AV Hospital survives another year of turmoil

Abraham, a former AV Hospital vice president and interim CEO from September 1991 to January 1992, was appointed in December to serve again as interim CEO while a nationwide search continues for a full-time replacement.

Abraham's appointment by a newly seated board of directors was controversial, because he once was sued by the hospital over allegations of fraud.

Abraham denied the allegations and countersued for defamation of reputation. In March 1995, the hospital agreed to pay Abraham $350,000 to settle the dispute.

The hospital began 1998 by joining Los Angeles County in January to open a satellite healthcare clinic in Palmdale, a move to treat the area's uninsured as well as reduce traffic in the emergency room in Lancaster.

That same month, hospital administrators began searching for a new law firm after their old law firm - Latham & Watkins - helped hospital director Deborah Rice analyze Harenski's salary history.

That analysis led the board in 1997 to reduce Harenski's base salary from $384,000 a year to $285,000. Harenski also had to agree to repay $100,513 in supplemental retirement program overpayments.

Board members John Manning, Shirley Sayles and Larry Chimbole favored the law firm search, saying the hospital's legal bills had been too high. Talk of the search ended when the board's disagreements with Harenski multiplied.

In March, Harenski was forced to repay another $80,023 he received in December when he cashed in paid-leave hours at an excessive rate and did not return the difference.

Harenski said the memo requesting the payment was dated the day before he signed his new contract with the board. Hospital administrators said the memo was received after the contract was signed but was backdated.

An investigation into such allegations is still under way by the Los Angeles County District Attorney's Office.

Also in March, the board agreed to enter a joint venture with 35 local physicians to build a $3 million outpatient surgery center on hospital grounds at 15th Street West and Avenue J. The center was to open by January 1999, accommodating 4,800 patients a year. As of Christmas, no ground had been broken.

In April, the board leased space for a Valleywide program to reduce child abuse and hired Lea Butterfield as its director. Butterfield and 11 other workers started the program in July with the goal of counseling 150 couples at risk for abusing their offspring.

Also in April, the hospital released the results of an eightmonth, $45,000 study showing the south Antelope Valley needed a primary-care "healthplex," not a full-service hospital. The south Valley, with its current population, could not support a freestanding hospital, according to consultant Kelly Drosihn.

Drosihn's firm was hired later to compile a plan for the $4 million healthplex. No plans for the facility have been made public.

The opening of the hospital's new pediatric intensive care unit was well-publicized in April. The unit was built to treat patients under 18 with respiratory problems, traumatic injuries and other lifethreatening medical conditions.

In June, the hospital board raised room rates 15%, saying AVH's rates had been in place since 1992 and were 40% below those charged in Los Angeles.

The board also considered making Harenski eligible for retirement at age 55 instead of age 62 as well as increasing his retirement benefits from about $80,000 a year to about $318,000 a year. Also pondered was a lump-sum bonus payment for all hospital employees, including Harenski and other administrators.

A split among board members and protests from the public resulted in the rejection of raises and bonuses for top administrators, although all the facility's approximately 1,700 full- and part-time employees were granted bonuses of 3% of their salaries.

Claiming in July the board had breached his contract, Harenski issued a demand for a bonus, a supplemental retirement program and return of all the money he had paid back to the hospital under his 1997 agreement.

The board's response was to place Harenski on paid administrative leave and name Chief Financial Officer Bob Anderson as interim CEO. That leave was terminated in September, when the board agreed to erase Harenski's remaining debt of approximately $84,083 and pay him $280,480 to depart.

Also in September, an audit showed the 350-bed hospital holding a $6.2 million revenue surplus left after $145.4 million in expenses. Of that $6.2 million surplus, $4.7 million was reaped from $38 million worth of investment monies the hospital was planning to spend on a variety of projects, including:

about $11 million on a skilled-nursing facility;

about $10 million on routine care-equipment purchases;

about $10 million on new computers; and

about $2 million for a new administrative support building.

The remaining $5 million was to be held in reserve. The outlays did not include the planned expenditure of $60 million to replace older sections of the 44-year-old hospital. Those sections must be repaired and strengthened by 2008 to meet state seismic standards.

In July, the hospital dedicated its remodeled emergency room, where the number of treatment rooms was raised from 17 to 29 and the amount of space for those waiting was expanded from 796 square feet to 2,600 square feet.

In September, the board agreed to hire a consulting firm to run the hospital's finance department in the absence of Bob Anderson, who was working as CEO. Anderson's pay was increased from $136,992 a year to $253,632 a year to compensate him for his new position.

As the calendar changed to October and breast-cancer awareness month, the state terminated the hospital's authority to operate its in-house breast screening unit because employees failed to supply proper information.

That authority was reinstated Dec. 23. In the interim, the hospital relied on mobile mammography machines operated by a company the hospital purchased.

Less than two weeks before the election, board members Deborah Rice and Steve Fox accused incumbent candidate Shirley Sayles of misusing hospital money to benefit herself and former CEO Harenski.

Sayles denied the allegations, but she, Dr. John W. Birsner and two other candidates lost bids for board seats to Palmdale physician Donald Bean and Lancaster finance director Gary Hill.

Less than one week before the election, a report showed the hospital was deficient in cleanliness during a surprise visit in June by inspectors from the Los Angeles County Department of Health Services.

Inspectors also said the hospital failed to administer medications as ordered, failed to provide considerate and respectful care, and failed to complete discharge records according to policy.

Hospital administrators said the county report was exaggerated and that the inspectors found problems only in isolated areas.

Meanwhile, the board voted to hire an executive-search firm to find a full-time replacement for Harenski. The hospital also began work on a $9.8 million skilled nursing care facility for the Valley's aging senior population.

After the hospital's new board was seated Dec. 9, it voted to return Anderson to his former post as chief financial officer and replace him with Abraham. Doing so also allowed the board to terminate the services of the financial consulting firm hired in September.

The new board also terminated consulting services of Thomas Rieger, hired by Harenski without the board's permission in December 1995 for strategic planning. Board members said the moves allowed the hospital to save nearly $470,000 a year, money better spent on patient care.

Although the hospital agreed in October to join the county in opening two more care clinics - one in Lake Los Angeles and one in Littlerock - to expand treatment for residents in outlying areas, operations money has yet to be approved by the county Board of Supervisors.

The money for the Lake Los Angeles clinic is expected to be approved early next year, in time for a February opening.