Cardinal: Longtime CEO Pam Shipman was forced out

The forced retirement of Cardinal Innovations Healthcare Solutions’ longtime leader, along with the recent departures of four top executives, has raised questions about the managed care group that oversees $635 million in government money and serves as a statewide model for cost control in behavioral health.

After the Observer raised questions, Cardinal leaders said this week that CEO Pam Shipman’s retirement came after an emergency board meeting April 27, in which the board voted to act on long-standing performance issues. Shipman, who was making $400,000 a year, was notified the next day, and a severance package was offered Saturday after a regularly scheduled board meeting, her Charlotte attorney, John Gresham, says.

Gresham, who responded to a reporter’s call to Shipman, called Cardinal’s account of performance problems “far-fetched” and said he is preparing a response.

Acting CEO Richard Topping says the changes will result in better service for the 357,000 people in 16 counties, including Mecklenburg, who are enrolled with Cardinal for treatment and support for mental illness, substance abuse and developmental disabilities such as intellectual disability, autism and cerebral palsy.

He said the issues that led to Shipman’s dismissal involved responsiveness and adapting to Cardinal’s growth. There was no misuse of public money, Topping said.

“The idea is this is going to get better,” said Topping, who will officially take the top job July 1 and also earn $400,000 a year. “Transitions are tough, but the system here worked.”

Mecklenburg County commissioner George Dunlap, a Cardinal board member, agreed: “There’s no improprieties, no money-related issues.”

Topping and Cardinal spokeswoman Kim McMillan said the recent departures of four other top executives are based on personal reasons or new jobs. Medical Director Craig Hummel told staff in March he’d be leaving in May for an out-of-state job closer to his family, while three other executives announced their resignations within the past week.

State Sen. Tommy Tucker, R-Waxhaw, says the ouster of Shipman, who was known statewide as a leader in behavioral health and managed care, damages Cardinal’s credibility with state lawmakers who are pondering Medicaid reform. He said he and other legislators were told nothing about why she was leaving.

“My confidence level has dropped,” Tucker said. “Since we have 600 million bucks in there, we need to know.”

Growth brings problems

Cardinal Innovations, a Kannapolis-based nonprofit that began as Piedmont Behavioral Healthcare in 1974, is little known to the general public but highly regarded by state health officials. Cardinal served as North Carolina’s pilot for managed care, in which organizations such as Cardinal contract with psychologists, counselors, clinics and other professionals to provide Medicaid services. If such groups bring down costs, the savings can be used to expand services.

In her 28 years, Shipman helped turn Cardinal from a small care provider for Union, Cabarrus and Stanly counties to an organization with 635 employees covering territory that sprawls from the South Carolina border to the Virginia state line.

Cardinal added Mecklenburg County to its territory in April 2014, amid protests from families and elected officials who disagreed with the state’s decision to take control away from the county-operated MeckLINK. After the first year, many said the transition went better than they expected, though rough spots remained.

Topping, who had been Cardinal’s general counsel since 2009, said that Shipman’s work was respected but that she struggled to keep up with the ever-growing organization. In summer of 2014, he said, the board declined to renew her contract but kept her on as an at-will employee, with five pages of “fairly strict goals that she needed to meet.”

The board continued to work with her but was not satisfied, he said. He said the problems culminated with a weekend board retreat in late April, when Shipman did not attend the first day and arrived late, without explanation, on the second. The next Monday, April 27, the board held an emergency meeting and voted to direct Shipman, who is 61, to leave immediately, taking vacation time until a June 30 retirement date. Topping took over, and Shipman’s retirement was announced to employees and posted on Cardinal’s website the next day.

Word gets out

Topping said the plan had been to present Shipman’s departure as a normal retirement out of respect to her.

But rumors began to circulate. Tucker, the state senator, and Mecklenburg County Manager Dena Diorio said they heard that Shipman had been forced out but didn’t know details.

Tucker said that’s a problem, given the large amount of money the state turns over to Cardinal and the credibility Shipman built. The state is in the midst of debating Medicaid reform, including proposals that could expand the managed care model to physical health and invite for-profit groups to compete for contracts.

“Is there fraud? Is there financial instability within Cardinal?” Tucker asked Monday. “From a public policy standpoint, where do we go from here?”

Diorio said Tuesday that she was surprised to learn from a reporter that Chief Administrative Officer Steve Timmons, who had been the point person in working with Mecklenburg County, was also leaving Cardinal.

Last month, Diorio told the Observer she thought the transition from MeckLINK to Cardinal had gone well for the most part, but she was frustrated by an unresolved dispute about paying for residential treatment for teens who need intensive, constant care because of violent or self-destructive behavior. The issue flared up as Diorio prepared a 2015-16 budget and her staff told her that if the stalemate remained, the county would have to spend $500,000 next year to cover costs that should be paid by Cardinal.

Topping said this week that’s an example of the kind of problem he hopes to resolve. He and Diorio plan to meet soon.

“We’ll start the relationship from the beginning and move forward,” Diorio said.

This story was originally published May 19, 2015 at 11:25 AM with the headline "Cardinal: Longtime CEO Pam Shipman was forced out."