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December 23, 2011 > Washington Hospital Healthcare System Recognized for Innovation, Excellence and Patient Safety in 2011

Washington Hospital Healthcare System Recognized for Innovation, Excellence and Patient Safety in 2011

By Patricia Danielson, RHIT Board Member and Past President, Washington Township Health Care District

Washington Hospital Healthcare System is ending 2011 on a high note. We have reached significant milestones that continue to reinforce this institution as a premiere medical facility committed to meeting the health care needs of our community.

The close of the year is also the time that the Board of Directors reviews the performance of our Chief Executive Officer, Nancy Farber, and makes any adjustments to her compensation consistent with our compensation philosophy and the Internal Revenue Service Guidelines for establishing reasonable compensation. As President of the Washington Township Health Care District Board of Directors, I am proud to say that her performance has been exceptional given the overall performance of the Healthcare System and the achievements that have been made, especially when considering the difficult economic climate and the great uncertainty surrounding healthcare reform. Our achievements are in large part the result of Nancy Farber's strong leadership and commitment to building a healthcare system that will serve this community for years to come.

This high level of success is evident in our financial statements and the numerous accomplishments. Washington had a strong financial performance in FY 2010-11 compared to other hospitals. The total net operating income for our last fiscal year was $36.8M, well above the budget. Again, we were able to provide millions of dollars for charity care, specifically in 2011 Washington provided $44 million in health care services to the District's medically indigent who could not pay. This includes care provided for free and also care provided to the Medi-Cal population that Washington subsidizes since the Hospital is compensated much less than the cost of providing care.

Just recently, the Board "cut the ribbon" on the newly completed Central Utility Plant, a very complex construction project and a critical piece of infrastructure needed to support the operations of the Hospital in the decades to come. The Central Utility Plant was completed on time and on budget. Also recently, Washington Hospital was granted Magnet Status recognition by the American Nurses Credentialing Center. A Magnet designation is the highest level of recognition that a hospital can achieve for nursing excellence. Only 6.7% of hospitals in the United States have earned this status and Washington is one of only four hospitals in the Bay Area to have this designation.

The Joint Commission, which rates hospitals on key measures of service and patient care, named Washington Hospital as a top performer on key quality and patient safety measures. It is a prestigious designation awarded to an elite group of only 405 hospitals in the entire nation.

We also received the 2011 HealthGrades award for patient safety excellence, which places the hospital among the top 5% in the nation for patient safety. Washington is the only hospital in the East Bay and one of only 268 hospitals nationally to receive this designation.

Washington Hospital's Center for Joint Replacement (CJR) received a five-star customer service award and the Top Performer Award from Professional Research Consultants. The CJR also scored in the top 10% nationally based on excellent patient responses. HealthGrades, the leading national health care rating information and advisory service, ranked it the number one joint replacement program in California.

Washington's stroke program received the 2011 HealthGrades Five-Star Award, ranking among the top 15% in the nation for the treatment of stroke. For the third year in a row we were also awarded the Gold Seal of approval from the Joint Commission for Primary Stroke Centers.

In addition to considering the achievements of the Healthcare System in the Board of Directors' review of the CEO's compensation, we have retained Integrated Healthcare Strategies to provide independent compensation data to make sure that we are paying the CEO fairly and appropriately. This firm helps us to properly align the CEO's compensation rate with other similar hospitals in California and across the country that compete for the same executive talent. Integrated Healthcare Strategies uses its own proprietary database and in addition, uses two other commercially available databases in its analysis. The Board has determined that the CEO's base salary should be administered using ranges built around the 65th percentile of the determined peer group and her overall cash compensation should be administered using ranges targeting the 75th percentile of the peer group.

Eric Reehl, a consultant with Integrated Healthcare Strategies, recently presented his findings at our November 9, 2011 Board of Director's meeting which is available on our website at

Additionally, I want to remind everyone that the District does not receive any taxpayer dollars to cover its operations including salaries. We are a self-sustaining organization. That means that our revenue comes from sources other than taxpayer funds. The principal source of our revenue comes from patient generated revenues. We get paid from insurance companies like Blue Cross and Blue Shield as well as from governmental programs like Medicare and Medicaid. The general obligation bond money that was approved through Measure FF in 2004 goes only towards specified new construction projects. That money is kept in separate accounts and is monitored by a citizen bond oversight committee.

At the December 14, 2011 meeting of the Washington Township Health Care District, the Board of Director's considered possible adjustments to the CEO's cash compensation and extension of her employment agreement.

The following three actions were taken:

Over 80% of hospitals in Washington's peer group also have an executive incentive plan. It should be understood that unlike other employees at the Hospital, Ms. Farber has 40% of her base salary placed at risk and paid based on performance. Because of the CEO's exemplary work this year, the Board voted to award Nancy Farber the maximum At-Risk Performance Compensation Award possible of 40% of base salary which equals $252,867. This award is made in accordance with the Board's compensation philosophy for the CEO and still places the CEO below the 75th percentile of our peer group in overall cash compensation.

This past year the CEO's salary was 16% below the peer group at the 65th percentile level. The Board acknowledged that they could not just make up the difference in one year and determined that she should receive an increase of 3% to her base salary effective November 1, 2011 which is approximately equal to the average increase for executive compensation as reported by Integrated Healthcare Strategies.

Lastly, the Board of Directors voted to extend the CEO's contract by one year, for a new term beginning November 1, 2011 and ending October 31, 2015.

Washington Hospital Healthcare System's accomplishments have occurred in very challenging economic times and are a direct reflection of the success of the institution and the leadership of Nancy Farber. She has earned the compensation that has been awarded to her and it is fair and appropriate based on the comparative compensation data provided to us by our outside consultants. I am confident that this will help to ensure that we will have the strong leadership that we need to continue to meet the health care needs of our community today and in the future.

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