Needed: A Webcast on Disruptive and Criminal Hospital Executives

I received this, unsolicited, via email:

Webcast:  Managing Disruptive Docs in a New Era of Hospital-Physician Relations

If you haven't already purchased this live Webcast, don't miss out! Left unchecked, disruptive physicians do more than just create a negative work environment; they endanger patient care and can lead to million-dollar lawsuits and bad publicity.  Our top experts will show you early intervention techniques and a range of effective resources that can help you reduce behavioral problems, retain star physicians, create a healthier workplace and save millions in potential lawsuits.

The agenda includes:

    Defining and identifying causes of disruptive behavior
    Economic consequences of disruptive behavior
    Overcoming disruptive physician problems

This program will be guided by your questions, so register now and ask away!

Your instructors:

Alan Rosenstein, MD, MBA
Medical Director of Physician Wellness Services

David Danielson, JD, CPA
Senior Vice President, Clinical Risk Management, Sanford Health

Scott Hurst
Former Director of Physician Alignment and Recruitment, CHRISTUS Spohn Health System

Managing Disruptive Docs in a New Era of Hospital-Physician Relations is designed to help CEOs, COOs, CMOs, group practice administrators, HR leaders, and physicians learn strategies and tactics to prevent, reduce, and limit the severity of disruptive physician incidents.

"Disruptive physician" is a vague term subject to enormous abuse, leading to sham peer review among other totalitarian tactics.   It reminds me of the old Soviet Union's politics.

You have been deemed a Disruptive Physician, Comrade.  You will be given a fair trial, then shot

In particular, this label can be used to suppress clinician concerns about care quality in an era of cost cutting and care manipulation through electronic workflow control systems (e.g., EHR's CPOE, CDS etc.)

The potential of being labelled as "disruptive" may be one reason why physician outcry against the very low quality of healthcare IT systems and dangers posed by them is relatively uncommon.

Patients - you - ultimately suffer when your physicians fear being your outspoken advocates.

As the many stories of healthcare executive malfeasance and profiteering at the expense of patients on this blog indicate, what is really needed for true healthcare reform are webcasts on:

MANAGING DISRUPTIVE AND CRIMINAL HOSPITAL EXECUTIVES IN AN ERA OF RAMPANT CORPORATIZATION OF MEDICINE.

-- SS

Addendum:  here are additional resources on the “Disruptive Physician”:

Abuse of the “Disruptive Physician” Clause, http://www.jpands.org/vol9no3/huntoon.pdf

The Insulting Physician “Code of Conduct”, http://www.jpands.org/vol13no1/huntoon.pdf

In the latter article, Lawrence Huntoon MD PhD, and expert on abuses of this label, notes:

... The typical physician code of conduct is initiated by a hospital administration. Its wording is curiously similar from one hospital to the next, suggesting that a template is being circulated.

... The physician code of conduct is intentionally insulting, demeaning, and degrading to physicians, and reduces physicians to being treated like juvenile delinquents at a reform school. It assumes that all physicians, like juvenile delinquents, need to be subjected to a long list of prohibited behaviors because, in the hospital administration’s view, physicians are predisposed to such things as theft, destruction of property, and physical and sexual assault. Conspicuous by its absence is any mention of “disruptive” or “abusive” hospital administrators, or any similar code of conduct applicable to a hospital administration.

Dr. Huntoon then goes on to make a recommendation, a "hospital administration’s code of conduct":

... The term “disruptive hospital administrator” and/or “abusive hospital administrator” should be incorporated into the hospital administration’s code of conduct and should be defined as anyone in the hospital administration who, in the view of the medical staff (as determined by majority vote), interferes with the ability of physicians to provide safe and high-quality care to patients in the hospital.

His detailed criteria for “disruptive hospital administrator” in the latter article are worth reading in their entirety.

-- SS

Private Equity vs Patient Care - a Bainful Example

A long investigative report in Salon summarized allegations about the quality of care in various treatment centers owned by Aspen Education, and its parent company, CRC Health Group, in turn wholly owned by a private equity firm, Bain Capital.  The article provides examples of what can go wrong when health care organizations are taken over by remote leadership focused overwhelmingly on short-term revenue.   

A Death from a Treatable Disease
The report opened with the investigation of a 14 year old resident at Youth Care, in Salt Lake City, and Aspen Education treatment center.  Brendan Blum "died of a twisted-bowel infaction," according to the local medical examiner, which allegedly went untreated because "two poorly paid monitors on duty," were slow to seek approval to call for emergency services, and "were too low on the totem pole to call 911 themselves."

The article cited "previously unreported allegations of abuse and neglect in at least 10 CRC residential drug and teen care facilities across the country."  It charged, "such incidents have largely escaped notice because the programs are, thanks to lax state regulations, largely unaccountable." 

Allegations of Toxic Corporate Culture

The article noted numerous other reports of unexplained and allegedly wrongful deaths, and other allegations of mistreatment of patients.

Furthermore, the article noted allegations "that such incidents reflect, in part, a broader corporate culture at Aspen's owner, CRC Health Group, a leading national chain of treatment centers.  Lawsuits and critics have claimed that CRC prizes profits, and the avoidance of outside scrutiny, over the health and safety of its clients." 

We have frequently discussed how the corporate culture of the finance industry, the industry that brought us the global financial collapse/ great recession, has influenced health care, and how this culture may be related to extensive problems with the leadership of health care, including lack of understanding of or even outright hostility to the health care mission, the prioritization of self-interest over the mission, conflicts of interest, and even outright criminal behavior, such as fraud, and kick-backs (bribery).  One way that finance may influence health care is the presence of finance leaders on the boards of trustees of non-profit health care institutions (see recent examples here and here). 

A more direct way the culture of finance can influence health care is for private equity firms (that is, re-branded leveraged buyout firms, look here) to purchase organizations that actually take care of patients.  The Salon article noted:

CRC’s corporate culture, in turn, reflects the attitudes and financial imperatives of Bain Capital, the private equity firm founded by Mitt Romney. (The Romney campaign also did not reply to written questions.) Bain is known for its relentless obsession with maximizing shareholder value and revenues. Indeed, this has become a talking point of late on the Romney campaign trail; he bragged to Fox in late May that '80 percent of them [Bain investments] grew their revenues.' CRC, a fast-growing company then in the lucrative field of drug treatment, was perhaps a natural fit when Bain acquired it for $720 million in 2006. In conversations with staff and patients who spent time at CRC facilities since the takeover, there are suggestions that the Bain approach has had its effects. 'If you look at their daily profit numbers compared to what they charge,' Dana Blum [the mother of the boy who died in the incident discussed above] said of CRC’s Aspen division in 2009, 'it’s obscene.' That point, ironically enough, was underscored by the glowing reports in the trade press about its profitability.

The article discussed how Bain Capital's acquisition of CRC Health Group further tilted the balance towards short-term revenue and away from quality care:

When Bain purchased CRC, it looked like an investment masterstroke. The company, founded in the mid-’90s with a single California treatment facility, the Camp Recovery Center, had quickly grown into the largest chain of for-profit drug and alcohol treatment services in the country, with $230 million in annual revenue. Under Bain’s guidance, its revenue has nearly doubled, to more than $450 million. CRC now serves 30,000 clients daily — mostly opiate addicts — at 140 facilities across 25 states. In the first five years after its acquisition, Bain had already extracted nearly $20 million in management-related fees from the chain, although Bain investors haven’t cashed in yet through dividends or an IPO. Bain’s purchase, a leveraged buyout, also saddled CRC with massive debt of well over $600 million.

According to company executives and independent analysts, hands-on oversight of subsidiary companies is a hallmark of both Bain and CRC. Romney’s campaign literature boasts about Bain taking exactly this sort of direct role in helping to turn around failing companies. 'Over the life of an investment, they have a strong management team willing to participate,' Sheryl Skolnick, an analyst with CRT Capital, a leading institutional brokerage firm, says of Bain.

The CRC acquisition immediately made Bain owner of the largest collection of addiction treatment facilities in the nation. Unlike some Bain Capital acquisitions, which led to massive layoffs, the company’s approach with CRC was to boost revenues by gobbling up other treatment centers, raising fees, and expanding its client base through slick, aggressive marketing, while keeping staffing and other costs relatively low. But that rapid pace of acquisition couldn’t be sustained in the mostly small-scale drug treatment industry alone. So Bain Capital and CRC set their sights on an entirely new treatment arena: the multibillion-dollar 'troubled teen' industry, a burgeoning field of mostly locally owned residential schools and wilderness programs then serving, nationwide, about 100,000 kids facing addiction or emotional or behavioral problems.

