Employment of executives’ family at Kettering Health Network
The IRS requires nonprofits to disclose if they employ relatives of key officials, or officials who receive more than $150,000 of compensation. KHN’s 2009 tax documents, released in November, provide the first disclosure of relatives of key officials who are employed there. Those relatives include:
Richard Manchur, son of KHN CEO Fred Manchur. As director of noninvasive cardiovascular services at KHN’s Grandview Medical Center, Richard Manchur was compensated $92,049 in 2009.
Jared Keresoma, manager of facilities and security at KHN's Greene Memorial Hospital since August 2009. Keresoma, son-in-law of Fred Manchur, was compensated $23,773 in the latter part of 2009.
Michelle Chew, wife of Roy Chew, president of KHN's Kettering Medical Center. Michelle Chew, a nurse, was compensated $10,900 in 2009 by Kettering Medical Center. She left her job after Roy Chew was named KMC's president in 2009.
Jacqueline D'Aurora, KHN marketing manager and family member of Janice Wooles, director of network finance/controller. D'Aurora was compensated $68,048 in 2009.
Kathryn Stiles, a marketing specialist for Kettering Medical Center and family member of Eugene Stiles, KHN's director of network reimbursement. Her 2009 compensation from Kettering Medical Center was $50,632.
DAYTON — Local policies for the employment of executives’ family members vary widely from hospital to hospital and from health system to health system. But Kettering Health Network, which employs about 9,500 people, has the only local nonprofit hospitals that in 2009 employed executives’ relatives, tax records show.
For example, given Fred Manchur’s status as KHN’s chief executive officer, KHN’s employment of his son, Richard Manchur, and his son-in-law, Jared Keresoma, creates a workplace scenario that would be prohibited at KHN competitor Premier Health Partners. But it would be possible at other hospitals here and around the state.
Premier, the region’s largest health system with 14,200 employees, will not hire immediate family members of directors — or more senior executives — at any Premier hospitals. Those hospitals include Miami Valley and Good Samaritan hospitals, Atrium and Upper Valley medical centers, and Miami Valley Hospital South.
“The problem is that when you have immediate family members in the workplace, it gets complicated,” said Bill Linesch, Premier’s vice president of human resources.
Managers, who are supervised by directors, may have an immediate family member working elsewhere at Premier, as long as that relative is not working in the same department and is not under the direct supervision of a relative.
The Children’s Medical Center of Dayton’s policy for the employment of relatives reads, in part, “individuals will not be placed in a position having direct effect upon the progress, employment, salary or supervision of a relative.”
However, Dayton Children’s, which employs 1,848 people, does allow managers to have “indirect supervision” of relatives, so long as it is done in collaboration with the human resources department or the director of the specific work unit. Confidentiality, work relationships and fair treatment of all employees also must be maintained, according to the policy.
Dayton Children’s seeks to ensure a culture of fairness, said Vicki Giambrone, vice president for marketing and external relations.
While the hospital doesn’t currently have an executive’s relative working within that executive’s span of control, “it sounds to me like we need to tighten up our policy,” she said.
During fiscal 2008-09, Dayton Children’s employed Carrell Pickoff, a part-time nurse and the wife of one of its trustees, Dr. Arthur Pickoff. Dr. Pickoff also chairs the hospital’s Pediatrics Department, though his employer is Wright State University’s Boonshoft School of Medicine. Dayton Children’s, however, subsidizes that position.
Dr. Pickoff said he and his wife work in two different areas of the hospital. He said he has never encountered a potential conflict of interest involving his wife. Carrell Pickoff works in clinical trials and at Dayton Children’s urgent-care location in Springboro, he said. She received total compensation of $25,136 in fiscal 2008-09 from Dayton Children’s, a tax record shows.
At the Columbus-based OhioHealth system, managers may not directly supervise a family member. But it is possible for a senior OhioHealth executive to have a family member working within the organization, which has more than 15,000 employees, said Jon Joffe, vice president of human resources.
Similarly, the Cleveland Clinic does not allow a manager to directly supervise a family member, and family members may not hold a job in which they would benefit from their personal relationships to another family member, spokeswoman Heather Phillips said. Job applicants also must disclose the identities of any family members already working at the Cleveland Clinic, she said. But an immediate family member of a senior executive could potentially be employed by the Cleveland Clinic if such conditions are met, she said.
The employment of family members does not account for all potential conflicts of interest in the workplace. At Premier’s Miami Valley Hospital and Upper Valley Medical Center, for example, some directors have a financial interest that could be perceived as a potential conflict of interest. Premier claimed on tax documents that those transactions are “arm’s-length” and audited for compliance.
IRS seeks to spur better corporate governance
Beginning with 2008 tax forms, the Internal Revenue Service required nonprofits to disclose if any key employees have family members working for the organization.
That requirement was part of a broader IRS push to encourage best practices for corporate governance in the wake of scandals at some nonprofits, said Sam Warwar, tax partner at Coolidge Wall Co., LPA in Dayton. “If there is better corporate governance, there is less opportunity for abuse,” he said.
In the absence of shareholders, nonprofits must answer only to boards of directors, and the IRS wants to ensure those boards are sufficiently independent, Warwar said. The agency also wants transparency to the public since nonprofits often enjoy significant tax exemptions.
So nonprofits must disclose if they employ family members of board members or key employees.
The purpose: discourage hospitals from employing executives’ relatives who are not qualified, or from overpaying those relatives, Warwar said.
