Fletcher Allen CEO Likely Leaving Post for Midwest Hospital 

The chief executive officer of Fletcher Allen Health Care, Vermont's largest hospital, is likely leaving to become the new chief at a Midwestern hospital, FAHC officials told staff today.

In an email sent to all Fletcher Allen staff late Tuesday morning, Board of Trustees Chairman Roger Stone said Dr. Melinda Estes "is in discussions with a hospital system in the Midwest regarding the possibility of becoming their next CEO."

Stone did not name the hospital.

Estes (pictured) was hired in 2003 following a financial scandal related to a multimillion-dollar renovation — dubbed the Renaissance Project — that landed her predecessor in federal prison and shook confidence in the hospital's finances. Stone and other hospital officials credit Estes for repairing the hospital's images and strengthening its bottom line.

A neurologist and neuropathologist who also has an MBA, Estes is one of the highest paid CEOs in Vermont, earning a total compensation of $1.9 million in 2009, up from $700,000 when she was first hired in 2003. Prior to joining Fletcher Allen, she spent most of the previous two decades in The Cleveland Clinic health care system.

In his email to hospital staff, Stone wrote: "I want to acknowledge that this may be difficult news for you to receive. I know it was for me. I am sure many of you have gotten to know Dr. Estes over the past eight years and have also appreciated her leadership and dedication to the success of the organization and to the community we serve."

Stone wrote that Estes recently informed the Board of Trustees of her candidacy for the other job.

"I have tremendous respect for Dr. Estes and what she has accomplished, and I would hate to see her go. That said, this is an extraordinary professional opportunity for her, and if it happens, I will join my fellow board members in wishing her all the best," Stone wrote. "We have been very fortunate to have Dr. Estes at the helm for almost eight years. Thanks to her steady, competent leadership, Fletcher Allen is on very solid ground and well-positioned for the future."

Should Estes depart Fletcher Allen, Stone wrote, the trustees will appoint an interim leadership team and conduct a search for a new CEO.

Mari Cordes, president of the Vermont Federation of Nurses and Health Professionals, the union that represents nurses at FAHC, said she wishes Estes well in her new endeavor.

"It is a challenging time for a major transition like this for our hospital," said Cordes. "In addition to policy reform at the state and federal level, we are in the middle of contract negotiations with the hospital that include pay equity for outpatient nurses facing an ever increasing burden of patient care complexity, the sale of the outpatient dialysis units to the for profit company Fresenius, and the hospital is investigating the sale of the inpatient rehab unit at Fanny Allen."

Codes added that, "despite the challenges, we look forward, as always, to a collaborative relationship with the Fletcher Allen Health Care CEO, with patient care and quality at the center."

FAHC management and others involved with the Renaissance Project scandal were found to have developed and implemented a scheme to falsify the true costs of the project and conceal them from the Vermont Department of Banking, Insurance, Securities and Health Care Administration (BISHCA).

FAHC's CEO Bill Beottcher pleaded guilty, repaid Fletcher Allen $733,000 and was sentenced to two years in a federal prison. Several other top FAHC officials pleaded guilty and paid fines and were able to avoid jail time by cooperating with investigators. Thad Krupka, the former chief operating officer, pleaded guilty in 2005 to three state charges of making false claims, and agreed to cooperate with the prosecution. He had to give back $170,000.

FAHC reached a settlement agreement with state and federal prosecutors, too, regarding the Renaissance Project investigations. As part of that settlement, FAHC paid $1 million, half to the state and half to the federal government. FAHC's law firm — Downs, Rachlin and Martin — paid about $2 million in restitution for its role in the scheme, as did the hospital's architect.

Tsoi-Kobus and Associates, the architectural firm for the project, agreed to cooperate with prosecutors and paid $1.3 million to resolve its role. Macomber Barton Mallow, the construction management firm, also cooperated and paid $150,000. Vermuelens Cost Consultants, the construction cost estimating firm used by Fletcher Allen, cooperated and forfeited $50,000.

After obtaining BISHCA approval, based upon false information, FAHC continued to misrepresent the costs of the project by, among other things, claiming in filings with BISHCA that the costs of the project would be $173.4 million. The project, at completion, cost nearly $370 million.