A recent lawsuit brought by Southcentral Foundation (SCF) contains a number of claims against the Alaska Native Tribal Health Consortium (ANTHC) that are misleading and without merit. We regret that SCF chose to litigate its concerns, rather than work collaboratively with us, as we all share the common goal of improving access to the highest quality health care for Alaska Native people.

We take the issue of effective and responsible governance very seriously. We have worked diligently to implement responsible policies and procedures that will best position ANTHC to address the health needs of our People moving forward. We assure that our remuneration and compensation policies and practices are based on the appropriate market and comply with all laws and regulations.

We hope to resolve SCF’s current concerns quickly, so that we can return our entire focus to enhancing health services and improving access to better serve our people.
In the meantime, to ensure the public has a more complete picture of the issues raised by SCF, we’d like to take this opportunity to clarify a few important facts:

ANTHC Board Service is uniquely demanding. ANTHC’s governing Board is comprised of 15 Alaska Native Directors, who live in, and represent communities and regions from every part of the Alaska. Over 80 individuals who served as Directors have been responsible for governing the Consortium’s diverse statewide activities and ensuring that effective coordination occurs between ANTHC and over 200 tribes and communities. Directors are responsible for ensuring that ANTHC’s activities are synchronized with, and supportive of, the efforts of our tribal partners, so that together we can meet the diverse needs of Alaska Natives throughout the State. The commitment of time and degree of deliberation, care and coordination greatly exceed what is expected of most non-profit boards. The Alaska Tribal Health System serves as a model of excellence in the IHS system, and our Directors are absolutely essential to that success.

Many Boards function with an Executive Committee. The Executive Committee serves a critical role, ensuring important decisions regarding ANTHC are made in a timely and responsible manner. An executive committee enables a Board of Directors to operate efficiently, as not all Directors have the ability to convene on a frequent basis when decisions on certain matters demand attention. ANTHC’s bylaws allow for the formation of such a committee, and they are a common practice by boards of companies and organizations around in Alaska and around the world of similar size and complexity.

ANTHC’s Executive Committee cannot execute decisions on its own. All Executive Committee decisions must be ratified by the full Board of Directors before they are enacted. This ensures the proper checks and balances are in place, and that the Board has final say on important organizational matters.

Directors must maintain strict confidentiality.All ANTHC Directors are required to sign non-disclosure agreements to protect the confidentiality of communication at the Board level.

Many of our Directors, both past and present, had been underpaid for their honorable service to our organization – in some cases, for upwards of 15 years. This occurred because the Indian Health Service (IHS) systematically failed to honor its contractual agreements to pay agreed-upon administrative fees to support our organization. As a result, ANTHC was forced to pay our Directors out of limited administrative funds, at a far lower rate than what they should have earned. We took IHS to court to enforce its financial obligations to ANTHC, and reached a $153 million settlement with IHS to resolve 15 years of underpayments for necessary administrative costs, including the cost of governance.

ANTHC used a portion of the IHS settlement to correct prior underpayments to Directors who selflessly devoted their time and energy to ANTHC – because it was the right thing to do. For years, individual Directors graciously served our people and made significant personal and professional sacrifices to ensure our success. Due to IHS’s failure to uphold its financial obligations, the Board set fees at a sizably reduced level to support our organization. And so, it was only fair for us to provide a retroactive adjustment when ANTHC’s dispute with IHS had resolved. It’s worth noting, too, that the full Board ratified the decision to retroactively correct these payments.

We contracted with a reputable, independent third-party to help us determine how Directors should be compensated. This analysis identified the annual median compensation similar organizations paid their Directors – and we set the total compensation well below this amount.

To be a world-class medical organization, ANTHC must recruit and retain the best available talent to lead our organization. That requires that we compensate members of our executive team at competitive, fair market rates. Prior to December 2014, ANTHC leadership compensation was largely based on, and compared to, that of a federal organization executive. It was significantly lower than what other medical organizations of ANTHC’s size were offering qualified professionals to run their organizations. And it wasn’t enough to encourage the best medical and business minds to come to Anchorage, AK. In December 2014, we changed our executive compensation structure to make it more in line with what these individuals would earn at comparable organizations.

We are expanding access to care. Under the Board of Directors’ leadership, ANTHC has focused on improving access to care in recent years. And there have been some dramatic improvements, including over 311,821 square feet in new renovated facility space since 2010 and reduced wait time for specialty services, with 44% more specialty clinic visits since 2011. ANTHC also entered a historic partnership with the State to build a patient housing facility, removing a significant barrier to care for rural residents who need to travel to Anchorage for care, and partnered with the Ronald McDonald House to provide enhanced pre-maternal services for expectant mothers. With the vast majority of the settlement funds still available, ANTHC is working on improving rural access to care by expanding the capacity of tribal partners to provide services closer to home; improving travel and care coordination; and expanding services at the hospital. We are also evaluating opportunities to improve elder care, long term care and behavioral health services to ensure the services we provide best meet the needs of our people.

We are grateful to all who have served the Board to advance our mission. We sincerely appreciate the personal sacrifice of our former and current Directors, who ensured we could meet our responsibilities without cutting services and programs. And we look forward to continuing our efforts to provide the highest level of medical care for our people.

Additional Facts

What is the lawsuit about?

SCF has asked the court to issue a “declaratory judgment” to resolve a disagreement about how to interpret a federal law (Section 325 of PL 105-83), that authorized the creation of ANTHC and provided for the co-management of the Alaska Native Medical Center.

