healthy4u: SSM Health Care

No Blues, but Lots of Green for St Louis Hospital System CEOs

A recent<a href="http://www.stltoday.com/business/local/hospital-ceos-see-double-digit-pay-hikes/article_431263e2-81c9-5367-b0bd-f48885169adb.html"> article</a> in the St Louis Post Dispatch provided the latest examples of how hospital <a href="http://hcrenewal.blogspot.com/search/label/executive%20compensation">executive compensation</a> continues to defy gravity.  In summary, <blockquote class="tr_bq">In recent years, executives at St. Louis-area nonprofit health organizations have seen annual double-digit increases of as much as 40 percent in their total compensation packages, which typically include salaries, bonuses, pensions and health benefits. Such pay hikes occurred as these nonprofit organizations enjoyed their largest operating margins in years,...</blockquote> The examples include... BJC Healthcare <blockquote class="tr_bq">Steven Lipstein, president and chief executive of St. Louis-based BJC Healthcare, received a total compensation package of about $3.3 million in 2011, the latest year currently available per BJC’s tax filings. That’s a 40 percent hike over his compensation of $2.3 million in 2010. A year earlier, he received a 4 percent increase.</blockquote> In particular, <blockquote class="tr_bq"> According to BJC’s 990 tax filing, Lipstein’s 2011 compensation of $3,279,956 included a base salary of $920,576; bonuses and incentive pay of $2,213,555; other compensation of $15,733; deferred compensation of $99,651; and $30,441 in 'nontaxable benefits.' </blockquote> Also, <blockquote class="tr_bq">Five BJC executives received total compensation packages in 2011 exceeding $1 million.</blockquote> For comparison, note that <blockquote class="tr_bq">The health system paid about $1.7 billion in salaries and benefits in 2011 to its 28,559 employees — an overall increase of nearly 5 percent over its labor costs in 2010, when it had about 250 fewer employees.</blockquote> So Mr Lipstein's compensation rose much faster than the system's total labor costs.  Also, <blockquote class="tr_bq"> BJC employees — which include a spectrum of jobs from administrators, physicians and nurses to medical technicians, office workers and supply clerks — earn annual salaries and benefits on average totaling about $58,343. Lipstein’s pay package of $3.3 million for 2011 was 56 times greater than the average BJC employee’s compensation.</blockquote> So the CEOs compensation was much larger than that of the average employee, and seems to have risen much faster. SSM Health Care <blockquote class="tr_bq">William Thompson... [is] chief executive of Creve Coeur-based SSM Health Care, which operates 18 hospitals in four states. He received total compensation of $2.3 million in 2011 — a 26 percent increase over 2010. Some of that pay hike was attributable to a change in jobs. Thompson, SSM’s former chief operating officer, assumed the role of chief executive in August 2011. In 2010, his pay increased 95 percent from $918,229 to $1.8 million.</blockquote> Ascension Health Alliance <blockquote class="tr_bq"> Anthony Tersigni, chief executive of Ascension Health Alliance, received total compensation in fiscal year 2012 of $4 million — a 12 percent increase over the previous year. A year earlier, he received a 6.5 percent increase over the previous year in his former role as chief executive of Ascension Health. </blockquote> In addition, <blockquote class="tr_bq"> Nine executives at Ascension’s headquarters received total compensation in fiscal year 2012 exceeding $1 million.</blockquote> Mercy Health <blockquote class="tr_bq">Lynn Britton, chief executive of Mercy, received $2.2 million in total compensation in fiscal year 2012 — a 15 percent increase over 2011. A year earlier, he received an 18 percent increase.  </blockquote> And, <blockquote class="tr_bq">Five current and former Mercy executives received total compensation in fiscal year 2012 exceeding $1 million. </blockquote><blockquote>Myra Aubuchon, a former Mercy senior vice president who left the health system in 2010, received a payout in fiscal year 2011 of $3.4 million for retirement benefits, severance and other compensation. In fiscal year 2012, she received an additional $405,339 in compensation. Mercy executives are provided additional perquisites, including first class and charter travel on Mercy’s aircraft and the opportunity at times for their spouses to accompany them to business and other events. Executives and staff fly to and from some business meetings in Mercy’s midsize corporate jet, a Rockwell Sabreliner. </blockquote> The Usual Talking Points So all CEOs of the St Louis area's bigger non-profit health care systems made more than $1 million, often several  times that.  Most of the systems had multiple other hired executives who made at least $1 million.  Often executives received other perks far beyond anything received by other employees, such as travel on corporate jet aircraft.   We have noted that nearly every attempt made to defend the outsize compensation given hospital and health system executives involves the same talking points.   We first listed the talking points <a href="http://hcrenewal.blogspot.com/2011/09/talking-points-sans-original-thought-to.html">here</a>, and then provided additional examples of their use <a href="http://hcrenewal.blogspot.com/2011/09/more-repeats-of-talking-points.html">here</a>, <a href="http://hcrenewal.blogspot.com/2012/03/example-of-how-complex-takes-control.html">here</a> <a href="http://hcrenewal.blogspot.com/2012/12/health-care-hired-managers-not-playing.html">here,</a> and <a href="http://hcrenewal.blogspot.com/2013/05/executive-compensation-as-legal.html">here</a>.   They are: - We have to pay competitive rates -  We have to pay enough to retain at least competent executives, given how hard it is to be an executive -  Our executives are not merely competitive, but brilliant. The Post-Dispatch article provided more examples of these stereotypical justifications. Competitive Rates  The SSM CEO actually seemed to make such an argument to justify his own pay, <blockquote class="tr_bq">'I’ve been (at SSM) for 33 years, and for a lot of those years I wasn’t paid nearly the salary I’m paid now,' Thompson said. 'If you look at the revenue, I don’t think I’m over- or underpaid.'</blockquote> He provided no data to support is argument. And again, <blockquote class="tr_bq">Salaries and benefits for nonprofit health executives 'need to be competitive if we are going to be able to attract the talent needed to run these very complex organizations,' he said.</blockquote> How that talent was defined was not apparent. The chief of  public relations of Ascension Health Alliance added, <blockquote class="tr_bq"> [Chief advocacy and communications officer Jon] Glaudemans said that Ascension is seeking “to remain competitive in a market that is increasingly complex and characterized by challenging regulatory circumstances, including implementation of the Affordable Care Act.”</blockquote> From the senior vice president for human resources for Mercy Health, Cynthia Mercer, we had this contribution, <blockquote class="tr_bq">'We’re competing for the same pool for talent,' Mercer said. 'It’s difficult to secure talent. ...'</blockquote> She did not provide a definition of talent either.  Note that she also said, <blockquote class="tr_bq">We feel that it’s very important as a ministry to be just in our approach, respecting the dignity of each of our co-workers regardless of their position.  </blockquote> She did not explain the justice provided by the top executives' use of private corporate aircraft and the free travel provided to their spouses. Retention An example came from the chief PR flack from Ascension, <blockquote class="tr_bq">'We are required to be competitive, but we also have a mission to care for those who are poor and vulnerable. Candidly, many of our executives could do better for themselves working in other environments.'</blockquote>He did not give evidence that his or any other local executives were in great demand in such other environments.  