One of CRC’s first acquisitions under Bain ownership was the Aspen Education Group. Founded in 1998 with about six schools, Aspen Education had expanded to 30 troubled-teen and weight-loss programs by 2006, including Youth Care of Utah. With Bain’s backing, CRC purchased Aspen for nearly $300 million in the fall of 2006.

Less than a year later, Brendan Blum was dead.

At the time of the CRC acquisition, Aspen already had a history of abuse allegations, including at least three lawsuits, and two known patient deaths, one by suicide. Featured on 'Dr. Phil,' it grew out of schools inspired by the 'tough-love' behavior-modification approach of the discredited Synanon program, which was eventually exposed as a cult. By 2006, Aspen was facing a wrongful death lawsuit, later settled, over an incident in 2004 in which a 14-year-old boy, Matthew Meyer, perished from heat stroke just eight days into his stay at its Lone Star Expeditions wilderness camp in Texas.

This just underscores concerns we raised here about how ownership by private equity could undermine the ability of health care organizations to fulfill their missions. At the time we worried that private equity's short time horizon would clash with health care's long-term focus, how standardized cost-cutting approaches, including emphasis on individual employees' "productivity," could undermine patient care, and how private equity's obsession with secrecy is the antithesis of the transparency required to make health care accountable.

The Increasing Influence of Private Equity

Ironically, the reason that the problems at CRC have gotten such public attention is that the former leader of the private equity firm that controls it is now running for the US presidency. His candidacy emphasizes just how influential the culture of private equity has come.

The purchase of CRC came seven years after [former Massachusets Governor and now Republican presidential hopeful Mitt] Romney publicly announced his retirement as CEO of Bain Capital, where he had been in charge since its founding in 1984. But at the time of his departure, Romney worked out an arrangement to continue to share in Bain’s profits as a limited partner in the firm. Today, he is still an investor in 48 Bain accounts. Though he has refused to disclose their underlying assets, some information about them can be gleaned. For example, he has reported at least $300,000 to $1.2 million, if not more, in fluctuating annual earnings from Bain Capital VIII, the convoluted $3.5 billion array of related funds that owns both name-brand companies such as Dunkin’ Donuts and the lesser-known CRC Health Group. Most of these funds were made more attractive to privileged investors by being registered in the Cayman Islands tax haven. And Romney’s connections to CRC run even deeper: Of the three Bain managing partners who sit on CRC’s board, two, John Connaughton and Steven Barnes (with his wife), gave a total of half a million dollars to Restore Our Future, the super PAC supporting Romney. They also each donated the $2,500 maximum directly to his campaign.

Furthermore, it provides a warning about much more influential it might become, particularly in regard to health care:

Romney has been outspoken about his belief that for-profit health care companies can flourish only without onerous regulations. 'I had the occasion of actually acquiring and trying to build health care businesses,' he said during a primary debate last year. 'I know something about it, and I believe markets work. And what’s wrong with our health care system in America is that government is playing too heavy a role.'

The allegations against one of those health care businesses suggest another viewpoint.

I have frequently repeated a contention that true health care reform would emphasize leadership of health care organizations that understand and uphold the values of health care, starting with prioritizing the needs of patients and the public's health over all other concerns. Instead, there is a danger that health care leaders will be ever more removed from patients and the public, and their health needs, while they become ever more concerned with making as much money as possible in the short-run, and after that, the Devil take the hindmost.

Steward Health Care vs Rhode Island Blue Cross Blue Shield: How Public Relations Twists the Narrative

Negotiations between a local RI hospital system and the largest RI health insurer have now become very public. An advertising campaign by the larger hospital system that is set to absorb our local one provides lessons on how important health care policy issues are publicly discussed.

Simplified Background

Landmark Medical Center is a small health care system in northern Rhode Island.  It has been in financial difficulty, and hence management negotiated a buyout  [see comment of 19 July, 2012 below] while in receivership a buyout was negotiated.  It is now in the process of being acquired by Steward Health Care, a regional hospital system based in Massachusetts (summarized here and here).  Meanwhile, Landmark has been in negotiations with Rhode Island Blue Cross Blue Shield, the largest RI health insurance company.  The negotiations have not been going well, so RI BCBS notified its policy-holders that it is possible Landmark will not be in its network in the future.  This difficult negotiation prompted Steward Health Care to make the discussion more public.

The Steward Health Care Advertisements

Steward Health Care has run a series of full-page advertisements in the Providence Journal.  One advertisement that has run at least three times, by my count, includes the following text:

WHAT KIND OF CHARITABLE ORGANIZATION SPENDS $120 MILLION ON ITS HEADQUARTERS
BUT DENIES SERVICES TO ITS POOREST COMMUNITIES?

Blue Cross & Blue Shield of Rhode Island is designated as a "charitable organization." But they certainly don't spend like one. They invested a small fortune on their opulent corporate offices in Providence. They dish out million each year in executive salaries. And for all that exorbitant spending, they pay absolutely nothing in Rhode Island state taxes.

Then, in May of this year, they refused to give Landmark Medical Center in Woonsocket a long-term contract without Steward Health Care participating. Steward, trying to be helpful, proposed base rates that were 5% below the state median, quality metrics used by the federal government, and a commitment to payment reform. But suddenly, the coffers had run dry. Blue Cross refused to even discuss the proposal.

Instead, they issued their response: Terminate Landmark Medical Center.

Never mind the residents who would lose their only hospital, the employees who would lose their jobs, or the elderly who would have to travel for care. Blue Cross was only interested in protecting the one group they serve most effectively, themselves.

This pretty plainly was a David vs Goliath narrative, with poor, small Landmark Medical Center and Steward Health Care, whose only goals were to serve local residents, as David, and huge, wealthy Blue Cross Blue Shield of RI, whose only goal is allegedly to serve its executives' interest, as Goliath.

Given that we have frequently discussed how self-interested, over-compensated executives may fail to uphold, or may even undermine their health care organizations' missions, this seemed like a narrative primed for further discussion on Health Care Renewal. In addition, Blue Cross Blue Shield of Rhode Island was beset by a scandal before we began Health Care Renewal (look here), involving allegations of excess compensation given to and conflicts of interest affecting its CEO.

Blue Cross Blue Shield of RI: Executive Compensation, Budget and Taxes

In fact, the most recent figures made public by RI BCBS on executive compensation showed that CEO Peter Andruszkiewicz was offered total compensation of $600,000 a year when he started in 2011 (look here.)  Also, as suggested by the advertisement above, there has been considerable local controversy about the size, scale, and price of the new RI BCBS headquarters (e.g., here).   Apparently, however, Blue Cross Blue Shield of Rhode Island does pay state taxes (per this report).

On the other hand, keep in mind that RI BCBS is one of the few health insurance companies to provide community (age-adjusted only) rated individual health insurance even for people with pre-existing conditions, (look here) at the behest of state law, to be sure. So perhaps RI BCBS is not quite the ogre oppressing the poor that the advertisement implies it to be.

But wait, there is more. This all started as a contract negotiation between a health insurer and a local hospital system which is about to be acquired by a regional hospital system. If Steward Health Care saw fit to bring up the executive compensation practices, budget, and taxes of Blue Cross Blue Shield of Rhode Island as relevant to the dispute, might Steward Health Care's executive compensation practices, budget, and taxes also be relevant?

Steward Health Care and Cerberus Capital Management: Executive Compensation, Budget, and Taxes

The problem is that we know very little about Steward Health Care's executive compensation practices, budget, and taxes. While the advertisement above (and Steward's own web address, steward.org) imply that Steward is only about providing health care to the poor and needy, and perhaps that Steward, like Rhode Island BCBS, is non-profit, neither is quite true.

In fact, Steward Health Care is the new name for what was once Caritas Christi Health Care, formerly a Catholic non-profit health system that was acquired in 2010 by Cerberus Capital Management, a private equity firm (look here).

Private equity firms are notably secretive. Neither Cerberus, nor its new health care acquisition, has seen fit to publish any details about executive compensation practices, budgets, or taxes.

We do have a few clues, however.

Executive Compensation
Caritas Christi at the time it was acquired by Cerberus was lead by CEO Ralph de la Torre.  His compensation in 2009 prior to the acquisition was $2.2 million a year.  He is still leading Steward Health Care. It is reasonable to expect that his compensation is not less than it was before, and probably more (look here).  It is reasonable to guess that Dr de la Torre's total compensation is currently several times larger than that of the BCBS of RI CEO. 

