Three Facets of One Hospital: Coddling the Rich, Hounding the Poor, and Crooked Executives

Juxtaposing three news stories from the past few months raises disturbing questions about the priorities of the leaders of one of the US' more prestigious hospitals.<br /><br /><strong>"Chefs, Butlers, Marble Baths: Hospitals Vie for the Affluent"</strong><br /><br /> This 21 January, 2012 <a href="http://www.nytimes.com/2012/01/22/nyregion/chefs-butlers-and-marble-baths-not-your-average-hospital-room.html">article </a>from the New York Times focused on the ritzy comforts now provided for wealthy (but perhaps not very sick) patients at the renowned New York Presbyterian/ Weill Cornell Hospital.  It opened, <br /><blockquote>The feverish patient had spent hours in a crowded emergency room. When she opened her eyes in her Manhattan hospital room last winter, she recalled later, she wondered if she could be hallucinating: 'This is like the Four Seasons — where am I?'<br /><br />The <em>bed linens were by Frette, Italian purveyors of high-thread-count sheets to popes and princes. The bathroom gleamed with polished marble</em>. Huge windows displayed panoramic East River views. And in the hush of her $2,400 suite, <em>a man in a black vest and tie proffered an elaborate menu and told her, 'I’ll be your butler.'</em><br /><br />It was Greenberg 14 South, <em>the elite wing on the new penthouse floor of NewYork-Presbyterian/Weill Cornell hospital</em>. <em>Pampering and décor to rival a grand hotel,</em> if not a Downton Abbey, have long been the hallmark of such 'amenities units,' often hidden behind closed doors at New York’s premier hospitals. But the phenomenon is escalating here and around the country, health care design specialists say, part of an international competition for wealthy patients willing to pay extra, even as the federal government cuts back hospital reimbursement in pursuit of a more universal and affordable American medical system. </blockquote><br />Additional amenities include:<br /><blockquote>A waterfall, a grand piano and the image of a giant orchid grace the soaring ninth floor atrium....</blockquote><br />Also,<br /><blockquote>the visitors’ lounge seems to hang over the East River in a glass prow and Ciao Bella gelato is available on demand....</blockquote><br />An architect who specializes in designing such luxury facilities for hospitals noted:<br /><blockquote>'These kinds of patients, <em>they’re paying cash</em> — they’re the best kind of patient to have,' she added. 'Theoretically, it trickles down.' </blockquote><br />Note that the article also mentioned other hospitals which offered similar luxuries, including Johns Hopkins Hospital in Baltimore, Cedars-Sinai Medical Center in Los Angeles, and Mount Sinai Medical Center in New York.<br /><br />On the other hand,....<br /><br /><strong>Hounding the Poor for Payment While Getting Government Money for Indigent Care</strong><br /><br />On 12 February, the New York Times published an <a href="http://www.nytimes.com/2012/02/13/nyregion/study-finds-new-york-hospitals-flout-charity-rules.html">article</a> about how New York Presbyterian/ Weill Cornell deals with patients with fewer resources than those discussed above:<br /><blockquote>For most of her life, Hope Rubel was a healthy woman with good medical insurance, an unblemished credit history and a solid career in graphic design. But on the day an ambulance rushed her to a Manhattan hospital emergency room shortly after her 48th birthday, she was jobless, uninsured and having a stroke. <br /><br />Ms. Rubel’s medical problem was rare, a result of a benign tumor on her adrenal gland, but the financial consequences were not unusual. She depleted her savings to pay $17,000 for surgery to remove the tumor, and then watched, 'emotionally paralyzed,' she said, as $88,000 in additional hospital bills poured in. Eventually <em>the hospital sued her for the money</em>.<br /><br />Yet that year the hospital, <em>NewYork-Presbyterian/Weill Cornell, had already collected $50.2 million from the state’s so-called Indigent Care Pool to help care for people like Ms. Rubel who have no insurance and cannot pay their bills</em>. </blockquote><br />Note that the article also included other New York hospitals that allegedly used aggressive collection tactics on poor patients even though they too collected government money for indigent care. These included NYU Langone Medical Center and State University of New York Downstate Medical Center.<br /><br />And one more...<br /><br /><strong>Kickbacks for Hospital Executives</strong><br /><br />For some reason, the only media coverage of this story was not in New York, but <a href="http://articles.philly.com/2012-02-13/news/31054958_1_kickbacks-philadelphia-developer-hospital-employees">by the Philadelphia Inquirer </a>on 13 February, 2012.<br /><blockquote>The FBI said that ... [Michael Yaron] he <em>received asbestos-removal and construction contracts at New York Presbyterian Hospital for two of his companies</em>, Cambridge Environmental & Construction Corp. and Oxford Construction & Development Corp., <em>because he paid about $2.3 million in kickbacks starting in 2000</em>.