A $4.2 million payout to Blue Cross and Blue Shield of Ohio trustees who retired in March has raised eyebrows among consumer advocates.
But news of the juicy perk apparently didn't stir board members at Saint Luke's Medical Center in Cleveland, even though one of their own might have shared in the bounty.
The hospital is directly affected by the Ohio Blues' decision to sell its assets to Columbia/HCA Healthcare Corp. Saint Luke's signed a 1994 affiliation agreement that gave the Ohio Blues the power to appoint all its board members starting in 1998.
In April, a Columbia official told MODERN HEALTHCARE*the sale of the insurer's assets would transfer control of the hospital to Columbia (April 8, p. 33). However, officials of Columbia and Saint Luke's said last week they are not certain that is the case.
Charles D. Clark, vice chairman of the board at Saint Luke's, is one of seven Ohio Blues trustees who retired in March, just after approving the Columbia deal. He'd been on the hospital's board for 10 years.
Consumer advocates charge that the $4.2 million in early retirement benefits and $19 million promised to other officials of the plan amount to payola for selling the plan's assets to Columbia.
In an interview, Clark declined to say whether he received an early retirement payment for his year of service on the Ohio Blues board. He said any money he received was payment for his services and his expertise.
"I didn't receive any payment for approving a deal with Columbia," he said.
According to a news release from the Ohio Blues, Clark is co-founder of Merchants Financial Group, a Cleveland-based corporate finance firm. He served as a consultant for the Primus Venture Capital Fund.
The payments were described in federal court Oct. 18 by an attorney for the national Blue Cross and Blue Shield Association.
The Ohio Blues declined comment on the payments, which weren't specifically disputed by the plan's chief counsel at the hearing.
Rumors of their existence had been reported in the local media since August, but the subject of whether Clark accepted a payment was never raised at Saint Luke's board meetings, said hospital spokeswoman Gina Goodwin. "It's not been considered an issue," Goodwin said.
MODERN HEALTHCARE requested an interview with Saint Luke's board Chairman Francis Beam but was told he had just left for a foreign vacation and was unavailable.
Saint Luke's is sponsored by the United Methodist Church, whose appointee on the hospital's board could not be reached for comment last week.
Whether or not the Ohio Blues sells to Columbia, Saint Luke's has decided to pursue an arrangement with the for-profit hospital giant. On April 24, the board voted unanimously to sell its assets to a for-profit joint venture that is half-owned by Columbia. The other partner in the venture, called Columbia-CSA Health System, is Cleveland-based Sisters of Charity of St. Augustine Health System.
That transaction is expected to be completed by year-end. Its value has not been disclosed. The Ohio Blues had one other hospital trustee on its board, Ivan Winfield of Mayfield Village, Ohio-based Meridia Health System. Winfield garnered much publicity for his decision to quit the Ohio Blues board in December 1995 during negotiations with Columbia, reportedly because he objected to the structure and expenses associated with the deal.
Winfield's attorney said that Winfield did not receive a retirement benefit from the insurer.