The leadership of Cerberus Capital Management includes, according to its web-site, John W Snow, chairman and senior managing director.  Mr Snow, former Secretary of the US Treasury, was listed in 2009 on the Virginia 100 web-site as having a net worth of approximately $90 million, although not with much confidence in the precision of the figure.  He is also a director of the Marathon Petroleum Corporation, from which he received $300,000 in compensation in 2011, according to the company's proxy statement, and of Amerigroup, from which he received at least $170,000 in equities, and additional amounts in fees and deferred compensation in 2011, per that company's proxy statement.  Stephen A Feinberg, founder, CEO, and senior managing director, described as a "recluse" in the New York Times, was listed as number 21 on a list of the 25 most powerful businessmen in 2007 by Fortune, at that time running through Cerberus 50 companies with total revenues of $120 billion.  On Wikipedia, his net worth was estimated as $2 billion in 2008.  These figures suggest that leaders of Cerberus Capital Management can make very large amounts of money, orders of magnitude larger than the compensation of the BCBS of RI CEO.

Budget
There is little public information on the budget of Cerberus Capital Management, but note again the estimate above that in 2007, it controlled 50 companies with $120 billion in revenues.  There is also little public information about the budget of its subsidiary, Steward Health Care.  Estimates from a recent article in Commonwealth suggested that Cerberus invested $251.5 million in Steward, but that Steward's 2011 budget had a net loss of $57 million.  According to the Woonsocket Call, an apparently short-term balance sheet from March 31, 2012 showed that Steward Health Care had assets of $1.1279 billion, liabilities of $1.0259 billion, and stockholder equity of $102 million.

Taxes
There seems to be no significant public information on taxes paid by Steward Health Care or Cerberus Capital Management.  According to Chareles Ferguson in Predator Nation, Cerberus chairman John W Snow resigned as Treasury Secretary "in 2006 only because it was revealed that he had not paid any taxes on $24 million in income from CSX, which had forgiven Snow's repayment of a gigantic loan that the company had made to him."

So while RI BCBS can be faulted for paying relatively high executive compensation, using its funds to build a rather lavish headquarters building, but not for failing to pay RI taxes, at least all these have been issues for public discussion. Furthermore, Cerberus Capital Management, and Steward Health Care which is its creature, while explicitly bringing these issues into the public debate about the Landmark negotiation with Blue Cross Blue Shield of RI, have not seen fit to reveal their own executive compensation, budget, or taxes. There is reason to think that their executive compensation and management budgets could be far more bloated that those of RI BCBS. We have no idea whether they have paid what might be considered their fair share of taxes, but note that their current chairman has had issues in the past with his personal tax payments.

Summary

The vigorous advertising/ public relations campaign by Landmark Medical Center, Steward Health Care, and ultimately Cerberus Capital Management to get a more successful outcome of the negotiation between Landmark and RI BCBS seems to be an example of the tactics used in support of the public relations by large, for-profit health care organizations. In the absence of any transparency about the executive compensation, budget, and tax payments by Cerberus Capital Management and its subsidiary, Steward Health Care, lavish public advertising faulting the executive compensation, budget, and tax payments of its counter-party suggests a rather crude attempt to twist the narrative so as to divert public attention from relevant issues.

If this was not the intention, perhaps Cerberus and Steward will make their executive compensation, budgets, and tax returns fully transparent?  We wait with bated breath.

In the absence of such transparency, skepticism about their public discourse remains warranted.

There is more and more public discussion of health policy from the local to the global levels. Much of this discussion, like much political discussion in general, seems dominated by expensive public relations efforts on behalf of the richer health care organizations. Physicians, other health care professionals, health policy researchers and leaders, and the public at large should be alert to the possibility that these communications will use psychological manipulation to divert its narratives in directions favored by these large health care organizations. Anyone listening or viewing communications coming out of such public relations efforts ought to consciously think about the relevant facts and issues they ignore, and why they may have been consciously omitted.

Quantitating the Corruption of Finance Leadership (Who May Overlap with Health Care Leadership)

The bad leadership in health care that we frequently discuss now appears to exist in a context of an increasingly corrupt society.  In particular, we have discussed how the leadership of major health care organizations, such as teaching hospitals, and the universities within which medical schools operate, now frequently interlocks with the leadership of finance.  The ongoing global financial problems have been blamed on bad leadership in finance.

A Survey of Finance Leaders

Now, a survey by a law firm that supports corporate whistleblowers offers some quantitation of the corruption within finance.  The press release for the survey is here, and a summary of results is here.  The survey respondents were 250 US based, and 250 UK based "senior individuals within the financial services industry."

Key results were:

- 24% of those surveyed believed that the rules may have to be broken in order to be successful.

- 25% of UK respondents believed financial services professionals may need to engage in unethical or illegal activity to get ahead; US respondents were only slightly less inclined to engage in wrongdoing at 22%.

- 12% of total respondents believed that it was likely that staff in their company have engaged in unethical or illegal activity in order to be successful.

Perhaps exhibiting ego bias, the senior professionals thought that there competitors were even worse:

39% of total respondents believed it was likely that their competitors have engaged in illegal or unethical activity in order to be successful.

A substantial number of respondents admitted that they would be willing to engage in illegal activity were the circumstances favorable:

16% of total respondents were at least fairly likely to engage in insider trading if they could get away with it. Perhaps more troubling, only 55% of all respondents could say definitively that they would not engage in insider trading if they could make $10 million with no risk of getting arrested.

An important fraction thought that the worked within organizations that encouraged unethical and illegal behavior:

- 30% of all financial services professionals reported feeling pressure to compromise ethical standards or violate the law as a result of their compensation or bonus plan.

- In assessing other pressures that may lead to unethical or illegal conduct, 23% of all respondents also reported feeling other pressures to compromise ethical standards or violate the law.

Note that due to social desirability bias, the survey likely understates these problems.

Comment

Also note that at least so far, this survey is not much less anechoic than much of the evidence of corruption in health care that we have discussed. Although it has been briefly noted in the financial blogs and press, like Reuters, BusinessWeek, and also in the New York Daily News and Los Angeles Times, no other main-stream media has commented yet.

One post on a Forbes blog by Peter Cohan made the weary observation:

Business corruption follows a well-worn path. The boss tells you to bend the rules, and knowing that ignoring that request will cost you your job, you do what you’re told. At the end of the year you get a big bonus and promotion.

Then a disgruntled customer or employee leaks the shady activity to the press or a regulator and your company pays a fine and gets a few weeks of bad headlines. Time passes and the cycle restarts.

He concluded in part:

The conditions that make business corruption pay off have not changed despite numerous scandals — recent ones include Enron, WorldCom, Madoff, and Lehman Brothers – all of which reflect the same conditions that prompted me to write Value Leadership a decade ago: Let executives write their own report cards, base bonuses on those numbers and you will get corruption every time.

The solution is as clear to me as it is impossible to implement. First, all corporate financial reporting must be conducted by highly paid government auditors –rather than by auditing firms that are paid by the companies they audit. Second, performance-linked bonuses must be set aside in escrow accounts for a decade until it’s clear whether the true benefits of business strategies exceed their costs.

As long as there is no limit to how much money companies can put into politicians’ pockets, this fix will never be implemented. That’s because money puts big business in control of politicians who — if they were responding to the interests of the majority of Americans — would eliminate the conditions that make the benefits of business corruption exceed its costs.

But business corruption pays for those who finance Washington campaigns so the soil in which it flourishes remains fertile.

The same is likely to be true of unethical practices by and corruption of health care leadership. After all, health care leaders now mainly come from business management backgrounds, and so have been trained in the same way as financial professionals, and exposed to the same culture that they have experienced. As we have noted, the leadership of health care and finance often overlap. For example, see ours posts on the finance influence on the board of Dartmouth College; the role of the former CEO of bankrupt Lehman Brothers on the board of New York-Presbyterian hospital; the role of finance leaders who derided the Occupy Wall Street as "imbeciles," among other things on the boards of miscellaneous health care organizations; the role of finance leaders on the board of Pfizer, etc, etc, etc.

True health care reform may require larger reform in the greater society.  In any case, we need to reform the culture of health care organizations so that leaders put patients' and the public's health first, and self-interest last.  Furthermore, health care organizations should not provide positive incentives merely for exceeding financial or volume benchmarks, and should provide strong negative incentives for unethical behavior.

Administrators at Pepper Spray U Found to Have Violated Medical Professor's Academic Freedom

There they, the management of University of California - Davis, go again.

The Wilkes and Hoffman Op-Ed Questioning A University Sponsored Aggressive Prostate Cancer Screening Program

According to the Los Angeles Times, and a post in Inside Higher Ed, the trouble began when Dr Michael Wilkes, a professor of medicine at University of California - Davis, and Jerome Hoffman, a professor of emergency medicine, wrote an op-ed in the San Francisco Chronicle in 2010 questioning the wisdom of a program run by UC-Davis promoting aggressive screening for prostate cancer with the PSA test.  They brought up problems with using PSA for screening that have been known for a while, including the poor ability of the test to detect cancer, the inability of the test or of prostate biopsy performed in response to the test to differentiate aggressive prostate cancer from cancer that will not progress, which is more common, the risks of such biopsies, and the poor effectiveness of available prostate cancer treatments, compared with the frequency with which they produce harms.  All these issues have again been brought to the fore by US Preventive Services Taskforce's latest recommendations not to screen for prostate cancer, based on similar concerns.

