Sale of hospital could be challenged

Originally published in the Texarkana Gazette and on writeforarkansas.org on Nov. 28, 2011, the second of a two-part series.
 
MURFREESBORO, Ark. — The Pike County Quorum Court took a back seat in the September 2010 sale of countyowned Pike County Memorial Hospital to Louisville, Ky.-based New Directions Health Systems.

Members insisted on a provision allowing the county to recover licenses and equipment and voted to ratify County Judge Don Baker’s signature on the final agreement, but otherwise played little role in the transaction. Negotiations, with the exception of some legal documents prepared by deputy prosecutor Jana Bradford, were handled exclusively by Baker, who has kept details close to his chest.

“I was the contact for the Quorum Court, and I was the one that signed everything,” he said.

Baker said negotiations were carried out almost entirely by phone and that no written record of the calls exists.

The Gazette submitted several requests for documents concerning the hospital under the Arkansas Freedom of Information Act.

A June 2011 FOI request sought any written communication with New Directions dating to January 2010.

“(We) do not have any records of correspondence in this matter,” Baker wrote in response.

The Gazette sent a follow-up request in September for correspondence with any company that expressed interest in purchasing the hospital.

Baker replied that the Gazette, which had previously obtained copies of the asset purchase agreement, deed and promissory note on file with the Pike County Circuit Clerk, already possessed all documents covered by the request.

It was only in October, when the Gazette asked for the letter of intent from New Directions mentioned in June 2010 Quorum Court meeting minutes, that Baker admitted having other documents.

In a large box stored under a bench in the county judge’s office, folders contain dozens of pages of emails, faxes and draft agreements exchanged with New Directions and one letter from the owner of De Queen Medical Center, who briefly expressed interest in the closed hospital.

The Gazette’s initial FOI request was filed with the documents.

“I didn’t think it was important,” Baker said after allowing access to the documents, all of which state law requires to be available to the public. “We had it all here, but I thought you had everything you needed.”

A confidentiality clause included in the final purchase agreement requires the county to “use its commercially reasonable efforts to … hold in strict confidence” any information about New Directions or its affiliates.

Some variation of the provision was in effect early in the negotiations. The June 2010 letter of intent referenced an agreement “currently existing between the parties.” In a May 6 letter, New Directions’ president Timothy Ayers wrote that the company would be tight-lipped.

“I want to assure you that we are very discreet and keep all confidences very well,” Ayers wrote.

Baker said no confidentiality agreement with New Directions was in effect and that the language in correspondence with the company had no bearing on his decision to release documents to the Gazette.

• • • •
The file in Baker’s office is an incomplete record of negotiations, since record-keeping was haphazard in the early stages of negotiations, said Judy Stokes, Baker’s secretary.

Noticeably absent is any mention of Karen Voan’s work for New Directions.

Voan is Baker’s daughter.

Voan began working for the hospital in mid-2009, about the time the county leased it to Southwest Arkansas Healthcare, according to several former hospital employees. She was among a handful of workers who volunteered to help clean the hospital in the weeks after the sale to New Directions.

Voan had the additional task of collecting employment applications and necessary medical records from the closed hospital, she told the Gazette in November 2010.

When contacted after the Nashville Leader reported in December 2010 that Baker had told the Quorum Court that New Directions was paying Voan for her work, Voan insisted she was working purely as a volunteer. Baker said he had been misquoted.

Baker was asked again about his daughter’s employment after Voan, in an August update on the hospital in Arkansas Business, identified herself as the hospital’s human resources director.

“What she’s doing, they’ve had to have some medical records at the old hospital,” Baker said. “She’s came down once a month and got some stuff together for them, and they pay her some. I don’t know how much.”

Baker, whose son, Justice of the Peace Paul Baker, was hired briefly as the county’s 911 coordinator in 2010 until some residents objected, said Voan’s employment was never mentioned during negotiations with New Directions. The arrangement came about because “she knew more about what was going on than anybody else,” he said.

