Hacienda Board of Directors: Time to Leave?

 In CHR Blog

Based on DNA evidence, a male LPN was arrested Jan. 23 and charged with sexual assault and abuse of a vulnerable adult who resided at Hacienda HealthCare in Phoenix. He allegedly raped and impregnated a 29-year old nonresponsive quadriplegic, who gave birth December 29, 2018, much to the surprise of staff. Frantic employees worried about the baby turning blue during the 911 call, but both mother and baby survived. The nurse surrendered his license after the arrest. Two doctors were removed from Hacienda. The facility CEO resigned about a week after the birth.  Should the Board of Directors also resign?

 

Governor Ducey’s Call for Termination

To resign or not to resign – that is the question facing the Board of Directors for Hacienda Healthcare. Last Friday, Arizona Governor Ducey called for the termination of all “senior leadership”, including the Board. His series of six tweets expressed outrage after the Arizona Republic reported appalling behavior by Hacienda’s CEO. Specifically, it described how former CEO Bill Timmons groped employees, made sexually explicit comments, and exhibited explosive and bizarre behavior back in 2006 that continued for at least some years.  The Board knew about it and according to the Governor, protected Timmons’ job by keeping him at the helm.

To characterize the sexual assault and pregnancy incident as shocking, sickening, and horrendous fits the facts. To further learn that an organizational culture may have contributed the scenic backdrop for such an awful act is remarkably troubling. To find out that the Board tolerated sexually-charged and outrageous CEO misbehavior in 2006, is not particularly surprising, given the pre-Weinstein period referenced by the first reported complaints. It may well be disgusting, as many women have experienced firsthand, but not a big surprise.

Fast forward to 2019 and the Governor’s call for termination. Just who should resign and who shouldn’t?

Before we answer that question, let’s look at the Governor’s role and tweets. Laurie Roberts of the Arizona Republic raised excellent questions to Governor Ducey. She asked him to explain how the state is supposed to ensure safety when the institution – in this case Hacienda’s Intermediate Care Facility (ICF) for the Intellectually Disabled – isn’t even required[i] to be licensed?  Especially since the facility gets 90% of its funding from government. It also had a near monopoly on the type of institutional placements Hacienda provided.

Roberts pointed out that Timmons donated $4000 to the Governor’s campaigns, and bragged to state officials about his relationship with the Governor. He purportedly touted his high-ranking connections as a way to get officials to back off.  Despite Gov. Ducey’s denial, we too are concerned that the relationship may have influenced the amount of governmental oversight given to Hacienda HealthCare.  Hacienda’s skilled nursing facility, at the same location as the ICF, received the lowest possible 1-star federal rating from Medicare[ii]. Only five nursing facilities out of 68 homes in Arizona were rated that low. Yet, the current state rating showed an A for Quality. Sounds like a notable discrepancy. There were questions in 2016 and 2017 relating to financial improprieties as well, that some feel should have been pursued more vigorously.

One could argue that the state had an obligation to protect vulnerable adults – many of whom were actually placed there by the state. The system failed, and the state’s role in failure to protect the resident cannot be overlooked.

 

Board Bylaws

All nonprofit organizations have boards of directors. They add and replace themselves according to their individual organizational bylaws.  Gov. Ducey called for the Hacienda Board to be “terminated”, which is not very practical, since the Board controls itself according to its bylaws. No individual has “termination powers”, per se.  Therefore, to replace board members immediately, the simple way is for current members to resign and for new board directors to be appointed. New prospects need to be qualified, experienced and ready to serve.  Should this happen?  Let’s look at a few angles on this question. After examining these angles, you might ask yourself if there will be any board members left.

 

Overlapping Boards

First, the Governor said his “confidence level in that institution and its leadership is zero”. It’s important to note that Hacienda, Inc., the Intermediate Care Facility where the rape occurred, is one of at least eight corporations in the Hacienda family. According to state records, there are six nonprofit corporations and two for-profit corporations[iii] in this family of companies. Hence, if confidence in the Board of one company is shaken, then confidence in the rest of the companies should also be questioned. The Board members serve on multiple boards within the family. For example, the Board chair Tom Pomeroy, and Treasurer Ralph Wallwork serve on all eight boards. Board members appeared to have between three and six years of experience with Hacienda.  In other words, plenty of time to be familiar with the organization, but not “too much” time as to be vulnerable to and cozy with management.  Twelve years is often cited as “too much” time on a board, and loss of independent judgment occurs.  While directors may have retained their independence, maybe they didn’t give enough attention to each of the eight companies inside Hacienda.  The current crisis will require even more time and attention. Members who don’t have the time to do a quality job on the Board should resign.

 

Did the Board Fulfill Hacienda’s Mission?

The unpaid “job” of board director is to preserve the mission of the organization.  Hacienda, Inc.’s mission reported on its GuideStar profile, is “to enrich the lives of individuals with special needs in a home-like atmosphere, to acknowledge each individual and each family as unique with distinct needs. To improve the standards in our community by providing the highest quality of care…”  In 2017, it celebrated its 50th anniversary. It was founded to provide residential care for medically fragile, developmentally disabled children.  Board members should ask themselves if they are comfortable that this mission was fulfilled in 2018. At best, we would give a C grade for meeting mission, but on the “highest quality” expectation, it’s an easy call to mark Failed.

