Wadley Regional Unveils Its Plans for Hope Project

Wadley Regional Medical Center of Texarkana, Texas, said it plans to spend about $2.6 million during the next year on medical equipment at its newly acquired hospital in Hope.

Wadley Regional’s parent company, Brim Holdings of Texas, an affiliate of Iasis Healthcare of Franklin, Tenn., bought Hope Medical Park Hospital LLC for $3.7 million on Aug. 1 out of U.S. Bankruptcy Court. Hope Medical, formerly known as Signature Medical Park Hospital LLC, filed for Chapter 11 bankruptcy protection in May.

Wadley Regional serves nine counties in southwest Arkansas, spokeswoman Shelby Brown said, “so it’s not unreasonable for us to look to expand our footprint.”

Hope Medical had been struggling for years, and in June, two of its owners were sent to federal prison for five years for not paying payroll taxes at a hospital in Texas.

Wadley will focus on improving outpatient services and the emergency room at the 79-bed Hope hospital, which is now called Wadley Regional Medical Center at Hope.

Wadley has contracted with CEP America of Emeryville, Calif., the largest physician-owned emergency medicine group in the country, to work at the hospital, she said. The move is designed to increase patient volume, Brown said.

Wadley also plans to buy a CT scan machine and an MRI machine.

“With some updated equipment, we’ll actually go out and market to the referring physicians and to the community … about the new technology,” Brown said. “There certainly is some technology needs over there, and we just want to be able to provide that to the community.”

The hospital has about 150 employees, and Brown said no additional hiring is planned.

Crimes Take a Toll

Hope Medical Park’s struggles can be tied to two of its owners, James Cheek, who owned 50.8 percent of the company, and Herschel Breig, who owned 18.2 percent. The other two owners were Dudley Bell, 8 percent, and Ted Cheek, 23 percent. All of the businessmen are from Springfield, Mo.

In August 2011, a grand jury in Lubbock, Texas, indicted Cheek and Breig on several counts related to not paying taxes at Highland Medical Center in Lubbock. Both had an ownership interest in the hospital. Cheek was its CEO, and Breig was its senior vice president of cash management.

Between March 2006 and May 2008, Cheek and Breig should have forwarded the $1.86 million in taxes they withheld from hospital employees to the Internal Revenue Service. Instead, according to the indictment, they kept the money.

They both pleaded guilty, and on June 15, they were sentenced to five years in federal prison and three years of probation. They were ordered to pay $5 million in restitution and a fine of $10,000.

Pushed Into Bankruptcy

While Cheek and Breig were committing their crimes, the Hope hospital was racking up millions of dollars in debts.

Wadley Regional had “provided the struggling hospital with interim financing to help the facility pay employees, bills and other expenses necessary to maintain day-to-day operations during the bankruptcy proceedings,” according to a hospital news release on July 16.

When Hope Medical filed for Chapter 11 reorganization in May, it reported $19.7 million in debt and $19.5 million in assets. One of the biggest debts was a $5 million claim from the IRS.

The hospital’s assets included $6.7 million in accounts receivables, but only 22 percent of those are believed to be collectible, the bankruptcy filing said.

From Jan. 1 through Aug. 31, Hope Hospital posted a $5.7 million loss, according to the hospital’s bankruptcy records.

In 2011, Hope reported a loss of $3.25 million on patient revenue of $63.5 million. In 2010, it reported net income of $123,365 on patient revenue of $71.1 million. n