By Tim Hunt
ValleyCare board chair speaks outUploaded: Feb 13, 2014
John Sensiba, chairman of the board of ValleyCare Health System, sat down this for an interview about the system and the recent departure of long-time CEO Marcy Feit.
Here are key points we discussed.
STRATEGY: Sensiba emphasized that the board wholeheartedly supported the strategy of developing an integrated service model with physicians employed by a medical foundation that is joined at the hip to the hospital. Over the past five years, ValleyCare has acquired some of the largest primary care practices in the Livermore Valley and built contractual relationships with key specialists to provide a continuum of care. The model is similar to the Kaiser Permanente model.
The foundation has run at substantial and increasing losses from 2009-2011 (2012 or 2013 results were not available). Losses grew from $5 million to $7 million to $10 million, while net assets were negative $22 million after the year that closed in June 30, 2011.
The hospital organization, by contrast, was positive on its bottom line in each year. Financially, the system is fine, he said.
Sensiba said that the trend needs to change trajectory, but the really important number how the overall enterprise does, not any specific part. Losses in the physicians' foundation, which refers patients to the hospital, could be absorbed as long as the health system overall performed well.
ValleyCare, under Feit's leadership, has reached out into the community with a number of programs designed to provide care even if they do not directly pencil on the bottom line. It operates campus health care at both Las Positas and Chabot community colleges as well as the Livermore Rotary Foundation's mobile health van and the innovative clinic at the Livermore Wal-Mart store.
PARTNERSHIPS AND AFFILIATIONS: Sensiba said that the system was not for sale, but it was likely that ValleyCare would seek a partner that could help with the necessary capital funding. As a stand-alone system, in the long run, it does not have the access and capability to tap the capital markets that systems will need to continue to invest and stay up with the ever-changing trends in medical care.
He also said that the competition from the joint venture of San Ramon Regional and John Muir was welcome. The venture purchased a four-story office building across from the BART station last month and announced plans for an urgent care center and physicians' offices.
"Competition is good. Our strategy is there is abundance and we will strive to meet our mission of quality care. I am confident we will be fine," Sensiba said.
FEIT"S DEPARTUE Although Feit's 16-plus-year tenure in the CEO position as well as her 42 years at ValleyCare seemed to come to an abrupt end to this observer, Sensiba said the board had considered the change for a while and there was no event that precipitated the change that was announced Feb. 4 in a letter to the hospital membership.
COMPENSATION: Reviewing the IRS 990 forms for the hospital, there were three salaries that jumped out: a $1.96 million payment to Feit in 2010 and payments of $1,047,000 to CFO Ken Jensen and $1,044,000 to general services vice-president Vern Brown. These were management retention bonus that the board put in place to ensure that the key management team stayed together, Sensiba explained. Once the plans vested, then the retention bonus was payable in one year, which accounted for the salary spikes. Jensen was paid $532,000 the year prior, while Brown received $350,000.
FUTURE: ValleyCare is an unusual non-profit because its ultimate governance is the 1,400 members who have invested in the hospital. They elect the board. The community raised money back in the 1960s to build Valley Memorial Hospital in Livermore on East Stanley Boulevard. Those who contributed $100 or more in those days (and for the next few decades) became members of the corporation. The membership would have to approve any sale or formal financial partnership.
The volunteer board, Sensiba said, is driven by its mission to provide quality health care to the people in the valley. If there was a partnership or sale that would ensure that mission was met going forward, then the board would need to do its duty and bring it forward to the membership and the community. He also pointed out that the requirement for a corporate vote ensured that there would not be secret deals.
Sensiba, a certified public accountant who leads a firm in Pleasanton, emphasized that he and the board are committed to transparency and keeping the membership and the community informed. The board is fleshing out its short-term plans and expects a public announcement within the next few weeks.
He said that the board will discuss the search for a new CEO when it meets this month, but said it was not urgent because the board has confidence in the management team and the interim CEO Scott Gregerson. It's also important that the board agree to its short-term and longer term strategy so members know what type of person they are looking for to lead the organization. Gregerson joined the hospital in 2012 after working for both hospitals and physicians' groups. He is an attorney and very intelligent according to both Sensiba and a number of people recommending him on his LinkedIn profile.