In a move that many Nashville health-care experts say came years too late, but was nonetheless a surprise and a shock, Baptist Hospital last week unceremoniously dumped C. David Stringfield as its chairman of the board.
Stringfield, 59, will stay on as an unpaid board member of the hospital. His compensation package before the ouster, hospital sources say, totaled more than $600,000 annually.
The decision to remove the controversial executive came after a lengthy, regularly scheduled meeting of the hospital board’s executive committee last Thursday, Nov. 19. Reached at his Florida condominium the same day, Stringfield was informed of the executive committee’s decision by telephone.
The timing of Stringfield’s ouster surprised many Baptist Hospital doctors and executives. Stringfield had assumed the chairman’s role only seven weeks ago, stepping down from his position as hospital president and chief executive officer on Oct. 1. He had effectively controlled the hospital’s board for the 16 years he was president and CEO, during which time he showed little tolerance for dissent.
On Tuesday, Stringfield released a statement to the Nashville Scene:
“I am out of state and quite ill with the flu. I’ve devoted every ounce of energy for over 30 years to help make Baptist Hospital one of the leading health-care providers in the nation, and great progress has been made toward improving services to patients and the public. I wish Baptist Hospital my best for the future, and I will assist the hospital in accomplishing its mission. I have a great deal of love and respect for the people of Baptist Hospital.”
As for why Stringfield had been fired by the board, the hospital itself said the move was made to cut costs as part of a general review of executive pay and benefits at the not-for-profit institution. “We’re looking at costs all over the hospital, and this decision was part of that effort,” says Ken Ross, the hospital board’s vice chairman. Ross will serve as acting chairman until a new chairman is elected.
Privately, Baptist Hospital board members say the Stringfield ouster was more complex. Stringfield has left the hospital in awful financial condition. Having gone through a period of enormous expansion under his leadership, the institution is seeing many of his growth experiments lose money. In recent months, it has taken steps to scale back a number of operations. In addition, Stringfield’s bizarre and abusive management style, and his questionable business ethics, had become an embarrassmentif not an outright liabilityto the hospital. (See “King David: Power and Paranoia at Baptist Hospital,” Nashville Scene, July 3, 1997.)
“If a tax-exempt institution sees that an individual is tarnishing its reputation or becoming a drag on its business opportunities, it’s appropriate to cut him loose,” explains William J. Lehrfeld, a Washington, D.C., attorney who specializes in the laws governing tax-exempt organizations like Baptist Hospital.
More specifically, board members and senior hospital executives point to five strategic mistakes in recent years that set the stage for Stringfield’s departure.
♦ Stringfield committed tens of millions of marketing dollars to sponsorship deals with the Tennessee Oilers and the Nashville Predators. These contracts are “under review” today, says trustee Ross. Although these contracts didn’t appear to make financial sense, Stringfield was said to be “obsessed with not letting Columbia/HCA get them,” reports one Baptist insider.
♦ Stringfield badly overpaid for physician practices acquired by Baptist in the mid-1990s. By some accounts, the hospital last year lost approximately $1 million a month on these contracts. Recently, numerous doctors have been abruptly fired by Baptist Healthcare Group, the hospital division that manages Baptist’s physician practices.
♦ Stringfield pursued costly and ineffective managed care strategies to attract market share in Middle Tennessee.
♦ Under Stringfield’s leadership, the hospital embarked on an expensive and far-reaching building boom. Today, several of these new facilities remain woefully underutilized, including health-care centers in Donelson, Dickson, CoolSprings, and Madison.
♦ Stringfield failed to consummate merger discssions with the city’s two other leading nonprofit hospitals, Vanderbilt University Medical Center and St. Thomas Hospital. Senior executives at both hospitals said they backed out of discussions with Baptist Hospital because of concerns about Stringfield.
♦ Finally, the hospital suffered from a lack of financial leadership and financial controls during Stringfield’s reign.
Against this backdrop came news earlier this month of apparent financial improprieties in the hospital’s construction and real-estate dealings during Stringfield’s tenure as CEO. (See “Sweet Deals Gone Sour: Charges of kickbacks, rigged bids, and more surround Baptist Hospital construction executive Gerald Hemmer,” Nashville Scene, Nov. 12, 1998.) The hospital launched its own investigation into Baptist construction chief Hemmer after the Scene faxed the hospital in mid-October with dozens of questions about Hemmer’s business practices. Hemmer was placed on administrative leave that same week.
Last week, his status was changed to unpaid. Ross says the investigation of Hemmer is “ongoing.” Through his attorney, Hemmer has denied any wrongdoing.
Meanwhile, hospitals like Baptist can retain their tax-exempt status only if the Internal Revenue Service believes the institution is acting within the legal guidelines that govern not-for-profit organizations. Legal experts say the trustees’ decision to remove Stringfield as board chairman may be based on fears that the IRS will begin to look at alleged improprieties at the hospital during Stringfield’s tenure as CEO.
Trustee Ross says the hospital has not been contacted by the IRS.
In related news, it appears that Stringfield’s ouster may well rekindle merger talks with Nashville’s other nonprofit hospitals. A St. Thomas board member told the Scene that his hospital is “definitely interested” in talking to Erie Chapman, Stringfield’s replacement as CEO. A Vanderbilt spokesman declined comment on possible merger negotiations.
Meanwhile, it’s expected that Stringfield will be out of his plush, 2000-square-foot office by year’s end. He will, however, retain his retirement benefits, Ross says.
At least one board member expresses discomfort with how Stringfield’s departure was handled. “In all my years, I’ve never seen anybody get the bad news by phone,” says longtime hospital trustee Guy E. Bates. Sr.
In a hospital press release, Virgil Moore, chairman of the hospital’s executive committee, said Stringfield “has made an enormous impact on Baptist Hospital during his 30 years here, for which we are deeply grateful.”
Others were not so complimentary. Baptist physicians told the Scene that there was “cheering” in the hallways when news of Stringfield’s departure became public.
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