published Tuesday, February 22nd, 2011

Hutcheson ex-CEO gets full year's salary as severance


by Emily Bregel
  • photo
    Hutcheson Medical Center President and CEO Charles Stewart
    Contributed photo

After years of multimillion-dollar losses, Hutcheson Medical Center President and CEO Charles Stewart will collect $325,000 in severance pay, the Chattanooga Times Free Press has learned.

"I don't think they should have given him one dime," Ted Rumley, Dade County executive, said Monday. "I don't think there's a person I know of in Dade or Walker or Catoosa who would say he should have gotten anything."

The Times Free Press obtained Stewart's contract on Monday after the newspaper's lawyers threatened legal action.

The contract states that Stewart will not get a lump-sum payment but will have the money doled out in increments over the next 12 months.

County leaders and local doctors have been highly critical of Stewart's leadership at the county-owned community hospital in Fort Oglethorpe.

On Feb. 14, Stewart and interim Chief Financial Officer Gerald Faircloth resigned at a meeting of the board of Hutcheson Medical Center Inc., the private nonprofit company that leases the hospital building from the Hospital Authority of Walker, Dade and Catoosa Counties.

Members of the Hutcheson Medical Center board said they had to abide by the confines of Stewart's contract, which was formulated when Stewart was hired with the help of consulting firm Integrated Healthcare Strategies.

"It is a lot of money, there's no question," board Vice President Paul Chambers said Monday. "And Hutcheson has really experienced a lot of downturns. ... The thing about it is, it's a contract and, under the circumstances, that contract was honored."

In a Monday interview, Stewart said his employment contract, including the severance arrangement, is a standard contract that was developed at a time when Hutcheson was struggling mightily in 2005, he said.

"It was in very dire condition financially at this time," he said. "That's why I had to have that assurance coming in, that I would be provided an adequate severance package in the event that something like this occurred.

"I've worked 51/2 years working to the best of my ability to keep Hutcheson a viable organization."

Although the contract stipulates that Stewart would not receive severance if he terminated his employment contract voluntarily, Stewart pointed to a section in the contract that said a "change of control" at the hospital would allow him to resign, but still receive severance pay.

Hutcheson is negotiating a partnership agreement that would shift control of the hospital's executive hiring to Erlanger Health System in Chattanooga, Stewart said.

Details on the Erlanger agreement could emerge this week, Chambers said.

LEAVING UNDER FIRE

Stewart left amid concerns over the hospital's deepening losses and an exodus of loyal subspecialists and affiliated primary care physicians. Some doctors said the hospital administration had alienated loyal doctors, leading to fewer patient referrals to the hospital.

HUTCHESON NET INCOME

FY2006—Loss of $1.4 million

FY2007—Profit of $766,766

FY2008—Loss of $467,517

FY2009 (unaudited)—Loss of $7.3 million

FY2010 (unaudited)—Loss of $7.1 million

Source: Financial statements

County leaders also expressed dismay at news reports that Stewart pocketed a $69,000 bonus in a year that the hospital lost more than $7 million.

The economic recession has cut into the number of patients who can afford to pay for their care, increasing uncompensated care losses for the community hospital, Hutcheson officials have said. But hospital leaders also pointed to improvements in other nonfinancial measures at Hutcheson, including patient satisfaction rates and quality measures.

The hospital has ended the past two fiscal years more than $7 million in the red. The hospital lost $3.3 million in the first quarter of the current fiscal year, which began in October 2010.

The Times Free Press filed a Freedom of Information Act request to obtain Stewart's employment contract last Tuesday, but hospital officials initially refused to comply.

The newspaper is not the only one having problems getting public documents from the hospital board.

A financial adviser hired by the hospital trustees appointed by Dade, Walker and Catoosa counties filed a separate open records complaint with the Georgia attorney general's office in December, after the hospital tried to charge him $1,000 to access requested public records.

DOCUMENT DOWNLOADS

PDF: Stewart Contract

On Monday, the hospital's Executive Finance Committee voted unanimously to discuss all financial records in open public session during future Hutcheson Medical Center board meetings, which are held the fourth Monday of every month, said board Chairwoman Martha Attaway. The full board will vote on the recommendation Monday.

"We want to make sure everyone is aware of what's happening," she said. "We're trying to be more open and transparent."

Hutcheson's leadership has undertaken a search for a new leader, while Chief Nursing Officer Debbie Reeves acts as interim CEO.

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Should the ex-CEO of Hutcheson receive his severance pay?
about Emily Bregel...

Health care reporter Emily Bregel has worked at the Chattanooga Times Free Press since July 2006. She previously covered banking and wrote for the Life section. Emily, a native of Baltimore, Md., earned a bachelor’s degree in American Studies from Columbia University. She received a first-place award for feature writing from the East Tennessee Society of Professional Journalists’ Golden Press Card Contest for a 2009 article about a boy with a congenital heart defect. She ...