He certainly did not try to reconcile how an organization with a mission to care for "the poor and vulnerable" was making a multimillionaire out of its CEO. Brilliance The chief public relations flack at Ascension Health Alliance provided this example, <blockquote class="tr_bq">'When we look for leadership of our ministry, we need to draw from the best and brightest to serve those who are poor and vulnerable,' said Jon Glaudemans,...</blockquote> Whether his use of the term "best and brightest" was meant to be an ironic allusion to the leaders who lead the US into the controversial and bloody Viet-Nam War was not clear. In response to the first Post Dispatch article, a physician, self-described as " a 40-year veteran of Washington University Medical School and BJC hospitals," wrote a<a href="http://www.stltoday.com/news/opinion/mailbag/letters-to-the-editor/bjc-s-chief-executive-lipstein-is-worth-his-compensation/article_3c5d00e5-8867-50d6-8a28-825765db8929.html"> letter</a> in Mr Lipstein's defense.  To prove the CEO's brilliance, Dr Robert G Levitt gave him personal credit for a number of accomplishments, such as addressing readmissions for congestive heart failure patients, and avoiding outbreaks of multidrug resistant bacteria in intensive care units, that seem to be more likely to have resulted from diligent work by health professionals.  He praised Lipstein for actually "respond[ing] to emails from physicians and staff," which hardly seems brilliant.  Finally, he noted "BJC has not laid off workers as other St. Louis hospital systems have done to save costs." It only took three days for that point to be proven wrong, as the St Louis Post-Dispatch then<a href="http://www.stltoday.com/business/local/bjc-healthcare-lays-off-employees/article_7faa2efb-5380-5cdb-91ae-0bf3280c13cd.html"> reported</a>, "BJC Healthcare began on Wednesday laying off 160 employees, the first layoffs in the company’s 20-year history."  <a href="http://www.bizjournals.com/stlouis/blog/health-care/2013/06/bjc-cuts-administrative-staff-some.html">Per the St Louis Business Journal</a>, these layoffs may include at least some "direct patient care staff," that is, e.g., nurses, and were due to declining revenue.  Summary The St Louis Post Dispatch main article on CEO pay opened thus, <blockquote class="tr_bq">Trimming medical costs is the latest mantra among hospital executives, government bureaucrats, insurers and benefit managers as they grapple for ways to contain U.S. health care spending.But executive compensation in the health care industry shows few signs of hitting a ceiling. </blockquote> It included comments by Professor Harold Miller of the Center for Healthcare Quality Payment and Reform and Carnegie-Mellon University, <blockquote class="tr_bq">'But if a health care executive’s pay is based on the amount of revenue they generate, the problem is in the incentive,” he said. “Basically, hospitals get rewarded by putting more heads in beds. It works against the goal of affordable health care. We need to start paying these executives to keep people healthy.'</blockquote> And he noted the danger is, <blockquote class="tr_bq">when executives start chasing their own compensation rather than the good of the company. We’ve seen that in banking, and that can happen in health care</blockquote> I would argue that this is already what is going on. Non-profit organizations whose missions include taking care of poor people pay their top executives millions of dollars. We have yet to see any logical, evidence-based justifications for such generous and ever rising compensation.  This compensation is increasingly out of proportion to what other employees are paid   Their compensation may rise even when their organizations' finances are challenged (see the example of the BJC layoffs above).  Nearly all rationalizations of their compensation are made by people whose jobs depend on the executives they are defending (as above), or by other hired executives who may be eager to defend their brethren.  As long as hired executives chase compensation rather than uphold the health care mission, expect their personal fortunes to increase, and the mission to wither. We await  true health care reform which would ensure health care organizational leadership that puts upholding the health care mission ahead of lining their pockets.  .

