Graham signs for $180,000

New Three Rivers Hospital CEO takes pay cut for job

— New Three Rivers Hospital CEO J. Scott Graham has signed a three-year contract at a salary of $180,000 per year plus benefits.

The hospital released the contract Tuesday afternoon, a day after the board of commissioners approved it and five days after The Chronicle requested it be released.

The signing of the contract is the culmination of a hiring process that had to be restarted due to the commission’s failure to abide by the state Open Public Meetings Act.

Graham had been under a five-year contract at Coulee Medical Center, but left his position about a year early April 10. His ending salary there was about $201,000.

Coulee Medical Center commissioners waived his 90-day notice and terminated his employment immediately April 14.

Although Graham has declined to comment about his departure from Coulee Medical Center or his announced intention to sue the hospital, his resignation letter cited the board’s and physicians’ behavior as the driving factors.

“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,” he wrote. “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.”

Coulee Medical Center commissioners disagreed with Graham’s resignation letter claims.

Furthermore, Graham’s accusations came about a month after the Coulee Medical Center board had retained legal counsel to see if it had sufficient grounds to fire the embattled CEO.

At the time, the board had given a contractor authority to investigate whether it had cause to fire Graham. If cause was found, the hospital wouldn’t have had to pay salary or benefits to Graham following his termination. Without cause, he would have been paid one year’s salary and benefits.

At Three Rivers, his new contract includes a similar exit clause.

Unless Graham is fired for cause – meaning theft, “acts of moral turpitude,” negligence or

misconduct, breaking the law, failure to perform his duties or breach of contract – he is entitled to receive a severance package of one year’s salary and benefits.

Graham is also required to give a 60-days resignation notice to receive a severance package beyond unused vacation and paid time off.

Former CEO O.E. “Bud” Hufnagel’s contract had the same clause.

The contract includes a covenant not to compete, meaning Graham cannot work for, with or as an “independent contractor, consultant, agent or otherwise engage in any business or activity in which employer is engaged in that directly or indirectly competes with the business of employer.” It extends for a year past the end of his employment with the hospital, but only within a 30-mile radius.

In Hufnagel’s contract, the hospital set a radius of 100 miles.

Hufnagel signed a two-year contract in September 2011 for $150,000 per year. His base salary was increased to $175,000 when the contract was renewed last July.

Graham’s contract notes he could receive raises or bonuses following future annual performance reviews.

Neither Graham’s or Hufnagel’s contracts include specific costs of benefits, although Commissioner Tracy Shrable has said Graham is offered the same benefits package as other employees.

Both contracts include a cell phone provided by the hospital, reimbursement for business expenses and four weeks of paid vacation per year. Graham’s contract has an additional offer to pay for his mental health/counselor license and ACHE annual membership dues, as well as a relocation allowance of up to $10,000.

Graham said he and his wife, who own a home in Grand Coulee, are considering moving to within the hospital district.

On Tuesday, The Chronicle requested employment contracts and benefits information for Mid-Valley Hospital CEO Michael Billing and North Valley Hospital Linda Michel, for comparison purposes, but they were not received before press time.

North Valley confirmed Thursday afternoon that it was processing the request.

Hufnagel submitted his resignation letter last December 2013, stating that he and the board had differing views on how to help the hospital become financially solvent. His decision came in the wake of – but not in response to – local physicians’ call for his resignation following a series of contentious budget meetings that tackled potential actions such as cutting the obstetrics and cardiopulmonary rehabilitation departments. The cardiac rehab program will end May 22, at least until physicians are able to give the time to supervise it, but the hospital is keeping and looking into expanding obstetrics.

Hufnagel, who was listed simultaneously as a principal at CareSync Consulting of Seattle, personally advised Graham of the Three Rivers opening. He was also allowed to review the resumes of the 26 applicants for the job – although only the names of two candidates were released.

Less than two days after The Chronicle requested information about Hufnagel’s role in the health-care consulting business, how much Three Rivers paid the firm and his involvement in the hiring of Graham, the webpage showing his as a CareSync principal was removed.

Last week, Hufnagel noted that in his three years as Three Rivers’ administrator, he helped the facility reduce its outstanding warrants with Okanogan County from more than $3 million to about $1.6 million.

His last day was Thursday.


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