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Sevier County Medical Center Reflects on Struggles and Triumphs in Year OneLock Icon

5 min read

Steve Cole looks back with pride on the first year of operations at the newest hospital in Arkansas, a year that saw it deliver health care services to more than 12,000 patients. His reflections as the chairman of the Sevier County Medical Center Board of Governors also come with a touch of fiscal trepidation.

Steve Cole

“Where do you start?” said Cole, gathering his thoughts on highlights as the facility approaches its Jan. 23 anniversary. “I really do know why people don’t build brand new hospitals. We had zero accounts receivable to start. That’s been an absolute challenge. It’s like solving a great big puzzle. We’ve learned a lot.”

Accounts receivable now total $6 million as the built-new-from-the-ground-up rural hospital near De Queen stabilizes its cash flow. However, the timing of the project during a period of record construction inflation provided an added and unforeseen degree of financial difficulty.

That hurdle left Sevier County Medical Center to work its way through outstanding debt tied to unanticipated construction costs. The amount owed to construction creditors currently stands at about $2.8 million.

“We’ve tried to be open and not run from our creditors,” said Lori House, president and CEO of Sevier County Medical Center. “We really appreciate those who have been very understanding with us. It’s not fun for us and a situation we don’t want to be in.”

Despite the early financial travails of the hospital, its viability was underscored by a revenue sustainability assessment in November. The report by EqualizeRCM of Austin, Texas, indicates Sevier County Medical Center is on track to achieve fiscal stability.

“They were very impressed with where we were, especially with starting from zero,” House said.

The hospital obtained its critical care designation last year to significantly improve its reimbursement rate and has gotten its contracts squared away with all of the large insurance carriers.

House appreciates the expedited payments that the Arkansas Medicaid office has made while the hospital gets its financial affairs lined out. “They have helped us and have been a great friend to us through our transition process,” she said.

In four months, House expects the hospital to cross a fiscal milestone.

“We have submitted our cost report for Medicare and also Medicaid,” she said. “Those cost reports should be paid out in May. That is going to be our turning point. We’ve just been doing the best we can to this point. That’s when our first big windfall arrives.”

That positive, big picture perspective hasn’t placated everyone.

Payment Plans

Last month, an unhappy construction creditor’s complaint led to state Sen. Jimmy Hickey, R-Texarkana, requesting an audit of the hospital’s use of federal American Rescue Plan Act funds.

“A subcontractor who is owed about $78,000 thought they could get paid through those funds, but we can’t do that,” Cole said. ARPA funds could only be used for certain expenses — supplies and equipment, but not construction, he said. “That’s exactly what we used it for.”

To help compensate for the added cost of developing a rural hospital under a COVID cloud, the Legislative Council of the Arkansas General Assembly in 2022 awarded $6.25 million in federal rescue funds to Sevier County Medical Center to pay for equipment and supplies.

The Arkansas Legislative Audit will examine the hospital’s handling of those funds, a narrow scope of work that doesn’t entail a full-blown audit of the hospital.

“They haven’t come to see us yet, but we welcome them,” Cole said. “We do owe people money, and that bothers me more than anything. We will get them paid.”

Among the financial surprises was a subcontractor who fell by the wayside in the summer of 2021. The low-bid drywall subcontractor failed to perform and was replaced with the next-lowest bidder. However, that bid was $1.3 million higher and more than $800,000 beyond what was budgeted.

Conway’s Nabholz Construction Corp., which oversaw construction of Sevier County Medical Center, is helping the hospital work through its fiscal shortfall as revenue from patient care ramps up.

Jake Nabholz

“They were very good to work with,” said CEO Jake Nabholz. “It was a very successful project and was very needed for that part of our state.

“They do owe us and several vendors. But we’re sympathetic to what they are going through with starting a brand new hospital. That’s challenging. And we’re working with them on a payment plan and trying to get some of the smaller vendors paid first.”

The bigger ticket items that helped boost construction costs included a second procedure room, an expanded laundry room and reconfigured landscaping and parking area to accommodate a second helipad.

“There have been times where we’ve had two helicopters here, and we’re shipping two patients out at the same time,” House said.

The air ambulance service facility, operated by Air Evac Lifeteam of O’Fallon, Missouri, adjoins the south side of the hospital grounds.

Worth the Stress

Development of the 42,000-SF, 15-bed facility is backed with a $24.2 million bond issue supported by a 1-cent sales tax increase overwhelmingly approved by Sevier County voters on Oct. 8, 2019.

That financial foundation proved insufficient in the face of escalating construction expenses and startup costs.

“But we couldn’t stop,” Cole said. “We had to plow forward.”

While wading through the first-year tribulation, boosters find solace in restoring local hospital service after the 2019 closure of the privately owned, financially drowned De Queen Medical Center.

As of Dec. 31, the number of patients walking through the hospital doors for some type of health care service totaled 12,172. Sevier County residents dominated that tally, accounting for 9,024.

Four neighboring counties provided most of the remaining patients: Polk County, 1,294; Howard County, 514; McCurtain County, Oklahoma, 475; and Little River County, 418.

“We’re pleased, but we want it to be more,” Cole said. “We want more usage, and we know we’ll get there.”

Sevier County Medical Center near De Queen features two helipads. (Karen E. Segrave)

The hospital’s emergency room staff treated 5,665 patients during 2023. “That’s a testament to usage,” Cole said. “What if this hospital wasn’t here?”

Regarding “what-if” scenarios, House recounts two patient encounters with life-altering consequences involving a burn victim in dire straits and a stroke patient.

“If we were not here, I don’t think they had a good chance of surviving,” she said of the burn patient. “We barely got the breathing tube in before the throat swelled shut. It was a really close call.”

In the other ER situation, quick confirmation of an ischemic stroke led to treatment with blood clot-dissolving medicine 34 minutes after the patient came in the door.

Administering thrombolytic Tenecteplase often reduces the severity of stroke damage, reverses some of the effects and hastens recovery. The sooner it can be delivered the better.

These types of stories have made the ongoing challenges and sometimes nerve-wracking effort  to make the Sevier County Medical Center happen worthwhile.

“It’s been a wonderful but stressful experience getting it open,” Cole said.

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