GOLD BEACH – The Curry Health District board of directors has informed CEO Bill McMillan they would not renew his contract and is expected to hire Quorum Health Resources of Brentwood, Tenn., to manage Curry General Hospital and hopefully stem substantial losses suffered over the past two to three years.
Quorum manages critical care hospitals throughout the United States.
“The board has chosen to have Quorum Health Resources manage the hospital,” CEO Bill McMillan said Wednesday. “As the result of that, I’m stepping down from my position. I wish the board, hospital and staff good luck.”
McMillan said he did not know when he would be leaving.
“I have a 60-day notice provision in my contract,” McMillan said. “I believe Quorum will bring in an interim CEO. I don’t know when that is. I will serve the board in the interim.”
Board member Mary Stansell said the board didn’t actually take any action.
“What we had done is we stated we are considering going with QHR to manage the hospital, but we had not yet even consulted with our attorney.”
She said that the board informed McMillan they were considering going with QHR. Stansell said that McMillan said he had a contract that requires a 60-day notice and six months’ severance.
“He then chose to say he was going to give that 60-day notice,” she said.
Stansell said the board will review McMillan’s contract again to make sure they are doing everything correctly.
“Quorum can provide what we want, but we haven’t even seen their proposal. We want to review what they can do for us,” Stansell said.
“We’re going to have another meeting as soon as we can to work through the process of what we’re doing,” she said.
“We’re considering it, but we have not yet made the decision. It has got to be voted on by the entire board,” Stansell said. “There was not a vote. We cannot do anything as a board without a vote.”
Board member Marlyn Schafer said that it was clear to McMillan that the board is going with Quorum.
“He said he would start clearing his desk right away. The issue is the attorney will have to determine how to word it,” Schafer said.
“There’s no way we will hire him back,” Schafer said. “We have to have a formal vote and a contract has to be passed. He knows we are not going to renew his contract. We made it very clear. It was all in open session. Quorum told us they would work out a contract and get it to us.”
Schafer said that, because of financial issues, the board thought they needed a change.
“Basically, we’re not renewing Bill’s contract. We will hire Quorum to preside over management for us,” Schafer said.
She said Quorum will hire current Chief Financial Officer Mark Sayler and would bring in an interim CEO within two weeks.
“We have the opportunity to pick our own CEO. We will have doctors involved, the Health Department involved, a big process with a lot of people involved,” Schafer said.
McMillan, who has a salary of $149,000 a year, has a provision in his contract that requires a 60-day notice and six months’ severance pay if his contract is not renewed.
Quorum, which is ending one year of its five-year contract as consultants to the hospital district, will not increase its charges to the district if the board extends its contract one year so there are five years left, Schafer said.
The health district was told by its auditors last October that it had lost a substantial amount of money during the past two fiscal years, which could endanger the district’s ability to stay in business.
The audit showed that the hospital district reported an operating loss of $1,132,000 in the last fiscal year, although Sayler noted that, with the property tax collected by the district, that is reduced to $936,000. The loss in Fiscal Year 2010 was $552,000.
The district, which operates Curry General Hospital in Gold Beach, Curry Medical Center in Brookings and Curry Family Medical in Port Orford, had operating income of $466,000 in fiscal year 2009.
The district said that much of the problem is the economy and decreased payments from government health plans.
The board hired Quorum as consultants to help it pull its way out of the losses.
The health district expected to save more than $1 million annually as the result of cutting back staff in December at the recommendation of its consultants.
McMillan said the district eliminated 23 positions in December. At the time, he said those cutbacks would save $928,000 in direct salary or $1.1 million counting benefits.
But the board recently learned it had not saved nearly as much as expected because most of the staff reduction was lower wage employees.
“We had a meeting, evaluation and some stuff,” Schafer said. “We have things to work out with our attorney. There will be a meeting on June 27 to pass the budget. There will be a special meeting between now and then. We need to consult with our attorney first, make sure everything is complete.”
Schafer said Quorum made a proposal to the board.
“Financially, we needed to have the experts. They manage critical use hospitals all over the United States,” she said.
Schafer said McMillan has said his management style is ‘Rip the Band-Aid off and get it over with.’ I believe he will be gone within two weeks. We needed to solve the problems financially. He understood. He didn’t have any comments at all.”
When Quorum first mentioned the possibility of taking over management, Schafer was assigned the task of checking with hospitals they manage.
“I called all over the United States,” she said. “I called South Carolina, I called Ohio, I called about six different hospitals and did background checks.”
Schafer said she did not speak to the people Quorum recommended at those hospitals.
“I called the hospitals and found out names of people on their board. I called the individual board members,” she said. “I got nothing but ‘It has saved us. We are thriving. If we don’t like the administrator they pick, they’ll find another one.’ ”
Schafer said the consultants have been telling the board they had problems.
“We knew it. The board woke up. I don’t want to cause any problems for Bill. I want to make it as amicable as we can. But it’s time for a change,” Schafer said. “Based on how things go, who we hire, we’re just looking for everyone to pull together.”
McMillan had good things to say about Curry General Hospital.
“I have enjoyed my time here,” he said. “I feel we have built a great program. I hope it continues to grow and prosper.”