Steward Health Accepts Bid for Hope Hospital in Bankruptcy Sale

A Google Street View image of Wadley Regional Medical Center in Hope in 2013 (© Google)

Steward Health Care of Dallas has agreed to sell Wadley Regional Medical Center in Hope to Pafford Health Systems Inc., a local ambulance and health services provider, as part of the for-profit hospital operator’s bankruptcy reorganization.

In a filing Sunday in U.S. Bankruptcy Court for the Southern District of Texas, Steward said it had accepted a $200,000 cash bid from Pafford rather than hold an auction for the hospital. Under the agreement, Pafford would also assume the hospital’s liabilities.

There were no other bidders for the 79-bed hospital, which employs about 80 people.

A court hearing to consider approval of the sale was scheduled for July 31.

Steward filed for Chapter 11 bankruptcy in May and announced plans to sell all of its 31 hospitals, including the Wadley Regional Medical Center in Hope and the Wadley Regional Medical Center in Texarkana, Texas. The Hope hospital is in the first group of hospitals Steward put up for sale. Steward received approval for a $225 million loan to keep its hospitals open while the sale process continues.

Clay Hobbs, chief operating officer at Pafford, told Arkansas Business that the ambulance service wants to prevent a “dire situation” from happening in the four-county area it serves. If Wadley Regional were to shut down, it would require Pafford’s ambulances to transport patients to hospitals beyond the local 911 coverage area, making the availability of ambulances across the region scarce.

“Lives would have been lost,” he said.

Wadley Regional was founded in 1955 as Hempstead County Memorial Hospital. It was acquired by Steward in 2017.

Hobbs said Pafford is looking at long-term upgrades for the hospital and its equipment, but for now, the company and local stakeholders are focused on finalizing the deal with Steward.

“We truly have an emergency situation on our hands right now through this bankruptcy, and we’re trying just to sustain operations and trying to work with our with our county and our city government to make sure that we can obtain the funding to shore up the building and the operations,” Hobbs said.

Pafford submitted the bid in partnership with Hope and Hempstead County, which agreed to purchase the hospital’s real estate. One deal is contingent upon the other, according to the Anna Lee Powell, president of the Hempstead County Economic Development Corp. She stressed that the arrangement still needs court approval.

Pafford Medical has about 500 employees and about 1,600 workers under all its brands, which includes a physician group that operates out of the emergency room at Wadley Regional Medical Center and the Pafford Health Systems Medical Clinic.

James and Carol Pafford founded the ambulance business, Pafford Medical Services Inc., in 1967. Since then, it has grown into one of the largest private ambulance providers in the country.

The Paffords’ daughter, Jamie Pafford-Gresham, who grew up working for the ambulance provider, took over the company’s Arkansas locations as CEO in 1997.

Pafford-Gresham and her brothers, Greg Pafford and John Pafford, became owners of the company and expanded it into companies providing advanced life-support emergency ambulance services to more than 80 locations with 230 ambulances in five states and the U.S. Virgin Islands.

In 2022, Pafford Medical added contracts to cover areas in Saline, Faulkner and Benton counties, giving it 17 counties in Arkansas.

Powell said Pafford’s bid for the hospital shows “how much they really, truly care” about the Hope community.  “This is absolutely coming from their heart,” she said. “They’re not in the rural health care business. They’re in the ambulance business.”

The bid comes as rural hospitals across the U.S. face financial pressure from rising costs and stagnant insurance reimbursement rates.

“Hospitals in general, to manage, are difficult right now, yes,” Hobbs said. “But we believe people that we have put together (a group of people) that have the best interest of southwest Arkansas at heart, and are going to make sure that we are sustainable and that we’re working for that common goal of taking care of patients here.”

Steward began acquiring hospitals in 2010 with the backing of private equity firm Cerberus Capital Management.

Last week, the U.S. Senate Health Committee announced it was launching an investigation into Steward’s bankruptcy. Committee members accused company executives of lining their own pockets at the hospital system’s expense. They pointed to a sale-leaseback of Steward’s physical facilities that netted Cerberus an $800 million profit and stuck the hospitals with “unsustainably high rent.”

In a statement about the sale of Wadley Regional Medical Center, Steward President Mark Rich said, “Steward has done and will continue to do everything it possibly can to continue operating in a very difficult health care environment.”