Hospital Vendors Earn Millions for Range of Contract Services

by Mark Friedman  on Monday, Jan. 13, 2014 12:00 am  

Doing business with hospitals can mean big business for vendors, and tax forms filed by nonprofit hospitals provide a peek into how hundreds of millions of dollars are spent.

A review of the most recent IRS Form 990s filed by 33 nonprofit hospitals in Arkansas showed that a total of $286.1 million was paid just to their largest independent contractors, an increase of almost 23 percent compared with 990s from the previous fiscal year. The most recent data for the hospitals was from 2012 or 2011. The comparison was made by using the collective total of each of the most recent contract amounts and then comparing it to the previous year’s available aggregate amount.

Most of the contractors supplied physician coverage to the hospitals, according to the public tax records, which were used to create a list of the highest-paid independent contractors as disclosed by nonprofit hospitals. For-profit and government-owned hospitals are not required to file 990 forms with the IRS and weren’t included on the list.

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As during the years covered by the 990s, finding physician coverage remains a top priority for hospitals, said Paul Cunningham, executive vice president of the Arkansas Hospital Association.

“I don’t think that’s gotten any better since those years,” he said. “Matter of fact, it might have gotten a little worse, to tell you the truth.”

Emergency room physicians are especially vital outside contractors, said Larry Morse, the administrator of the 80-bed Johnson Regional Medical Center in Clarksville. He said hospitals would either contract directly with a physician or contract through a company to receive emergency room services. Some hospitals even use physician contractors to perform surgeries.

“It’s less [expensive] than having to hire someone full time and allows us some flexibility,” Morse said.

The contractor that received the most money from a single hospital was the University of Arkansas for Medical Sciences of Little Rock, which was paid $50.7 million to provide medical services to Arkansas Children’s Hospital in the fiscal year that ended June 30, 2012. ACH paid UAMS 5.6 percent more in the previous fiscal year.

Accretive Health of Chicago was the second-highest paid independent contractor paid by a single hospital. Baptist Health of Little Rock paid the consulting company $43.5 million in 2011.

Nabholz Construction Corp. of Conway was paid more for services rendered to nonprofit hospitals in Arkansas than any other independent contractor during the most recent year and the previous year. Disclosed payments to Nabholz totaled $104.3 million during the period.

The biggest client was Arkansas Children’s, which paid Nabholz $37.5 million during the fiscal year that ended June 30, 2011, and another $29.4 million during the year that ended in mid-2012. Nabholz was the general contractor for the largest construction project in the hospital’s 100-year history: the 258,000-SF, $121 million South Wing, which opened in 2012.



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