The University of Arkansas for Medical Sciences' contract to provide certain services at Baptist Health Medical Center-Conway is unfair to the Conway Regional Health System that also operates a hospital, the Conway system's chief executive officer told lawmakers Thursday.
But UAMS' interim chancellor defended the university's contract with Baptist Health, saying the latter pays reimbursement for services provided and an administrative fee to UAMS. UAMS isn't subsidizing Baptist Health.
The two executives spoke and answered lawmakers' questions during a two-hour public hearing before the Legislative Council's Joint Performance Review Subcommittee.
"While I understand and extol the virtues of competition, what is occurring in Conway is nothing less than a tipping of the scales and an example of government intervention that will stymie the virtuous effects of competition and ultimately I think hurt UAMS," said Matthew Troup, chief executive officer and president of the Conway Regional Health System.
"As a provider in this state, we want a strong UAMS, as well," he said. Earlier this month, UAMS announced that it was laying off about 250 employees because of a larger-than-expected deficit.
Troup said Conway Regional Health System has served and grown with its community since 1921. It offers a wide range of services across virtually every major specialty.
The number of hospital beds increased from 150 to 261 in Faulkner County with Baptist Health-Conway's 111-bed hospital opening in 2016, and it is going to take a long time to fill those beds, he said.
UAMS interim Chancellor Stephanie Gardner said UAMS has contracts with 48 hospitals and clinical affiliates, has relationships with 94 hospitals and more than 1,000 affiliation agreements with hospitals and clinics throughout the state to allow the university to meet its three-pronged mission of education, clinical care and research.
UAMS is dependent on clinical revenue for about 80 percent of its revenue, she noted.
Gardner said UAMS is at its capacity to provide services at its Little Rock medical center, so the contract with Baptist Health allows its doctors to provide services in Conway that wouldn't be provided.
"This is an arrangement that works for both institutions," she said.
UAMS started providing emergency medicine and orthopedic surgery services to Baptist Health when that hospital opened in September 2016, and one of UAMS' doctors began providing gynecology-oncology services there in the past few months, UAMS spokesman Leslie Taylor said after the meeting.
Under the contract, UAMS doctors are paid from clinical revenue from reimbursements made by Baptist Health for services provided, said Bill Bowes, UAMS' senior vice chancellor for finance and administration.
"It is not paid by taxpayer dollars," he said.
UAMS has been paid about $5.3 million for services provided at the Conway hospital since it opened, and the reimbursement for services has any administrative and overhead costs built into it, Taylor said.
Sen. Jim Hendren, R-Sulphur Springs, asked Gardner whether UAMS has similar contracts with other hospitals.
Gardner said UAMS has had an agreement with the Baptist Health facility in Little Rock for decades under which UAMS doctors provide health care in that facility, and there are other affiliations that are similar, such as one with White River Medical Center.
None of UAMS' agreements with hospitals are identical, Gardner said.
Hendren asked if UAMS would refuse to negotiate a deal with any other comparable hospital.
Gardner replied, "No, sir."
Sen. Jimmy Hickey, R-Texarkana, questioned whether UAMS would offer the same agreement to two hospitals.
Gardner said UAMS' discussions with Baptist Health have evolved over the decades.
"There is a greater relationship between us than can be characterized in a contract or proposal that outlines contract reimbursement," she said. "It's also the facility that can support the service such as state-of-the-art robotics."
Hickey asked if UAMS would have to negotiate the same reimbursement rate for orthopedic care for hospitals in the same trade area.
Gardner said UAMS officials will talk with any entity about a potential partnership, but "there is no way that we can actually have our physicians practice in any and every facility in the state, so it would have to make sense."
Under questioning from Rep. Mark Lowery, R-Maumelle, Gardner said, "We did spend a great deal of time looking at an affiliation in the past with CHI St. Vincent, and ultimately it became apparent that the culture of the two organizations would make a relationship of a significant size difficult.
"I think the desire at that time was for CHI St. Vincent to be more involved in the operations of our hospital, and so the decision was made that was not a workable arrangement and we would [go in] a different direction," she said.
Troup said Conway Regional hired a consultant several years ago in a request-for-proposal process to determine a strategic partner.
UAMS backed out within three months of that process, Troup said. Gardner disputed that.
Troup said Conway Regional eventually decided to partner with CHI St. Vincent, and he is a CHI St. Vincent employee, but his focus is on Conway.
"Nobody asked us if we needed additional ER or orthopedic coverage or any of the other 13 specialties offered at Baptist Conway by UAMS," he said.
Afterward, Lowery said the Joint Performance Review Subcommittee plans to hold another public hearing to probe deeper into state law governing UAMS' contracting.
Metro on 01/26/2018