CHILLICOTHE, Ohio — What can $6.5 million dollars buy you in Ross and Pickaway counties? Well, it turns out, not much, even if you are a mega-health system that is trying to block your competitor. But does it come at the price of letting go of employees?
Some background
It all started when a group of doctors left Adena Regional Medical Center in Chillicothe. Dr. Brian Cohen was arguably the most popular physician involved. He was one of the first two orthopedic surgeons employed by Adena Health System and helped grow the team to more than 30 providers. Cohen is known for his expertise in the areas of knee and shoulder surgery and robotic-assisted surgery. He now practices at several locations, including OhioHealth’s office on Bridge Street.
But in April 2021, Cohen along with doctors Aaron Roberts and James Thompson — all of whom worked in the Adena Bone and Joint Center — were sued and terminated by the health system after previously tendering their resignations. The departure would spiral into a multi-million dollar legal battle that continues today. Adena is accused of firing the group before they could go to work for a competitor. The doctors filed a motion to dismiss Adena’s suit, claiming it did not have viable cause to support the allegations. Three of the doctors filed a countersuit against Adena, alleging that the health system retaliated against them and breached their employment contracts.
Depositions started flying, motions were written, and now, the case is expected to head to trial sometime in the next 18 months.
This all came at a time when Adena was spending millions raised by their foundation for the “Adena Orthopedic and Spine Institute” (AOSI). The AOSI brought several services together under one roof, including orthopedics, sports medicine, podiatry, physiatry, neurology, interventional pain management, an inpatient unit, and a spine center. Constructed adjacent to the hospital on the Adena Regional Medical Center campus, the 111,000-square-foot structure includes clinical space, operating suites, inpatient and outpatient recovery rooms, imaging services, physical therapy capabilities, and a three-story attached parking garage.
How dare they
When Cohen and others left, it would later be learned that a competing health system, OhioHealth, based in Columbus, had partnered with the doctors to offer orthopedic services. Some say that Adena’s administration “went into meltdown mode” with worry that OhioHealth would use its war chest of a virtually unlimited pocketbook to build a competing orthopedic center in Ross County. In fact, rumors started to swirl that OhioHealth had engaged a law firm to buy a few acres of land on Hospital Road, just down the street from Adena’s new center. To say that those inside Adena’s hierarchy were concerned about the competition would be an understatement. The mere thought that another health system would dare take root in Ross County was almost unfathomable to some, but to have the gall to build next door to a legacy system like Adena was unthinkable, and people such as the Chief Executive Officer of Adena would stop at nothing to prevent it, records show.
Who is Jeff?
Jeff Graham is the CEO of Adena Health System. He made nearly $2 million in compensation last year as the captain of the ship. He has several homes across the state and country, one of which is in Chillicothe, but he hails from the Kentucky area. He had previously overseen what was once the Greenfield Medical Center in Highland County in the early 2000s before going on to lead a medical group south of Cincinnati.
While Adena is a non-profit organization, they spend millions on their CEO’s salary, along with hundreds of thousands for his support staff. The Chief Financial Officer made more than $600,000, while the Director of Human Resources grossed a half-million in 2020. In a town like Chillicothe where the median household income is $45,899, eyebrows are often raised when the salaries are mentioned on social media.
Letting staff go, cutting expenses
On Thursday, Adena announced they had let go more than 60 employees and farmed out nearly another 400 jobs to a third-party company in an attempt to save money in — what the hospital called — bad economic times and soaring inflation. While the health organization pleads poverty, they had no issue spending millions on unused land to block other doctors from setting up shop.
The race to spend millions
OhioHealth had hired a Columbus law firm to facilitate the purchase of a piece of land down the road from Adena. Their plan was to build medical offices that would allow Cohen and others to call home and return the orthopedic surgeon back to the Scioto Valley. When Graham found out about OhioHealth’s plan, he allegedly went to the same law firm and offered double the asking price, bringing it to more than $3.5 million for the property that was sold a decade earlier for just $14,000.
“I wasn’t aware that we even bought the property,” one board member told the Guardian, who spoke on the conditions of anonymity because they feared retaliation. “There are board members sitting on the board right now who are unaware of the transaction, let alone that IRS documents were fabricated to cover it up.”
