NCMC halts Banner contract talks

The board, after reviewing Figa’s findings, followed his advice to suspend indefinitely the contract process and voted to fire the consulting firm, BKD LLC of Kansas City, Mo., and its negotiator, Jeff Tindle.

In summarizing findings from his three-week investigation, Figa wrote to the board:

“At this point, the negotiations with Banner are so tainted with actual and potential conflicts of interest that I cannot recommend that NCMC Inc. move forward in finalizing the negotiated agreement with Banner. Instead, I recommend that NCMC Inc. maintain the status quo (in) its business dealings with Banner, pending clarification of its goals and options. Only after NCMC Inc. completes this overall reevaluation should it go forward with third parties, which may well include Banner.”

Any resumption of negotiations with Banner will involve as many as five new board members to be chosen early next year. The 10-member board, at its annual meeting in January, expects to fill those vacancies, Board Administrator Bill Hughes said.

Banner officials did not return phone calls from The Business Report seeking comment on Wednesday morning.

Figa found in his report that the “interactions between Banner and Ascriptus are suspect and create both an appearance of conflict of interest and an actual conflict,” subject to Colorado law and NCMC’s own policies.

Figa discounted Sewell’s decision to divest his interest in Ascriptus after, as Sewell said, he became aware of the company’s interest in doing business with hospitals.

The investigator cited documents, including Ascriptus’ private placement memorandum issued to investors and dated a year prior to Sewell’s investment, that “states, in more than one location, that Ascriptus intended to market products to hospitals.”

His report also details the discussions, beginning in August, between the company and Banner officials about the possibility of entering into a service agreement.

“Banner contacted Ascriptus on Oct. 4 about exploring a possible business relationship, the same day that the NCMC Inc. board voted to approve a new agreement with Banner,” Figa wrote in his report. “The timing is disturbing.”

Sewell had earlier scheduled an August meeting with Ascriptus officials so they could demonstrate their transcription software for hospital managers, Figa found.

“At the point of that meeting, Sewell was not on Banner’s frontline negotiating team,” Figa wrote in his report. “Nevertheless, Sewell continued to exert substantial authority at the hospital. He personally and his employer would be profoundly affected by the outcome of the negotiations in many ways.”

Figa called the timing of the August meeting “troubling, especially as it appears to have been called by Sewell.”

In recommending that the board terminate its contract dealings with Banner, Figa also prodded them to explore other alternatives.

Board members “should carefully, deliberately, and thoroughly explore other potential alternatives,” Figa recommended. “These include operating independently, sending out a request for proposals, associating with Poudre Valley (Health Systems of Fort Collins), as well as continuing with Banner as is, or continuing with Banner under a new agreement.”

Click here to view Figa’s seven-page report and a statement by the NCMC Board

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