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Washington Hospital Depends on Successful Leadership to Deliver Highest Quality Medical Care for this Community

December 21, 2010

The environment this past year has been, and will continue to be, very challenging for Washington Hospital and for other businesses and community organizations. For Washington Hospital, we must deal with the consequences of an economy that is still very shaky and also confront the challenges of federal healthcare reform. Regardless of how one might feel about reform, this much is clear: without the regulations, which won’t be forthcoming for some time, healthcare providers can only speculate on how the reform will affect their operations.

Fortunately, our not-for-profit, community-owned Washington Hospital Healthcare System has continued to be successful despite this very difficult environment in which many community-based hospitals are struggling or failing. This point is critical because in order to keep local control, which is our mission, Washington Hospital must remain financially strong while continuing to provide for the health care needs of its residents.

It is important to understand that Washington Hospital is quite different from many other public entities. It is a special purpose district and, as such, it is required by the Governmental Accounting Standards Board to function as a "business enterprise". This makes it unique in many ways as compared to other governmental entities. Washington Hospital must compete for our employees and executive leadership from the same labor pool as other comparable for-profit and not-for-profit health care providers. In this way, we are different than local cities or counties, for example. To recruit and retain top-quality, professional staff, the Hospital must pay market rate salaries, in a market place where we are competing with comparable health care systems. It is our ability to attract and retain top-quality professional staff that has allowed our district to provide the best of care to our residents and has kept this Hospital in the black financially, unlike many other hospitals in the Bay Area and elsewhere.

It is important to realize that Washington Hospital is independent of any civic or corporate affiliation and the Hospital’s operations are self-supporting. District residents do not pay any taxes that are used to operate the hospital or are used for any salaries. The general obligation bond money that was approved through Measure FF in 2004 is used only for specified new construction projects. Many of these projects are required as a result of the State of California’s unfunded mandates relating to seismic upgrades.

As mentioned, Washington Hospital has experienced a successful year on many fronts. A modern power plant is under construction, and ground was broken on a new Center for Joint Replacement. Both projects are on time and under budget. Washington also opened a new and expanded Outpatient Diabetes Center and implemented new programs for our residents such as neurointerventional radiology. In 2010, Washington Hospital’s Community Cancer Program and Stroke Program won excellence awards, and Ohlone College not only named Washington Hospital "Citizen of the Year" but also named their science wing in honor of Washington Hospital Healthcare System.

Financially, Washington outperformed many California hospitals this year and exceeded last year’s income by 24 percent while, at the same time, providing a record $42 million in health care to the community’s medically underserved populations, and providing an additional $3 million for community education.

These accomplishments and others were discussed at the December 13, 2010 meeting of the Washington Township Health Care District Board of Directors. At this meeting, the Board considered, as it does annually, the Chief Executive Officer’s compensation and contract and discussed the many successes achieved this past year. The Board of Directors reported that the CEO’s performance has been outstanding given the overall financial and strategic success of Washington Hospital. The Board of Directors also reviewed and discussed the compensation recommendation made by Integrated Health Strategies – one of the nation’s leading health care executive compensation firms. Integrated Health Strategies was engaged by the Board as an independent consultant because of its reputation in the industry and the need to ensure that the CEO’s compensation is evaluated by an independent group. Integrated Healthcare Strategies studied Washington Hospital Healthcare System and compared the compensation of the CEO with others in a peer group to determine an appropriate salary range to achieve the Board’s philosophy of positioning the CEO’s base compensation around the 65th percentile of comparable hospitals and the total cash compensation at the 75th percentile of comparable hospitals.

While the compensation firm recommended an increase of 10 percent to the CEO’s base salary to bring her in line with the Board’s compensation philosophy, the Board and the CEO agreed that it was prudent to take in consideration the current economic climate. Thus the Board unanimously approved a 3 percent increase to the CEO’s base compensation, rather than the recommended 10 percent. In terms of the at-risk portion of the CEO’s total compensation, the Board determines that amount based on the overall performance of the Healthcare System. The award can range from zero to 40 percent. Given the outstanding achievements on so many fronts, the Board voted to award Ms. Farber an incentive award of 40 percent.

"It is hard to describe our chief executive officer’s performance this year as anything other than outstanding, given Washington Hospital’s overall performance and the achievements that have been made, especially when considering the difficult economic challenges in our country," said Dr. Bernard Stewart. "This year, Ms. Farber’s accomplishments exceeded those of last year. This high level of success is evident in our financial statements and the numerous accomplishments that have been made this past year."

"All members of the community should be proud of their hospital. It has been successful because we reinvest every dime of profit back into the community in the form of new programs and services to meet the health care needs of the residents of this District," Dr. Stewart continued.

If you would like to watch the December 13, 2010 Board of Directors meeting, it can be viewed by going to www.whhs.com.

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