Editor’s Note: Artificial intelligence software was used to assist in compiling this report.
By Scott Loftis
Eureka Springs Times-Echo
Eureka Springs City Council members expressed persistent concerns about the city-owned hospital’s finances, record-keeping and the leadership of the Eureka Springs Hospital Commission during a workshop Tuesday, July 22 — with one member questioning the competence of the hospital’s financial management.
Council member Rachael Moyer, who initiated the call for the workshop, outlined five areas of concern she described as serious enough to jeopardize the hospital’s future, ranging from potentially inaccurate financial reports to unexplained liabilities on the hospital’s balance sheet and $3 million in federal COVID relief funds that might need to be repaid.
“In full transparency, I’m not an accountant,” Moyer said at the start of the meeting, held in the basement of The Auditorium, adding that she consulted with a certified public accountant to better understand the hospital’s financial condition.
Moyer described the hospital as a vital community asset, and expressed a lack of confidence that it was being operated responsibly.
COVID funds might have to be repaid
Moyer’s most urgent concern centered on a $3 million liability listed on the hospital’s 2024 balance sheet under “Other Deferred Revenue.” According to city finance director Michael Akins, who joined the council for the workshop, that line item represents unverified COVID relief funds received by the hospital during the time it was operating under a management agreement with an outside company.
Because the hospital has been unable to produce receipts or documentation verifying how the funds were spent, the amount has been carried forward as a liability — meaning it could be recalled by the federal government at any time.
Council member Steve Holifield pointed out that the current hospital leadership has said they inherited the issue from previous administrators and lacked access to required documentation. However, Moyer and others on the council argued that the responsibility to investigate and resolve the issue still rests with the current leadership.
Moyer said it was her understanding that the COVID relief funds are included on the hospital’s balance sheet as a liability because they might have to be repaid.
“If we were approaching this in the most responsible way, would the hospital commission set aside money that would be held in case that was recalled, or how long will that sit there on the balance sheet?” Moyer asked. “How long do we carry a $3 million liability for? And the reason I’m asking this question is because I want to know how much money we actually have to spend.”
Akins said there is a “time frame” regarding the COVID relief money.
“They say it’s four years,” he said. “They’re coming up on four years. They feel like in September. If they’ve not been asked for the money back by September, then …”
Council member Susane Gruning echoed Moyer’s concerns, noting the lack of clear answers from the hospital commission and administrators.
“I guess the frustrating thing is, why couldn’t the hospital answer that,” Gruning said. “… It still kind of behooves me that we have a CFO, and the CFO should have known this was COVID and been able to answer for Sandy (Martin, the hospital commission chair) to answer.”
Budget concerns
Moving to her next concern, Moyer described what she views as a troubling lack of clarity around ongoing expenses and criticized the commission for failing to produce a revised budget for 2025 despite a net loss of operating income.
“We know that they’ve already completely surpassed the spending on their budget,” Moyer said. “Right now it looks to me like the commission is spending a lot of money, planning to spend more money — without a budget,” Moyer said. “Just out there like drinking water when you don’t have a backup. I don’t know. It’s just scary to me. That’s just not how my mind works.”
Moyer said she calculated that the hospital has seen net financial losses averaging $366,226 per month for the past five months. Without the subsidies it receives as a designated Rural Emergency Hospital, Moyer said, the hospital would not have survived.
“Without a subsidy, we would already be closed,” she said. “We obviously have a subsidy. How long that’s going to last and what that’s gonna look like, we don’t know because we know that a big national change is happening. But right now we’re operating at $370,000 a month loss. So to say that, you know, we’re doing great, everything’s fine, there’s no alarm here, I don’t think that reflects that. And that concerns me.
“Now if I heard something like: ‘Oh my gosh, yes we are, and we’re gonna put down spending freezes and we’re going to tighten our belts … that is the conversation that I would expect to hear when something like that was pointed out to the commission. Instead we hear: ‘You’re wrong, everything’s fine, that’s not correct, you made up numbers,’ and it’s just not the case.”
Moyer also raised questions about a line item labeled “construction in progress” on the hospital’s balance sheet, valued at $863,000. Moyer said she had seen no visible signs of ongoing construction and was unaware of any official plan for capital improvements.
“That seems like a significant thing to talk about or report,” she said.
Akins and Mayor Butch Berry offered tentative explanations — including potential holdover funds from a shelved hospital expansion plan — but no one at the meeting could confirm what the construction- in-progress entry represented.
“We have a CFO and a commission, in my opinion, that has neglected the financial health of the hospital for the last 16 months,” Moyer said. “I think that’s a problem.”
The absence of a revised 2025 budget, council members agreed, makes it difficult to determine whether the hospital’s recent purchases and staffing decisions — including the hiring of a new CEO with a $230,000 annual salary — are financially sustainable.
Akins noted that the hospital’s June financials showed a small net gain, but Moyer cautioned against overconfidence.
“If you look at a five-year trend, they’re at their peak,” she said. “June is the peak. I mean, if I were forecasting, I would expect July to look not quite as good, August to look not quite as good, September no, October a little bit better, and then nothing.”
Labor costs
Moyer also challenged the commission’s assertion that there was no meaningful cost difference between hiring permanent staff and using contract labor.
