EMH successor losing public input

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BANGOR – Eastern Maine Healthcare soon will be a nonentity, stripped of its authority and wholly replaced by a more powerful and less publicly accountable organization named Eastern Maine Healthcare Systems.

For the past several years, the expanding nonprofit organization – best known as the corporate parent of Eastern Maine Medical Center in Bangor – has quietly been altering its governance structure in the direction of a more centralized administration and of decreased community oversight.

Corporate leaders maintain the “modernized” governance structure of the new organization reflects the changing face of health care administration in Maine and the rest of the United States.

But the nonprofit organization’s acknowledged shift away from its community roots – including fewer board members and less community say over their appointment – is drawing fire from doctors and other observers who say the changes rob citizens and board members of their traditional oversight and give too much power to administrators.

EMHS has been in low-profile existence since 2000, operating with a hand-picked interim board and a preliminary set of bylaws while EMH has continued to function as the visible authority.

Soon, though, EMHS will consume EMH and emerge as the full-blown parent of at least seven regional hospitals, a community health staffing service, a for-profit set of support services, a real estate concern, an air ambulance service and other subsidiaries and affiliates.

In accordance with corporate bylaws, board members of Eastern Maine Medical Center, Acadia Hospital and Eastern Maine Healthcare historically have been nominated and approved by the parent organization’s “corporators” – a loose-knit group of about 500 citizens who represent the community interest in the nonprofit entity.

While corporators – recently renamed “members” – rarely become directly embroiled in governance issues, their ability to affect the makeup of the boards has provided a potent check to administrators who answer to those boards.

But the members of the powerful new EMHS board are selected and approved not by the corporators but by other board members – including CEO and president Norman Ledwin, who sits on the governance boards of all member organizations as well as on the EMHS board.

EMHS board members also are not necessarily chosen from within member institutions, but for their professional expertise – banking, real estate management, information technology and so on.

Bylaws of EMH mandate five physicians on the board, but preliminary EMHS bylaws require only one.

While corporators still will have some say in the makeup of the EMMC and Acadia boards, the parent board, which is not chosen by the corporators, has ultimate authority in all matters.

“These changes that are taking place come as a result of trying to streamline the organization,” according to Irving Kagan, who chairs both the EMH and EMHS boards and sits on the EMMC board. Kagan said the organization is calling on the expertise of national health care governance consultant James Orlikoff, based in Chicago.

Orlikoff, recently named one of the 10 most powerful people in health care by Modern Healthcare magazine, spoke at last winter’s annual meeting of the corporation and last month addressed the EMMC medical staff on the importance of moving away from the corporator model. He has made several trips to the area to provide guidance during the restructuring.

Kagan said the expanding interests and territories of EMHS member organizations and affiliates are so intertwined that maintaining traditional community oversight is no longer effective or efficient.

“You’d have to have corporators from all over the area. You can’t have a system if one community’s corporators were to select all the directors and trustees for the system,” Kagan explained in a recent phone interview.

Kagan said that though many nonprofit health care organizations were founded with a system of powerful corporators, the model is now an outdated “carryover” that is rapidly disappearing.

“[In other places] corporators have very little function other than to be informed as to what’s happening and be supportive of the hospital,” he said.

But in Portland, where the MaineHealth system is developing a similar network of members and affiliates, the corporator system is alive and well.

Corporators at Maine Medical Center’s parent company directly name the members of the MaineHealth board and vote to approve or reject the selection of board members at all member organizations.

The system is “indispensable,” according to Executive Vice President Francis McGinty. “Most people would agree that the function of the corporators is to protect the mission of the institution. If the board is moving in a direction that’s not in keeping with the mission, the corporators are empowered to check it.”

Because most of the approximately 530 MaineHealth corporators also serve on the autonomous boards of member organizations as far away as Damariscotta and Norway, the process of keeping them involved and informed can be unwieldy, he acknowledged.

But their geographic and professional representation is a great asset, said McGinty. “The corporators keep us in contact with a large number of people across the region with a strong interest in health care issues,” he said.

Though EMHS bylaws are still being developed, much of the business of the EMH board has already moved to the senior level.

“The operations of the EMH board have been curtailed in anticipation of this change,” board chair Kagan said. “All of the committee functions have been passed on to the senior board.” EMH still meets, he said, but “only when it’s necessary.”

These changes are frustrating to Bangor attorney Ray Bradford, one of two Bangor area residents named to the EMH board at last winter’s annual meeting of the corporators.

Bradford’s name was added to the slate of nominees at the last minute, in challenge to the accepted procedure by which corporators are presented with an approved list of names to vote on by the board’s own nominating committee.

Bradford’s name, and that of Bangor physician Dennis Shubert, was tendered by a group of concerned doctors and other residents known as “the good governance committee” who felt new blood was needed to shake up the balance of power.

