LANCASTER — The Antelope Valley Healthcare District and Antelope Valley Hospital, Inc., will pay nearly $1 million in severance packages to former Antelope Valley Hospital CEO Michael Wall and Chief Financial Officer Colette Nichols, after the district determined it did not intend to terminate either contract for cause as stipulated in their contracts and both resigned.
The executives’ resignations were announced Nov. 20, after they had been placed on paid administrative leave in October by the elected boards which govern the hospital and its operations.
During the district’s board meeting on Wednesday, Board President Kristina Hong announced the district “did not intend to terminate for cause within the language of the contract” for Wall and Nichols.
In both contracts, items that would be cause for termination include conviction of felony or misdemeanor, embezzlement of funds, willful failure to provide services and fraud. Wall’s contract also stipulates as cause for termination acts of dishonesty, intentional misrepresentation or other such acts.
Wall and Nichols were placed on paid administrative leave Oct. 17, while investigations continued into alleged improprieties, the exact nature of which has not been disclosed by either board, either publicly or with Wall and Nichols, they said.
One of those investigation has concluded and the second is no longer proceeding and reached no conclusion, Hong said.
No details in either investigation have been made available to the public as yet, as there are issues of attorney-client privilege involved that must be cleared first, she said.
According to Wall’s severance agreement, he will receive $450,000 in severance pay and the remaining $56,000 of the $100,000 loan for purchasing a house within the district he received when he was hired in January 2017 was forgiven. Under the terms of his contract, the $100,000 loan was to be forgiven over the course of the four-year contract term at $25,000 each year he remained employed.
Wall will also receive the full $161,700 performance bonus for 2018 that was already due to him because he met the contract requirements.
In addition, the district will pay the health insurance premiums for six months should he continue with the employee group plan under federal laws which allow for such extensions.
For Nichols, the severance agreement pays $475,000 and will pay the health insurance premiums for herself and her child for 12 months should she continue with the group health plan.
Wall was hired by the Antelope Valley Healthcare District Board under a four-year agreement in January 2017, following a board turnover in the November 2016 election that led to the ouster of Alecto Healthcare Services management company, after 13 months.
Nichols joined the executive team in March 2017.
When asked Friday if she had anything to say about the executives’ tenure with the hospital, Hong answered “absolutely nothing.”
Reached Friday, both Wall and Nichols spoke fondly of their time with Antelope Valley Hospital and the people there, and expressed pride in the accomplishments of the past two years.
“For me, I just decided it was time for me to move on,” Wall said. “I was really proud of what I was able to accomplish, particularly with Colette. The organization really had a lot of successes, through working with the medical staff, working with the board, working with rank and file.”
“I appreciated working with the board and working with the community. I fell in love with the community,” he said. “I just made the decision based on everything that was going on that it was time for me to move on.”
“I elected to bring my working relationship with the hospital to a close because the hospital counted on me to achieve great results, I’ve achieved them successfully, and now I’m ready to devote my full focus to the next challenge,” Nichols said. “A.V. Hospital has given me so many wonderful memories, so much warmth and affection, and I cannot thank them enough for the honor of the opportunity to be their (Chief Operating Officer and Chief Financial Officer). It’s no secret that my heart belongs to the hospital’s incredible staff, its world-class physicians, its precious patients, and this Antelope Valley community of 500,000 people who I’ve been privileged to live amongst and call my friends for the past eight years.”
Wall and Nichols listed among the accomplishments of their tenure improvements to the hospital’s financial performance, including upgrading the hospital’s credit outlook with Moody’s Investors Service from “negative” to “stable” for the first time in six years.
“It’s huge. CFO’s work for a lifetime to get that kind of upgrade. It was really nice for the hospital,” Nichols said.
Part of the effort in improving the hospital’s finances included staffing changes which impacted some 300 employees in order to reduce the hospital’s labor costs to bring them in line with industry standards.
“The financial recovery plan may have painful for those individuals who were affected, I understand that, but you can not have a hospital at 67% of salaries, wages and benefits and be sustainable long-term. That’s an industry standard,” Wall said.
Wall also cited the improvement in the hospital’s grade from an “F” to a “C” by the Washington-based Leapfrog Group, a nonprofit health care organization that publishes hospital safety grades twice a year.
“I’m really proud of the work that we did on so many fronts,” Wall said.
Nichols also cited as achievements in redesigning the surgery schedule with surgeons and staff to increase surgical volume by as much as 40% with the same staffing levels, and leading “a complete creation of a new Mission, Vision, and Values with the executive team that the board unanimously approved, with an emphasis on teamwork, collegiality, respect, and a focus on quality.”
Both also cited the success of Measure H in November 2017, which brought on a new organizational structure intended to improve stability in the district’s governance by creating a non-profit corporation with a nine-member board to manage the hospital for the district. The measure passed with more than 73% of the vote.
That model for governance and how the district will proceed with it is now a matter of discussion as the time nears for its completion.
The support for that measure last year was one sign of building relationships with community leaders, Nichols said. This led to support for community activities “in a way that the hospital has not participated in years. This was consistent with our Mission and we became a vital community resource to support the Antelope Valley,” she said.
“I sincerely hope and believe that AV Hospital’s best days are still to come and its proudest moments are yet to be. Tomorrow might never have happened had we lacked the courage we have showed together in the last two years to chart a course of strength, transformation and honor,” Nichols said.
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