UMC CEO Valenti won’t seek contract extension, could receive $3 million in delayed compensation

The University Medical Center of El Paso announced Monday that James “Jim” N. Valenti, President & CEO, will not be seeking an extension to his current contract that expires in May 2016.

UMC says it has been Valenti’s “longtime” plan to not seek an extension.

“This is going to be a tremendous loss to UMC and our community but Jim’s decision marks a new and positive transition for him,” said UMC Board Chair Stephen DeGroat. “Jim and I worked together for a long time and have seen so many successes and milestones. He was the perfect CEO for UMC. When he started, UMC was not financially stable. Thanks to Jim, it has since become financially stable and has nearly doubled in size, both in employee count, services provided as well as square footage.

“Jim steadied our course, expanded our reach through greatly expanded clinical services and access to care in our community, renovation and expansion of the main hospital, and growth of our staff in expertise and sheer numbers,” he added. “That is an amazing accomplishment, and it is also a reason I am so sorry to see him make this decision. As he said to me, the one last thing he wanted to have accomplished before announcing he would not seek an extension was the settlement with EPCH. He did not want to leave it for someone else to solve. I respect and commend him for that – and wish him the very best that his future could bring.”

Valenti was hired in 2004.

Valenti came under scrutiny last year when he was awarded a $120,000.

In November, Valenti passed a board evaluation with “flying colors.”

The board president said Valenti met goal No. 1 — quality patient care, praising Valenti’s “exceptional leadership in a rocky year for UMC.”

That year included a $60 million dollar shortfall that led to 100 budget cuts, 56 employees laid off and a $20 million dollar line of credit, plus friction with Texas Tech and a Children’s Hospital with millions of dollars in unpaid debt.

He receives $460,000 in base pay plus a bonus every year based on goals he accomplishes.

Since 2006, the bonuses have ranged from $105,000 to nearly $150,000.

The bonuses aren’t the only pricey benefits Valenti receives.

Valenti gets deferred compensation. Essentially, the board promises to pay him an additional percentage of his base pay every year until he makes it to May 2016, when he could get a potential lump sum of $3 million.

ABC-7 asked Valenti in mid-November if he felt comfortable accepting the $120,000 bonus just three months after more than 50 employees were laid off at UMC.

“I think it’s important that you have in all organizations competent leadership,” Valenti replied in November.

Valenti has received bonuses of more than $100,000 each of the past 10 years. His first year at UMC in 2006 he received the largest one of more than $148,000. His lowest bonus was in 2007 when he received just over $105,000. The past three years Valenti’s bonuses have ranged from $120,000 to $133,000.

ABC-7 pointed out to Valenti that the bonus upset a lot of people and asked him if he had anything to say to those who may still be seeking employment after being laid off at UMC.

“I think there’s plenty of opportunity,” Valenti said. “We’re hiring a lot of people in healthcare.”

“Do I understand the public outrage? I do,” County Judge Veronica Escobar said of the situation in November.

“I’m certainly not pleased with the board’s decision,” County Commissioner Vince Perez said in November, “particularly given the timing of all that’s happening at UMC.”

ABC-7 asked Escobar and Perez whether Valenti should consider returning the bonus.

“You know, I think that’s an option he should consider,” Escobar said.

“That’s his decision,” Perez added. “That’s something I would encourage given the timing, because I think the big issue right now is the public’s trust.”

So ABC-7 asked Valenti whether he would consider returning the bonus.

“I don’t believe so, I don’t believe so,” Valenti replied, before being asked if he felt like he’d earned it. “Absolutely.”

UMC’s then-board chair William Hanson explained in November that Valenti’s compensation is based on a competitive contract agreed to by the Hospital District and CEO nearly a decade ago.

The UMC board had a special board meeting in November and its chairman read a statement defending Valenti’s $120,000 bonus and vice-chair singled out for criticism by a County Commissioner.

Hanson issued a statement at that meeting defending Valenti.

As you know from media reports in the last few days, some of our recent decisions on compensation and incentive rewards have been criticized. We hear the criticism. We respect your concerns. We are attempting to provide you with better information about our decisions. I want you to know that the merit pay freeze for 2015 remains in effect. This is consistent with the budget that this board approved for the current fiscal year. I also want you to know that UMC has some pay-for-performance benefits that have been prescribed by policy or legal contracts. Pay-for-performance benefits are based on the achievement of goals and targets that were set by this board or management last year. The board directed some employees, including our CEO, to work towards these goals and if the goals were achieved the employee would receive compensation. The employees performed that work and they achieved those goals. UMC is obligated to pay these employees. It would be unfair and improper to not do so.

I also would like to acknowledge our fellow board member and Vice Chair, Laura Ponce, who was singled out for criticism for the action taken by our board on these performance and compensation programs. I think it is important to remember that UMC board decisions are made as a result of a collaborative and collective process of critical thinking and decision making in which all board members participate. The board members cast individual votes and a majority decision is issued on all matters of substantive importance. Individual board members do not make policy or contractual decisions alone. It is unfair to single out an individual board member for a decision that was reached and agreed to by 100% of board members in attendance.

Members of the UMC board heard from dozens of people during public comment on Dec. 12, 2014, every one of them praising Valenti.

The hospital’s leader has been under scrutiny after he disclosed details of negotiations between UMC and the Children’s Hospital without authorization from the board and without sharing the plan first with El Paso Commissioners Court, which oversees UMC.

“Almost an hour into public comment and not one negative word from speakers about UMC CEO Jim Valenti, not even from a woman who was laid off,” tweeted ABC-7 reporter Darren Hunt, who was at the meeting.

The board is considering disciplinary action against Valenti.

When the CEO took the podium, he said he was concerned disciplinary action now could be used to lead a larger action against him in the future and asked the board to let him keep his job.

“I will do everything in my power to be a better person and a better executive. Please allow me the chance to finish my mission,” he said.

Valenti’s speech was followed by a standing ovation by many of the approximately 75 people in attendance at the meeting.

The board spent about one hour meeting behind closed doors. Members then came out and took no action. Hanson said they “plan to meet to discuss communication issues” at a later date.

In mid-April 2015, El Paso County Judge Veronica Escobar spoke with ABC-7 about the goals approved by the UMC board of managers for Valenti.

“There was some alarm last year over the fact there were so many layoffs and yet the whole leadership team still received bonuses,” Escobar said. She said she’s all about paying quality people for quality work, and doesn’t believe the criticism was about the incentive pay itself.

In order for Valenti to get any bonuses at the end of the current fiscal year, he must avoid another downgrade in the hospital’s bond rating and maintain the Joint Commission Certification at the hospital.

The goals are divided into four major categories: patient satisfaction, quality of care, achieving annual performance goals and the financial health of the hospital.

“This set of goals focuses on patient satisfaction,” UMC Director of Public Relations Ryan Mielke said in April. “I think he’s been working on that this year.”