Medical Center Trustee Finance Chair Resigns

By J. Douglas Allen-Taylor
Tuesday April 18, 2006

The Secretary-Treasurer and Finance Committee Chair of the Alameda County Medical Center Board of Trustees abruptly resigned from the board last week, leaving the board without a key financial expert at a time when the center is facing a fiscal crisis and questions about board oversight of its fiscal management. 

Former Pleasanton mayor Tom Pico, a certified public accountant, said in a telephone interview this week that he resigned “for health and personal reasons. I needed to take a little different direction in my life. My health is not going to allow me to be on any outside boards.” 

Management consultant Stanley M. Schiffman, who Pico succeeded as Board Finance Committee Chair when the board reorganized on the first of the year, will resume the chair duties on a temporary basis. 

Shortly after taking over the chairmanship of the board’s Finance Committee, Pico had asked former trustee Gwen Sykes to join the committee. Sykes had been a frequent critic of the center’s management and hiring practices. She was removed from the ACMC board last March in a disputed voice vote by the Alameda County Board of Supervisors. 

The medical center runs several public medical institutions in Alameda County, including Highland Hospital in Oakland and Fairmont Hospital and the John George Psychiatric Pavilion in San Leandro. 

Pico’s resignation came one day before ACMC Chief Executive Officer Wright Lassiter told a joint meeting of the ACMC Board and the Alameda County Board of Supervisors that despite increased revenues, the center is still projecting an $11.5 million deficit for the current fiscal year. 

Lassiter called the budget situation a “fiscal crisis” and said his management team is taking immediate steps to close the budget gap. 

A month ago, when Lassiter made the same projection to ACMC trustees, Pico suggested that the budget problems were being underestimated. At that meeting, Pico called the $11.5 million deficit figure “the best possible case. A more realistic assessment is that we will have a deficit of another $2.5 million to $5 million above that unless we get a handle on expenses.” 

At that March meeting, trustee Daniel Boggan Jr. said that there were “major structural problems with this budget” and added that “when I was asked about it by a senior county official after this budget was passed, I thought we were underbudgeted by $1 million per month.” 

Boggan said at the time that while the board “has to give the administration time to fix this problem, we can’t just put a band-aid over it.” 

At Monday’s joint meeting, Lassiter told trustees and supervisors that sales tax revenue is running higher than budgeted figures from several sources, including Measure A, the half-cent transaction and use tax overwhelmingly passed by Alameda County voters in 2004 primarily to aid the medical center. 

But Lassiter said that salaries are busting the budget. With 138 more employees than projected, the center is running $3 million over budget each month on personnel costs, including salary and benefits. Overtime costs are running 40 percent over budget. 

Personnel costs make up 65 percent of the medical center’s budget. 

Asked by supervisors to explain how the center could be so far overbudget on its personnel costs, Lassiter gave one example, saying that misreading of state hospital personnel regulations contributed to the problem. The CEO said that the budget had project a 1-to-6 nurse-patient ratio for the John George Psychiatric Pavilion, but the Pavilion actually had to staff based upon the higher, state-mandated 1-to-5 nurse-patient ratio. 

Public hearings on the fiscal year ‘06-’07 budget by the ACMC Board of Trustees Finance Committee are expected to begin next month.  

Lassiter had no hand in drawing up this year’s medical center budget. That document was developed by Cambio Health Solutions, the Tennessee-based company hired by the medical center in early 2004 to analyze ACMC’s finances. Cambio’s involvement with ACMC ended when Lassiter was hired last September.  

During her two years on the board before being ousted by the supervisors, Sykes often complained that trustees were asked to approve salaries for high-level hires at the center without knowing the full cost of the contracts. 

“The board would be asked to approve a hiring contract based on a one-page summary, without being given the actual contract itself,” Sykes said in an interview with the Planet. “That’s one of the reasons we ended up overbudget.” 

Sykes said that in October of last year, for example, she wrote to ACMC management, asking that the Human Resources Committee, of which she was the co-chair at the time, be provided “with all information…related to the hiring” of a management staff member. “I do not recall receiving a CV, salary offer package nor reference information.” 

Sykes wrote that she had earlier told board members that the employee “was provided an offer outside of the budgeted range, which concerns me in light of our difficulty in managing the existing budget and directive to staff to adhere to the budget determined solely by the board.” 

She said that while nurses and other lower-paid workers got much of the blame for the center’s budget woes, the real problem was in doctors’ salaries. 

“The center was doing a lot of hires that they didn’t need, at costs they couldn’t afford,” she said. “It was irresponsible.” 

At the March meeting in which CEO Lassiter first reported the projected $11.5 million budget deficit, Sykes told trustees that the center needed to impose a moratorium on new high-level hires. 

“We need nurses, and that’s it,” she said. “If it’s not nurses, I don’t think we need to be hiring anybody.” 

Sykes is considering legal action to attempt to restore her position on the board.  

The Public Information Officer for the medical center has been out of the office since last week and was not available for comment.  

In other ACMC news, registered nurses are currently considering a contract offer by the medical center that would boost their salaries 4 percent this year and 4.5 percent the following two years. Voting on the package is scheduled to end this week..