Not only did Wilkes and Hoffman question the basis for the university sponsored program's aggressiveness, they speculated that it might have to do with money.  The program was sponsored not only by UC-Davis but by the American Urological Association Foundation.  In fact, that foundation's current corporate sponsors include:  Astellas Pharma, Inc., Endo Pharmaceuticals, Ferring Pharmaceuticals, Intuitive Surgical, Inc., Pfizer, Inc., and Qualigen, Inc., although the op-ed did not specifically list its commercial support.

The University Slap(p?)s Back

Nonetheless, per the Inside Higher Ed post,

Michael Wilkes received an e-mail from an administrator at the University of California at Davis. Wilkes, a professor at the medical school, was told that he would no longer lead a program sequence that taught better patient care, and support for a Hungarian student exchange program he headed would be withdrawn.

Within weeks, Wilkes was told that he would be removed as director of global health for the UC Davis Health System. He also received letters from the university’s health system counsel suggesting that the university could potentially sue him for defamation over the op-ed.

Again, this occurred despite the facts that many distinguished people have questioned the wisdom of aggressive prostate cancer screening, and that this particular prostate cancer program was supported by an organization that in turn is supported by money from pharmaceutical devices and drug companies that may stand to gain from selling drugs and devices related to screening for prostate cancer, and the diagnosis and treatment of such cancer. Wilkes and Hoffman were raising valid clinical and policy concerns about the public actions of a government-supported university, in my humble opinion.

Thus the university lawyer's apparent threat of defamation suits thus appears to be a SLAPP, a threat of strategic litigation against public participation. In California, a 1993 law provides recourse for people who have been threatened with SLAPPs (look here).

The Faculty Committee Responds

Regardless, Prof Wilkes filed an internal complaint, and again, per Inside Higher Ed,

Now, a committee on academic freedom at the university that investigated allegations of intimidation and harassment against Wilkes has found them to be true. The faculty committee said in its report, a copy of which was obtained by Inside Higher Ed, that the actions of the university administrators cast doubt on its ability to be a 'truthful and accountable purveyor of knowledge and services.'

The group has asked the dean and other top officials at the university’s school of medicine to write letters of apology to the professor, admit to errors of judgment, stop proposed disciplinary actions against him and take steps to prevent future violations of academic freedom. This week, representatives of the university’s Academic Senate are expected to vote on similar resolutions against the administrators.

Now, according to the LA Times,

The next step is up to campus Executive Vice Chancellor Ralph Hexter, who in consultation with Chancellor Linda P.B. Katehi is expected to decide by fall whether to impose any discipline on the medical school executives, campus officials said.

Good luck with that.

The Context at UC-Davis

I would be surprised if any such punishment occurs. After all, UC-Davis has a record of not tolerating dissent, but tolerating administrators who suppress such dissent.  We have previously discussed:
- How the UC-Davis police infamously pepper sprayed peaceful student demonstrators, apparently at least partially in response to Chancellor Katehi's vague orders to clear the campus (see post here).
- A subsequent report blamed this incident on incompetent, or worse leadership by Katehi's administration, but so far it is not obvious that this has lead to any changes (see post here).
- How UC-Davis adminstrators tried to punish a medical student who got in a dispute with an overly officious student who apparently was "monitoring" his actions on an email list server, apparently on behalf of the administration, invoking "professionalism" as if that meant blind obedience to academic administrators (see post here).

Furthemore, Chancellor Katehi has a record of her own relationships to industry.  Here we noted that she sits on the board of a large publishing conglomerate that includes a medical education and communication company (a MECC) as a subsidy.  So I suspect she may not rush to punish subordinate executives because they suppressed criticism of the role of commercial money in medical academics.

Summary

So UC-Davis seems to be another academic medical institution run by people more interested in bringing in commercial support than the academic medical mission, including the support of free speech and academic freedom.  Its case is another example of how leadership that seems hostile to the mission in one instance is likely to be hostile to the mission in other instances.

Here I summarized what I believe to be the real threats against professionalism in the academic medical context.  As we have said again and again, true health care reform would encourage leadership who understand the mission and will put its support ahead of financial concerns and ahead of their own self-interest.

See also posts in the Health News Review blog, and the University Diaries blog.

Who Cares if The Patients Die? - Apparently Not Some Hospice Marketers

An article in USA Today suggests that marketers for hospices are pushing even more aggressive measures to recruit patients, regardless of the consequences.

Marketing Hospice to Prevent Re-Admission

Per USA Today,

Hospice marketers, exploring possibilities for new revenue to help continue the industry's remarkable growth, are looking to exploit a provision in the 2010 health care law by persuading hospitals to send Medicare patients into end-of-life hospice care instead of readmitting them to the hospital.

Such a move, the hospice marketers say, will enable hospitals to avoid paying the Medicare penalties required by the new law when hospitals discharge patients and then have to readmit them within 30 days: Instead of readmitting the patients, hospitals should send them to hospice care, which also is covered by Medicare, according to a USA TODAY analysis of marketing materials.

Patients with severe heart problems and pneumonia tend to decline quickly and often move in and out of hospitals, said hospice marketing specialist Rich Chesney, who proposed the idea.

It might be better, Chesney said, if a hospital CEO hired people to talk to family members about hospice, instead of a doctor, who is more focused on not losing a patient. Chesney made his proposal recently at a conference sponsored by the National Hospice and Palliative Care Organization, an industry trade group. [Chesney is apparently the President of Healthcare Market Resources, whose slogan is "growing bottom lines with information." - Ed]

'If (hospices) make that part of their business and their revenue stream, that's sound business,' said Stan Massey, chief marketing officer for Transcend Hospice Marketing in Holland, Ohio. Massey recently wrote a blog recommending hospice marketers talk to hospital CEOs instead of the doctors who usually decide who is eligible for hospice care. Those conversations, he wrote, 'must be framed heavily in terms of financial benefit.'

Ignoring the Hospice Mission

Lost in the marketers' thinking seems to be any notion of the hospice mission. Hospices are supposed to provide compassionate palliative care to patients at the end of life who do not want any further aggressive intervention. Good hospice care is likely to make the last days of such patients more tolerable.

However, generally hospices intentionally do not provide any care beyond palliation, such as, for example, antibiotics for acute infections, transfusions in the case of acute blood loss, or surgery for acute trauma. Should a patient who is not at the end of life be erroneously admitted to hospice, and then suffer some new acute problem, that patient is at risk of bad outcomes, including death because of denial of the sort of care available in acute care settings. Thus, admitting patients to hospice who are not at the end of life or have not given truly informed consent for hospice care may lead to patients dying prematurely, or suffering suffering preventable complications of treatable diseases and injuries.

Aggressive marketing of hospice, particularly pushing hospice for patients just because they seem likely to be re-admitted to a hospital, especially by having marketers try to go around patients' own physicians, risks admitting patients to hospice who should not be in hospice. Thus such aggressive hospice marketing may lead to needless, and wrongful deaths of, injuries to, and morbidity for patients who should have received more aggressive treatment.

The USA Today article did note:

Health care analysts and ethicists, however, say such proposals are contrary to the intent of the health care law, which is to provide better care, not to put more patients into hospice care for which they are not ready.

The proposals warp the 'whole idea behind hospice,' said Josh Perry, a business and ethics professor at Indiana University.

In addition,

Good hospices have been working with hospital CEOs for years, said Carolyn Cassin, president of the National Hospice Work Group, a coalition of the 25 largest not-for-profit hospice organizations. But the goal, she said, was to make sure patients received the care they needed. She said she was surprised to hear it characterized as a marketing approach to cut costs.

While hospice care costs less than hospital care, at $151 a day for Medicare patients, it's meant for people who are going to die. In hospice care, patients agree not to seek care to improve their health, such as more surgeries, hospitalizations or chemotherapy. After a doctor certifies that he expects a person to die within six months, Medicare covers hospice care.

Experts say they fear patients will be sent to hospice before their time and miss the proper care that could restore their health. Penalties, Perry said, are a 'good thing' to hold hospitals accountable. 'This isn't about extending hospice.'

Summary

We have previously discussed, most recently here, allegations that specific for-profit hospice corporations were admitting patients who were not at the end of life just to make more money. The current USA Today article suggests that the phenomenon of hospices enrolling inappropriate patients just to enhance revenue could be more widespread than previously appreciated. The more often hospices enroll patients who are not at the end of life, and/or have not given true informed consent for hospice care, the more patients are likely to suffer needless and wrongful morbidity and injuries, and the more patients are likely to needlessly, and wrongfully die prematurely.

