Local ambulance provider set to buy Southwest Arkansas hospital from bankrupt corporation

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)

An Arkansas-owned medical service company is set to purchase the local hospital in Hope from its corporate owner and operator that declared bankruptcy in May.

Dallas-based Steward Healthcare Group operates 31 hospitals in eight states, including Wadley Regional Medical Center in Hope, and is in the process of auctioning them off in the U.S. Bankruptcy Court for the Southern District of Texas.

On July 21, the court authorized the sale of Wadley Regional for $200,000 to Pafford Health Systems, which provides ambulance services to Hempstead County and its seven neighboring counties. The sale is set to be finalized at an Aug. 13 court hearing.

Pafford began as an ambulance company in Magnolia, according to its website, and now has operations in Louisiana, Mississippi, Oklahoma and Texas as well as Arkansas.

The hospital will be renamed Southwest Arkansas Regional Medical Center upon the finalization of the purchase, said Clay Hobbs, Pafford’s chief operating officer and a member of the nonprofit Southwest Arkansas Healthcare Authority.

The authority has been working to ensure that the last hospital on Interstate 30 before entering Texas would come under local control after more than a decade of corporate ownership that led to financial uncertainty, Hobbs said.

“We have a special niche here in the region, and it’s been trying and troubling, but we’re going to make it,” he said.

In addition to Hempstead County, the hospital serves three counties that do not have hospitals : Lafayette, Nevada and the southern portion of Pike.

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 June, the Hempstead County Quorum Court and the Hope board of directors each passed resolutions 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.

“It’s a difficult position to be in the hospital business, especially the rural hospital business, and we could not do that alone,” Hobbs said. “Pafford needed the assistance of the city and county.”

Another Steward-owned hospital, also called Wadley Regional Medical Center, has been the Hope hospital’s sister facility in Texarkana, Texas, and has yet to be purchased in the auction. The Hope hospital will maintain its working relationship with the Texarkana hospital even without continued shared ownership, Hobbs said.

“We as a community are trying to position ourselves to be better advocates for healthcare in our community and ensuring that we have sustainable healthcare, that we have a pulse on the operators in our community and how they are managing their finances in a way that is good long-term,” Anna Lee Powell, Hempstead County Economic Development Corporation president and a member of the healthcare authority, said in June.

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. Cheek had a long history of buying hospitals and driving them into financial ruin, according to a 2016 investigation by the Dallas Morning News.

“There were a lot of promises from Steward, but the real trauma happened in 2012,” Powell said.

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 owns nine hospitals.

Hobbs said many of the current employees at the Hope hospital worked there in 2012 and have seen the issues with management and finances up close, so the Southwest Arkansas Healthcare Authority wanted to ensure their jobs were safe despite Steward’s bankruptcy.

“They’ve made a lot of sacrifices to stay in Hope and take care of our community, and we wanted to make sure that they have a stable place to work for years to come,” Hobbs said.

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