- The Washington Times - Thursday, August 28, 2003

The chief executive officer of the bankrupt company that owns Greater Southeast Community Hospital is set to receive nearly $1 million this year, despite the ailing hospital’s recent history of failed inspections and understaffing that threaten its closure.

Paul Tuft, CEO of the Scottsdale, Ariz.-based Doctors Community Healthcare Corp., has received $448,432 in salary and $102,483 for travel and other expenses since the company declared bankruptcy in November 2002, according to company pay records.

Mr. Tuft’s annual salary is more than $750,000. Additional money for travel and other expenses could push Mr. Tuft’s compensation package to $1 million this year, according to an analysis of pay records obtained through U.S. Bankruptcy Court filings.

Doctors Community owns and operates five U.S. hospitals, including two in the District that are funded in large part through D.C. taxpayer dollars. Two years ago, city officials awarded a five-year, $500 million contract to the D.C. Healthcare Alliance, which oversees public health care in the District. About one-third of that $500 million in public funding goes to Greater Southeast.

Creditors have called Mr. Tuft’s salary “enormous” and suggested a pay cut in recent U.S. Bankruptcy Court filings, which contain the corporation’s pay records.

The high salaries for Doctors Community executives also concern Greater Southeast workers and community activists. They blame the Arizona managers for Greater Southeast’s failed inspections, loss of accreditation, layoffs and the threat of closure.

Greater Southeast is the primary hospital for low-income D.C. residents. City health inspectors suspended its license in January, citing patient care lapses and understaffing. The inspectors will decide in October whether to close the hospital.

Activists previously criticized the salaries when court records in February showed that despite the mounting crisis at Greater Southeast, Doctors Community executives paid themselves more than $4 million in salary bonuses and advances in the year prior to filing bankruptcy.

However, current payroll records show Doctors Community executives — and their family members — continue to earn lucrative salaries even during the ongoing bankruptcy proceedings.

Steven Dietlin, chief financial officer, receives $337,236 per year. The corporation paid Mr. Dietlin an additional $5,632 in expenses through June 30. Erich Mounce, vice president of mergers and acquisitions, gets paid $321,120 per year. He has received $59,101 in expenses.

Mr. Tuft’s father-in-law, David Denslaw, also a vice president of mergers and acquisitions, receives $200,172 in salary. And Mr. Tuft’s brother, Alan Tuft, another vice president of mergers and acquisitions, has been paid $16,191 in salary, $41,666 in consulting fees and $10,234 in expenses through June 30.

Meanwhile, Mr. Tuft and Mr. Mounce have proposed to “acquire all or substantially all” of the corporation’s assets, creditors say.

A source involved in the bankruptcy case said the pair’s bid, which may involve forming a separate corporation to take over Doctors Community, has made creditors reluctant to openly criticize the executives’ current salaries.

“There’s been an awful lot of grumbling about the pay,” the creditor said. “But we may have to end up working for these people again, so nobody’s made a big deal about it in court yet.”

However, Sam Albert, a District.-based attorney for creditors, referenced the high salaries last month in legal papers opposing the hiring of a firm to oversee the company’s affairs during bankruptcy.

Mr. Albert called the salaries of Mr. Tuft and Mr. Mounce “enormous” in court papers. The legal filings also stated that creditors were assessing a recent proposal by Mr. Tuft and Mr. Mounce to acquire Doctors’ assets.

Doctors spokesman John Ray said the pair’s proposal could involve forming a separate corporation or remaining Doctors Community. He called both options standard reorganizing practice in companies recovering from bankruptcy.

“Whether in the end it would it be Doctors Community Healthcare or something else remains to be seen,” Mr. Ray said. “Sometimes when folks reorganize they want to keep the name. Other times they want to create a different name for a number of reasons.”

Mr. Ray also downplayed criticism of current salaries.

“If the creditors really have an issue with the salaries, then all they have to do is petition the court,” Mr. Ray said. “If you ask me, I’m convinced that the salaries must be in line. If they were unreasonable, the creditors have a responsibility to go to the judge and to say that they’re not.”

Community health activists, however, say they do not want Doctors Community or any of its executives to run Greater Southeast.

“The same group under a different name is the same group,” said Vanessa Dixon, a member of the D.C. Healthcare Coalition, which has been critical of Doctors Community.

“If this same group put as much energy into the hospital as they do their own well-being, then there wouldn’t be a health care crisis in this city.”



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