This article was originally published on www.risemiaminews.com on April 10, 2015.
Former Florida Gov. Jeb Bush’s public political beliefs and personal financial gain seem to have been at odds during his time as a member of the board of directors of Tenet Healthcare.
The potential republican candidate for president stepped down from the company in late December, a move that came as no surprise to political watchers. But with the announcement, new attention is focusing on what Bush actually did at the nation’s third largest for profit hospital chain and whether he supported the corporation’s embrace of the Affordable Care Act, also known as ObamaCare.
Just to put into perspective how big of a boon ObamaCare has been for Tenet, it’s CEO Trevor Fetter reported in a November 2014 press release that the company’s net earnings grew over 59% from the same time in 2013. Fetter said that 40% of that growth had come as a direct result of ObamaCare reforms.
Specifically, the additional revenue came from the Medicaid expansion in five states which Tenet operates in and a decrease in uninsured and “charity” hospital admissions.
“We drove an accelerating contribution in the third quarter from healthcare reform, with sequentially higher declines in uncompensated care and increases in Medicaid volume,” Fetter said in the release. “We achieved another quarter of strong performance across every dimension of our business.”
“It would make sense to pay Jeb Bush, because he’s a well connected guy.”
Bush joined Tenet soon after leaving public office in early 2007 and served until the last day of 2014. Bush came on the board shortly after the Securities and Exchange Commission (SEC) accused the company of wide spread Medicare fraud between 1999 and 2002.
The government said that Tenet’s strong earnings in those years came about because of the company’s “exploitation of a loophole in the Medicare reimbursement system.”
Tenet refused to admit or deny the allegations made in the SEC complaint and agreed to pay a $10 million civil penalty. However, it did also pay $725 million to settle a Justice Department inquiry on the same matter.
Bush was brought on in part to help clean up Tenet’s corrupt image and instill greater public confidence. That strategy seemed to have worked.
And Bush was not the only politician on the ten-member board. Former Democratic senator Bob Kerrey of Nebraska spent over a decade on the board starting in 2001, then temporarily stepped down in order for run for senate in 2012 and quickly rejoined it after losing. Kerrey did not respond to a request for comment.
According to multiple experts on corporate finance and governance, it is not unusual for politicians to be brought into the fold of companies.
“It is to most boards advantage to have people from both sides [of the political spectrum]”, Carlos Parra, a professor and Corporate Sustainability expert at Florida International University (FIU) said. “It would make sense to pay Jeb Bush, because he’s a well connected guy.”
That “well connected guy” happens to be a conservative leader and a son and brother to American presidents. Bush is also according to multiple polls, an early frontrunner in the 2016 republican presidential primary.
He also really doesn’t like ObamaCare, at least not in public.
In an interview on ABC’s “This Week” in October 2013, Bush emphatically said that, “Obamacare, flawed to its core, doesn’t work.”
But while he was publicly opposing President Obama’s signature domestic policy achievement, he and his company were profiting from its successes.
According to an SEC filling, Bush was paid $128,000 in cash and received $170,000 in stock options, for just under $300,000 in total compensation from Tenet in 2013.
2013 was a banner year for Tenet as it turned out. The company finalized a blockbuster deal to buy up Vanguard Health Systems, which increased the number of hospitals under Tenet’s management from 49 to 77.
Fetter told CNBC that the merger was sought after because of Vanguard’s footprint in states that had embraced the Medicaid expansion, or soon would. In other words, Fetter sounded confident that the law would be staying in place.
“Any board member has a higher calling to the shareholders than his political beliefs”
“The more you’re exposed to states with large numbers of uninsured people today, the better it is for a hospital in the future,” Fetter said in the cable interview.
Some find Bush’s perceived cognitive dissonance on the issue to be potentially problematic.
“If it were to come out that he were opposing ObamaCare but while on the board he was privately supporting it, then that would be a huge conflict,” Everett Wilkinson, a South Florida Tea Party leader said in a phone interview. “If I was on the board of Tenet Healthcare, I would not be happy that the president of the company came out and supported the legislation.”
A Bush spokesperson told the Washington Examiner that the former governor strongly opposed ObamaCare in Tenet board meetings.
Tenet declined to release copies of the minutes to the meetings from board gatherings during Bush’s tenure, saying through a spokesman that they were not publicly available.
It’s worth noting that many business insiders see nothing wrong with the situation.
Bruce Foerster is the president of South Beach Capital Markets Advisory Corporation, a company that offers advice to firms and corporate boards. He said that he found Bush to be an upstanding businessman who played by the rules and liked the ideological balance on the Tenet board.
“Any board member has a higher calling to the shareholders than his political beliefs,” Foerster said. “The CEO of Tenet [Fetter] has the courage to have differing opinions in the board room, which is a rare trait for a CEO.”
But Qiang Kang, a professor of finance at FIU took a different view, saying that if Bush was making a profit directly from ObamaCare than he should disclose it. “I would not call it a conflict of interest but I do think it is an interesting issue,” Kang said.
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