“All we have to do is look at what they’ve provided to us to see that there is a difference, and a remarkable difference, especially when you’re operating at a $370,000 a month loss,” she said. “It makes a difference whether you employ or whether you contract for labor.”
Moyer presented calculations comparing wages, benefits, and contract labor costs, showing that the hospital was paying a premium for contract workers.
“We’re spending money on something, but we don’t have extra money,” she said. “That is my concern.”
Balance sheet discrepancy
Moyer and other council members repeatedly questioned whether the Eureka Springs Hospital Commission is capable of properly overseeing the facility’s operations and finances.
Moyer pointed out that a balance sheet provided to the council by the hospital commission showed a discrepancy of more than $1.3 million compared with the hospital’s bank balance as reported by chief financial officer Cynthia Asbury at the end of May. After council members questioned those numbers, Martin and Asbury reported at a brief commission meeting on Monday, July 21, that the discrepancy was caused by an error in the hospital’s financial software.
Earlier, Martin discounted council questions about why the hospital’s bank balance decreased by almost $2.5 million from July 2024 to May 2025, while the hospital’s income statements reflected a net loss of $465,000 over the same period. Martin told the Times-Echo in a June 24 email that those numbers represent “two different base points and financial views” and “different calculations.”
At Tuesday’s workshop, Moyer questioned why the accounting error that caused the discrepancy beteen the balance sheet and the bank balance wasn’t flagged earlier.
“Who is it at the hospital commission or the CFO or the CEO who is looking at the balance sheet?” she asked. “Who is looking for these things? Because as soon as we got it, it took us like one day — like two hours, to be honest with you — to figure it out.”
‘If they’re gonna sink it …’
Council member Terry McClung said that while he doesn’t want to lose the hospital, it is up to the facility to “save itself.”
“This city does not have the financial wherewithal to support any inflow of general revenue,” into the hospital,”
“That’s a simple, plain fact. … So, you know, if they’re gonna sink it, they’re gonna sink it.”
Started as ‘a people problem’
Later, council member David Avanzino pointed out that the months-long controversy surrounding the hospital began with complaints of a hostile work environment, with allegations of bullying by Asbury and Jodi Edmondson, the hospital’s human resources director who is currently serving as acting CEO.
The hospital commission fired the previous CEO, Angie Shaw, in November 2024. Several other employees have since been terminated, and more have resigned.
One hospital commissioner, Barbara Dicks, resigned in November 2024 after the Times-Echo reported that she had exchanged text messages with then-commission chair Kent Turner about firing Shaw as early as August 2024. Turner was removed from the commission in January after a 5-0 vote by the city council.
“This started as a people problem, a human problem, with what was going on under the hostile work environment at the hospital,” Avanzino said at Tuesday’s workshop. “I’m really glad we’re here, but I don’t want us to forget about the people who have been fired, who are still afraid for their jobs, and work in that type of environment.”
‘No confidence’
Later, Moyer criticized the hospital commission for its response to questions from the city council.
“I have no confidence in the commission,” Moyer said plainly. “My lack of confidence, almost 100 percent lack of confidence in the current commission right now is because when a question was brought to them, they ignored it, deferred it, got aggressive and basically weren’t going to do anything about it. And that reaction could kill the hospital if it continues.
“I understand that if things happen on the national level and that funding and subsidy gets cut, we’re dead anyway,” she continued. “So we may be beating a dead horse, to use a terrible metaphor. I take this position very seriously. I love this community and I know you all do, too. And if we can do everything that we can to save this asset, then I think we should. I do not have confidence in the commission. And I personally do not have confidence in whoever is operationally managing the finances over there. That’s just me. And the commission has continued to support that for whatever reason. I don’t understand that, but I don’t have to, because we have evidence. We presented it multiple times and the reaction has not been good in my opinion — not caring, not kind and not what I want for this community.”
Outside review?
Several council members discussed the idea of bringing in an outside firm to review the hospital’s books. Akins noted that a full forensic audit could cost $20,000 or more, but suggested a more limited review could be done for less.
Moyer said she would support waiting for the final results of an audit conducted by Forvis before committing to additional expenditures.
Akins explained that the audit had been completed but not yet certified, and that Forvis was expected to deliver its final report and presentation in August or September.
Berry proposed a joint meeting of the city council and the hospital commission once the audit is presented, so both bodies can hear directly from the auditors and ask questions.
‘A lot of dominoes’
While agreeing to wait for the audit report from Forvis, Moyer also made it clear that if the hospital commission remains uncooperative, she would push for independent oversight.
“We’ve already been met with resistance, outright aggression, and noncompliance,” she said.
Moyer said that “if that kind of behavior continues moving forward,” her next step would be to move for removal of commissioners.
Berry pointed out that commissioners are volunteers.
“So I’m sure if you remove them, they may be perfectly happy over that,” he said. “But then we’ve got to find somebody to replace it, and we can’t do it, unfortunately, unless we all want to resign from the city council and become hospital commissioners. None of us, I don’t think, want to do that either. So then we’ve got another issue to come up with, so we just need to keep all that in mind when we do this. There’s a lot of dominoes that can fall.”
The Eureka Springs City Council’s next regular meeting will be held at 6 p.m. Monday, July 28, in the basement of The Auditorium.
