Valley Medical CEO's money, everyone's money

PUBLIC scrutiny of executive pay at Valley Medical Center is wholly appropriate because the hospital is taxpayer supported.

If it hadn't been for some extraordinary numbers, CEO Richard Roodman's compensation might have gone unnoticed. He recently received a $1.7 million retirement payout, in addition to collecting a $900,000 salary for continuing to work at Valley Medical, which is funded by property taxes from King County Hospital District No. 1. In this recession, most people are happy to be employed.

Roodman's arrangement — receiving retirement pay without retiring — was unusual enough to be spotlighted in a recent draft state audit. Auditors said the arrangement fell outside typical industry practices and should not be included in future employment contracts at the hospital.

Roodman says he merely turned a unique set of circumstances to his favor.

In 2003, the five-member commission that oversees the hospital district approved the payoff and set aside the money. Enter a tax rule known as constructive receipt, which taxes income before it is received. The policy is meant to thwart tax evasion, but it also meant Roodman would eventually pay taxes — in this case about $800,000, he says — whether he retired at the time stated in his contract or didn't.

But aspects recounted in a story by Seattle Times reporter Susan Kelleher are troubling. The way was paved for Roodman's payout in late 2007 when his contract was amended following a contentious election in which two incumbent commissioners were unseated by candidates promising reform. Roodman's amended contract was approved before the reformers took office, a level of haste that lends the appearance of contrivance.

The lesson here is that nonprofit doesn't mean poor. In the Seattle area, 15 nonprofit hospital leaders earned at least $1 million in 2007. Virginia Mason President Mike Rona got $4 million when he left Virginia Mason last spring.

These are things the public deserves to know. Residents served by Valley — an area that includes Renton, Covington, Tukwila, parts of Bellevue, Newcastle, SeaTac, Black Diamond, Maple Valley and some of unincorporated King County — likely didn't.