Southwest Arkansas hospital set to face audit over its use of American Rescue Plan funds

This story was updated Friday, Dec. 8, 2023, with comments from Lori House.

Arkansas lawmakers on Thursday greenlit a potential audit into a Southwest Arkansas hospital’s use of federal COVID-19 relief funds it received last year.

Sevier County Medical Center received $6.25 million in American Rescue Plan Act funds in December 2022, shortly before the hospital opened. CEO Lori House told a legislative committee the hospital needed the funds in order to avoid “a lot more debt than we originally hoped for.”

The hospital had about $2 million on hand at the time but was set to pay almost all of it to the contractor that built the 42,000-square foot facility, said Greg Revels, the hospital board’s vice chairman. The additional $6.25 million was meant to pay for hospital equipment and furnishings.

State Sen. Jimmy Hickey, R-Texarkana, whose district includes Sevier County, said he recently heard concerns from both constituents and other lawmakers that Sevier County Medical Center has been “delinquent” in paying some of the suppliers of the hospital’s construction materials.

Hickey also said the hospital board has told him the ARPA funds have been spent properly and in their entirety.

“I just knew that it was going to be prudent to make sure that all the ARPA funds were spent according to the way [the award] was passed out of the subcommittee, for medical equipment and whatever else,” Hickey said in an interview.

Lead Auditor Roger Norman of the nonpartisan Arkansas Legislative Audit shared Hickey’s request with the Legislative Joint Auditing Executive Committee on Thursday. The panel approved the request with no audible dissent, and the full Legislative Joint Auditing Committee voted Friday to accept the panel’s report and authorize the audit.

House said in an email Friday morning that building the hospital during the COVID-19 pandemic brought “tremendous financial challenges,” especially “with zero accounts receivable to lean on.”

Panel approves another $12.5M in federal aid for rural Arkansas hospitals, totaling nearly $40M

“We do indeed have creditors that are owed and we have a plan to repay them, while still providing our area with great health care,” House said. “As far as the ARPA funds are concerned, we received 6.25 million dollars and have submitted all documents accounting for every penny spent, and exactly by the rules of spending set forth by the state.”

Sevier County’s previous hospital in De Queen closed in 2019 when its out-of-state owner was charged with Medicaid fraud. Later in 2019, voters in the county approved a half-cent sales tax for a $24 million bond issue to pay for the construction of a new hospital just north of De Queen.

The county remained without a hospital throughout the pandemic, and the two nearest hospitals were each about 35 miles away from De Queen, in neighboring Howard and Little River counties.

The ARPA funds Sevier County Medical Center received did not come from the $60 million that lawmakers set aside in August 2022 as emergency relief for struggling rural hospitals. Lawmakers have since distributed nearly $40 million to 10 rural hospitals, including $3.4 million to the hospital in Howard County.