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Memorial Hospital enters summer of stalemate

Subheadline: 
As hospital partnership talks derail, many issues holding back progress in fixing finances

A surface calm between officials at the parent corporation of Memorial University Medical Center and the county-appointed hospital authority seems to be masking a stalemate over how to ensure the system’s financial stability.

The acrimony surrounding the stalemate may be preventing a dialogue that could spark a resolution.

Memorial and North Carolina-based Novant Health Inc. negotiated for five months before talks abruptly fell apart May 9 as Memorial’s board and the authority failed to reach an agreement on how to make it all work.

The deal with Novant would have infused $295 million into Memorial over the first 10 years of the agreement and cover the $163 million in bonds secured by Chatham County. 

And as the summer begins — with no clear solutions in sight and no public word on any new negotiations — the issues going forward are how to untangle Memorial’s flagging balance sheets, the relationships and leadership on both sides, how to overcome various accusations involving compensation and political motivations, and just how the ongoing gridlock will affect the community members that Memorial serves.

Harry Haslam Jr., a certified public accountant who heads Memorial’s 19-member board, has called the partnership between Memorial and Novant a do-or-die matter to ensure Memorial’s finances against mounting debt.

Maggie Gill, Memorial Health president/CEO who took the helm in April 2011 and immediately turned the red ink into black, finds herself in the middle.

Efforts by the Savannah Morning News to obtain documents to pierce the silence have been unsuccessful.

 

Maggie Gill’s leadership

Publicly, both the hospital board and its chairman, Haslam, and his counterpart at the Chatham County Hospital Authority, Don Waters, agree they want to do what is best for Memorial and the communities it serves.

“This is not about an individual,” Gill said Friday. “This is about doing what is best for Memorial, our team and the patients we serve. Achieving stability, gaining resources and advancing care is what we have all been working toward for many years.”

Discussions over the proposed deal with Novant have been marked by public discord. At a May 18 Memorial board meeting, Dr. Frank Rossiter Jr., a retired physician and community leader who sits on both boards, told board members he felt that the authority had “been marginalized to say the least.”

He abstained from voting on a resolution by board member and former chair J. Curtis Lewis III for a vote of confidence for Gill, her leadership team and hospital staff.

Two other board members present in the room, Dr. Gerald Caplan and Rex Templeton, also abstained. Charles McMillan, who also sits on both boards, broke and seconded Lewis’ motion.

Lewis, an attorney and proponent of Novant’s bid, took the hospital board chairman’s post in 2011 when Gill became president/CEO and worked with Gill and the board in the turnaround.

He has urged restraint by both sides and told the Memorial board on May 18 he did not think the Novant deal was dead.

 

Key issues in discussions

Key to the opposition appears to be a concern by at least some authority members of an alleged agreement in the Novant shared services deal, which allegedly benefited Gill’s compensation package.

Both Gill and Memorial Communications Director Becky Keightley have repeatedly and adamantly denied that any such agreement existed.

“Maggie Gill is a Memorial Health employee,” Keightley told the Savannah Morning News on May 23. “The Memorial Health board of directors is solely responsible for setting her compensation.

“She was not a ‘named consultant’ and is not paid by Novant Health. She is an ex-officio (non-voting) member of the Memorial Health Board. ... In addition, she was not a voting member of the (Novant deal) negotiating committee.”

Further, Keightley said, Gill did not receive money from Novant through Memorial, adding that, “Maggie Gill’s contract is independent of the Novant Health shared services agreement.”

In a joint message Friday afternoon to Memorial’s 19 board members, physicians and leadership, Haslam and Lewis reaffirmed their support for the Novant deal, then told the recipients that:

“Maggie Gill has no relationship with Novant Health. Ms. Gill is employed by and compensated by Memorial. ...The Memorial board uses an independent compensation consultant to ensure compliance with laws and regulations. Ms. Gill's compensation, including bonuses and incentives, is determined by the Memorial board with the advice of the independent consultant. ... As a longtime devoted team member, there is no question about Ms. Gill's dedication to the organization.”

That agreement has allowed Memorial to save more than $8 million in supply purchasing, service contracting and clinical best practices, the statement said.

