Documents gathered through a public records request show that the local county-owned hospital’s former president and CEO was terminated by the hospital without cause.
Why Larry Heydon was terminated after 11 years as CEO was not clear. The separation agreement reached by Heydon and the board of trustees for the county-owned Johnson Memorial Hospital said that neither side would discuss it in detail nor admit to any wrongdoing or liability.
The separation agreement also says that Heydon’s employment ended as allowed by a specific clause in his employment contract. That clause said that the hospital can terminate his employment immediately, at any time, with or without cause.
Heydon’s resignation letter, dated Feb. 27, said that he was resigning his position as CEO and all other hospital-related positions and memberships. The next day, the hospital issued a news release that said Heydon had resigned and that Dr. David Dunkle would be the interim CEO.
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Heydon will be paid his salary through February 2020, according to the separation agreement. His benefits, however, were terminated with his employment, and he was required to return all hospital property within seven days, the separation agreement said.
Johnson Memorial is a non-profit hospital operated by an appointed five-member board of trustees but owned by Johnson County government.
Even though the hospital is owned by the county, it is not required to release salary information for its employees, including its top leader, said Steve Key, an attorney and executive director of the Hoosier State Press Association, of which the Daily Journal is a member.
As a county hospital, it is subject to the Indiana open door and public access laws, which require that its business be conducted in public meetings, and that most records be open to the public unless state or federal law provides a specific exception. For example, state law protects any information that could be considered competitive by the healthcare industry, including salaries, benefits and severance amounts; essentially information that puts one hospital at a disadvantage to others.
"The legislature agreed to give county hospitals some special provisions to help them compete against private hospitals," Key said.
A tax form filed by the hospital in 2012 lists Heydon’s base salary as $363,157, and an additional $19,846 in other compensation. Most non-profits are required to file Form 990s with the IRS, and in most cases, those documents must be made public, Key said. But none of Johnson Memorial’s have been made public since 2012.
In 2014, the hospital applied for an exemption from the IRS, which determined it no longer had to file a Form 990, according to the IRS ruling.
Johnson Memorial is still a non-profit in the sense that donors can file deductions on their taxes, but it is mostly considered a unit of government, said David Wiesman, hospital board member and former chief financial officer. About 15 to 20 county hospitals across Indiana fall under the same category, he said.
Wiesman said he can’t speak to why hospital officials pursued that exemption when they did, but said hospitals have a lot of other forms and reports they are required to file, so they will seek to remove any reports from that task list if possible.
Heydon’s sudden ‘separation’
Hospital board chairperson Sandi Huddleston said Heydon resigned, and the board released his short resignation letter.
"I hereby resign my position as President/CEO of Johnson Memorial Hospital, effective immediately. This resignation includes a resignation from membership and/or positions in any other organizations which I hold by virtue of having been President/CEO of Johnson Memorial Hospital," the letter said.
Huddleston would not say why Heydon’s employment ended. She said that despite what hospital documents say, Heydon did in fact resign, and due to the hospital industry’s difficult climate right now, he wanted to move onto something different.
Heydon could not be reached.
His resignation letter, employment contract, wage changes and separation agreement were provided by the hospital, with all financial information redacted.
Heydon received pay raises in March of 2015, 2016 and 2017. He did not receive a raise in 2018, according to those documents.
The separation agreement includes a "No Admission" clause, which says neither the hospital nor Heydon will admit any wrongdoing or liability. In fact, both parties will deny it, documents said.
The agreement also instructs Huddleston on how to handle a reference request from any employers considering hiring Heydon. She agreed to only provide Heydon’s dates of employment, his last position held and a signed copy of a short reference letter Heydon agreed to.
In it, she said that under Heydon’s leadership, the hospital grew, developed a strong reputation in the community and became a stronger organization financially.
How and why Dunkle was chosen
Last month, Johnson Memorial announced a new president and CEO, David Dunkle, who had been serving as interim CEO since February.
Hospital officials met with several search firms, but due to the cost of a national search, decided not to proceed, Huddleston said this week. They did not interview any other candidates for the job, she said.
The CEO is responsible for more than 800 employees and a multi-million-dollar budget.
Huddleston said that Dunkle, a long-time Johnson Memorial employee, was chosen to lead the hospital because the board was able to watch him in action during the three months that he served as interim CEO, and unanimously decided he was the best fit for the job.
The board also appreciated his familiarity with the hospital and community, having worked and lived here since college, Huddleston said. He understands the needs of the hospital and its patients, she said.
Dunkle, a resident of the Center Grove area, is a Franklin College and Indiana University School of Medicine graduate.
In addition to his role as a family doctor, he has served as vice president of medical affairs and vice president of the Johnson Memorial Hospital Foundation Board. He was named the hospital’s “2018 Physician of the Year.”
In addition to his leadership role, he will continue to practice medicine part-time, he said.
Johnson Memorial Health operates a main campus in Franklin, which is in the midst of a $47 million construction project to open a new emergency department and outpatient services building in 2020. Dunkle has been heavily involved in the planning and construction of that expansion.
Johnson Memorial also operates the Greenwood Primary Care Center, the Whiteland Primary Care Center and the Franklin Primary Care Center. In 2013, Johnson Memorial partnered with Community Health Network to open the Stones Crossing Health Pavilion.