Bigfork Valley Public Comments Committee meeting held in Effie

by Rebecca J. Passeri

The Bigfork Valley Public Comments Committee met with district residents on the afternoon of Dec. 12, at the Effie Community Center.

The meeting was called to order by Committee Member Gail Blackmer. She explained that Joel Karels, chairman of the committee, was unable to attend the meeting, so she would voluntarily assume the responsibility of opening the meeting. She said, “This meeting is held as an opportunity that the board of Bigfork Valley Hospital has offered the community to offer comments and the board representatives are here to listen and take your comments. That’s basically it. This is the approximate third meeting we’ve had of this type to allow public comments on topics of your choice concerning the hospital and the hospital district and its operations. We are going to just listen to your comments. We have chosen to use the venue of a public place and to move the location around so that it makes it more convenient for the people living in various areas of the hospital district. We met previously at the hospital itself. Now here we are in Effie and we have not scheduled for 2014 yet, but we can do that and publicize it for as long as the public feels they want to continue with this type of process. And we probably will go as far as Big Falls one time and probably down to Marcell and certainly back in the hospital a time or two. That’s basically all I have to say. I think we should probably do a round of introductions and then I will open the floor for comments. I will be making some notes on comments and Sally [Sedgwick], our public relations person, and Kyle [Hedlund] are also here and I am assuming that you’ve got some way to take some notes so we can do some research on the direct questions that we want to be responding to.”

Hedlund said, “I am recording it.”

Blackmer acknowledged that, then introduced herself and asked the others to do the same. There were 10 district residents present, five hospital board members, including Blackmer and Public Comments Committee Member Shelly Mai, and three hospital employees, including Sedgwick and Hedlund. Another district resident arrived shortly after the meeting began, and a second one arrived quite a bit later in the meeting.

The first to speak was Bigfork resident Gene Rajala. He said, “I would like to make a few comments, and I would like them to be read, verbatim, at the next regular board meeting.”

“Your personal remarks?” asked Blackmer.

“Yes,” said Rajala. “My personal opinions and comments. I don’t see anybody here that’s recording it manually, but I see that you have recorders, but I would like to have my whole comments passed on to the whole hospital board.”

Blackmer said, “Ok. Sure.”

Rajala continued, “I got a copy of the Professional Services Agreement between Bigfork and Acumen Health, which is Dan Odegaard, apparently. After reading this, I don’t know how many of you on the hospital board have went through and negotiated this or talked it over, or whatever. The first time you ever seen this was at the last hospital board meeting. I assume that might have been the first time that you seen it. It wouldn’t probably be presented in this type of a format and it wouldn’t be prepared for them this way. The comments I have to make about it, after I read it, is that it’s been prepared by an attorney, apparently, but with the input of the person that the attorney represents, or Acumen. It seems to me like that the person that presented this to you thinks he’s the only person that’s capable or available for this job. And I don’t see why the board should be dealing with a third person, like Acumen, when you are dealing with one person for the job. Your job is to hire him and your job is to give him direction, and you should be taking direction from the people here – or your constituents. After reading his contract – there’s a lot of legalese in it – and one thing I certainly don’t agree with is the five-year contract. I don’t think you should be deciding a contract and passing it to the next people who might be on this board next year, or the year after, or the year after, and tying their hands in any way, shape or form. I think a one-year contract should be more than sufficient and I think you should be having a contract directly with Mr. Odegaard and not going through Acumen. I don’t see why you should be making a contract with a third person for hiring the person that you are hiring. I think most of the board members here have probably never been employers and they are probably not aware of what employers’s duties and responsibilities are. If you are the employer, you should be giving direction to the person that you are employing. If there is going to be a contract or an agreement, the employer should be making it, not the employee, and presenting it back to the employer. The board members’ responsibility is to their constituents – the people they represent – not to the CEO or anybody in between. This looks to me like a document that should be rejected totally, and I think what you should do is – you should hire an attorney if you don’t feel qualified to write the agreement between you and your CEO – and if you need help with it, maybe you should have two attorneys. Maybe you should review a contract that other people have in this situation, because this contract, to me, has got nothing in it for the employer and everything in it for the employee. I think that’s it. I don’t think I can add any more.”

At this point, the furnace began to run and Blackmer asked Hedlund if the noise would cause his recorder to not pick up what was being said. He said that he felt it would, so one of the residents turned it down.

