Updated: Hospital board approves new contracts for CEO, CFO

Hazel Hawkins Hospital

Weeks before new leadership takes over on the board of directors, the San Benito Health Care District board approved renewing contracts Thursday for the chief executive officer and the chief financial officer.

The contracts will lock in the key officials for up to four more years, barring a termination that would result in severance payments.

According to records obtained by the Free Lance, CEO Ken Underwood has a salary of $336,793. An email from district administration says that Underwood is currently $59,694 below the average of similar hospital CEOs in his California peer group. That average is $396,487, according to the hospital documents.

According to the CEO employee agreement, the district would pay Underwood $336,740 per year under the proposed deal for another four years. According to the CFO employee agreement, the district would pay CFO Mark Robinson $257,296 per year in a new contract. That’s the same as his current salary, according to records.

The board can terminate the contracts at any time without cause, according to the letter. But if the district were to terminate the agreement without cause, the terminated employee would receive 12 to 18 months of severance pay. Another provision in Underwood’s contract would allow him to receive severance, under a voluntary resignation, if another entity gains majority ownership of the district.

The consideration comes nine days after Board President Gordon Machado’s loss in the election to Dr. Ariel Hurtado for the District 3 seat.

During the meeting, Hurtado asked the current board to provide the new board with written reports and guidelines in order to evaluate Underwood.

“What I’d like to see: Please give us written evaluations along with the rubric of all the guidelines I’m sure you have because that’s what every contemporary and modern hospital does have,” Hurtado said to the board.
“And if we don’t, that’s the problem because we’ve always been lagging behind. Unfinished business for six years? We need to get this hospital up to modern guidelines.”

Registered nurse Brandy Colbert said in a phone interview before the meeting that the CEO/CFO employment agreements were addressed last month, but the board had decided to push the agreements to the newly elected board. Then the employment agreements showed up again on the latest meeting agenda.

“Why is there an attempt to ram this through on a lame-duck board?” said Colbert.

The five-person hospital board will have a total of three new members, with the election of Angelina De La Cruz and Jerrianne Marie Hernandez to respective, uncontested district seats as well.

Directors Jim West and Parveen Sharma will join Machado in departing the board in December.

During the meeting, Machado said that the CEO/CFO employment agreements are mandated by state law and that he didn’t think the issue should be pushed to another board lacking experience working with Underwood.

Board member Parveen Sharma questioned why the current board was taking action at the last meeting before handing control over to the newly elected board.

“I have nothing against (Underwood) signing a contract, but I don’t think this is the right time,” Sharma said to applause from the audience. “I think the right time is when the new board takes over. We’re saddling them with a financial burden that they don’t deserve.”

After some back and forth with Machado, Sharma said she thought the new board is going to be intelligent and capable of passing the agreements.

“I’m not objecting to the contract. I’m objecting the timing of the contract,” Sharma said. “We should have cleaned it up a long time ago. This is not the time.”

District administration in the proposal compared local CEO salaries from the State of California Controller website. The regions compared include Lompoc ($393,957), Sierra View (347,036, Sonoma Valley ($370,455) and San Gorgonio Memorial Hospital ($474,500). Those four salaries add up to $1,585,948. Administration then divided the total by four to reach an average of $396,487.

In a letter from the Salinas-based law firm Ottone Leach & Ray LLP, attorney Gary Ray states he has prepared and submitted draft versions of the employment agreements for both the CEO and CFO for the health care district.

“These employment agreements incorporate standard terms and conditions used in employment agreements currently in place among other Local Health Care Districts in California,” Ray said in the letter.

The letter, dated Nov. 16, states the agreements are in full compliance with both the California Health and Safety Code and the California Government Code. The initial term of each agreement is for a two-year period, with an annual renewal that expires within four years of the effective date as required by the health and safety code.

Top 20 Special District Salaries Statewide from 2015
CEO of Beta Healthcare Group Risk Management Authority – $1,245,691
CEO of Washington Township Health Care District – $1,174,597
Staff Orthopedic Surgeon of Alameda Health System – $863,392
CEO of Palomar Health District – $841,220
Chief, Orthopedic Services of Alameda Health System – $791,343
CEO of Kaweah Delta Health Care District – $734,312
Chief Medical Officer of Alameda Health System – $708,430
General Counsel of Palomar Health District – $650,321
President/CEO of Salina Valley Memorial Healthcare District – $623,605
Staff Orthopedic Surgeon of Alameda Health System – $616,994
Staff Orthopedic Surgeon of Alameda Health System – $598,542
CEO of Tri-City Hospital District – $578,902
CFO of Beta Healthcare Group Risk Management Authority – $538,000
Urologist of Alameda Health System – $501,989
Senior Associate Administrator of Washington Township Health Care District – $474,688
CFO – Senior VP of Kaweah Delta Health Care District – $470,527
Client Services Vice President of Beta Healthcare Group Risk Management Authority – $464,218
Chief of Medical Services of Washington Township Health Care District – $458,070
CEO of Tahoe Forest Hospital District – $453,777
CEO and General Manager of Sacramento Municipal Utility District – $453,747

Top 20 San Benito Health Care District Salaries from 2015
CEO – Administration – $348,755
Vice President – Nursing Administration – $310,899
Staff Nurse III (Benefited) – Intensive Care Unit – $279,266
Vice President – Accounting – $272,954
Staff Nurse II (Benefited) – Emergency Room – $258,693
Staff Nurse II (Benefited) – Medical Surgical Floor – $249,157
Staff Nurse III (Benefited) – Same Day Surgery – $239,469
Staff Nurse II (Benefited) – Surgery – $234,026
Staff Nurse III (Benefited) – Surgery – $219,469
Nursing Manager – Surgery – $214,175
Manager – Physical Therapy – $205,835
Registered Nurse – Skilled Nursing Facility Mabie – $204,625
Staff Nurse III (Benefited) – Recovery – $202,770
Staff Nurse II (Benefited) – Medical Surgical Floor – $199,994
Staff Nurse II (Benefited) – Same Day Surgery – $198,356
Staff Nurse II (Benefited) – Surgery – $198,192
Registered Nurse (Benefited) – Skilled Nursing Facility Northside – $193,008
Staff Nurse II (Benefited) – Emergency Room – $191,646
Registered Nurse (Benefited) – Skilled Nursing Facility Mabie – $189,215
Staff Nurse III (Benefited) – Same Day Surgery – $186,075

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