County works on hospital’s image

“Hopefully, we’ve removed the cancer that’s within the hospital,” Clark County Chairman Rory Reid said. “It’s given people an impression of the hospital that I don’t think is fair.”

Nearly a year ago, commissioners fired Lacy Thomas, the hospital’s once highly touted chief executive, after learning he was under investigation in connection with the funneling of money to friends in Chicago through contracts that are alleged to have required little or no work in return.

Days later, two of Thomas’ deputies, Chief Financial Officer Richard Powell and Chief Operating Officer Marlo Hodges, were suspended in connection with the allegations.

After the administrators were fired, the county conducted an audit and discovered more questionable conduct by Thomas. The audit, released in October, indicated Thomas approved pay increases for 123 positions or employees without authorization. He also promoted 81 other employees without permission, according to the audit.

The effect of the raises and promotions amounted to $2.3 million from hospital coffers between January 2004 and December 2006, according to the audit. Reid said Thomas regularly made personnel decisions without commissioners’ knowledge.

Thomas continued to reassure commissioners in 2006 that the hospital was financially stable and improving. But when he failed to provide reports backing up his statements, the board became suspicious in the fall of 2006.

“He would tell me the hospital was on budget; don’t worry, be happy,” Reid said of the 2006 conversations with Thomas. “At that point we didn’t believe him, but we were having trouble getting information.”

Late that year, as the commission considered firing Thomas, Reid received a phone call from Las Vegas police informing him that Thomas was under investigation.

“We were being lied to on a consistent basis,” Reid said. “It took us a while to figure it out, but when we did, we were told by the sheriff not to take action because it would compromise the investigation.”

In January, county finance analysts revealed that the hospital had hemorrhaged some $50 million during the previous two years.

Compounding the hospital’s troubles and further tarnishing its reputation was a criminal complaint filed in September that charged four UMC employees with theft, grand larceny and burglary.

The complaint alleged that between January 2004 and March, Thomas Hutchinson, Christopher Roth, Sime Perkov and Peter Panagos stole equipment from the hospital, returned equipment to home improvement stores and exchanged it for personal gift cards, and used company time and materials worth more than $250 for their own personal projects.

A preliminary hearing for the four men is scheduled for Dec. 18.

Critics have questioned how the criminal acts could have slipped by the commissioners, who serve as the hospital’s Board of Trustees.

Commissioner Bruce Woodbury said the board members had no way of knowing of illegal activities occurring at the hospital.

“If somebody is looking for a county commissioner who is going to be monitoring the UMC supply room, that won’t be me,” he said. “It is our job to make policy and try to have the best possible management in place.”

Once the commission learned of the problems at the hospital, it took immediate action, Reid said.

“It’s a fair criticism, but it has to be put in the right context,” Reid said. “It’s not like we weren’t aware of the problems. It took us time to get our arms around what they were because people were trying to hide the ball. It’s not an excuse, it’s just the way it is.”

Since Thomas’ departure in January, Kathryn Silver has served as the chief executive officer. She was previously the hospital’s associate administrator of managed care, business development and planning.

Reid said commissioners are pleased with Silver’s performance but are conducting a national search for a new hospital chief.

Korn-Ferry International, an executive recruitment group, is conducting the search, county spokesman Dan Kulin said.

“We owe it to the community to look at all possibilities before we name a permanent CEO,” Reid said. He said Silver is a candidate for the position.

The county has made adjustments to the organizational chart at UMC to rebound financially. County Finance Director George Stevens is overseeing the hospital’s finances, and the county is continuing to audit the hospital each month.

Administrators have reworked service contracts, eliminated 50 vacant positions and postponed raises for certain employees. The changes have amounted to $20 million in savings, Reid said. Rules on removal of items from the stock room were tightened, and more surveillance cameras were installed near the hospital’s storage areas.

“It’s unfortunate that this happened,” Reid said. “People who engage in criminal activity don’t let you know what they’re doing. Oftentimes, you have to react to it and try to prevent future occurrences.”