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Hospital leader under fire for paying daughter to drive him

August 22, 2012 |  5:37 pm

On his receipts, the acting director of a Central Coast public hospital district appeared to be paying a luxury car service to ferry him to and from the airport as part of his weekly commute.


But Lowell Johnson, interim chief executive at Salinas Valley Memorial Hospital, was actually paying his daughter for those rides, $50 each way. He then turned in receipts to the hospital district labeled “Airport Town Car.” The district paid him nearly $4,000 in reimbursements for the trips during his first 12 months on the job, according to records reviewed by The Times.


Hospital district officials said they were unaware of the payments to Johnson’s daughter until earlier this week but see no problem with it. They noted that his contract grants him paid car service and that the board doesn’t monitor who drives him.


Johnson also said there was nothing wrong with the reimbursements. He said he did not need to inform the hospital’s board that he had hired his daughter as a driver because he remained under his limit of $1,500 in travel expenses each week. He also receives $10,000 each week in salary.


“In my mind, there’s absolutely no issue with it,” Johnson said. “There’s nothing here.”


The reimbursement records were obtained by a union that has been in a heated labor dispute with the hospital for more than a year. Organizers with the National Union of Healthcare Workers say Johnson’s expenses are another sign of overly generous executive compensation practices at the public hospital — and lax oversight.


Last year, Salinas Valley came under widespread criticism after The Times reported on a $5-million retirement package awarded to Johnson’s predecessor, former chief executive Samuel Downing. In February, a state audit took the hospital to task for extensive business dealings with companies linked to its board members.


The reports have come during a period of steep cutbacks at the hospital, which has been struggling to adjust to the economic downtown and looming changes in healthcare law. Since the start of 2010, more than 340 staff positions have been reduced at the hospital, and officials say they still need to cut about $15 to $30 million in annual operating expenses.


Johnson, a turnaround specialist who has held interim roles at 30 different hospitals in 14 different states, called the contract negotiations with the NUHW “the most contentious I’ve ever had to deal with.” About 65 employees have been laid off since his hiring in May 2011.


Throughout his tenure, Johnson has been commuting to work at the hospital from his home in Seattle. Along with the car service, records show the hospital has rented a home for him in the Salinas area at a rate of $3,500 a month and paid for his airfare, parking, golf rounds and groceries.


In a brief interview with The Times, his daughter Karyn said she does not actually run a car service company but had been giving her father rides to the airport “just about” every week. She said she also occasionally drives customers from her dogwalking business to the Seattle airport as well.


Lowell Johnson said paying his daughter $100 a week for the rides was cheaper than the $120 rate another company was charging.


“My goal has always been to find the lowest cost options for my client,” he said.


Johnson also pointed out that the hospital’s overall spending on executive leadership had decreased 62% during his tenure and its controversial supplemental pension program was eliminated.


Union leaders offered a sharply different take on his tenure, saying he’d continued the practice of wasteful spending at the top levels of the hospital. Along with the payments to his daughter, they were outraged over Johnson’s habit of billing the hospital for candy bars he purchases at the Seattle airport.

“At $10,000 a week, can’t you buy your own candy bar?” said John Borsos, a vice president with the NUHW.

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-- Sam Allen

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