Cape Coral (Fla.) Hospital has signed a 90-day management contract with Quorum Health Resources to bring in additional staff to help turn around the financially troubled, scandal-plagued hospital.
Besides the 90-day contract, which includes an option for the hospital to extend the agreement six months, Quorum was hired to complete an "action plan" to stabilize the hospital's finances. Cape Coral, a 201-bed hospital, lost more than $10 million in fiscal 1994.
Terms of the contract weren't disclosed.
In June, Cape Coral's board fired three top executives and accused them in court documents of embezzling $761,000 from the not-for-profit hospital from 1989 to 1992.
Cape Coral attorneys now say they have uncovered two additional discrepancies in the hospital's financial records.
One, $450,000 was improperly withdrawn from an "executive payroll account" from 1987 to 1989, said Chris Rolle, an attorney for Cape Coral from the Orlando office of Foley & Lardner.
Two, the hospital cannot account for 8,500 troy ounces of silver residue collected from the radiology department during the past 15 years. The silver is collected from used X-ray film and was supposed to have been sold to recyclers, Mr. Rolle said.
There are no records showing that the hospital collected any revenue for the missing silver, Mr. Rolle said. During the past 15 years, the price of silver has ranged from $5 per troy ounce to $45.
The three fired executives are J. Michael Ward, former president and chief executive officer; Jay Murphy, former chief financial officer; and Daniel Edgar, former chief operating officer.
Allan Woodruff, an attorney for Messrs. Ward and Edgar, said he hasn't seen any evidence linking his clients with the missing silver. He described the money withdrawn from the executive accounts as "bonuses."
Mr. Rolle said the board had not approved bonus payments to the three executives from the executive accounts. He added that they weren't entitled to the money under their employment contracts.
Under its contract, Quorum has provided four employees through its intensive resource division to help Cape Coral regroup in anticipation of a merger with Lee Memorial Hospital, Fort Myers, Fla.
Quorum manages 263 hospitals, including four in its IR division, which provides interim turnaround management.
The proposed merger between Cape Coral and Lee Memorial was challenged earlier this year by the Federal Trade Commission. The hospitals won in trial court, but the FTC appealed the decision to the 11th Circuit Court of Appeals. A decision is expected in two weeks.