A Louisiana lawmaker has drafted legislation to overhaul the governance of Slidell (La.) Memorial Hospital, after voters earlier this month rejected a proposed sale of the public hospital to Tenet Healthcare Corp. (April 14, p. 16).
Not-for-profit hospitals have been swept up in the tide of governance reform as boards nationwide have been called to task for corporate mismanagement and wrongdoing (March 24, p. 26).
Draft legislation circulated last week would require most of the hospital's nine-member board to have specific qualifications. It also would expand appointment powers to local wards and business groups; currently, the St. Tammany Parish Council appoints most of the board members. The chain of command would be changed so that the chief financial officer would report to the chief executive officer rather than the board.
Meanwhile, hospital and community leaders have begun to assess options for the capital-starved hospital, including other purchasers.
Critics have blamed poor governance for the hospital's financial problems and its unpopular decision to sell to Tenet. But in an interview with Modern Healthcare, even the bill's sponsor admitted last week that the idea that a governance overhaul would turn the hospital around is "probably more perception than reality."
"I want everybody to realize you may not have any solution just because you change faces on the board table," said the sponsor, state Sen. Thomas Schedler, a Republican from Slidell.
Schedler said constituents have been "clamoring" for a governance overhaul. The legislation is expected to be introduced by the end of this month. Schedler said a combination of strategies, including a tax levy smaller than one rejected by voters last year, along with a sale or equity joint venture and elimination of unprofitable services, is probably needed.
Schedler said he thinks Ochsner Clinic Foundation, New Orleans, which operates ambulatory services in Slidell and once proposed a merger with Slidell Memorial, "could be enticed to take a new look" at an equity venture. Ochsner made itself conspicuous by running radio and television ads opposing the sale to Tenet.
Anticipating a possible partnership, the legislation would allow the board to add members if it acquires a minority partner.
Schedler admitted that finding top-notch candidates could be easier said than done. He said strict requirements contained in the draft might have to be relaxed before the bill is introduced. For example, one board member would have to be an attorney who is a member of the Louisiana State Bar Association's health law section and has "considerable experience or expertise" in hospital and healthcare matters, according to the draft. Another would have to be a certified public accountant with at least five years of experience in the auditing and financial procedures of hospitals. Also mandated would be a banker, an insurance executive and two physicians selected by hospital medical staff.
Slidell Memorial Chairman Bob Schaefer said adding experts sounds good, but "where in heck are you going to find a CPA with five years experience in a hospital that wants to serve on a hospital board for (close to) nothing?" Board members earn $75 per meeting. Schaefer said the board has no lawyers or CPAs and has just one physician and one member with some experience in insurance. The only banker, former Chairman Al Hamauei, resigned earlier this month.
While supporting more requirements for board members, Hamauei said the hospital's financial problems can't be blamed on poor governance but rather on competition from for-profit facilities and bad advice from consultants who advocated investments in an HMO and physician practices.
Patrick Quinlan, CEO of Ochsner, said Ochsner's ads prior to the April 5 referendum were not motivated by a desire to do its own deal with Slidell Memorial, but rather to voice antitrust concerns, which were echoed by the Federal Trade Commission. Those concerns stemmed from the fact that Tenet operates Slidell's only other hospital. "We took a simple high road based on public policy," Quinlan said.