Tom Beeman is used to getting what he wants.
Less than two and a half years after taking over the top spot at St. Thomas Health Services, the Pennsylvania transplant successfully sealed the $340 million acquisition of the company’s cross-town competitor, Baptist Hospital. Other area hospital executives, including Beeman’s predecessor John Tighe, had tried unsuccessfully to wed themselves to Baptist in previous years. But by 2001, when the timing was right, Beeman fully intended the merger to go down on his watch, and it did. The 49-year-old former Navy Seal was planted firmly at the helm of a sprawling five-hospital system in January 2002.
Beeman began assembling a team of trusted advisors, even before the merger went through. Today, that seven-person team is known as the CEO Advisory Council. Primarily comprised of salaried employees of St. Thomas and parent company Ascension Health, it advises Beeman on a variety of operational and managerial issues. The only two non-salaried employee members of this insider team are Berry Holt, St. Thomas’ legal counsel of 20 years who is also a partner with Boult, Cummings, Conners & Berry, and Beeman’s new-found ally, Evette White, chief executive of Image III Advertising. It was this latter appointment that raised more than a few eyebrows around town over apparent conflicts of interest.
Within months of befriending White in the 2000 class of Leadership Nashville, Beeman awarded her a lucrative consulting project that eventually netted her firm St. Thomas’ multi-million dollar advertising account. And when Beeman began assembling his advisory team for the combined systems, it became clear White would be a part of it. He fiercely advocated making her a senior vice president and its chief strategic officer. In this role, White would be in charge of the hospital network’s internal marketing division and personnel—as well as the work carried out by her ad agency on the system’s behalf.
Such an unorthodox arrangement at Nashville’s premier nonprofit hospital system invites scrutiny, especially considering the responses of many of those involved to even simple requests for information and comment. While White generously allotted time to discuss the matter, Beeman declined to be interviewed on the subject, and his public relations gatekeeper, John Van Mol of Dye, Van Mol & Lawrence, avoided providing information as basic and key as the nature of the hospital’s policies on conflicts of interest. Unfortunately, this peculiar behavior by a faith-based not-for-profit evokes memories of Baptist Hospital, now a big part of the Ascension Health system here, during the 1990s. Until the firing of CEO David Stringfield in 1998, the hospital raised opaqueness and dissembling to art forms.
For her part, White admits that the unorthodox nature of such a relationship concerned her initially. She also worried that existing Image III clients might feel shortchanged if St. Thomas locked up too much of her time. “You have us as your agency partner,” White reasoned with Beeman before accepting the post. “I’ll be here when you need me to be.”
Still, Beeman persisted, and White eventually agreed. Meanwhile, some in the business community, particularly those in the ad industry, looked on in disbelief.
“[This arrangement] is the oddest thing I’ve ever seen,” comments a local advertising veteran who spoke on condition of anonymity. “I’ve never known an agency person to be on staff or hold a title at a client company. Agency principals sometimes do sit at the big table when major issues are being discussed, and we do sometimes play an integral role in the decision-making process. But we don’t ever serve as titled officers.”
At issue isn’t whether Beeman had the right to fill the position with someone he liked, trusted and felt competent to advise him on strategic issues. He’s the CEO, and according to Berry Holt, cleared White’s appointment with St. Thomas’ board and Ascension. “[The arrangement] has been reviewed by all parties and found to be just fine,” Van Mol says.
Furthermore, St. Thomas Health Services appears to have some checks and balances in place to protect the system’s interests. For instance, White is not authorized to make expenditures on behalf of the system. That authority rests with St. Thomas Chief Financial Officer Ken Venuto. Additionally, White must disclose her involvement with Image III when appropriate. St. Thomas also points out that Image III serviced the account before White was named chief strategic officer, not the other way around. That said, it’s the gray areas that register cause for concern.
For example, at some point, in making trusted recommendations regarding marketing initiatives, it is likely that White may find herself in the position of having to decide what’s best for her agency versus what’s best for St. Thomas. And from an employee standpoint, can the system’s full-time marketing staff (about 10 people) freely challenge the costs and quality of Image III’s work knowing that White, who is for all intents and purposes their boss, is the principal stakeholder in the company? “I am very supportive of that kind of input from our people,” White responds, adding “there are no soft personalities” on board. “I expect people to take ownership of their position.”
With so much room for criticism, why was Beeman so insistent that White be a titled officer? Van Mol e-mailed the following: “It is important to our health care ministry that we be the best stewards we can be of the resources entrusted to us. Part of this strategy is to pick the best people we can find to work with us—individuals who are leaders in their own right—and gain their expertise on a part-time basis while they continue to be leaders of their own organizations.”
