Some Jefferson Parish Council members fired back Thursday at the parish’s inspector general over his report Wednesday that criticized the council’s management of $4 million in consulting contracts related to the leasing of the parish-owned West Jefferson Medical Center to private management.
The 426-page report criticized parish officials for allowing the $1.1 million contract with the hospital merger and acquisitions consulting firm Nemzoff & Co. to be uncapped and for never ratifying the $2.9 million contract with the law firm Hogan Lovells. It said the process was inefficient, often contentious and marred by poor communication and management.
Councilman Paul Johnston, however, said he found it amusing to be criticized by someone who was as involved in the process as anyone.
Inspector General David McClintock “was involved with this thing all the way. He was in the meetings. He was on the committee,” Johnston said. “He’s blaming the council for everything, but he had input the whole time.”
Councilman Ben Zahn called the report “426 pages of hindsight observations (that) poorly serve a council that sought his advice and is suffering the consequences of following it.”
That advice, which Johnston also criticized in an interview Thursday, was McClintock’s recommendation that the council pay Nemzoff by the hour, not the flat fee he had proposed. Both said the council voted to go to an hourly rate at McClintock’s urging and ended up spending more money.
While McClintock’s report noted that the parish was paying an hourly fee, it said the bigger issue was that the cost of Nemzoff’s contract wasn’t properly managed, as evidenced by the lack of a cap.
Consultant Joshua Nemzoff had no public comment on McClintock’s report, but in an email sent to McClintock and circulated among council members that was obtained by The New Orleans Advocate, he pointed out a previous consultant — Kaufman Hall — was paid $1.5 million in the early stages of the hospital lease negotiations, a process that stalled and led to the parish hiring his firm. He said the parish should be very happy with the money it spent.
“My client then had the wisdom to take the process away from (Kaufman Hall) and hire two of the leading experts in the country to get this deal done. And that is what we did,” Nemzoff wrote. “It is a fantastic deal, and the fact that we were able to get it done in the chaos that is in fact your parish government structure is a credit to all of those involved. Cliff (Stromberg of Hogan Lovells) and I were told on day one and every day until closing that we were the experts and we should get the best deal that we could, which is exactly what we did.”
Sounding a similar note, Johnston said extracting the parish from the business of running the hospital, leaving the issue in the hands of professionals and ending up with debts paid and close to $120 million in the bank for only $4 million in fees is a trade-off he would make again.
“We got a great deal,” he said. “I think they both did a damn good job for us.”
Zahn said all meetings were conducted in accordance with state law and were attended by the parish attorney and the inspector general.
“At no time in public meetings, behind closed doors or on conference calls did the inspector general suggest these deliberations were illegal or improper,” Zahn said.
Zahn said McClintock’s criticism of the Hogan Lovells contract — saying it was never ratified by the council — was also off base, because the earlier signing of the contract by the president and board chairman of West Jefferson Medical Center was sufficient.
“As the hospital district’s governing authority, the council amended the contract at the request of the inspector general to stipulate to whom the law firm would report,” Zahn wrote in an email. “The hospital district at that time was exempt from the parish procurement requirements, including contract caps. The council amended this contract in September 2015 to remove the hospital district’s exemption from the parish procurement process.”
The report also criticized the fact that the parish’s negotiation team was changed several times, though Zahn said that, too, came at McClintock’s recommendation.
The report also took the council to task for not taking minutes during the numerous executive sessions when the hospital deal was discussed. Johnston said the council takes its cue from the Parish Attorney’s Office, which never suggested formal minutes be taken. Either way, he said, the claim that the lack of formal notes hampered the process had no merit.
Zahn said the report’s criticisms about poor communications and management show McClintock is “out of touch with reality.”
“As the governing authority, the Parish Council was the team leader and exercised its rights in all deliberations,” he said.