<br /><br />Neither Yaron, a resident of Meadowbrook, Montgomery County, nor his attorneys could be reached for comment yesterday. No one answered at Yaron Properties, his offices on Arch Street in Old City.<br /><br />Bucks County native Moshe Buchnik, a president of two asbestos-abatement companies, was also convicted after the four-week trial. <em>Santo Saglimbeni, a former vice president of facilities operations at the hospital, and Emilio 'Tony' Figueroa, a former director of facilities operations at the hospital, were also convicted. The FBI said the two former hospital employees steered contracts to Yaron and Buchnik in exchange for the kickbacks</em>.</blockquote><br />The Inquirer apparently covered the story because Yaron lives in Philadelphia. Thus it treated the convictions of a former vice president and former director of facilities operations at New York Presbyterian/ Weill Cornell Hospital as afterthoughts.<br /><br /><strong>Summary</strong><br /><br />Thus, in the last six weeks, we have been treated to stories that showed how New York Presbyterian/ Weill Cornell Hospital has devoted substantial resources to create luxury suites for rich patients, presumably because they may pay cash; while simultaneously hounding poor patients who could not pay their large medical bills, even though the hospital was receiving government funds for indigent care; and until recently was employing some executives now shown to have abused their authority. <br /><br />The themes of the three individual stories should be familiar.<br /><br />The first story was a reminder that the very rich are different from you and me in how they interact with the health care system. In many ways, the rich and powerful - some might call them the one percent - are personally protected from various aspects of health care dysfunction. For example, <a href="http://hcrenewal.blogspot.com/search/label/executive%20health%20plans">here</a> we have discussed how wealthy executives seem to be able to obtain health insurance with benefits unheard of by the more common folk, and <a href="http://hcrenewal.blogspot.com/2011/10/how-rich-and-influential-get-health.html">here</a> we discussed how the wealthy and influential may get preferential hospital treatment. Thus, even one percenters who are not otherwise involved in health care may not be inclined to lend their support to any efforts to really reform the system. <br /><br />Aggressive bill collection practices by hospitals which are supposed to serve the poor are also old news. We first <a href="http://hcrenewal.blogspot.com/2004/12/money-trumps-mission.html">discussed</a> such practices occurring in New York City in 2004 - yes, this blog is that old. We also <a href="http://hcrenewal.blogspot.com/2008/12/suing-poor-patients-in-maryland.html">discussed</a> such practices in Baltimore in 2008. Such practices are an example of <a href="http://hcrenewal.blogspot.com/search/label/mission-hostile%20management">mission-hostile management</a>.<br /><br />Finally, we have commented many times about misbehavior by health care executives, and discussed examples of <a href="http://hcrenewal.blogspot.com/search/label/fraud">fraud</a>, <a href="http://hcrenewal.blogspot.com/search/label/kickbacks">kickbacks</a>, and <a href="http://hcrenewal.blogspot.com/search/label/health%20care%20corruption">health care corruption</a>. It has been unusual, however, for individual executives to actually suffer negative consequences when they induce systemic misbehavior in their organizations. Instead, the results are often <a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements">legal settlements</a> that only lead to financial penalties on the organizations that are no more than costs of doing business. <br /><br />However, the juxtaposition of stories that a hospital has been coddling the rich, and simultaneously hounding the poor while it was lead by at least a few criminal executives is unusual. One would think that they should lead to an in-depth look at the leadership and governance of the institution in question, perhaps even to some reform of same. (By the way, one area of interest to such an investigation should be the presence of several former and current leaders of some of the failed financial firms that lead us into the global financial crisis or great recession on the board of that hospital, as we discussed <a href="http://hcrenewal.blogspot.com/2012/01/new-york-presbyterian-hospital-trustee.html">here</a> and <a href="http://hcrenewal.blogspot.com/2009/12/with-leaders-like-these.html">here</a>.) <br /><br />However, so far I seem to be only one to note the inter-relationships of these stories, and their implications, while obvious, therefore remain anechoic.<br /><br />So I get to repeat.... Health care organizations need leadership that understands, and knowledgeably upholds the organizations' missions and patients and the public's health. The leaders should be subject to incentives that align with these responsibilities, and should not be given opportunities to personally profit from activities hostile to the mission.

