DE QUEEN, Ark. (KTAL/KMSS) – A rural southwest Arkansas hospital will officially close next week, following months of financial uncertainty.
City and county officials announced Thursday that the De Queen Medical Center will close on May 7, following the voluntary suspension of their license to operate as a Critical Access Hospital.
The Critical Access Hospital (CAH) designation is designed to reduce the financial vulnerability of rural hospitals and improve access to healthcare. CAHs receive certain benefits, such as cost-based reimbursement for Medicare services. They have to meet certain conditions in order to maintain that designation, including being more than 35 miles away from another hospital and providing 24/7 emergency services.
News of the closure comes after months of financial struggles. Reports of employees not being paid on time began in December, followed by layoffs. A month later, electricity was turned off because of unpaid bills, forcing the hospital to divert patients to another hospital more than 35 miles away. The medical center hasn’t seen any patients since February.
There was talk in late February of a possible sale to Healthy Connections, an Arkansas-based non-profit with nine locations throughout Southwest Arkansas. But Healthy Connections said the hospital never responded to their offer.
Sevier County Judge Greg Ray placed the hospital into temporary receivership in March, saying in an order that there is a “real and present danger” that the assets of the De Queen Medical Center are not being used properly.
The judge appointed the hospital’s director of nursing as the temporary receiver and barred the hospital’s owners from spending or transferring any assets.
In early April, the medical center filed for Chapter 11 bankruptcy in Miami, Florida. Sevier County attorneys are seeking to have the case moved to the Western District of Arkansas.
Jorge Perez, the owner of the hospital, reportedly owes the county $120,000 in back taxes and thousands more to others, including backpay to several employees. On the hospital’s bankruptcy, he listed assets between $1 million and $10 million and liabilities in the same range.
Meanwhile, Sevier County officials say they are in the process of building a new hospital that will be under local ownership. There is no location selected yet, however.
“We have to have a hospital,” said Steve Cole, chair of the Sevier County Rural Development Authority.
County officials say the best-case scenario would be for construction to begin in a year, but that there is no way of knowing a target date for sure just yet.
They say a sales tax will likely be needed to support the new hospital, which also still needs legislative approval.
County officials had previously tried to keep the CAH license active for the De Queen Medical Center because it likely wouldn’t be approved for another one if it were allowed to lapse without costly major upgrades. The hospital had been grandfathered in to retain the license up until now.