Jack Hillstrom of Marcell asked to speak next. Blackmer said, “I will be making a written statement to the Dec. 30 board meeting at a later date. But I am going to read part of what I THINK I am going to say. I briefly discussed this proposed agreement that Gene Rajala refered to with Matt Huju [Hospital Board Member representing Marcell District, particularily paragraph 10 on page 4, the anticipated employment agreement dated Jan. 1, 2014 reads: ‘Severance. In the event of the termination of this Agreement under Sections 5, 6(b), 9(a), or 9(b), Hospital District shall continue to pay Acumen Health the annual fee described in Sections 3(a) and 3(b) until the end of the then-current Term, but in no event less than one year (365 days). This Section shall survive the termination of this Agreement.’ I mentioned to Matt Huju that, in my opinion, the Hospital District, in the worst case, could have to pay the former hospital CEO, through Acumen for the annual fee of $265,740 times five years – it’s a five-year term, automatically renewable successive five-year terms. The maximum payment then, would be about $1,328,700, plus the automatic annual three percent increase. As written, it appears the severance package survives the death of the CEO, with the payments continuing to go to Acumen. At the same time the Hospital District would have to hire a NEW administrator at a market-based salary. Matt indicated that this was discussed in the Executive Personnel closed committee meeting, and that this paragraph was supposed to be changed to show a maximum severance payment of one year’s annual fee or at least a formula that greatly reduced the Hospital District’s exposure. This paragraph MUST be changed. Bigfork Valley, in its current financial situation, cannot afford to bear the risk of the severance package. We’d just go broke. The Western Itasca Review’s minutes reflect that no one at the meeting could remember which attorney reviewed the Professional Services Agreement. Matt Huju indicated that this agreement was drafted many years ago by an attorney and has either been amended or restated several times. He did not remember the name of the attorney or the firms name. I have also discussed this paragraph with Chair Gail Blackmer. She indicated that the minimum severance payment suggested is one year’s fee and further indicated that Mr. Odegaard’s attorney had prepared the draft document. She did not agree that the language used would permit a large fee as I suggested earlier in this correspondences. She may request that legal counsel representing the hospital review the draft and make recommendations. So far, to the best of my knowledge, the board has not had legal representation on this important and costly contract. I requested and received records of the employee contracts between Mr. Odegaard and the Hospital District, and the Professional Service Agreements between Acumen Health and Mr. Odegaard that were in effect Jan. 1, 2009 to the present time. As a result of that, when I received those recoreds, it goes all the way back to 2004, because the 2009 agreement was merely an amended portion of the 2004 signed agreement between Mr. Odegaard, at that time, and the District. There were eight fully packed pages of information in that 2004 Employment Agreement. They no longer exist. The agreement has been stripped of a lot of the things that SHOULD be in an employment agreement. The Hospital District – in the old one – will consider the Chief Executive Officer’s evaluation and the fiscal condition of the hospital when making its determination of the CEO’s annual base salary. I think that’s what the Executive Personnel Committee – I think that they are attempting to do what we want them to do, but I don’t think the result is happening. Way back when, in 2008, he was making $188,300. Now, this new contract is $265,740. The contract was amended in November, 2010, by 10 percent. I guess I just don’t see why there are such big raises, and I DON’T understand the Benefits. The Benefits paragraph shows health insurance, dental insurance, vision benefits. But then when I go to the Executive Committee minutes, which I also requested and received, it shows that prior to last year, at the end of 2012, not only did we – ‘we’ meaning the Personnel and Executive Committee – discuss a contract between Dan Odegaard individually with the Hospital District, it also, as it turned out, became another Professional Services Agreement between Bigfork Valley and Acumen Health. Again, I don’t understand why. I DO understand why he would prefer to be a corporation and take some tax benefits and stuff – that is not abnormal. It is done by school districts and a couple of other hospital districts throughout the state. So I am not trying to beat that horse. It’s OK. But why don’t we have legal representation from the Hospital District on one side and Dan on the other side. We only hire one employee, as the Board of Directors – that’s Dan. And we should do so very carefully. When he wants a raise or a change in the contract, we should talk to the hospital’s attorney, NOT to HIS attorney. If his attorney drafted this, as I think he did – and it certainly looks like he did – we should be responding by having our attorney review it and come back with suggestions. I suggest that at the Dec. 30 board meeting, this be tabled until that happens. And you can table indefinitely, because the contract that is already in place gives him an automatic raise of three percent, just like the new one does. So money wise, there is no difference. Just leave it alone and work on this contract until you make a mutual agreement that is satisfactory to both sides. I guess I will stop there.”

Blackmer said, “Basically, we are taking this information. But there’s a couple of things I would like to say. First of all, the Western Itasca Review articles are not the minutes. They are Becky’s interpretation of the recorded material that she has heard.”

“Ok,” said Hillstrom.

Blackmer continued, “Number 2, you did mention in there that, on the severance package, that he would be paid even in the event of death, and the Executive Personnel Committee said, ‘No. We’re not going to pay if you’re dead.’ And Dan said, ‘Of course you’re not.’ So that has been removed. It was more of a typo than anything. He was very agreeable to remove – I think it was Section 8 that says that the contract will terminate upon the death of Chief Executive Officer. And we all agreed to remove Section 8 from the package. I felt that I had to at least respond to those things. And I will say that – because you are both requesting that it be reviewed by a legal – somebody who is in fact representing the hospital – it was forwarded to an attorney as of last night.”