Three Facets of One Hospital: Coddling the Rich, Hounding the Poor, and Crooked Executives

Juxtaposing three news stories from the past few months raises disturbing questions about the priorities of the leaders of one of the US' more prestigious hospitals."Chefs, Butlers, Marble Baths: Hosp…

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New York - Presbyterian Hospital Trustee Advocated Novel Cardiac Procedure - "Reach In, Rip Out Their Heart, and Eat It Before They Die"

The dominant theme of <a href="http://hcrenewal.blogspot.com/">Health Care Renewal</a> has been how problems with the leadership of health care organizations have lead to our current state of health care dysfunction.  We have discussed examples of <a href="http://hcrenewal.blogspot.com/search/label/ill-informed%20management">ill-informed,</a> <a href="http://hcrenewal.blogspot.com/search/label/mission-hostile%20management">mission-hostile</a> leadership rewarded with <a href="http://hcrenewal.blogspot.com/search/label/executive%20compensation">excess compensation</a>, exhibiting <a href="http://hcrenewal.blogspot.com/search/label/impunity">impunity</a> in the face of alleged misbehavior, and at times descending into <a href="http://hcrenewal.blogspot.com/search/label/health%20care%20corruption">corruption</a>.  The cause of these problems is doubtless multi factorial.  However, one possible cause is that rather than exercise stewardship and hold leadership accountable, those in charge of <a href="http://hcrenewal.blogspot.com/search/label/governance">governance</a> of health care organizations, that is, boards of directors or <a href="http://hcrenewal.blogspot.com/search/label/boards%20of%20trustees">trustees</a>, have instead infected the organizations with the amoral culture now dominant in much of the business world, especially <a href="http://hcrenewal.blogspot.com/search/label/finance">finance</a>.  We have discussed, most recently <a href="http://hcrenewal.blogspot.com/2011/12/they-think-we-are-imbeciles-and-they.html">here</a> and <a href="http://hcrenewal.blogspot.com/2011/10/health-cares-99-percenters.html">here</a>, how the <a href="http://hcrenewal.blogspot.com/search/label/boards%20of%20trustees">boards</a> of health care corporations often include heavy representation of leaders of finance, including many of those who seemed responsible for the global financial collapse, great recession, or whatever we will end up calling it.  <br /><br />I recently stumbled upon a particularly graphic example of the sort of predatory culture that now exists on the boards of health care organizations.  (More on how I did so later.)  Below is an embedded YouTube video of a speech made by a current <a href="http://nyp.org/about/board-trustees.html">Trustee of New York - Presbyterian Hospital</a> (who has been on the board since 2007).  He is Richard Fuld, the former CEO of Lehman Brothers, whose continuing role on the hospital board, despite his failed leadership of one of the financial firms whose bankruptcy ushered in the global financial collapse, we discussed first <a href="http://hcrenewal.blogspot.com/2008/09/failed-masters-of-universe-running.html">here</a>.<br /><br /><iframe allowfullscreen="" frameborder="0" height="315" src="http://www.youtube.com/embed/x93EHs627GI" width="560"></iframe><br /><br />Just to underline it once more, Mr Fuld, referring to short sellers of his company's stock, said he "what I really want to do is <em><strong>I want to reach in, rip out their heart, and eat it before they die</strong></em>."  <br /><br />Can there be a more stark reminder of what has gone wrong with the governance of health care?  Can anyone watch this video and argue that Mr Fuld ought to be on the board of a hospital system?  Why is he still on the board in January, 2012, when this video was released in October, 2011?<br /><br />While I suspect not many other hospital system board members have been videographed displaying equally brutal sentiments, there are likely others with similarly barbaric tendencies.<br /><br />So, on a more positive note.... The boards of hospitals, hospital systems, medical schools, and their parent universities ought to be populated with people who take their stewardship roles seriously.  They ought to be people who understand, agree with, and support the organizations' mission, and their dedication to patient care and teaching.  They ought to understand what good leadership of health care organizations entail.  Needless to say, they ought to be of good character and above any ethical reproach.  In short, they ought to be the opposite of the sort of person displayed in the video above.<br /><br />It should now be obvious that grievous problems with the leadership and governance of health care organizations are principle causes of the dysfunction in our health care system.  True health care reform will require wholesale changes in health care leadership and governance.<br /><br />PS - In case the video above seems too short on context, see the one below:<br /><br /><iframe allowfullscreen="" frameborder="0" height="315" src="http://www.youtube.com/embed/GZCmWkQuyPc" width="420"></iframe>