No Blues, but Lots of Green for St Louis Hospital System CEOs

A recent article in the St Louis Post Dispatch provided the latest examples of how hospital executive compensation continues to defy gravity. In summary,In recent years, executives at St. Louis-area …

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20 Jun 2013

Hospital Executives - What Will They Think of Next?

Health care organizations are now most often run by people with management, not clinical backgrounds.  It seems like business schools have taught managers to sign on to whatever the latest management fashions are.  So what are the latest fashions in hospital management?  Here are a few hot items. Retreading Pharmaceutical Representatives My jaundiced reading of the business news suggests that most executives think that marketing is the most important part of their organizations, and that clever marketing can sell any product or service. For example, the pharmaceutical industry spends about twice as much on marketing as it does on research and development (despite pharma executives' protestations that they run research driven businesses) (see <a href="http://hcrenewal.blogspot.com/2008/01/blogscan-575-billion-spent-yearly-on.html">this post</a>). So it should be no surprise that now hospitals are using "hospital representatives" to market referrals to their institutions to doctors. From <a href="http://www.usatoday.com/money/industries/health/story/2011-12-13/hospitals-sales-reps/51887938/1">last week's USA Today</a>: <blockquote>n northwest Indiana, Carrie Sota visits five or six doctors' offices every workday as part of her new sales job. But Sota isn't selling the physicians on a prescription drug or a medical device. She's promoting her hospital — the University of Chicago Medical Center. Sota, 30, is one of four employees the academic medical center has hired in recent months to make 'sales calls' on physicians in the hope that they will send more patients to the hospital. 'We are trying to build meaningful relationships,' said Sota, who was previously a saleswoman for a small medical device company. The University of Chicago Medical Center is one of a growing number of hospitals nationwide hiring former drug and device sales reps to visit doctors' offices to persuade them to use their services over competing facilities. Rather than handing out samples of prescription drugs, the sales reps call on doctors armed with the latest information on how their facility is reducing hospital-acquired infections and improving patient-satisfaction scores. In visits that can last five to 20 minutes, reps try to win doctors' loyalty by helping them get better times on operating room schedules or easier patient referrals to hospital-based specialists. The sales reps can also carry messages back to the hospital, such as a doctor's request for a new medical device to be available in surgery.</blockquote> The article suggested a few problems with this approach. First, the point of the marketing is not to improve the match between patients' needs and the services the hospital provides. Rather, it is to generate referrals that have the potential to provide the maximum revenue: <blockquote>While hospitals have always tried to woo doctors to refer patients to them, the institutions are growing more direct in their efforts. The hospitals mine data to see which doctors have the most profitable, well-insured patients, and then they assign those doctors to a sales rep.</blockquote> So in particular, <blockquote>Many of the physician liaisons focus on specialists, who bring in patients for services with the highest profit margins, including orthopedics, cardiac care and cancer care, [Duke University Health System physician liaison manager Christine] Perry said.</blockquote> Second, the hospital reps have incentives based on revenue, not on value to the patient: <blockquote>About two-thirds of Tenet's liaisons are former drug and device sales reps, and they can make tens of thousands of dollars in bonuses if doctors increase their referrals to the hospitals. </blockquote> Third, across the system, the revenues generated may be much less than the costs incurred, since most of the marketing will only succeed in moving patients from one hospital to another: <blockquote>Paul Ginsburg, president of the non-partisan Center for Studying Health System Change, said, 'When you look at the health system, this is a waste of resources. It's a zero-sum game.' He added: 'The net results of changing physician-referral patterns is that one hospital gains at a cost of others, and all the hospitals burn resources to pay (sales)people who take up the doctor's time.'</blockquote> Of course, the reps could succeed in persuading doctors to refer patients to specific hospitals for services the doctors originally did not think the patients needed. That would be good were the patients to need those services, but bad if they were not. Fourth, we have discussed (for example, <a href="http://hcrenewal.blogspot.com/2007/05/fool-me-once-shame-on-you-fool-me-twice.html">here</a> and <a href="http://hcrenewal.blogspot.com/2008/04/more-about-cynical-world-of-drug-reps.html">here</a>) how pharmaceutical representatives use sophisticated psychological and emotional manipulation, despite claims that all they do is provide unbiased information and educational, to influence physicians to prescribe drugs. Again, this may result in patients getting drugs whose benefits do not outweigh their harms. It is possible that hospital representatives will do something similar: <blockquote>'These people are really good and really assertive and very sophisticated,' said Stephen Newman, Tenet's chief operating officer.