Gila Regional Medical Center CEO steps down

Written by on February 21, 2020

Taffy_Arias_CEO

Gila Regional Medical Center’s CEO, Taffy Arias, has “separated from the hospital,” according to Tony Trujillo, chairman of the hospital’s board of trustees. Arias delivered her resignation to Trujillo, effective immediately, last Friday. Arias was in the midst of an already scheduled leave of absence when she quit the post she took in April 2017.

Details surrounding the CEO’s departure have been slow to emerge, and Arias herself declined to comment. “There will be a special board meeting on Monday” to discuss her departure, she said. “I’m not talking to the media at this time.”

“She wasn’t asked to resign,” Trujillo confirmed. He added that, following Arias’ resignation last Friday, he approached the hospital’s chief financial officer, Richard Stokes, and asked him to fill in as interim CEO, a position Stokes accepted, according to Trujillo. 

“I am not the interim CEO right now,” Stokes said, however. “I’ve been acting within my capacity as CFO, and have not strayed beyond that and will not do so unless or until the board takes action on Monday.”

In addition to the confusion surrounding Arias’ immediate replacement, the Gila Regional board of trustees was not convened to discuss the decision to tap Stokes as interim CEO. The move on Trujillo’s part is likely to ruffle a few feathers among his fellow trustees, who are collectively responsible for hiring and firing the hospital’s leadership. Trustees contacted by the Daily Press declined to comment publicly about Trujillo’s actions.

“I asked Richard Stokes to stay on in that capacity until Monday,” Trujillo said. “We have a special meeting on Monday, and at that time the board will take action on the reason for her separation.” Trujillo wouldn’t elaborate on Arias’ reasons for leaving, but as CEO of the struggling hospital, she has been under immense pressure.

“The hospital is not doing well, that’s not a secret,” Trujillo said. “The pressure is greatest on the CEO.” 

Trujillo said that due to his obligations as a lobbyist during the 30-day legislative session in Santa Fe — which ended Thursday — he was unable to convene a meeting of the board of trustees last week to address the sudden departure of the hospital’s top executive, adding that other trustees had similar conflicts. He described the immediate step he took to engage Stokes as “absolutely necessary.” 

At the time Arias was hired, Gila Regional had suffered a series of crushing financial blows that led county commissioners to discuss the possible sale or lease of the hospital. Gila Regional’s finances began to improve under Arias’ leadership, and when Stokes came on board in February 2018, the new CFO began a thorough review of the hospital’s books and management systems, instituting new practices that resulted in increased revenue. 

Then, Stokes was caught by surprise in mid-2019 when the hospital discovered it would experience a projected $9.5 million shortfall in revenue due to changes in the way the New Mexico Human Services Department distributes reimbursements for uncompensated patient care costs. While the state ultimately awarded Gila Regional reimbursements that translated to a less-devastating loss of around $5 million, future reimbursements won’t improve until the hospital makes a long-discussed switch to being designated a critical access hospital by the Centers for Medicare and Medicaid Services.

Stokes told the Daily Press that otherwise, going forward, the hospital was set to recoup less than half of the reimbursements it used to receive, equaling losses of at least $5 million each year.

Earlier this month, Arias told the Daily Press that, until recently, she had opposed the move away from being an acute care hospital, due to concerns that the switch would affect the hospital negatively. “I misunderstood what it would mean for the hospital,” she said. 

Gila Regional has discussed the financial issues related to its designation as an acute care hospital for at least a decade, and in fact experienced identical losses — an estimated $9.5 million — for similar reasons over the nearly three year period leading up to Arias being hired in 2017. 

On Wednesday, the board of trustees will hold another special meeting, likely in order to greenlight an already-prepared application to become a critical access hospital. That process will take up to nine months, after which the hospital will be eligible for “100 percent” of its reimbursements for Medicare patient care costs, according to Stokes. Both Stokes and Arias emphasized earlier this month that the hospital would see “zero” changes to the services it offers due to the redesignation.

Meanwhile, Trujillo said that Arias’ contract is “under review,” and admitted that the hospital is most likely on the hook for an expensive buyout, despite Arias’ unsolicited resignation without notice.

During a meeting of the Grant County Commission in May last year, Commissioners Alicia Edwards and Harry Browne expressed astonishment that the Gila Regional board of trustees had approved what Edwards called an “ironclad contract” that leaves little room for terminating the CEO.  

“I think that it is a highly unusual contract. I talked to other hospitals and people thought that it was very odd,” Browne said at the time. “I would add that the requirements in the contract that had to be met before the hospital could terminate the contract — our reading of it was that she would have to commit a felony to terminate that contract. 

“If she drove the hospital into bankruptcy she couldn’t be terminated,” he said.

Trujillo was on the board when Arias’ contract was approved and, during the same meeting in May, disputed the commissioners’ claims that the contract had anything wrong with it.

“They have had issues with the fact that we gave her a five-year non-cancelable contract,” Trujillo said at the time. “We wanted stability going forward. To say it is non-revocable isn’t right and I beg to differ.”

Edwards told the Daily Press on Thursday that she “would fully support Richard [Stokes] being the interim CEO if that’s the direction they want to go,” adding that the decision is entirely up to the board of trustees. 

Geoffrey Plant may be reached at geoff@scdaily press.com.

 

Article Categories:
Main · Top Stories
Menu Title
x