New York - Presbyterian Hospital Trustee Advocated Novel Cardiac Procedure - "Reach In, Rip Out Their Heart, and Eat It Before They Die"

The dominant theme of Health Care Renewal has been how problems with the leadership of health care organizations have lead to our current state of health care dysfunction.  We have discussed examples …

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Investigations, Indictments and Guilty Pleas at Famous US Teaching Hospitals

Some of the US most prestigious academic medical centers have been receiving unusual scrutiny lately.<br /><br /><strong>Mount Sinai Medical Center and New York - Presbyterian Hospital.</strong><br /><br />As <a href="http://online.wsj.com/article/SB10001424052748704464704575208374268651564.html">reported</a> first by the Wall Street Journal,<br /><blockquote><em>Federal prosecutors are investigating <strong>allegations that bid rigging and fraud</strong> at <strong>Mount Sinai Medical Center</strong> and <strong>New York-Presbyterian Hospital</strong></em> resulted in the hospitals awarding contracts worth tens of millions of dollars to outside contractors.<br /><br /><em><strong>Purchasing officials</strong> at the hospitals, two of the city's largest and most prestigious, are alleged to have gotten more than a million dollars in payments</em> from companies that were then given lucrative contracts to perform work such as re-insulating pipes and removing asbestos, according to documents filed in the Southern District of New York. <br /><br />Nine contractors are involved in the case. So far, eight people and three companies supplying the hospitals have pleaded guilty to charges including bid-rigging, mail fraud and tax fraud. Three more people have been indicted on similar charges. <br /><br /><em>The Federal Bureau of Investigation and Internal Revenue Service have been investigating and the Justice Department's Antitrust Division is prosecuting the allegations in the case</em>.</blockquote><br />Some relevant specifics:<br /><blockquote>The most recent indictment, handed up by a federal grand jury April 6, involved the alleged awarding of more than $195,000 in maintenance and insulation contracts. <em>Mario Perciavalle, <strong>associate director of plant services at Mount Sinai</strong>, is accused of taking at least $20,500 in cash</em> from a Long Island City company in 2004 and 2005 in exchange for the company, unnamed in documents, winning the deals.<br /><br />Prosecutors also are pursuing a case involving a former official <em>at New York-Presbyterian, Salvatore Scotto-DiVetta, a <strong>supervisor at the hospital's Facilities Operations department</strong>. He pleaded guilty in March to rigging bids for re-insulation contracts</em>, the Department of Justice said.</blockquote><br />The next day, the Journal <a href="http://online.wsj.com/article/SB10001424052748704471204575210560835140390.html">reported</a>:<br /><blockquote><em>Two New York-Presbyterian Hospital officials</em> and two contractors who did business with the prestigious hospital were<em> indicted on fraud charges</em> Tuesday in the latest cases stemming from a federal investigation into bid-rigging and fraud.<br /><br />The indictment alleges that the<em> <strong>hospital officials</strong>—Santo Saglimbeni of Armonk, N.Y., and Emilio Figueroa, </em>whose hometown wasn't given—received payments and gifts in exchange for awarding contracts to certain companies. </blockquote><br />And already the box score for this investigation increased:<br /><blockquote>As a result of the investigation, <em>a total of five hospital employees, 10 people outside the hospitals and six companies have either pleaded guilty or face charges</em>.</blockquote><br />The comments by hospital officials had a familiar ring to anyone who has been following the hearings in Washington on the global financial collapse. From the first article:<br /><blockquote>A Mount Sinai spokesman said the hospital notified the Justice Department 'about the possibility of impropriety immediately after it was identified in an internal audit' and is cooperating with the investigation. The spokesman said the hospital dismissed the employee under investigation and instituted tougher contracting systems.</blockquote><br />From the second:<br /><blockquote>New York-Presbyterian was an 'unknowing victim of these alleged crimes,' a hospital spokeswoman said. She also said that the staffers named in the indictment no longer work at the hospital, and it is cooperating with the investigation.</blockquote><br /><strong>Partners Healthcare System</strong><br /><br /><a href="http://www.boston.com/business/healthcare/articles/2010/04/29/justice_department_launches_antitrust_review_of_partners_healthcare/">Just out</a> today in the Boston Globe:<br /><blockquote>The US Department of Justice has opened <em>a civil investigation into possible anticompetitive behavior by Partners HealthCare System Inc.,</em> the region’s most powerful hospital and physician network.