But it also added that, “During the early period of the engagement, Memorial and Novant Health agreed that Maggie Gill would act as the key person in their joint effort to provide value for Memorial and the region that Memorial serves.

“This role was factored into the Shared Service fee negotiations to Memorial’s financial benefit.”

Gill headed an effort in 2011 to team with Novant on a shared services agreement, an affiliation that remains in place despite Novant’s walking away from the “membership substitute agreement” designed to forge a stronger affiliation.

A review of Memorial’s IRS Form 990s filed by nonprofits show that:

  • In 2012, Gill was paid total compensation of $797,732 including $278,750 in “Bonus & Incentive Compensation.”
  • In 2014, she was paid a total compensation of $952,477 including $245,250 in “Bonus & Incentive Compensation.”

Efforts by the Savannah Morning News to obtain documented information outlining Gill’s role and benefit, if any, through the state’s Open Records Act were denied on Wednesday by Memorial attorney Jeffery Wilson.  

On Friday morning, Savannah Morning News Executive Editor Susan Catron sent an email formally requesting that Authority Chair Waters ask the authority to conduct an audit “to determine if there were any contracts or proposed contracts between Novant and the Memorial CEO, and whether any payments were made by Novant either to the CEO or to Memorial and how those payments were used.”

A short time later, authority attorney Steven Scheer said: “The Authority appreciates your inquiry and dedication to the community. The Authority supports the public’s right to know. The Authority will consider your request promptly.”

 

Each side feels targeted

Meanwhile, Waters, president/CEO of BrasselerUSA, a Fortune 500 company, has complained he and fellow board members have been targeted by Memorial Board officials and others in the system.

Likewise, Gill apparently feels she has been targeted.

Adding to that have been independent efforts by Memorial physicians to enter the fray — in at least one instance urging fellow docs to vote for Tony Center in his challenge to Chatham County Commission Chairman Al Scott. Scott handily defeated Center in Tuesday’s balloting and won a second term as commission chairman.That email along with other efforts stem from innuendo that Scott was hampering the negotiations with Novant.

Scott has insisted that Novant provide written assurances that they would protect local taxpayers and key safety-net hospital services at Memorial and cover the county’s $163 million bond for Memorial from 2012 before any agreement could be reached.

He has remained above the fray and noted that the authority board members appointed by the county are all top-drawer individuals and capable of handling the negotiations without his interference.

Gill said she cannot stop people from voicing opinions, but she sought to ensure that Memorial letterhead or computers were not used to express political messages that could jeopardize the nonprofit’s status.

Wilson, the organization’s in-house counsel, sent an email dated May 12 instructing the entire Memorial team that Memorial’s status as a nonprofit corporation “does not support one political party or political candidate as an organization.”

Memorial Health email accounts were not to be used to “relay political support for one candidate over another. All personal tasks should be completed utilizing your personal email accounts,” his email said.

 

Armato strikes back 

In a May 9 memo that terminated negotiations, Novant President/CEO Carl Armato said: “The authority has indicated its intent to go beyond its historical role and has insisted upon inserting itself into the detailed oversight of Memorial operations, potentially resulting in inconsistent direction from two differing governing bodies.”

For their part, Waters and Art Dana — a retired certified public accountant and treasurer for the authority — remain outwardly supportive of the Novant deal, but insist that the authority is more than simply a $1-a-year landlord for Memorial and its properties.

They contend they were surprised — Dana said “blindsided” — by Novant’s decision to terminate discussions and said they would welcome a resumption of talks whenever Novant wanted.

They contend the authority — through its lease — is the trustee of what Waters calls Memorial and its half-billion-dollar asset owned by Chatham County and its taxpayers.

But it was clear early on that Novant was becoming frustrated with the delays.

On April 13, a conference call with Novant deteriorated rapidly, ending with Novant’s Armato giving Memorial until 5 p.m. Friday, April 15, to delete an objectionable word from the agreement.

The authority authorized Waters to respond with a letter of intent on April 15, which he did, but with slightly altered wording. Instead of the language “commercially reasonable” to govern any attempted changes in core services, Waters used “unreasonably withheld” in his reply.

The authority was created to represent the public when Memorial opened in 1955. Thirty years later, an agreement was reached that designed the authority to contract with the hospital and its board to lease the land and buildings from the county, the hospital authority said.