Van Mol and an Acsension spokesperson chalk up White’s relationship with the system to nothing more than the commonly practiced “leased executive” arrangement. He even offered a few local examples, including the business relationship between veteran public relations executive Paula Lovell and Belmont University. Nashville Post spoke with Lovell and determined that, while the relationships are similar in many respects, there’s a fundamental distinction between the two arrangements.
While Lovell holds a titled position at Belmont (director of special initiatives), is a contract employee, and technically supervises the institution’s marketing department and personnel, her communications firm does not execute related marketing initiatives on Belmont’s behalf. Lovell says that she is the only person from Lovell Communications that bills time against the Belmont account, and that a Georgia-based ad agency handles much of the ad work. Additionally, she notes that the school has in-house media buying resources, which means Belmont forgoes paying standard media commissions. White’s agency benefits from two separate agreements with St. Thomas—one of which covers Image III’s work as a vendor and the second, a retainer fee, that covers White’s time as chief strategic officer, as well as the efforts of two other Image III employees.
Even prior to these murky relationships and White’s appointment to her present St. Thomas post, some had begun questioning the relationship between Image III and the health system. Image III won the business—conservatively estimated at more than $2.5 million in annual billings today—without competing in the agency review process that is customary for accounts of this size.
As Nashville Post understands, Beeman agreed to enter into a six-figure marketing consulting agreement with Image III shortly after befriending White (see timeline, pages 22-23). He reportedly instructed St. Thomas’s then vice president of marketing Mark Lee Taylor to fire former agency of record Endres & Wilson Advertising. This occurred several months into the consulting agreement with Image III but apparently before work to be performed in the contract was completed. Taylor and others at St. Thomas vehemently opposed the agency switch and advised against it. In the end, Beeman made an executive decision to terminate Endres & Wilson. Taylor left St. Thomas a short time later.
“We were never given any indication that [St. Thomas] was dissatisfied with us professionally,” says former Endres & Wilson partner Ken Wilson. “We had very positive feedback from all the decision-makers over there.”
Despite the absence of any expressed dissatisfaction by St. Thomas, Wilson says he saw the writing on the wall months before his firm was terminated. Wilson, now with The Buntin Group, says he saw a copy of the six-figure marketing consulting proposal submitted by Image III in December 2000.
As for his firm, Endres & Wilson could not withstand the loss of the five-year-old account, scaled back its twelve-person staff and ultimately dissolved the partnership.
Bobby Frank, a partner with local ad firm Frank Best International, describes the turn of events as “disappointing.” While he confesses that his agency certainly would have enjoyed the opportunity to compete for the St. Thomas account had it been put up for review, he finds it unsettling that Endres & Wilson was fired after producing good work. Frank credits Endres & Wilson’s award-winning work on behalf of St. Thomas for “raising the level” of hospital advertising locally and creating the level of competition that exists in the marketplace today. Others in the industry concur. “[Endres & Wilson] was out there with a bold and different creative body of work for St. Thomas. It certainly made a big statement,” says Lewis Advertising’s Steve Dennison.
White laments that some would lay the demise of Endres & Wilson at her feet. She says Beeman selected her agency in part because he was looking for an agency experienced in working with health care systems instead of only single hospitals. Her agency possessed that experience, having recently lost HCA’s TriStar account, after a ten-year run, to The Buntin Group—an event that left her agency vulnerable but available for new local hospital business. White adds Beeman’s under-the-radar agency switch was necessary because St. Thomas had not yet revealed plans to merge with Baptist, and any public move might have tipped its hand.
For their part, some at St. Thomas dismiss all the backbiting as so much “sour grapes” by those who lost or coveted the system’s business. To be sure, some bad air does linger because of Image III’s back-door entry at St. Thomas. But sour grapes do not dispel the suspicions of impropriety that shroud White’s dual role with Nashville’s second largest health system. Such suspicions are best countered by a sound system of checks and balances that can withstand scrutiny and does not rely on the judgment of any one person.
Ultimately, though there are measures in place that ostensibly help ensure that St. Thomas gets its money’s worth and that Image III does not profit excessively from the account, a good deal rides on White’s integrity. Prices set by her agency must be fair market value. To the extent that she influences the communications expenditures approved by CFO Venuto, St. Thomas must trust that she won’t steer an inappropriate volume of business towards Image III. For fiscal year 2002, the system’s first full year in business after the Baptist acquisition, White notes that Venuto and the communications council have mandated a 20% reduction in overall budget. She says she is hell-bent on making that happen. Image III’s media-buying team “has been negotiating [ad rates] like crazy,” she says. “We are being good stewards in the greatest sense of the word.”
As for her titled position and expanded role with St. Thomas, White says little has changed other than the fact that the relationship has generated “much more attention” than they care to deal with. “We’ve all been under scrutiny, and we all just want to get to work.”