Two National Medical Execs Resign From Troubled Firm : Health care: Giant hospital company says Richard K. Eamer, Leonard Cohen will continue to offer advice.
National Medical Enterprises, one of the largest U.S. hospital companies, said Monday that two of its founders and key executives have resigned, seven weeks after one of them brought in a new chief executive to run the troubled firm.
Richard K. Eamer, 65, who stepped down as chief executive and president in April to make way for Jeffrey C. Barbakow, will resign as chairman and a director effective today.. It was Eamer who approached Barbakow last spring to ask if he was interested in being chief executive.
The other departing executive is Leonard Cohen, 68, who was replaced as chief operating officer in April by Michael H. Focht Sr. Cohen will relinquish his titles as vice chairman and director.
Eamer and Cohen will assume the titles of chairman emeritus and vice chairman emeritus, respectively, and will continue to advise the firm, National Medical said.
With the departure of the two co-founders, the difficult task of rebuilding National Medical’s reputation within the health care industry rests with Barbakow and his new management team.
Barbakow, 49, a former managing director of Donaldson, Lufkin & Jenrette Securities who had been an outside director of National Medical since 1990, faces daunting legal, financial and public relations problems stemming from scandals in the company’s hospital operations.
Santa Monica-based National Medical faces lawsuits brought by insurers and patients accusing the company of fraudulent billing, primarily involving its psychiatric treatment facilities.
The company has also acknowledged that it is the subject of criminal investigations by federal and state authorities. The Wall Street Journal has reported that federal prosecutors expect indictments against National Medical officials this summer.
National Medical has also had to contend with a widely circulated report by a San Francisco brokerage, W.I.G. Securities, that it faces possible bankruptcy. The company has denied that bankruptcy is imminent.
David Olson, a spokesman for National Medical, said the resignations of Eamer and Cohen are “absolutely not related” to the state and federal investigations. Of the possibility of indictments, he said the company has not been informed of any, adding, “We regard those reports as exceedingly speculative.”
National Medical said Eamer and Cohen would not be available for comment. Barbakow was traveling Monday and also was unavailable, Olson said.
Asked why Eamer and Cohen were leaving, Olson said, “That’s something we’re really not going to have a whole lot to say about.”
The company’s announcement was made after the markets closed Monday. National Medical stock closed unchanged at $11.125 in New York Stock Exchange trading.
Eamer and Cohen co-founded National Medical in 1969 and built it into one of the nation’s largest health care companies, with annual sales exceeding $4 billion. The company, which operates 131 acute care, rehabilitation and psychiatric hospitals, is due to release results today for its latest fiscal year.