The lease is the only document the county can use to “require that these services be provided to the Chatham County community,” the authority said.

They have been insistent on guarantees for the safety net services — Level 1 trauma care, neo-natal ICU, indigent care and medical education — for the life of the 40-year lease Novant wants.

But Gill and Memorial officials contend the authority has continued to move the goal posts by changing language and altering demands in its interaction with Novant officials.

Gill said on May 10 that the partnership agreement was doomed by the authority repeatedly changing agreements intended to make the deal work.

“The constant modifying (by the authority) created doubts about if we really wanted the partnership to happen,” Gill said the day after Novant walked away from negotiations.

Meanwhile, a cascade of chatter has made the email and social media rounds, undoubtedly fanning the flames of discourse.

A May 18 email from Waters to authority members complained of “a dreadful series of events” the day before.

In that case, Amanda Payne, identified as the wife of Ben Payne, headmaster of the Savannah Classical Academy and a Memorial nurse, complained that when she rose during a meeting of Memorial officials and employees to ask “whether anyone in Memorial management was receiving compensation or a bonus from Novant,” she was booed and escorted from the room by security, the e-mail said.

Keightley, responding for Memorial, said Friday the nurse “was not escorted out.”

During the meeting she was asked to identify herself and Payne admitted she was video-taping the meeting in violation of policy, Keightley said.

She was asked to leave and did so.

 

 

MORE INFORMATION

Subject: MESSAGE FROM HARRY HASLAM and CURTIS LEWIS, Chairman and past Chairman of the Memorial Health Board of Directors

Dear Board Members, Physicians and Leadership,

The Memorial board has been asked repeatedly about the Novant Health Shared Service agreement and Maggie Gill’s relationship to Novant.  We are sending this communication to clarify any questions.

  • Memorial and Novant Health have had a well-known contractual relationship for Shared Services since 2012. This agreement allows Memorial to work with Novant Health to save money in supply purchasing, service contracting and clinical best practices. Memorial has benefitted significantly from the Shared Service relationship, saving over $8 million dollars. During the early period of the engagement, Memorial and Novant Health agreed that Maggie Gill would act as the key person in their joint efforts to provide value for Memorial and the region that Memorial serves. This role was factored into the Shared Service fee negotiations to Memorial's financial benefit.
  • The decision to select Novant Health as a strategic partner was a Memorial board decision based on the merits of the proposal. It should be noted that Ms. Gill is not a voting member of the Memorial board. The fact that Memorial's Shared Service experience with Novant Health was positive helped to demonstrate that Novant Health would be a good long term partner. The Memorial board remains convinced that Novant Health is the preferred partner for Memorial
  • Ms. Gill has no relationship to Novant Health. Ms. Gill is employed by and compensated by Memorial. Ms. Gill is accountable only to the Memorial board.  The Memorial board uses an independent compensation consultant to ensure compliance with laws and regulation. Ms. Gill's compensation, including bonuses or incentives, is determined by the Memorial board with the advice of the independent consultant. Bonus/incentive compensation is a standard in the market and derived from a “balanced scorecard” approach to system-wide goals; these goals include quality, service, financial and growth objectives.  As a long time, devoted Team Member, there is no question about Ms. Gill's dedication to the organization.

Thank you for your continued support.

My Memorial, Harry Haslam and Curtis Lewis

 

The timeline: 

  • September 2015: The Memorial Health board agreed to pursue partnership negotiations with Novant on an “exclusive basis”
  • March 29: Memorial board unanimously approved the deal in what Haslam said was “another step toward our goal.”
  • May 9: Novant unilaterally withdrew pursuit of the agreement
  •  May 9: Memorial President/CEO Maggie Gill said the partnership agreement was doomed after the county's hospital authority repeatedly changed agreements intended to make the deal work. 
  • May 9: Hospital Authority Don Waters said he was surprised by the Novant move, adding, “We trusted we were dealing in good faith to resolve the issues and move forward with the Novant deal and had no reason to think this was not progressing.” 
  • May 11: Art Dana, who is the hospital authority's treasurer, said the Novant decision had “blindsided” authority members and vowed to revive the discussion whenever Novant was ready. 

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