Jonesboro, AR – Jonesboro Right Now – For Northeast Arkansas residents, the most important question surrounding the sweeping changes to Medicaid may not be what happens to the program in Washington.

It may be what happens in the hospital down the street.

Hospital executives at both NEA Baptist and St. Bernards Healthcare say Arkansas hospitals are already operating in a difficult financial environment, with reimbursement rates that lag behind neighboring states while the cost of drugs, medical supplies, equipment and labor continues to rise.

Now, the federal One Big Beautiful Bill Act is adding another layer of uncertainty.

Major provisions affecting Medicaid are scheduled to take effect beginning in 2027, including new work and community-engagement requirements for many people receiving coverage through Arkansas’ Medicaid expansion program. Arkansas has already begun a “soft launch” of the process of checking recipients for compliance, although the requirements themselves do not take effect until Jan. 1, 2027.

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The changes have prompted concern from hospital leaders across the state, including executives at two of the largest health-care organizations serving Northeast Arkansas.

But those executives say the situation is more complicated than simply asking whether hospitals will survive.

The real question is how hospitals will adapt to a health-care system in which costs are rising faster than reimbursement — while potentially serving more patients who have no insurance.

A problem that existed before the federal law

Zach Chandler, executive vice president and chief strategy officer for Baptist Memorial Health Care Corporation, the parent company of NEA Baptist Hospital, said the financial challenges facing Arkansas hospitals did not begin with the One Big Beautiful Bill.

Arkansas hospitals, he said, have been operating at a disadvantage for years because of reimbursement levels.

Josh Conlee, senior vice president of Strategic Services for St. Bernards Healthcare, agrees.

Conlee said Arkansas hospitals receive substantially less reimbursement per hospital day than hospitals in surrounding states.

He cited figures showing average commercial reimbursement per inpatient day of approximately $13,670 in Arkansas, compared with $15,900 in Tennessee, $17,700 in Missouri, $19,500 in Texas, $14,000 in Mississippi and $15,000 in Oklahoma.

At the same time, Conlee said, health insurance premiums paid by consumers and employers are generally similar across those states.

“Arkansas is factually lower than everybody while healthcare premiums, what we all pay for insurance, are basically the same across all those states,” Conlee said.

Chandler made a similar argument, saying Arkansas hospitals are among the lowest-reimbursed in the country while paying essentially national prices for many of the goods and services required to operate a hospital.

That creates a financial squeeze that predates the new federal law.

“The train has been rolling for a while,” Conlee said.

The cost of providing care keeps climbing

While reimbursement has remained comparatively low, the cost of running a hospital has continued to rise.

Conlee said drug expenses increased by approximately 13.6% last year, while supply expenses increased 9.9%.

Chandler cited similar figures from the American Hospital Association, saying hospital drug costs rose 13.36% in 2025, medical supply costs increased 9.9%, labor costs rose 5.6% and total hospital expenses increased 7.5%.

Reimbursement, he said, increased only about 2.9%.

Those figures are among several statistics provided by the hospital executives that JonesboroRightNow.com will continue to independently verify.

The basic problem, however, is straightforward.

Hospitals have to purchase medications, surgical supplies, equipment and other necessities at prices determined largely by national markets.

They cannot necessarily raise what they are paid by government programs or insurers at the same rate.

Conlee said labor is another enormous expense.

Hospitals are labor-intensive organizations, and St. Bernards continues to provide cost-of-living increases to employees, he said.

That is important for retaining workers, but it also increases one of the hospital’s largest expenses.

Then comes Medicaid

The financial pressure takes on a new dimension with the changes coming under the One Big Beautiful Bill Act.

The law establishes new work and community-engagement requirements for certain Medicaid expansion recipients. Beginning Jan. 1, 2027, those who are not exempt generally will have to complete 80 hours per month of work, community service, higher education, work programming or a combination of those activities to maintain coverage. Compliance will be checked periodically.

Arkansas began testing its process for determining compliance in July.

The state is essentially trying to work out the administrative machinery before the penalties actually begin.

That distinction is important because hospital executives say they are not only concerned about people who intentionally fail to meet the new requirements.

They are also concerned about people who could lose coverage because of the complexity of the system itself.

