Memorial CEO paid executive to retire

Memorial Health System's former CEO paid an executive $242,854 to leave the hospital a year before he was scheduled to retire so another employee could be promoted.

Former CEO Dick Eitel said he paid vice president of human resources Ron Burnside a year's salary, because he was concerned his chosen candidate for Burnside's job, already on city-owned Memorial's payroll, would be wooed by another company.

The payment in July 2007 caught some Colorado Springs City Council members by surprise and fuels their ire over what Councilman Jerry Heimlicher called "ineffective financial management and oversight."

Vice Mayor Larry Small said the payment was "completely out of line," "appalling" and "the ultimate in poor management."

"If he had someone in mind who could succeed (Burnside)," Small said, "seems that person would be available a year later. If the individual left, then it's his job to hire somebody else. The world is full of people who can do those jobs."

Heimlicher said it's further evidence the council should assign a full-time auditor to Memorial for six months to a year "to get to the bottom of these things."

"What scares me is, what do we not know about?" he said.

Eitel, who retired earlier this year, has been replaced by Larry McEvoy, who said in a statement, "The board and senior leadership are reviewing prior philosophy and practice and developing our future approach."

Eitel told The Gazette the payment came at a time when many top executives, including chiefs of medicine, finances, nursing and human resources, were about to retire.

Carlene Crall, human resources director, had been with Memorial for a year, and Eitel thought she would be a "terrific" human resources officer, he said.

"I wanted to have orderly succession," he said, saying it was in the best interest of the health system.

"I didn't want her to look at other opportunities, so I asked Ron to retire a year earlier than he was expecting," Eitel said.

When Burnside retired on July 6, 2007, he received $64,082 for unused sick and vacation time. Eitel also paid him a year's salary, because, "I didn't feel it was fair to penalize him for retiring early."

Crall was promoted on June 24, 2007, at a salary of $209,997. She's since received a 4.5 percent raise to $219,440.

At present, the health system has no chief operations officer, chief financial officer, chief of nursing or chief of medicine. It had two different chief operations officers recently, one staying eight months and another resigning in January after six months.

Eitel said that he spoke to some members of Memorial's Board of Trustees, who supported his Burnside decision, but that he couldn't recall if he told the full board. He said such payments aren't unusual in the industry.

Burnside was charged with two alcohol-related traffic offenses since 2001, but neither occurred while he was working and had no bearing on his being asked to retire early, Eitel said.

In October 2006, Burnside was charged with drunken driving after being stopped going 93 in a 55 mph zone outside Divide on Colorado Highway 67. His blood alcohol content was 0.097, according to court records, above the legal limit of 0.08 for driving in Colorado.

He was placed on probation and paid $595 in fees and fines, court records show.

In 2001, Burnside was charged with driving while ability impaired, for which the BAC limit is 0.05.

He received a deferred sentence and a fine.

Eitel said Burnside reported the arrest to him, the board and his top staff.

"I think he showed a lot of courage in coming forward and talking to myself and the board immediately about it," Eitel said. "They were all very supportive of him. It didn't affect his performance. As far as I know it was a tragic mistake and an isolated event and didn't impact this decision at all."

Heimlicher, who wants to look at selling the health system, said Memorial is "out of control financially."

In the past two years, the health system has been faulted for failing to have a contract with the architect for its new north hospital and main hospital addition, cost overruns on both projects, a lack of policies in various areas, including personnel, and McEvoy's hiring at a salary of $550,000, $100,000 more than Eitel was paid.

"They're a damn good medical service, but man alive," Heimlicher said. "This is totally inappropriate to do what they did. There should be no policy that's up to the discretion of the CEO. It's a business and it has to be run like one. This is totally wrong for a CEO to pass on what appears to be a favor to a friend or long-term colleague."

Small said a year's pay is "completely inappropriate" and that he supports Heimlicher's idea for an independent audit.

City Manager Penny Culbreth-Graft's contract requires the city to pay her six months salary and benefits if she's fired without cause and nothing if she's fired for cause.

Colorado Springs Utilities CEO Jerry Forte's contract allows him to earn up to 18 percent of his annual salary in incentive pay, but he can't draw the money for at least five years. If he leaves under less than amicable circumstances he foregoes a good share of the money.

CONTACT THE WRITER: 636-0238 or pam.zubeck@gazette.com