Report 2011-113 Recommendation 4 Responses

Report 2011-113: Salinas Valley Memorial Healthcare System: Increased Transparency and Stronger Controls Are Necessary as It Focuses on Improving Its Financial Situation (Release Date: March 2012)

Recommendation #4 To: Salinas Valley Memorial Healthcare System

To ensure that the terms of its CEO's employment and compensation are clear, and to aid the board in its oversight role, the Health Care System should engage its next permanent CEO in a written employment contract.

1-Year Agency Response

The Health Care System provided documentation that it hired a new permanent CEO effective April 2013 and used an employment contract that specified the terms of the CEO's employment and all compensation and benefits to which the CEO is entitled. Moreover, the Health Care System now requires employment contracts for all of its executives.

California State Auditor's Assessment of 1-Year Status: Fully Implemented

6-Month Agency Response

According to the Health Care System's executive compensation policy, its permanent CEO, when hired, will be engaged in an employment agreement. In addition, in its six-month response, the Health Care System indicated that it now requires employment contracts for all of its executives, including the CEO, and that it executed an employment contract with its chief operating officer. Moreover, Chapter 322, Statutes of 2012 (Assembly Bill 2180), requires that a written employment agreement entered into with a hospital administrator by a local health care district include all material terms and conditions regarding compensation and benefits agreed to by the district and the hospital administrator. In addition, the governor vetoed Assembly Bill 2115 of the 2011–12 Regular Legislative Session on September 13, 2012. This bill if enacted, would have required, rather than permitted, local health care districts to enter into written employment agreements not to exceed four years when hiring a hospital administrator or CEO. (See 2013-406, p. 82)

California State Auditor's Assessment of 6-Month Status: Fully Implemented

All Recommendations in 2011-113

Agency responses received after June 2013 are posted verbatim.