Care provider will try again to sell in state

Preferred Family contacts Spa City’s Quapaw House

One of Arkansas' biggest mental health services companies, embroiled in a federal political corruption investigation for the past 21 months, is making a second attempt to sell its operations in the state.

Preferred Family Healthcare Inc. of Springfield, Mo., has signed a letter of intent to sell its Arkansas clinics to Quapaw House Inc., a substance abuse and mental health care nonprofit based in Hot Springs, both companies announced Friday.

Preferred Family had said last month it was close to a similar sale to TrueNorth, which has a sister company in Russellville. Then the Missouri provider announced Tuesday that the deal had fallen though.

Casey Bright, chief executive for Quapaw House, said Preferred Family contacted his company Wednesday morning.

"We have a letter of intent," he said in a telephone interview Friday evening. "We are still negotiating the agreement and the price. It's been a busy 48 hours."

Preferred Family's announcement to its roughly 500 Arkansas employees described the letter of intent with Quapaw House as "not a final deal," but "very encouraging news."

The biggest obstacle in finalizing the sale is the Oct. 12 deadline Preferred Family has set for closing its operations and leaving the state, Bright said.

"To do an acquisition of that size between now and Oct. 12 is massive, and a ton of work," he said.

Quapaw House is the smaller of the two entities with about 175 employees. It has offices in Hot Springs, Russellville, Little Rock and Pine Bluff.

The Hot Springs company reported $5.2 million in income and $5.3 million in spending in fiscal year 2016, according to its latest available tax filing. Its net assets were recorded as $2 million.

Preferred Family is selling its buildings, vehicles, furniture and all other assets in Arkansas, the Quapaw chief executive said. Determining the exact price isn't easy, but Bright said his company will make public the letter of intent and details of the sale when it closes.

Oct. 12 is now the target date for Quapaw to begin running all PFH clinics in Arkansas, so services to clients won't be interrupted and employees who shift from Preferred Family to Quapaw House won't have a work stoppage.

Quapaw has offered mental health treatment for years, Bright said. On July 1, the nonprofit was certified in Arkansas to bill Medicaid patients for that care.

Preferred Family earned most of its income in Arkansas, more than $33 million per year, through the state's Medicaid program.

Preferred Family operates at 45 locations in Arkansas, according to the company's website. Among them are Health Resources of Arkansas that serves 25 counties in the state's north-central section, Decision Point in Bentonville, the Wilbur D. Mills Treatment Center in Searcy, and other clinics spread across the southern part of the state from Texarkana east to Lake Village.

Former executives of the Missouri company have been charged or implicated in kickbacks and political corruption schemes involving then-sitting and former Arkansas legislators. The investigation became public with the guilty plea of former Rep. Micah Neal, R-Springdale, in January 2017.

Preferred Family Healthcare and its Arkansas affiliates lost 16 state contracts June 29 when the Department of Human Services rescinded them after the arrest of a former executive who was charged with Medicaid fraud. Not all of the contracts used Medicaid funds. The department then brokered deals with other providers to take over those contracts.

Preferred Family told its employees on July 3 that it could not sustain its Arkansas business without the state contracts. Besides the Arkansas clinics, the company also operates in Illinois, Kansas, Missouri and Oklahoma.

The company decided it was in the best interest of its employees, its clients and itself to sell its non-contract clinics and services to a business that can keep the company's staff in the same communities, a company spokesman said last month.

The former chief Arkansas lobbyist for Preferred Family, Rusty Cranford, pleaded guilty in June to a $3.5 million bribery and influence-peddling scheme.

A top executive with Preferred Family, Keith Noble, pleaded guilty Monday to a single count of knowing about crimes of other executives in the political corruption scheme.

Metro on 09/15/2018

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