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Cost of dismissing Cook County hospital CEO? More than $600,000, plus a big pension.

Wednesday, January 08, 2020
Chicago Tribune
by Hal Dardick

The Cook County health board’s decision to part ways with its CEO will prove costly to taxpayers, with the tab expected to top $600,000.

Not only does Dr. John Jay Shannon stand to collect $542,000 in severance pay and health insurance benefits per the terms of his contract, but his interim replacement got a raise of more than $40,000. In addition, the county will have to spend tens of thousands of dollars more on a national search for a permanent successor.

The panel, which is appointed by County Board President Toni Preckwinkle, voted in late November to end Shannon’s contract. Members indicated they wanted new leadership at one of the nation’s largest public health systems, which includes Stroger Hospital and has a $2.8 billion budget.

The deal Shannon struck in 2014 with a previous health and hospitals board called for him to be paid a year’s salary, plus the cost of health benefits for a year, if he were dismissed without cause.

With a $517,500 yearly salary, Shannon was the highest-paid official in Cook County government. Health system officials said the cost of extending his health coverage for a year would come to nearly $25,000. Shannon declined to comment on his severance Tuesday.

M. Hill Hammock, chair of the county Health and Hospitals System, said the board “intends to pay the severance in accordance with the contract.”

“Severance agreements are standard operating practice in healthcare,” Hammock said in a statement. “They exist as both a recruitment and retention tool in an industry that is highly competitive.”

On top of his severance payment, Shannon is eligible is to apply for a county pension this year. He worked at the old Cook County Hospital from 1990 to 2007 before departing to serve as chief medical officer at Dallas’ public health system. Shannon returned to Cook County as an executive in 2013 and was elevated to CEO in 2014.

Based on those years of service, Shannon’s pension would top $254,000 a year, according to the county pension fund’s online “retirement estimator.” County pension beneficiaries also are eligible for health insurance subsidies.

Pension fund officials did not respond to questions Tuesday, but Shannon told the Tribune that he has applied for his pension.

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The health system will incur other costs related to Shannon’s departure. Debra Carey, Shannon’s former deputy, was elevated to interim CEO and given a 10% raise, to $461,000 a year.

Meanwhile, the health board plans to conduct a nationwide search, which is expected to involve hiring a search firm, for a permanent replacement. Such searches typically cost tens of thousands of dollars.

County Commissioner Larry Suffredin, who praised the former CEO for stabilizing the health system upon his departure, nevertheless said he’s concerned about the potential for a hefty payout to Shannon and is exploring whether it’s legal.

Suffredin noted that a state law that took effect at the start of 2019 limited severance pay for public officials in Illinois to 20 weeks of pay. It’s unclear whether that law would apply to Shannon, however.

The law doesn’t specifically state that it applies to so-called home rule governments like Cook County. The law also only applies to contracts approved, renewed or renegotiated after Jan. 1, 2019. Although Shannon’s 2014 contract was amended in February 2019, when he received a $17,500 pay raise, it’s not clear whether that would make his severance subject to the the state law limitation, Suffredin said.

“Since any payout under the contract would come from Cook County revenues that I would have to vote on, I am trying to determine if the new law and the limitation to 20 weeks apply to this contract,” Suffredin said. “I’ve asked the Cook County Health and Hospitals System to give me their position on the applicability of the new law.”

The state law was approved after highly publicized, controversial severance packages of more than $700,000 were awarded to a series of government officials who exited Metra, the College of DuPage and Northern Illinois University.

Although the health board did not publicly give a reason for Shannon’s departure, there was growing concern among county officials about the rising costs of medical care not covered by either private-sector health insurance or Medicaid. This year, the cost of so-called charity care and unpaid debts is expected to reach $590 million — up from $314 million in 2014.

That’s a reversal of fortune for the health system, which saw significant reductions in unpaid health care under the federal Affordable Care Act, known as Obamacare. Part of the problem was retaining patients who were insured through Obamacare and under its rules had the option to go to other hospitals — a trend that Shannon had acknowledged and was working to reverse through a revamp aimed at improving services and expanding the reach of health care.

Some county commissioners said privately they were concerned about one of Shannon’s approaches to that issue, which involved criticizing private hospitals for not doing enough to care for uninsured patients, rather than seeking a cooperative approach.

There also was a pair of inspector general reports that were critical of how the health system paid its bills and handed out raises.

hdardick@chicagotribune.com

Twitter @ReporterHal

 


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