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CCMSD board continues discussions over HMS


April 2, 2020

Before discussions could continue on renewing the contract between Health Management Services (HMS) and Crook County Medical Services District (CCMSD) on Wednesday, the Board of Trustees needed to hear an update on the board’s complaint that the company is in violation of its current contract.

“We had served a letter of notice of default on HMS,” said attorney Kara Ellsbury of Hirst Applegate LLP.

The perceived default lies in the fact that CEO Nathan Hough has, for several months, spent a few hours each week acting as the CEO for the hospital in Lusk.

The board feels that this violates the terms of the contract, which states the district will be provided with a “dedicated, full-time CEO” and that Hough “cannot be a dedicated, full-time employee of CCMSD” if he is spending time elsewhere.

The disagreement boils down to semantics: the board interprets the phrase “dedicated, full-time” to mean that Hough cannot devote attention to any other organization, even if he is already working enough hours for CCMSD to be considered full-time. HMS feels differently.

HMS responded to the violation via its own attorney, Erin MacLean of Freeman & MacLean PC. In the response, the argument is made that the contract does not state Hough will devote his full attention and energies to CCMSD – and that the district has provided “no evidence that HMS has not successfully fulfilled its obligations”. Nor, it says, has Hough ever been a direct employee of CCMSD.

“HMS dedicates a substantial number of employees, above and beyond Mr. Hough, who serve CCMSD in what is an equivalent, and, at times, more than the equivalent, of a full-time, dedicated basis,” says MacLean in her response.

The response further points out that HMS had been led to believe it needed to replace Hough and took steps to advertise for a new CEO. However, “When CCMSD Board members found out about this advertisement and the public in Crook County communicated its displeasure at this detail, since Mr. Hough is so well liked by the community, I understand that the CCMSD made clear that it wanted HMS to keep Mr. Hough as HMS’ CEO for CCMSD,” says MacLean.

The letter asks for clarification as to whether the board does in fact believe there are issues with Hough’s performance and set out a timeline for investigating any issues raised.

Ellsbury informed the board that a response has been drafted to the letter and asked for approval to submit it. She summarized the contents of her reply, which acknowledges that Hough is an employee of HMS, “which is true, but it’s beside the point”.

The contract obligates HMS to provide a “dedicated, full time” qualified individual, Ellsbury argues in her response, so, “It’s really irrelevant who employs Nathan, the obligation is still the same”.

Additionally, Ellsbury said, MacLean raised the argument that HMS dedicates a substantial number of employees above and beyond Nathan. However, she said, that’s also irrelevant: “That’s what the district is paying for”.

The response also addresses that whether Hough’s performance is satisfactory is not relevant, because either way HMS is not meeting its contractual obligation.

The 30-day deadline for HMS to resolve the perceived default is March 30, said Ellsbury, but the master service agreement allows for another 60 days. However, that additional 60 days is only to be used if HMS cannot reasonably cure what is wrong in the 30-day period and if they have commenced trying to cure the problem.

HMS has argued they have additional time because have sought clarification from the district, said Ellsbury, but she “completely disagrees” and thinks they should cure the issue by March 30.

Trustee Sandy Neiman made a motion for the letter go forward. This was passed, though Trustee Trish Habeck, who stated she had not had chance to read the draft, did not vote aye (Chairman Mark Erickson did not request nay votes).

Ellsbury confirmed the letter would be sent that day, “and then I will continue efforts to resolve this issue”.

Discussions continue

As promised at last month’s meeting, the board opted to continue its discussions with HMS regarding contract renewal in a public forum, instead of in executive session.

Karl Rude, President of HMS, had been asked to draw up potential contract structures that would meet the board’s requirements. An idea placed on the table at that time was for Hough to step up the ladder and become the vice president of hospitals for HMS, with a CEO in Crook County underneath him.

As requested, Rude presented four proposals, varying from the status quo, to Hough becoming the VP of hospitals, to leaving him as CEO with a director of operations underneath him as an employee of CCMSD.

Rude also explained that his hope is to agree on a contract that solves the current disagreement between the two sides. If that proves possible, he suggested an amendment to the current contract to adopt the changes until the new contract goes into effect in September.

“We just make it all part of the same negotiation,” he said.

Chairman Mark Erickson spoke to the need to rebuild trust between the sides, mostly through ensuring better communication. Rude expressed his respect for this need and said he knows it is in his interests as well.

Erickson asked Rude to put “some more meat on the bones” by adding details of such things as reimbursement rates. Rude stated that he would be grateful for additional input, too, on such things as what cost savings the board is hoping to see.

The board decided it would be necessary to seek advice from its legal counsel and retired into executive session to do so. Rude was asked to continue developing the proposals.

New Board Member

As ex-trustee Joey Kanode stepped down during the disagreements between HMS and CCMSD, the board needs to fill his seat until the coming elections. Neiman presented two names from Moorcroft who are interested in talking to the board and suggested a time should be set up to interview them.

This will be done prior to the next board meeting.


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