The Yell County board that oversees Dardanelle Community Hospital wants a federal judge to appoint a receiver to take over operation of the facility.
The hospital, which does business as River Valley Medical Center, is in "an operational and financial crisis -- one that is putting hospital patients at risk," according to the emergency motion filed Monday in U.S. District Court in Little Rock.
"The hospital's laboratory is no longer functioning as required by state law and is adversely affecting patient care at the hospital and the Yell County community at large," according to the motion from John Keeling Baker and Devin Bates, Little Rock attorneys who represent the six-member board, which is appointed by the Yell County Quorum Court.
"The hospital's blood supplier is owed monies from over 120 days ago and is about to shut off the hospital's blood supplies," they wrote. "Vendors are no longer supplying basic lab supplies and radiology supplies to the hospital because DCH cannot pay its debts. Vendors are also repossessing lifesaving equipment, including a ventilator."
The board's attorneys want a court hearing within 14 days.
Vicki Andert, CEO of the Allegiance Health Management hospitals in Dardanelle and Eureka Springs, said Tuesday that she was unaware of the board's request for a receiver. She referred a reporter to Allegiance's corporate headquarters in Shreveport, but nobody returned a telephone message left there Tuesday.
The 25,000-square-foot Dardanelle hospital has as many as 35 beds, depending on configuration, according to court filings. It's the only hospital in northern Yell County, but there are hospitals 5 miles away in Russellville and 20 miles away in Danville.
Dardanelle Hospital opened in 1965 as a 26-bed facility, according to rivervalleymedicalcenter.com. The hospital's board leased the facility to Allegiance in 2007 and announced the name change to River Valley Medical Center.
"River Valley Medical Center is devoted to providing the highest level of medical care to Arkansas residents," according to the website. "In pursuance of that goal, we are always improving our technology, techniques and understanding of medicine. As the field is in a constant state of innovation, we make it a habit to keep up so that our patients are the first to benefit."
As of Sept. 10, the Dardanelle hospital was $90,000 behind in its lease payments, according to a federal lawsuit that the hospital board filed Dec. 7 against Allegiance and Dardanelle Community Hospital, doing business as River Valley Medical Center.
Allegiance had agreed to pay $15,000 per month, according to the lease. The 5-year lease had been renewed twice and was to expire in 2022.
The hospital board terminated the lease, effective six months from Oct. 17, 2018, but Allegiance contends that the lease hasn't been terminated, according to the lawsuit.
The board requested a declaratory judgment as soon as possible so they would have time to find another hospital operator.
R. David Freeze of Texarkana, Texas, an attorney for Allegiance, filed an answer Dec. 28. He denied the allegation that the defendants were behind on lease payments, but he didn't provide details in the court filing.
"Plaintiff's claims are barred because defendants have timely cured prior to the filing of this lawsuit any material default claimed by the plaintiff," Freeze wrote.
A hearing was held Jan. 9 before U.S. District Judge D.P. Marshall Jr., and a bench trial was scheduled for July 31 in Little Rock.
The plaintiffs filed several exhibits in the case Monday. One was a statement from Dr. Rob Goodman, who has worked at the Dardanelle hospital since 1997.
"Over the last six months, I have become alarmed at certain aspects of how the hospital is being operated," Goodman wrote in the March 2 declaration. "I am concerned enough about what I have observed that I submit this declaration in hopes that the court will immediately appoint a receiver to operate the hospital, which I believe is critically needed."
Goodman wrote that he witnessed a ventilator being repossessed and removed from the hospital by an unpaid vendor. The repossession compromised health care at the hospital for several hours, he wrote.
Supplies and basic equipment are also needed to perform laboratory tests, according to Goodman. The lack of supplies compromised the hospital's ability to "immediately report" all communicable diseases to the Arkansas Department of Health, he wrote.
During 2018 and through "today," Goodman worked at the hospital as an independent contractor of Global Physicians Network and not as an employee of the defendants, he wrote.
Randall Stark, an employee of the Oklahoma Blood Institute, wrote in a Feb. 21 statement that the Dardanelle hospital was more than $20,000 delinquent in its account, according to another exhibit in the case.
"The company soon expects to discontinue service of blood products to Dardanelle Community Hospital LLC in accordance with its contractual rights," wrote Stark.
Allegiance has owned 90 percent of River Valley Medical Center since March 14, 2017, according to a court filing.
River Valley Medical Center was insolvent as of Dec. 31, lacking cash flow and resources to pay obligations as they come due, according to Bruce Engstrom, a certified public accountant who reviewed the company's financials.
From June to December, current assets decreased from $7.3 million to $6.4 million, while current liabilities increased from $3.8 million to $5.5 million, Engstrom wrote in a declaration filed as an exhibit in the case.
During that time period, available cash decreased from $133,764 to negative $207,950, he wrote.
The financials showed a $1.4 million receivable from the River Valley Medical Center Family Clinic, which is part of the hospital operation, but the clinic is also insolvent, so it's unlikely that the amount would be repaid, wrote Engstrom.
"In my experience, once the amount of available cash drops too low, then the business has to defer paying its suppliers, which in turn results in the suppliers ceasing to provide critical supplies and the business has to stop operations," Engstrom wrote. "Based on the trends observed within the financials, I believe this fate will soon befall DCH."
Ronald Merritt, who has been chairman of the hospital's board of governors since 2002, has found three hospital organizations in Arkansas that might be interested in operating the Dardanelle hospital, according to an exhibit filed Monday. That could be jeopardized if the facility closes and loses its status as a "critical-access hospital," which makes it eligible for higher reimbursements from Medicare, he wrote in a March 1 statement.
"Critical-access hospitals" is a special designation given by the Arkansas Department of Health for facilities in rural areas that offer inpatient acute care and emergency services.
A Section on 03/06/2019
Print Headline: Arkansas hospital's 'operational and financial crisis' puts patients at risk, filing says