SCF claims that section 325 entitles SCF to unprecedented access and authority, including the right to:

access all information at ANTHC, even executive session discussions, attorney-client privileged advice, and sensitive information about other regional health organizations and their patients;
demand that ANTHC revamp its governing documents, after almost 20 years of operations; and
prevent the Board from delegating its authority to an executive committee to ensure consistent and timely decision-making.

Does ANTHC allow its Directors access to enough information for due diligence?

Yes. Individual ANTHC Directors may review significant amounts of information to support their decision making.

Has ANTHC engaged in improper conduct?

Absolutely not. There are a number of misleading and completely inaccurate claims included in SCF’s complaint.

What happened with the President’s position?

Prior to 2014, ANTHC combined the Chair of the Board and the President positions.
Although it began as a part-time position, the President’s responsibilities increased significantly over the years
- ANTHC more than tripled in size
- The scope of its activities greatly expanded
By 2008, the President’s responsibilities required a full time commitment.
In 2014, the Board voted to uncouple the Chair and President positions and give itself the option in the future to have different individuals serve in each role.
At the same time, the Board formally recognized that the President’s role had become a full time position and worked with an outside expert to set fair, market based compensation for the President position.
That resulted in a significant increase because the prior pay was:
- Based on a Chair position instead of a President position that is responsible for all operations
- Set well below the market
- Set for a part time position rather than a full time position
- Had not been adjusted for more than five years
The Board set the remuneration for the Chair position the same as for other Board Officers.

What does the ANTHC President do?

In addition to his separate responsibilities as Chairman of the Board, the President is the highest ranking executive officer of the Consortium. He is responsible for:

Strategic Leadership
Oversight of Financial, Operational and Other Critical Functions
Major Contracts and Agreements
External and Intergovernmental Affairs
Developing and maintaining key partnerships

Why did the Executive Committee approve the President’s contract?

In 2014-15, the Board of Directors made a significant shift to set employee compensation at competitive market rates so it could hire and retain valued employees.
The Executive Committee was responsible for oversight of executive compensation.
Its charter included a procedure to help the Executive Committee comply with non-profit requirements and ensure that compensation was reasonable and not excessive.
In accordance with its charter, the Committee worked with an outside compensation expert to determine the appropriate range for the President’s compensation.

How much advance notice of the potential change in compensation did the Directors have?

The Board’s discussion regarding compensation began more than six months prior to the Executive Committee discussion.
Prior to ratifying the Executive Committee’s decision, other Directors had an opportunity to review the Executive Committee and compensation expert’s recommendations in detail.

How were the decisions about Board compensation and President’s compensation related?

Generally, both followed the Board’s decision to move toward more competitive, market-based levels and to use external experts to conduct surveys and assist with due diligence.
Otherwise, they were completely independent decisions.

Why did the Board ask the Chairman & President to evaluate historic Board compensation?

In December, the Board of Directors tasked Mr. Teuber with arranging for the evaluation of historic board compensation.
The Chairman & President was the most “disinterested” (i.e. impartial) Director on the Board, because his own pay would not be affected by the evaluation or recommendation.

Did the Chairman & President propose a retroactive compensation plan at the December meeting?

No. He did not make a proposal in December 2014 (nor in a later June meeting, when the Board considered the issue six months later).
At Chairman Teuber’s request, the Executive Committee formed a separate ad hoc committee, including three other individuals, who would be least affected by the potential outcome.
The ad hoc committee’s evaluation and recommendations were considered by the Board of Directors in June 2015, more than six months after the December meeting.

Was the President & Chairman’s proposal an “implicit message” that Directors would be rewarded for supporting proposed bylaw changes?

No, he didn’t make a proposal in December (nor in June).

How were bylaw amendments proposed?

Directors were given 21 days advance written notice of the substance of the proposed changes.
The Bylaw and Policy Committee recommended the changes for the Board’s consideration.
The discussion at the Board meeting lasted more than an hour and included a number of proposed amendments to the proposal.

Were the changes adopted with little or no discussion?

No. The Board discussed the proposed changes for more than an hour.
The discussion included an overview of the proposals.
The Board considered multiple motions to amend the proposals in the course of the discussion.

Did the President & Chairman refuse to entertain or answer questions from Ms. Sylvester about proposed changes when he chaired the December 2014 meeting?

No. Ms. Sylvester actively participated in the discussion of the proposed changes.
She asked at least 10 substantive questions during the discussion.
She received responses to all the questions she asked during the meeting, including many responses provided by Chairman Teuber.
Ms. Sylvester made five motions related to the proposals
She also made at least six comments on the proposals.
In addition, ANTHC provided written responses to three pages of Ms. Sylvester’s questions (and comments) that she distributed at the Board meeting.

Did the changes in the bylaws affect the authority of the President?

No, not in any significant way. The changes clarified the already in place duties and responsibilities of the position.
They also made it a separate position (instead of combining it with the Chair position).

Can the ANTHC Executive Committee make decisions without getting Board approval?

No, ratification is currently required for all Executive Committee actions.
All Executive Committee decisions have been ratified by the Board, including those related to the President’s compensation.

How often does the Executive Committee meet?

Since 2014, it has met only once or twice a year.

Do Directors get notice of Executive Committee actions?

Yes. From day one, the Executive Committee has been required to provide notice of its actions and decisions to the ANTHC Directors.

Statement by ANTHC Regarding Southcentral Foundation Litigation

Additional Facts