<br /><br />In a letter sent to Partners and the state’s three largest health insurers on April 19, investigators from the Justice Department’s antitrust division demanded documents relating to Partners’ 'contracting and other practices in health care markets in Eastern Massachusetts.'<br /><br />The letter, obtained by the Globe, said the probe sought to <em>determine whether the practices violated the Sherman Antitrust Act, which bars companies from using their market power to limit trade or artificially raise prices. </em></blockquote><br />The background is:<br /><blockquote>Boston-based Partners has been under growing scrutiny because of its market power and ability to draw high prices from insurers. The company employs about 5,500 physicians and operates a half dozen smaller hospitals, in addition to their prestigious Harvard-affiliated Boston teaching hospitals, Mass. General and the Brigham.<br /><br />Earlier this year, Attorney General Martha Coakley issued a report documenting that <em>Massachusetts insurance companies pay some hospitals and doctors, including those in the Partners network, twice as much money as others for essentially the same patient care</em>. The report pointed to the<em> market clout of the best-paid providers as a main driver of the state’s spiraling health care costs</em>.<br /><br />A 2008 Globe Spotlight Team series focused on the Boston market found that hospitals such as Mass. General and the Brigham typically are paid 15 to 60 percent more for essentially the same work as other hospitals.<br /><br />Soon after that series, <em>Coakley launched her investigation into whether Partners and Blue Cross-Blue Shield, the state’s largest health insurer, may have illegally colluded</em> to increase the price of health insurance statewide over the last decade, according to several legal and government sources.</blockquote><br />And again, the official response had a familiarly evasive ring:<br /><blockquote>Partners spokesman Rich Copp yesterday noted that the hospital network already has supplied similar information to investigators from the state attorney general’s office, which launched its own review of Partners’ contracting practices last year. He noted in Partners’ defense that it vies with other providers in the area’s 'highly competitive' health care market.<br /><br />'The Department of Justice has requested the same information that we have provided to the attorney general’s office,' said Copp. 'We will continue to cooperate with both government agencies during this ongoing analysis of health care in Massachusetts.'</blockquote><br /><strong>Summary</strong><br /><br />So there it is.  Multiple indictments for and guilty pleas to charges of bid-rigging and fraud at two New York academic medical centers, and state collusion and federal anti-trust investigations of a Massachusetts hospital system.  The issues involve four of the most prestigious teaching hospitals in the US.<br /><br />Of course, not all the indictments may result in convictions, and the investigations may not result in charges.  But this involves some institutions that at one time would have appeared beyond reproach.  The lack of clear denials from the inevitable official spokespeople, and attempts to deny responsibility for the actions of employees elsewhere identified as "officials" do not provide much reassurance.<br /><br />Of course, readers of Health Care Renewal would have known that questions could be raised about leadership and governance of these once-revered institutions.  Questions could be raised about the incentives implied by the <a href="http://hcrenewal.blogspot.com/2009/12/98-million-dollar-man.html">huge compensation</a> given to the top hired executives at New York - Presbyterian, awarded by a <a href="http://hcrenewal.blogspot.com/2009/12/with-leaders-like-these.html">board of trustees</a> that includes some of the leaders of the more prominent failed finance corporations involved in the global financial collapse.  <a href="http://hcrenewal.blogspot.com/2009/01/to-whom-did-scorpions-in-bottle-owe.html">Questions</a> could be raised about the dominant presence of finance leaders and possibly <a href="http://hcrenewal.blogspot.com/2009/06/mans-best-hospital-run-by-boss-of-mecc.html">conflicted</a> individuals on the Partners board, and apparent interlocks among Partners leadership and the leadership of the largest health insurer in Massachusetts, which was willing to <a href="http://hcrenewal.blogspot.com/2009/01/scorpions-in-bottle-shook-hands-secret.html">pay that system so much.</a><br /><br />Maybe, instead of <a href="http://hcrenewal.blogspot.com/2010/04/pondering-leadership.html">lecturing</a> the more lowly among us about our responsibilities to improve health care, the leaders of our previously most august health care institutions need to introspect more about their own responsibility to address the metastasis of "greed and incompetence" in health care from the financial sector.