</blockquote> Unbundling Payments The airlines decided a while ago that they could make more money by charging passengers for each checked bag, and even for those little meals on plastic trays. It looks like hospital executives have discovered a new way to unbundle. As reported last month by <a href="http://www.stltoday.com/business/local/outpatient-sticker-shock-for-a--minute-treatment/article_a2915e64-1499-11e1-bf45-001a4bcf6878.html">the St Louis Post-Dispatch</a>, hospitals have begun charging often hefty "facility fees" for patients seen as outpatients in hospital clinics or hospital owned practices, even for very minor procedures or just office visits, and even for Medicare patients. (Private physicians who see patients in their own offices cannot charge such fees to Medicare patients, and most private insurance companies will not cover such fees.): <blockquote>A few weeks after Allison Zaromb took her 4-year-old son Meir to see a dermatologist in an outpatient office at the SSM Cardinal Glennon Children's Medical Center campus, she received separate bills from the doctor and the hospital. The cost for a 3-minute procedure to treat Meir's warts totaled $538, which included a $220 bill for physician services - and a separate bill for a $318 hospital 'facility fee.' Zaromb, a periodontist who lives in University City, is now suing SSM Health Care Corp. and Cardinal Glennon Children's Medical Center in a proposed class action lawsuit on behalf of other patients</blockquote> More generally, <blockquote>With the proliferation of hospital-owned outpatient centers and hospital-owned physician practices, hospital 'facility fees' have become increasingly common. Such hospital facility fees often involve greater dollar amounts than the fees charged by physicians.</blockquote> Technically, it all appears to be legal: <blockquote>Under federal regulations, health systems are permitted to charge a hospital facility fee for an outpatient service if it's done in a clinic that is 'hospital-based' - meaning that the clinic is owned and operated as part of a hospital or health system, regardless of whether the clinic is physically located on the hospital grounds.</blockquote> This technique does seem to be a way to increase revenue. But one person's revenue is another person's cost, so it also seems to be a great way to further increase the already high cost of US health care. It is not obvious, however, that these increased costs will lead to increased quality of care or value for the patient: <blockquote>'From a consumer's perspective, when you go see your doctor, you go see your doctor - whether it's in an office inside a larger hospital complex or right across the street,' [Zaromb's lawyer John] Phillips said. 'The doctor's practice remains the same. ... They're making the doctor's office a ‘hospital-based' clinic for one reason: to make money by charging a facility fee, not to improve consumer service.'</blockquote> Negotiating the Costs of Medical Devices One of the favorite topics on <a href="http://hcrenewal.blogspot.com/">Health Care Renewal</a>, at least before we found even more outrageous subjects, was the stratospheric cost of medical devices. For example, look at posts from 2005 <a href="http://hcrenewal.blogspot.com/2005/09/1600-screw-and-other-outrages.html">here</a>, <a href="http://hcrenewal.blogspot.com/2005/08/imaging-test-pre-certification-blues.html">here</a>, <a href="http://hcrenewal.blogspot.com/2005/08/wooden-headed-health-care.html">here</a>, and <a href="http://hcrenewal.blogspot.com/2005/08/new-york-times-examines-why.html">here</a>. So last month we found out that hospital executives have come up with a revolutionary idea to combat the high cost of devices. They will actually try to see what prices the device companies charge other hospitals, and then negotiate the prices down, as <a href="http://www.reuters.com/article/2011/11/30/us-hospitals-idUSTRE7AS2ZI20111130">Reuters</a> reported as big news in late November: <blockquote>Implantable devices make up a sizable chunk of typical hospital budgets, and administrators are devising new ways to limit that cost as they brace for cuts to government reimbursement and treat more patients who can't pay for care. That means methodically working through each category of device, from heart valve replacements and stents to spinal products, to see where they can negotiate lower prices. It also means creating databases of shared information on pricing between hospitals.</blockquote> Imagine that! Of course, the notion that buyers ought to bargain with sellers to get the best price goes back a few years. However, only in 2011 did it apparently occur to hospital executives that they ought to negotiate the prices of one their most expensive purchases. This suggests that there has been something profoundly wrong with the basic assumptions underlying the commonly accepted wisdom that making the health care system more of a market will lead to more financially efficient care.  Summary In 1988, Alain Enthoven advocated in <a href="http://www.amazon.com/gp/product/0444703594/102-6581115-0444916?n=283155">Theory and Practice of Managed Competition in Health Care Finance</a>, a book published in the Netherlands, that to decrease health care costs it would be necessary to break up the "physicians' guild" and replace leadership by clinicians with leadership by managers (see 2006 post <a href="http://hcrenewal.blogspot.com/2006/03/consequences-of-breaking-physicians.html">here</a>). Thus from 1983 to 2000, the number of managers working in the US health care system grew 726%, while the number of physicians grew 39%, so the manager/physician ratio went from roughly one to six to one to one (see 2005 post <a href="http://hcrenewal.blogspot.com/2005/04/growing-proliferation-of-managers.html">here</a>). Health care went from being controlled by clinicians to controlled by a growing volume of managers.  Most of these managers were generic, in that they had little if any knowledge of, experience in, or sympathy to the values of health care. These generic managers have used the same techniques advocated for the management of supermarkets or automobile manufacturers to manage health care organizations, despite all the obvious differences in context, goals, values, and people involved. So these generic managers have brought us such "innovations" as the "hospital (marketing) representative," and the "facility fee" for outpatient visits, but only thought to negotiate device prices in 2011. But that is why we pay them <a href="http://hcrenewal.blogspot.com/search/label/executive%20compensation">the big bucks</a>. How many more arguments do we need that health care organizations ought to be lead by people who understand the health care context, share its core values, and are accountable for how these organizations affect patients' and the public's health?

