Disclosures Call Palos Hospital's Transparency Into Question

Is Palos Community Hospital being transparent with its patients, staff, donors and the community at large?

A recent Crain’s article about the Palos Heights hospital board and executive shake-up focuses on a Cook County judge who sits on the hospital’s board, whose brother’s law firm has represented the medical facility in almost half of the 170 malpractice and personal injury cases.

Judge Lynn Egan has served on the board of the hospital’s parent company St. George, and on Palos Community Hospital’s executive board committee, for 15 years.

Her brother, Matthew Egan, is a partner in the Chicago-based law firm Pretzel & Stouffer. According to Crain’s, Matthew Egan “represented Palos in at least 15 cases before his sister's judicial colleagues, most of them involving medical malpractice or personal injury.”

Further, Crain’s contends, the hospital did not disclose the financial relationship with Matthew Egan in the hospital’s tax filings between 1999 and 2011.

Lynn Egan maintains that she disclosed her brother’s representation of Palos in an annual conflict statement available to hospital auditors and tax preparers.

In a statement provided to Crain’s, she added:

 “I believe that I have performed my service as a jurist and volunteer PCH board member in a responsible and ethical manner. Any suggestion to the contrary is false.”

Palos Community Hospital board chairman Edward Mulcahy further defended the hospital in response to questions from Crain’s, stating that the hospital would further examine its internal procedures. He also said that it was the administration’s responsibility, not the board of directors', to hire vendors.

After 30 years of relative growth and tranquility under the leadership of CEO Sister Margaret Wright, who retired in 2013, the Crain disclosures come on the heels of new hospital CEO Edgardo Tenreiro’s abrupt resignation on Feb. 12 after just 90 days on the job.

When Tenreiro, a highly experienced hospital administrator from Baton Rouge, LA, was hired to replace the retiring Wright last October, he claimed in an interview with Crain’s that Palos Community Hospital was losing $1 million to $2 million per month. (Palos posted $375.5 million in revenue in 2012.)

Brimming with ideas and vitality, Tenreiro outlined his strategy Palos would likely include affiliations and partnerships with physicial and other hospitals, such as Evergreen Park’s Little Company of Mary Hospital, so Palos could “remain relevant for the future.”

The same day that Tenreiro resigned, Greg Paetow, a three-year board member quit for “personal reasons.” A second board member also resigned last month, as did Thomas Barcelona, chairman of the board of parent company St. George Corp., which solicits donations for the hospital, Crain’s reported.

Although neither Judge Egan, her brother nor Palos Community Hospital’s board have been accused of violating the law, the perceived lack of transparency raises questions, especially in light of the sudden departure of four hospital leaders, the Chicago-based Wagenmaker and Oberly law firm opines in its blog.

Wagenmaker and Oberly, which represents regional and national non-profit clients, says non-profit leaders need to be ever mindful of the fragility of an organization’s reputation, especially in our high-velocity information age.

“The [Crain’s] article … smacks of scandal, even though it does not allege any violations of law by Judge Egan, her brother, or the hospital.  Nevertheless, in light of recent turnover on the hospital’s board and executive leadership, the authors spin this relationship into a very negative news piece for the hospital.  The article provides an important reminder that even the suggestion of self-dealing may tarnish an organization’s image in the public eye.”