MTPR

New Kalispell Hospital CEO Takes Over In Wake Of $24 Million Lawsuit

Apr 25, 2019

The $24 million that the hospital in Kalispell agreed to pay in 2017 to settle a whistleblower lawsuit was the biggest recovery ever in Montana under federal False Claims Act.

Leaders at Kalispell Regional Healthcare admitted no wrongdoing in response to an investigation that doctors were referring patients to hospital-affiliated businesses in which the doctors had an ownership interest. Doing so would call into question whether those referrals were motivated by medical necessity or financial interests.

The hospital’s CEO stepped down last November shortly after the settlement was announced.

It requires Kalispell Regional to file regular reports with the U.S. Department of Justice (DOJ) demonstrating that it’s complying with anti-kickback laws. The hospital’s new CEO, Dr. Craig Lambrecht, who took over this month, says that’s a top priority.

Craig Lambrecht: That compliance commitment falls right at the top. Because we have to complete the compliance program as directed by the DOJ, and then there's an intermediary that helps us. That is definitely one of the priorities. But at the same time, we have a parallel course that we have got to continue to provide great quality, demonstrate our committment to quality and viabililty as an organization so we can continue, invest and grow and do the things necessary. So the compliance is a piece. It is not the ultimate priority. And we've got a lot of parallel activities that we need to continue, based on quality.

Eric Whitney: In an interview last week, I asked Lambrecht if he thinks the settlement Kalispell Regional agreed to — which includes a gag order preventing the hospital from talking about some aspects of it — damaged trust between the hospital and people in the Flathead Valley.

Craig Lambrecht is CEO of Kalispell Regional Healthcare
Credit Courtesy Kalispell Regional Healthcare

Lambrecht: I don't think there's any question about that. I think that trust is something that is got to be earned again. I'll go back to the gag order; when you can't talk about a lot of things that you would really like to talk about, people become very suspicious. And then when you're throwing out numbers of tens of millions of dollars in settlement and you have different individuals in health care’s names and salaries are in the news. People don't embrace those conversations. There isn't an ability to, kind of, move forward in a trusting environment, and in health care that's a very bad thing. Because the trust of health care is really the thing that's going to drive the success of the organization.

Whitney: Lambrecht says that health care and education are two fundamentals necessary for economic development in any community, and that Kalispell Regional plays an important role in the Flathead beyond taking care of sick people.

Lambrecht: Well, we're the largest employer, and we need to make sure that every person who works in this organization — you know, the 4,000-plus employees — are excited about where they work, because that morale component not only helps the quality but it creates the stability. And you look at 4,000 employees, you look at average family size is probably 3.5 individuals. That's a lot of people that are counting on a sound foundation for their future. More importantly, when you look at the obligation that we have to serve people, I think it's important that in addition to being the employer of choice we've got to show that we are the ultimate community partner. That we are partnering with schools, that we are partnering with nursing homes, all components of the strata of this socio-economic make- up of the valley. And that's just part of the obligation that we have.

Whitney: Lambrecht is a an emergency medicine physician and National Guard veteran who served two tours in Iraq. He spends time at the family ranch his great-grandfather homesteaded in southeast Montana, but is a North Dakota native. His previous job was president of a hospital system in Bismarck; one he helped guide through a merger in 2012. Lambrecht said he held a series of forums with about 1,500 Kalispell employees and said he heard them loud and clear on the idea of a merger here.

Lambrecht: And it was just a resounding message, Eric, that they want this organization independent. Because one of the questions in the forum was, you know, are we going to have to merge? Do you want us to merge? And then I asked the question back. What is it that you want to do as the employee base? And [the answer was] resounding. I didn't hear a single person of those 1,500 say we want to merge. We want to be independent.

Whitney: But remaining viable as an independent isn’t going to be easy, Lambrecht says. Before it merged, the hospital he came from in North Dakota was similar in size to Kalispell Regional. Which is to say, big for its neighborhood, but not really that big.

Lambrecht: When you're independent and you're a $600 million organization in Montana. It's a very special thing, but it's a very heavy lift because an organization of $600 million — in the broad scheme of health care — is not a very big organization. So when you look at investments in wages and capital, electronic health records and providing quality that the bigger organizations that are very complex and significantly larger do, you still have to compete with them because you've got to meet those quality standards regardless of our size. So, we've got to find those efficiencies. We've got to do it in a way that's very responsive. But clearly the independence and the maverick-ism of Montana, I've heard loudly and clearly. And we're up for it.

Whitney: One thing that’s going to help Kalispell Regional Hospital stay viable, Lambrecht says, is the continuation of Medicaid expansion that the Montana Legislature has now passed and is awaiting Gov. Steve Bullock’s signature. Every state lawmaker from the Flathead Valley voted against Medicaid expansion.

Lambrecht: Medicaid expansion is a godsend to us. I don't understand all the specifics of the political positions that people have within the state. But I do know, coming from a state that had Medicaid expansion reauthorized, it created wonderful access for people who needed health care. So many participants or people at the poverty line and 200 percent of the poverty line were just not getting health care; from cancer screening to diabetes to complex medical needs. And when they feel like they're part of the system and they have access, that is something that is so important. And we're providing the care regardless. At Kalispell Regional Health, regardless of whether or not someone has insurance, we have to take care of them, and it is morally, ethically the right thing to do. But when you look at the viability of the organization, if we're providing the care, the bad debt and the charity that goes along with taking care of people that can't afford to pay could potentially hamstring the organization and make us not viable. And it's not unique to Kalispell. It's unique to all of Montana. You know, there's about $2 billion — and more importantly — there's about 9,000 jobs and 100,000 people that are getting health care because of expansion. So kudos to the legislative leadership that recognizes the importance. Because we need it.

Dr. Craig Lambrecht is the new CEO of Kalispell Regional Healthcare.