Connections | Louisville Healthcare Council has history of spending with CEO's family members

LOUISVILLE, Ky. (WDRB) -- On May 18, 2021, the Louisville Healthcare CEO Council convened what it called the "Capital Access Committee," a small group of people steeped in the city's entrepreneurial circles.

The volunteer committee was helping the Healthcare CEO Council, a nonprofit backed by Humana, Norton and other large Louisville health care companies, establish an investment fund that aimed to seed innovative health care companies.

And, according to minutes of the 2021 meeting, the CEO Council had recently come across a tool that would help: a piece of software connecting the council's companies and their investment dollars to entrepreneurs worth supporting.

Tammy York Day, the CEO of the CEO Council, "informed the group of a new platform we are engaging, Konexons, that will help with the buildout the interface between Chairman's Circle members and innovators," according to the minutes, a copy of which was obtained by WDRB News.

What the minutes of the 2021 meeting don't reflect is whether York Day divulged another relevant piece of information about Konexons: It was owned by her then-husband, Alex Day.

The CEO Council went on to pay Konexons LLC $30,000 in 2021. Today, startup founders seeking assistance from the council are directed from its website to a form hosted by Konexons.

The CEO Council, which goes by the name "CEOc," is at the center of ethics charges involving Metro Council member Anthony Piagentini. The eastern Jefferson County Republican is under scrutiny for inking a $240,000 consulting job with CEOc in late 2022 around the same time the Metro Council approved a package of $40 million in grants for the organization.

But a close look at CEOc's six-year history reveals that the Piagentini case isn't the only questionable deal the nonprofit has orchestrated.

In 2020 and 2021, the tax-exempt CEOc spent more than $400,000 with a pair of for-profit businesses owned by people related to CEOc's leader, Tammy York Day: Her sister Tonya York Dees' events company, York Management Inc., and her now ex-husband Alex Day's entrepreneurship venture, Konexons LLC.

CEOc continues to do business with York Management and Konexons, though the amounts spent with them after 2021 are unknown because required public disclosures are not yet available, and CEOc declined to reveal those figures voluntarily.

York Day initially agreed to an interview with WDRB News earlier this month before cancelling. CEOc instead responded to written questions via email. Meanwhile, Alex Day and Tonya York Dees did not respond to requests for comment.

In written responses, CEOc said it followed "compliance protocol" each time it decided to direct the organization's funding toward businesses owned by York Day's family members. That protocol includes competitive solicitation of vendors, disclosures of conflicts and "mandatory recusal" by any conflicted party.

"This is to ensure the highest caliber vendor is chosen to accomplish CEOc's mission and goals," the organazation said.

But three experts in nonprofit finances said CEOc's pattern of reliance on vendors with personal connections to the organization's leader — at minimum — raises questions about whether CEOc complies with Internal Revenue Service rules requiring tax-exempt organizations to spend their money on the primary purpose and not for the personal benefit of insiders.

"It definitely raises red flags," said Beth Gazley, a professor specializing in nonprofit management at Indiana University.

CEOc backed by Louisville's largest health care firms

Until it secured the $40 million in grants in December 2022, CEOc was a relatively obscure organization with a handful of employees and about $1.5 million a year in revenue — mostly comprised of dues paid by its 15 member companies.

Those companies include Louisville's corporate crown jewel, Humana Inc., as well as the large hospital systems (Norton, Baptist and the University of Louisville) and locally headquartered nursing home operators Signature HealthCARE, Trilogy Health Services and Atria Senior Living.

The health care-related companies formed CEOc in 2017 with a mission to "promote the (Louisville) region as the epicenter of healthcare aging innovation."

The organization is a 501(c)4 nonprofit, meaning CEOc itself is exempt from taxes, but its donors do not get tax deductions for their contributions, as they would with a charity.  

CEOc's first hire was York Day, 57, who had been chief operating officer of Delta Dental of Kentucky Inc., a large dental insurance network.

