Two SMH board members resign in wake of RHG decision

Two Salem Memorial Hospital board members resigned Tuesday afternoon after Rural Health Group, which has guided Salem Memorial Hospital since 2022, announced during that afternoon’s regular board meeting it was exercising the 30-day out clause in its contract.

“As a lifelong resident of the Salem Memorial Hospital District, it has always been my wish to live in a community that provides its residents with first-class health care in the small community of Salem,” board chairman A.J. Seay wrote in his resignation letter, delivered to board member Judy Thompson moments after RHG announced to the board that it no longer wished to contract with SMH.

“My vision and hope for the hospital no longer aligns with the desires and management of the rest of the board of directors. Moving forward, it’s in the best interest of all if I step away from my role as board member.”

Board member Willie Strader later in the day also resigned, emailing a letter of resignation to the board.

“I do not agree with the remaining board members’ vision for the future of the hospital or their plan for management,” said Strader in his letter of resignation.

When contacted by The Salem News, Hannah Harris, executive assistant for SMH, confirmed RHG’s decision.

“They did do their 30-day notice, yes,” she said. “I think they (RHG) were going to send something official to Mark (hospital attorney Mark Weaver). I don’t think that’s official yet.”

When contacted by The Salem News, RHG expected to offer a statement Wednesday once ownership had further discussed the situation.

Seay said at the end of the meeting, which he described as “embarrassing,” RHG’s Darrell Morris asked to speak, and Morris said RHG was giving the 30-day notice to exit the contract, which is to manage the hospital.

“Embarrassing and unprofessional,” Seay reiterated to The Salem News Tuesday after the meeting, “how both our CEO Wayne Reid and our lab director Melissa Carter were addressed in open session in front of staff, RHG and the media.”

SMH board meetings have been contentious over the past year-plus, with board members and staff arguing and tempers sometimes flaring.

Salem Memorial Hospital’s board of directors less than four months ago (April 18) voted 4-2 in closed session to extend the contract of RHG for one year with the 30-day out.

Voting yes April 18 on the motion to extend were Strader, Thompson, Seay and Wanda Tatom. Voting no were Ray Bruno and Mike Swyers. Thompson, Tatom, Bruno and Swyers are the remaining board members, with Bruno elected chairman during Tuesday’s meeting.

The Salem News in a May 8 letter emailed to all board members and administration asked for responses to the votes, writing in part, “The Salem News would like to hear from all of the board on this issue as to why you voted yes or no, and from the leadership as to what has been accomplished since RHG took over, as well as challenges still remaining.” The same letter was also hand delivered to each board member at the May 16 board meeting.

Board members Seay and Strader, as well as Reid, emailed responses. Thompson, Tatom, Bruno and Swyers did not.

RHG was brought in to run the hospital during a financial crisis. SMH’s board in February 2022 voted 6-0 to fire Kasey Lucas as chief executive officer, hire Bill May as an interim replacement and bring on RHG. May was affiliated with RHG, based in Kansas City.

RHG was brought into SMH by the board of directors for an initial period of 90 days, beginning Feb. 4, 2022. RHG’s role, according to the board, was to assist the hospital in responding to the financial crisis.

Finances were bleak. The board was told during its regular meeting January 2022 that cash-on-hand year to date dropped to 30 days. The Missouri average for Missouri Critical Access hospitals (such as SMDH) is 53 days and the national average is 71, according to a report given the board.

In December 2021, SMH checking, savings and CDs totaled $2.44 million compared to $9.8 million the previous year. Year to date, SMH was showing a loss of operations of $2.2 million.

Seay, who had served on the SMH board for 15 years, said Tuesday that the financial picture was turning around, and that RHG and the dedicated SMH staff were making that possible.

“I look at the big picture, and hospitals all around are in trouble,” he told The Salem News Tuesday. “There is so much competition in health care. As a board we focused on turning this around. We made great improvements. We can’t get back to where we were overnight, it’s a years-long project. . . . We made money six months in a row. I don’t know if there is a hospital in Missouri that has done that.”

Strader was appointed to the SMH board in 2019 to fill a vacancy and was elected in April of this year.

“A few years ago, I was asked to fill a vacant position for District 4 on the board of directors for Salem Memorial Hospital, and I was honored to be elected when I ran for the position two years later,” he said. “In the time since, we have battled from the lowest of lows and to where I thought was a path to success for this hospital and our community.”

When contacted Tuesday afternoon about his resignation, Strader said, “It was obvious certain members of the board have a different vision than I have. They (RHG) were willing to work with us, but it was obvious we (as a board) weren’t willing to work with them.”

RHG employs Reid as CEO. He could not immediately be reached for comment.

Vacancies will be filled by the remaining board members, according to Weaver, hospital attorney.

"I always recommend that the board publishes notice of the vacancy, and those interested and qualified will be asked to appear at a board meeting," Weaver said of the process to fill the two board seats. "Then the board will vote in open session to name the new board members."

See thesalemnewsonline.com and the print editions of The Salem News for updated information on this story.

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