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By TESS VRBIN | Arkansas Advocate
A year after Arkansas lawmakers rejected a bill that would have required minimum reimbursement rates for hospitals, three very different regions of the state have seen their local hospitals reduce services.
Government-run insurance programs, like Medicare and Medicaid, and private insurers pay Arkansas health care providers among the lowest amounts nationwide. Meanwhile, the costs of labor, equipment and administration have increased, said Baptist Health CEO Troy Wells and Arkansas Hospital Administration Executive Vice President Jodiane Tritt.
“We are doing the same work, often for a sicker population, with significantly fewer resources,” Wells said. “…We will continue to have fewer resources to compete for physician manpower, and patients in Arkansas will have a more difficult time accessing the care they need.”
As the Arkansas Legislature is in the middle of a legislative session focused on crafting the state’s budget, health experts and legislators say more work needs to be done next year at the state level to address the rising cost for hospitals and the relatively low amount they receive for providing that care.
Without higher reimbursement rates in the near future, more hospitals might have to scale back or close permanently, Tritt said.
“We hate to sound like we’re crying wolf, because our hospitals do more with less as often as possible,” she said. “The problem is, we’ve been doing more with less for so long that we’re at a fever pitch.”
Eight Arkansas hospitals have shuttered their labor and delivery units since 2020, most recently Baptist Health-Fort Smith, which will end these services April 28. Only 22 of Arkansas’ 75 counties have labor and delivery units, leaving women in some parts of the state to drive an hour or more to receive care.
Women can still give birth at Fort Smith’s Mercy Hospital after Baptist’s maternity ward closes, but the city’s Republican senator, Justin Boyd, said the situation highlights the need to make the hospital payment system more fair.
“When the market isn’t working, the Legislature’s job is to step in and have that debate on changing the rules in that market,” Boyd said.
Changing Medicare and Medicaid reimbursement rates would require an act of Congress. On the state level, lawmakers won’t have an opportunity to introduce another bill addressing commercial payor reimbursements until next year’s legislative session.
Camden’s Ouachita County Medical Center, which ended its labor and delivery services in January, was $8.5 million in debt when CEO Glenda Harper took over in August 2025. The hospital has filed for bankruptcy and applied for rural emergency hospital status, Harper said. If its application is approved, it will be Arkansas’ sixth hospital to trade inpatient services for more federal funding.
Jacksonville’s only hospital, Unity Health, closed its emergency room and medical-surgical unit Wednesday, about three years after it opened. The hospital struggled with reimbursement rates and not being paid for uninsured patients seeking primary care from the emergency department, Jacksonville Mayor Jeff Elmore said.
Elmore is grateful the facility still has psychiatric and radiology units, but said he’s disappointed Jacksonville residents have to seek emergency care elsewhere.
“I would trade out the other two services for the emergency room service any day,” he said.
Rural areas such as south Arkansas tend to see the most financial struggles for health care providers, but the loss of services in Jacksonville and Fort Smith indicate urban and suburban areas aren’t immune to the problem.
Rural hospitals could receive federal funding through the new $50 billion Rural Health Transformation Program, but it isn’t meant to alleviate the costs of hospital operations, Tritt said.
Need for transparency
Increasing reimbursements shouldn’t create higher insurance premiums, because neighboring states have similar premiums but higher reimbursement rates, Tritt said.
Last year’s proposed legislation would have required commercial payors to gradually increase reimbursement rates to the average of their rates in Arkansas’ six neighboring states. Several lawmakers opposed to the bill said they would not vote to increase their constituents’ premiums. Others took issue with the bill’s exemption for insurance provided by state government and higher education.
Republican Rep. Brandon Achor of Maumelle said it’s likely lawmakers will introduce similar legislation next year. Achor was among the bill’s cosponsors and is running for a Senate seat that includes part of Jacksonville.
Achor said legislation would need to be introduced earlier in the session to ensure there’s “early engagement with the different players involved.” He also said he believes “there needs to be significantly more transparency in the flow from the patient’s dollar” between medical care and insurance companies.
“Insurance companies aren’t closing, pharmacy benefit managers aren’t closing, consultant operations aren’t closing and brokerages aren’t closing, but hospitals, primary care [clinics], maternity wards and pharmacies are,” said Achor, a practicing pharmacist.
Wells called last year’s bill “a reasonable, fair approach” and said the policy’s financial impact on employers should be studied in advance of the next legislative session.
Insurance premiums for Arkansans on private health care plans in the state marketplace increased by an average of more than 20% this year. Congress did not extend Affordable Care Act subsidies by the end of 2025, which would have prevented many Americans’ insurance premiums from increasing.
Meanwhile, the federal government is expected to decrease Medicaid spending in rural areas by about $15.5 billion per year thanks to a 2025 federal tax cut law, according to the nonpartisan health research organization KFF.
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