Tax filings show Central Maine Healthcare's spending during turmoil

Feb. 10--LEWISTON -- During his first nine months on the job, Central Maine Healthcare CEO Jeff Brickman earned a nearly $200,000 bonus -- money that was paid out the following year as Central Maine Healthcare faced three critical challenges: the loss of more than a quarter of its doctors to turnover, three oversight organizations registering concern about infection issues at the system's flagship hospital, and spending of millions of dollars more than the hospital took in.

For years the Sun Journal has examined executive pay, perks and certain expenditures by area nonprofit hospitals in Maine because of the impact of health care costs on the public. This year it focused on CMHC, whose newly public tax documents for fiscal year July 2017 to June 2018 reveal where the nonprofit spent its money as turmoil was starting to roil the health system.

Brickman's bonus was equal to about 30% of his base salary. Other findings: CMHC saw a 50% increase in the number of independent contractors it paid $100,000 or more. Former Central Maine Medical Center President Tina Legere received a year of severance pay after her resignation. CMHC paid Illinois-based consulting firm Kaufman Hall $6.2 million on top of the $4.3 million it was paid the year before.

CMHC is the corporate parent of Central Maine Medical Center in Lewiston, Bridgton and Rumford hospitals, and 50 medical practices from western Maine to the midcoast and throughout central Maine. With about 3,000 workers, it is one of the largest employers in the area.

Brickman was named CEO in June 2016 and took over that fall. He succeeded Peter Chalke, who retired after 33 years with the system, 14 of them as CEO.

Almost immediately after he started, Brickman made public that CMHC had lost a "significant" amount of money that fiscal year under Chalke. It needed, he said, a "transformational" plan for its future, including its financial future.

"I am working like hell to make sure that we can sustain this organization for the long term because of the community dependence on what we do for them," Brickman told the Sun Journal in December 2016.

A 2018 Sun Journal examination of CMHC's 2016-2017 tax records showed that the system's board of directors gave Chalke a $169,000 bonus the year he retired, about 30% of his base salary, despite leaving CMHC in financial trouble, according to Brickman. It also showed that Brickman received a $40,000 signing bonus.

At the time of that examination, CMHC board of directors Chairwoman Deborah Dunlap Avasthi told the Sun Journal that Brickman did not get a bonus the following year, which would have been fiscal year 2017-18. She said the no-bonus decision applied to the whole senior leadership team.

"We're following a rigorous process. There were certain goals and objectives Jeff had established with the executive comp team that were not met this year," Avasthi said at the time. "We did not pay out any variable pay bonuses."

The newly available tax documents for 2017-18 show that Brickman and senior leaders actually did receive bonuses that year. But according to CMHC, those bonuses were earned in 2016-17, but paid out in fiscal year 2017-18.

Brickman earned the most. His base salary was $659,000 and he received a $195,000 bonus. With retirement and other compensation, he made just under $1 million.

He was paid that bonus during a particularly tumultuous period for CMHC.

In January 2017, both the system's vice president of nursing and the head of CMMC -- Legere -- resigned. Legere's resignation left the flagship hospital without a permanent president for much of 2017. Almost all of the system's senior staff would turn over in the following months.

In the fall of 2017, CMMC violated a federal law that requires hospitals to evaluate and stabilize any patients who show up to the emergency department.

In December 2017, the Centers for Medicare and Medicaid Services announced it would penalize CMMC for high rates of infection and patient injuries. That same month, CMMC's accrediting agency found problems with the hospital's infection control policies and procedures, which CMMC later addressed.

In April 2018, the hospital monitoring group Leapfrog gave CMMC a grade of C for safety, making it suddenly one of the lowest-rated hospitals in Maine at that time, though it would later return to a grade of A.

During 2017 and 2018, employees throughout the system grew increasingly unhappy with leadership and doctors left in droves, leading to a 27.1% physician turnover rate. Weeks after that fiscal year ended, in the summer of 2018, medical staff at all three hospitals voted no confidence in Brickman, the president of Bridgton and Rumford hospitals resigned and CMHC's chief physician executive resigned.

The newly available tax documents also show that CMMC struggled financially throughout both 2016-17 and 2017-18, spending $10 million more than it took in each fiscal year.

CMHC did have positive points during that time. It hired a new CMMC president in the fall of 2017. It announced the construction of its Topsham Care Center in March 2018 and completed a $430,000 renovation project at CMMC that spring.

CMHC spokeswoman Kate Carlisle accepted all questions for this story on behalf of CMHC leadership. She said Avasthi, the board chairwoman, wanted to comment directly to the questions presented last week but could not "do it as thoughtfully as she would have liked on deadline, given her daily responsibilities." She said Brickman "was not asked to comment, but he would not necessarily respond to the questions you had."

