Public hospital CEO in Wash. paid $1.1M in 2010

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RENTON, Wash. -- Top salaries at a publicly-funded hospital in Renton, Valley Medical Center, have become intensely controversial since two hospital district commissioners were voted into office. The elected officials call themselves reformers. Others in the community call them troublemakers.

The chief executive officer of the hospital, Rich Roodman, is the highest paid public employee in the state of Washington. Last year he made a base salary of $615,000. He also collected a bonus of $201,201 for meeting performance goals. On top of that he was paid $263,335 in a retention payment.

The five-member board of commissioners who set Roodman’s salary authorizes this annual payment as a way to motivate Roodman to stay on at the hospital. He’s been at the helm since 1983. Most companies provide a retention payment as a lump sum once the executive has fulfilled his or her contractual obligation; not on a yearly basis.

In total, Roodman earned $1,134,837 in 2010 to run Valley Medical Center, which is part of King County Hospital District No. 1. The district collects property taxes from 400,000 residents in Renton, Covington, Tukwila, as well as parts of Bellevue, Newcastle, SeaTac, Black Diamond, Maple Valley and some unincorporated areas of King County.

Roodman makes about 40 percent more than the chief executive officer of University of Washington Medicine and more than double what the executive director of the University of Washington Medical Center earns.

"Do we need to be paying this much? And the answer is no," said Anthony Hemstad, one of the reformer commissioners elected in 2008. “When corners are being cut every which way, public health tax dollars need to be going into maximizing the public health benefit, not the benefit of CEOs.”

Vascular Neurologist Dr. Aaron Heide is the other reformer commissioner. His six year term began last year.

"There are no justifications for making this salary in this current atmosphere," said Heide.

Heide and Hemstad say Valley Medical Center is run more like a private club than a public agency. They ran on platforms to make the hospital’s business more transparent and accountable to taxpayers. But the men say the other three commissioners have no interest in reforming anything.

"I've worked at many layers of government and I've never seen an institution run this way and it raises all sorts of warning bells for me," said Hemstad. "This is an old culture that doesn't want to change," he added.

An example of what the two commissioners say is problematic at Valley Medical Center is the difficulty they have in obtaining information. When they asked for detailed executive pay data, it took four months to obtain it. The numbers weren’t turned over until Hemstad submitted a formal request for public records.

“They certainly didn’t want this [executive pay] to be public, even to the commissioners. If they did they would have given it to us when we asked for it,” said Hemstad.

The KING 5 Investigators had no trouble obtaining salary data from the hospital after submitting a public records request. The reporters found it's not just the CEO, but all top managers at Valley Medical Center who pack home healthy paychecks.

Paul Hayes, the executive vice president, made $588,249 last year, which included a bonus of $154,275 for meeting performance goals.

The senior vice president of medical affairs, Kathryn Beattie, made $489,479. Those figures outpace the top boss at renowned Harborview Medical Center, which is also funded by tax dollars.

The in-house attorney for Valley Medical Center, David Smith, pulled in $352,196 in 2010, which makes him the highest paid public lawyer in the state. Smith makes about two-and-a-half times what Attorney General Rob McKenna is paid.

“Maybe in good times, absolutely. In bad times? I have a tough time when we’re talking about cutting staff and cutting services, and they’re still making more and more and more. I have a problem with that,” said Heide.

KING 5 attempted to conduct on-camera interviews with the other three commissioners and with CEO Roodman. All of them declined.  Board president Sue Bowman did speak with KING 5 by telephone. She said the compensation levels are important to stay competitive. They don’t want to lose top talent to other hospitals.

“I don’t know why Rich’s [CEO] pay is an issue? Commissioner Hemstad brings it up over and over again. I told him, 'Anthony, it is what it is,'” said Bowman. “I don’t think the five-member board needs to keep focusing on compensation. What are we doing for the community? That’s what’s important.”

Bowman also said the board carefully considers research presented to them by outside consultants and attorneys before voting on CEO compensation. Milliman, a healthcare compensation consulting firm, provides the hospital with a full analysis of market comparative data every other year. They consistently find Valley Medical Center’s pay structure is right on target.

John Hankerson, principal and strategic rewards practice leader of Milliman, wrote a memo about his findings to Roodman and Bowman dated February 9, 2011.

“We have consistently found that base pay and total cash compensation have been well aligned with [hospital goals] and that the magnitude of the incentive plan is consistent with other healthcare organizations that are striving to improve performance and quality patient care,” wrote Hankerson.

“We defined the appropriate market [comparable salaries] as ‘where VMC [Valley Medical Center] might recruit executive talent from or where it might lose executive talent to.’ In that light we have included such local organizations as Evergreen, Overlake, Virginia Mason to name just a few,” wrote Hankerson. “In our opinion, the current levels of incentives used at VMC are appropriate and consistent with best practice as well as smart management.”

Senator Cheryl Pflug, the ranking minority on the Senate Health & Long-Term Care Committee, doesn’t think public hospitals should be basing salaries on what non-profit and for-profit institutions pay.

“They pick and choose who they compare themselves to. A much more appropriate comparison would be the University of Washington,” said Pflug.
Pflug unsuccessfully sponsored a bill this session that would have banned public hospitals from coming up with salaries by comparing themselves to institutions that aren't taxpayer-funded, such as Swedish Medical Center and Virginia Mason.

“Seriously, is this the Mayo Clinic? No. This is not the University of Washington Medical Center either, which doesn’t pay these kinds of salaries,” said Pflug.

Controversy over money isn't new to Valley Medical Center. Four years ago the Washington State Public Disclosure Commission (PDC) fined CEO Roodman $120,000 after they found the hospital illegally spent tax dollars on mailings, postage and consultants to sway voter opinion on ballot measures in 2005 and 2006.

The PDC called it the biggest case ever involving a public agency misusing taxpayer dollars for a campaign. Valley Medical Center called it a misunderstanding.

In 2009 the Washington State Auditor’s Office found Roodman collected a troubling $1.7 million retirement payment that year, on top of the $900,000 salary he earned in 2009. The auditor found the commissioners authorized this payment “without explanation or public benefit." The auditor also recommended Valley Medical Center should “avoid including similar provisions in future contracts.”

The reformer commissioners say voters put them in place to enact change but it's impossible because they are consistently voted down, three to two.

"To be a little crude, if I were to ask to scratch my butt, it would be voted against three to two," said Heide.

Video of board meetings from the hospital’s website shows dysfunction and conflict within the five-member panel. During a meeting last year commissioners are seen bickering, talking over each other and raising their voices when Dr. Heide continues to try ask questions about executive compensation. He’s told by fellow commissioners that the item is not on the agenda and that he is out of turn and out of order.

"If there is an idea, there is a question, let it be asked, let it be discussed. And that has not been allowed from day one that I've been on the commission. Never. Just sit down and shut up? Correct," said Heide.

Commission president Bowman tells KING 5 Heide and Hemstad create needless trouble and get in the way of progress for the hospital.

“The dissension within the board is very sad because I don’t think they [Heide and Hemstad] understand healthcare,” said Bowman. “They are dead wrong [on most issues.] The things they propose, any board member would vote against.”