A local CEO’s troubling ouster

The Observer editorial board

Cardinal Innovations runs health services in 16 counties.
Cardinal Innovations runs health services in 16 counties. mhames@charlotteobserver.com

It’s hardly unusual for a boardroom shakeup or two to ripple through a corporation.

Such upheavals usually play out behind closed doors, with little or no public accounting of who ousted whom and why. That lack of disclosure seems unacceptable, however, when the firm in question uses $635 million in government money to help people dealing with mental illness, substance abuse and developmental disabilities.

That’s how big a responsibility the state has entrusted to Kannapolis-based Cardinal Innovations Healthcare Solutions. And that’s why the circumstances around the Cardinal board’s sacking of respected CEO Pam Shipman are troubling.

Cardinal originally announced Shipman’s departure as a simple retirement. The April 28 press release praised her, noting that she’d been instrumental in creating the insurance-firm-style service delivery model Cardinal uses in Mecklenburg and 15 other counties.

State officials, impressed by the firm’s lower costs and improved services, are using Cardinal as their statewide model for behavioral health services. Having struggled for decades with rising Medicaid costs, the state is turning one of its biggest headaches over to Cardinal and other firms.

Which brings us to the troubling part of Shipman’s dismissal. Acting CEO Richard Topping is now saying that Shipman was forced out because she struggled to keep up with the organization’s explosive growth.

Observer staff writer Ann Doss Helms reported that four other top officials are also leaving the company; three of them announced their departures last week.

Coincidence? Doubtful.

Sen. Tommy Tucker, R-Waxhaw, is right to wonder if all is well over at Cardinal. “The optics from the outside looking in do not look good to the legislature,” he told the editorial board Wednesday.

We don’t know if the board made a mistake in forcing Shipman out. Last year’s addition of Mecklenburg County to Cardinal’s plate of responsibilities dramatically increased the firm’s scope of work; it might well be time for a new CEO.

Cardinal officials say they took care to alert lawmakers and state health officials when Shipman’s retirement became official. But they haven’t given a clear answer to a key question: Did they also divulge to state officials the full circumstances of her retirement?

Cardinal has by many accounts done a good job so far, and no money’s missing. But the staff upheaval, and the limited transparency, should concern state officials.

It should also serve to caution GOP lawmakers who seek to outsource more public services to private firms. As we’ve seen with a few troubled new charter schools, outsourcing can be problematic. Strong oversight should always follow public dollars.

The state does require intensive audits of Cardinal’s finances and services. That’s good. But lawmakers and the N.C. Department of Health and Human Services would be well advised to seek a more formal way to keep posted on who’s coming and going in the top ranks – and why.