Carlisle said CMHC's executive compensation program is designed to attract, motivate and retain highly skilled talent needed to fulfill the system's mission and objectives. She added that its executive compensation is "reasonable when viewed in light of the competitive market for executive talent."

She said Brickman's $195,000 bonus was "rewarded for performance and meeting goals."

When asked for specifics -- whether Brickman's bonus represented the full amount he was eligible for and what the goals were that he was supposed to meet -- Carlisle decline to comment, citing privacy concerns.

"I have let Deb (Avasthi) and Jeff (Brickman) know about these questions, though, and if they decide they can be addressed without privacy concerns, they will let me know," she said.

They did not respond in time for publication of this story.

Brickman's bonus was the largest of CMHC's executive team, whose bonuses ranged from $10,000 to $92,000 paid out in fiscal 2017-18. His bonus was also one of the largest of any health system CEO in Maine paid that year.

Tax documents show St. Mary's Health System leaders received no bonuses during that time. The CEO for MaineGeneral Health in Augusta received a bonus of $44,000 and the CEO for Brewer-based Northern Light Health -- then Eastern Maine Healthcare Systems -- received $52,000.

Of the largest health systems in Maine, only Portland-based MaineHealth gave its CEO a bonus bigger than Brickman's. William Caron Jr. received $260,000.

MaineHealth board Chairman Bill Burke said Caron and his team must meet specific goals, such as improved patient safety, successful project launches and good financial management, in order to get a bonus. Burke said Caron, who has been CEO of MaineHealth since 2000, performs so well that he has gotten most of the incentive money he's been eligible for in recent years, though he rarely, if ever, gets the whole thing.

"I don't remember paying out 100%. The goals are a stretch enough. We feel like we've made a mistake if they can get 100% because, again, that starts feeling like salary," Burke said. "I think in some contexts, bonus for people is just like money that falls out of the sky at the end of the year whether you did a good job or not, or it's profit sharing. In this case, we really want it to be things that are hard to achieve."

Brickman's bonus wasn't the only new information to come from the 2017-18 tax documents.

Legere, who resigned as CMMC president in January 2017, received $508,000 during that period. Of that, about $470,000 was classified as "other reportable compensation." Carlisle said that amount was severance -- 12 months of pay plus any unused paid time off -- as required under Legere's contract.

"That level is the industry standard for the president of a hospital," she said.

The documents also showed that CMHC increased the number of independent contractors it paid $100,000 or more, from 29 in years past to 46 that year.

In its tax documents, CMHC was required to name just the five highest compensated contractors. Without names for the other 41, Carlisle said it would be "nearly impossible" for her to say what they were all hired to do.

"I can tell you that during that particular time of transition/change management at CMH, we did use some independent contractors in interim leadership and other critical roles because of staff turnover. Pretty typical of an organization in turnaround," she said. "Additionally, we employed independent contractors in the IT space to facilitate our changeover in the electronic medical record system."

She said the health system is using fewer highly paid contractors now, though she said she could not give an exact number.

The five highest paid contractors included an Illinois company that provided IT services for $662,000, a Texas company that handled collections for $685,000 and a Wisconsin company that provided benefits administration for just over $1 million.

CMHC also paid international law firm Ropes & Gray, which has an office in Boston, about $1.3 million. On its website, Ropes & Gray describes itself as a "premier international law firm" that "routinely represents clients in high-profile matters."

Carlisle declined to say why the firm was hired.

"Many if not most organizations of our size retain outside counsel for expert advice on a range of issues," she said.

In all, CMHC spent $1.7 million on legal issues, according to the documents.

CMHC's highest paid independent contractor was, for the second year, Kaufman Hall.

Brickman told the Sun Journal in 2016 that he'd hired the consulting firm to look at CMHC's performance, quality and finances. He declined at the time to say how much the consulting group would cost, except to say it would be "a lot of money" and "a very significant investment in resources."

Tax documents show CMHC paid Kaufman Hall about $4.3 million its first year of hire, fiscal 2016-17. The latest documents for 2017-18 show the health system paid Kaufman Hall about $6.2 million the second year, for a total of $10.5 million.

"Transformation of an organization, like CMH's successful turnaround, often requires the careful use of expert guidance, which in our case came from consultants including Kaufman Hall," Carlisle said. "They helped us execute the deep financial and organizational changes we needed to make. The value of partnering with expert consultants can be measured by CMH's current improved state. We made necessary changes and now are pivoting toward growth and greater progress toward our strategic goals."

She said she could not say how much the health system has paid Kaufman Hall since.

Related Headlines

*

Who else got a bonus?

___

(c)2020 the Sun Journal (Lewiston, Maine)

Visit the Sun Journal (Lewiston, Maine) at www.sunjournal.com

Distributed by Tribune Content Agency, LLC.