Investigations, Indictments and Guilty Pleas at Famous US Teaching Hospitals

Some of the US most prestigious academic medical centers have been receiving unusual scrutiny lately.Mount Sinai Medical Center and New York - Presbyterian Hospital.As reported first by the Wall Stree…

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With Leaders Like These...

My current favorite book about the global financial meltdown, aka great recession, <a href="http://www.harpercollins.com/books/9780061892486/The_Sellout/index.aspx"><em>The Sellout</em>, by Charles Gasparino</a>, featured vivid portraits of the bad leadership that lead to the collapse.  For example:<br /><br /><strong>Richard S Fuld, Jr</strong>, former CEO of Lehman Brothers (now bankrupt) - <br /><blockquote>Fuld had become more <em>isolated and arrogant</em>. (p.208)<br /><br />As the firm's leverage increased, Fuld's grip on his management and board grew. He was revered by so many people in his circle of senior advisers that <em>almost no one dared to speak out</em> about the firm's risk and leverate, and almost never to Fuld himself. Everyone else was <em>so scared to be cursed at in public or even fired that they simply kept their mouths shut.</em><br /><br />Fuld's leadership was more like that of a <em>cult leader</em> than even that of an imperial CEO. (p. 209)<br /></blockquote><strong>Maurice R ("Hank") Greenberg</strong>, former CEO of AIG (now bailed out by the US government) -<br /><blockquote>Greenberg had begun the financial products group that sold all those [now discredited] credit default swaps in the late 1980s....<br /><br />Greenberg had a love-hate relationship with the group and its various leaders. He hated the risks they took and the independence the top people in the group sought. But he loved the profits the financial products group ... produced.<br /><br />Yet Eliot Spitzer, the New York State attorney general and by now Wall Street's most famous enforcer, believed Greenberg ran a <em>company that regularly committed accounting fraud and created fictional profits through a series of sham transactions</em> that had nothing to do with credit default swaps. Greenberg considered these possible transgressions so trivial that he called them 'foot faults,' as in a minor foul in tennis.<br /><br />Greenberg eventually did resign.... (p. 204)<br /><br />[and the financial products unit nearly drove AIG bankrupt]<br /></blockquote><br /><strong>John A Thain</strong>, former CEO of Merrill Lynch (bailed out by being forcibly merged into Bank of America under pressure from the US government)<br /><blockquote>Over time, it became difficult to keep track of<em> every statement coming out of Thain's mouth that turned out to be wrong </em>since nearly the moment he had taken over as CEO. (p. 417)<br /><br />Thain was <em>becoming unhinged</em>; during a briefing in one of his finely decordated conference rooms that had been part of the $1.2 million office spending spree, people close to the firm said, he completely lost his compusure when an aide informed him about the size of the [company's] losses. What Thain did isn't clear, but Merrill Lynch had to replace a shattered glass panel that appeared to have been the target of the CEO's rage. (p. 419)<br /></blockquote><br />- <strong>Sanford I Weill</strong>, former CEO of Citigroup (bailed out by the US government)<br /><blockquote>But in reality, Will <em>never really ran anything</em>. He was a visionary, to be sure, but one whose vision was so myopically focused on building the empire had lusted for for so long and on its share price that he ignored just about everything else. (p. 144)<br /></blockquote><br />So here we again have reminders of how bad leadership of major US financial firms lead to the collapse. We had <a href="http://hcrenewal.blogspot.com/2009/12/health-care-bubble-parallels-with.html">discussed </a>a series of such factors and how they obtain in health care, suggesting that health care is undergoing a bubble likely to burst just as badly as did the financial/ housing bubble.<br /><br />However, I supplied these quotes not just to underline this point.  It turns out that Mr Fuld, Mr Greenberg, Mr Thain, and Mr Weill have something in common other than having helped to lead their financial firms toward the brink, something in common with relevance to health care.<br /><br />We recently <a href="http://hcrenewal.blogspot.com/2009/12/98-million-dollar-man.html">discussed</a> the outsize compensation given to the current CEO and other top leaders of one of the country's revered medical centers, New York - Presbyterian Hospital.   I suggested that such "compensation madness" will continue to inflate the health care bubble.  What that post did not discuss was how these leaders got to be so well paid.  Presumably, their compensation was set, or at least acquiesced to by the Board of Trustees of the hospital.  So I thought it might be entertaining to see who is currently on this Board.<br /><br />According to the <a href="http://nyp.org/about/board-trustees.html">medical center web-site</a>, the Board of Trustees as of October, 2009, was quite large (including 88 people by my count).  The web-site lists only names, not biographies, so that who most of the members are was not obvious.  This lack of transparency, which is not uncommon in health care organizations, would make figuring out who all the people ostensibly responsible for the $9.8 million dollary man are quite laborious.  However, I did recognize a few names immediately.  These were <strong>Richard S Fuld, Jr, Maurice R Greenberg, John A Thain, and Sanford I Weill</strong>.  <br /><br />Thus, the Board of Trustees of New York - Presbyterian Hospital includes four of the most well-known architects of the global financial meltdown.  Thus, is it any wonder why the Board of Trustees was happy paying the CEO of a not-for-profit health care institution at a level comparable to a for-profit corporate CEO?  (And is it any wonder that the Dean of the Faculties of Health Sciences and Medicine, and Executive Vice-President for Health and Biomedical Sciences at Columbia University, one of the two medical schools that provide students, trainees and faculty at New York - Presbyterian Hospital, once admitted that the school's main criterion for faculty success was ability to generate external funds, which he called being a <a href="http://hcrenewal.blogspot.com/2007/04/medical-schools-to-faculty-show-me.html">"taxpayer,"</a> rather than ability to teach, research, or take care of patients?)<br /><br />As we have discussed before, boards of trustees of not-for-profit health care institutions have a primary duty to uphold the institutions' missions.  Thus, one would think such boards would be selected according to their dedication to their missions.  But perhaps, in the grubby real world, there may be more important criteria, possibly such as the size of their donations to the institution.  Furthermore, those likely to donate the most  may be more likely to be richest (and perhaps most in need to making themselves appear philanthropic and public-spirited) than the most fervent upholders of patient care, teaching and research.<br /><br />Maybe giving stewardship of our once proud health care institutuions to people most likely to defend their missions, rather than most likely to donate a lot of money, would result in somewhat poorer institutions which do a better job of patient care, teaching and research. 

