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Hospital pays new CEO as ‘adviser’

Graham, Hufnagel will overlap during transition period

— Three Rivers Hospital is paying its next CEO, J. Scott Graham, $3,461 per week as a transition adviser before the commissioners can approve his employment contract next month.

The employment contract, which notes an$180,000 annual salary, was introduced at Monday’s board meeting.

Board Chairwoman Vicki Orford said the hospital was advised by the Municipal Research and Services Center that the contract can’t be ratified until the next meeting, set for 4 p.m. May 12 at the Hillcrest Administration Building, 415 Hospital Way.

Graham’s transition adviser contract is effective until May 12.

He told The Chronicle “it feels great” to be at Three Rivers Hospital.

“I’m really happy to be here,” he said Monday. “I’m thrilled with the opportunity to work with this board and the employees … It’s been a wonderful experience so far.”

Orford said the proposed contract doesn’t include incentive bonuses.

Commissioner Tracy Shrable said Graham will have regular benefits offered to other hospital employees.

At Coulee Medical Center, Graham’s most recent employer, his salary was about $201,000.

Current CEO O.E. “Bud” Hufnagel, who resigned, is paid $175,000. His starting salary in 2011 was $150,000 per year, and the board gave him a raise last year.

“I was directed by the board to go in and help negotiate the beginnings of a contract, then turn it over to a lawyer to actually do the contract with Scott,” Orford said, noting that

she arrived at the figure by “pulling up the Department of Health compensation report, the latest figures they have on it.”

Of the 87 listed hospitals, Orford said 77 percent of those CEOs will be making more money than Graham.

“I think we negotiated the best we could do, and we welcome Scott aboard,” she said. “In trying to get Scott established and Bud out the door, we ran across some things with MRSC and we needed to have where they could both be here at the same time, but we can only have one CEO at a time.”

Graham confirmed he has accepted the CEO contract and thanked the board.

As transition adviser, Graham’s pay was determined by dividing his current salary by week, Orford said.

“So far, everything’s going pretty well,” Hufnagel said of the transition, noting Graham’s familiarity with the area and physicians.

Hufnagel’s resignation was initially intended to be effective April 30, but he has offered to stay on through May 16, hospital spokeswoman Rebecca Meadows previously told The Chronicle.

Graham resigned at Coulee Medical Center on April 10, and that hospital’s commissioners voted to waive his 90-day notice in their April 14 meeting and terminated his employment effective immediately.

In his resignation letter, Graham cited controversy over the hospital’s attempt to renegotiate physician contracts and indicated his intention to sue Coulee Medical Center.

Although the board had given Graham direction to renegotiate physician compensation in his 2013 performance review, bringing salaries more in line with market value, he said he was met with “retaliatory conduct” from the board since the process began.

“To be clear, my separation from the hospital is effectively a constructive discharge, and not a voluntary resignation,” Graham wrote. “The board has engaged in a pattern of retaliatory conduct against me since I properly raised the important issue of physician compensation being out of compliance with federal law.”

Graham also accused the physicians of “tortiously” interfering with his employment relationship with the hospital.

“I do intend to pursue liability claims against the hospital district and the physicians over these issues. My attorney will be in contact with hospital counsel in the near future with respect to these claims.”

When asked Monday about the issues with his previous employer, Graham declined to comment.

In the resolution to accept Graham’s resignation, the board said it did not agree with Graham’s claims.

The Coulee Medical Center board launched an investigation last month into whether there was cause to fire him after physicians announced a vote of no confidence and called for his resignation with the backing of some other hospital employees and community members.

After witnessing his first official Three Rivers Hospital board meeting Monday, Graham said of the commissioners, “It’s obvious they want the hospital to succeed.

“I think they do a great job trying to manage the complexities of hospital governance.”

Graham was selected from a pool of 26 candidates. After The Chronicle took Three Rivers to task for violating the Open Public Meetings Act, the board took a step back and re-selected four finalists in a public process. That field was winnowed to the Top 2, Graham and Eugene Suksi of Crescent City, Calif.

The board named Graham as its top choice after public interviews with both finalists March 25.

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