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

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

February 22nd, 2011 by Emily Bregel in News

Hutcheson Medical Center President and CEO Charles Stewart

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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