Will reforms right Manatee Rural Health?

Agency says it has completed reform efforts; expert says time will tell if that’s enough

dmarsteller@bradenton.comDecember 19, 2010 

MANATEE -- Manatee County Rural Health Services officials say they’ve completed their reform efforts, but a medical ethics advocate cautions that only time will tell whether the agency truly addresses conflicts of interest and other problems uncovered by the Bradenton Herald.

The agency says it added two new board members, hired new janitorial and lawn service contractors and received an executive compensation study last week. That’s on top of previously replacing one board member and adding another, changing policy to require a two-thirds vote to do business with insiders, and hiring a procurement director, among other actions.

Agency officials, clearly hoping to put the matter behind them, said no more reform measures are planned in response to a Herald investigation into the agency’s financial dealings.

The newspaper found that board members steered at least $3 million in agency business since 2004 to themselves, agency employees or family members, declaring none of those deals were a conflict of interest. The Herald also determined, among other things, that the agency’s longtime chief executive officer, Walter “Mickey” Presha Sr., is the best-paid by far among his peers in Florida.

“I think we’ve covered all the issues that you (the Herald) brought up,” said Tom Nolan, a Bradenton political consultant hired to be Rural Health’s media liaison in response to the Herald’s reporting. “Everything’s been addressed.”

Not so fast, says Dr. Roy Poses, a Brown University medical professor and president of the Foundation for Integrity and Responsibility in Medicine.

While Rural Health’s actions are promising, it’s too soon to tell whether the measures are true reform, he said.

“In general, they’re clearly making some changes in the right direction,” Poses said after reviewing all of the Herald’s articles on Rural Health, as well as updates from last week’s meeting. “But right now, it’s not very clear that they’re gotten very far in that direction.”

Consultant: CEO’s pay OK

Among the agency’s reactions was to hire Pete Smith, a McLean, Va., compensation consultant, after he was quoted in August in the Herald as saying that Presha’s $433,000-plus salary “doesn’t sound all that unreasonable.”

Smith repeated that opinion in submitting a compensation study to the agency’s board Wednesday, saying Presha’s compensation is not out of line when compared to a dozen other health care agencies across the country. The agency did not make a copy of his report available, claiming employee privacy. Nolan provided the Herald with a list of the agencies used for comparison.

“It is a lot for Manatee County and a lot for a nonprofit,” Smith said of Presha’s salary during a telephone interview Thursday. “But his compensation is clearly reasonable, given the responsibilities and requirements involved.”

Smith also reviewed compensations for four other top Rural Health executives -- Ray Fusco, chief operating officer; Jeff Zimmerman, chief financial officer; Charlie Wells, vice president of intergovernmental affairs; and Dr. George Childs, chair of the surgery department.

Smith said all five executives’ salaries fell between the 25th and 75th percentiles when compared to those paid by a dozen other organizations, and thus were reasonable. According to its fiscal 2009 tax return, Rural Health paid $176,549 to Fusco; $185,835 to Zimmerman; $102,825 to Wells; and $348,879 to Childs.

For the comparison, Smith said he chose 12 other community health organizations throughout the United States that were similar to Rural Health in terms of size, services provided, number of employees and physicians, revenues and expenses, and other factors.

Those organizations included several hospital systems with as many as 3,800 employees and $86 million in annual revenues. Rural Health, which does not operate a hospital, reported 525 employees and $43.7 million in revenues in the 2009 fiscal year, according to its latest tax return.

Two Florida organizations were among those Smith used for comparison, but neither is a rural health system.

“The peer group that I felt most represented the market did not include other rural health systems in Florida because they’re smaller, far smaller,” than Rural Health, Smith said.

But Poses, while acknowledging he is not a compensation expert, wonders if that casts doubt on the validity and usefulness of Smith’s conclusions.

“I think it’s good they got this information,” he said. “Yet comparing these community health agencies to hospitals is a question because they’re not the same.”

The real measuring stick will be what the board does with the information, Poses said.

While Smith said Presha’s pay was at the upper end of the scale, Rural Health’s board still may feel that Presha deserves a raise to keep up with competitors, Poses said.

“Everyone tends to think their CEO is above average, and that just drives executive pay up and up,” he said. “It’s like Lake Wobegon: All our children are above average.”

Presha and Garry Lowe, the board’s chairman, declined interview requests submitted through Nolan from the Herald.

Two new board faces

Nolan said Rural Health’s board approved two new members Wednesday: Soila Abrams and James M. Wallace.

Abrams, who did not return telephone calls Friday, is a community health worker for the Manatee County School District, Nolan said.

She was named Florida’s Migrant Health Provider of the Year in 1995, when she was a Rural Health employee, according to Herald archives.

Wallace, 87, is an attorney and financial planner in Bradenton. He has been a practicing attorney in Manatee County since 1952, after graduating from the University of Miami’s law school.

He said he applied for the Rural Health board at Presha’s request because of the quality of medical care his employees receive from the agency.

“I think they do a wonderful job for the people of Manatee County,” Wallace said. “I’m really 100 percent for them.”

He and Abrams are among three new members to the board, which the agency expanded from nine to 12 seats in response to the Herald’s findings. The other new member is Victor Young, a Sarasota automotive dealer who joined in October.

A fourth new member, Bradenton pediatrician and former Rural Health employee Dr. Carlos A. Mendez, previously succeeded John Lewis, who resigned.

Poses said the latest board members will “bring new blood.”

“I hope they were chosen because they are really interested in supporting the (agency’s) mission, and not for other reasons,” he said.

Wallace said he wants Rural Health “to keep doing what it’s been doing, because it’s a wonderful organization.”

Other issues remain

Poses commended other Rural Health actions, including:

-- Terminating lawn and janitorial services contracts with two employee-owned businesses and hiring outside replacements. West Bay Landscape’s and Jani-King’s contracts take effect Jan. 1, Nolan said.

-- Hiring a procurement director, Tanita Montgomery, who joined the agency in October.

-- Revising the board’s conflict-of-interest policy to require a two-thirds vote to approve a business transaction with a board member, employee or their family members. Previously, a simple majority was needed.

“Again, they’re steps in the right direction,” Poses said. “Again, we need more details.”

But the agency has not addressed other questionable practices the Herald uncovered, including board members and executives netting an $850,000 profit on the sale of vacant land next to the agency’s administrative headquarters; board members who changed bylaws so they could remain in office after exceeding term limits; and its chief financial officer’s full-time residence in Illinois.

Nor are there any plans to address those issues, agency officials said.

“My client is looking forward in 2011 to focusing on its charitable mission, which is providing quality health care services to an underserved population, especially in this economy,” said Jonathan Fleece, a Bradenton attorney for the agency.

But Poses said Rural Health can’t escape the fallout.

“It looks like there were a lot of conflicts of interest and self-dealing, and that should not have been happening,” he said. “I think there will be lessons learned from this.”

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