Fort Smith jobs concern comes with CHS-HMA deal

So what happens to the planned Health Management Associates (HMA) regional service center and its 500-plus jobs now that the company is being acquired by a much larger hospital operator? It’s obviously too early to tell, but one thing is certain: The specter of even a hint of uncertainty is not pleasant in a metro area that has lost almost 7,000 jobs in the past five years.

It was announced early Tuesday (July 30) that HMA, the parent company of Sparks Health System in Fort Smith and Summit Medical Center in Van Buren, agreed to be acquired by Community Health Systems. Initial reports place the buyout value at $7.6 billion. The deal, if it meets shareholder and regulatory approvals, is expected to close in early 2014.

Franklin, Tenn.-based Community Health is almost double the size of Naples, Fla.-based HMA, and its hospital portfolio includes eight facilities in Arkansas. Those include four in Northwest Arkansas – Northwest Medical Center-Bentonville, Northwest Medical Center-Springdale, Siloam Springs Regional Hospital and Willow Creek Women’s Hospital.

The acquisition created a big stir in the national business media. But in the Fort Smith area, the deal not only impacts the thousands employed by Sparks and Summit, but raises valid questions about the future of the service center.

Officials HMA announced April 4 that the center would be housed in what is now the Phoenix Expo Center in what was once a portion of Phoenix Village Mall. The property is owned by FSM Redevelopment Partners. HMA estimates the annual payroll will be $21.5 million, with the center at full employment within 12 months. The facility is scheduled to begin operations in early- to mid-September.

The center is one of several recent positive jobs and investment announcements that regional civic and economic development leaders hope will help reverse the problem of persistent high unemployment in the region.

June’s jobless rate of 7.7% marked the 54th consecutive month that the rate has been at or above 7%. In June 2008, there were 132,392 employed in the Fort Smith metro area. June 2013 employment was 125,482.

Lance Beaty, an owner of FSM Redevelopment Partners who is managing the build out for HMA’s Fort Smith center, said he has not received any indication that the project will be halted.

“All of our communications have been to push forward. We are still on an expedited time schedule,” Beaty said Tuesday, adding that it’s “too premature to make definitive comments” about what the CHS-HMA deal will mean for Fort Smith.

The following statement, credited to Eric Waller with HMA, was sent Tuesday afternoon by HMA to The City Wire:
“The details of the integration of Health Management and CHS will take many months to unfold. We look forward to a thoughtful planning process. As one company, Health Management will have an even stronger financial and operation profile and enhanced means to compete, grow and thrive in a rapidly evolving healthcare landscape.”

In a “425” filing with the U.S. Securities and Exchange Commission, HMA President and CEO Gary Newsome said it will be “business as usual” for both companies until the deal is closed.

“It is important for you to know that this combination will not impact the hospital operations of either company. Culturally and organizationally, our companies are ideal partners, with highly complementary businesses, very little geographic overlap and a similar strategic focus on suburban and rural hospitals,” Newsome said in the filing.

Tim Allen, president of the Fort Smith Regional Chamber of Commerce, said his conversations with local HMA officials indicate they are still moving to open the center.

“It appears that it’s business as usual, so we’re still very optimistic (about) the hiring, the building out of the facility here in Fort Smith. … We’re going to march forward until further notified, so we’re still pretty excited about the project,” Allen said.

Allen also believes the new owners will like what they see in the area “if and when” the deal is closed.

“I am sure they will be as pleased with the workforce in Fort Smith as HMA has been,” he said.

Beaty also turned the potential to a positive, saying the HMA deal with Phoenix included an option to expand the service center.

“I might add that they (HMA) also have an option to expand the center. … Also think about this: We might be a lower-cost market for them (new owners). They might decide this is the place to be and keep this here or move something here. You never know,” Beaty said.