Conlee said St. Bernards wants the process to distinguish between people who should no longer qualify for Medicaid and people who accidentally lose coverage because of administrative problems.

“The administrative piece” should not inadvertently disenroll people who remain eligible, he said.

How many people could lose coverage?

The number that has generated the most attention is roughly 200,000 to 250,000 Arkansans who could potentially lose coverage as Medicaid expansion changes take effect.

Conlee said that number is generally referring to Arkansas’ Medicaid expansion population, which he estimated at a little more than 200,000 people.

He pointed to data from the Arkansas Center for Health Improvement as a resource for examining the potential impact by county.

For Northeast Arkansas, Conlee estimated that approximately 20,000 people fall within the Medicaid expansion population in the region.

That does not mean 20,000 people will necessarily lose coverage.

Instead, St. Bernards is planning for multiple possibilities.

Conlee said the organization is modeling scenarios ranging from the possibility that all of those people could lose coverage to scenarios involving half that number or substantially fewer.

“We are looking at, again, best case, worst case, and everything in between,” he said.

That is what hospital finance and accounting teams are being asked to do: plan for a future in which no one can say with certainty how many patients will remain insured.

The patient doesn’t stop needing care

For hospitals, the concern is not simply how many people have insurance cards.

People without insurance still get sick.

They still have heart attacks.

They still suffer strokes.

They still develop cancer.

And they still show up in emergency rooms.

Federal law requires hospitals to provide emergency screening and stabilizing treatment regardless of a patient’s ability to pay.

Conlee said St. Bernards has seen the consequences of delayed care before.

People without insurance or who are underinsured may postpone preventive and routine medical care. By the time they enter the health-care system, they can be considerably sicker.

That often means they arrive through an emergency department, where treatment is more expensive.

And in cases where the patient cannot pay, the hospital may not be reimbursed for the care.

Chandler described the same concern from Baptist’s perspective.

If people lose Medicaid coverage, he said, they will not stop having medical emergencies.

“The hospital pays for it,” Chandler said.

That creates a difficult question: Who ultimately absorbs the cost of that care?

Could hospital services be affected?

Neither hospital executive said that Northeast Arkansas residents should expect widespread cuts in services.

In fact, St. Bernards offered a reassuring message.

Conlee said residents should not be worried about the availability of quality health care in Northeast Arkansas.

“We’re going to be here to serve,” he said, noting that St. Bernards has been serving the region for 126 years.

But that does not mean hospital executives are sitting still.

Conlee said virtually every hospital system is examining the financial performance of its individual service lines.

Some services lose money.

That is not necessarily a problem, he said, if other services generate enough margin to subsidize them — particularly when the service is considered essential to the community.

But when financial pressures increase, hospitals have to examine every option.

Those options can range from reducing a service, to partnering with another organization, to restructuring it or, in some cases, eliminating it.

Conlee pointed to recent examples elsewhere in Arkansas where hospitals have cut services or entered into partnerships to preserve access.

“We’re doing the same,” he said of St. Bernards’ internal analysis.

That does not mean a particular St. Bernards service is currently scheduled to be eliminated.

It means the organization is planning for multiple financial scenarios.

Rural hospitals face an even tougher challenge

One of the biggest concerns raised during a recent conversation on AETN public television’s Arkansas Week was the vulnerability of rural hospitals.

That concern was echoed strongly by Conlee.

Smaller hospitals generally have fewer services, fewer opportunities to spread administrative costs and fewer financial options when one service line becomes unsustainable.

Conlee specifically mentioned smaller hospitals serving communities such as Osceola, Walnut Ridge and Forrest City.

Those hospitals, he said, are “even more challenged.”

That is important to Northeast Arkansas because the health-care system extends well beyond Jonesboro.

St. Bernards has been actively involved in providing health-care services in Mississippi County and other smaller communities, while Baptist has expanded its system to include hospitals such as the facility in Paragould.

Conlee said keeping health care local is important not only for patients but for the hospitals themselves.

Patients bypassing local hospitals in favor of larger regional facilities can weaken the smaller hospitals that provide care in those communities.

“Keep healthcare local when appropriate,” he said.

Bigger systems have an advantage — but no guarantee

Both Chandler and Conlee said being part of a larger health system provides some protection against financial pressures.

