Thursday, January 26, 2012
In April 2011, healthcare industry hired gun Lowell Johnson was brought in by the board of the Salinas Valley Memorial Healthcare System to do a very specific job: Get the board out of the mess they’d gotten themselves into and make the hospital pretty, fiscally speaking, as a merger or acquisition target of another hospital or healthcare system.
That mess included the unexpected retirement that month of longtime CEO Sam Downing – was he pushed by the vote-of-no-confidence letter signed by the medical staff, or did he jump? – amid revelations the board had authorized nearly $4 million in retirement payments to Downing in addition to his annual pension. Downing, at the top of his game, was earning about $790,000 a year, making him one of the best-paid public employees in the state; those numbers are all relevant because Memorial gets 1 percent of its funding from a special tax district. Despite the fact the 1 percent only amounts to a few million dollars a year, those are, in effect, taxpayer dollars the board is spreading around.
The mess grew from there. It included the finding that the board had authorized nearly $1 million on a report from McKinsey & Co., hired not through the board itself but by the hospital’s local law firm, Ottone, Leach, Olsen & Ray, that laid out the whys and the hows of the hospital locating a financially stable suitor in order to survive. (Disclosure: My husband took Anne Leach to prom, Salinas High ’89.)
The report, which was finalized last May, was leaked (sadly, not to me) to Salinas Californian reporter Jeff Mitchell. In a colossally dumb move, the board discussed hiring an investigator to try to find out who leaked the report. Mitchell has stopped writing about the hospital – I’m guessing he ticked off all the wrong people in all the right places.
That mess also included a protracted battle with labor that saw more than 600 positions eliminated between January 2010 and now, a one-day strike and threats of other day strikes, and a three-day lockout of workers by management. After more than a year of intense negotiations that got so heated a $600-an-hour hospital attorney from Walnut Creek at one point reportedly called union organizer John Borsos an asshole, the hospital and the union announced on Jan. 18 they had reached an agreement on a new contract. The union voted 388-1, with a 54 percent turnout, to ratify the contract that will run through August 2013. The terms have yet to be disclosed; the board votes on Jan. 26.
The union representing the hospital’s nearly 600 registered nurses agreed to a new contract that leaves their healthcare and retirement benefits intact, defers raises for a year and then includes wage increases for the next three years. The concessions will save the hospital about $2 million.
So it’s a typical situation. Labor pushes, labor concedes, and the hospital keeps spending money.
As the board waits to vote on the NUHW contract, we’re waiting for the results of a state audit requested by 28th District Assemblymember Luis Alejo. The Joint Legislative Audit Committee approved Alejo’s request after a marathon session that had hospital attorneys and board members tell Alejo, “Gee, if you just tell us what you want, we’ll give it to you.”
The report was due in December. Like most things Sacramento, they’re behind.
In the meantime, I have questions I wouldn’t mind having answered.
I emailed law firm partner Gary Ray (who my husband did not take to prom) last week and asked where I should send a Public Records Act request to find out the details of Lowell Johnson’s expense reports. He’s allowed to spend the money: Under the contract he signed with the board last April, he gets $10,000 a week payable each Friday, and is allowed to spend an additional $1,500 per week on expenses, including travel, personal automobile, meals and rent. I have the amounts he’s invoiced for – the report is on the mcweekly.com website – I’m extrapolating he’s taken about $50,000 in expenses – just not what he’s been spending the money on.
Ray hasn’t responded.
I’d also like to find out how many supplemental pension plans exist for SVMH executives, and who’s paying for those. There’s a fun little document called Supplemental Pension Plan 1 that includes eligibility for the hospital CEO and five senior vice presidents. The hospital has deemed those positions “critical to… long-term success,” so they established that plan. There’s also the Defined Contribution Retirement Plan 1, available to the six senior vice presidents. By my count, there are three other retirement plans specific to various executives.
As soon as Ray responds and I parse the details of the various retirement plans, I’ll let you know where the money is going.
MARY DUAN is the Weekly’s editor. Reach her at firstname.lastname@example.org and follow her at twitter.com/maryrduan.