Hospital Executives - What Will They Think of Next?

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19 Dec 2011

Will Hired Executives Let "Healing Prevail Over Profit?" - Questions from Public and Catholic Non-Profit Health Systems

Hospital - noun, 1.  a charitable institution for the needy, aged, infirm or young  2.  an institution where the sick or injured are given medical or surgical care, <a href="http://www.merriam-webster.com/dictionary/hospital">Merriam-Webster</a>              - noun.  1.  an institution providing medical and surgical treatment and nursing care for sick or injured people, <a href="http://oxforddictionaries.com/definition/hospital?region=us">Oxford Dictionary</a> Two recent NY Times articles raise concerns that changes in leadership may cause hospitals to stray from their original purpose.  Cook County Health and Hospitals System The first NY Times <a href="http://www.nytimes.com/2011/08/19/us/19cnchealth.html">article</a> discussed leadership of Cook County Health and Hospitals System (in the Chicago, IL area). This is a public health system whose mission was traditionally "to serve Cook County's neediest patients." The management of the system, however, is now increasingly in the hands of paid consultants. For example, until recently, its COO (chief operating officer) was: <blockquote>Mr. [Tony] Tedeschi, [who] like other of the system’s recent top managers, works for the Sibery Group, which has had contracts with the system to provide temporary executive talent.</blockquote> Furthermore, his successor was <blockquote>Ms. [Carol] Schneider, whose contract runs through December, works for the Washington Group Ltd., a consulting company that provides administrative help to the system. </blockquote> Furthermore, <blockquote>PricewaterhouseCoopers has a three-year, $50 million contract calling for it to save the system $300 million or bring in the equivalent in new revenue.</blockquote> Not to mention, <blockquote>consultants from the Sibery Group, which is based in Oak Brook, [were appointed] to top management posts within County Health. For example, a Sibery employee, Robert Hamilton, was until recently chief operating officer of Provident Hospital. Another, David Sibery, was until recently head of support services for the health system. </blockquote> Turning leadership over to executives hired by outside, commercial firms has lead to concern. <blockquote>The role consultants play at County Health is the object of strong criticism from doctors, nurses and other staff members who say they fear that consultants driven by the bottom line are at odds with the system’s obligation to serve Cook County’s neediest patients. Hundreds of front-line staff members have been laid off in the last two years. </blockquote>One particular concern was the lay-offs directed by yet another group of consultants. <blockquote>The county decided to close Oak Forest based in part on the advice of Navigant Consulting, which in a 2009 report found that Cook County’s hospitals were overstaffed compared to those of other health systems. Navigant’s assessment also formed the basis for the layoff of 1,350 people systemwide in the last two years. Doctors, nurses and union leaders argued that Navigant’s calculations were flawed. </blockquote> Most troubling are allegations that outsourced leadership by commercial consultants is stifling health care professionals' input into the system, including perhaps whistle-blowing about threats to its core mission: <blockquote>A doctor at a county clinic who would not let his name be used because he feared losing his job said consultants were 'coming at it like our county system is a system that could make money.' The purpose of the system 'is to take care of people regardless of their ability to pay,' the doctor said. 'If they want to get out of that commitment, that’s fine, but they’re going to leave people in the dust.' </blockquote> In addition, <blockquote>A nonunion supervisor, who would speak only on the condition that her name not be used for fear of retaliation, said the constant presence of consultants — and a lack of clear results — was undermining staff morale. 