Kettering Health uncovered financial impropriety after an internal investigation into allegations of misuse of funds and operational mismanagement, the health system said in a recent announcement about the end of its internal investigation. The investigation revealed Kettering Health funds had been used for non-business purposes, according to the hospital network.
“Kettering Health will be seeking repayment of these funds from the individuals involved and sharing information related to our investigation with the appropriate authorities,” the hospital system said in a statement on Tuesday, Nov. 7.
Kettering Health won’t say what government agencies are involved, who the subject of the investigation is or how much was allegedly spent on non-business purposes.
Ted Ramirez, a corporate governance attorney who in recent years has worked for Kettering Health and with the Conference of Seventh-day Adventists, called the hospital network’s pledge to address the issues “long overdue.”
“New CEO Mr. Gentry’s statement ends with an elegant call to a better future. The message is refreshingly frank in some respects, and its tone is high,” Ramirez said. “Transparency and governance are and always will be challenges for Kettering, the Adventist Church, and many tax-exempt nonprofits upon which our communities depend for crucial services and ethical leadership.”
But Ramirez said that while former hospital network CEO Fred Manchur and others are gone, people who were involved are still working there.
“Some observe that not all those, within and ‘external,’ who sailed the ill-fated Manchur Ship into the iceberg, are gone. Some remain in senior administration or advise them. Some see early indications that personal preferences and vendettas are influencing Kettering’s treatment of those who have left, fled, who will be among the ‘multiple individuals’ Kettering says it will pursue. Who was allowed to ‘retire’ with ‘packages’ and nondisclosure agreements?” Ramirez said.
‘The Kettering Way will still continue’
Lori Van Nostrand is a former executive secretary at Soin Medical Center who made complaints to the Ohio Attorney General about nepotism in the hospital system and hospital funds being used for improvements at Manchur’s house, among other things. She also said there were lot of trips that were non-hospital related.
Following the recent announcement about the internal investigation ending, Van Nostrand remains skeptical that those implicated in the investigation will be held accountable.
“No, they won’t. No, the Kettering way will still continue until the attorney general calls them out. Secondly, why would they not list the people who, quote, owe money back? Why not list them and how much they owe back. Why are you protecting those people?” Van Nostrand said.
Kettering Health’s first announcement regarding the internal investigation released in March came in response to records obtained by the Dayton Daily News and other media outlets containing a pair of complaints filed with the Ohio Attorney General’s Office alleging “abuse of charitable funds.”
The complaints referenced Manchur and Dave Weigley, former chairman of the Kettering Health board who is still president of Columbia Union Conference of Seventh-Day Adventists, which sponsors Kettering Health.
Officials with the Seventh-day Adventist Columbia Union Conference declined to comment on the health system’s internal investigation.
Hospital won’t say what changes made
Two statements came from Kettering Health on Nov. 7, the first saying “senior executives and board members” implicated in the investigation were no longer with the organization. Kettering Health later amended its statement to replace “senior executives and board members” with “individuals.”
“In addition, we have made significant changes to policies, procedures, and governance to ensure this type of behavior will not occur in the future,” its statement says.
Kettering Health declined to provide documents or specify what those changes were. They did not include changes to governance or conflict-of-interest policies disclosed to the IRS.
The Dayton Daily News requested copies of the most recent governance documents from Kettering Health, which the nonprofit network is required to make publicly available under IRS rules. This newspaper was told the latest versions had already been provided earlier this year in March.
The documents Kettering Health provided earlier this year dated back to 2010 and 2020, prior to when the complaints of financial impropriety were made.
Kettering Health’s conflict of interest policy was last revised in December 2020 and approved by its administrative finance council and network leadership group in January 2021.
The other governance document Kettering Health provided was its amended and restated articles of incorporation that became effective January 2010. The articles also say, “No officer, Director, Member of employee of the Corporation shall receive or be lawfully entitled to receive any pecuniary profit from the operations and activities of the Corporation, except reimbursement of out-of-pocket expenditures and reasonable compensation for services actually rendered to or on behalf of the Corporation.”
Former board member optimistic
Former Kettering Health board member Phil Parker said it is essential that new Kettering Health CEO Michael Gentry make the network more transparent and rebuild the trust lost in the wake of the original allegations about financial wrongdoing and the announcement that the internal investigation found financial impropriety in the use of hospital network funds.
“There was a flawed culture in the organization that CEO Gentry inherited upon his arrival that going forward must now change. The public, the community and especially the organization’s employees and board leadership, must expect a fresh air of trust in the organization’s future,” Parker said.
“This organization is much too important for us to let this issue or even past individuals degrade its service to our community. I’m confident that these changes can and will prevail with new board and professional leadership,” said Parker, who left the Kettering Health board of directors in the summer of 2022 at the end of his second three-year term.
Parker, the retired president and CEO of the Dayton Area Chamber of Commerce, remains on the boards overseeing the network’s Soin Medical Center and Kettering Health Greene Memorial, formerly Greene Memorial Hospital.
In an interview with this newspaper last spring Parker called for more transparency on the part of Kettering Health officials, an improved governing structure and better oversight by the health network’s board of trustees.
He said the other network board members had raised concerns about spending, including travel expenses. But when board members asked top administrators if funds were spent inappropriately “many of us got feedback that said everything was budgeted and approved,” Parker said in that earlier interview.
The board should have done a better job scrutinizing expenses and not been so quick to accept what network officials told them, Parker said.
Kettering Health is ranked as the region’s second largest employer, after Wright-Patterson Air Force Base, according to the Ohio Department of Development’s 2022 major employer list. Kettering Health is reported as having approximately 14,400 employees in Ohio, the same as Honda. For comparison, Premier Health Partners is reported as having 11,100 employees.
Kettering Health has 15 area medical centers and more than 120 outpatient locations throughout Western Ohio, as well as Kettering Physician Network, which includes more than 700 board-certified providers.
