Trust, But Verify (Gwen Moritz Editor's Note)

It was like a gift from the SEO gods: Rep. Mark Lowery, R-Maumelle, co-chair of the Arkansas Legislature’s Joint Performance Review Committee, suggested that what the committee learned about a UAMS contract to provide doctors to Baptist Health’s new Conway hospital “fits under the definition of collusion.”

Collusion is a word that has a lot of currency currently, so naturally we used it in the headline of our online article about the committee’s hearing into the University of Arkansas for Medical Sciences’ deal with Baptist Health.

That deal — specifically, complaints from Conway Regional Medical Center that a government agency has bailed Baptist Health out of a bad business decision — was the subject of excellent reporting by our Senior Editor Mark Friedman. And while I’m not at all sure it is collusion, it is newsworthy when a legislator uses such loaded language.

The Conway hospital competition is one that has been the subject of speculation in the Arkansas Business newsroom for years — long before Baptist-Conway opened at the end of 2016, long before UAMS became its go-to provider of ER doctors and orthopedic surgeons. Our question was always whether Conway needed a second full-service hospital.

We’re not business consultants, remember; we don’t have access to internal market evaluations and business plans. But we’re collectors of publicly available data, and Conway Regional’s cost reports in recent years showed an average occupancy rate in the low to mid-60s. A crying need for additional beds does not seem to have been the reason that 111 beds were added in a market that was far from filling the 150 it had.

But the beds were added and the competition has cut into Conway Regional’s business. Matthew Troup, the administrator contracted from Catholic Health Initiatives, said the legacy hospital had seen a 25 percent decrease in emergency room patient volume and a 9 percent drop in admissions.

Meanwhile, Baptist-Conway reported cumulative operating losses of $47.1 million between Jan. 1, 2016, while the new hospital was still under construction, and Sept. 30, 2017. This, according to a Baptist Health spokesman, is in keeping with expectations.

If these were two private businesses — albeit nonprofits — duking it out in head-to-head competition, it would still be an interesting business story. I might compare it with our coverage of competing convention centers in Jonesboro, another case that looks to the outside observers in the newsroom to be too much supply in a market with limited demand.

Unlike the competing convention centers, Baptist-Conway is not being subsidized by UAMS; on the contrary, Baptist is paying UAMS, which is struggling with its own losses. But Troups’ complaint is that UAMS has bailed Baptist out by providing doctors that the new hospital couldn’t — or, at least, didn’t — attract on its own. And that is worth a lot.

Carrie Helm, CEO of Arkansas Surgical Hospital in North Little Rock, told the Performance Review Committee that she spends tens of thousands of dollars recruiting doctors. She’d love to turn that chore over to UAMS the way Baptist-Conway has — she even offered to build another operating room — but UAMS has not been as receptive to that idea.

Why not? That’s just one of the many things we don’t know. Here’s what bugs me most: UAMS, ostensibly accountable to the public, is selling its doctors’ services, and the taxpayers who employ those doctors aren’t allowed to know how much the buyer is paying. As he reported last month, Mark Friedman requested a lot of documentation under the Arkansas Freedom of Information Act, but all he got was the finished contract and the payment schedule with the dollar amounts redacted.

UAMS spokeswoman Leslie Taylor said, “UAMS is compensated for its actual costs of providing the services, with the potential for incentive payments if quality targets are achieved.” She also said releasing the terms of the agreement “would fall under the competitive advantage exemption of the Arkansas FOIA.”

How publishing the actual costs of state employees would “give advantage to competitors or bidders” (the language of the FOIA) is unclear to me. When the government is the buyer, revealing the terms of a bid would create an obvious advantage to a competing bidder. But when the government is selling something at its cost, who would be disadvantaged by making that public?

UAMS also says that no other documents related to the contract with Baptist-Conway exist. Arkansas Business and you readers must trust that these contracts are fair to the taxpayers and that they were arrived at without a single letter or email being generated or received by any employee of UAMS.

Fortunately, the Joint Performance Review Committee can verify.


Gwen Moritz is editor of Arkansas Business. Email her at GMoritz@ABPG.com.