Tahoe hospital board conducting conflict of interest investigation
This is the first in a series of stories the Sun is pursuing regarding recent reports that question the credibility and transparency of Tahoe Forest Health System, and the district’s reaction to them. Look to tahoedailytribune.com in the future for more articles.
TRUCKEE, Calif. — The hospital board is asking for the public’s patience as it reviews internal conflict of interest policies amid media reports that link CEO Bob Schapper with his wife’s medical company.
“The board takes its oversight duties very seriously and is currently conducting an inquiry,” said Karen Sessler, a Tahoe Forest Hospital District director. “I understand that the public may want quick answers to its questions, but it is in the best interest of this community’s hospital district that the board waits to get the results and considers them thoughtfully.”
According to a July 23 board statement, an active review of the district’s policies started two months ago.
When asked what sparked the investigation, board chair John Mohun said it evolved out of the district’s compliance program that’s been in effect for years. As for how the matter came to the board’s attention, he said that can’t be disclosed at this time.
“It is very important to understand that prior to the finalization of the investigation, that Mr. Schapper’s legal rights as well as his privacy rights are preserved,” Mohun said. “It is equally important to understand that the process of the investigation must be performed accurately as well as in a timely manner.
“Sometimes it’s slower than people want it to be, but it’s important to do it right.”
A report will be forthcoming, hopefully “very shortly,” Mohun said.
“When we have all of the information and our review is complete, the board will make public the results of the review as well as corrective actions planned, if any are needed,” the July board statement reads.
CONFLICT OF INTEREST?
News of the review comes after Moonshine Ink published a July 11 report, raising examples of a potential conflict of interest with Schapper, and the hospital’s involvement with Medical Practice Solutions Inc., a company operated by his wife, Marsha Schapper.
According to the Truckee-based newspaper, Medical Practice Solutions contracted with the hospital in February 2004 to work on doctor contracts for the hospital’s outpatient clinics, and it negotiated with insurance companies on reimbursement.
In an interview with the Sun this week, Ginny Razo, chief operating officer for the hospital district, said Medical Practice Solutions was first contracted with the hospital in February 2003.
The district paid MPS roughly $915,000 over the course of more than seven years for its services.
Further, California Secretary of State documents show Bob Schapper was listed as the company’s chief financial officer in 2003 and 2013.
When asked to address his connection with MPS, Schapper stated the following in an email to the Sun: “As has been disclosed many times over the years, I have been a participant in name only in Medical Practice Solutions. I am not an active participant in the corporation. When Marsha filed the corporate documents, she wanted me to be listed, which is not at all unusual.
“The accounting and tax terminology for this is ‘substance over form’ meaning that I was listed on paper, but factually had no involvement.”
In an interview with the Sun, TFHD director Roger Kahn added Schapper “took no actions that would influence the scope of (Marsha’s) work, or influence the amount of compensation she received from the district.”
“To the best of my knowledge, Bob Schapper was not involved in any way in negotiating or approving the MPS contract, recommending it to the district or influencing in any way the decision of the district to enter into a contract,” Kahn said.
Betts shares a similar view.
“Our CEO, Bob Schapper, has been extremely prudent in making sure he dismissed himself from conversations that involved the direction or oversight of Marsha Schapper,” she said in a statement to the Sun. “Oversight of Marsha has always been 100 percent handled by other members of senior leadership with no influence from our CEO.”
In October 2010, Marsha Schapper was hired as a full-time district employee, serving as executive director of multi-specialty clinics until May 14, 2014, when her position was eliminated for consolidation purposes, Razo said.
Betts added that Marsha’s change from an independent contractor to an employee came after a recommendation from district legal counsel.
“Ms. Schapper reported to Crystal Betts, CFO, for all duties and responsibilities associated with her position, exactly as she had when she was a contractor,” Kahn said. “Bob Schapper took the same hands-off approach with respect to Ms. Schapper’s employment with the district as he did with the district’s contracts with MPS.
“… The CFO has stated on multiple occasions that Bob Schapper never participated in any communications or discussions or negotiations related to Marsha Schapper’s employment, duties, performance or her compensation.”
Yet this spring, when the conflict of interest issue was raised, the board decided to review its policies, said TFHD Director Dale Chamblin.
“Bob and Marsha have served this hospital and our community very well, and it will serve no one to rush to judgment,” Chamblin said.
In a July 15 letter published on the hospital’s website, Bob Schapper stated that as a small, rural health system, it’s often difficult to recruit and retain needed positions, with Marsha possessing the experience in managed care contract negotiation and health clinic administration the district lacked internally prior to her hiring.
“Her role as the spouse of an executive working for a hospital is not unique in rural communities where specialized talent is often scarce,” he wrote. “It is, however, worth evaluating.”
He added that he hopes the board completes its examination of conflict of interest policies quickly to help guide future employee selection.
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