October 12, 2012
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An internal investigation of Bingham Memorial Hospital in Idaho revealed that CEO Louis Kraml and CEO Dan Cochran's contract with CHC was an opportunistic business deal that conflicted with their positions at Bingham Hospital.
Louis Kraml, the Idaho hospital CEO formed ICS to land a questionable sole-source billing contract with CHC, making headlines in the Idaho press. Fallout from the press exposure concerning the shady deal resulted in an independent probe of Bingham Memorial that cost the hospital nearly half a million dollars.
Teton Valley News reported that the 200-page report revealed seven areas of problems with the hospital, including the CHC contract.
Market Watch quoted the report:
2. Saipan hospital, billing, equipment and reimbursements
a. Mr. Cochran and Mr. Kraml's involvement with the Saipan hospital began as an effort to provide support for a failing hospital that was critical to the residents of Saipan but evolved into a private business opportunity for Mr. Cochran and Mr. Kraml.
b. Mr. Cochran and Mr. Kraml's contracts with Bingham Memorial Hospital did not prohibit other business endeavors and the review concluded the hospital was properly reimbursed for costs associated with the Saipan situation including cell phone bills.
c. The Board has recommended a change in employment contracts to require Board approval of participation in any private business venture outside of responsibilities at Bingham Memorial Hospital.The Executive Summary of the 200-page report : revealed that Kraml and Cochran used Bingham Memorial equipment and resources "to benefit ICS, the company they formed to land a billing deal with CHC.
As a result of the investigation, all future outside business contracts "like that of the Saipan hospital will be subject to board approval in the future."
From the Executive Summary:
Billings for Saipan Hospital
ALLEGATIONS During the first two weeks of May, Channel 8 ran several stories involving allegations that BMH Administrators Mr. Louis Kraml and Mr. Dan Cochran formed a company called International Consulting Services, LLC (“ICS”) to help a hospital on the island of Saipan. (Bingham Memorial CEO Denies Allegations of Bad Business, May 2, 2012, Marissa Bodnar; Saipan AG Says “No” to Deal With Bingham Administrators, May 9, 2012, Marissa Bodnar.) The articles questioned whether Mr. Kraml and Mr. Cochran kept dealings with Saipan separate from BMH, whether they conducted business with Saipan while on the “Bingham Memorial clock,” and whether ICS entered into a legal contract with the Hospital in Saipan.
BMH’s investigation focused on the allegations involving BMH resources. Questions about ICS’s agreements with the Saipan hospital should be directed to attorneys for Mr. Kraml, Mr. Cochran, and ICS.
CONCLUSION Without informing the BMH Board of Directors, Mr. Kraml and Mr. Cochran formed a company called ICS and through it entered into billing and consulting agreements with a hospital on Saipan. The agreements with the Saipan hospital are no longer in place, and ICS is no longer in business. Costs associated with the use of BMH equipment and supplies were properly reimbursed to BMH by ICS.
1. Mr. Kraml and Mr. Cochran formed a company called ICS. ICS entered into billing and consulting agreements with the Commonwealth Healthcare Corporation of Saipan (“CHC”). ICS entered into these agreements without the knowledge or consent of the BMH Board of Directors.
2. The employment contracts of both Mr. Kraml and Mr. Cochran require them to “render full-time professional services” and “serve the Hospital on a full-time basis,” but the contracts do not prohibit them from having outside business interests.
3. Mr. Kraml and Mr. Cochran utilized some BMH resources to the benefit of ICS. They utilized BMH cell phones while traveling on Saipan, BMH e-mail to correspond with representatives in Saipan from December 2011 through the Spring of 2012, and BMH employees who provided incidental services (e.g. arranging travel, ordering equipment for ICS, etc.).
4. Mr. Kraml and Mr. Cochran reimbursed BMH for their use of cell phones while on Saipan. BMH accountants closely scrutinized cell phone bills to confirm reimbursements were received.
5. BMH human resources department has confirmed Mr. Kraml and Mr. Cochran utilized their BMH vacation time for their trip to Saipan.
1. Define and clarify the rules relating to outside business or employment opportunities for BMH employees, including Administrators.
2. Require Administrators to report and disclose involvement in actual or contemplated outside business or employment opportunities to the BMH Board of Directors.
3. Develop procedures for evaluating and approving or disapproving potential outside business or employment opportunities.
4. Bring existing employee contracts into compliance with newly created rules regarding outside business or employment opportunities.
5. Require Administrators to annually disclose whether they are serving as an officer, director, manager, or board member of another entity.Although the contract issue may have been resolved in Idaho, the same cannot be said for the CNMI. Was an investigation of CHC's involvement in the deal ever conducted on Saipan? What company is now handling billing at CHC? This scandal seems to have disappeared from the radar as news of CHC's Immediate Jeopardy status, exodus of hospital personnel and financial problems have taken over the headlines.