UNANSWERED QUESTIONS
Patients, Healthcare Workers and Kern County Taxpayers Deserve Answers to These Questions About KCHA/Kern Medical Center
Meridian Healthcare Partners took over operations of Kern County Hospital Authority/Kern Medical Center in 2013 amid great fanfare. In August 2023, KCHA terminated Meridian’s contract — less than two months after local news outlets reported allegations by healthcare workers and their union at Kern Medical that Meridian and financial consultants Cantu Management Group received as much as $23 million in overpayments.
The alleged overpayments have outraged front-line healthcare workers at Kern Medical who have warned for years that short staffing at the hospital is harming care for patients and creating untenable conditions for workers.
Q. Who are the shareholders of Meridian Healthcare Partners and Cantu Management Group?
Meridian Healthcare Partners is a private consulting firm formed to operate Kern Medical, a safety net hospital that receives millions in federal and state tax money. While under contract Meridian Healthcare Partners and Cantu Management failed to publicly disclose their ownership structure, their shareholders or how many people they employ. The same is true of Cantu Management Group, which managed Kern Medical’s finance department under a consulting agreement.
Q. Why did KCHA’s Board of Governors vote to reduce disclosure, reporting and conflict of interest requirements for Meridian and Cantu executives while granting Meridian’s CEO increased check signing, contracting and purchasing authority at the hospital?
On August 17, 2016, the Board of Governors approved an agreement authorizing three executives from Meridian and Cantu to manage an LLC to operate an ambulatory surgery center with funding from KCHA. The agreement explicitly exempted all three executives from standard conflict of interest restrictions. At its September 21, 2022 meeting, the KCHA Board of Governors voted to reaffirm its previous delegation to Meridian’s CEO the authority to exempt certain Kern Medical officers — including Meridian and Cantu Management Group consultants — from completing conflict of interest disclosures as part of their contracts.
In separate actions from 2016 to 2017, the KCHA Board of Governors:
- Empowered Meridian’s CEO to enter into contracts on behalf of KCHA, some without prior Board approval;
- Authorized Meridian’s CEO to open and close bank accounts with any bank and sign checks of up to $250,000 without a second signature or prior Board approval;
- Removed performance criteria for Meridian, replacing the firm’s discretionary performance fee with a higher guaranteed monthly management fee;
- and dropped the requirement that Meridian’s CEO provide KCHA’s Board of Governors with a quarterly written report of expenditures paid pursuant to the resolution designating him as KCHA’s Purchasing Agent.
Q. Why did KCHA decide to hire Meridian CEO Scott Thygerson as an employee at Kern Medical for $630,000 per year?
Who initiated the conversation to directly hire Scott Thygerson as a permanent hospital employee at $630,000 per year — a salary far larger than those earned by the CEOs at other public hospital systems several times the size of KCHA/Kern Medical? What was the process for determining the salary for this position?
Q. Why did KCHA’s Board of Governors retroactively approve $3 million in unauthorized payments to Cantu Management Group?
Why was the retroactive amendment to CMG’s contract approving the overpayments originally placed on the board’s July 20, 2022 agenda as a consent agenda item without the need for discussion? Why did Director Berjis direct CEO Scott Thygerson to respond to the union’s allegation, rather than following KCHA’s Internal Investigation Policy?
Q. Why do KCHA’s financial disclosure reports show that Meridian was paid as much as double the amount allowed under its contract?
KCHA’s state financial disclosure reports show that it paid Meridian $10,554,486 in the 2017-2018 fiscal year, $9,048,202 in the 2019-2020 fiscal year, and $8,385,928 in the 2020-2021 fiscal year — close to double or more than double the maximum payable allowed by their contract each year between 2017 through 2021.
Between December 2016 and December 2021, Meridian founding CEO Russell Judd and Meridian executive Scott Thygerson convinced the KCHA Board of Governors to approve amendments to KCHA’s contract with Meridian to remove established performance measures and increase Meridian’s management fee, thereby increasing their own compensation.
Q. Why did KCHA’s legal department ask state health regulators to remove information about Meridian’s compensation from disclosure reports?
On or before March 25, 2022, why did the KCHA legal department ask California’s Department of Healthcare Access and Information (HCAI) to remove from Kern Medical Center’s disclosure reports information about compensation paid to Meridian? HCAI is the state regulator tasked with collecting data to enforce state rules to protect hospital safety and healthcare quality, access and affordability.
Q. Why did KCHA’s Board of Governors terminate Meridian’s contract?
The KCHA Board of Governors gave no public explanation for terminating its agreement with Meridian in August of 2023. The KCHA Board also voted to pay Meridian $850,000 in termination fees. Who initiated the proposal to terminate Meridian? How did each board member vote?