It seems to me that unexpected morbidity of, injuries to, or premature death of hospice patients who were not obviously already at the end of life could lead to civil litigation, and even criminal investigation.

Furthermore, the realization that hospices, once considered the most humane of health care institutions, are more frequently run for profit, and may put profit ahead of their mission should provoke re-examination of our haste to encourage more and more patient care to be given by for-profit organizations in an era of "greed is good."

If we really want better health care, we will have to change policies, practices, and laws so that leaders of health care organizations are motivated more by the desire to help patients than by the desire to become rich.

The Case of the Vanishing Graduate Medical Education Funds

While primary care falters in the US, those who teach it seem to feel increasingly poverty stricken.  Now it appears that one reason for this is an amazing example of multiple failures of transparency and accountability.  Let me work through it, begging your pardon for a little bit of "inside baseball," medical education style.  The results suggest how we desperately need some medical disciples of Sherlock Holmes.

Background

My personal experience and increasing data suggests that most medical school faculty believe that their teaching is not valued by their institutions because teaching brings in no external funds.  In 2004, Dr Catherine DeAngelis, then the editor of JAMA, wrote "few medical schools provide adequate, if any, reimbursement for teaching time."(1)  (See this 2005 post.)   This seems absurd on its face, since what are medical schools for if it is not to provide teaching. 

However, there is evidence of this mission-hostile behavior.  In 2007, we quoted from a revealing interview with Dr Lee Goldman, Executive Vice President for Health and Biomedical Sciences at Columbia University,(2) who stated that "taxpayers," faculty who "generate more [money] than they cost," are valued most, and implied that faculty who focus on teaching are regarded as "welfare recipients," who bring in less external funding, and are valued least.  In 2010, we noted the results of a large-scale survey presented by Dr Linda Pololi in which 51% of faculty felt that the administration only valued them for the money that they brought in, and half felt that their institutions did not value teaching.(3)

Yet while faculty seem to believe that educational institutions receive little if any money to pay for teaching, it is not clear why the believe something so counter intuitive, and it is less clear what money actually goes to pay for medical education.

US Government Funding for Graduate Medical Education

However, several recent publications affirm that actually a lot of money goes towards one important form of medical education, yet the specifics of the money flows are shrouded in secrecy.  In the May, 2012, SGIM Forum, Dr Mark Liebow and colleagues summarized some of what is known about federal support of graduate medical education, that is, education of interns, residents, and other house officers.(4)  There are two streams of money that flow from Medicare to US hospitals:

Direct GME (DGME) payments help hospitals pay the salaries of residents, teaching faculty, and support staff. DGME is the product of three numbers: a per resident amount that varies by hospital, adjusted annually for inflation; the number of residents in the hospital (capped for each hospital at 1997 levels); and the fraction of discharges from the hospital that are Medicare beneficiaries. The Indirect Medical Education (IME) payment is a percentage amount added on to each DRG payment. The percentage is calculated via a complex formula (the only US statute containing an exponent!), where the key factor is the ratio of interns/residents to beds (IRB ratio).

These two streams are of considerable size:

Of the $9.2 billion Medicare paid for GME in 2010, $3 billion was for DGME and $6.2 billion for IME. The money is paid to hospitals sponsoring training programs rather than to the training programs or other hospitals where training occurs. While about 1,100 hospitals receive GME payments, 66% goes to the 200 hospitals that have the largest numbers of residents.

So, the 200 largest hospitals get about $2 billion in direct GME money (and presumably about another $4 billion in indirect money). This averages then to about $10 million DGME and $20 million indirect GME per hospital.

Thus, teaching, at least the teaching of interns, residents, and other house-staff does pay, and much more than trivial amounts. (Note that these amounts are not for teaching of medical students, which ought to be supported by other funding streams.)

Why then do faculty think that teaching does not bring in any money?

The GME Money Vanishes

An article by Dr Saima I Chaudhry and colleagues in the American Journal of Medicine begins to explain, although the explanations are found between the lines.(5)

First of all, while the graduate medical education money is paid by the government to the hospitals, the government does not publish what it pays to individual hospitals:

It has been previously reported that the amount of GME funding individual hospitals receive is not publicly reported by the Centers for Medicare and Medicaid Services,....

The government also does not hold the hospitals accountable for how they spend this money, nor for the quantity or quality of education they supply in exchange for it.

Remarkably, Chaudhry et al imply that that the people who run graduate medical education teaching programs also may not know how much money their hospitals receive from the government to fund their programs. The introduction to their article noted:

It is unclear how much program directors know about the amount and flow of DME funds to their programs. Program directors' beliefs about the transparency of funding to their programs, or their desire to influence how funds are distributed to them, also are unknown.

The article reported on a survey of internal medicine residency program directors which asked about "their knowledge of D[G]ME funding for their programs, the transparency with which funds are distributed to them, and their desire to influence this disbursement." The researchers sent surveys to 372 member programs, representing 97.1% of all US internal medicine residencies. They got 268 responses, a 72.0% response rate.

The main results were that only 159/268 (59.3%) of program directors had tried to find out how much DGME money their programs received, and of those, only 84 (52.8% of those enquiring, but only 31.3% of all respondents) actually knew how much money their programs got.

Of the 92 program directors who did not even try to discover how much money their programs received, approximately 21% said that "no one would tell me," 21% said that the "information would be inaccurate," 14% said they "don't know who to ask," and 2% were "afraid to ask."

Summary

US medical school faculty, especially those in primary care, increasingly feel pressured to perform activities that they perceive brings in money from external sources. They tend to believe that their own teaching somehow does not bring in any money, and that their careers will fail if they do not put more emphasis on other activities that the institution views as more profitable.

However, literally billions of US government dollars go to support the education of house staff, including the salaries of faculty who teach interns and residents, who probably are the majority of physician faculty. Faculty probably do not know this, because the government does not publish the amounts given to individual hospitals, nor demand of the hospitals any accountability for how they spend the money they receive.

Presumably, the top executives of each hospital know how much money the government gives them. Nonetheless, the majority of physician leaders of residency programs are never told these amounts, apparently because their hospital executives kept the amounts secret. Many of those educators who have tried to find out the figures were unsuccessful. Some did not even try to find out based on beliefs that their attempts would be unsuccessful, any amounts they discovered would be inaccurate, the people who knew the amounts were hidden, or that it would be dangerous to their careers to even try.

Thus billions of dollars of money flowing from the government to fund graduate medical education seems to have vanished in an amazing example of widespread deficiencies in accountability and transparency.

There are many people who blame government for many social ills. In this case, one can blame the US Congress for not writing a law that makes the money flows transparent and hospitals accountable for providing good educational value for the money provided. One can also blame the executive branch, particularly the Center for Medicare and Medicaid Services (CMS) of the US Department of Health and Human Services (DHHS) for not making the money flows and the values received for them transparent.

There are a few people, including this author, who also blame the leadership of health care organizations for many of the problems besetting health care. In this case, one can blame top leadership, presumably CEOs and chief financial officers (CFOs) of hospitals for hiding the amounts of money they receive from Medicare to finance graduate medical education. One can also blame the physician leaders of residency programs for not insisting that they know the true sources of financial support for their programs, obtain budgets that reflect this support, and recognition that their faculty really do bring in external funds for their teaching of house staff (and are thus valuable "taxpayers" in Dr Goldman's parlance.)

It is amazing that such amounts of money have been flowing for years mostly in secret. The secrecy has fueled incorrect, and in retrospect, bizarre ideas about the funding of medical education, and the value of medical educators to their institutions. This secrecy, in turn, has helped suppress the morale of medical educators, support the control of managers of health care professionals, and distort the flow of money within academic institutions and to compensation for certain favored individuals.

Would our dysfunctional health care system not be better off if we demanded transparency and accountability from its leaders?  In particular, the US government should make payments to hospitals for graduate medical education completely transparent, and develop a system to hold these hospitals accountable for how they spend the money.  Meanwhile, top leaders of hospitals receiving this money should make the amounts transparent, first to the people who are supposed to be doing the education that the money pays for, and to the public at large.  This would allow those running the relevant educational programs to develop reasonable and realistic budgets, to treat their faculty with respect, and to demonstrate what value they provide for the money received. 
The ongoing anechoic effect, and related deception and secrecy fostered by leaders in health care are major reasons our health care system is so dysfunctional, that costs are so high, and access and quality so poor.  True health care reform would ensure health care leaders put the mission before their personal enrichment, and act ethically with accountability, transparency, and honesty. 
References
1.   DeAngelis CD. Professors not professing. JAMA 2004; 292: 1060-1.  Link here.
2.  Goldman L, Halm EA.  A view from the top: general internal medicine from the perspective of a chair and dean.  SGIM Forum, April, 2007.  Link here.
3.  Pololi L, Ash A, Krupat E.  Faculty Values in the Culture of Academic Medicine: Findings of a National Faculty Survey. Link here.
4.  Liebow M, Jaeger J, Schwartz MD. How does Medicare pay for graduate medical education? SGIM Forum, May, 2012.  Link here.
5. Chaudhry SI, Khanijo S, Halvorsen AJ, McDonald FS,Patel K. Accountability and transparency in graduate medical education expenditures. Am J Med 2012; 125: 517-522. Link here.

