Health agency’s conflict of interest dilemma BRADENTON HERALD EDITORIAL | Nonprofit should halt all insider business deals

September 9, 2010 

With insider business deals, conflict of interest concerns and questionable bylaw changes swirling around Manatee Rural Health Services, the nonprofit organization must establish strong ethical standards to restore its damaged credibility.

Board members, agency employees and family members are reaping fat profits from contracts with the agency, which provides comprehensive medical services to hundreds of indigent, uninsured and under-insured people in Manatee, Sarasota and DeSoto counties, and ranks as the largest community health agency in Florida.

By receiving millions of dollars from Medicare and Medicaid annually, Manatee Rural Health must be held to high standards.

The messy ethical entanglements came to light in a Bradenton Herald investigation by reporter Duane Marsteller, with the first in-depth report Aug. 22 and another Sept. 5.

In the wake of the initial revelations, Walter “Mickey” Presha Sr., the chief executive officer of Manatee Rural Health, announced several positive steps aimed at reforming the organization. But those measures fall short of a complete ethical overhaul.

In that first report, Manatee Rural Health board members shrugged off conflict of interest charges with an unsettling ease. Marsteller examined the agency’s tax returns filed since 2004 and found some $2 million steered to businesses owned by agency officers, board members, employees or their relatives.

Canceling some contracts

Two recipients received more than $500,000 apiece over that time span. John Lewis, a board member, received $558,121 for optometry services. The Pinnacle Group of West Coast Florida Inc. pocketed $536,591 for construction, maintenance and repair work. One of its principals is Trina Presha-Rosier, the chief executive’s daughter.

The two blatant examples of conflict of interest involve agency employees who also hold contracts with the organization to provide work they oversee at Rural Health.

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

Chris Mullinex, Manatee Rural Health’s facilities director, owns A to Z Complete Property Management Inc., which received $387,673 for janitorial cleaning and maintenance services.

Presha plans to cancel those agency contracts once a procurement officer is hired to supervise major purchases and deals. Still, that raises the question about a corporate culture that found these two arrangements acceptable in the first place.

The hiring of a procurement officer will remove department heads and a board committee from the approval process, now ripe with abuse since those individuals routinely authorized agency contracts with one another.

Manatee Rural Health board members are required to sign a conflict of interest statement that prohibits such agency business dealings. Family members are also banned from engaging in business with the nonprofit.

Thanks to a loophole the size of some of those contracts, the board can wave off conflict of interest considerations by following this agency policy: “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 defend the loophole by citing full disclose and competitive bids as the reasons for accepting insider business deals. That rationale ignores the potential for a quid pro quo among board votes.

Then in 2006 the board changed the agency’s bylaws to eliminate term limits, thus maintaining the cozy business relationships and furthering the impression of an ethical lapse.

Board members had been restricted to three consecutive three-year terms with a two-year lapse before members could rejoin. Two board members have been seated for more than two decades each.

The National Association of Community Health Centers encourages agencies to steer clear of business connections with insiders over conflict of interest concerns. Marsteller also discovered other Florida agencies follow such a strict policy.

Manatee Rural Health should end these all-too-cozy business relationships, strike that loophole from board policy, re-establish term limits and adopt strong ethical standards in line with national and state codes of conduct.

CEO salary exorbitant?

Is Manatee Rural Health CEO Presha’s salary excessive? At $433,000 annually, which ranks as the highest among the state’s community health agencies, that’s certainly debatable. But Presha directs Florida’s biggest federally qualified community health agency, one with 400 employees and $45 million in annual revenues.

Marsteller’s in-depth report also compared Presha’s salary with hospital chief executives through the Southeast through a study by the Hospital & Healthcare Compensation Service. Last year’s average pay stood at $362,000.

The Manatee Rural Health board reviews and approves the chief executive’s salary annually, and members applaud his job performance and management skills in such a large and complex organization.

While Presha’s compensation does not appear to be out of line, the problem here is the agency’s chief financial officer comes up with the compensation survey used to determine his supervisor’s salary, an untenable situation. Presha plans to recommend to the board that an outside consultant perform that survey, a positive change.

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