York Management Inc.

The crux of the ethics case against Piagentini is his $20,000-per-month consulting job with CEOc, which Louisville Public Media revealed earlier this year.

But the councilman also faces a lesser charge that he violated ethics rules by accepting a free ticket worth $200 to $500 to CEOc's annual "Optimize" conference in September 2022.

The conference Piagentini attended — like all of CEOc's events that have required outside management — was planned by York Day's sister Tonya York Dees' company, York Management.

The 2023 Optimize conference held last month at the state-owned Kentucky International Convention Center also involved York Management, with York Dees signing the venue's rental agreement on behalf of CEOc, according to public records.

In 2020, CEOc spent $241,680 — nearly 20% of its expenses that year — on York Management for various events, according to CEOc's publicly available tax return. York Management received another $135,000 from CEOc in 2021, according to CEOc's tax return.

York Dees formed York Management in 2002, according to Kentucky corporate records. Her sister, York Day, had an official role with York Management until about the time York Day joined CEOc. York Day was listed as a "director" of York Management from 2006 to 2018, according to Kentucky records.

In its written responses, CEOc said Day has never had any ownership or position with York Management, despite her having been "previously listed as a director on an administrative form."

"She never had any role with York Management nor received any compensation. She has not been listed (as a York Management officer) during her time with CEOc," CEOc spokeswoman Caitlin Greenwell said.

CEOc said York Management fairly beat out other events vendors in three procurements for CEOc's business since 2020, and that York Day recused herself from the selection processes.

"YMI (York Management Inc.), with their expertise locally and nationally, rose to the top, leading to their selection," CEOc's Greenwell said in an email.

In 2020, York Day was one of only three people CEOc employed by CEOc, while the organization had six employees in 2021.

The executive committee of CEOc's board selected York Management, CEOc said. The organization did not respond to WDRB's request for a historical list of that committee's members.

CEOc said in addition to York Management's years of experience with "major events," the committee considered that Greater Louisville Inc., the Louisville area's chamber of commerce, and Metro government had previously selected York Management to plan the Louisville Innovation Summit from 2014-2017, a precursor to the events hosted by CEOc. 

CEOc also produced copies of three requests for proposal, or RFPs, soliciting vendors for its events work, which the organization said were distributed "widely to nationally recognized, referred and local companies." It declined to discuss the respondents to those RFPs.

Konexons LLC

In the fall of 2019, Alex Day donned a sport coat and stepped lightly around a backyard. Recording himself with what appears to be a selfie-stick, Day made a video introducing his "Konexons" mobile platform, an app-like site with business networking features.

Another series of Konexons-branded videos appeared on YouTube in February 2021, encouraging participants to define their goals, identify their strengths and find their place in "the life wheel."

Three months later, according to the CEOc minutes obtained by WDRB, York Day told the Capital Access Committee about CEOc "engaging" the Konexons platform.

She again touted her then-husband's business in an Oct. 19, 2021, email, referring to CEOc by its original initials, LHCC.

"A big part of our agenda today was for Alex Day to take us through the Konexions (sic) platform as the tool that connects LHCC board/Chairman's Circle to the work of this committee and the entrepreneur's/innovators," York Day said in the email to the Capital Access Committee.

Just as with her sister's events management company, York Day recused herself from the process that resulted in Konexons doing business with CEOc, the organization said.

"Recusal during selection process is to clear any conflict of interest, real or perceived, to ensure the best vendor is chosen for efficacy and cost. All policy and processes were followed for this selection," CEOc's Greenwell said, in reference to Konexons.

CEOc added that Alex Day's business no longer presents a conflict of interest because Alex Day, 54, and Tammy York Day are divorced.

"Any conflict of interest surrounding Konexons' engagement ceased to exist after 2021 because this is the ex-spouse of Tammy York Day, and she has no financial interest or ties," CEOc's Greenwell said.

