PREVIOUS COVERAGE | Rural health exec’s pay tops in state

Manatee Rural Health Service’s contracts have employee, family ties

dmarsteller@bradenton.comAugust 23, 2010 

MANATEE — Providing medical services to the indigent and uninsured in Manatee and Sarasota counties has financially benefitted some of Manatee County Rural Health Services Inc.’s officers, board members and their families, records show.

The nonprofit agency has paid nearly $2 million in recent years to businesses owned by board members, officers, employees or their relatives, according to tax documents obtained by the Bradenton Herald. And its chief executive officer, Walter “Mickey” Presha Sr., has long been the highest-paid CEO of any such agency in Florida: His salary last year was $433,000 — $140,000 more than that of his closest counterpart, records show.

Agency officials defend the insider business dealings, saying those affiliated businesses either won competitive bids or offered unique expertise or services at a reduced cost. They also say Presha’s salary is appropriate, given his experience and the agency’s size and scope.

But Rural Health’s peers say they don’t do business with insiders, calling it a conflict of interest. And an executive compensation consultant who specializes in nonprofits says Rural Health’s payments to affiliated businesses are “large red flags” that call the agency’s integrity into question.

Conflict of interest?

According to tax returns filed since 2004, Rural Health has paid:

n $558,121 to John Lewis, a board member, for optometry services.

n $536,591 to The Pinnacle Group of West Coast Florida Inc. for construction, maintenance and repair work. One of its principals is Trina Presha-Rosier, Presha’s daughter.

n $344,766 to The Lawn Authority of Manatee County Inc. for lawn care maintenance at the agency’s facilities. Wardell Jackson, the agency’s vice president of support services, is a principal in the business.

n $387,673 to A to Z Complete Property Management Inc. for janitorial cleaning and maintenance services. It is owned by Chris Mullinex, the agency’s facilities director.

n $96,000 to R & L Healthcare Advisors, whose principals include Marc Lazarus, a board member, for consulting services.

n $44,242 to More Power Properties and Investments LLC, co-owned by board Chairman J. Garry Lowe, for storage of agency files and equipment and the purchase of a modular building.

According to a conflict of interest statement that board members are required to sign, Rural Health prohibits them, management and their families from having any “beneficial interest or substantial obligation to” any entity engaged in business with the agency. But some have been able to bypass that prohibition because of this loophole: “Unless it has been determined by the board, on the basis of full disclosure of facts, that such interest does not give rise to a conflict of interest.”

Board members say that’s what happened in each case.

“It’s always disclosed to the board, so we always have the opportunity to not do it,” said Juanine Lowery, a board member since 1984. “It hasn’t been a problem. It’s always been competitive.”

Jackson, Mullinex and Presha-Rosier’s businesses won competitive bids, which are reviewed by a board committee and approved by the full board, Lazarus said. Presha said he is not involved in reviewing bids for construction projects that his daughter might seek.

The agency chose to do business with the three board members’ companies because of special circumstances, agency officials said.

Lewis is one of Manatee Rural Health’s founders and has overseen its optometry services since the beginning. Lowe offered the storage space for less than what commercial storage facilities charged, then sold one of the storage buildings to Manatee Rural Health for a reduced price. And Lazarus has 36 years’ experience in the health care field, including as an executive at Sarasota Memorial Hospital.

They were hired because they provide needed services at a lower cost, thus allowing the agency to spend more money on patient care, officials said.

“Everything’s checked out and vetted,” Lazarus said. “The arrangements are as good as or better than what we could get on the open market.”

For example, Lazarus said his consulting firm normally charges up to twice the $4,000-a-month retainer that Manatee Rural Health is paying it. The consulting work that the agency asks him to do is beyond the scope of his position as a volunteer board member, he said.

But Pete Smith, of Smith Compensation Consulting in McLean, Va., said the scope of Rural Health’s insider business dealings raises questions.

“Most would say we shouldn’t do this, even if it’s right,” he said. “When you have that many, that’s not good. It makes you wonder how squeaky-clean things really are.”

He, as well as the National Association of Community Heath Centers, discourages agencies from doing business with insiders to avoid the appearance of a conflict of interest.

It is advice that most centers in Florida follow.

Only one other agency has disclosed any insider business dealings since 2004, according to their tax returns. That one, Health Care Center for the Homeless in Orlando, reported $182,800 in such business.

Several others said they prohibit such dealings.

“The center has adopted a policy where it will not have a business relationship with any companies owned by board members or members of management,” Tampa Family Health Centers said in a note on its 2009 tax return.

Top salary defended

Rural Health board members also defend Presha’s $433,000 salary, which makes him the highest-paid chief executive officer of any federally qualified community health center in Florida. His job performance, managerial skills and the organization’s complexity and size are all reasons he makes the top salary, board members say.

Presha, 66, oversees the largest federally qualified community health agency in Florida. It provides comprehensive medical services in Manatee, DeSoto and Sarasota counties, with a focus on the indigent, uninsured and under-insured. Its staff saw nearly 83,000 patients and delivered two out of every three babies in Manatee last year.

It has $45 million in annual revenues and more than 400 employees, including 75 doctors.

It also has paid its CEO the most since at least 2002, according to a Bradenton Herald review of tax returns filed by 27 such Florida agencies.

Presha made $433,463 in the fiscal year that ended Nov. 30, a $4,000 drop from what he earned in the previous year. Still, it was $140,000 more than the next-highest-paid CEO, head of Collier Health Services Inc.

“I know what I do,” said Presha, who said he took a pay cut to take the Manatee Rural Health job in 1984 and has turned down job offers with higher salaries since then. “If I could do it for free, I would do it for free. But I earn my keep.”

His salary is based on an annual review by the board. That review includes a salary comparison done by the agency’s chief financial officer and Presha’s job performance and success in meeting goals.

“If he doesn’t do a good job, he doesn’t get the compensation,” said Jeff Zimmerman, the CFO.

Lowery said the board has unanimously approved Presha’s salary every year she has been a member.

“Mickey doesn’t get paid enough for what he does in comparison to other health care organizations in the area,” she said. “I have no problem paying Mickey what we’re paying him because he gets results.”

It could not be determined if Presha makes more than the CEOs of Manatee Memorial Hospital or Blake Medical Center, as both refused to disclose their CEO’s current or past salaries.

According to a study by the Hospital & Healthcare Compensation Service, hospital CEOs in the Southeast region — Alabama, Florida, Georgia, Mississippi, Puerto Rico, South Carolina and Tennessee — made an average of $362,641 last year. The national average was $356,802.

Smith said Presha’s salary appears to be in line.

“$400,000 doesn’t sound all that unreasonable based on organizations that I’ve dealt with all over the country,” the consultant said.

But Smith questioned allowing Zimmerman to choose which agencies to include in the salary comparison that is used to determine his boss’ pay. “That’s a set-up that’s ripe for problems,” Smith said.

Duane Marsteller, transportation/growth and development reporter, can be reached at 745-7080, ext. 2630.

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