The CEO as False Messiah

Why is the leadership of health care organizations so bad?  An important explanation of one part of the puzzle appears on InformationWeek's Brainyard blog written by Venkatesh Rao. 

The Visionary, Charismatic, or Messianic Leader

In "The Fall of the Messiah Leader," Rao described the rise of the concept of "visionary" leadership:

we'll look at the rise in the 1980s and impending fall of the idea of 'Leadership' as a pop business construct. The role of visionary leader emerged to make up for the apparent failure of the manager mind, but it evolved into something very different, illustrated in the picture below: a role dedicated mainly to creating and maintaining an illusion of control in the markets interspersed with occasional Big Bold crisis management moves that generally fail.

Rao suggested that the first example of the messianic organizational leader was former General Electric CEO Jack Welch:

Welch was the first modern example of 'charismatic leadership,' and his was the first widely recognized business name since the robber barons. I challenge you to name, off the top of your head, one "celebrity" business name between Rockefeller and Welch that the average man on the street would have recognized.

Rao described the charismatic, or visionary leader in truly messianic terms:

one savant-like figure can intuitively read market conditions, spot brilliant strategic opportunities, create clarity of purpose in pursuit of that opportunity, and steer by an innate sense of True North, without a compass.

Oh yeah, and while performing this miracle routinely, the leader also models virtues and values that would put saints to shame. This idealized leader sparks a pursuit of corporate greatness with a brilliant strategic insight every few years, and he ensures that the pursuit is conducted in accordance with values so noble you feel like writing epic poems in his honor.

These charismatic figures are supposed to be capable of intuitively cutting through complexity and producing visionary decisions that make the managers' jobs tractable again.

In case this description of supposedly messianic leaders of recent years sounds far-fetched, recall the example of the failed, then eventually jailed CEO of what was once the Allegheny Health Education and Research Foundation (AHERF), one of the largest vertically integrated health care systems of the 1990s. (Currently, we call such organizations accountable care organizations, or ACOs.) Abdelhak was described in an American College of Physicians publication as a "visionary." (See the summary beginning on p 5 here.) Abdelhak had previously been called a "visionary" or a "genius" in the media. [Gaul GM. Creator of a cross-state health system despite personal and financial questions, Sherif Abdelhak has boldly expanded from Pittsburgh to Philadelphia. Philadelphia Inquirer, March 4, 1991. P. D1. Gaul GM. The new prescription for health care: Hahnemann’s merger dwarfs - and frightens - many local rivals. Philadelphia Inquirer, November 21, 1993. P. E1.]  For more recent examples of how health care leaders may be described in messianic terms, look here, here, and here.

The False Messiahs

Just as Abdelhak proved to be not a messiah, but a criminal, most messianic leaders are anything but. As Rao put it,

Do these Messiahs actually do the job required of them--relieve beleaguered mere-mortal managers and steer the company toward greatness? Nine out of 10 times, they do nothing of the sort. What they do is convince people that they're in control.

His main point is that the "messiahs" are just people playing at that role, supported by public relations, if not propaganda and disinformation:

Heroic, charismatic leadership in the context of large public companies is mostly a myth. What makes it a myth isn't that such figures don't exist (there have been a handful, such as Welch himself, Jobs, and Bezos), but the idea that the phenomenon can be studied in general terms, codified, and turned into a teachable skill.

True leaders are born, not manufactured. And they're quite rare. What the leadership cottage industry can manufacture are false leaders: People who can act like leaders. That theater has two audiences: the media and Wall Street.

The psychological allure of 'leadership' as a concept is almost entirely due to its profitability as a business-writing cottage industry, which in turn is based almost entirely on appealing to the vanities of wannabe-Messiahs. On the other side, there's an entire shadow world devoted to manufacturing perceptions of Messianic capabilities, by 'proving' claims to charismatic leadership using hagiographic narratives.

Rao claimed that the rise of such falsely messianic leadership was due to the ability of such leaders to bewitch investors:

The de facto job of a leader is to manage perceptions on Wall Street and thereby manage the stock price. Projecting an image of charismatic leadership is the easiest way to do that. Managers fight fires out of sight, creating a perception of corporate normalcy and control, and the Glorious Leader uses that blank canvas of apparent normalcy to spin tales that mesmerize Wall Street.

Who Else Benefits

Rao wrote mainly in the context of understanding the stresses and challenges of managers (who he sees as distinct from leaders in the context above). Thus he may not have written about other factors in the etiology of falsely messianic leaders.

I hypothesize that such leaders are not only good at bewitching investors, but bewitching other constituencies and stakeholders. Most health care organization now must deal with government agencies. Non-profit health organizations must deal with groups that are interested in their ostensibly charitable missions. Having a apparently messianic leader makes it possible to bewitch these groups.

Furthermore, I hypothesize that falsely messianic leaders greatly benefit two groups within their organizations. The first is obviously their apostles, often the top layers of organizational executives just below the CEO. Such positions are now almost as personally remunerative as are CEO positions. The second is obviously the spin-doctors, that is mainly the public relations and sometimes the marketing people who help produce the theatre that creates the perception of messianic qualities.

The Final Common Pathway

Rao suggests that falsely messianic leaders are likely to lead their organizations to a bad end, even if they themselves may escape the consequences:

Charismatic theater-leadership is about to die a messy death, like Qadaffi, because the sheer amount of chaos converging in a bottom-up torrent to the CEO's office will become unmanageable very soon. The theater will become increasingly hard to sustain.

Leaders fail when their managers fail to keep up with the fire-fighting. Once the fires become visible externally, the apparent normalcy necessary for the leader to manage perceptions is gone.

At this point, the leader is an impossible situation, but the theater must continue. And so we're treated to the grand finale of the tenure of a CEO: the Big Bold Move, the Bet The Company moment.

The Big Bold Move is usually a Big Dumb Move--deciding to go after large new markets, taking on bold new product initiatives costing hundreds of millions of dollars, making major acquisitions. It's a high-stakes game with a billion-dollar ante.

And usually these moves fail because charismatic leaders are forced to make them at terrible times, with bad data, when growth has stagnated or is plummeting, and there's a need for an 11th hour business model shift to replace hundreds of millions of dollars of collapsing revenue streams. A case of too much, too late.

The leaders who fail are sacked, land safely with golden parachutes, and proceed to loudly blame 'culture' (read: 'incompetent middle management') for the failure.

Rao is writing for a general business audience. The outcomes of such failures when the falsely messianic leader is in charge of a health care organization can obviously be even worse, leading to rising health care costs, declining access and quality, and threats to patients' and the public's health.

Summary

We have seen many health care leaders praised for their brilliance and paid royally despite leadership resulting in financial distress, threats to the organizations' health care missions, poor patient care, unethical behavior, or even crime. (The most recent example as of the time this was written was here. For other examples look here.)   Yet health care CEOs are just people, sometimes smart, but almost never brilliant.  Promoting them as messianic to bewitch key constituencies, justify the remuneration of other top managers, and the hiring of more public relations flacks is likely to lead to the sort of organizational disasters and system-wide dysfunction we discuss on Health Care Renewal.  The rise of the falsely messianic leader may allow the entry of the most dangerous false messiahs, the psychopathic ones.  (We discussed the likelihood that some health care leaders are actually psychopaths here.)

Rao's theory of falsely messianic leadership (and related, and also religiously allusional theories of the "divine rights of CEOs," look here and here), suggest that the better paid the CEO, and the more expansive the descriptions of the CEOs talents, the more skeptical we ought to be. 

In the secular occupation of health care, we ought not to yearn for messiahs, but hope for reasonable leadership that draws on the collective knowledge and values of health care professionals rather than dubious "visions," and that show accountability, integrity, transparency, honesty, and ethics.

From Serving the Poor to Paying Executives Millions - Carolinas HealthCare System

A striking contrast between a large health care organization's historic mission and its current practices appeared in a series published by the Charlotte News-Observer called "Prognosis: Profits" about the Carolinas HealthCare System.

A Historical Mission to Serve the Poor

The system evolved from a public hospital meant to serve the poor.  In particular,(1)

Only 30 years ago, it was a charity hospital called Charlotte Memorial – a crowded, dreary place that lost money every year because most of its patients couldn’t pay their bills.

