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Auditor Critical of Hospital CEO's $1.7 Million Payout

John Ryan
11/13/2009

The state auditor says some government–run hospitals have been spending too much money on their employees. A new audit says Evergreen Hospital in Kirkland and Stevens Hospital in Edmonds could save $8 million over five years by using fewer temp workers. The auditors didn't find any such savings at Valley Medical Center in Renton. But as KUOW's John Ryan reports, the audit did criticize the unusually generous pay package for Valley CEO Rich Roodman.

TRANSCRIPT

Valley Medical paid Roodman close to a million dollars in 2008. He's doing even better this year. On top of his usual base salary, the Valley Medical Center CEO collected a $1.7 million retirement payout in February.

Here's the unusual thing about that retirement payment. Roodman is still the hospital's CEO.

Roach: "I think it's absolutely outrageous that Rich Roodman was given $1.7 million as a retirement package when he hasn't retired and when it is a public agency."

Pam Roach is a Republican state senator from Auburn and a longtime critic of the public hospital district that runs Valley Medical.

Like all 56 public hospital districts in Washington, Valley is a government entity. It's run by elected commissioners and partially funded by local tax dollars.

Rich Roodman couldn't be reached for comment yesterday (Thursday). But I did get to speak with Don Jacobson. He's president of the five–member board of elected commissioners that oversee Valley Medical Center. Jacobson says he has no regrets about paying retirement benefits to a CEO who wasn't actually retiring.

Jacobson: "It was really important, his leadership, he'd been there for 20 years, his leadership was really important to us. Like anybody else, they get an offer someplace that's a good offer, people tend to move around."

Jacobson says Roodman was being headhunted and Valley needed to make sure he stuck around to see construction of the hospital's new emergency tower through to completion.

The auditors also found that Roodman's retirement payout exceeded what the board had authorized by a quarter–million dollars.

Valley officials say they have launched their own investigation into the overpayment. They say Roodman has placed a quarter–million dollars of his own money into a separate bank account until the investigation concludes. That's to avoid even the appearance of impropriety. They say the overpayment is a mistake that resulted from bad legal advice from a third–party attorney.

In understated language, the audit says it's not a typical practice to pay retirement benefits to someone who is not retiring. The audit also says Valley should avoid doing so in the future.

The Valley CEO has had some other unusual expenses covered by his employer.

He was fined nearly $200,000 by state elections officials in 2007 for spending public–hospital money on two ballot measures that would benefit the hospital district. That violates state law. The state agreed to fine Roodman only $120,000 if he paid with non–public funds. Valley Medical's insurance company paid the fine for Roodman. Hospital officials say the hospital's insurance rates did not go up afterwards.

The state auditor's office says its audit of the state's three largest public hospital districts cost $1.3 million. They say the savings they identified made it well worth the price.

I'm John Ryan, KUOW News.

© Copyright 2009, KUOW

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