“I mean, they’ve called me a time or two back earlier and said she was doing a good job,” Baker said.

Voan said she has received mileage reimbursements from the company for retrieving medical records but is not and has never been employed by New Directions.

“Nobody (expletive) pays me,” Voan told the Gazette in October.

She said the Gazette would be contacted by New Directions’ attorney if anything about her appeared in the newspaper.

Representatives of New Directions have not returned calls to the Gazette in more than a year and did not respond to requests for comment for this story.

• • • •
The sale of Pike County Memorial has an additional wrinkle that could undo the events of the past 14 months.

The September 2010 agreement was approved under a portion of Arkansas law allowing counties to sell real estate without taking bids in limited circumstances.

The law stipulates that land can be sold without taking bids to “lawfully incorporated, quasipublic, nonprofit, nonsectarian organizations” and must be dedicated to the organization. The sale must be approved by the county judge and a two-thirds vote of the Quorum Court.

According to several opinions issued by the Arkansas Attorney General’s Office, the law leaves several points open to interpretation, such as the amount a property must be sold for, how a county must “dedicate” and what organizations qualify as “quasipublic.”

But there is no debate on one key point: The purchaser must be a nonprofit.

New Directions is organized, both in Arkansas and Kentucky, as a for-profit company.

Generally, a county must follow normal bidding rules that require taking sealed bids when selling any piece of property valued at more than $2,000.

According to the Pike County Assessor’s Office, the hospital is appraised at $373,826 and a modular building on site is valued at $87,285.

In addition, the no-bid exemption applies only to real estate—land and buildings—and not to any other property.

According to a fixed-asset list from 2008, the most recent one the county has, the hospital contained $1.1 million in equipment, from a $30 walker to a $65,000 telemetry monitor. The list is not up to date, Baker said, but a substantial amount of the equipment was sold to New Directions with the hospital, also without bid.

Jerry Kizzia, a justice of the peace from Murfreesboro, said the Quorum Court was happy to have found a buyer.

“There wasn’t a whole lot of interest in it,” Kizzia said. “At the time, I was thinking we were pretty lucky to find somebody who would step in that quick and open it up.”

Baker said that the legal details of the sale, including the decision to sell without soliciting bids, were handled by Bradford, deputy prosecutor.

“We kind of go on her advice,” he said. “I hadn’t thought about the legality.”

Bradford did not respond to phone or email messages seeking comment.

The county’s decision to sell property to a for-profit company without taking bids leaves the sale of the hospital open to legal challenge.

Under state law, any sale of county property that does not comply with bidding rules “shall be null and void.”

Another provision allows any county taxpayer to file a request in circuit court within two years of the sale to have the property returned to the county.

If a judge overturns the sale, the purchaser is not entitled to a refund, the law states.

• • • •
At the time of the sale, Baker expressed optimism that New Directions would quickly reopen Pike County Memorial.

“I may be wrong a year from now, but I’m confident right now,” Baker told the Gazette in September 2010.

His expectations now are more reserved. He said he still thinks New Directions will open a hospital in Pike County, but won’t be convinced until he sees it with his own eyes.

Last month, he expressed regret that the county hadn’t declared the hospital permanently closed in November 2009, rather than seeking a buyer. He said the issue has caused him more of a headache than any other issue in his political career.

Murfreesboro residents think the town needs emergency medical care, especially with Howard County Memorial Hospital in Nashville being 15 miles away.

“We need some kind of medical facility here for the local people and the tourists. … If you get sick or something happens after 4 o’clock in the afternoon, you’re just out of luck,” Kizzia said.

Patrick Ayers, current president of New Directions, recently told the Murfreesboro Diamond that the company remains committed to building a new hospital in Pike County, leaving open the possibility that it would be in Glenwood rather than Murfreesboro.

But Kizzia doubts New Directions will follow through.

“I just wish I could figure out what this company was wanting,” Kizzia said. “You wouldn’t go down and buy a car and put a down payment on it and let it sit there. You’ve got to have some reason.”