Financial analyst, doctor defend KRH health-care practices

A former financial analyst at Kalispell Regional Healthcare said this week the whistleblower lawsuit filed against the hospital is a skewed and out-of-context snapshot of a complex business model that aimed to create the best possible health-care network for patients.

Chris Hassler, the manager of financial analysis at Kalispell Regional for 16 years until she left her position at the hospital last summer, is mentioned in the whistleblower suit because she prepared cost reports and data requests for the administrative team and department managers on a regular basis.

Hassler said although hospitals typically don’t have a financial analyst on staff, Kalispell Regional Healthcare President Velinda Stevens “understood the importance of having that” position and hired her.

“She ran a business. She looked at the right things,” said Hassler, who did financial analysis work in the aerospace, manufacturing and telecommunications industries before joining the hospital staff. “She looked at the same things non-health-care organizations look at.”

Whistleblower Jon Mohatt, the chief financial officer for the Physician Network at Kalispell Regional, alleges Stevens, who died last year, compensated certain specialty physicians at rates inconsistent with the number of services they performed, and he claimed there was a “scheme of mutual enrichment” spearheaded by hospital executives, in which the physicians’ salaries and bonuses were dictated by the value and volume of their referrals to the hospital rather than productivity.

Hassler said the hospital did not track referrals during her 16 years on staff, and had no mechanism to even input that kind of information.

The lawsuit alleges Stevens led an accounting scheme of tracking, monitoring and rewarding specialists’ “contribution margins,” defined in the suit as “the volume and value of referrals.”

Hassler maintains that equating contribution margins and referrals is “not comparing apples to apples.”

“A contribution margin is a way of looking at a product line before overhead allocations,” she said. In general terms a contribution margin is a measure of a company’s ability to cover variable costs with revenue.

Hassler also noted data reports can be interpreted in different ways.

“I know how easily data can be misunderstood if taken out of context or manipulated to tell one side of the story,” Hassler said. “It is unfortunate that our legal system and cases like this make settlement the responsible choice for the organization. The information and the way it is presented is shocking.”

Hassler said that had she not spent a major part of her career analyzing and understanding this kind of data, she may have jumped to the same conclusion that the physicians and administrative team “were laughing their way to the bank.

“But I know that is not true,” Hassler continued. “I could go through those 91 pages and point out discrepancies and misinterpretations, but it would not change the outcomes or undo the collateral damage caused by the unsealed and unsubstantiated document.”

Hassler said she feels betrayed that her emails and reports requested by the investigation were taken out of context and misinterpreted to support Mohatt’s case, “especially when I reflect back on how I tried to help (Mohatt) understand the data sources and reports used by the organization before he presented information.”

Hassler said she responded to about 300 data requests a year. The lawsuit documented only a small number of data requests — about 30 of some 1,200 reports requested over a four-year time span.

“Those reports, which were called contribution margin reports, did not represent physician referrals as implied,” she said. “The report contained actual surgery cases performed — including a significant percentage of emergency surgery cases — so to say these reports represent a referral and mutual enrichment scheme is misleading and I think any patient who had his or her life saved by one of these surgeons would agree.

“The part that is really out of context is these reports include all hospital-generated business,” she said, explaining they included things such as nursing costs and hospital room rates.

Hassler explained certain business lines of a hospital typically lose money, such as inpatient medical cases, delivering babies, emergency-room services and psychiatric care.

“Hospitals have to look for other ways to offset those losses,” she said. “So surgeries typically are where hospitals make enough to cover” the losses in other areas.

That’s a key reason why Stevens was focused on bringing in top specialists who could generate revenue and create a health-care system where patients wouldn’t have to travel outside of the area for care, Hassler added.

Also, the increases in physician salaries documented in the lawsuit were due, in part, to the growth of Kalispell Regional Healthcare, Hassler said.

“Velinda recruited good doctors to build a strong hospital that would not be vulnerable to a takeover,” Hassler said. “That was the most important thing to her.”

Stevens was progressive in using data, but not for the purposes claimed in the suit, Hassler said. Rather, the data was used to determine areas would Kalispell Regional could improve patient care and fill a void.

“What bothers me the most is [this lawsuit] paints a picture that no one can argue or vet,” Hassler said. “What [Velinda Stevens] and her administrative team did for the organization and this valley during her tenure was phenomenal and I hope that is her legacy, not the settlement of this lawsuit, which she cannot defend.”

The hospital is expected to reach a settlement in the whistleblower case and has set aside $21.5 million for that potential settlement. But except for a blanket statement that “KRH continues to dispute the allegations of misconduct,” no further explanation has been offered by hospital executives.

“Velinda devoted her life to that hospital,” Hassler said. “She grew that organization.”

Dr. Nicholas Costrini, who was the director of the Digestive Health Institute from May 2015 until earlier this year, reiterated Stevens’ quest to build a high-quality hospital system.

“Velinda’s position was, in order to move them [the hospital] into the 21st century, she had to hire high-quality people and have them build high-quality programs,” Costrini said.

The salaries paid to Costrini and other specialists were necessary because those physicians “put the hospital on the map and made it from a small community operation to one that can serve the entire state, Southern Canada, Idaho and Northern Wyoming,” Costrini said. “And that’s what it takes. It takes money.

“In a growth phase, I think it’s fair to have salaries outside the 95th percentile, since 95 percent of hospitals are not in that growth phase,” he added.

Costrini said he was hired to design, build and direct an entire institute and to hire enough doctors to run it.

“As a director, my job was to get the word out that we’re building something that doesn’t exist in the state,” Costrini said. “Was I overpaid? Absolutely not. I built something that will bring the hospital revenue for the next 25 years.”

Costrini pointed to several talented Kalispell Regional physicians, such as surgical oncologists named in the lawsuit, who were hired specifically to enhance Kalispell Regional’s status as a top-notch care facility.

“These guys are really good. You think they’re going to come out here for nothing?” Costrini asked. “The program has to be built and it takes time to build. [Velinda Stevens] did the right thing for the community.”

Features Editor Lynnette Hintze may be reached at 758-4421 or lhintze@dailyinterlake.com. Reporter Adrian Horton contributed to this report.