Community Health Systems could add up to 250 jobs to its Shared Services Center in Fort Smith thanks to an $18.8 million refinancing deal that allows Beaty Capital Group to add 34,500 square feet the center’s space located in the former Phoenix Village Mall.
The services center was opened in September 2013 by then Health Management Associates. The almost 90,000-square-foot space was initially staffed to provide administrative support to 23 hospitals and more than 150 physicians. Systemwide, the company now operates 159 hospitals in 22 states and manages 27,000 licensed beds.
Based on previous reports from CHS, the center employed an estimated 575 people by the end of 2015. The planned expansion would boost employment to an estimated 825.
Little Rock=based Arkansas Capital Corp. and Beaty Capital Group, Inc. arranged an $18.8 million loan syndication with nine other lenders for the refinancing and expansion of the Phoenix Center in Fort Smith. The deal closed July 29.
Arkansas Capital Corp. President Al Hodge said the organization historically focused on deals in central Arkansas, and this transaction expands its activity into Northwest Arkansas and the Fort Smith area.
“We and our partner banks are excited to have been a part of making this project a reality for the Fort Smith community,” Hodge said.
Lance Beaty, president of Beaty Capital Group, which through an affiliate has an ownership interest in FSM Holdings, said two separate locations are being modified in the Phoenix Center, one with 27,000 square feet and the other with approximately 7,500 square feet. FSM holdings obtained on Aug. 16 two building permits with a total value of $3.75 million.
“In addition to the expanded space, the parking lot will be reworked and several aesthetic and functional changes will be made as part of the improvement,” Beaty said. “FSM Holdings will be delivering some of the space for occupancy on September 1 and the remaining space on November 1 of this year.”
Shannon White, vice president of Shared Services Center – Fort Smith, said the region has a good workforce from which to recruit employees.
“We are fortunate to have access to a deep talent pool to fill the need for the business services our location provides,” White said in a statement. “In addition, the Phoenix Center’s willingness to accommodate our growth and continued support of the Arkansas Economic Development Commission and the Fort Smith Chamber of Commerce allows us to continue to expand on behalf of the hospitals we serve.”
Tim Allen, president and CEO of the Fort Smith Regional Chamber of Commerce, praised all the people and organizations that made the expansion possible.
“This expansion is the direct result of the collaboration of several partners, including Lance Beaty, Shared Services Center, Arkansas Economic Development Commission and the Chamber of Commerce. Today’s announcement is a testament of the company’s continued commitment to the community and to the quality of Fort Smith’s workforce,” Allen said.
The jobs are welcome news in a metro area that has yet to see employment numbers recover from the Great Recession. The number of employed in the Fort Smith region totaled 116,990 in June, up from the 116,302 in May, and up 1.08% from the 115,730 employed in June 2015. The number of employed in the area is down 6.7% compared to the high of 125,426 in June 2006. The size of the Fort Smith regional workforce during June was 123,083, up from 121,906 during May, but just below the 122,779 in June 2015. The labor force reached a revised high of 132,004 in June 2007, meaning the June workforce size is down 6.75% from the peak number.
“Shared Services Center is not only creating new jobs, but high-wage jobs that will improve the quality of life for our fellow Arkansans,” Mike Preston, executive director of the Arkansas Economic Development Commission, said in a statement. “Fort Smith is a great example of a community that has prioritized economic development and we see the results of that focus in today’s announcement.”
MALL BACKGROUND, CHS FINANCIALS
Beaty, along with partner Dr. Steve Nelson of Fort Smith, purchased the 35-acre and almost abandoned Phoenix Village Mall in January 2009. After investing more than $16 million in the property, Beaty said the location is – prior to the ongoing expansion – home to more than 1,500 jobs with an annual payroll of more than $35 million. Sykes, a Tampa, Fla.-based call center operator, employs more than 700 at the former mall site.
The mall site has also seen expansion with the move of Empire Liquor’s Fort Smith store. The store, owned by Nelson, moved from the corner of Old Greenwood Road and Phoenix Avenue, to a 10,000 square foot space in a renovated strip mall building on the 35-acre former mall site.
Sparks Health System and Summit Medical in Van Buren were part of the early 2014 sale of HMA to Community Health Systems, a company whose portfolio of hospitals was nearly double the size of HMA’s portfolio. In addition to Sparks and Summit, CHS owns four Northwest Arkansas facilities — Northwest Medical Center-Bentonville, Northwest Medical Center-Springdale, Siloam Springs Regional Hospital and Willow Creek Women’s Hospital in Johnson.
CHIS on Aug. 2 reported a second quarter loss of $1.432 billion, a wide swing from the $111 million net income in the same period of 2015. The loss was the result of a one-time accounting charge reducing the value of goodwill in the CHS hospital division. For the first six months of the year, the company posted a $1.421 billion loss, compared to a $189 million gain in the same period of 2015. Revenue for the first six months of the year totaled $9.589 billion, down from $9.793 billion in the same period of 2015.
Admissions were down 5.7% for the first six months of 2016.
For the first six months of 2016, 34.8% of CHS revenue was from Medicare and Medicaid, compared to 35.4% in the same period of 2015. Of the revenue remainder, 52.9% was from managed care and other third-party insurance operators, and 12.3% from self pay.
CHS stock (NYSE: CYH) has not been popular with the market in recent quarters. The share price closed Friday at $10.84. During the past 52 weeks the share price has ranged from a $49.78 high to a $10.53 low.