County Law Update

from Summer 2015 County Lines

Judges’ topics include county jails, bridges

Law regarding county hospital management authority

Under Arkansas law, the question of what entity has the authority to manage, control and operate the county hospital depends upon whether the county hospital facility has or has not been leased to a private hospital corporation. If the county hospital facility is leased to a private hospital corporation, the “management, control, and operation” is shifted to the board of directors of the private hospital corporation. After the county hospital facility is leased to a private hospital corporation, the lease agreement thereafter controls the relationship and neither the County Hospital Board of Governors nor the County Quorum Court is otherwise able to manage, control or govern the business affairs of the local (county) hospital. A.C.A. 14-263-103, 104, 105 & 106.

The County Hospital Board of Governs When Hospital is NOT Leased: The Arkansas General Assembly originally stated that all county hospitals would be governed by a County Hospital Board of Governors. “There is created in each county in this state owning a county hospital a board of governors which shall be charged with the responsibility of the management, control, and operation of the county hospital ... .” A.C.A. 14-263-103. The board of governors has “the duties of managing, controlling, and supervising the operation of the county hospital.” That would include, for example, hiring (or firing) the hospital administrator.

The Private Hospital Corporation Board Governs When

Hospital IS Leased: The Arkansas General Assembly has authorized the lease of a county hospital facility to a private hospital corporation. “Should the board of governors determine that it would be in the best interests of the citizens of the county that the hospital be operated or leased to an individual, a firm, or a corporation, the board of governors may contract or lease the equipment and hospital facilities to the individual, firm, or corporation for a period of time and for consideration and conditions the board of governors may deem wise, subject to approval of the contract or lease by the county judge and the quorum court of the county in which the hospital is located.” A.C.A. 14-263-106. Further, “the county may be the lessor of the hospital rather than the board” and,“[t]he existence of a board of governors is no longer required once the county rather than the board of governors has leased the hospital facilities.” A.C.A. 14-263-103 and 106.

The Lease Agreement Controls WHEN County Hospital Facility is

Leased: Notice the law says “the board of governors may contract or lease the ... hospital facilities ... for a period of time and for consideration and conditions the board of governors may deem wise ... .” In other words, once the lease agreement has been approved, the conditions in that lease agreement thereafter control the relationship between the county and the private hospital board. If, to use the prior example, the lease agreement does NOT say the county quorum court gets to choose the hospital administrator (which it likely never would), then the private hospital board (and not the quorum court) thereafter gets to hire (or choose to keep or fire) the hospital administrator. “If the county rather than the board of governors leases the hospital facilities, the duties of managing, controlling, and supervising the operation of the county hospital shall be imposed upon the lessee ... . ... [T]he county, if it is the lessor, will thereafter be responsible for all matters pertaining to the lease, the facilities, and the lessee, including without limitation the renewal or extension of the lease or any conflicts that may arise pertaining to the lease or the lessee.” A.C.A 14-263-106. In other words, once the lease agreement has been approved, the new relationship is landlord and tenant and the lease agreement thereafter controls the details of the relationship.

Board Functions: Hospital board functions include “employ[ing], in addition to other personnel, some competent person to act as administrative officer” and “managing, controlling, and supervising the operation of the county hospital” and “what policies and methods of operation shall be in the best interest of the hospital” and “the authority to make regulations, employ personnel, and prescribe any and all requirements and other matters pertaining to the operation of the hospital ... .” A.C.A. 14-263-105.