Calif. Senate Mulls Bill To Require Contracts for Hospital Executives

The California Senate is considering a bill (AB 2115) that would require a written employment agreement when a local health care district employs or contracts with a hospital administrator or CEO, HealthyCal reports.

The bill -- by Assembly member Luis Alejo (D-Watsonville) -- was unanimously approved by the Assembly.

Background

The legislation was developed following a state audit of Salinas Valley Memorial Healthcare System, a public hospital in Monterey County. The audit found that Sam Downing, a former CEO of Salinas Valley, had worked without a written contract for 26 years.

Alejo's office said that Downing -- who retired in 2011 -- received more than $4.9 million in supplemental pension and severance benefits.

According to HealthyCal, Downing received most of the money before he retired. In 2010, Downing announced that the hospital's staff would be reduced by 5% to 6% while he was receiving the expanded compensation.

Reaction to Audit

Jim Gattis, president of Salinas Valley's board of directors, responded to the audit by focusing on quality of patient care. He said, "[T]he auditors noted that the quality of the patient experience did not appear to suffer as a result of our recent initiatives to reduce costs."

Marva Diaz, a legislative aide in Alejo's office, said that while Downing worked for Salinas Valley, the "board members changed, and there was a lack of oversight."

Diaz said that if Salinas Valley had a contract with Downing, it would have prevented "any lack of transparency."

She added that it is still unclear whether other health care districts employ CEOs without written contracts.

Support for Bill

Amber Wiley, senior legislative advocate for the Association of California Healthcare Districts, said, "This bill creates a uniform approach, which fosters good governance for all health care districts and the communities they serve."