Med center trustees consider ousting execs for consultants
By Rebecca Vesely, STAFF WRITER, The Oakland Tribune
Friday, April 30, 2004

Trustees of the troubled Alameda County Medical Center are considering a proposal to replace top administrators with a consulting group and pay the firm about 58 percent above executive salaries, according to the contract proposal.

In addition, trustees approved new contracts Wednesday with two other consulting firms to manage John George Psychiatric Pavilion in San Leandro and public relations for the medical center.

Under the terms of the proposed plan, Cambio Health Solutions would take over day-to-day operations of the medical center while conducting a search for a new CEO and other administrators.

Cambio consultants would replace interim Chief Financial Officer Robert Strawn, Chief Operating Officer Judy Armstrong and Director of Human Resources Sandra Osibin, according to the terms of the proposal presented to the medical center's Board of Trustees on Wednesday.

On Monday, the trustees announced they were firing interim CEO Efton Hall Jr., whose contract expires May 10. The other three executives are still employed at the medical center, a spokesman said.

Cambio was hired in February on an 18-month, $3.2 million contract to suggest ways to lower a $71 million deficit at the medical center and implement reforms. Cambio reports directly to the medical center's trustees.

To replace the four top executives, Cambio proposed that in addition to its monthly fee of $182,000, it would receive fees equal the administrators' salaries plus 28.5 percent, for benefit costs. The firm is also asking for an additional 25 percent of those salaries, according to the proposal.

Outgoing CEO Hall's annual salary is $220,000. If the deal is approved under the terms proposed, Cambio would earn an additional $117,700 per year above Hall's salary -- $337,700 total -- to act as CEO.

"That's just wrong," said Joe DeVries, staffer for Supervisor Nate Miley, who spearheaded a successful half-cent sales tax initiative in March to fund the medical center. "I really hope the trustees take a hard look at this."

Cambio's deal doesn't stop there.

Once Cambio hires a permanent replacement for these executives, the consulting firm would receive an "oversight fee." That fee would range from 35 percent of the hired CEO's salary to 10 percent of the director of human resources' salary, according to the proposal.

Cambio would also have authority to enter into or terminate contracts with outside consultants on behalf of the medical center, "except as the trustees may specifically authorize from time to time," according to the proposal. It could also purchase capital assets without trustee approval.

"The Board of Trustees should not write them a blank check," DeVries said.

Cambio's compensation proposal was met with outrage from unions representing workers, which will soon begin meeting to confer on a plan approved by the trustees Monday to eliminate 340 jobs. The medical center estimates it will save $14 million to $20 million due to the layoffs.

"On Monday they voted to fire 340 people, and on Wednesday they consider this?" said Bradley Cleveland, spokesman for SEIU Local 616. "It's such an insult to staff."

The medical center has been under fire for years over hiring high-priced consultants. In July 2003, PriceWaterhouseCoopers found that the medical center actually hired fewer consultants than the industry standard.

The medical center recently retained other consultants besides Cambio.

On Wednesday, the trustees approved a contract with KB Consultants for $15,000 a month plus expenses from March through October. The firm will also receive a rate of $200 an hour plus expenses for consultancy and management services of five contractors, according to terms approved.

KB Consultants was brought in to turn around John George Psychiatric Pavilion, which is under scrutiny from state and federal regulators over multiple violations, including safe staffing protocols.

In November, a longtime physician was murdered at the facility and a female patient has been charged with the crime. Last month, the staff executive in charge of bringing John George into federal and state compliance quit.

The trustees also approved a contract with Brown & Raleigh, a public relations consulting firm. The firm has been handling media relations duties and will be paid a total of $100,000 for services rendered from December 2003 to the end of June.

Plans to hire a staff public information officer appear to be on hold, as that position was included in the list of layoffs approved Monday by the trustees.

The medical center, which includes Highland and Fairmont hospitals and clinics in Oakland, Hayward and Newark, is experiencing declining state and federal revenues amid higher numbers of uninsured patients.

In March, voters approved a half-cent sales tax to underwrite the medical center, under the campaign slogan "Healthcare for All." The medical center will receive two-thirds of the estimated $90 million a year that will be raised by the tax.

Contact Rebecca Vesely at rvesely@angnewspapers.com.