Hospital commission approves contract with Alliance Management Group

Thursday, June 11, 2020

By Samantha Jones

The Eureka Springs Hospital Commission will keep working with Alliance Management Group to run Eureka Springs Hospital.

At a special called meeting on June 2, the commission revisited its proposed contract with Alliance. Chairman John House said the proposed contract had “very minor changes” compared with a contract the commission looked over on May 26. In the original contract, Alliance requested to be paid $30,000 a month with a monthly 7.5 percent bonus if the hospital meets its financial goals.

Commissioner Chris Baranyk said the new request is for $25,000 per month and asked House how much the bonus would bring in for Alliance. House said Alliance would receive a base contracted rate of $300,000 per year, with the opportunity to earn $300,000 more through the monthly bonus. Alliance would be paid anywhere between $25,000 and $50,000 per month, House said, totaling $600,000 per year if Alliance receives its full bonus every month.

“That’s not a salary. That’s a contract rate,” House said, “because it’s going to a company, not them as individuals.”

House said it’s important to keep the hospital’s history in mind while making this decision.

“The amount of money the previous management company took out of the hospital was that much or greater,” House said. “They took out a significant amount of money for management fees and that kind of thing.”

Commissioner Tyson Burden said he didn’t feel right spending so much money on the management company, saying $600,000 a year for a critical access hospital making less than $10 million a year is “just crazy high” compared to other medical institutions.

“That’s sky high compared to other places. It’s just too high,” Burden said.

Instead, Burden suggested extending the current contract with Alliance for another six months.

“Then we can see where we’re at. That’s one option I’d be willing to entertain,” Burden said. “It needs to be something a little more reasonable. That’s where I’m at on it.”

Burden said the hospital doesn’t need to net that much money for Alliance to receive its bonus each month, saying the net profit should be around $375,000 for the bonus to kick in. The hospital was bringing in that net profit with its previous management company, Burden said.

“We weren’t doing our full potential back then and letting a lot of things go and still made that,” Burden said, “so it’s not hard to conceive that you could at least double that. Then you’re still up in these numbers that are really out of line for other small critical access hospitals.”

Baranyk agreed.

“As a doctor, when you have management making more than two to four times than you make in a year … it’s too much money,” Baranyk said.

Burden asked if the commission needs two people from the management company working at the hospital and treasurer Barbara Dicks said that Alliance representatives Darrell Parke and Mark Stearns both do important jobs.

“Mark’s job is taking care of the facility. It’s old and it needs lots of care,” Dicks said. “That’s been his main job. My way of thinking is if they make that much money, that means the hospital has made that much money, and good on us.”

House agreed.

“This is going to Alliance Management Group. It’s not going to Darrell. It’s not going to Mark,” House said. “Right now, there’s two people in that group. If they decide to bring on another person, they’re diluting their pay. We’re not having to pay them more.”

Dicks moved to approve the contract and allow House to sign it, and the commission voted 3-1 to do so, with Burden voting against the motion.

The commission’s next regular meeting is scheduled for 6 p.m. Monday, June 15, at 25 Norris St.

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