — was convenient. “We did this at just the right time,” Bell said.

• How will Jackson Healthcare turn around the finances of Sparks?
Two broad areas were used to answer the question. Bell said Jackson, through its numerous subsidiaries, can provide support to the hospital at “brother-in-law” prices. Bell said never in his past hospital acquisition efforts has he had the resources of a supporting company like Jackson to further the business model of the hospital. “This is a once-in-a-lifetime opportunity … I haven’t had had at my disposal ever in my career the resources” that Jackson Healthcare will provide, Bell said.

Bell said with Sparks being the only hospital in the Jackson network, “the focus” will be 100% on making the deal work.

Woodrell said Jackson’s proven ability to recruit doctors and key medical staff “will be the key” in improving top line revenue for the hospital. Jackson Healthcare will allow Sparks to expand the ongoing financial recovery plan and speed it up, he said.

“The physician staff here knew (Jackson) was the premiere recruitment group,” Boreham said. “They know what it could mean … We will recruit additional lines” of medical service with Jackson.

• Will Jackson cut services and staff to make the deal profitable?
Bell, Woodrell and Boreham offered a definitive “No,” as an answer. “We’ve said it before: We’re going to grow our way out, not cut our way out,” Woodrell said.

Boreham, echoing a business philosophy from her late husband and former Baldor Electric Chairman and CEO, Roland S. “Bud” Boreham, reiterated that companies can’t cut and grow at the same time. She was firm in noting that the hospital didn’t agree to the Jackson acquisition in some effort to cut staff and services just to make money. “That’s not how you grow,” Boreham stressed.

• The Sparks board of directors will be dissolved and a local board of advisors will be named by Jackson Healthcare once the deal is finished. Boreham said the advisory board will retain most of its input roles but will not retain its financial authority. That role, obviously, will rest with Jackson Healthcare.

• Bell said Jackson did not intend to release the cost of the transaction. He noted that Jackson is a private company and the deal is not subject to any public oversight that requires transactions details.

OTHER COMMENTS
• “Fort Smith has to have two top-quality hospitals providing health care to our citizens,” Fort Smith Mayor Ray Baker said when asked about the Sparks deal. “I will do everything I can do” to help Sparks and its new owner succeed.

But Baker did say he was sad to see the long tradition of local ownership of Sparks come to an end. (The first chairman of the Sparks board of directors? Judge Isaac C. Parker.)

• St. Edward Mercy Medical Center, the cross town competitor of Sparks, issued a statement about the Sparks transaction.
 
“It is important for our community to have two hospitals providing quality care,” said Jeff
Johnston, CEO and president of St. Edward Mercy Health System. “We look forward to
continuing to work with Sparks in the future.”

• Sandy Sanders, interim president of the Fort Smith Regional Chamber of Commerce, said the news “was very encouraging.” He said both hospitals (Sparks and St. Edward) play a “significant role” in Fort Smith.

“It’s good news in my opinion because the new capital partner will help the hospital be successful,” Sanders said.