St. Lukes raise raises eyebrows

Published 2:10 pm Friday, July 23, 2010

A two percent raise given to St. Lukes Hospital employees recently has become a political issue for the eight candidates seeking seats on the Polk County Board of Commissioners this fall.

Thats because last June, the current county board gave the hospital $285,000 to back the hospitals growth plans after hearing reports that without assistance the hospital could be in trouble.

The county had received the $285,000 from the sale of the county-owned James Tool building in Columbus.

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Polk County began renting its 111 Locust Street building to James Tool Machine & Engineering in 2005 as an incentive to bring in jobs. James Tool began its operations with 10 employees with plans to grow to 30 employees. In 2008, James Tool decided to purchase the building from the county for $285,000. At the time the county planned to use the money as seed money for other business incentives in the future.

Although all five sitting commissioners and the five candidates now seeking seats unanimously expressed support for St. Lukes as a vital part of the community, their opinions varied when asked last week about the financial assistance given to the hospital last year.

Four of the five sitting commissioners who voted yes still think it was the right vote. Only county chairman Cindy Walker expresses some regret.

Of the non-incumbent candidates, Republicans David Moore, Ted Owens and Tom Pack all three say they think that Polk County economic development money should have been rolled over and used to again create new jobs, as was done with James Tool.

Democrat Margaret Johnson says she thinks the hospital donation was a good investment for Polk County, even though it was earmarked as economic development money, while Democrat Benny Smith disagrees those particular funds should have been used.

St. Lukes CEO Ken Shull says the $285,000 gift was a smart economic development investment by Polk County. (See full statement, page 10.) The money was used to strengthen the hospital by implementing phase I of St. Lukes Strategy for Growth, he says.

Its important to know that these funds were project specific and utilized for no other purpose than to strengthen a successful hospital service line, says Shull. Growth in our orthopaedics program has indeed generated increased revenues that have cascaded to other services provided by St. Lukes. Many counties our size, unfortunately, have lost their hospital and safety net.

Those hospital losses have created negative economic impacts for those counties, Shull says.

As for giving St. Lukes employees raises this year, Shull said, After salaries and wages had been frozen for 12 months, our board of trustees voted unanimously to share this success with those whove worked hard to help improve St. Lukes financials our staff. Though small, this raise is extremely important to employee morale and retention especially in critical needs areas for highly trained medical professionals on call 24/7, 365 days a year.

Nonetheless, the countys $285,000 gift has turned into an economic development and political topic. Last month, St. Lukes submitted an article to the Bulletin saying its board approved a pay raise as hospital finances have improved. Polk Countys budget, which was being debated at the same time, includes no county employee increases for the second year in a row.

The county also cut funding for its economic development director and a custodial position. (The Republican candidates are also questioning the elimination of the county economic development director position in times such as these.)

When St. Lukes representatives came to commissioners in June, 2009, hospital officials and supporters said that the hospital was in an emergency situation financially and could be forced to close its doors. Commissioners formed a committee to look into the hospitals financial conditions, and voted unanimously on June 22, 2009 to give the hospital $285,000 from the sale of the James Tool building, a decision backed by the Polk County Economic Development Commission (EDC).

County commissioner Tommy Melton, the countys representative on the St. Lukes Hospital Board of Trustees, made the motion to grant the hospital the money.

Melton, an independent candidate for re-election this fall, says he supported the decision for improvements to the county-owned hospital building then and feels even better about it now.

Since the time of the gift, Melton says, the county has seen its donation spent on a portable

x-ray machine, computer software, a scheduling module, IT/Fiber optic project, office renovations and orthopaedic marketing.

Melton also said that during the period of transition, the hospital cut jobs, which put greater demands on the remaining employees, who even with the two percent raise have salaries below the state median.

I feel even better now than I did when I made the original motion, Melton says. St. Lukes has now seen seven months of financial improvement. The $285,000 was well spent on machines, renovations, etc., but the real key to any successful operation is its employees.

County chairman Cindy Walker, however, says she now feels differently about the gift considering the hospitals quick financial turn around.

Walker says she voted in favor of the donation after two months, four meetings, two Power Point presentations and joint hospital and county committee recommendations appeared to demonstrate that one of Polk Countys largest employers was truly in dire straits.

I am amazed and puzzled at the turn around, Walker says, particularly in light of the statements made by commissioner Melton, voting member of the St. Lukes Board of Trustees, in April 20, 2009 approved minutes.

She quoted Melton from the minutes as saying, This really is an emergency situation, and that he wanted to move forward and be progressive, and not wait until the hospital does close.

To think that a $285,000 shot in the arm could bring our beloved patient, St. Lukes, from deaths door in less than a year is truly remarkable, Walker said. Add to that a dose of fee hikes, staff cuts and hard work and what you have is nothing short of miraculous.

Things appear to be going so well, Walker says, that perhaps St. Lukes might consider it possible to replenish the fund that handily aided their recovery so that other businesses and deserving entities might experience similar success.

Commissioner Warren Watson, who is also up for re-election this year as an independent candidate, says that initially he did not approve of the donation to St. Lukes but now thinks it was a good decision for Polk County.

Watson says his initial position was that since the $285,000 was seed money recouped from an economic development project, it should be used for other such projects. He met with hospital officials and stressed the need for the hospital to become self-sufficient and not depend on county funding.

