Millions in health care district deals involve firms with ties to officials

Washington Hospital Healthcare System is a member of Beta Healthcare. Millions in health care district deals involve firms with ties to officials
July 13, 2012
Jennifer Gollan and Katharine Mieszkowski
California Watch

A financial review of more than 20 health care districts in California found millions of dollars in transactions involving companies and nonprofits with ties to top district officials.

...Close ties to nonprofits

Nonprofits with connections to health care district board members also have benefited.

In the Sequoia Healthcare District, which also serves the Peninsula, board member Gerald Shefren voted in April 2011 to approve a $60,000 grant to Pathways Home Health, Hospice and Private Duty, a nonprofit where his wife, Joyce, works part time.

It marked the first time the district had provided a grant to the nonprofit, according to Lee Michelson, the district’s CEO.

Last year, Shefren served on a district committee that recommended Pathways and other groups receive funding from the health care district, documents show. Shefren said he recused himself from that decision. There are no records of the meeting, nor is the district required by the state to keep them, Don Shoecraft, spokesman for the Sequoia district, said in an email.

But soon after, at a full district board meeting, Shefren voted to advance the $60,000 grant for the nonprofit where his wife works, meeting minutes show. He seconded a motion to vote on a package of grants, then joined the 4-to-1 majority in approving it.

Questioned by The Bay Citizen about his vote, Shefren said: “In talking with our CEO and legal counsel, I think that this is an oversight. This probably should have been pulled out separately, so that I could recuse myself from the Pathways grant and vote on the other ones.”

Nancy Farber, CEO of the Washington Hospital Healthcare System, attends a district board meeting in Fremont in May. The district approved payments of $350,000 to a nonprofit now run by Farber’s husband.

By contrast, Nancy Farber, CEO of the Washington Hospital Healthcare System, maintains that she followed the state’s conflict-of-interest rules. With compensation of more than $912,500 in 2010, Farber was one of the highest-paid executives within a health care district in California. As CEO of the health care system, Farber reports to the Washington Township district’s board, which oversees Washington Hospital and various outpatient clinics that serve residents primarily in southern Alameda County.

Since April 2010, Farber’s husband, Peter Farber-Szekrenyi, has played a leading role at the George Mark Children’s House, a nonprofit organization that provides care for children facing serious illnesses.

That was not his first involvement with the San Leandro nonprofit, either. He began volunteering for the organization in January 2009 before joining the nonprofit’s board of directors in May 2009.

In July 2009, the health district board voted to authorize Farber to provide a $100,000 grant to the George Mark Children’s House, documents show. The district board then voted to give the nonprofit an additional grant of $250,000 on March 10, 2010, documents show. Less than a month later, Farber-Szekrenyi became a consultant, earning $12,800 per month as executive director, while the Children’s House closed for roughly six months to reorganize its finances. In April 2011, he became the Children’s House CEO, earning $208,000 a year.

Farber did not vote on either grant because she does not sit on the district board. But she participated in a discussion about the second transaction, telling board members that the $250,000 grant would be awarded in installments based on “agreed upon milestones,” meeting minutes show.

Under state law, public officials are not permitted to participate in a decision in which they have a financial interest.

Despite repeated requests for an interview left at her office and with the district’s public relations staff, Farber declined to respond directly to questions about her role in awarding the grants. However, a written statement from the district’s spokeswoman said that two weeks after the board awarded the second grant, Farber notified board members that her husband had been asked to become the organization’s executive director.

“The matter of the $250,000 grant recently acted upon by this Board can no longer be allocated at my discretion as originally conceived,” Farber wrote in her letter to the board, dated March 24, 2010.

The district in its statement to The Bay Citizen maintains that Farber “stepped away from dealing with matters relating to George Mark Children’s House” after her husband took the job.

However, as CEO, she continued to run the system, which provides ongoing logistical help to the Children’s House, which reopened in fall 2010. The hospital has donated billing services to the small facility, which typically cares for three to four patients at a time, who stay an average of two weeks.

The Washington Hospital Healthcare Foundation provided more than $55,000 between 2009 and January of this year to support the nonprofit’s operating costs, events and fundraisers, documents show. As CEO, Farber approved at least a portion of those payments, according to the district.

Both Farber and her husband also serve on the health care foundation’s board of trustees.

In a promotional video about George Mark Children’s House posted on YouTube, Farber-Szekrenyi said his wife suggested he help the facility because it might close.

“See if you can get on the board and help them,” he said she told him.

Farber-Szekrenyi says his organization did not receive any special treatment.

“Washington Hospital’s and Nancy Farber’s initial assistance predated my role as CEO of George Mark Children’s House,” he wrote in an email to The Bay Citizen, adding that after he became CEO, “Nancy Farber declared her conflict and refrained from further participation in the grant process.”...