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Published on 07/24/1995 All articles from this issue

Camino Healthcare legality questioned by audit

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By Clyde Noel / Town Crier Staff Writer

Under pressure from hospital physicians and nurses, the El Camino Hospital District Board of Directors agreed July 17 to appoint an auditing firm to audit Camino Healthcare's compliance with certain covenants made under the ground lease between the District and Camino Healthcare.

The board also looked into hiring attorneys to investigate any conflict of interest charges during the de-districting of El Camino Hospital when Camino Healthcare was formed.

The action took place just prior to last Thursday's announcement that Dick Pettingill was resigning from Camino Healthcare as chief executive officer.

Pettingill had been under fire for an alleged conflict of interest by serving as CEO for both the public hospital district and the private health care system. District board member Mark O' Connor repeatedly brought up the issue, prompting legal investigation that triggered Pettingill's resignation from the district post in late June.

On a letter from the Santa Clara County District Attorney's Office on potential conflict of interest, O'Connor said "the District Attorney's letter makes it real clear, if we have conflict of interest here we have the power and authority to dismantle the (Camino Healthcare) system."

The other question before the board is whether Pettingill profited by the district reorganization. His annual salary was listed at $230,000.

But Douglas Usher, chairman of the Camino Healthcare Board of Directors, vigorously defended Pettingill and the new health care system.

"There is no question that the reorganization was both legal and appropriate," Usher said in a July 13 letter to hospital employees. "The study of whether El Camino Hospital should develop an integrated delivery system (IDS) was started in 1989 by Neilson Buchanan, then CEO of El Camino Hospital District.

"Over the past 36 months, the issue was thoroughly and publicly discussed and the five elected District board members decided that the best interests of the community would be served if the District board formed a new non-profit corporation by transferring the District's assets to the new nonprofit corporation. And the board instructed that a new group of community board members operate the non profit corporation."

Usher said the District board consulted with three separate law firms regarding the District re-organization and other related issues such as the applicability of the Brown Act (the state's open meeting law) to determine the legality of the process.

"Allegations have been made that the District reorganization was illegal because Dick Pettingill was the CEO of both the District and El Camino Healthcare System when the District decided to reorganize the hospital into a nonprofit corporation. This is completely false," Usher said.

In a recent meeting with Town Crier staff, Usher and Gerald Peters, legal counsel of Camino Healthcare, said much of the dissension stems from a refusal to acknowledge medical practices are rapidly changing. They cited less patient time in hospitals and more reliance on outpatient services, along with declining reimbursements from health care insurers.

"For Camino Healthcare to ignore this national change would be catastrophic," Usher said. "In an effort to respond effectively to the market changes, Camino Healthcare has taken steps to expand its outpatient base and take more care into the community."

"Too many of the doctors don't want to accept the future. They want to live in the past and practice medicine the way they always have. We aren't cutting their income, national medical forces are," Peters said.

Usher said that it should be expected that some who have become accustomed to the old way of delivering care will resist change.

"Some may even resort to rumors and misinformation to preserve a system that serves their needs. Once these criticisms are examined and revealed for what they are, then I hope we can all move forward to meet the changing health care this community needs," he said.