State lawmakers are scheduled to resume their inquiry into the University of Arkansas for Medical Sciences’ contract to provide emergency room and orthopedic services at Baptist Health Medical Center-Conway.
Members of the Arkansas Legislature’s Joint Performance Review Committee set a Dec. 17 meeting to ask more questions about the contract, which has been criticized by Matt Troup, president and CEO of Conway Regional Health System. He said the contract is unfair competition because UAMS, a taxpayer-supported teaching hospital, is helping to supply doctors to the crosstown rival, which started seeing patients in September 2016.
In January, the Joint Performance Review Committee held a hearing and quizzed UAMS about the arrangement. During the meeting, which also was attended by officials from Conway Regional and Baptist Health, the committee requested more information from UAMS about details of the arrangement.
In October, UAMS submitted the answers, Rep. Mark Lowery, R-Maumelle, co-chair of the JPRC, told Arkansas Business last week. “The answers were relatively unresponsive to the questions submitted by members,” he said. “So we’ll ask officials from UAMS to provide us those answers in full.”
He said potential legislation is also being discussed that would require UAMS to collaborate with any hospital that wants a similar partnership. “We would call it ‘any willing partner’ legislation,” he said. “That’s the thing that we’re concerned about, is that [UAMS is] picking and choosing winners and losers on the services that they will collaborate on.”
The Senate chairman of the committee, Missy Irvin, R-Mountain View, said last week that she had not spoken with Lowery about proposed legislation. But she said she has more questions about UAMS’ arrangement with BHMC-Conway.
“There are a lot more questions that we want to ask and probably answers that need to be given,” she said.
She hopes the Dec. 17 meeting will provide clarification and a path forward, Irvin said.
“I am a big proponent of making sure there’s a fair competitive process,” she said. “I think that’s important so you’re not picking winners and losers. I think our government should not be doing that.”
UAMS spokeswoman Leslie Taylor said, in an email response to questions from Arkansas Business, that UAMS believed it answered the committee’s questions. “However, we will reach out directly to them to see if there’s further information we can provide,” she said.
One of the questions the committee posed was how much Baptist Health had paid UAMS for services provided at BHMC-Conway. (In January, UAMS would not reveal the amount to Arkansas Business, citing the competitive advantage exemption of the Arkansas Freedom of Information Act.)
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In the answers it submitted to the committee, UAMS said it has received a total of $8.3 million in revenue from the BHMC-Conway contract. It began providing emergency room services there in 2016 and orthopedic services in January 2017. The answer, however, didn’t break out how much money UAMS received for each service.
UAMS also said that the amount doesn’t include revenue “derived from other sources from billings and collections for professional services.” Taylor didn’t immediately respond to a question from Arkansas Business asking whether UAMS had received other revenue.
In a recent interview with Arkansas Business, UAMS Chancellor Cam Patterson touted the benefits of the arrangement with BHMC-Conway, which he inherited when he assumed his post in June. “I think the situation right now is very good for the city of Conway and Faulkner County,” he said. The union allows people in Conway and the surrounding communities to stay close to home while they receive better and more specialized health care, he said.
UAMS’ surgeons have performed more than 1,000 orthopedic surgical procedures in Conway since UAMS began the relationship with BHMC-Conway, Patterson said.
“We’ve generated over $14 million in clinic revenues that are staying in Conway rather than moving out to Little Rock or other cities,” Patterson said. “So we see this as a big value not only in terms of patient care, but in terms of economic impact for the city of Conway.”
Troup, however, sees that as a problem. “The whole point in all of this, and the reason we raise the concern, isn’t that UAMS is taking care of Conway residents,” he said. “It’s that they’re doing it at a Baptist facility. Baptist benefits from all that work. … And our whole contention all along is that same great benefit isn’t offered to any other willing partner in the state.”
Baptist Comes to Conway
Baptist Health first announced it was considering building a hospital in Conway in October 2013, and the city’s longtime hospital naturally thought that was a bad idea. Jim Lambert, then CEO of Conway Regional, told Arkansas Business that a second hospital wasn’t needed. Even with a population that had grown by about 10,000 over the past decade to about 65,000, there still wasn’t enough demand to support a second hospital, he said.
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Nevertheless, Baptist went forward with its plans and opened its $150 million 111-bed hospital in September 2016.
Troup’s theory is that Baptist planned on wooing doctors away from Conway Regional to staff its hospital. And when that didn’t happen, Baptist turned to UAMS for physicians — and got them quickly and easily.
Troup said it takes months for a hospital to recruit orthopedic surgeons. “Baptist got them at a snap of the finger,” he said. “For everyone else in this state, it is immensely difficult.”
Stephanie Gardner, then interim chancellor at UAMS, told Arkansas Business in January that she wasn’t involved in the initial discussions about providing physician services to Baptist’s Conway hospital. However, UAMS had worked with Baptist Health for more than 20 years, “and so a natural discussion occurred, I think, about our needs and expanding our footprint to meet our mission,” she told Arkansas Business in January.
A False Equivalency?
