NUHW Supports Assemblymember Alejo’s Request for Financial Audit of Salinas Valley Memorial Hospital

May 3rd, 2011

Statement from the National Union of Healthcare Workers on Assemblymember Alejo’s Request for a Financial Audit of SVMH:

The Los Angeles Times reports today that last week, Assemblymember Luis Alejo requested a state financial audit of Salinas Valley Memorial Hospital. According to a letter by Alejo, the purpose of the audit request is to investigate fiscal mismanagement by SVMH’s Board of Directors, and the diversion of hospital funds by Board members “to organizations and causes of which they are personally associated.”

The National Union of Healthcare Workers, which represents nearly 900 employees of the hospital, supports the Assemblymember’s call for an audit.

Last week, the Los Angeles Times reported on the “extreme” public pension benefits of SVMH CEO Sam Downing, whose retirement this week will bring his pension payouts to nearly $4 million on top of his $150,000 annual disbursement. Downing’s $790,000 salary in 2009 made him the third highest-paid public employee in the state that year, according to an earlier Times story.

The Times editorial board has expressed its disapproval of Downing’s “seemingly outsized compensation,” noting that the Board “jumped through extra hoops to build Downing’s retirement kitty,” using creative accounting methods to evade IRS rules. The Monterey County Herald editorial board likewise referred to Downing’s pension as “much too generous, and certainly not reasonable, particularly at a time when layoff notices are flying around the hospital like aspirin and plastic bedpans.”

NUHW joins with the editors of both papers and with Assemblymember Alejo in questioning the hospital’s outlandish executive compensation practices. We would further add that outsized executive pay is not limited to Downing, but rather includes numerous hospital executives who are rewarded salaries of upwards of $325,000 per year.

In his letter to Assemblymember Ricardo Lara, Chair of the Joint Legislative Audit Committee, Assemblymember Alejo also cites the “apparent conflicts of interest” on the part of Board member Harry Wardwell in particular. As Regional President of a bank that holds over $20 million in the hospital’s cash, Alejo explains, Wardwell “may have used his positions to profit at public expense.” The letter further explains that “SVMH has made large donations to entities directly tied to Board members,” including the California International Air Show, which was co-founded by Board President Jim Gattis and for which Wardwell serves as Executive Director.

NUHW has repeatedly called for investigation of these questionable financial relationships, and we applaud the Assemblymember for heeding those calls.

NUHW members at SVMH have frequently pointed to the skewed priorities of Healthcare Board members who have advocated cutting medical staff at the hospital even while paying over $10 million in fees to Wellspring Partners, an out-of-state management consulting firm with a record of financial scandal that has already led to the bankruptcy of one community hospital under Wellspring’s control. Board members who have supported these decisions are pushing an agenda of private profiteering at the expense of patient care for the residents of our community.

NUHW supports the Assemblymember’s call for an audit as a first step in correcting the Board’s missteps and putting patient care at the top of the hospital leadership’s list of priorities again.

Read the letter here: http://bit.ly/SVMHauditrequest