Public or not? Trustees challenging access status at Perry County Memorial

Voters in Perry County, Missouri, pay about $350,000 in property taxes annually to go toward Perry County Memorial Hospital. The $350,000 is a fraction of the overall budget, but taxpayers have always had representation for this taxation, per Missouri law.

Every two years, voters elect board members.

Two of the more recently elected board members say the hospital's appointed executive board of directors and the CEO are blocking their oversight responsibilities by keeping information, decisions and documents secret from them. The effect for taxpayers, these board members say, is that the hospital is giving up its operational control to Mercy -- which recently partnered with PCMH -- without sharing detailed information that could shed light as to how and why executives came to that conclusion, why a former CEO was fired and why certain employees are paid what they are. The Perry County Commission voted to approve the acquisition in March, following a 15-month process that included the recommendation of the hospital's executive board, a vote of the board of trustees and the commission.

PCMH Board of Trustees members Joe Hutchison and Bill Bohnert say their requests to examine documents, contracts, audits and decisions have been repeatedly denied.

The hospital's CEO, Chris Wibbenmeyer, said the hospital system is doing nothing wrong and operating as businesses and hospitals typically do, keeping certain financials and records confidential. He said the board dynamics in which the hospital system has been operating for three decades have never been challenged before Hutchison and Bohnert aired their grievances. The structure has been successful, Wibbenmeyer said, in growing the hospital's capital footprint for the last 30 years.

For their part, Hutchison and Bohnert say the alleged stonewalling has prevented them from evaluating the hospital's arrangements with Mercy as well as evaluating the fairness of the board's termination agreement.

Hutchison's and Bohnert's objections, many of which have been made publicly, have created controversy and speculation about the operation and transition of the hospital, leading to confrontational meetings.

Hutchison, a Perryville dentist voted to office in April after the Mercy merger was approved, says legal action may be needed to get documents and contends inquiries may reveal that the hospital has been wrongly constructed with conflicts of interest for decades.

Board's origins

The predicament of document and information access as it relates to the public-private hybrid board setup dates back to 1998 when the public board and the County Commission created a private not-for-profit executive board to run the hospital. At the time, proponents of the move said public hospitals could not borrow money, but private, not-for-profit institutions could. Advocates also stated a private not-for-profit hospital could move into joint financial ventures with non-public partners. It was also stated at the time that Medicare was "headed for bankruptcy without changes".

Reporting by the Southeast Missourian at the time stated that Perry County Memorial administrative data -- utilization rates, employee pay structure and other financial information -- were public information and could be accessed by anyone, such as is the case with public school districts and city councils. Ralph Paulding, the hospital administrator at the time, said such public availability of that information "puts the institution at a disadvantage when we're trying to bid". The switch to a private hospital, the public was told at the time, would help the small hospital compete with larger organizations. Now, the hospital is poised to become part of one.

The 1998 arrangement kept the five-member elected board intact, but a new appointed executive board, a "board of directors" would oversee the day-to-day operations of the hospital. It was decided that two of the five elected trustees would also serve on the board of directors, though some pushed for three. The Perry County Commission expressed concern at the time that "there be a path back to the voters from the new board". Reporting at the time stated the county would retain ownership of the hospital, nursing home and related operations, such as selling the facilities or filing for bankruptcy.

Information access

Because the hospital receives property tax dollars and elects a public board for financial oversight, questions exist about whether hospital leadership can keep certain documents, contracts and decisions hidden from elected trustees and the public.

Perry County Memorial's board of directors is appointed by administrators. Currently the president of the board of directors is Beth Guth, with Kay Taylor, Linda Buerck, Keith Moeckel and Patrick Naeger serving as members, according to the hospital's website. Naeger and Guth serve on both boards.

The intentional two-person overlap was established in 1997, but it created by its nature potential problems when or if the board of directors and the board of trustees were in conflict. Not until Hutchison's arrival to the board has this become an issue, Wibbenmeyer said.