“Ok,” said Hillstrom. “I have another question. When reading the Executive Committee minutes, it mentioned that there was some life insurance purchased. Is that still on record?” When Blackmer indicated that it is, he asked, “Shouldn’t that be in this contract?”

Blackmer said, “It’s a decision of the – the hospital, itself is the beneficiary of the life insurance policy.”

“Yes,” said Hillstrom. “Is there another policy that is purchased where the beneficiary is his family or his wife?”

“Yes,” said Blackmer.

“Isn’t that a part of this contract?” asked Hillstrom.

“It doesn’t have to be part of that contract, no,” said Blackmer.

“What happens if he’s not with us? Do we keep paying him the premium?” asked Hillstrom.

Blackmer said, “Well, that would be something that our attorney can help us out with.”

“Are there other things like that, that he already has that should be in this contract?” asked Hillstrom.

Blackmer said, “Well, we’ll ask our attorney about that. It was good advice to get it sent to an attorney. It was sent out last night.”

Hillstrom asked for the name of the attorney. Blackmer told him, “It is Johnson, Killen & Seiler in Duluth.”

Hillstrom asked, “Does Dan have an attorney that he has used?”

Blackmer answered, “I don’t know who that is. That’s his personal attorney.”

“Has that attorney represented the hospital in the past?” asked Hillstrom.

“No,” said Blackmer. “I believe that is his personal attorney.”

Hillstrom said that he was finished for the time being, and would let someone else talk.

Committee member Mai said, “I will say that I think the points you have brought up are very valid.”

Hillstrom said, “I am not trying to turn things topsy-turvy.”

Mai said, “No, I know.”

“I just don’t agree with the way this is drafted,” said Hillstrom.

Richard Olson, a rural Effie resident, commented, “Our President of the United States don’t make that much money.”

Someone said, “But he makes it for the rest of his life.”

Blackmer said, “Salary structures are based on the market of similar positions in similar hospitals. We generally review the salary survey that’s put out by the Minnesota Hospital Association, a professional organization that surveys CEOs and breaks it down by budget size, type of hospital – and we are a Critical Access Hospital, which involves a lot more responsibility. So we go on the reported salary structures of the reported – the hospitals who choose to participate in that survey – and it’s broken down into three or four different categories and what’s the average? What’s the high point? What’s the median? What’s the low point? And we usually pick – well, we don’t pick – but we come to a term of what’s going on throughout the state.”

Bigfork resident Anne McGarry asked, “Aren’t Critical Access hospitals pretty limited? There aren’t very many of them.”

Blackmer replied that there are quite a few now. Hillstrom said that he thought there are at least 60 in Minnesota.

Blackmer said, “At first when it started out – the Critical Access – you had to be a certain number of miles from a bigger one, you could only stay three days. And most of those requirements are still in place, but there’s loop holes and so places that are still pretty close to another hospital have still been able to designate themselves as Critical Access. So there are quite a few.”

Hospital Board Member Roberta Votava said, “There are 79, when I last looked.”

Hillstrom said, “I am, I guess, semi-retired. But I have acted as a CEO for a bank for over 30 years – almost 40. And we used salary surveys also. One of the problems with salary surveys is that, oftentimes, in banking, somebody that owned their own bank compared to somebody that was running the bank for someone else, this person was very, very highly paid, and this person was medium, so to speak. In the case of the Critical Access hospitals, is there a situation like that where maybe one or two of them are very highly paid and most of them are in the middle, and then you have chosen a place that’s too near the top?”

Blackmer asked Jennifer Drotts, a hospital employee, “Jennifer, do you know how they construct that survey at all?”

Drotts said, “No. I request a copy of it for Carol [Carol Mills, District Hospital Board member). But how it is constructed, I don’t know.”

Blackmer said, “Most hospital systems – and I am just guessing here – that would have the high pay are probably not eligible for the – the highest paid in the state – the Abbott Northwesterns.”

Hillstrom said, “Common sense tells me that you are right. But let’s say that the highest paid person – I have not seen the surveys, so I am just using numbers – let’s say the highest paid person is making $400,000 and the lowest one is making $125,000. And then there is so many ways to make a survey and show the results that it’s hard for most people to figure out just what they are trying to do. So if the bulk of those people are in the middle and are making about $200,000, are you selecting from the median? Or are you going higher than that? Where are you taking the salary from?”

Blackmer said, “Well, we are accepting a salary as presented in a contract and then we are comparing it.”

“So he suggests the salary?” said Hillstrom.