'I’ve never seen employee morale as low as it is now, at all levels,' the supervisor said. A survey of employees conducted by management in January found that fewer than a third of health system employees think senior managers are 'trustworthy' or have 'a sincere interest in the well-being of employees.' The survey also found that more than half of employees do not think they can voice their opinion without fear of retaliation. Dr. Richard David, co-director of neonatal intensive care at Stroger Hospital, said doctors were frustrated that Pricewaterhouse consultants had not sought their advice and seemingly ignored opinions offered by medical staff members. Dr. David said cuts most likely recommended by consultants were interfering with patient care in his unit. He cited calls from other doctors that go unanswered because staff reductions have left only one desk clerk, who also covers another unit. </blockquote>So it appears that through the miracle of out-sourcing, nominally public hospitals can now be lead by hired executives from commercial firms, whose corporate culture may be more about laissez faire capitalism than serving the poor.  SSM Health Care The <a href="http://www.nytimes.com/2011/08/21/us/21nuns.html">second</a> NY Times article was about the exit of nuns as leaders of Catholic hospitals and health systems.  In summary, <blockquote>In 1968, nuns or priests served as chief executives of 770 of the country’s 796 Catholic hospitals, according to the Catholic Health Association. Today, they preside over 8 of 636 hospitals. ... only 8 of 59 Catholic health care systems are directed by religious executives. </blockquote> The focus of the article was on the retirement of Sister Mary Jean Ryan as CEO of SSM Health Care, (SSM honors Sisters of St. Mary, a predecessor of the Franciscan Sisters of Mary, the Sister's order). Sister Mary Jean Ryan was not a typical hospital system CEO: <blockquote>her legacy ... extends to preaching about the dignity of patients, paying blue-collar workers above scale, making her hospitals smoke-free, banning the use of foam cups and plastic water bottles, and insisting on gender-neutral and nonviolent language. There are no 'bullet points' in SSM presentations, and photographs are 'enlarged,' never 'blown up.' Even Sister Mary Jean can struggle to define precisely what the nuns brought to their hospitals. 'There is this thing called presence, she said, explaining that she was trained to see Jesus in the face of every patient....</blockquote> Also, her leadership: <blockquote>meant turning away business arrangements with doctors who decline to accept Medicaid. It has meant discounting treatment for the poor and offering charity care to the uninsured, just as the order’s founders did. The St. Louis nuns’ earliest ledgers denoted patients unable to pay as 'Our dear Lord’s.' </blockquote> But Sister Mary Jean has left, and this, and the general loss of religious leadership of Catholic hospitals and health systems: <blockquote>has stirred angst in many Catholic hospitals about whether the values imparted by the nuns, concerning the treatment of both patients and employees, can withstand bottom-line forces without their day-to-day vigilance. Although their influence is often described as intangible, the nuns kept their hospitals focused on serving the needy and brought a spiritual reassurance that healing would prevail over profit, authorities on Catholic health care say. </blockquote> Money is likely to become much more important at SSM: <blockquote>Mr. William P Thompson, Sister Mary Jean’s handpicked successor, said he planned to hold fast to her commitment to patients, the environment and nonviolence. But he also acknowledged that he would be 'trying to drive more efficiencies in the system.' </blockquote> One cannot help but wonder if these "efficiencies" will resemble those deployed by the outsourced consultant leadership of Cook County.  