With Leaders Like These...

My current favorite book about the global financial meltdown, aka great recession, The Sellout, by Charles Gasparino, featured vivid portraits of the bad leadership that lead to the collapse.  For exa…

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The $9.8 Million Dollar Man

We seem to have a new candidate for the award for best-paid CEO of a not-for-profit academic medical center, as <a href="http://www.nypost.com/p/news/local/sickening_bonuses_8pL0AI56MMF7wcPa3ibFDM">reported in the New York Post</a>,<br /><blockquote>Wall Streeters aren't the only ones raking in big bonuses during tough economic times.<br /><br />Hospital presidents and CEOs also collect fat bonuses and 'incentive payments,' even as health-care systems cry poverty, claiming they struggle to break even against government cutbacks, tightwad insurers and skyrocketing costs.<br /><br />While warning of layoffs and slashed patient services, many hospitals shower their top execs and department heads with bonuses and perks. They include housing allowances, chauffeurs, first-class air travel, tuition for their kids and country-club memberships.<br /><br />Under new IRS rules, the extras are disclosed for the first time in recently filed 2008 tax records obtained by The Post.<br /><br />The filings for the city's biggest and most prestigious private, tax-exempt hospitals show at least a dozen CEOs get compensation of $1 million and up. Some also cash in early on million-dollar pre-retirement payouts while on the job.<br /><br />Dr. Herbert Pardes, who runs the New York-Presbyterian Hospital and its health-care system -- the city's largest private hospital network -- received a $1 million bonus in 2008 on top of his $1.67 million salary.<br /><br />The hospital has a 'pay for performance' philosophy but says even though Pardes met his goals, his bonus was smaller than 2007's to 'reflect the current external environment.'<br /><br />But <em><strong>Pardes' compensation totaled $9.8 million in 2008</strong></em> because he vested in a retirement plan that will pay $6.8 million when he leaves in 2011. He also received a $93,500 housing allowance and the use of a car and driver.<br /></blockquote><br />The Post article also listed two other hospital CEOs who got over $4.5 million in compensation, and several other top executives at other hospitals who got substantial compensation despite the hospitals' financial distress or accusations of unethical behavior.  On the other hand, the CEO of the city's Health and Hospital Corporation, with a budget of $6.3 million, got only $291,000.<br /><br />Note that Dr Pardes' total compensation was more than double the compensation for a Boston medical center CEO that I <a href="http://hcrenewal.blogspot.com/2009/09/safety-net-medical-center-ceo-gets.html">thought</a> was so outlandish back in September, 2009. <br /><br />So here is much more evidence about the continually inflating health care bubble.  Not only do executives of big, for-profit drug, device, biotechnology and health insurance companies make seven and eight figure salaries, now it appears executives of ostensibly not-for-profit, charitable organizations can also make this much.  <br /><br />Is it possible that at least Dr Pardes' compensation was a fluke, related to a one-time retirement payment?<br /><br />The answer appears to be negative.  