Two contracts that were signed by the Copper Basin Hospital District Board have raised the eyebrows of the county commission. Commission Chairman Mark Bishop said last week that the contracts should never have been signed without consulting with the commissioners first.

The District Board’s contract with Johnstone calls for a retainer of $7,000 per month, plus expenses, and also calls for Johnstone to be paid $8,000 for the work done in 2007 and 2008, for which he has not been paid. It calls for him to have an office in the hospital. The agreement is for a period of five years. The contract also notes that Johnstone is working for the City of Ducktown but the District Board and the hospital agree this is not a conflict. If there should be the appearance of a conflict, Johnstone said he would no longer work for Ducktown because his primary work is the District Board and the hospital.

At last week’s meeting, Johnstone said he realized his contract has become an issue and added, “It’s not about me; it’s about saving the hospital.” He said he has agreed to shorten the length from five years to three and will change the language regarding conflict of interest if needed. He said the cost of his contract is less than 1% of the hospital expenses, adding he will do all legal work and keep the Board and Brim on an even keel as well as make sure everyone knows what is going on.

The agreement with Brim calls for short-term management support while evaluating a long-term agreement, with ultimate control remaining with the District Board.

The contract calls for an interim Chief Executive Officer and interim Chief Financial Officer, overall supervision, management support services for the hospital’s operations, and an in-depth operational assessment of the hospital.

Under the interim agreement, Brim is to be paid $25,000/month, plus reasonable travel and out-of-pocket expenses, beginning after approval of the Line of Credit or assumption of receivables. Brim would be reimbursed for the salary and benefits of the interim CEO and CFO and their expenses..

Although there has been no long-term agreement, the proposed budget calls for an annual payment to Brim of $180,000 plus $20,000 for expenses.

County Attorney Denny Mobbs told the commission last week that everybody understands the importance of the hospital but noted the county needs to be sure that its $700,000 responsibility will never come due. “I’m not trying to keep this from going through,” he said, adding "I have some real concerns. I have to give my opinion on what kind of risk you could put taxpayers in.” He said all risk in the interim agreement is shifted away from the management company and onto the hospital. For example, he said, Brim would not be held responsible for any claims unless it was caused only by Brim. If there were to be a joint claim, he said, Brim would not be responsible unless it was the only one liable.

Mobbs also pointed out that the contract calls for the hospital to remain responsible for ensuring compliance with regulations. If there were a penalty for non-compliance under Brim’s management, he said, Brim should reimburse the hospital.

He also said he was concerned that there is no requirement to provide reports to the cities and county and said there should be a fixed rate for expenses rather than let Brim have the discretion.

The commission tabled a decision on the requested $1.4 million line of credit to turn the hospital around.