Wibbenmeyer says the dual-board setup has worked hand-in-hand in the past. He said the board of directors, known colloquially as the "private board" oversees the day-to-day operations, including the hiring and firing of the CEO. Meanwhile, the board of trustees oversees the expenditures relating to hospital property and buildings, per the lease agreement signed by the trustees in April 1998. That lease agreement will terminate June 1, 2028. The lease acknowledges that the health system is a private corporation and also spells out that the trustees are to deposit the tax funds "to provide building maintenance". The lease requires the health system to submit a proposed budget "indicating the precise nature of the proposed expenditures for building maintenance and renovation for the ensuing year. Sums furnished by the county may be used only for such building maintenance and renovation as annually approved by the Board ..." This language is interpreted by some as meaning the trustees' oversight only belongs to money spent on capital projects, not operations.

However, the lease also states that the health system must keep proper books and "will allow the Board reasonable access thereto". At a meeting Thursday, Sept. 28, Wibbenmeyer provided a review of the hospital finances and statistics, including information that the number of emergency room visits increased, a number that Wibbenmeyer said reflected public trust in the hospital system.

But Hutchison and Bohnert said they believe they've not been allowed reasonable access to specific financial information, including access to the books. Wibbenmeyer has told Hutchison he would need a court order to obtain certain documents, according to Hutchison.

The lease also provides a section about mergers and consolidation, stating that the health system will not merge with another corporation without approval of the board of trustees. PCMH announced in March 2022 it would "begin negotiations of a non-binding Letter of Intent with Mercy" which would allow the parties to share confidential information, meaning that the board of directors would share information with Mercy not available to elected trustees.

At that time, some voiced concerns over the lack of transparency in the process, but later public forums were held, and the public had an opportunity to give and seek input.

The deal was finalized in March 2023 with approval by the board of trustees. The chairman of the board of trustees at the time, Greg Unger, said in March that "Mercy has been really good to work with and will be a great partner with our long-term future in mind. Perry County will benefit from this partnership for years to come."

As for the bylaws, the board of trustees' "primary concern" is "stewardship of the patients, visitors, providers, employees and leaders". Among several requirements and authorizations, the bylaws require the CEO to provide periodic reports on the financial condition of the hospital but does not specify how much information should be divulged.

As for conflicts of interest, the bylaws state that "any Trustee or Officer having a duality of interest or possible conflict of interest on any matter should not vote or use his personal influence on the matter."

Conflicts of interest

Hutchison and Bohnert, Perry County's elected coroner and former Cape Girardeau narcotics police officer who defeated incumbent Trustee Stephen Rozier in April of 2022, argue that more information should have been divulged to the board of trustees. Hutchison alleges that the merger vote to approve Mercy's acquisition was tainted because they could have put the board of directors' interests ahead of the taxpayers' broader interests.

Frustrated by a lack of accessibility to documents, meeting minutes and decisions, Hutchison turned to the stat's Sunshine Law to try to force the hospital system to relinquish certain information. Newspaper reporting done at the time of the lease agreement stated that the decision to make the hospital private was made in part to keep information out of the public's hands.

That issue is complicated by a 1999 Missouri Supreme Court opinion derived from a lawsuit, North Kansas City Hospital Board of Trustees v. St. Luke's Northland Hospital. That case isn't identical to the situation in Perry County, but similar themes run throughout. The ruling established that "a nonprofit corporation created to carry out the purposes of a municipal hospital and controlled by the hospital's board of trustees is a quasi-public governmental body and therefore is subject to the Sunshine Law", according to the Missouri Attorney General's website. The opinion also established that employee salaries and contracts are not held to be "individually identifiable personnel records" falling under exemptions. That ruling came about a year after Perry County's board of trustees handed over operational authority to the private board of directors.