 

Two Roles for the Board

The late Peter Drucker, a management guru, studied organizations and leadership intently. Some of his thinking is dated. For example, all managers were men in his world, and sexual harassment was not a subject he identified. But much of his thinking is timeless. He understood the need for the Board to be an executive board that hires, reviews, and removes management if necessary, and who advises management in helpful ways. He also highlighted the board’s role in public and community relations.  Overall, these two board roles address what management is doing and what external publics want and expect.

 

Did the Board Meet Public Expectations?

There are many immediate groups that are Hacienda’s stakeholders.  Vulnerable children and adults, and their families are stakeholders. The San Carlos Apache tribe of which the victimized woman was a member, is a stakeholder. Associations who advocate for the disabled comprise another group. By addressing stakeholder needs and the company’s brand in the marketplace, a board helps ensure trust and future long-term support for an organization.  Drucker stressed “The governing board of directors must be a board that represents no one except the basic long-term interests of the enterprise.”[iv]  Board members should ask themselves if they met external public and community interests well enough to ensure the long-term future of Hacienda.

Criminal employees are a risk to every healthcare service business. If the DNA results hold up in court, the offending employee will hopefully be found guilty.  Further, CEO Timmons (who also chaired the ICF board) has resigned. The Board needs to assure that there was no pattern, no extension of the one incident, and that the quality of hiring practices, nursing direction and medical care are sufficient to meet highest performance expectations.  The Hacienda brand has been hurt due to this egregious incident, but perhaps it could recover, if care is otherwise outstanding. But if members think their work is done by finding the perpetrator and changing the CEO, then it’s time for those members to step down from the Board.

 

How Well Did the Board Monitor Management?

This question is probably the most critical. It’s hard for the average consumer to be comfortable with the Board’s oversight of management in light of the Arizona Republic’s revelations about Hacienda’s former CEO’s groping and disgusting conduct.  Really, the Hacienda board knew of the CEO’s behavior?  Shall we understand this to mean, that since members joined the Board in 2012 (or sooner), they also heard of behavior problems?  So, it wasn’t only in 2006?  If this is news to some of the newer Board members, then perhaps a few such members can stay, and their lack of knowledge chalked up to a poor orientation.

As a reminder, though, the Board should have discussed its code of conduct and implications in the post-Weinstein era. After all, it’s been more than a year. Healthcare is not exempt from sexual harassment in the workplace, even when the CEO has a poster in his office claiming “Perfection is our goal, excellence will be tolerated”. Such hypocrisy fits the Harvey Weinstein model quite well. Did the Board think of Timmons as a superstar, in the same way Hollywood thought Weinstein was “god”?  It’s time for us to ask the Board the Nixon Watergate question – what did you know and when did you know it?  The Board should identify those who knew of leadership behavior problems of the magnitude described. Those who turned a blind eye to the CEO and a changing society, in favor of protecting the CEO need to resign; those (if any) in the minority who advocated Timmons resign or be fired may consider staying for continuity.

A footnote to the hiring and oversight of the CEO. Hacienda’s new leader Patrick White is a former Board member. We hope the state’s requirement to bring in a third-party management team will be successful. This will be challenging because “imposed” management or an imposed board will be adversarial. Such relationships are not helpful to building a high-performing organization. In addition to operations and safety, the team needs to address culture which – news flash – is not something one can simply mandate or change overnight.  The CEO and new management group also need to address the sad one-star rating [ii] of the skilled nursing facility. It’s reasonable to expect that Mr. White had already been advocating for upgraded performance when he was on the Board.  If not, then our consumer confidence in his leadership judgment is seriously lowered. The Skilled Nursing Facility board and the Hacienda, Inc. (ICF) board formerly chaired by Bill Timmons need to be rebuilt at minimum. Bring in some new Board members – at least five – who can help raise standards, who can adequately monitor and support management, and who will help build a truly worthy organization.

Your residents, patients, families and public constituents expect it. Easy call.

 

For more on long-term care ratings, see Nursing Home Quality & Long-term Care Ratings – free at ConsumerHealthRatings.com

[i] In light of the Hacienda incident, the 23-member Arizona Developmental Disabilities Planning Council recently issued a report “Sexual Abuse of Arizonans with Developmental and Other Disabilities” that includes a recommendation to remove state licensing exemptions for facilities serving people with intellectual disabilities.

[ii] At the time the resident’s pregnancy was discovered, Hacienda’s rating at NursingHomeCompare was 1-star. Medicare updated its ratings on January 30, 2019, which showed improvement to 3 of 5 stars. This new Overall Rating is considered average. Improvements in reporting staffing ratios caused the Overall Rating to go up. Quality of resident care remained 2-stars.

[iii] For-profit Hacienda corporations listed with the Arizona Corporation Commission include Innovative Home Health Care (2006), and retail South Mountain Health Supply (1997). Nonprofits include Hacienda HealthCare (parent), Hacienda Children’s Hospital (opened in 2015), Hacienda Skilled Nursing Facility (2004), Los Ninos Hospital (1997), Arizona Children’s Health Care Corporation (1997), and the original Hacienda, Inc. (1970).

[iv] Peter F. Drucker, Management: Tasks, Responsibilities, Practices, 1974

 

 

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