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Talks begin in CEO hiring

Embattled Graham begins negotiating hospital contact

— Three Rivers Hospital has begun contract negotiations with J. Scott Graham to potentially take over as CEO this month.

Hospital board Chairwoman Vicki Orford said negotiations began Monday.

The board must vote on the contract in an open public meeting, and Orford said a special meeting will be scheduled once a draft contract is ready.

The hospital offered the job to Graham, the embattled current CEO of Coulee Medical Center, on March 25.

He was selected from a pool of 26 applicants that culminated in two finalists, himself and Eugene Suksi of Crescent City, Calif.

After more than two weeks, Graham has yet to return multiple calls from The Chronicle seeking comment on his selection or the issues facing him at Coulee Medical Center.

Three Rivers has about three weeks left to develop a course of action, whether Graham takes the reins or the board decides to go a different route.

Current CEO O.E. “Bud” Hufnagel’s last day is April 30.

While Hufnagel’s salary was raised last summer from $150,000 to $175,000, Graham is paid $201,578 per year at Coulee Medical Center in Grand Coulee, according to his 2013 performance review. Graham’s initial five-year employment contract in 2010 noted a starting salary of $150,000.

Three Rivers budgeted $38,930.75 in benefits for Hufnagel in 2013, but noted he waived group medical coverage that would have cost more than $6,500. The remainder was divided among vacation time, sick time, holiday pay, basic life insurance and retirement. The hospital also noted that sick and holiday pay “were not necessarily depleted to equal the full amount.”

The Coulee Medical Center board has sought legal advice on firing Graham for management-related issues at that hospital.

Commissioners have been firm in supporting their decision to offer the job to Graham, despite controversy at Coulee Medical Center.

According to his contract, if Graham is fired without cause he is entitled to receive one year’s worth of salary and benefits. If he is fired for cause, the district does not have any further financial obligations.

At least one Coulee Medical Center employee has issued a public resignation, stating issues with management; about 30 nurses are seeking union representation; and doctors issued a vote of no confidence in Graham and asked for his resignation last year.

Employees and community members have cited concerns about morale, losing their jobs and the hospital giving out $180,000 in bonuses to administrators and some providers in January for meeting goals.

Part of the reason for the contention, according to former board member Greg Behrens, was because physicians were unhappy about contract renegotiations.

“The doctors basically did not like going into new contract negotiations, and it was something we had to do, get their payment in line with reasonable market hospitals,” said Behrens, who resigned from the board March 20. “The doctors refused to negotiate their contracts, and to this day they’ve still refused to.”

Board member Betty Brueske told The Chronicle recently the contracts still had not been finalized.

Graham’s 2013 evaluation reveals that he was directed by the board, as one of his goals in 2014, to “bring physician compensation in line with industry standard.”

The board also signed a resolution Sept. 25 authorizing Graham to implement new compensation rates and take any measures needed to accomplish that, “including negotiation and execution of new agreements and termination or amendment of existing agreements.”

An accompanying memorandum established a formula for compensation of full-time providers: $43 per wRVU (work relative value unit), plus benefits.

To determine how to set salaries, Coulee Medical Center looked to 2012 data from the Medical Group Management Association, which provides compensation and productivity information every year, according to Chief Operating Officer Alan Wagner.

In the 2012 data, average provider compensation was listed as $215,666 for 861 physicians across the U.S., with average compensation per visit at $67.06.

According to records obtained by The Chronicle, two Coulee Medical Center physicians – Dr. Andrew Castrodale and Dr. Jacob Chaffee – have been paid a higher amount since 2010.

Castrodale was paid $314,520 last year, down from a peak $411,205 in 2011. He made about $117 per visit. Chaffee was paid $316,998 last year, down from $345,605 in 2011. He was paid about $201 per visit.

They also had less clinic visits than the average provided by Medical Group Management Association. The data suggested an average of 3,216 visits in 2012, while Castrodale saw 2,580 patients and Chaffee saw 1,378.

On March 10, the board passed a resolution to hire a third party, ECG Management Consultants of Seattle, to conduct a fair market value study to draft new contracts with Castrodale and Chaffee.

In February, board Chairman Jerry Kennedy asked the hospital’s attorney, Randy Stamper of the Spokane-based Stamper Rubens law firm, if the resolution amending physicians’ compensation could be edited or rescinded.

Another resolution passed the same day to seek consulting services from Jon Smiley to evaluate whether there is cause for the board to fire Graham. Behrens voted against the measure, while the others – Kennedy, Brueske, Kris Hare and Geary Oliver – voted in favor.

Stamper Rubens also serves as the legal counsel for Three Rivers Hospital.

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