Rather than allowing corporators to reject one of their own nominees, though, the board simply added two new positions. Bradford and Shubert were approved to serve, along with all the other nominees.

Bradford said he discovered just before the vote that the power of the EMH board would be curtailed. “I was a lame duck before I was even elected,” he said in a recent interview.

The board has met twice since he was named, he said, and the atmosphere has been cordial but restrained. “It’s very clear that the substantive work of the corporation is going on at the senior board,” he said.

Physician Fred Heineman, a member of the good governance committee, said Bradford’s experience is emblematic of the organization’s power-guarding behavior. In previous years, corporators have “rubber-stamped” the slate of nominees presented by the board, he said.

“It was only this year, when they didn’t get their way exclusively, that they felt the need to change,” he said.

Heineman said the geographic and professional diversity of EMHS’ interests should not be an excuse for doing away with the corporator model.

“They should have corporators from all their locations,” he said, “or they will lose their responsiveness to the community. This is like the difference between a dictatorship and a democracy. You could argue that a dictatorship is more efficient, but they just don’t seem to work too well.”

Also uncomfortable with the changes is Orono resident Mary Cathcart, a four-term state senator who, along with Bangor resident Elizabeth Warren – the wife of Bangor Daily News publisher Richard Warren – was named to the EMMC board at the same annual meeting.

Cathcart, also a good governance nominee, said she has attended three hospital board meetings but has yet to be formally oriented to the structure and procedures of the organization.

Cathcart is unhappy with the changing role of the corporators. “I am not in favor of having a board that appoints itself. Certainly we need to keep the corporators in order to stay accountable to the community,” she said.

She also objects to the process by which the parent organization is conducting its search for a new hospital chief executive officer to replace Ledwin, who announced in January his decision to focus on system-level administrative issues.

Cathcart said that, at a March meeting she could not attend because of her legislative responsibilities, the EMMC board voted to give authority for naming the new hospital CEO to the system CEO, Ledwin.

Ledwin also will have direct oversight, and “hiring and firing” authority, over the new hospital official, Cathcart said.

She would have voted against the measure had she been present, Cathcart said. “Clearly, the board should have a voice in who the new CEO is,” she said. “It makes me wonder what our role is.”

Cathcart said board members have been told who the two finalists for the position are but have not been given information about their backgrounds or qualifications.

Reached for comment on Friday, Ledwin said the search for the new hospital CEO has included interviews with an extensive “matrix” of physicians, community members and trustees.

Though a search committee will make a recommendation, Ledwin acknowledged he would have “significant influence” over who is ultimately offered the position. “I’m held accountable for every organization in the system,” Ledwin pointed out. “I will be evaluated on the performance of the subsidiaries.”

Asked about the changing role of the corporators, Ledwin declined to comment. “It’s really an issue for the board, not for management,” he said.

Corporators will be asked to approve the bylaws of Eastern Maine Healthcare Systems, including the changes to their own responsibilities, at a coming meeting.

The next scheduled meeting isn’t until winter, but a special meeting could be called at any time with just five days’ notice.

Eastern Maine Healthcare Systems 2004 board of drectors

. David S. Beebe, Winterport, retired physician

. Stanley S. Bergen Jr., Stonington, retired physician.

. Douglas H. Brown, Camden, retired president, Doug’s Shop ‘n Save

. P. James Dowe, Bangor, president, Bangor Savings Bank

. G. Clifton Eames, Bangor, retired president, N.H. Bragg & Sons

. George F. Eaton Jr., Bangor, lawyer, Rudman & Winchell

. Michael R. Gray, Pittsfield, retired president, Lehr Insurance Agency

. Albert Hobbs, Houlton, vice president of finance, Katahdin Trust

. Irving Kagan (chairman), Orono, retired president, Penobscot Shoe

. Larry LaPlante, Presque Isle, chief financial officer, Maine Public Service

. Norman A. Ledwin, Holden, president and CEO, EMMC, EMH and EMHS

. Ralph Leonard, Old Town, president, Central Equipment Co.

. Michael Lynch, Pittsfield, financial planner, Northeast Planning

. P. James Nicholson, Waterville, certified public accountant, Nicholson and Associates

. Jacob A. Palmer III, Unity, president, Kleinschmidt Associates

. Jay Reynolds, Fort Fairfield, vice president for medical affairs, TAMC

. William Smythe, Presque Isle, owner, Save A Lot

. Walter E. Travis, Hampden, retired president, Bangor and Aroostook Railroad

. Peter G. Vigue, Pittsfield, president and CEO, Cianbro Corp.

. Dottie Wheeler, Bridgewater, vice president and general manager, Burelle’s Information Services