BEST OF 2016- As PeaceHealth Sheds Jobs, Departing Execs Receive Millions, Rank-and-File Raise Concerns

Financial disclosures show that PeaceHealth has paid $22.7 million in “separation benefits” over the past three years, while non-executive workers say they’re being wrongly fired

Pacific Northwest healthcare giant PeaceHealth has drawn headlines recently for a high-level executive shuffle that’s been presented by the Vancouver, Washington-based nonprofit as a series of voluntary departures. But documents obtained by The Lund Report, as well as interviews with current and former PeaceHealth employees, bolster the growing view that the Catholic health organization has been slashing staff from the executive level all the way down the chain.

For the highest-ranking workers of PeaceHealth, getting kicked to the curb often includes a bonus – or “separation benefit.” The company spent $22.7 million on these payments in the three-year period from June 2012 through June 2015, as at least a dozen executives left. Employees with less clout report terminations they see as unjust – with benefits cut off immediately and at least two workers reporting they were fired from their PeaceHealth doctors at the same time as they lost their jobs.

Employees had plenty of advance warning that cuts were coming: At the start of its 2013-2014 fiscal year, former PeaceHealth CEO Alan Yordy announced plans to boost core earnings by $130 million, by boosting revenue and cutting expenses. PeaceHealth’s decision to hire Beth O’Brien as its first chief operating officer was another warning sign, says a high-level official who spoke to The Lund Report on condition of anonymity. “Wherever Beth goes, she leaves a trial of bodies,” the insider said.

And despite an early effort to avoid layoffs – “Our first priority is to minimize work force reductions through responsible hiring practices,” Yordy said at the time – the company ultimately eliminated at least 500 jobs, including his.

Along the way, many of those who lost their jobs at an organization that says it’s guided by its Catholic values say they feel betrayed. “It’s a very money-hungry place,” said a former specialist in medication authorizations who was fired from PeaceHealth in 2015, and who says she was retaliated against for trying to point out its flaws.

Yet the cuts, and other operational shifts within PeaceHealth, have achieved their goal. The Catholic health system’s operating surplus has climbed from $9.8 million in its 2013 fiscal year, to $38.6 million in 2014, and $158.4 million in 2015.

Rank-and-file frustrations

A number of former rank-and-file PeaceHealth employees have cried foul after losing their jobs – and some have taken PeaceHealth to court over their terminations.

In 2015, registered nurse Sally Andrew sued PeaceHealth in federal under the Americans with Disabilities Act, claiming she had been fired from PeaceHealth St. John Medical Center after an on-the-job injury left her with limited ability to grip with her right hand. In her legal complaint, Andrew wrote that PeaceHealth accommodated her disability at first – then after six months told her she was being let go because her physical limits left her unable to perform essential functions of the job.

PeaceHealth responded to Andrew’s contention that her injury is a disability saying the medical organization “lacks sufficient information from which to form a belief about whether plaintiff is a woman with a disability,” though it did acknowledge her limited right-hand grip. The healthcare organization insisted it was acceptable to fire Andrew, because her injury left her unable to perform essential duties, and required her to shift her work to others within her department.

A trial in the civil suit is scheduled for 2017.

Registered nurse Jamie Farnham, filed suit last year alleging illegal employment retaliation at PeaceHealth Sacred Health Medical Center at Riverbend, starting in 2014. In court filings, Farnham says she was ordered to chart two separate surgeries on a single patient as one operation – although one procedure began and ended under the care of another nurse, who recorded start and end times, and a second procedure started after Farnham’s shift began. Farnham “refused to change the chart because she believed the requested change would violate Oregon State Board of Nursing practice standards, as well as federal laws regulating Medicare and Medicaid billing procedures,” her civil complaint reads. Several days later, she was told that refusing to change the chart would cost PeaceHealth Riverbend $20,000. After consulting with the Oregon State Board of Nursing, which she says backed her decision, Farnham refused multiple requests by higher-ups to change the chart. She was subsequently reprimanded at work, criticized for “tone and posturing,” given extra duties at work, and warned that supervisors were watching carefully for mistakes.

Responding in federal court, PeaceHealth argued that Farnham “relieved another nurse during the course of an ongoing surgery.” While the hospital agreed that the patient was removed from the operating room and then returned for completion of the surgery, it disputed the nurse’s contention that two separate procedures took place. “All of PeaceHealth’s actions were for legitimate business reasons,” it wrote in court filings.

Additional motions in Farnham’s lawsuit are due in court on April 15.

The Alaska Nurses Association sued PeaceHealth and its Ketchikan Medical Center last year over treatment of an unnamed nurse who was subject to disciplinary action. When the association sought to file a grievance through its union-negotiated contract, PeaceHealth rejected that effort.

In federal court, PeaceHealth argued that the union “failed to state a claim upon which relief may be granted, and that several legal doctrines bar the nurses association from continuing with its suit.”

Litigation is ongoing

Former admitting manager Robyn Boose is suing PeaceHealth Southwest Medical Center in Vancouver, alleging wrongful termination, sexual harassment and disability discrimination – and also claiming that PeaceHealth accused her of stealing client files, when she did nothing of the sort, according to reporting on the case by The Columbian newspaper.