On Private Equity and Catholic Hospitals Furthermore, there is reason to think that Catholic, non-profit hospitals and health care systems may become even more like commercial firms. An <a href="http://www.healthleadersmedia.com/page-1/FIN-269977/Private-Equity-Interest-In-Nonprofit-Hospitals-Growing">article</a> in HealthLeaders Media about the increasing interest by private equity firms in non-profit hospitals and health care systems noted, <blockquote>[A] well-publicized deal was the buyout of Massachusetts-based Caritas Christi Health Care, which was a nonprofit, by Cerberus Capital Management. [see our posts <a href="http://hcrenewal.blogspot.com/search/label/Caritas%20Christi">here</a> and <a href="http://hcrenewal.blogspot.com/search/label/Steward%20Health%20Care">here</a>] The 2010 sale not only gave Caritas a cash infusion, but altered its tax status to for-profit. These acquisitions moved to center stage the use of private equity capital as a strategic opportunity for healthcare leaders. For instance, this past February, the nation's largest Catholic health system, Ascension Health, partnered with the Stamford, CT–based private equity firm Oak Hill Capital Partners, embarking on a joint venture to buy Catholic hospitals. Leo P. Brideau, FACHE, president and CEO of the St. Louis–based Ascension Health Care Network, says the joint venture allows the organization to provide an alternative funding source for the acquisition of Catholic healthcare entities.</blockquote> Then, <blockquote>Brideau says seeing other Catholic hospitals financially flounder—only to be sold to non-Catholic entities—aligns with the organization's mission to grow its network of Catholic hospitals. The vision to strengthen Catholic healthcare was another driver for Ascension's partnership with Oak Hill Capital. </blockquote> However, the article raises further concerns about whether private equity's interest in non-profit, particularly Catholic hospitals will help these institutions' missions.  The thinking of one private equity expert was: <blockquote>The core goal of a nonprofit hospital or health system is to provide patients with high-quality, cost-effective care, while earning a healthy margin; private equity firms have a different end goal. The general aim of a private equity firm is to achieve a large return on investment in the form of capital gains. How the private equity firm achieves those ends is where hospitals need to do their homework, [managing partner of Linden Capital Partners Brian] Miller says. </blockquote> Despite what private equity gurus may think, non-profit hospitals' missions never used to make a goal "earning a healthy margin" co-equal with that of taking good care of patients. It does not appear that achieving "a large return on investment" will be compatible with the traditional culture of Catholic hospitals in which "healing would prevail over profit." Nor does it appear compatible with the recent words of Pope Benedict XVI (as reported by the AP, <a href="http://articles.boston.com/2011-08-18/news/29901339_1_young-people-pope-benedict-xvi-ethics">via</a> the Boston Globe): <blockquote>'The economy doesn’t function with market self-regulation but needs an ethical reason to work for mankind,' he told reporters traveling aboard the papal plane. 'Man must be at the center of the economy, and the economy cannot be measured only by maximization of profit but rather according to the common good.' He said the current crisis shows that a moral dimension isn’t 'exterior' to economic problems but 'interior and fundamental.'</blockquote> Summary As hospitals and health systems are increasingly lead by people from the world of business, at a time when business culture increasingly believes "greed is good," the fundamental values of hospitals and health care professionals are more often ignored, if not directly threatened.  To repeat, health care organizations need leaders that uphold the core values of health care, and focus on and are accountable for the mission, not on secondary responsibilities that conflict with these values and their mission, and not on self-enrichment. Leaders ought to be rewarded reasonably, but not lavishly, for doing what ultimately improves patient care, or when applicable, good education and good research. If we do not fix the severe problems affecting the leadership and governance of health care, and do not increase accountability, integrity and transparency of health care leadership and governance, we will be as much to blame as the leaders when the system collapses.

Will Hired Executives Let "Healing Prevail Over Profit?" - Questions from Public and Catholic Non-Profit Health Systems

Hospital - noun, 1. a charitable institution for the needy, aged, infirm or young 2. an institution where the sick or injured are given medical or surgical care, Merriam-Webster - noun.…

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26 Aug 2011

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