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Trustees split over management contract

VDMC board asks executive committee to review contract

October 31, 2012
Anne Blankenship ( , The Daily Freeman Journal

Members of the Van Diest Medical Center board of trustees were unable to come to an agreement on the proposed Mercy Network management contract Tuesday noon when they met in special session to discuss the document. About 20 employees crowded into the conference room to hear the board's discussion on the matter.

The hospital has had an affiliation agreement with Mercy for more than 20 years. Currently, the hospital is operating under an extension of that agreement while the new management contract was being written. At last week's regular board session, the trustees received a new revision of the contract and some of the board members said they needed more time to review the details of the agreement.

Four of the board members - George Heller, John Hemingway, Steve Mourlam and Hank Witt - said they had enough issues with the contract as proposed to prevent them from approving the document on Tuesday. One of the main points of their concern was the fact that the new contract requires the hospital administrator to be an employee of Mercy Network.

"I don't think I can support an agreement where we don't employ our own CEO," said Heller. "The other parts of the agreement where they assist us and help with training - I believe in that 100 percent. But I can't go along with sharing the CEO."

Heller said he would have no problem with Mercy helping to recruit an administrator for the hospital.

"But he or she would have to be our employee, not Mercy's, in my mind. But I'm only one vote," he said.

"That CEO would still have to answer to us," said board Chairman Carroll Ose. "We're going to get a lot of management direction from Mercy - like it or not."

Board member Nancy Dermand said the CEO would share those directives with the board of trustees and the Mercy liaison would also be present at board meetings to discuss those directives, according to Peg O'Connor, Mercy representative.

"If the CEO is not employed by Mercy, then we have no way of knowing what is going on. There's no sharing of information," O'Connor said.

"We try to make a special effort to make sure you're aware of what we're doing with that CEO or what that CEO is being educating on," she said.

Bob Mason, another Mercy representative present at the meeting, said that the CEO serves at the discretion of the board and if there were issues with the performance of the administrator, it would be quickly addressed.

Trustee John Hemingway asked when the contract would take effect if was approved. O'Connor said it would become effective immediately.

"We would work with you on how to transition," she said.

Trustee Don Bottorff said he felt the agreement was necessary to give the board guidance in the increasingly complex world of health care reimbursement.

"Regardless of who wins the election, there are going to be reduced dollars available and we need to have some help in managing that," Bottorff said. "Some type of arrangement for support is necessary and desirable, because I don't know what kind of administrator in these days and times, would take a job without some assurance of support and backup. I think it would effect the quality of people that would have available to us in the future as administrator."

Bottorff said he was sold on the idea of the affiliation agreement.

"At some point we need to work through this," he said.

Termination clause

He said the contract has a 90-day termination clause that the board could implement if it was unhappy with its relationship with the administrator or Mercy.

"I think that clause makes us better partners," he said, adding that the clause takes care of many of the concerns board members had voiced.

Bottorff did voice concern over the what he said was lack of board control of expenses, salary increase or severance packages for the CEO.

"It appears that to me under the language of the contract, that's unilateral. We find out about it after the fact or they (Mercy) tells the chairman about that," he said. "I have a vote and I'm not about to delegate it to the chair or Mercy."

Bottorff said that as long as Mercy didn't spend "a dollar of our money without prior authorization of the board," then he would support the agreement.

Chairman Carroll Ose said he would support the agreement and didn't have a problem with who wrote the check for the CEO.

"I think we need the management advice," he said.

"I can appreciate the need for their support, but I really think if we vote this through you'll have taken the present administrator and thrown him under the bus," said Hemingway. "That's basically what you're going to do if you vote in favor of this, in my opinion."

O'Connor said Palmer Schneider, the current administrator, could be the CEO, if he wanted to be an employee of Mercy.

Witt said that the document represented a multi-phase agreement and that he could not vote to accept the contract. Like Bottorff, Witt said he took issue with some of the language of the contract.

Bottorff said that if a majority of the board was in agreement with having the CEO be a Mercy employee, then the rest of the contract language concerns could likely be worked out.

"If the employment issue is a deal breaker for Mercy, and the majority of the board won't agree to Mercy hiring the employee, then there's really no point in spending more time on this," Bottorff said.

He suggested the executive committee work out the details of the contract with the Mercy representatives.

"If there are issues that cannot be resolved, then we need to look at another alternative," he said.

O'Connor said that the agreement had been approved by about 30 other network hospitals and she added that she was unsure if Mercy would change the language for just one hospital.

Bottorff had to leave the meeting before adjournment, but before he left, the board voted to have the matter reviewed along with the contract implementation timeline by members of the board's executive committee, with Nancy Dermand casting the only nay vote.

Executive committee members Ose and Hemingway agreed to meet with O'Connor Tuesday afternoon. Later in the afternoon, the hospital announced a special meeting of the board for Wednesday at 5 p.m.

Employees react

After the meeting, several hospital employees gathered in the hallway outside the conference room, many of them were visibly upset and some were crying. Several reached out to Ose to ask for a private meeting on the matter.

One employee, Margaret Dingman, a nurse at the hospital, said approval of the contract was long overdue. She also criticized Bottorff for leaving the meeting.

"I think this was a very important issue today and that it was very irresponsible of Mr. Bottorff to exit himself from the meeting. They should have come prepared to finish this today," she said.

"The employees of this facility have been unknown and in an uproar for too long. We need to finalize this," she said. "We would support the affiliation agreement with the CEO being an employee from Mercy."

"As far as John Hemingway's comments (about the CEO being thrown under the bus) that bus has already run and it didn't seem to bother anyone when it took our director of nursing out of here after 25 years of service," Dingman said.



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