Booneville Mayor Jerry Wilkins called the lease agreement between Mercy Fort Smith and the Booneville Community Hospital, which was announce in Fort Smith Thursday night, "the best of both worlds."
"You get somebody to help run the hospital and you retain ownership," Wilkins said Friday.
The management agreement will be effective Nov. 1 and includes a two month transition period leading to a renamed leased facility of Mercy Hospital-Booneville on New Year’s Day.
"We are enthused about it," said Wilkins. "(Mercy) is enthused to get such a nice facility. That is a nice facility out there."
Wilkins said he has yet to see the actual contract but he understands the lease on the city-owned hospital is for five years with a renewal option.
"I think it’s good for the city," he said. "I think it puts the hospital on stable ground."
Additionally, the mayor, who was on hand for the announcement at the fourth annual Mercy Community Roundtable, held at the MovieLounge in Fort Smith, said the agreement will allow the hospital "to contract out services cheaper." He added the lease agreement payment "will make the payment on the hospital."
In 2003, Booneville voters approved a perpetual 1 percent sales tax to support the hospital’s operation. Four years later, the tax was amended to pledge one-fourth of its annual revenue — $517,000 in 2012, with collections on pace to match that this year — toward bonds that went toward construction of a new, $18 million, 25-bed hospital. The interest associated with the bonds is about $90,000 per month.
Wilkins said he is uncertain whether monthly reports to the city council will continue once the agreement is in full effect, but he would expect that would happen if hospital officials are asked to do so.
A key benefit of the agreement, Gehrig told the Times Record, is the availability of Mercy physicians to hold periodic clinics at the Booneville hospital. Coupled with telemedicine, this could provide improvements to the community’s health-care options.
Both Wilkins and BCH chief operating officer C. David Hill echoed the sentiments.
"This will get us more services and more doctors," said Wilkins. "It’s almost impossible for a rural hospital like ours to survive independent(ly)."
"We need more (health) providers and Mercy has shown success with full-time physician recruiters," Hill said at Thursday’s meeting at the MovieLounge.
What the agreement doesn’t do is assume any prior hospital obligations.
Mercy Fort Smith President Ryan Gehrig told the Times Record the hospital will continue to be responsible for its city bond issues and a pending breech-of-contract lawsuit of $174,856 in which Dr. Sean Champion, a surgeon, alleges the hospital breached a contract, interfered with business expectancy, violated the Arkansas Whistleblowers Act and wrongfully terminated the doctor.
According to BCH chief financial officer Stuart Lisko, the hospital lost over $1.5 million in fiscal year 2013, which ended June 30.
The hospital showed a profit of $17,000 in the first year of fiscal year 2014, and through the first two months, the profit was over $93,000. Lisko said that was partially attributable to receipt of $322,000 due a vendor for work to implement Affordable Healthcare Act electronic medical records requirements.
In addition to its 365-bed hospital, Mercy Fort Smith also operates three critical-access hospitals in Ozark, Paris and Waldron, as well as Mercy Clinic with 123 providers in more than 20 locations across the region.
A not-for-profit corporation, Booneville Community Hospital Inc. operates the hospital through a seven-member board. The city oversees collection and disbursement of the sales tax, but hospital management is independent of city government.
Ownership of the hospital will revert to the city upon retirement of the bonded debt. The payout schedule is for 40 years and 36 years remain. Additional funding comes from the federal government, private insurance and private payments.
The Times Record contributed information used in this report.