Former Children’s hospital CEO received $250,000 severance

The bankrupt El Paso Children’s Hospital has described its relationship with the County hospital as abusive and co-dependent.

In court documents, Children’s says the service contracts it agreed to three years ago are unfair. The man who negotiated those contracts on behalf of Children’s was then-CEO Larry Duncan.

When Children’s financial problems became public last year, Duncan and the hospital parted ways in April 2014.

But ABC-7 has learned that he continued to receive a paycheck.

The ABC-7 I-Team searched through hundreds of pages of these bankruptcy documents, finding nearly two dozen line item entries detailing payments to Duncan over the past year.

“Severance agreements by nature are designed to provide an individual in a highly paid or top level position the bridge to secure another position that frequently takes quite a while to secure,” said Mark Herbers, current CEO of Children’s.

According to the bankruptcy documents, after four years with El Paso Children’s hospital, Duncan got a bridge totaling more than $250,000. ABC-7 asked Herbers how long that will continue.

“His severance agreement has been completed and last payment was in April,” Herbers said in a phone interview.

Duncan resigned under pressure last April, when the County hospital, UMC, revealed it wasn’t getting paid for services it provided the Children’s hospital. Duncan was at the helm when those service contracts were negotiated, which Children’s now calls “ambiguous and lopsided.”

UMC claims Children’s owes it roughly $100 million for services, a number which Children’s hospital disputes.

ABC-7 went by Duncan’s West El Paso home Wednesday, which is on the market for $765,000.

The intent was to ask him about the appropriateness of the severance package with Children’s now in bankruptcy proceedings.

When asked if he would answer some questions about his severance package Duncan said “no” and quickly closed the door.

Herbers said he could not provide ABC-7 with a copy of the agreement. He called big severance packages standard practice for most top hospital executives, pointing out he’s seen more lucrative ones than Duncan’s.

When asked in April 2014 if Duncan was forced out, former Children’s board chairman Sam Legate told ABC-7, “I think Larry felt like it was a good time for him to leave because the organization could be handed to someone who could get the ball and go with it. There have been a number of challenges publicly. He (Larry) felt confident with the arrival of Ray Dziesinski, the hospital would be in very good hands and an opportunity for him to handoff the ball knowing it would be well received and handled well.”

When asked in April 2014 if Duncan was forced out, Legate said, “I think Larry felt like it was a good time for him to leave because the organization could be handed to someone who could get the ball and go with it. There have been a number of challenges publicly. He (Larry) felt confident with the arrival of Ray Dziesinski, the hospital would be in very good hands and an opportunity for him to handoff the ball knowing it would be well received and handled well.”

Asked if El Pasoans should be worried that the sky is falling with the CEO, Duncan, resigning, Legate told ABC-7 last year, “No, no, no. For me it’s very exciting because we are getting our house in order and moving forward. It’s time to move to the 2nd step. We were at adolescents and we need to mature and he’s the guy to do it. He’s had 30 years in upper management in hospitals. He’s absolutely what the organization needs. It’s awesome that we got this guy.”

Legate resigned from Children’s board in May of this year because the commitment to the board was growing.

Read the April 2014 El Paso Children’s Hospital’s full statement on the leadership change below:

CFO Ray Dziesinski will assume the post of CEO following the resignation of Larry Duncan today. “We love El Paso but are currently entertaining other opportunities. Our thanks to the El Paso Community who welcomed my family and me with such warmth and affection, “said Duncan.

“We wish to thank Larry for his part in bringing El Paso Children’s Hospital up out of the ground. There has been a lot of good work in the last two years,” said Chairman of the Board Sam Legate. “Larry Duncan took El Paso Children’s Hospital from a hole in the ground to a true separately licensed children’s hospital approved by the Joint Commission. Under his tenure we saw extremely successful recruitment of pediatric specialists to almost quadruple what El Paso had before and the recent achievement of COG (Children’s Oncology Group) status. We wish Larry and his family the very best.”

“As a Board, we are committed to making El Paso Children’s Hospital a leading children’s hospital and a recognized leader for specialized pediatric care. Ray Dziesinski brings over thirty years of health care financial management and oversight,” said Legate. “He served Children’s Medical Center in Dallas as Senior VP and CFO from 2007 to 2013 and more recently as their Chief Treasury Officer. We are confident of his ability to steer El Paso Children’s Hospital through the next stages of growth.”