The hospital system is actually "a public, tax-exempt entity called a hospital authority". Because of this special status, it has the power of eminent domain, the ability to seize property albeit with compensation, and its employees have "more privacy protection that those of other public agencies."

However, in the "greed is good" 1980s, the hospital began a transformation,

The board hired [Harry] Nurkin in 1981 to revamp Charlotte Memorial’s image, attract paying patients and avoid the fate of struggling public hospitals in Atlanta and Chicago.

Until then, patients with insurance mostly chose Presbyterian Hospital or Mercy Hospital, with stately buildings at the edge of Myers Park.

With a vision of building one of the Southeast’s finest medical centers, Nurkin paid attention to details, such as wallpaper, plants and furniture. And he put the hospital in the black by improving collections from patients and insurers.

In 1983, when Nurkin unveiled the hospital’s first long-range plan, some board members sat in wonder at a slide show that accompanied his bold outline, according to 'A Great Public Compassion,' a book by writer Jerry Shinn.

The plan called for a heart institute, a doctors’ building and an 11-story, $40 million tower that would replace a 1940s wing. All of that came true – and more.

Now a Huge Hospital System

From those humble origins, Carolinas HealthCare System has now become(2)

a juggernaut. It’s now the country’s second-largest public hospital system, behind only the nationwide system of Veterans Affairs hospitals.

One of the benefits of that growth is access to quality medical care. Carolinas HealthCare offers one of five organ transplant programs in the state and operates the region’s most comprehensive trauma center, where accident victims frequently arrive via medical helicopter. Five-year-old Levine Children’s Hospital has brought new pediatric specialties to Charlotte, and Levine Cancer Institute has recruited specialists from such respected institutions as the Cleveland Clinic.

With nearly $7 billion in annual revenue, Carolinas HealthCare runs about 30 hospitals and owns more than $1 billion worth of property in Mecklenburg County alone. It has more than $2 billion in investments.

In the five-year period ending in 2011, it spent $1.8 billion on capital projects.

Forgetting the Mission: Suing Poor Patients

However, as the system grew, its mission seems to have been forgotten.

In particular, Carolinas HealthCare seems to now have a penchant for suing poor patients who cannot pay its bills. A Charlotte Observer article documented that while the hospital does not refuse poor patients care, it may later pursue them if they cannot pay. The article noted the case of a woman who was assured that the hospital had funds to pay for patients like her, but who then faced a lawsuit for $34,000 and a lien on her house. In general(3)

most N.C. hospitals are tax-exempt – a distinction that saves them millions each year. In exchange, these nonprofits are expected to provide financial help to those without the means to pay.

But thousands of times a year, hospitals are suing patients instead, an investigation by the Charlotte Observer and The News & Observer of Raleigh found.

An in-depth look at some of those cases suggests most of the patients were uninsured, and that a significant number of them should have qualified for free hospital care.

Critics contend those hospitals are financially ruining people they could afford to help. Carolinas HealthCare System, the multibillion-dollar public enterprise that owns CMC-Mercy, has generated average annual profits of more than $300 million over the past three years.

During the five years ending in 2010, N.C. hospitals filed more than 40,000 lawsuits to collect on bills.

Most of those suits were filed by just two entities: Carolinas HealthCare and Wilkes Regional Medical Center in North Wilkesboro. Each filed more than 12,000 suits over the five-year period, according to state courts data. Wilkes Regional, which is managed by Carolinas HealthCare, appears to be the state’s most litigious individual hospital.

In addition,

Often, the lawsuits hit people who are among those paying the highest rates for hospital care: the uninsured. Bills for uninsured patients are usually higher because they don’t have insurance companies to negotiate discounts on their behalf.

It’s unclear how many of the patients sued in North Carolina lacked health insurance and substantial income or assets. But in interviews with 25 of those patients, the newspapers found 17 of them were uninsured; 10 said they were never told about the hospitals’ financial assistance programs.

An editorial summarized the contrast between Carolinas HealthCare historic mission and its current practices(4)

Carolinas HealthCare, once a small, struggling operation, has become one of the top hospital systems in the country. Novant Health, owner of Presbyterian Hospital, has grown into a powerful and respected health care provider. Their successes have come thanks to an aggressive philosophy of accumulation and growth, which has led to patients in the Charlotte region having access to the latest in medical technology and research, as well as top doctors in a diversity of medical fields.

But that accumulation has contributed to the high cost of health care in North Carolina, and that growth has caused the hospitals to stray at times from their non-profit charitable mission. A Charlotte Observer and News & Observer investigation that begins today details how a hunger for money and power has caused the two hospitals to sometimes lose their way, contributing to the region’s health care cost woes and leaving thousands of patients with financially crippling bills.

Opaque, Unaccountable Governance

While the Charlotte Observer did not provide opinions about the reasons that this large health care organization appears to have forgotten its raison d'etre, its reporting suggests some familiar elements.

The governance of the organization may have been appropriate for a small, struggling public hospital, but as the system grew, lack of accountability and transparency may have become more important. It is easier to lose one's way when no one is observing one's actions.(1)

Most hospital business gets done quietly – until there is a well-planned announcement.

The system’s self-perpetuating board includes top community and business leaders whose nominations get approval from the Mecklenburg commissioners’ chairman.

Quarterly hospital system board meetings, at 7 a.m., are polite and scripted. Votes are unanimous on everything from building new hospitals to borrowing millions of dollars. Questions are worked out in private discussions, closed-door committee meetings or executive sessions.

Meetings aren’t widely publicized. Except for a couple of newspaper reporters, only board members and hospital officials attend. Future meeting dates are provided to those who attend board meetings or call the system’s main office.

State law requires public organizations with websites to post meeting times. Carolinas HealthCare had not been doing that until last week, after an Observer reporter asked about it.

The board’s agenda sets no time for public comment.

While operating so quietly, the board appears to have become a very cozy little group,

The 1943 hospital authority law intentionally kept elected officials and politics out of operations. The link is that the commissioners’ chairman must sign off on hospital board nominees.

It has been a rubber stamp.

County officials remember once in 30 years that a proposed board member was rejected. That was in 2008 when nominees included Gloria Pace King, who had been ousted as CEO of the United Way of the Central Carolinas because of public outcry over her $2 million pension package.

In December 2008, the board renominated King for a new term. But hospital officials say Roberts, then commissioners’ chairwoman, objected, and King wasn’t reappointed.

Over the years, the board has included city leaders, such as bank CEOs Hugh McColl and Ed Crutchfield, and Stuart Dickson, the retired head of the company that owns Harris Teeter. His father, Rush S. Dickson, was an original board member whose name is on the entrance to what is now Carolinas Medical Center.

Lavish CEO Compensation

As noted earlier, not only are the actions of the hospital system's governing body kept secret, but up to recently, compensation paid to all employees, including top executives was also secret.(1)

State law gives its employees more privacy protection than those of other public agencies.

For example, salaries of all state, county and city government employees are public. That’s not true for public hospital employees.

Until a 2009 change in state law, Carolinas HealthCare had for years refused to make public the total compensation for top executives. They said state law precluded them from disclosing more than basic salary.

As a result, the public hospital system wasn’t disclosing as much detail as its private counterpart, Novant Health, does in publicly available reports to the IRS.

At the urging of the Observer and other state newspapers, legislators broadened the law in 2009 to require disclosure of total compensation for top executives at public hospitals.

So it should not be any surprise that an opaque, unaccountable board run by a cozy group of insiders saw fit to allow its friends in the management make some money, a lot of money. The Charlotte Observer reported that there were nine hired managers with total compensation greater than $1 million in 2011.(5)

Michael Tarwater
CEO, Carolinas HealthCare System
Total 2011 compensation:
$4,236,305
Percentage increase over prior year:
14.10%

Joseph Piemont
President/Chief Operating Officer,
Carolinas HealthCare System
Total 2011 compensation:
$2,536,792
Percentage increase over prior year:
19.70%

Greg Gombar
CFO, Carolinas HealthCare System
Total 2011 compensation:
$1,751,798
Percentage increase over prior year:
8.90%

Laurence Hinsdale
Executive Vice President, Carolinas HealthCare System
Total 2011 compensation:
$1,693,314
Percentage increase over prior year:
44.10%

Paul Franz
Executive Vice President, Carolinas HealthCare System
Total 2011 compensation:
$1,575,927
Percentage increase over prior year:
-1.30%

Dennis Phillips
Executive Vice President, Carolinas HealthCare System
Total 2011 compensation:
$1,351,138
Percentage increase over prior year:
12.20%

John Knox
Chief Administrative Officer, Carolinas HealthCare System
Total 2011 compensation:
$1,197,528
Percentage increase over prior year:
11.80%

Roger Ray
Chief Medical Officer, Carolinas HealthCare System
Total 2011 compensation:
$1,080,159
Percentage increase over prior year:
No data for prior year

Russ Guerin
Executive Vice President, Carolinas HealthCare System
Total 2011 compensation:
$1,060,931
Percentage increase over prior year:
3.00%

Should it be surprising that executives who can become so rich, and who are subject to so little oversight, are more interested in preserving the hospital system's operating margin which supports their wealth than in providing the care to poor people that was the hospital system's original reason to exist?

