In further fallout from its tax assessment crisis, Plumas District Hospital directors met in closed session Tuesday, Sept. 28, to terminate Chief Executive Officer Dick Hathaway's employment "in order to effectuate a change in leadership style." His last day was Sept. 29.
Hathaway's contract, which has been under renegotiation since February, had been extended to Sept. 30. He'd been working to get better terms for a new contract, including a heftier severance package and increased salary.
Over the past few months, a rift had developed between Hathaway and the hospital board, and talk finally turned from discussing details of a new contract to negotiating severance terms.
Hathaway's severance agreement provides him with a severance payment of nine months' salary and full benefits.
Six months' severance was provided in his contract. He'll be paid an additional three months severance, fairly standard in the healthcare industry, according to board president Dr. Mark Satterfield.
In addition, the extra severance provided a "bar to litigation," which could save the district a substantial sum if there were problems.
It also allowed the board to request a consulting agreement with Hathaway to "facilitate the transition to new management."
Hathaway also received an "earned but deferred bonus" of $25,000 for the fiscal year 2008 - 09. The bonus is required under his contract for receiving a good performance evaluation for that year.
PDH will also pay health insurance premiums for Hathaway and his wife for a period of 18 months.
The severance agreement acknowledges that Hathaway has also requested, and the board has agreed, to pay him $19,000 in accrued and unused paid time off.
In addition to the bar to litigation, in signing the agreement Hathaway and the board of directors agreed, "This is a compromise settlement of potential disputed claims."
After all the language aimed at avoiding litigation, it stipulated that in the event of disagreement, dispute or claim, the parties would first try mediation. If that didn't work, it would go to binding arbitration and not court action.
The agreement also said PDH has no obligation to make payment until the seven-day period, during which Hathaway can revoke his signature, runs its course.
Immediately following the marathon four-hour closed session during which the severance agreement was completed and a possible line of succession was discussed, the board issued a press release announcing the search for a new hospital head to begin immediately.
The board appointed Linda Jameson, chief nursing officer, as interim CEO for a period of time as short as a couple of weeks or as long as six months.
"The board also is looking into various other interim solutions, including the possibility of bringing in a temporary but seasoned healthcare CEO ... right here in our own region." That would be Tom Hayes, Eastern Plumas Health Care's CEO, who has managed a significant turnaround of that beleaguered hospital in a single year.
Hayes has been talking hospital cooperation since he came to EPHC a year ago, and this would give him a chance to fulfill that vision in ways that have been thwarted until now.
"He thinks in bigger terms," said Satterfield. "He believes one plus one can equal three. He's got credibility. He's done it."
Satterfield is referring to Hayes' 26-year tenure as CEO of Fremont-Rideout Health Group in Marysville and Yuba City. There, he brought Fremont Medical Center and Rideout Memorial Hospital into one system, adding a cancer center in partnership with U.C.-Davis, and long-term care facilities that included skilled nursing, assisted living and Alzheimer's facilities.
He also brought the hospital's reserves from $2 - $3 million when he arrived to $250 million upon his retirement.
According to Hayes, "PDH contacted me and asked me if I would help. I'd want clear expectations regarding what the board and community expect before I said yes."
In addition, he got the go-ahead from EPHC's board before he told PDH he would consider the possibility of working for both hospitals.
About the possibility of making that vital collaboration a reality he said, "Having the opportunity to have the two organizations work together for the benefit of both would be challenging - and a great opportunity."
In addition, he'd expect to "help give (PDH) ideas of options for leadership."
The person who takes on the permanent CEO role will have to contend with the aftermath of the Measure B debacle, still a volatile situation for the hospital and the community.
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