OAKLAND, Cal. (WPTA21) – The nation’s largest union of registered nurses wants a new CEO for Community Health Systems, the parent company of Lutheran Health Network, based in Fort Wayne.
National Nurses United has released a report in which it alleges Wayne T. Smith has mismanaged the health care and hospitals corporation.
“Based on a review of Smith’s tenure as CEO, it appears that his primary goal has been to enrich himself at the expense of patients, and the corporation’s assets,” said National Nurses United President Zenei Cortez. “The CHS board must put an end to Smith’s flagrant mismanagement. Rather than squander money on bloated bonuses the board must direct new leadership to reinvest in the hospitals that CHS has let fall into terrible disrepair.”
The release coincides with the annual CHS stockholders meeting, taking place in Franklin, Tenn., where the company is headquartered.
According to the Associated Press, the CHS board has proposed a resolution to reward Smith with a compensation package quadrupling last year’s bonus pay, despite massive losses to shareholders and untold hardship in the communities exploited by CHS. In the report, nurses express strong opposition to the CHS board resolution to reward Smith’s appalling mismanagement stating that, “approving the proposal would be an astonishing endorsement of a corporate leader working only for himself.”
The report also documents:
- In addition to service reductions, CHS has been a national leader in hospital closures. Many of these hospitals are in non-urban locales where the economic impact of losing a hospital—often the largest source of professional employment in these locations—can be felt throughout a community for years.
- CHS closed four hospitals between 2014 and 2018 in Tennessee, the state that has in the past decade, lost the most hospitals per capita in the nation. At least two of these hospitals were closed in areas federally designated as “Medically Underserved Areas,” and all provided highly utilized emergency, surgical, and other specialty services.
- During CHS’ highest performing years, prices charged at its hospitals ranked among the highest in the nation. Today, CHS holds the #2 spot, owning 15 of the nation’s 50 most expensive hospitals, that is, hospitals that charge the most in relationship to actual cost of services.
- Factors leading to CHS’ financial downturn, including Smith’s decision to take on $9 billion of debt to acquire Triad Hospitals in 2007, followed by the 2014 acquisition of HMA, increasing its already-huge debt to $14 billion, a billion more than its 2013 net operating revenues.
- The CHS board consistently rewarding CEO Smith with excessive compensation despite the company’s poor performance. In March 2019, while reeling from CHS’ $788 million loss the previous year, which ended with share values near their all-time low, $2.80, shareholders learned that Smith would be awarded a 42% raise for his performance in 2018, for a total of $7 million.
Just this year, Lutheran Hospital leaders suspended the heart transplant program citing the departure of the program’s chief physician and the immediate inability to hire a replacement. The move sent patients to hospitals in Indianapolis for care.
In addition, childbirth services at the company’s St. Joseph hospital were also scuttled and rolled into existing operations at DuPont Hospital.
Earlier this year, Lutheran Health Network’s CEO Mike Poore announced his intention to step down from the role. The announcement comes only two years after his predecessor, Brian Bauer, was fired after a failed takeover bid by a group of Fort Wayne doctors.
At the same time, company leaders are planning a new, modern hospital adjacent to the existing St. Joseph facility. The hospital, called Lutheran Downtown, will have 60 beds with the ability to grow to 100 in the future.
ABC21 has asked CHS leaders for comment. We will update this story once we hear back.