As ballots were being counted for the results of the Arkansas Primary elections, Clay Hobbs, Chief Financial Officer of Pafford Medical Services, the operator of Southwest Arkansas Regional Medical Center, brought the Hope City Board of Directors an update Tuesday night on a hospital that has struggled for income since its previous operator declared bankruptcy in 2024.

The meeting in its entirety can be seen on the City of Hope's Facebook page.

Hobbs told the board that reimbursement issues tied to the hospital’s transition to critical access status are finally beginning to ease.

“We are getting paid for the critical access portion now, for most of it,” Hobbs said. While some facility and physician fee collection procedures remain unresolved, he said reimbursement is improving. The shift moved the hospital from a flat per‑visit rate to a per‑day rate based on actual costs.

Hobbs also reported progress on several service fronts, including the hospital’s recently recognized stroke program, its telehealth partnership with UAMS, and the opening of swing beds for patients needing rehabilitation following procedures such as hip replacements.

On long‑term sustainability, Hobbs said six regional hospitals are now participating in a Southwest Arkansas consortium focused on shared services and planning, formed following a Rural Health Transformation funding meeting held as part of the state Department of Finance and Administration’s stop at UAHT for its Rural Health roadshow earlier that day.  He cautioned that funding from the initiative, which distributes federal funds appropriated from the Big Beautiful Bill, will take time to materialize.

Hobbs acknowledged that the hospital’s effort to secure nonprofit status has taken longer than hoped. “It’s a work in progress, and it’s taking some time,” he said, citing restrictions following bankruptcy and ongoing legal work involving two law firms. Going nonprofit will allow the hospital to accept tax-deductible donations and make it eligible for more corporate grants.

“This has been a long year and a half,” Hobbs said. “I don’t think that I ever knew what we were taking on a year and a half ago. I know none of us did. But we had to do it, and we stepped up, and I’m glad we did.”

One board member said his recent emergency room experience had been positive, praising the physicians involved. Hobbs thanked him and said simply, “We are trying hard.”

Later in the meeting, City Manager J.R. Wilson previewed a proposal he said will receive a fuller presentation at the board’s March 17th meeting, a possible countywide sales tax dedicated to hospital operations.

Wilson told directors that Hempstead County is considering placing a three‑quarter‑cent sales tax before voters, with proceeds earmarked exclusively for the hospital and with a 10‑year sunset clause. A tentative special election date of June 9 is under discussion. If approved, Wilson said, the tax “would generate about $30 million over the 10 years.”

Bond counsel on the matter is Friday, Eldredge and Clark of Little Rock. Wilson said county representatives will appear before the board at the March 17 meeting to answer questions and present a formal resolution. “I didn’t want y’all to get blindsided,” he told the board.

Wilson also told directors that the county’s bond counsel has asked the city to formally transfer its ownership interest in the hospital to Hempstead County in order for the arrangement to function smoothly if pursued.

“There are some legal reasons why,” Wilson said. “I can’t really explain those legal reasons. They’re asking us to do it, and I’m bringing it to you. This is not a vote tonight. They’re going to be here next meeting to answer your questions.”

Wilson emphasized that the city’s $2.5 million investment in the hospital, $1 million from Hope Water and Light and $1.5 million from the city’s general fund, would not simply be surrendered if an ownership transfer were approved. Hempstead County has separately invested $1 million.

“We’ve already worked a tentative agreement,” Wilson said, “that if we give our interest to the county, but let’s say for some reason it’s sold in the future, or they got some money for the sale of it, then we’re asking for some side contract that would be sure that we get part of those revenues and refunding of some of the money we put in.”

One possible framework Wilson outlined would allow the city to recover its investment first, the county second, with any remaining proceeds divided. “That may be a very fair way to do it,” he said, noting the city’s larger contribution. Negotiations are ongoing, and any final agreement would return to the board for approval.

Before the hospital discussion, the board revisited a decision made at its previous meeting, the selection of ETTL as the third‑party testing firm for the new Recreation and Aquatic Center.

Wilson brought the item back at the request of project contractor Hunter Clippert of Ideal Construction Company, who raised concerns after the earlier vote. Wilson said he initially believed the matter was settled but reconsidered after consulting with architect Clay McGill of BiLD Architects, who agreed the concerns warranted discussion.

“I don’t ever want to keep information from you,” Wilson told the board. “Because I think the board’s goal, like my goal, is to have all the information and make the best decisions possible.”

Clippert, joined by representatives from McClellan Engineers, argued that geotechnical testing should remain with the firm that designed the foundation. He said soil testing is inherently subjective and separating design and testing responsibilities can create delays and liability disputes.

“Dirt doesn’t operate that way,” Clippert said. “It’s not good practice.”

McClellan’s Stephen Head described Hope’s expansive clay soils as particularly challenging, while Clippert noted that structural engineer Frank Allison had submitted a letter echoing the same concerns Clippert had. Clippert also cited the benefit of having a local engineer available to respond quickly.

Director Mark Ross said he wished the issue had been more clearly explained earlier. Clippert acknowledged he should have stayed for the prior discussion. The board voted to reverse its earlier decision and approve McClellan Engineering for the testing work.

Wilson reviewed with the board the city’s 2025 financial report, noting the books are nearly closed. A formal amended budget will be presented at the next meeting.

The general fund recorded $6,094,087 in revenue and $6,139,733 in expenditures, a deficit of about $44,862. Wilson cited Christmas bonuses and rising insurance premiums as primary factors.

The sales tax fund showed a larger gap, driven almost entirely by hospital spending. While $400,000 had been budgeted, actual hospital expenditures reached $1.9 million. A $1 million land sale helped offset the shortfall, but roughly $500,000 remained unbudgeted.

Other funds showed mixed results, with airport and sanitation deficits explained by economic development spending and equipment failures, respectively. The wastewater fund finished nearly even after absorbing several emergency repairs.

Finance Director Cindy Clark said remaining audit items are non‑cash entries. “As far as what y’all see on here,” she said, “this is pretty much final.” The board approved the report.

The board also approved bond counsel and engineering consultants for a separate landfill remediation project partially financed by a loan from the Arkansas National Resources Commission.  Cindy Clark also received permission to destroy temporary paper records that have exceeded their retention period.  The city has electronic versions of all these records.

Fire Chief Todd Martin received approval to apply again for a Firehouse Subs Public Safety Foundation grant, potentially targeting a battery‑powered extrication tool.

During comments, Director Gary Johnson raised concerns about a property at West Third and Hervey that seems to be accumulating cars waiting for repair. Wilson said code enforcement will follow its standard process.

Mayor Don Still noted that replacing a traffic signal with a stop sign on West Third and Elm has so far resulted in no accidents.

The board approved surplus status for a Parks and Recreation truck, Rotary Club installation of musical instruments in Pocket Park, and addressed a scheduling issue related to a Juneteenth event request for use of a building.

Wilson closed with project updates and announced a March 17 retirement reception for longtime employee Steve Montgomery, and said Assistant City Manager Daniel Shelman will lead the next meeting while Wilson attends his son’s wedding.

“I’ll be here to thank Steve for his service and sit in the audience,” Wilson said.