Hope-based Pafford Medical Services is set to buy the area’s hospital out of bankruptcy. Pictured is the Hempstead County Courthouse in Hope. (Hempstead County website)
A Southwest Arkansas-owned medical service company is set to take over operations of Hope’s only hospital later this month after a Texas bankruptcy judge finalized the company’s purchase of the facility from its previous corporate owner on Thursday.
The court ordered in July that Pafford Health Systems won the auction for Wadley Regional Medical Center, which will be renamed Southwest Arkansas Regional Medical Center. The company will pay Dallas-based Steward Healthcare Group $200,000 for the hospital’s assets, according to Thursday’s sale order from Judge Christopher Lopez of the U.S. Bankruptcy Court for the Southern District of Texas.
Steward previously owned 31 hospitals in eight states before declaring bankruptcy in May and has been auctioning off its hospitals since then.
Pafford’s acquisition of the hospital came after the nonprofit Southwest Arkansas Healthcare Authority formed with the goal of securing local control for the last hospital on Interstate 30 before entering Texas, Pafford chief operating officer Clay Hobbs said at that time.
Additionally, the Hempstead County Quorum Court and the Hope board of directors each passed resolutions in June pledging $1,000,000 to support the hospital in 10 installments of $100,000 per month. The city and county “are equally committed to keeping the hospital open,” in the interests of both public health and economic development, according to both resolutions.
The city, county and Hempstead County Economic Development Corporation issued a joint news release Friday celebrating the “successful transition of ownership” of the hospital and “the power of partnership and community-focused leadership.”
“This transition marks a significant milestone in stabilizing and securing essential healthcare services for the residents of Hempstead County and Southwest Arkansas,” the release states.
Pafford will take over operations from Steward “as early as next week,” said Anna Lee Powell, HCEDC president and a member of the healthcare authority, who spoke to the Advocate Monday.
Citizens should anticipate “a smooth and uninterrupted transition of services,” the news release states.
The entities supporting the hospital have asked state officials for American Rescue Plan Act funds “to support the hospital in the emergency transition,” Powell said. Legislative committees are not expected to vote on the request this month.
The sale order requires Steward to terminate the hospital’s employees and Pafford to rehire at least 60% of them as long as they meet eligibility requirements. Rehired employees will retain insurance benefits eligibility, and their original hire dates will be used to determine their pension and retirement benefits, according to the order.
Background
The 48-bed acute care hospital’s services include an emergency room, an intensive care unit and a geriatric psychiatric unit. It does not have a maternity ward.
In addition to Hempstead County, the soon-to-be Southwest Arkansas Regional Medical Center serves three counties that do not have hospitals: Lafayette, Nevada and the southern portion of Pike.
Pafford began as an ambulance company in Magnolia, according to its website, and now provides services in Louisiana, Mississippi, Oklahoma and Texas as well as Arkansas. The company serves all seven counties that border Hempstead County.
Local ownership was important to Hope and Hempstead County citizens after more than a decade of corporate ownership put the hospital through financial hardship, Powell and Hobbs both said.
This transition marks a significant milestone in stabilizing and securing essential healthcare services for the residents of Hempstead County and Southwest Arkansas.
– Hope, Hempstead County and the Hempstead County Economic Development Corporation in a joint news release
In 2012, the hospital’s then-owner James Cheek and his business partner were convicted and sentenced to federal prison after failing to pay $1.8 million in taxes deducted from the paychecks of employees at a Texas hospital they also owned.
IASIS Healthcare bought the hospital later that year, and Steward and IASIS merged in 2017. Steward then became the nation’s largest physician-owned and operated health care system in 2020 when it transferred a controlling interest of the company to a separate management group of Steward doctors, led by CEO and founder Dr. Ralph de la Torre, Hope’s local news outlet reported.
Since filing for bankruptcy, Steward has kept its hospitals open with $75 million from Alabama-based Medical Properties Trust, which owns the physical buildings, according to WBUR in Massachusetts, where Steward owned nine hospitals before declaring bankruptcy.
MPT gifted the Hope hospital building to the local community for free, Powell said Monday.
Pafford did not purchase the Wadley Regional Medical Center in Texarkana, the Hope hospital’s sister facility, but the two will maintain a close working relationship, Hobbs said in August.