PASCAGOULA, Miss.—Imagine your retirement day. There’s a party, friends and family around, balloons and cake, and then a letter. The letter says that even though you’ve paid in to your retirement account, you won’t be getting a monthly check. Instead there will be a one-time payout. It happened last year to future retirees of Singing River Health Systems. Only most of them found out by reading an article in the Sun Herald.
The hospital’s pension fund is underfunded. The hospital is short $88 million.
Now some present and past employees want to see some accountability because the hospital has not been contributing to the retirement fund since 2009. When they stopped the contributions, the retirement account was funded at 100 percent.
Now there’s about $130 million in the fund, with about $12 million in annual payouts to current pensioners. Employees pay in three percent of every check. Only now that is frozen. Nothing is being paid in, under court order. Retirees are still getting their checks.
One question is: How long can that last? Another, and maybe the biggest one: Where is the money?
Now there’s a federal, class-action lawsuit against the hospital and the Jackson County Board of Supervisors and the people involved want to find those answers.
So do the supervisors. It’s a county-owned hospital.
FACTS: With some 2,400 employees, Singing River is Jackson County’s second-largest employer, next to Ingalls Shipbuilding. About 2,400 people are currently paying in to the retirement fund. Over 600 are retirees getting their pension check every month.
“We’ve hired a law firm. It’s Rushing and Guice,” said Mike Mangum, one of the county supervisors. The law firm is not to defend the suit, but rather to determine what went wrong.
“Billy Guice is the one handling this. He is procuring certain services to help us understand what’s going on at the hospital. He’s hired a forensic accountant that’s going over the books, trying to determine what has happened and how it happened.”
Mangum said, at this point, they do not believe there has been wrong doing.
“But if there’s been anything done wrong, we want to hold those people accountable.”
MIKE MANGUM INTERVIEW
He said the point is to understand how the hospital, the county and the employees got in the position they are in.
“We want to make sure we don’t ever get in that position again.”
Just how the hospital system could have gotten to $88 million in the red is what some employees want to know. Others already think they’ve got an idea.
Former Employees and Bad Decisions
Tony Brown is a former employee. He was a physical therapist. He told News Mississippi that he believes back room deals were apparent, and were an indication the administration did not have the employees best interest at heart.
“My feeling was that a contract service was going to brought in. When we voiced that concern, we were told that would not happen.”
Brown said he left after six years at the hospital because he felt there wasn’t room for advancement.
“Two or three months after I left, my friends that remained working there sent me messages or phone calls saying that the contract services of Encore Physical Therapy were brought in.”
He said there was one employee friend of his who was just a few days away from being fully vested in the retirement system (ten years) when she was not allowed to be vested in the new system. It was a do over.
While outsourcing is not new to hospitals, prisons, or universities, Brown said, in this case, it was in no one’s best interest.
TONY BROWN INTERVIEW
“We were told when we had the concerns about the contract service, there were feasibility studies that said it was more cost effective to have hospital employees run physical therapy studies.”
Brown said after Encore took over, the PT employees were told it was more cost effective for a contractor to run the department.
“Since that time there’s been another study and they’re finding out it’s costing the hospital three times more every month for the contractor to provide physical therapy services.”
Brown said the PT employees felt that there was better care for patients and better patient outcomes before the contractor took over.
And there are plenty more employees who believe bad decision making was a factor in the hospital’s shortfall. Former and current employees News Mississippi spoke with said former CEO Chris Anderson should have known the hospital was bleeding money and done something about it.
Anderson, a former CPA, was hired in March 2014 as CEO of Baptist Health Systems. He was in charge at Singing River for 16 years.
While there may have been no malfeasance, and that will be determined with the study by the Guice law firm, it is still unclear how the hospital lost so much.
Mangum, who is limited in what he can say because the supervisors are defendants in one of several lawsuits, said there may be a number of factors.
Current CEO Kevin Holland said at a local Rotary Club meeting last week that the state’s failure to expand Medicaid under the Affordable Care Act has been a contributor, and that the hospital is still losing money by not getting that reimbursement.
News Mississippi put in calls to Singing River for their viewpoint. They may get back to us at a later date.
What Can Be Done
What could keep Singing River and other hospitals from getting into dire straits is keeping employees and the people, the taxpayers, who pay for county-owned hospitals informed. To that end, the Mississippi legislature could take up bills that would make hospitals and hospital boards subject to the same laws that city councils and boards of supervisors are subject to. Those are the sate’s open meeting laws.
There are only certain instances where citizens can be kept out of a city council meeting. One of those, for example, is a personnel matter involving an employee. Otherwise, the meeting is open.
Currently, a hospital board does not have to allow anyone access, and many don’t.
“We want to end up with a quality health care system that’s financially viable for the citizens of Jackson County, for the employees and for the retirees of the health system,” said Mangum.
That may sound simple, but what ultimately happens with the retirement fund may get even more complicated, with legal fights ahead and people who paid in wanting exactly what they were promised, and no less.