However, the couple did not divorce until Dec. 28, 2022, and as of that date, they still lived at the same home in Oldham County, with Alex Day renting "a portion" from his ex-wife, according to Oldham Circuit Court records.

They have been separated since Jan. 3, 2021, York Day swore in her Dec. 22, 2022, divorce petition.

Asked for copies of requests for proposal that resulted in CEOc's selection of Konexons, CEOc produced one document dated December 2022, which asks for a "customized website/application (that) will allow the CEOc and Aging2.0 companies to direct prospective Entrepreneurs/Innovators to a specific electronic portal of their peers and prospective business endeavors."

(Aging 2.0 is suborganization of CEOc. It's a national network of chapters whose members are involved in innovations related aging care. CEOc acquired Aging 2.0 in 2021.)

CEOc did not explain the discrepancy between the December 2022 RFP and the internal records obtained by WDRB showing the organization had decided to hire Konexons more than a year earlier, in 2021.

CEOc appears to boost Konexons in other ways besides direct spending. For instance, the first step for startup companies who want to receive mentorship or other assistance from CEOc is to fill out an online form hosted by Konexons.

CEOc's Aging 2.0, meanwhile, requires its local chapters to "to process tickets via the Konexons platform."

Asked about these links, CEOc's Greenwell responded: "The CEOc and Aging2.0 instances in Konexons are proprietary to CEOc and Aging2.0. While we encourage use of the platform to fully achieve its purpose, there are multiple ways to engage with the organizations."

CEOc also provided copies of RFPs issued in April and May 2023, which it said Konexons LLC responded to but did not win because "the reviewing committee chose another vendor they felt more aligned in expertise."

'Concerning' if true, Metro Council president says

Gerard Colman, the chairman of CEOc's board and the CEO of Baptist Health, declined to be interviewed for this story. He issued a two-sentence statement that sheds little light on how the board views the potential conflicts.

"The CEOc Board of Directors approves all CEOc policies. Operational and personnel decisions made by CEOc leadership are governed by these policies," the statement said.

Federal and state laws generally prevent tax-exempt organizations from being run for the personal benefit of those who influence the organization, according to three experts interviewed for this story.

That doesn't necessarily mean those nonprofits are prohibited from hiring contractors with connections to their CEO, they said.  

"At what point are these transactions something that's benefiting those who are interested parties in the organization, those who have influence? That is a hard line to draw," said Brian Mittendorf, an Ohio State University professor who studies nonprofit finances.

Some nonprofit boards err on the cautious side, adopting policies that prevent problematic transactions.

CEOc described its "compliance protocol" as involving disclosure, RFPs and recusals, but did not provide a copy of any board-approved document.

Gazley, the Indiana University expert on nonprofit management, said CEOc's disclosure of the York Management and Konexons relationships in its public tax returns, as well as York Day's claimed recusal, don't necessarily absolve the organization of any problematic conflicts.

Such disclosures are merely the starting point for the IRS, a state regulator or those interested in the organization to investigate, she said.

"Just recusing yourself from one point in a nepotistic process doesn't remove the problems those processes create," Gazley said.

Greg Nielsen, who runs a Louisville-based nonprofit training and consulting business, said potential conflicts are primarily an issue of "reputation and risk management."

CEOc's receipt of $40 million in public funds via the Metro Council grants raises the stakes for the organization to instill public confidence, he said.

"If $40 million of the public's money is going to a single organization, do their practices and operations build trust with the public and community, or raise questions?" he said.

CEOc said it was important to note that York Management and Konexons "receive no funds" from those grants.

Other than Piagentini, the main proponent of awarding CEOc the $40 million in 2022 was Metro Council President Markus Winkler, a Democrat from eastern Jefferson County.

In a recent interview, Winkler said he knew nothing of CEOc's relationships with York Management and Konexons.

"It's hard to form a detailed opinion without really knowing what the story is (and) what the relationships are," he said. "Certainly, if true, it would be concerning."