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littleoleme said...

Heck, why stop at $325,000? Let's give him a bonus, too, just because he's THAT good. Yeah, I would say it's understandable why officials want to keep the financial dealings of Hutcheson under wraps. It needs to all come out into the light of day for public scrutiny. It would be nice to think that there would be a full-blown investigation launched into this debacle, but unfortunately, this is the sorry way that business is conducted in our society. The fat cats at the top, regardless of whether their company prospers or not, make sure they are taken care of, while the 'little people' worker bees are scrambling trying to secure other employment so they don't lose their homes. Way to go, Mr. Stewart! You make me proud!

February 22, 2011 at 8:36 a.m.
hcirehttae said...

I've said this so many times in so many different ways, I'm blue in the face. I can't say it better, so I'll just repeat it. I don't see why ANYONE, big or little, kitchen worker or NFL player, should have a guaranteed bail-out or golden parachute or whatever you want to call it. Reward should be based on performance; that's the system of free enterprise or capitalism or whatever you want to call it. You can't set up a system of "winners and losers" and then say, well, some people or institutions are exempt from being losers because they're "too big to fail" or have jobs that are too important.

February 22, 2011 at 9:05 a.m.

I thought the hospital was in trouble financially?? Something isn't right here! I understand a severance pay, but $325,000? That's just crazy!

February 22, 2011 at 9:10 a.m.
Libertine said...

Just curious, why does the federal Freedom of Information Act apply here, over the Georgia Open Records Act?

Also, these contracts are ridiculous, but there is an industry, i.e. search firms run by former health care executives in most cases, who convince local boards this is standard and no big deal. If the number gives you pause when you are considering the contract, board members, it is a big deal and you don't have to sign off on it.

February 22, 2011 at 9:16 a.m.
garth06 said...

I think it is time to move on and focus on the future for Hutcheson Medical Center. What has been done has been done. It is time to move forward and ensure that HMC is successful again. This community and employees need this hospital.

February 22, 2011 at 10:35 a.m.
nowfedup said...

AH yes the rising cost of health care and the rising corruptions of the ruling class seem about on same race to the top. Wonder when the public will demand some integrity or shut down from the bands of brigands running about at C// levels, pillaging the nation?

Record seem to show the worse the job the higher the bailout or severance or both. Amusing how the "Boards" made up of fellow C// levels OK these contracts ad "we need the best" and then end up with huge payoffs for failure. But since most serve on each others "Boards" expect more of same.

February 22, 2011 at 10:37 a.m.
harrystatel said...

With Mr. Stewart's record and abilities he'll soon be on the Erlanger management staff—with a signing bonus.

February 22, 2011 at 10:51 a.m.
jpo3136 said...

Until The Upper Crust lands at the unemployment office with the rest of us, they will never get the message. All $325,000 should have gone as debt service to the poor, I think. Meanwhile, accounting practices and business ethics are at such an indescribable low that we'll never to be able to ascertain if there's any observable truth to anyone's claims of losses or gains.

When these guys quit or get fired, they'll be looking for another job, just like the rest of us. That departure should be financed that way, too. Massive severance packages in times of large losses simply don't make good business sense.

Adam Smith's selfish economy is over. It managed to fire and swindle everyone within reach. We need to get our community and our country back on track with a more moderate plan that permits reasonable business decisions.

Large payouts to CEOs may attract selfish successors, but that's no longer what our business community needs. We have such a large supply of selfish people that they are no longer in demand. Instead, we require competence in the realm of building value and equity.

February 22, 2011 at 1:01 p.m.
ceeweed said...

Mr. Stewart's contract was approved in 2005 when the hospital was already struggling. Seems like case closed to me.

Medicare fraud tops 60 billion a year... E.R. doctors receiving quarterly bonuses for running up the bill on patients... Madison Avenue blankets the air-waves with ads that promise everything from dry undies to wet eyeballs.

Corporate fraud against Medicare, when discovered, is levied a fine. No one admits guilt no one sees the inside of a jail. In fact, some go on to be elected Governor of Florida, others end up serving in the U.S. Senate representing the Great State of Tennessee.

I am proud that we are ranked 37th in the world, amongst developed nations, in our ability to deliver health care to our citizens.

February 22, 2011 at 2:24 p.m.
jdawgrules2 said...

This makes me sick. Instead of giving him a full years salary severance, give it to the employees,I'm sure they could use it.

February 22, 2011 at 6:27 p.m.
dave said...

PEEE-WHEWWW!!!! SOMETHING SMELLS "FISHY".

February 22, 2011 at 6:54 p.m.
cannonball said...

I think some board members need to resign.

February 22, 2011 at 8:14 p.m.
JToddFoster said...

Libertine, we ran a correction today. You are correct: It was the Georgia Open Records Act, not the federal Freedom of Information Act.

February 23, 2011 at 5:13 p.m.
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