More than $12.5 million in federal aid will go to four rural Arkansas hospitals – including Magnolia Regional Medical Center — that received preliminary approval for the funds Tuesday from state lawmakers.
The full Arkansas Legislative Council on Friday will vote on whether to disburse the funds from the American Rescue Plan Act (ARPA) of 2021, aimed at covering costs incurred during the COVID-19 pandemic. Arkansas received an initial pot of more than $1.5 billion for lawmakers to distribute, and lawmakers set aside $60 million in August 2022 as emergency relief for struggling rural hospitals.
The Legislative Council’s Performance Evaluation and Expenditure Review subcommittee approved the following awards on Tuesday with no dissent:
— $1,916,015 to Magnolia Regional Medical Center
— $4,589,119 to Eureka Springs Hospital
— $3,441,839 to Piggott Community Hospital
— $2,620,000 to Delta Memorial Hospital in Dumas
The four hospitals are among 18 that the consulting firm Alvarez and Marsal evaluated to determine whether they are eligible for ARPA funds. The state hired the firm to help legislators decide how to prioritize hospitals’ requests for the dwindling supply of federal pandemic relief funds.
If approved Friday, the disbursements would bring the total number of rural Arkansas hospitals receiving ARPA aid to 10 of the 18 evaluated by consultants. The amount of distributed funds would reach nearly $40 million, two-thirds of what lawmakers reserved for these hospitals.
The PEER subcommittee awarded funds to four hospitals last month:
— $4.6 million to Baxter Health in Mountain Home
— $5 million to Fulton County Hospital in Salem
— $3.3 million to Arkansas Methodist Medical Center in Paragould
— $3.4 million to Howard Memorial Hospital in Nashville
Ouachita County Medical Center in Camden received $6 million in September 2022, and Drew Memorial Health System in Monticello received $5 million in June of this year.
Additionally, Sevier County Medical Center in De Queen received $6.5 million in December 2022 from a different subset of ARPA funds. It was not one of the 18 hospitals Alvarez and Marsal evaluated.
FINANCIAL AND WORKFORCE STRUGGLES
The hospitals seeking financial aid cited staff recruitment and retention struggles due to the pandemic, according to the consultant evaluations provided to lawmakers.
Magnolia Regional Medical Center faced a nursing staff shortage in 2022, which led the hospital to raise salaries, award bonuses and contract with traveling nurses. This contributed to the hospital having 120 days of cash on hand in February and 95 days in September.
Piggott Community Hospital has also used financial incentives to retain staff in all departments, including nurses, according to the evaluation documents. The Northeast Arkansas hospital had 13 days of cash on hand at the end of August.
Meanwhile, Delta Memorial Hospital outsources its billing procedures to outside companies and has several old pieces of equipment on site that are “past end of life” but “keeping us held together,” according to the evaluation.
Piggott Community Hospital and Delta Memorial Hospital are both critical access hospitals, which are located no less than 35 miles from other hospitals and have a maximum of 25 beds.
Eureka Springs Hospital is also a critical access facility and has opted into the “rural emergency hospital” designation, established in 2021 by a federal law and adopted in Arkansas earlier this year. The designation attracts more funds to rural hospitals from the federal Centers for Medicare and Medicaid Services (CMS) in exchange for the reduction or elimination of inpatient services and increased focus on emergency and outpatient treatment.
St. Bernards Five Rivers Medical Center in Pocahontas, part of the St. Bernards Healthcare system based in Jonesboro, became Arkansas’ first rural emergency hospital in September.
Angie Shaw, CEO of Eureka Springs Hospital, said the designation should improve the facility’s financial health, especially since its services have shifted from inpatient to outpatient care in the past 18 months.
“We’re already operating more or less as a rural emergency hospital,” Shaw said in response to questions from Sen. Missy Irvin, R-Mountain View.
Irvin said she appreciated Eureka Springs Hospital’s decision.
“I think it’s such a great option to be able to keep that critical infrastructure in place for a very rural place… and you have so many tourists that come through there as well,” Irvin said.
Piggott Community Hospital does not plan to seek rural emergency status or merge with another hospital, its administrators noted in the evaluation. The hospital became vital to healthcare in the region during the pandemic since a Southeast Missouri hospital had closed in 2018, the evaluation states.
“Moving to (become) a Rural Emergency Hospital (REH) might be expedient; however, what happens in the next pandemic?” the evaluation states. “PCH must have inpatient services to care for the community it represents.”
Last week, the Legislative Joint Auditing Committee authorized the Legislature’s independent auditing body to ensure that rural hospitals receiving specially designated ARPA funds are in compliance with state cybersecurity standards.
Lawmakers spent several meetings last year debating how to prioritize the appropriation of the state’s remaining ARPA funds, including for rural hospitals.
In September 2022, at the same meeting that gave Ouachita County Medical Center its requested aid, the Arkansas Legislative Council sent a $4.6 million request from Black River Technical College back to the PEER subcommittee instead of approving it.
The Northeast Arkansas college’s slightly increased request for $4.7 million received PEER approval again Tuesday and will return to ALC. The money would fund the construction of barracks for students at the school’s Law Enforcement Training Academy.
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