And the IRS is trying to make sure nonprofit corporations’ assets are not being taken advantage of by insiders, said Warwar, whose law firm represents nonprofits, including health care organizations.
Employment of family members can become an issue if an executive’s relative has performance issues in the workplace, said Nell Minow, editor of GovernanceMetrics International, which monitors corporate governance among publicly traded companies.
“Can you give the employee the level of independent oversight that is necessary in a professional context?” Minow said. “Will other people who work in the company be afraid to provide the appropriate level of feedback because they think they will get in trouble by raising that?”
An organization’s executives and board members must address the issues raised by the employment of relatives, Minow said.
“It is definitely a red flag,” Minow said. “The burden of proof is on them to show what steps they have taken to ensure they have addressed what appears to be a conflict of interest.”
Path to a Grandview management post
Among the five people identified on KHN’S 2009 tax documents as relatives of its executives, Richard Manchur received the most compensation: $92,049, according to a tax return.
Richard Manchur earned his bachelor’s degree in international management in 2002 at La Sierra University, which, like KHN, is affiliated with the Seventh-day Adventist Church. He received his master of business administration there the following year, according to the school.
According to his Linked- In web account, Manchur worked from August 2004 to September 2005 as a health and group benefits analyst for Watson Wyatt.
He then managed a family-owned company, Nature’s Pantry Health Products, from September 2005 to January 2008.
A California transplant like his father, Richard Manchur was named operational design and strategic support director at one of KHN’s hospitals, Grandview Medical Center, in early 2008 at age 29.
The job, which focuses on special projects, is a “transitional” position that helps groom leaders for other roles, KHN spokesman Kevin Lavoie wrote in an e-mail to the Dayton Daily News.
“KHN over the years has tapped key individuals who have the talent and competencies to groom for leadership positions,” Lavoie wrote. In keeping with those expectations, Manchur has taken classes at the University of Dayton’s Center for Leadership & Executive Development, a UD spokeswoman confirmed.
Grandview’s special projects post is modified, “depending on the skills and past experience of the employee and the organization needs at the time,” Lavoie’s e-mail states.
The special projects role was not created specifically for Richard Manchur, according to Lavoie.
In early 2008, when Richard joined Grandview Medical Center, his father was serving as president of another KHN hospital, Kettering Medical Center. But Fred Manchur also served as executive vice president for the entire health network, including Grandview. Fred Manchur subsequently became KHN’s president in January 2009, then CEO in December 2010.
In January 2009, Richard Manchur was named interim director of noninvasive cardiovascular services at Grandview. “He has gained the respect of the clinical and medical staffs during the past two years, and will be taking full responsibility for the cardiac service line” this month, Lavoie wrote.
Richard Manchur’s job involves oversight of the hospital’s cardiovascular service line, cardiology, vascular, center for circulatory disorders, cardiac rehabilitation and catheterization lab, according to a job description. His supervisor is Dr. Tom Hardy, vice president of medical affairs.
“He did not have experience in a hospital setting prior to Grandview, although he had worked with hospitals in his benefits consulting role,” Lavoie wrote in an e-mail.
People without previous hospital experience have been hired for management positions within KHN both before and since Richard Manchur joined the network, according to Lavoie.
KHN: Family hiring complies with policy
KHN declined to answer questions about how Grandview Medical Center ensured the hiring of Richard Manchur was an independent process, and declined to say if the Grandview jobs that Richard Manchur has held were posted or if anyone else applied for them.
KHN did not respond to Dayton Daily News requests to speak with Fred and Richard Manchur, as well as the younger Manchur’s supervisor, Dr. Tom Hardy. The Manchurs did not respond to direct e-mails requesting comment.
KHN also declined comment on the employment of Fred Manchur’s son-in-law, Jared Keresoma, manager of facilities and security at KHN’s Greene Memorial Hospital; Jacqueline D’Aurora, network marketing manager and family member of Janice Wooles, director of network finance/controller; and Kathryn Stiles, a marketing specialist for Kettering Medical Center and family member of Eugene Stiles, KHN’s director of network reimbursement.
Through e-mails, the Dayton Daily News requested more information directly from those executives and their employed relatives, but in almost all cases did not receive replies. Keresoma deferred comment to Lavoie.
Keresoma holds a master of business administration from La Sierra University. Prior to joining Greene Memorial Hospital, he worked for nearly three years as an administrative resident and then as an admitting manager at South Coast Medical Center in California, according to his LinkedIn web page.
The 2009 tax form for KHN’s Kettering Medical Center also shows Michelle Chew, wife of KMC President Roy Chew, worked at the hospital that year.
In an e-mail, Roy Chew, who also is KHN’s executive vice president, stated his wife, a nurse, began working for Kettering Medical Center before he met her. She stopped working at Kettering Medical Center after he became president there in 2009, he said.
Kettering Health Network said all the family members’ employment complied with its policy, but declined to provide the Dayton Daily News with a copy of that policy.
“Kettering will continue to attract dedicated physicians, young professionals and talented health care providers to our community,” Lavoie wrote.
Kettering Medical Center has several employees who are related and is very careful about the employment of relatives, Roy Chew stated in an e-mail. He added that it would be awkward for relatives of KHN managers to work at a competing hospital system.
“Here at KHN, we celebrate the fact that our employees think so highly of the hospitals that they encourage their family members and friends to work here,” Chew wrote in an e-mail. “This is the same way in which other major employers have embraced their employees in the past in Dayton, such as GM and NCR, where employees encouraged family members and friends to apply because of such a great working environment.”
Contact this reporter at (937) 225-7457 or bsutherly@Dayton