But neither suggested it eliminates the problem.

NEA Baptist is part of Baptist Memorial Health Care, a much larger regional health system.

Chandler said the system can spread administrative and corporate costs across more patients and facilities, provide specialized expertise and use its scale to improve purchasing efficiency.

It can also bring specialists into smaller communities through virtual care or limited on-site schedules.

St. Bernards has a similar advantage.

Conlee said St. Bernards Medical Center is the fourth-largest hospital in Arkansas by net revenue, according to the figures he cited, and St. Bernards operates six hospitals within its system.

That scale allows the organization to distribute some expenses across a larger operation.

But Conlee cautioned that size does not make a health system immune to the underlying financial pressures.

“It doesn’t guarantee,” he said.

Planning has changed

Perhaps one of the clearest indications of the uncertainty facing health-care organizations is how far into the future executives feel comfortable planning.

Conlee said strategic planning used to be conducted on a five-year cycle.

Then it moved to three years.

Now, he said, health-care organizations may be forced to look at six months or a year at a time.

The problem isn’t necessarily one particular change.

It is the number of changes occurring simultaneously.

Medicaid policy is changing.

Reimbursement is changing.

Labor costs are changing.

Workforce availability remains a concern.

And hospitals are trying to determine how all of those variables interact.

“You have to be flexible in your assumptions,” Conlee said.

What happens at the state level?

That leaves Arkansas lawmakers with a difficult question.

The federal law is federal law.

Arkansas cannot simply repeal it.

But both hospital executives said state policy could influence how well Arkansas hospitals weather the changes.

Chandler said hospitals will continue advocating for policy changes at both the federal and state levels.

Conlee said Arkansas will have to work within the federal framework while making sure the state’s Medicaid system is administered effectively.

The goal, he said, should be making sure people who are legitimately eligible remain enrolled while preventing administrative problems from unnecessarily pushing people off the program.

The Arkansas Legislature has also been identified by state officials and other health-care advocates as having a role in addressing the broader financial condition of the state’s health-care system.

The stakes are particularly high for rural communities.

The bigger picture

The warnings from Arkansas hospital leaders are not occurring in isolation.

The American Hospital Association has estimated that federal Medicaid changes could reduce hospital payments nationally, with potentially significant effects on staffing and service lines. Its analysis estimated an Arkansas hospital impact of approximately $181 million in one year and $1.9 billion over 10 years under a related Medicaid per-capita-cap scenario.

Arkansas is entering the changes from a position hospital leaders already describe as financially difficult.

The state’s hospitals face lower reimbursement than many neighboring states while paying national-market prices for much of the equipment and supplies they need.

Now, beginning in 2027, the Medicaid expansion population will face new eligibility requirements.

The Arkansas Department of Human Services is already preparing for that transition.

The result is an unusually complicated situation.

Hospitals have to plan for potentially fewer insured patients at precisely the same time that their costs continue to rise.

So what should Northeast Arkansas residents worry about?

There is perhaps one reassuring answer from the interviews.

Neither NEA Baptist nor St. Bernards is telling Northeast Arkansas residents to expect their health-care system to disappear.

Conlee was particularly direct.

“Don’t worry about healthcare,” he said. “We’re gonna be here to serve.”

But he offered a different piece of advice that may ultimately be more important.

Don’t wait until you’re sick.

Continue getting annual checkups.

Get recommended cancer screenings.

Take care of preventive health.

Use primary care when appropriate.

The reason is simple: preventive care is generally less expensive and less disruptive than waiting until a medical problem becomes an emergency.

And that may be the irony of the situation facing Arkansas hospitals.

The people running those hospitals are spending enormous amounts of time trying to determine what Washington’s changes will mean for their organizations.

But their goal remains remarkably simple.

Keep providing care.

Keep services available.

Keep health care close to home.

And find a way to make the numbers work.

For Northeast Arkansas, the message from both major health systems is not that a crisis is already here.

It is that the next few years will require hospitals to be more strategic, more efficient and more flexible than they have been before.

The financial pressures were already building.

The One Big Beautiful Bill has simply added another variable to an equation that was already difficult to solve.

And hospital leaders are now planning for what comes next.

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