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CEO pact approval expected

New hospital leader would make $180,000 a year

— Three Rivers Hospital commissioners plan to ratify a contract and appoint new CEO J. Scott Graham on Monday, granting Graham a salary of $180,000 per year.

The board will meet at 4 p.m. at the Hillcrest Administration Building, 415 Hospital Way.

A complete copy of Graham’s contract was not available before press time Friday. The resolution being considered only includes his salary; no information about benefits or exit clauses should he be fired or choose to leave.

During the April 28 board meeting, Chairwoman Vicki Orford said Graham had already accepted the contract.

His new salary will be a step down from what he made as Coulee Medical Center’s top administrator – about $201,000 – but it’s higher than what outgoing Three Rivers CEO O.E. “Bud” Hufnagel makes, $175,000.

In the meantime, Three Rivers is paying Graham $3,461 per week as a transition adviser before the commissioners can approve his employment contract.

Orford said the recommendation came from Municipal Research and Services Center, so Graham could start transitioning into his new role.

Graham resigned from Coulee Medical Center on April 10, citing a combative relationship with the board and physicians. He said they had been engaging in “retaliatory conduct” ever since he began renegotiating physician compensation. The direction to do that had come from the board in his 2013 evaluation.

Coulee Medical Center commissioners voted to waive his 90-day notice and noted their disagreement with his resignation letter.

Graham previously told The Chronicle he had no comment on the controversy, or on the legal action he told the hospital he would pursue.

Hufnagel resigned in December following, but not as a result of, several contentious meetings about cutting costs, such as eliminating the cardiopulmonary rehabilitation and obstetrics departments.

At the time, Three Rivers opted to keep both after an outcry of hospital employees, physicians and residents. However, commissioners have since decided to close the cardiac rehab program, effective May 22, because physicians aren’t able to contribute the time to supervise patients.

The labor and delivery department is still up and running, and Orford said she’s working with Dr. James Wallace on suggestions to enhance services in a way to focus on women’s overall health.

Hufnagel’s resignation was effective April 30, but his last day will be May 15, spokeswoman Rebecca Meadows said.

Other agenda items slated for Monday’s meeting include further obstetrics review, an update to a market study the hospital completed in 2012, reviewing and accepting board bylaws, financial and staff reports and discussion of an audit by accounting firm Dingus, Zarecor and Associates of Spokane Valley.

At the last meeting, commissioners approved hiring Merritt Hawkins and Associates to help recruit new physicians.

Hufnagel recommended Three Rivers begin with trying to recruit two or three general practice physicians with experience in obstetrics.

“We know it’s going to be inordinately difficult to recruit family practice with OB, but I think we need to get into it first to figure out what’s in the market and what’s available,” he said. If that effort fails, he said the hospital should focus on hiring two family medicine providers and one obstetrician-gynecologist.

The cost to recruit new physicians can fall between $25,000 and $30,000, Hufnagel said, but the quicker the firm finds new hires, the less expensive it will be.

“The amount of revenue that’s ultimately associated with each one of those physicians is substantially more than that,” he said.

Chief Financial Officer Jennifer Munson reported a net income of nearly $220,000 in March, which Hufnagel said has contributed to “an $879,000 turnaround over the past year.”

“Year to date, this was the best first quarter we’ve had for five years,” he said.

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