W. Memphis hospital plans to close doors

Crittenden Regional cites ‘insurmountable obstacles’

Crittenden Regional Hospital announced Monday that it would close because of "insurmountable obstacles" two months after voters passed a sales tax earmarked to help fund the financially strapped facility in West Memphis.

In a letter to the hospital's 400 employees, Chief Executive Officer Eugene Cashman wrote that the facility would cease admitting new patients immediately and would close its doors Sept. 7. The system's clinics and home health services will close Sept. 5, he wrote.

"Despite our best efforts, the combination of challenges we're facing -- a changing health care industry, a recovering economy and one of the toughest reimbursement climates in the nation -- continues to place mounting financial pressures upon our organization," Cashman wrote in his letter to employees.

"Because of insurmountable obstacles, we have made the difficult decision to halt all operations at 150-bed Crittenden Regional Hospital, and permanently close our doors," he wrote. "Even with funds from the sales tax scheduled to take effect later this year, our situation is simply not sustainable as a business."

The announcement stunned Crittenden County leaders, who said they thought the overwhelming passage of a 1 percent countywide sales tax during a special election in June was indication of the hospital's support.

Voters favored the tax 3,952 votes to 661 votes June 24. The tax, for which collections were scheduled to begin in October, was estimated to generate about $6 million to $7 million a year.

"We're shocked," Crittenden County Judge Woody Wheeless said Monday afternoon of the closure. "We're trying to digest what just happened."

West Memphis Chamber of Commerce Executive Director Holmes Hammett said, "We're waiting until this settles down before making a comment."

However, Hammett said he anticipates state agencies will assist hospital workers in locating new employment in the coming days.

Cashman, who did not return telephone messages Monday, said while campaigning for the tax in June that an increase in uninsured patients, federal cutbacks in Medicaid reimbursements, and a score of doctors who either relocated or retired from the facility had left the hospital facing $30 million in debt.

"It's a very critical time," he said in an interview then. "Without a tax, the hospital will lose its ability to operate."

The hospital closed for about a month after a June 6 fire broke out in an unoccupied intensive-care room on the second floor. The fire was quickly contained, but water from the hospital's sprinkler system -- which pumped 35 gallons a minute -- damaged floors, walls and ceilings.

Workers replaced materials, and the hospital reopened in late July, but Wheeless said he felt the fire was the "final nail in the coffin" for its demise.

Wheeless said hospital administrators were in negotiations with a private health care organization to buy Crittenden Regional Hospital as late as Friday evening, but a deal was not worked out.

"The firm said there was no way it could make the numbers work out in their favor, and they backed out," Wheeless said.

The county judge said he intends to develop a task force to begin recruiting other health care companies that may be interested in buying the hospital.

Monday's closure is an indication of economic hardships for hospitals, said Paul Cunningham, senior vice president of the Arkansas Hospital Association.

"This is an example of the paper-thin margin hospitals operate on," he said.

"This is something we've been talking about for the past 25 years. Hospitals are an integral part of communities. People and businesses looking to relocate look for hospitals. This is detrimental for West Memphis."

Arkansas has seen nearly two dozen hospitals close in the past 25 years. Facilities have closed in Hampton, Brinkley, Marianna, Gurdon, Lewisville, McCrory, Yellville, Corning, Cherokee Village, Searcy, Newport and Manila since 1990, he said.

The Southwest Regional Medical Center closed in Little Rock in 2007. A year later, Baptist Health Medical Center bought the 36-acre campus and buildings.

The Nevada County Hospital in Prescott closed in 1995, Cunningham said.

"Anybody who lives there knows that was not a good thing for that area," he said. "Hospitals are economic drivers."

Ward Wimbish, the director of economic development in West Memphis, said the loss of the hospital will be devastating to future recruitment in the city.

"It's very important to have a hospital," he said. "Businesses like to see communities that have hospitals. It's the root of our community. This will certainly be missed."

Cunningham said people in West Memphis will have drive to nearby Memphis for hospital care or make longer trips to the nearest facilities in Forrest City, Blytheville, Jonesboro or Helena-West Helena.

"There was great support for the hospital in Crittenden County," he said. "I think the fire was what turned the tide for them. They were closed for six weeks, and when they reopened, the revenue was not what it should have been."

Tom Atchley, excise tax administrator for the Arkansas Department of Finance and Administration, said Crittenden County businesses were set to begin collection of the 1 percent sales tax Oct. 1. He said county attorneys will have to submit a request to the department to repeal the tax.

Wheeless said that is already underway.

"This is still very fresh," Wimbish said. "There are no plans yet to move forward, but we will do something. We hope it can be reopened somehow."

State Desk on 08/26/2014

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