To that end, Hutchison and Bohnert are challenging the hospital's board of directors with public records requests. So far, according to Hutchison, he has asked for the information and documents and explanations, only to have his access denied. Hutchison said his requests relate to:

• a 13-year contract given by the board of directors to former CEO Patrick Carron;
• the subsequent dismissal of Carron;
• explanations of conflicts of interest that appear on the hospital's tax returns;
• issues relating to nepotism, specifically spouses of hospital executives who were hired into management positions;
• the contract and justification of a pay increases to doctors getting paid more than $1 million per year.

Carron was placed on administrative leave in October 2020, for reasons that have not been made publicly known.

"I really can't say a whole lot, but I can say there hasn't been any criminal activity," Moeckel, then-board of directors president, told the Southeast Missourian in 2020. Wibbenmyeyer said at the time there was no truth to any rumors that anything illegal had occurred.

Carron is also a plaintiff in a tort lawsuit against doctors Mark Schabbing and Darryl Green, both of whom are listed as staff members on Perry County Health System's online provider directory.

As a not-for-profit entity, the hospital must report certain information annually in a public disclosure, called a 990 form. The organization is required to list all officers, directors and employees who receive more than $100,000. In its 2022 form, the hospital system reported it paid former president/CEO Carron $357,654, and current CEO Wibbenmeyer $242,967. Carron was paid an additional $49,617 and Wibbenmeyer an additional $31,783 from "related organizations". In 2022, the hospital's highest paid employee was physician Joseph B. Byrne at $1.2 million. Ten employees were listed as making more than $100,000. Five of them were doctors. The others were the CEO, CFO, an associate vice president, HR director and a former CEO. Among the hospital's highest expenses were $23 million in salaries and wages (of which $1.2 million went to directors, officers and key employees); $8.4 million in medical supplies; $6.5 million in office expenses; and $13.7 million in professional fees. It reported net assets of $58.6 million.

In a news release issued by Mercy and PCMH in March, Wibbenmeyer said it is "extremely challenging" to operate a small hospital in today's economic environment. He added that many small hospitals across the country have closed their doors. He said the commission and the board of trustees "had the vision and the courage to act now to preserve" the hospital.

"Mercy's track record of operating critical assess hospitals and providing high quality care is exactly what we're looking for in Perry County," Wibbenmeyer said in Mercy's news release in March. "There's also Mercy's virtual care services which will increase patient care options. And, they have a unique collaboration with Mayo Clinic to improve early diagnosis and treatment of diseases. These are some of the many reasons we're looking forward to a long relationship benefiting everyone in our community."

Unger, the trustees' board chair at the time, stated in the same news release that partnering with Mercy "allows us to take advantage of their economies of scale, their ability to recruit physicians, nurses and other co-workers, and their technology, including electronic medical records".

The news release says Mercy intends to retain all current PCHS employees and that physicians currently at PCHS "will be invited" to join Mercy. Employees will be retained for a minimum of 18 months as long as they remain in good standing. Hutchison said the same timeline does not apply to Wibbenmeyer and his leadership team.

Hutchison says he's asked for current financials, saying he shouldn't have to wait for the annual 990 forms to be released to obtain specific payroll numbers and contracts. He said he's also asked for details relating to annual audits.

"As a trustee, I'm entitled to see these damn numbers," Hutchison said in an interview with the Southeast Missourian. "I've been elected to provide oversight."

The hospital reported operating income losses of $438,912 in 2020, following an operating income loss of $2.2 million in 2019.

Bohnert and Hutchison are also trying to get a better understanding of why the county's dialysis center has been shut down. Bohnert and Hutchison are seeking more documents associated with the arrangement between both parties.

Wibbenmeyer told the Southeast Missourian the dialysis center was shut down based on finances. He said the company that operated the center is consolidating its locations, like many such companies across the country.

On Thursday, Sept. 28, Bohnert resigned his position as the board's treasurer, citing advice he received from his personal attorney.