“He also has access to the surveys, and probably knows what the market is,” said Blackmer.

“And why are you giving him three percent a year, no matter how he operates, no matter if he’s good, bad or indifferent?” asked Hillstrom.

Blackmer said, “Because it was requested.”

John Nathe, a resident of both Marcell and Bigfork, asked, “Is that same adjustment given to the other employees?”

“The hospital employees?” asked Blackmer. “Each year, salaries are looked at.”

“Is that adjustment given to the other employees?” asked Nathe again. “The three percent.”

“Well, that’s what I said,” said Blackmer. “Each year, if it’s possible to do a salary adjustment annually, that is looked at.”

“But his is cut and dry,” said Nathe. “Regardless of what happens. But the other people take what they can get.”

“Well,exactly,” said Blackmer.

Mai asked, “Do they not have a contract?”

Blackmer said, “There are contracts, also, within the hospital. There is an AFSCM contract.”

Nathe said, “Well, if you can give him three percent, you should give the rest of the people three percent.”

“Well, the union contract will be requesting their percent, and I don’t know what that’s going to be because they are negotiating that,” said Blackmer.

Effie resident Tom Boland asked, “Did I not hear you say that Dan negotiated that three percent?”

Blackmer repeated, “It was a request.”

Hillstrom said, “Going a little bit further past the contract – and if Mr. Odegaard was here, I would be talking to him about it, but I can’t – his expense account. Does he get a car?”

Blackmer said he does not. Hillstrom said, “So out of the fee that he accepts through Acumen Health, he pays for his own vehicle?”

Blackmer said he does. Hillstrom said, “However, he does attend lots of meetings, either here in Minnesota or out of state – as he should – I am not out to try to beat that down – but there are a lot of expenses that have to get paid. From what I have read, you probably sign off on his expense report.”

Blackmer answered, “I don’t sign off on his expense report. He probably gets some mileage reimbursement.”

“Does anybody sign off on his expense report?” asked Hillstrom.

“I will have to take – I will have to find that out from accounting,” said Blackmer.

Hillstrom said, “For example – I have had expense reports most of my life – if I went to a hotel and paid $85 a night, or I could choose one that cost $595 a night. What would I choose if nobody was looking?”

“Yeah,” said Blackmer. “Uh huh. Exactly.”

Nobody spoke for several seconds, then Hillstrom asked, “What do you anticipate for hearing back from that attorney, Gail – time-wise?”

Blackmer said, “I think, um – fairly quickly.”

“And will the board get a chance to review it before they are asked to sign off on it?” asked Hillstrom.

“I suspect – what I would – sign off – obviously, the contract is not signed yet, but it’s – it has not been ratified yet at a board meeting,” said Blackmer. “I’m thinking that the questions to be asked of the attorney is to review the contract in the best interest of the hospital district, discuss adding or subtracting language, and if that attorney in fact suggests adding or subtracting language, it would, I imagine, have to be rewritten, redrafted, go before Dan, come before the board.”

Hillstrom said, “Generally speaking, it would not be a swift thing, because it comes back from your attorney, goes back to Dan and he reads it and talks to his attorney and then – I don’t know if you are going to have the attorneys talking to each other or if you are going to be in between. Do you have any idea about that?”

Blackmer said, “I don’t have any idea.”

“Having done this in the past,” said Hillstrom, “More than likely, the attorneys will end up talking to each other about suggestions from both parties.”

“Probably. We really want to try to minimize on our side – the cost of,” said Blackmer.

Hillstrom agreed, saying, “Minimize cost, yes.”

Votava said, “For clarification, Gail, at the last open meeting, did Carol [Mills], when she gave her report – again, she had said something about the Minnesota Hospital Association Survey, like you did just now – is there a certain percentile that you are ranking him in?”

“Pretty close, yeah,” said Blackmer.

Someone else said, “It was the 75th.” [Editor’s Note: I was unable to tell who was speaking].

Blackmer said, “It was the 75th.”

“So he was placed in the 75th percentile?” asked Votava.

Blackmer said, “The numbers were looked at. Again, you know, he is presenting te numbers and we are looking at them in comparison to the 75th percentile.”

“So that number fits the 75th percentile,” stated Hillstrom.

Bigfork resident Joan Lester said, “I just have a couple of questions. Who picked the attorney from Duluth?”

Blackmer said, “It’s an attorney that was recommended by our Human Resources and has been used for a lot of employment-related things – generally speaking, he’s an employment – employment law.”

Lester said, “And my second thing is, was there ever a time when the board did not give him everything he wanted? For example, the economy is still bad up here, we have $15,000,000 in debt. Has he ever been said to, ‘Would you take .5 percent increase for this coming year?’ Does he always get whatever he suggested?”The content you are trying to access is only available to members. Sorry.

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