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Regional medical growth response to being ‘medically underserved’

story by Ryan Saylor
rsaylor@thecitywire.com

Editor’s note: This article is a preview of the 5th annual The Compass Conference, which will be held Thursday (April 17). A panel discussion of the regional healthcare sector is the featured part of the conference. Link here for more more information about the conference and how you can reserve a seat.

While manufacturing may be a sore subject for many in the Fort Smith region, one economic bright spot that continues to shine is the medical sector. The recent years of growth that seems to be happening at rapid speed is a response to the market having been ill-prepared for the needs of the Fort Smith region many years ago, according to several local healthcare administrators.

According to Mercy Fort Smith President Ryan Gehrig, the growth of the last several years are the medical sector's attempt to reverse "the trend that had been the last 10 to 15 years before that."

Kyle Parker, president and CEO of the planned Arkansas College of Osteopathic Medicine, said Fort Smith used to be the go-to city for medical care in the region, though that has changed drastically.

"We are now the most medically underserved part of Arkansas. We rank 48th in the United States. There's no question that there is a huge amount of need in this area. You only have to go back to the 1970s when this part of Arkansas was called a 'Medical Mecca.'"

Dr. Cole Goodman, president of Mercy Clinic of Fort Smith, said the current slump in health care largely dates to the mid-1990s to the mid-2000s due to what he called an out-migration of physicians.

"We had difficulty recruiting new physicians," he said. "At the same time, our population grew."

With the Fort Smith region now, according to Parker, the most medically underserved part of Arkansas, local healthcare providers have been pouring millions upon millions of dollars into expansion of their hospitals, clinics and staff rosters. But with a shortage of doctors nationwide, it has been a challenge to meet the demand of a local population that includes eight counties in Arkansas, five counties in Oklahoma and a total regional population approaching 450,000.

In Arkansas, Parker said the average physician has a total of 3,600 patients.

Goodman said the large number of patients each doctor sees has put a strain on the system, with Mercy hiring doctors as quickly as it can, though seemingly unable to catch up due to the doctor shortage. And the story is the same at all of the area's hospitals and clinics.

At Sparks Hospital, Market Director of Marketing and Communications Donna Bragg said the hospital has recruited a total of seven new physicians in just the last year and has invested more than $44 million in capital into facilities since December 2009.

"As with the trend nationwide, there is a need for more doctors to treat our aging population and replace physicians who retire," she said. "At the same time, more individuals are gaining access to insurance coverage through (insurance) exchanges, and we expect patients will seek care from a number of sources — physicians, preventive healthcare and hospital services."

Gehrig said Mercy has brought on an additional "30 new providers to the community in the last 18 months," in addition to tens of millions of dollars spent on construction of new clinics, as well as the new Mercy Orthopedic Hospital along Phoenix Avenue. With each new physician brought on, Gehrig said about four staffers are hired, as well. Parker said that figure typically includes two nurses, as well as two office staffers to handle insurance claims and other necessary administrative assistance.

As the hospitals grow to meet the needs of the community, the growth is good for a local economy that has struggled since the start of the Great Recession in 2008.

According to figures provided by Mercy Fort Smith, the healthcare system's impact on the city of Fort Smith, as of 2011 included more than $247.5 million in spending at Mercy's facilities and its suppliers with an additional $34.6 million in direct capital investment with additional capital investments exceeding $49.3 million in the two years following the report. The system also had a payroll of $96.1 million for 1,754 employees in 2011, while paying $5.6 million in annual local and state taxes.

At Sparks, Bragg said of its more than 1,500 employees (as of 2013), more than 300 were physicians with a total payroll of more than $115 million in wages and benefits for its entire system. Additionally, it paid more than $8.4 million in taxes and as mentioned earlier, Sparks had spent $44 million on capital improvements to its facilities since December of 2009 and paid $525,000 in donations to the community since that time.

In addition to the numbers from Sparks, one must consider the new service center opened in Fort Smith by Sparks former parent company Health Management Associates  (HMA) of Naples, Fla., that will employ more than 500 with an average wage of $40,000 once fully staffed. Franklin, Tenn.-based Community Health Systems has since acquired  HMA.

Can the growth and millions in economic impact be sustained? Parker said it has to as Baby Boomers retire in record numbers and the need for physicians becomes greater than ever before. While Sparks and Mercy have confirmed heavy recruitment efforts, some of those efforts have come at the expense of other healthcare providers in the region, what Parker called a cannibalization of physicians.

That is just one of many reasons the Fort Smith Regional Healthcare Foundation has established the new osteopathic school to be built at Chaffee Crossing at a cost of about $58 million. When all is said and done, Parker said 600 osteopathic students will be enrolled each year and all the region's major healthcare providers — Mercy Fort Smith, Sparks, and Cooper Clinic — will work with the school to host residencies. The school expects to accept its first cohort of students in the Fall of 2017.

The hope, according to Goodman, is that many of the physicians that graduate from the Arkansas College of Osteopathic Medicine, as well as the steady stream of graduates coming out of the well-established nursing program at the University of Arkansas at Fort Smith, choose to remain in the area.

"The best way to get physicians to your community is to grow them yourselves, so to speak," he said with a laugh.

But even with the school's creation, recruitment of physicians to the region and continued expansion by the region's hospitals — Mercy is constructing two new clinics with more planned, according to Goodman — the healthcare sector of the economy will continue to thrive, according to all of those who spoke for this article, with many of them saying the need is large enough to justify a continued infusion of capital for many years to come. Just at Mercy alone, the hospital is in the middle of a planned $192 million investment in the community that began in 2011.

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And economists with the state of Arkansas predict a rise the number of individuals employed in the health care industry to rise by 20.7% across west central Arkansas by the year 2018, only one year after the opening of the ACOM.

The Education and Health Services sector of the Fort Smith metro area employed an estimated 16,400 in February, down from the 16,900 in February 2013, but up almost 4% compared to the 15,800 employed five years ago in February 2009. By comparison, the number of total employed in the metro area during February was an estimated 119,041, down 3.64% compared to February 2009.

Goodman said investments by the various healthcare systems, especially in recruiting a bench of talent that can step in when others retire or when needs arise, will continue, just as the figures predict.

"I see, at least from Mercy's standpoint, there's no real crystal ball to look into. But I see us continuing to grow and continuing to recruit to improve that growth and (level of care) and to maintain it. Once you get a certain number of physicians, that's great. But you still have to continue."

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