Court documents say she complained to human resources after a supervisor shouted and intimidated her physically, while making demeaning comments -- with no apparent consequences to the supervisor. Then, in August, she was fired after obtaining a colleague’s password to assist with a computer problem, even though other employees were not disciplined for the same behavior. Later, PeaceHealth alerted employees to a client data breach affecting 346 files – “several employees deduced the letter referred to Boose,” The Columbian reported.

Details of that litigation were not immediately available to The Lund Report.

Boose’s suit, in some ways, resembles allegations made by a former Longview, Washington, employee of PeaceHealth, who says she’s working with an attorney but has not at filed a lawsuit as of yet. Kristen Celeski says she believes she improved the healthcare organization’s system of obtaining prior authorization prescription requests by integrating an outdated process with new third-party vendor tools. She was fired in June 2015, but continued to receive alerts about patient prescription needs at her personal phone number and email address. Access to information about her personal health benefits was cut off within two weeks, Celeski said, but documents she provided to The Lund Report show that for months she repeatedly asked PeaceHealth officials to cut off her access to private patient records, with no success – including on June 17, June 22, July 23, Aug. 24, Oct. 9, Oct. 11, Oct. 12 and Oct. 20. Eventually, the healthcare organization closed some accounts, but even then, Celeski found that some of the third-party web accounts she had used for PeaceHealth still allowed her to log in.

As of Nov. 9, Celeski could still access an Express Scripts PeaceHealth data base. The next day, Nov. 10, the FBI approached with a search warrant. Federal officials seized her laptop, handwritten notes, a cell phone, and numerous personal and work-related documents, and held them for more than a month, according to one FBI document – and then returned those belongings on Dec. 14, as another FBI document shows. Celeski has not been charged, and says she believes PeaceHealth officials lied to the FBI to prompt the search of her home and seizure of her property. In November, PeaceHealth issued a press release, describing Celeski’s access to records as a “patient privacy incident,” which officials now say affected 1,407 people. Asked to comment on her allegations, PeaceHealth re-sent the November press release.

Celeski says her own experiences just scratch the surface, and she knows of numerous employees who have lost their jobs after being sticklers for the rules or butting heads with supervisors. She has filed complaints with the Washington Attorney General’s Office, the Federal Office for Civil Rights and others. “I just want them to tell the truth,” she said.

Copies of text messages, emails and Facebook messages obtained by The Lund Report show that at least three other former employees – including one who processed prescription requests, and one involved in management – feel they were unfairly fired, though they have not so far filed legal complaints with the courts.

Big payouts at the top

While rank-and-file employees of PeaceHealth describe being personally and financially devastated by losing their jobs, victims of the high-level executive shuffle have fared better financially.

In a 2015 financial report filed with bond regulators, the nonprofit describes its “separation benefits” policy: “The corporation actively seeks operational efficiency improvements. These plans may result in employees becoming eligible for separation benefits upon termination.” In 2013, those payments were $7.3 million; in 2014: $7.73 million; in 2015: $7.54 million.

As previously reported by The Lund Report, a number of PeaceHealth executives have lost their jobs since Beth O’Brien was hired as chief operating officer.

Those who have departed include:

  • Alan Yordy, President, CEO and Chief Mission Officer
  • Tricia Roscoe, Senior Vice President, Strategy, Innovation and Development
  • Elaine Dunda, Senior Vice President, Clinical Value
  • John Hill, Chief Executive Officer, Oregon West Network
  • Kevin Wahlstrom, Senior Vice President, Chief Financial Officer
  • Ryan Ball, Senior Vice President, Chief Information Officer
  • Dr. Howard Graman, Chief Executive Officer, PeaceHealth Medical Group
  • Sy Johnson, Chief Executive Officer, Columbia Network
  • Kathy Dean, System Vice President, Communications and Marketing.
  • Dr. Michael Murphy, PeaceHealth Senior Vice President and Chief Medical Officer
  • Gordon Edwards, System Vice President of Finance and Columbia Network CFO
  • Stu Hennessey, Senior Vice President and Chief Legal Counsel.

Any compensation these departing leaders may have received to usher them out the door will ultimately be disclosed in nonprofit tax filings, but it could take a year or more for these documents to become available.

An internal organization chart shows the scope of the changes: of 15 top PeaceHealth executives listed on the nonprofit’s website, eight are held by people new to those positions within the past two years:

  • President and CEO Liz Dunne
  • COO O’Brien
  • Val Baciarelli, Senior Vice President of Operations and System Services
  • Steve Glenn, System Vice President of Governance, and Chief of Staff
  • Chief Information Officer Dan Hein
  • Chief Nursing Officer Victoria King
  • Nancy Steiger, CEO Columbia Network
  • Interim CFO Peggy Allen.

In an interview with the Portland Business Journal last year, PeaceHealth board chair Sister Andrea Nenzel said the recent high-level departures and executive turnover are voluntary, not a sign that the Catholic health-care organization is “cleaning house.”

A source close to executive decision makers at PeaceHealth scoffed at that assertion. “The Sisters and the system board are directly responsible for what has happened,” the source said, cautioning that more cuts and layoffs likely lay ahead – at the executive level, in middle management, and throughout the organization.

“The bodies keep piling up,” the insider said.

Courtney Sherwood can be reached at [email protected], or find her on Twitter at @csherwood

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