Summary

As the local NAACP pointed out, the hospital system should better uphold its mission(6)

'The Bible says we’re not supposed to burden the poor and the sick and the afflicted. We’re supposed to lift them and help them and heal them,' NAACP President the Rev. William Barber said during the Charlotte stop of a statewide tour designed to bring attention to the struggles of low-income people. '(Carolinas HealthCare) is a group with money hounding people who are just trying to make it.'

However, I submit that restoration of this organization's mission will require more than exhortation. The governance of this organization, like that of many others we have discussed, needs to regain accountability, transparency, integrity, and ethics. It must insist that the leaders it hires uphold the mission ahead of other concerns, particularly personal enrichment. It must provide these leaders with realistic incentives based on how well they uphold this mission, not on revenue or operating margin.

Until such changes are accomplished, expect this hospital system, like many other health care organizations, to contribute only to our ever rising prices, declining access, and stagnating health care quality.

References

1.  Garloch K, Alexander A. Carolinas HealthCare System's evoluation: public hospital with private attitude.  Charlotte Observer, April 21, 2012.  Link here.
2. Alexander A, Garloch K, Neff J. Nonprofit hospitals thrive on profits. Charlotte Observer, April 21, 2012. Link here.
3. Alexander A, Raynor D. Hospital suits force new pain on patients. Charlotte Observer, April 23, 2012. Link here.
4. Anonymous. Money over mission at non-profit hospitals. Charlotte Observer, April 22, 2012. Link here.
5. Anonymous. Million-dollar hospital executives in North Carolina. Charlotte Observer, April 21, 2012. Link here.
6. Alexander A. Stop suing patients, NAACP tells Carolinas HealthCare System. Charlotte Observer, May 2, 2012. Link here.

Will the UC-Davis Chancellor be Held Accountable for "Systemic and Repeated Failures?"

During the brief Occupy Wall Street etc campaign last year, the pepper spraying of unarmed protesters on the University of California - Davis campus became a symbol for some of what the powers that be thought of those who challenge the political economic status quo.  We discussed this incident (here and here) on Health Care Renewal as an example of how the privileged hired leaders of big organizations, including health care organizations, may put their own interests ahead of the organizations' missions.  Note that this case is relevant to Health Care Renewal since UC- Davis has a medical school and academic medical center.

The Task Force Report

Now, five months later, an internal investigation of the case has been made public, and it seems to support our concerns about the leadership of large organizations.  The AP described the resulting report (via the Seattle Post-Intelligencer).  In summary,

a UC Davis task force said the decision to douse seated Occupy protesters with the eye-stinging chemical was 'objectively unreasonable' and not authorized by campus policy.

'The pepper-spraying incident that took place on Nov. 18, 2011, should and could have been prevented,' concluded the task force created to investigate the confrontation.

The report concluded that the Chancellor (functionally, the CEO) of UC-Davis, Linda Katehi had substantial responsibility for the incident:

The task force blamed the the incident on poor planning, communication and decision-making at all levels of the school administration, from Katehi to Police Chief Annette Spicuzza to Lt. John Pike, the main officer seen in the online videos.

Furthermore,

The task force blamed the chancellor for not clearly communicating to her subordinates that police should avoid physical force on the protesters. It also said she was responsible for the decision to deploy police on a Friday afternoon, rather than wait until early morning as Spicuzza recommended.

An editorial in the Merced Sun-Star focused more vividly on Katehi's poor leadership.

The independent assessment of events leading up to the infamous Nov. 18 pepper-spraying incident at the University of California at Davis provides a devastating indictment of the leadership of Chancellor Linda P.B. Katehi and key vice chancellors -- and of the operations of the campus Police Department.

Katehi showed either extreme naivete or incompetence in weighing a response to protesters camping in the Quad. The report of the task force, led by former California Supreme Court Associate Justice Cruz Reynoso, revealed a deeply flawed structure for decision-making. Little or no consideration of alternatives. Failing to record and adequately communicate key decisions, so that ambiguity and uncertainty ruled.

The command and leadership structure of the campus Police Department, the report concluded, is 'very dysfunctional.' Lieutenants, the report stated, don't 'follow directives of the Chief.' This department needs a top-to-bottom review to bring it into line with best practices in policing for a university campus.

Campus leaders had been dealing with protests since 2009 and were well aware of events that November in Oakland and at UC Berkeley.

But instead of deliberate preparations, those events, according to the report, sparked alarmist fears among Katehi and other administrators that if any encampment was not removed immediately, older non-students might assault young female students.

Katehi said she was worried about 'the use of drugs and sex and other things, and you know here we have very young students ... we were worried especially about having very young girls and other students with older people who come from the outside without any knowledge of their record ... .'

But the report suggests Katehi and her leadership team did little or nothing to verify whether these fears were well-founded, ignoring evidence from student affairs staff that protesters were students and faculty. The report concludes that Katehi's fears were 'not supported by any evidence' obtained by the Kroll Inc. investigators.

Worse, even if the concerns were real, Katehi and her leadership team did not consider alternatives to immediate removal of the encampment -- or learn anything from the experience of other places. This rush to action resulted in ad hoc decision-making, apparently with no one having a clear understanding of what was supposed to happen.

Katehi did make one thing clear: She wanted the tents removed at 3 p.m. -- though it was never certain what legal authority police had to remove tents during the day in order to implement a policy against overnight camping. Subordinates, the report says, took her statement as an executive order and tactical decision.

The report also notes that Katehi 'failed to express in any meaningful way her expectation' that campus police would use no force. There is no indication what Katehi thought police should do if protesters refused a request to take down tents.

Furthermore, an article in the Atlantic suggested that Katehi was not truthful in her dealing with the investigation:

at face value ... [the report's] findings are also very damaging to the still-serving Chancellor of UC Davis, Linda Katehi. For instance, the Kroll report says about a letter asking the demonstrators to disperse:

Chancellor Katehi told Kroll investigators that Student Affairs wrote the letter and that she did not review it before it went out. The record contradicts both of these statements, as detailed below. Katehi did review the letter, provided an editorial change and approved it. Student Affairs did not write the letter...

Will Leadership be Held Accountable?
So, in summary, the report on the pepper-spraying incident portrays the Chancellor of UC-Davis as presiding over a dysfunctional police department, hastily responding to rumors rather than evidence, making decisions without considering alternatives, poorly communicating decisions and their rationale, and not always being honest.  This is not the portrait of a capable leader.  This a a portrait of someone totally out of her depth.

So why is she paid the big bucks?  As we have discussed endlessly, the top hired leaders of big health care (and other related) organizations seem to be almost universally lauded by their boards of trustees, not to mention fawning public relations departments, as brilliant.  That brilliance is used as a rationale for the leaders' compensation and benefits, and for deflecting their accountability.

Yet often on close examination top hired leaders prove to be bumblers at best.  Again and again their leadership has been shown to subvert the mission of their own organizations.  Yet the structure that has been erected to protect them, to put them into a "CEO bubble," keeps them unaccountable.

Even after this report, will Chancellor Katehi be held accountable?  Once again, I am not holding my breath.  The strength of her protective bubble was demonstrated in an article in the Sacramento Bee,

Cruz Reynoso, the former state Supreme Court justice whose task force blamed 'systemic and repeated failures' of UC Davis' leadership for the pepper-spraying of students last fall, said Thursday that Chancellor Linda P.B. Katehi should stay on the job and enact reforms to prevent a recurrence.

'She should not resign. The balance is that she has done a lot of good despite this drastic poor judgment,' Reynoso said, a day after releasing an investigative report that faulted the chancellor for failing to make clear to campus police she wanted no force used in dispersing protesters and taking down an Occupy encampment on Nov. 18.

Reynoso said he was impressed by the chancellor's response: a written statement Wednesday vowing to protect students' 'safety and free speech' as the university learns 'from the difficult events.'

What an example of cognitive dissonance this was. "Systematic and repeated failures," and "drastic poor judgment," which resulted in injuries to students and clear violation of the university mission is not reason enough to fire a CEO (as long as she writes a contrite letter promising to uphold the mission in the future)? There is no way to understand this other than as a manifestation of belief in the "divine right of CEOs" (look here and here).

So my response is that we will not solve the problem of health care dysfunction, and our society's larger political economic problems until we resolve to hold our leaders accountable for the missions they are supposed to uphold.