The New York - Presbyterian Hospital's 2007 US Internal Revenue Service (IRS)<a href="http://www.guidestar.org/FinDocuments/2007/133/957/2007-133957095-04a99802-9.pdf"> form 990</a>, which was organized somewhat differently and may have used somewhat different definitions than the 2008 form from which the Post reporters apprently got their information, showed <em>Dr Pardes total compensation to be <strong>$4,736,824 plus a $1,433,761</strong> contribution</em> to employee benefit plans and deferred retirement plans in that year. In addition, in 2007, (apparently former) executive Vice President Michael A Berman, MD received <strong>$5,949,092 in compensation plus $31,830</strong>, current Executive Vice President and Chief Operating Officer Steven J Corwin MD received <strong>$2,671,747 plus $455,304</strong>, Senior Vice President and Chief Financial Officer and Treasurer Phillis RF Lantos received <strong>$2,481,044 plus $336,284</strong>, Senior Vice President and Chief Operating Officer Robert Kelly received <strong>$1,538,412 plus $271,641</strong>, Senior Vice President and Chief Operating Officer Cynthia N Sparer received <strong>$1,370,541 plus $307,259</strong>, Senior Vice President and Senior Legal Officer Maxine Fass Esq received<strong> $1,337,354 plus $257.06</strong>, Senior Vice President, Finance Dov Schwartzben received <strong>$1,314,960 plus $173,848</strong>, Senior Vice President and Chief Nursing Officer Wilhelmina Manzano received <strong>$1,218,966 plus $159,555</strong>.  In summary, in 2007, the medical center paid at least 10 current and former executives each substantially more than $1 million a year.<br /><br />By my calculations, the medical center <em>paid these ten executives over <strong>$26 million</strong> a year</em>, approximately equal to 25% of the center's fund excess (e.g., profit equivalent), of slightly over$106 million.  These ten executives received nearly 1% of the entire 16,850 employee institution's budget.  Furthermore, note that in the medical center's 2007 expense statement, general and administrative expenses, over $675 million, made up about 24% of the center's total expenses.  <br /><br />So it appears that gigantic compensation for New York - Presbyterian Hospital executives, which is outsize both in comparison to the Hospital's fund excess and total budget, is part of a long-term trend<br />The Post quoted Brian Conway of the Greater New York Hospital Association with this excuse:<br /><blockquote>There are thousands of 20-somethings on Wall Street making millions who don't have anywhere near the responsibilities or skills of New York hospital CEOs.<br /></blockquote><br />This fits in our catalog of logical fallacies.  It is an <a href="http://www.nizkor.org/features/fallacies/appeal-to-common-practice.html">appeal to common practice</a>.  Of course, the particular practice to which Mr Conway appealed is the exaggerated executive compensation in finance that many believe was a cause of the global financial melt-down, aka great recession.  One could also argue that not one Wall Street executive has the life and death responsibilities of the typical practicing primary care physician.  I doubt Mr Conway would try to argue that Dr Pardes' job requires 40 times the skill of full-time practicing primary care or cognitive physician.<br /><br />Instead, executive compensation for hospital CEOs seems best described <a href="http://hcrenewal.blogspot.com/2009/12/compensation-madness-insiders-hijacking.html">as Prof Mintzberg described</a> compensation for finance CEOs, <em><strong>"All this compensation madness is not about markets or talents or incentives, but rather about insiders hijacking established institutions for their personal benefit."</strong></em>  As it did in finance, compensation madness is likely to keep the health care bubble inflating until it bursts, with the expected adverse consequences.  Meanwhile, I say again, if health care reformers really care about improving access and controlling costs, they will have to have the courage to confront the powerful and self-interested leaders who benefit so well from their previously mission-driven organizations. 

The $9.8 Million Dollar Man

We seem to have a new candidate for the award for best-paid CEO of a not-for-profit academic medical center, as reported in the New York Post,Wall Streeters aren't the only ones raking in big bonuses …

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