(The Center Square) – Arkansas hospitals say they are in trouble.
Earlier this month, the Arkansas Legislative Council Executive subcommittee expedited a new law that allows hospitals with 50 beds or less to earn the “rural hospital” designation, enabling them to access increased federal funding. Gov. Sarah Huckabee Sanders signed Act 59.
“The Department finds that imminent peril to the public health, safety, or welfare of Arkansans requires the adoption of an emergency rule,” the Arkansas Department of Health said in an information packet provided to lawmakers.
Twenty-five facilities are eligible for the rural hospital designation, according to Laura Shue, DOH general counsel.
Larger hospitals have also claimed they are struggling financially. A recent report from Opportunity Arkansas, a nonprofit state government watchdog and taxpayer advocacy group, says those claims aren’t valid.
“The Truth About Arkansas Hospitals’ Financial Health” report focuses on revenues at Arkansas’s largest nonprofit medical centers. It suggests Arkansas’s hospital’s money issues do not stem from income. Instead, it can be attributed to heavy expenditures in the salaries of highly-compensated executive employees and on high-dollar expansion projects.
“As we’ve detailed in our research, Arkansas hospitals have a significant spending problem, not a revenue problem,” Nicholas Horton, founder and CEO of Opportunity Arkansas, said in an email to The Center Square. “They are paying their executives exorbitant salaries and building extravagant buildings, all while repeatedly telling the public and state policymakers that they are ‘broke.’ Enough is enough. These hospitals have gotten too big and lacked accountability for far too long.”
According to Opportunity Arkansas, executive pay has risen 47.6% over the last five years, which is “far outpacing growth in revenue and overall expenses by more than double.” Compensation for non-executive employees grew by only 26.6% on average, according to the report.
“Among just the largest ‘nonprofit’ hospitals and hospital systems, total annual compensation for the five highest-paid employees at each of these entities is an astonishing $38.9 million, for an executive average salary of more than $863,000 per year,” the report said. “Compare that average salary to the remaining 29,000+ hospital employees at these entities, who earn an average of just under $56,000 per year.”
The report also points to several expansion projects at area hospitals, including a $500 million expansion at Mercy Northwest Hospital, a new $36 million facility in Jacksonville for Unity Health and Baptist Health’s new behavioral clinic in North Little Rock.
“Contrary to their assertions, some Arkansas hospitals are actually doing quite well, as evidenced by massive investments in expansions and construction,” the report states.
Opportunity Arkansas’s findings on state hospitals’ finances follow claims by area hospitals and the American Hospital Association on how operating costs and the COVID-19 pandemic have put many facilities at risk of closure. According to a November 2022 report by the Center for Healthcare Quality and Payment Reform, nearly half of Arkansas’s rural hospitals were at risk of closing due to a lack of funding, with six hospitals in immediate danger.
Multiple attempts to contact the Arkansas Hospital Association’s communications team about Opportunity Arkansas’s findings and the current state of Arkansas’s hospitals were not answered at the time of this report.
Associate editor Kim Jarrett contributed to this report.
