New era beginning at Kern Health Systems [The Bakersfield Californian]

Nov. 26--Two years after Kern Health Systems made headlines after spending $8 million on an audit without the full knowledge of its board, hopes are high that a new CEO will help restore the public image and core mission of the taxpayer-funded agency.

After a months-long search, veteran managed care executive Douglas Hayward is expected to be named next week to replace former CEO Carol Sorrell.

A "head-hunter" organization was employed to find potential candidates, said KHS Board Chairman Paul Hensler. But of the 20-plus on the initial list, several said they could not relocate to Bakersfield due to upside-down real estate values in their homes. Three others dropped off the list because KHS could not ensure confidentiality.

"We formed a search committee of five board members," Hensler said. "We decided to interview three individuals. I was really impressed with all of them -- but Doug just stood out."

In interviews, it quickly became apparent that Hayward, 60, had done his homework, said both Hensler and fellow board member Al Wagner.

Hayward was fully aware of the controversy that surrounded KHS through 2010 and well into 2011. And he understood how the flawed culture of the organization contributed to its troubles, Wagner said.

"He seems like the kind of guy who's not afraid to turn the ship around," he added.

Hayward earned a master's degree in health services administration at the University of Michigan in 1976 and later attended the HMO Management Fellowship Program at the Georgetown University School of Medicine.

He would go on to serve as president and CEO of M.D. Health Plan of Connecticut, a physician-owned HMO serving 125,000 members. In 1995, he launched a startup HMO, WellCare Health Plan of Connecticut, that specialized in creating health coverage plans for the uninsured and underinsured small-employer group market, according to his resume.

After serving more than two years as chief operating officer at Preferred One Health Plan Inc., in 2005 Hayward became president of InvestCare LLC, a managed care consulting firm specializing in corporate expansion, product development and corporate turnaround. Most recently, Hayward has been working as executive director of Solano Coalition for Better Health in Fairfield, Calif.

Hayward could not be reached for comment over the Thanksgiving holiday weekend. He is expected to be confirmed by the KHS board of directors at a special meeting Dec. 1.

According to Hensler, Hayward's starting annual salary is $275,000. He will receive an automobile allowance of approximately $7,000 per year and will be eligible for Kern Health's employee health insurance coverage.

The decision to hire Hayward comes nearly five months after the resignation of Sorrell, who led KHS for 17 years. Sorrell had been the subject of media scrutiny, political criticism and public outrage for several months leading up to her departure.

It was an investigation begun by The Californian in late 2009 that revealed KHS had been spending hundreds of thousands of dollars per month to finance an audit of doctors' claims. Controversy exploded when it was learned the board was not aware of the huge cost of the audit.

Sorrell resigned in June, but not before locking down a severance deal worth more than $300,000. In an attempt to recover some of the $8 million audit cost, KHS sued Southern California-based Allied Management Group Special Investigation Unit, the firm Sorrell hired to audit the claims. That lawsuit is still pending.Created by the county of Kern in the mid-1990s, KHS operates two HMO-style health plans that serve more than 120,000 Medi-Cal and Healthy Families beneficiaries in Kern County.

Wagner said poor residents of Kern County are facing serious challenges in gaining access to health care. At the same time, KHS continues to operate at a surplus.

"I just hope we can get back on track to what we should have been doing long ago," Wagner said.

Hayward is expected to begin work Jan. 16.

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(c)2011 The Bakersfield Californian (Bakersfield, Calif.)

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