UAMS said working with other hospitals isn’t unusual. It has 164 contracts with other providers across the state, including most of the hospitals.
“This allows us to better perform our three-pronged mission of training tomorrow’s health care professionals for the state of Arkansas, providing care often unavailable anywhere else in the state and translating knowledge into new therapies,” said Taylor, UAMS’ spokeswoman.
In fact, UAMS has contracts with Conway Regional to assist with trauma education and pediatric cardiology, Patterson said.
Troup said the services provided to Conway Regional aren’t comparable to those provided to BHMC-Conway.
“He’s trying to equate an education program as a partnership just in the same way as a $14 million revenue stream is to Baptist in a very competitive market,” Troup said. “Those two are not equivalent in any sense, and I don’t even feel like I even need to make an argument there. It’s just obvious.”
Baptist Conway has seen its patient numbers climb since it opened its doors. For the first six months of this year, Baptist Health Conway had 1,550 admissions, up nearly 60 percent from the same period in 2017.
Visits to Baptist Health’s Conway emergency room increased 22 percent to 13,674 in the first half of this year compared with the same period a year ago.
“We continue to be encouraged by the growth at Baptist Health-Conway,” Troy Wells, president and CEO of Baptist Health of Little Rock, said in an email to Arkansas Business. “Baptist Health is committed to our mission of providing quality, faith-based patient services while responding to the changing health needs with Christian compassion.”
But the Conway hospital’s operating loss for calendar years 2016 and 2017 totaled $55.6 million. Baptist Health planned for financial losses in the early years of the hospital, Mark Lowman, the then Baptist spokesman, told Arkansas Business in January.
Meanwhile, after the new competitor opened, Conway Regional saw its admissions fall nearly 8 percent to 7,461 in 2017 compared with the previous year. Through the first eight months of this year, Conway Regional had 5,000 admissions, but no 2018 financial data was available.
Conway’s emergency room visits also dropped 25 percent between 2015 and 2017. Troup said the decline in emergency room patients resulted in the hospital missing out on between $20 million and $25 million annually in net patient revenue.
For 2016, Conway Regional had operating income of $3.9 million. A year later, when both hospitals had been open the entire year, Conway Regional posted an operating loss of $1.8 million.
‘Not Taxpayer Dollars’
In response to questions from the legislative committee, UAMS said it provides BHMC-Conway with seven emergency room physicians, each with a base annual compensation of $340,560, and five physician assistants, who have a compensation package of $109,160. That totals about $2.9 million annually.
UAMS has six orthopedic surgeons who spend a maximum of 20 percent of their time at Baptist Conway. The surgeons’ annual salaries range from $1 million to $480,000. If all six of those UAMS surgeons spent the maximum 20 percent of their time at BHMC-Conway, that would be equivalent to $857,316 in salary.
William Bowes, UAMS’ senior vice chancellor for finance and administration, told the committee in January that the money that pays its providers’ salaries comes from revenue for treating patients. “It’s not paid by taxpayer dollars,” he said.
UAMS receives only about 6 percent of its $1.5 billion budget from the state of Arkansas, Taylor said. The hospital and clinical services don’t receive state or taxpayer funding, she said.
“In fact, the clinical enterprise must generate enough margin to cross-subsidize our education and research missions,” she said. “Our hospital is the only one in the state that not only supports itself but also five colleges and a graduate school.”
She said that Conway Regional didn’t ask UAMS to provide orthopedic services; Baptist Conway did.
Troup told the legislative committee in January that Conway Regional didn’t need orthopedic surgeons or emergency room physicians, but BHMC-Conway did. Baptist’s new venture in Conway has “a business need, and UAMS is helping them with a business need, not a community need,” Troup told the committee.
Still, Patterson said he didn’t see how working at BHMC-Conway created a disadvantage for Conway Regional. “We’ve been interested in having a presence in Conway for a long time,” Patterson said. “In fact, we worked with Conway Regional several years ago to develop a specific relationship. Unfortunately, that fell through.
“I’m not sure how you can characterize our presence there as an unfair advantage in any way,” Patterson said.
Troup said what happened in talks between Conway Regional and UAMS four years ago has nothing to do with the current situation between BHMC-Conway and UAMS.
“For [Patterson] to say he doesn’t see how that’s an unfair competitive advantage to Baptist is really uninformed and naive or it’s intentionally misleading,” Troup said. “It just doesn’t make any sense. It’s not possible.”
|Baptist Health Medical Center-Conway
(Through June 30)
|Conway Regional Medical Center
(Through Dec. 31)
|Average Length of Stay (Days)||3.1||3.2||3.68||3.62||3.62|
|Emergency Room Visits||11,185||13,674||42,766||40,312||32,208|
|Inpatient Surgical Cases||218||292||1,950||1,775||1,572|
|Outpatient Surgical Cases||527||699||8,432||8,166||8,069|
* Baptist Health Medical Center-Conway opened to patients in September 2016.
Sources: Baptist Health’s unaudited consolidated financial statements and statistics for second quarter ended June 30, 2018, and Conway Regional’s filing with city of Conway Health Facilities Board