Like many Lawrence County residents, businessman and grocer Donald Lambert has fond memories of Lawrence County General Hospital.

"I had five children born there," Lambert said.

"It should have never, never closed down. I could just about cry when I drive by it now. It was a disgrace that we closed it down."

Lambert's sentiments are echoed by thousands of county residents. From the hundreds of former hospital employees to the countless patients the hospital served, many people regret the loss of the hospital that closed beneath a mountain of debt in January 2001.

What is different about Lambert, however, is that he was one of a handful of people uniquely positioned to see the inner workings of the county's only hospital. The former county commissioner served as a hospital board member during the 1990s until shortly before the hospital, then called River Valley Health System, closed.

For several years prior to the hospital's demise, audits pointed to long delays in billing, long delays in paying its own bills and after 1999, serious concern for the hospital's ability to survive.

So why didn't someone see the signs and make changes?

With such negative audits and red flags, questions beg to be asked: Who knew about this, and when did they know it? If they didn't know, why didn't they? If they did know how bad the situation was, what did they do to correct it?

Hospital board vs. management

Lambert and other hospital board members contend the hospital management misled some, if not all, of them about the hospital's fiscal health.

"No question the board was misled about financing," Lambert said. "I don't think any board member knew how bad it was."

His sentiment was echoed in part by former board members Ron Davis, who served on the board in the late 1980s into the mid 1990s, and Gary Tyo, who served from 1993-1996, filling the

remainder of a six-year term left vacant through a board member's retirement.

Davis and Tyo agreed that while other board members may or may not have been privy to sensitive financial information, they were routinely excluded financial information - even though Davis was at one time on the hospital board's financial committee.

"I was the finance director (for the hospital board) for three years and I don't think I ever got an accurate and honest financial report," Davis said. "Figures don't lie; liars lie."

Davis and Tyo said at board meetings and even at financial committee meetings, the information they received from hospital management amounted to little more than computer printouts with the numbers of checks written and the amounts for which they were written - and sketchy financial statements prepared by the staff. They said in their years on the board, management never gave them a copy of an audit, even though audits were prepared yearly by Hayflich and Steinberg CPA of Huntington, W.Va.

"Remember when I raised hell about financials?" Davis reminded Tyo.

"Which time?" Tyo responded.

Both Tyo and Davis said they questioned hospital management almost every time a major project or purchase was requested. Specifically, Tyo and Davis said they always asked if the hospital could afford the projects.

Tyo said the management's response was almost always the same: "We've got money. We can swing that."

Both former board members say the source of their frustration was primarily former Chief Executive Officer Terry Vanderhoof, who was hired in 1988 after the board chose to fire Hospital Management Professionals, a management company that had operated the hospital since 1983. Repeated calls to Vanderhoof's residence were not returned.

Other former members of the hospital management team, including former Chief Financial Officer Sherri Davidson and former Human Resources Director Chuck O'Leary, did not wish to comment.

"I think we were considered the two country bumpkins that found their way to town," Davis said. "I would always ask 'How are we doing on paying our bills?' and then I'd find out we were 30 days or 60 days behind, even though the management would say 'we're OK.'" Davis said.

One or two years before he resigned from the board, Davis said some local vendors informed him they had not been paid for goods or services. Some had not been paid a year after sending their invoice.

Both Davis and Tyo said when they asked questions, they were often ignored.

"I went to Sherri (Davidson) for information once and she Š said 'Terry won't let me,'" Davis said. He recalled that on more than one occasion, he would ask specific questions during board meetings or financial committee meetings about a financial issue and Davidson would first look at Vanderhoof before answering the question. Davis said he was never sure if she was simply deferring to him or was afraid to speak without his approval.

"I think some people on the board didn't want me on the board because I asked too many questions," Tyo said.

Tyo had, for instance, questioned why purchase orders were either not used or at least not shown to the board during board meetings or financial committee meetings. Tyo said after his three-year stint he was not reappointed to the board.

Vanderhoof's alleged unwillingness to discuss financial issues eventually made him bitter enemies with a number of former board members including Davis and Tyo. To this day, the pair are unwilling to forget what they believe were Vanderhoof's slights and his secretiveness.

Davis said while he voted for Vanderhoof's contract the first time, he refused to support the CEO when his contract was up for renewal. Tyo said he also refused to support Vanderhoof's bid to stay on as hospital chief.

"I voted against him and he got mad and asked me 'why?'" Tyo said. "I said 'you're not worth it. You know we're struggling; you don't need a raise.'"

When asked, other hospital board members did not want to comment about this matter.

Robert Griffith, who was on the board for 10 years and served as chairman for several years, said he did not want to comment on the issue but did discuss other things pertaining to the hospital.

