Crittenden Regional Hospital leadership states that they were clueless about dire revenue situation until weeks before closing | Arkansas Blog

Wednesday, October 8, 2014

Crittenden Regional Hospital leadership states that they were clueless about dire revenue situation until weeks before closing

Posted By on Wed, Oct 8, 2014 at 12:56 PM

Mark Friedman at Arkansas Business does a deep dive into the mess at Crittenden Regional Hospital, which filed for bankruptcy last month. This after the hospital and community leaders successfully pushed for a penny sales tax to save the hospital (that tax has now been enjoined; voters will have a chance to repeal it later this year before anything is collected). 

We've reported before that Crittenden County Judge Woody Wheeless had seen a pattern of neglect from the leadership of CRH since he was elected county judge almost two years ago. He said his "confidence was lost in the hospital board 20 months ago." The county had an agreement with the hospital board to see monthly financial reports (the county owned the property and leased it to CRH). But Wheeless said he never once got the reports: "I’ve constantly asked the CEO [Gene Cashman] for them, and he’s always saying, ‘I’ll get those to you, I’ll get those to you next week.’ And next week never came." 

If Wheeless had ever gotten those financial reports he kept asking for, the news would have been ugly. Friedman, relying on an affidavit given by Cashman as part of the bankruptcy proceedings, reports: 

Directors of Crittenden Regional Hospital learned on Aug. 19 that its monthly revenue was only $2 million — about half what they had previously been led to believe — while expenses were about $5 million, the CEO of the shuttered hospital revealed in a bankruptcy court filing.

Yikes. How could this have happened? Based on the affidavit, Cashman and co. are putting all of the blame on a single scapegoat, former CFO Brad McCormick. According to Cashman, McCormick had falsely been reporting monthly revenue of $4 million per month. 

On the surface, this just doesn't smell right. McCormick owned no stock in the hospital and had nothing to financially gain from acting alone to wildly over-report revenue. On the contrary, this level of malfeasance would presumably make it hard for him to ever work as a CFO again. McCormick is now CFO at Natchitoches Regional Medical Center in Louisiana and isn't commenting. 

Meanwhile, keep in mind that Cashman, an employee of Methodist Le Bonheur Healthcare in Memphis, was brought in at great expense to act as CEO and try to save the financially struggling institution as part of an agreement with Methodist to provide consulting services for CRH. Cashman was utterly clueless about the revenue picture until late August? Remember how he kept telling Wheeless "I'll get those to you next week"? Seems like maybe he shouldn't have procrastinated! 

Friedman also reports that CRH was looking for a buyer: 

The affidavit by Eugene Cashman also revealed that Crittenden Hospital Association, the nonprofit that operated the county-owned facility at West Memphis, was quietly looking for a buyer even as it successfully lobbied voters to approve a countywide sales tax specifically to shore up the hospital’s finances.

This is in line with what I've heard from insiders off the record. Multiple potential buyers showed interest, with one making a tentative $12 million offer, a deal that fell apart when the buyer declined to cover the hospital's monthly deficit. 

The other thing that struck me from the affidavit: Cashman states that it was impossible to find a loan to keep the hospital going until the money from the sales tax started coming in. That tax would bring in $30 million over 5 years — that's cash coming in with no additional expenses. They couldn't have worked out a deal with the county to devote some of that money to a lending institution? What about the underwriters for the bonds — Crews and Associates? Did they really turn down a loan under those circumstances? 

I'm expecting more drip, drip, drip on this. Note that Friedman's article didn't even get into the thicket of the current lawsuit alleging that the hospital withheld money from employees' paychecks for health insurance premiums, but never actually paid the claims, potentially leaving their employees on the hook for tens of thousands of dollars in medical care they were told was covered by their health insurance.

Things are getting ugly in Crittenden County. 

Tags: , , ,



Subscribe to this thread:

Add a comment

More by David Ramsey

Readers also liked…

  • Sabin's subterfuge in the race for mayor has roots in rigged city government

    The Arkansas Democrat-Gazette reports that an ethics complaint has been filed saying that the exploratory committee Rep. Warwick Sabin created to prepare for a run for Little Rock mayor was a subterfuge to avoid the city ordinance that doesn't allow campaign fundraising to begin until five months before the November 2018 election.Of course it is.
    • Aug 10, 2017
  • Use of solar on the rise in Arkansas

    With a pivotal ruling expected any day now from the Public Service Commission, Kyle Massey at Arkansas Business reports on the increase in Arkansans adding solar generation units on their homes and business.
    • Apr 13, 2018
  • Antwan Phillips wants to make a difference in reducing Little Rock violence

    KARK/Fox 16's push to do something about Little Rock violence includes a spotlight on people trying to make a difference — in this episode Antwan Phillips, a lawyer at Wright, Lindsey and Jennings.
    • Aug 30, 2017


Most Recent Comments


© 2019 Arkansas Times | 201 East Markham, Suite 200, Little Rock, AR 72201
Powered by Foundation