Back in 2021 when Cohen and the other doctors tendered their 120-day notices provided for in their employment agreements, almost immediately Graham suspected that the doctors might be hired by OhioHealth. On the morning of March 17, Graham texted Adena Board of Trustees Chairman Joseph Watson saying the departures needed to be discussed with the Board of Trustees Executive Committee and that “this is heating up and OhioHealth is in the middle of it.” That evening, Graham texted Watson that “I have given a lot of thought to the circumstances and I think that we should have a Board meeting to discuss.” Graham had decided on that day that “I feel that leaving Dr. Cohen and the other physicians in place until July is only harmful to the future of Adena. It is clear that their strategy is to partner with OhioHealth and compete to harm Adena,” text messages obtained by the Guardian shows.
Just two days later, on March 19, Graham’s assistant sent out a notice of a special meeting of the Adena Board of Directors for the following Monday. Shortly after the resignations were received, Adena administrator Ty McBee leaped into action and had Adena’s real estate advisors at Cushman & Wakefield run a search to see what undeveloped parcels near Adena were available that could be used to open a competing orthopedic practice after the doctors’ non-competition agreements expired. Among the sites uncovered by Cushman was the land on Hospital Road less than a mile from the main Adena campus. Adena learned that someone was close to buying that parcel. McBee and Cushman & Wakefield then tried to determine if the buyer might be a medical one.
Before the special board meeting on March 22, 2021, McBee told Graham that it was in fact a “medical user” looking to buy the land. Graham decided that this potential competitor might build a facility where Cohen and the others could work following the expiration of their non-competition agreements and needed to be kept away from Adena’s main campus, according to witnesses, and Graham knew he had to act, paperwork shows.
Records show the group also bought land for more than $2 million in nearby Pickaway County.
Lying to Uncle Sam?
The proposed real estate transaction had not previously been presented to, let alone approved by, Adena’s Finance Committee, even though the Finance Committee charter requires it, according to paperwork the Guardian obtained. The purchase of the real estate had never been in any capital expenditure budget, development plan, or master facility plan for Adena. This was true even though it had been undeveloped and open for potential expansion for years. No due diligence packet, valuation opinions, strategic planning documents, or other written materials justifying the purchase or proposed price for the land were presented to the board members at the time.
In order to purchase the land to block OhioHealth, Adena used a wholly-owned, for-profit subsidiary, Maximum Properties, LLC to facilitate a purchase and block OhioHealth. Paperwork obtained by the Guardian shows that Maximum Properties is an entity Adena created to maintain secrecy and anonymity around its real estate purchases. So much so, that Adena used a “secret agent” as its registered agent with the state to receive any legal paperwork.
A review of tax filings by Adena shows that they left off Maximum Properties from the required disclosure of affiliates filed with the Internal Revenue Service. Lawyers for the other side say that deceptively, Adena identified Maximum Properties as a non-profit entity in the official statement for its 2019 bond offering. The board member who the Guardian spoke with said they had concerns with a non-profit like Adena creating a for-profit organization, spending millions more than what a property was worth, only to block someone else from taking up roots.
“I have serious concerns with Jeff Graham taking $6.5 million without proper financial committee review and using it to purchase land at double the price; this is being done at a time when the hospital is laying off employees and blaming it on the economy. Perhaps if they weren’t spending millions to try and shut down Cohen, perhaps dozens of people would have their jobs. And to learn that we might have lied on our federal tax filings is possibly criminal,” the board member said. “I want nothing to do with it and the other board members need to rid the hospital of cancer before the entire ship sinks.”
The Guardian reached out to Adena Health System for comment regarding this story, who released a statement that reads, “Jeff Graham does not and has never owned, either outright or in part, directly or through any other entity, Maximum Properties, LLC. Adena has never given Mr. Graham funds for the purchase of the real estate. Suggestions otherwise are completely false, intended to disrupt Adena, and defamatory toward both Adena and Mr. Graham.”
When the Guardian circled back to Adena and clarified that a new question was being asked by the news organization: “did Adena spend millions of dollars to buy land — overpriced — to simply keep certain doctors out of town,” a hospital spokesman referred the publication back to the original statement.
Currently, the land is being rented by Adena to Kenworth to store semi-cabs with no clear plan for the land’s future.