The WhidbeyHealth Hospital Board of Directors selected a management services company to help manage the hospital district, provide an interim CEO, and help find a permanent CEO and CFO.
After a hospital attorney reviews the contract, the board is expected to hold another special meeting next week to approve the deal with HealthTechS3 and appoint Tennessee’s Michael Layfield as interim chief executive for health care. next six to nine months or so.
Under the proposal, HealthTechS3’s management service fee will be $350,000 per year for five years, although the hospital can opt out after three years. In addition to this, the hospital will pay Layfield a salary based on a rate of $375,000 per year, plus he will be compensated for travel, lodging, and meals; he plans to return home every two weeks, on company terms.
Layfield did not appear in person but spoke briefly at the meeting. He said he would meet with all key people in the organization immediately after the work began.
“We will diagnose what’s going on in the hospital, what’s working and what’s not working and we’ll work together to fix it,” he said. “It’s so simple.”
Layfield has faced his own controversies in the past as well as financial issues. He served as CEO of a Tennessee hospital roughly the same size as WhidbeyHealth Medical Center from 2016 to 2019; Towards the end of its tenure, the hospital was unable to pay employees, was forced to close the emergency room and lost power due to funding cuts, according to news reports.
In 2013, Layfield resigned from an Arizona hospital following a series of executive board sessions. He cited “baseless allegations” in his resignation letter, the Monticello News reported.
On Friday, WhidbeyHealth released a statement indicating that the hospital fully supports HealthTechS3’s board selection.
“They have a proven track record of successfully supporting integrated critical access healthcare systems, while ensuring that strategic goals and patient experience needs are met,” the statement read. “The Board of Directors, medical staff and executives believe this is the right partnership for WhidbeyHealth and the residents and visitors of Whidbey Island.”
At WhidbeyHealth, the hospital’s board of directors heard presentations from two medical services companies, HealthTechS3 and QHR Health, at a special meeting Wednesday afternoon. Dr. David Lemme, Chief Medical Staff, and Curtis Shumate, the new Director of Nursing, were invited to participate in the discussion.
Hospital board chairman Ron Wallin said Thursday the plan was for Layfield to start work next week. He said critical access hospitals are increasingly turning to management services companies to manage complex systems because of their ability to leverage professional expertise and national relationships.
“We want to keep the hospital running and provide health care to the community,” he said. He acknowledged that mistakes had been made, but stressed that the board was focused on moving forward in a positive direction.
The gravity of the hospital’s situation and the depth of management dysfunction have come to light over the past month, beginning with the medical staff’s vote of no confidence in CEO Ron Telles and two others. members of the administration. Shortly thereafter, Telles fired four other members of the management team; the action surprised and angered many people in the hospital.
The board fired Telles without cause during a special meeting in which an audit consultant described serious errors in the hospital’s financial reports. Acting CFO Jim Childers, who started work earlier this year, also sounded the alarm about the district’s serious money problems. The hospital has been turned down by two banks for line of credit loans to cover costs until hospital tax funds arrive in May, officials said.
Telles was both CEO and CFO until this year.
The deal with HealthTechS3 comes at a significant cost, but hospital officials hope the cost savings instituted by the company will more than offset the price. Wallin, for example, said the company could save the hospital up to $1 million a year in purchasing costs.
Still, the beleaguered public hospital district will pay hundreds of thousands of dollars more for administration this year, compared to last year, to address issues related to the management collapse.
In addition to the costs of HealthTechS3, the interim CEO and the eventual permanent CEO, the hospital must pay nine months’ salary of $430,000 per year to Telles, plus the cost of a new chief financial officer. Firing the four executives will eventually save the hospital $1 million a year, according to Childers, but the hospital must first pay them a severance package based on nine months of work.
During discussions at the board meeting, officials spoke positively about both companies. While they agreed that QHR Health’s proposed interim CEO seemed buoyant and personable, they lamented that he could only work for a few months and then a second interim CEO would have to be hired before a Permanent CEO can be found.
Childers, who previously worked for HealthTech, urged the board to hire the company. He said the company’s proposal explained precisely what its services were, while QHR’s was more vague.
In addition to finding a permanent CEO and CFO, HealthTech’s proposal says it will prioritize an operational assessment of the system; review staffing and productivity; enroll the hospital in the company’s group purchasing organization; and take a “deep dive” into organizational structure and labor expenditures.
Additionally, the company will provide expert support to the CEO, CFO, Board of Directors, Clinical Manager and more.
Layfield’s biography describes him as a “seasoned hospital CEO with over 35 years of experience in the healthcare industry” who has worked for for-profit and non-profit hospitals as CEO, Director financial and regional vice-president.
Layfield’s resume states that he has developed innovative new hospital product lines and is skilled in “physician alignment/recruitment, revenue optimization, patient empowerment, efficiency clinic, construction/upgrading of hospitals and development of teams”.
At the same time, he made headlines for running a hospital that ran into financial difficulties.
Articles in 2018 and 2019 by ABC News affiliates, NBC News, and Fox News described serious financial problems at Lauderdale County Hospital in Tennessee; Layfield served as CEO from 2016 to 2019. ERs were closed due to financial issues and employees did not receive paychecks, according to reports. The patients were forced to move to another hospital due to a power outage that Layfield attributed to “funding cuts”, Fox News reported.
In 2013, a Monticello, Arizona newspaper reported that Layfield resigned from Drew Memorial Hospital following executive board sessions, one of which allegedly included numerous doctors in violation of open meeting laws. . Two of the board members voted against the payment of severance pay. Although the cause of the controversy is unclear, Layfield wrote in his resignation letter that “these baseless allegations and my failure to manage effectively will end my productive years of employment,” the newspaper reported.
the News from Monticello reported that during Layfield’s five years as CEO, the hospital grew from less than $3 million in resources to over $10 million in cash and extended services. He cut 40 FTEs, or full-time equivalents, in his first year on the job.