"I don't like to point fingers," Griffith said. "I'll pass on that one."

Board member Jim Weber declined to comment.

Hospital management vs. the county commissioners

Despite being part of the hospital board's appointing authority, some Lawrence County Commissioners said they, too, were given little information. Commissioners alleged in some cases they were denied information about the condition of the facility, particularly in the year before the hospital closed.

The commissioners, along with the most senior common pleas judge and the juvenile probate judge appoint hospital board members which by state law, must consist of an equal number of Democrats and Republicans.

Commissioners had access to copies of the hospital's annual audits, parts of which were also referenced in the county's annual audit. But, they say, the hospital audits reflected positive balances until 1999.

The 1999 hospital audit stated the hospital lost $3.9 million that year and auditors expressed doubts that year about the hospital's future viability. The county commission did not receive its own 1999 audit until July 2000, a month or so before hospital staff publicly acknowledged a financial problem existed.

Lawrence County Commissioner George Patterson said that while commissioners received the hospital's audits, they wanted more specific information than the audit contained because they were hearing unsettling things in the community about hospital finances, and because of things they observed themselves.

"So often I'd wonder how they could have 400 employees taking care of 20 patients. With no more patients than that, there's no way you can make enough money (to operate)."

Patterson said for the most part, their requests fell on deaf ears.

"Most of the time we were just ignored," Patterson said. "Every once in a while they would give us something."

Patterson said one time, when he actually did get a financial statement from the hospital's administration, he took it to Ironton-Lawrence County Community Action Organization Executive Director Keith Molihan, who then took the statement to a financial expert for review.

"They said they read it and couldn't tell heads nor tails about it," Patterson said.

"But I don't think some of the financial statements told a true picture of things, anyway."

Terry Null, who served on the county commission from 1983-1996, said that at first Vanderhoof had a good working relationship with people in the community, including the county commission.

"In later years, that changed," Null said. "In the mid-1990s, especially in 1996, it got hushed."

Null said that, like others,

he felt at times the hospital administration was not forthcoming with information.

Null said he apparently ran afoul of management because he often questioned the purchase of various pieces of property. Null said although he was assured the hospital had the money for such purchases, he wondered why these properties were needed. One of the things Null said he questioned was the need for the outreach clinics that the hospital opened in South Point, Aid, Coal Grove and Wheelersburg.

"It would be great to have an ER in every section of the county, but can we afford it?" Null said.

By the mid 1990s, Null said requests for information about the hospital's financial health became a bone of contention between the commission and the hospital officials.

"Most things did not cross our table," Null said. "I felt like the commission should have been made aware of the financial and management decisions that were made. I felt like our door was always open. We requested things, but a lot of times they (the requested information) were late if they came at all. I felt like the administration thought they didn't answer to the county commission but to the hospital board. Maybe I could have been more demanding. I felt like that hospital belonged to the taxpayers."

Null said that one night he and his wife ran into Vanderhoof while they were walking in the neighborhood. The discussion about the hospital turned heated. Null said he thinks the hospital opposed him in his campaign for reelection to the commission, and ultimately, he lost to Bruce Trent.

Trent declined to speak about River Valley Hospital.

"What really bothers me is that both George Patterson and Terry Null came to me and said 'we can't get any financials.' Either he (Patterson) or Terry (Null) requested them and they said Vanderhoof said he didn't have to (give them the information)," Davis said.

He was emphatic that he does not blame commissioners for not supplying funds to keep the hospital open.

"Some people are trying to make them the heavy in this thing because they wouldn't loan the hospital any money toward the end," Davis said. "Well, I don't like to throw good money after bad, do you?"

Rose-colored glasses?

County leaders and others in the community who did not have direct dealings with the hospital said it was Vanderhoof's nature to project a positive outlook, regardless of how bad the situation might have been. In doing so, he may have misled people whether he intended to or not.

"Maybe (the hospital administrators) were the biggest optimists in the world," Null said. "They had a reason. It was always 'it's going to get better.'"

It never did, Null said.

"Someone or some group should be held accountable for the mistakes made," Null said.

Greater Lawrence County Chamber of Commerce Executive Director Bill Dingus said Vanderhoof seemed to want to paint a rosy picture of things, an opinion seconded by Lambert.

Lambert said he thought Vanderhoof was "one of the best" when he first was hired as CEO, he was later concerned that Vanderhoof's propensity to "paint a rosy picture" made him uneasy.

"I don't think any human is going to find where Terry Vanderhoof took $10 or $10 million," Lambert said. "It's just not there. It's just mismanagement. Š It's just a sad situation for Lawrence County."

Staff reporter Teresa Moore can be reached at (740) 532-1445, ext. 25 or via e-mail at teresa.moore@irontontribune.com