However, Watson says he was also reminded that without a facility like St. Lukes, Polk Countys economy would suffer, jobs would be lost and that the quality and access to healthcare would greatly diminish.

Since that time, which has been a little more than a year ago, I have attended several of St. Lukes board meetings, Watson says. I have watched the hospital change before my eyes. The morale is up, and the management team has some very specific goals. They are focused and on a mission.

Although the timing may not be the best, and there are taxpayers in the community who are struggling to make ends meet, as well as many who have lost jobs, we have to remember that part of the reason the funds were given was to help St. Lukes remain a viable business and healthcare provider for the community, Watson said. The financial gift to St. Lukes was an investment that this board chose to make after much deliberation and careful consideration and I think it was the right decision for Polk County.

Republican candidates for commissioner disagree and say if help was needed, it shouldnt have come from the Economic Development Commission seed money.

No, I would not have voted to give that $285,000 to the hospital, says Republican candidate Ted Owens, because it had been set aside for the purpose of attracting and assisting new businesses like James Tool to come to Polk County to provide jobs for the working people of Polk County.

However, I would consider helping the hospital if they could justify it, but I would have taken the funds from undesignated funds and not the EDC fund.

Owens says he served two terms on the hospital board and would rather go to St. Lukes than other hospitals, but he doesnt see the county being able to replenish the EDC fund for a long time.

Commissioner candidate David Moore also says he disagrees with how the county funded the hospital with EDC seed money.

Moore says the previous board of commissioners voted to use the seed money to reinvest into small businesses to create jobs. The St. Lukes gift did not create jobs, Moore says.

How many other businesses are going to come forward asking for money if the county is going to be passing money out like it did for the hospital. I absolutely do not approve of this transfer, said Moore. Consider this, the money could have funded the EDC directors position for several years.

Commissioner candidate Tom Pack says he believes it is important that the county keep St. Lukes open for business. He said the county needs to look at a true merger with a larger hospital system that will invest in St. Lukes, not just manage St. Lukes with no investment.

My understanding is that this money ($285,000) was not used to create more jobs at St. Lukes, said Pack. Economic development seed money should be used to create more jobs in the county and have a return so that the seed money is replenished for future job creation. By giving this money to St. Lukes it is lost money that will not be returned to the economic development commissions seed fund for future job creation in the county.

Democratic commissioner candidate Margaret Johnson says she understands the frustration of people who are also working hard and making sacrifices but are not getting raises. She says she is sure the hospital meant well by approving raises. However, she says giving raises so soon after asking for taxpayer assistance, especially when others are still sacrificing, does not do much for creating good will.

Under better circumstances, I would have liked to see the $285,000 from the James Tool building used to attract another business and create new jobs for our county, but the commissioners did the right thing when they acted to protect existing hospital jobs, Johnson said. This outcry over the raises is a reminder that during hard times, it is very important to make sure sacrifices are shared equally and that we can no longer afford to go it alone.

Democratic commissioner candidate Benny Smith says he recognizes the importance of having a stellar health care system and completely supports St. Lukes, which is one of the countys largest employers.

Having stated my support for our health care system, I do question the timing of the transferring of funds from the sale of the James Tool Building in the sum of $285,000.00, Smith said. Also, no one can dispute that employees feel valued and appreciated when appropriately compensated. I am concerned, however, about the funds that were allocated to be used initially for the Incentive Policy for Economic Development and whether or not they were distributed appropriately when they were transferred to St. Lukes Hospital.

Commissioner Rene McDermott, who served as the countys liason on a joint committee during the request for funding last year, says the countys 20/20 Vision Plan calls for support of St. Lukes expansion and service plans.

I supported the grant, as did my four fellow commissioners and the Polk County Economic Development Commission, whose advice we specifically sought, said McDermott. I continue to believe the support for St. Lukes was warranted. A viable community hospital is vital to our county, both from a health standpoint and economically.

McDermott says St. Lukes is the second largest employer in Polk County, and it would have been unthinkable to allow St. Lukes to close its doors, as the commissioners were repeatedly warned could happen without outside assistance and without quick action by St. Lukes itself.

McDermott adds that since the grant was made, the hospital has drawn down the money for the specific uses for which it had been designated and carried out its promises to raise money itself and to improve its economic performance by various means, including paying down debt, eliminating some staff positions and raising some charges.

Commissioner vice-chair Ray Gasperson, a Democrat who is up for re-election this year, says the history of taxpayer money being used for capital projects at St. Lukes dates back decades with the building being built by the county in 1972 and leased back to the hospital for $10 annually. In 2006-2007, Gasperson says, the county paid $400,000 for the purchase of a former doctors office now used for county offices, when the building was only valued at $226,662.

One can only conclude that the commissioners in 2006 and the next board in 2007, which included commissioners Watson and Melton, wished not only to purchase the building for office space, but to also provide an approximately $175,000 donation of taxpayer money to St. Lukes Hospital for capital improvements, Gasperson said.

Gasperson says he was initially against the $285,000 gift to the hospital, but after the committee was formed and hearing strong recommendations, he voted in favor.

It now appears that the funding along with the hospital eliminating some positions, raising fees for medical services and hard work by personnel has resulted in a major improvement of the financial picture for the hospital, said Gasperson.

See above for a full response from St. Luke’s Hospital, and look for full responses from commissioners and candidates for commissioner in upcoming editions of the Bulletin.