healthy4u: executive life style

At University of Miami, Faculty Without Confidence in their Hired Managers Afraid to Identify Themselves

The University of Miami has provided some vivid examples of the contrast between the power and privileges of the leaders of large health care organizations and the subservient role of faculty and staff.  Background Back in 2006, we <a href="http://hcrenewal.blogspot.com/2006/02/tale-of-three-ironies-university-of.html">noted</a> that while the University of Miami was paying its janitorial support staff less than seven dollars an hour, and supplying them with no health insurance, its President, Donna Shalala, was living in a 9000 square foot official mansion, with staff hired to make her bed.  While Ms Shalala did not seem very perturbed about the living conditions of the lowliest University staffers, as a member of the board of directors of UnitedHealth, she approved the munificent compensation given to its then CEO, Dr William McGuire (look <a href="http://hcrenewal.blogspot.com/2006/03/questionable-timing-of-unitedhealth_20.html">here</a>), who was a billionaire until he was forced to give up  some of the backdated stock options she had approved (look <a href="http://hcrenewal.blogspot.com/2009/08/final-settlement-of-unitedhealth.html">here</a>).  More recently, we discussed how Ms Shalala's "visionary" leadership included presiding over the hiring of Dr Charles Nemeroff, who had previously been forced to resign as chairman of psychiatry at Emory University for various unethical activities (look <a href="http://hcrenewal.blogspot.com/2011/06/embedded-networks-of-influence-in.html">here</a>).  Last year, while awaiting the construction of a new presidential mansion, Ms Shalala presided over layoffs of hundreds of faculty and staff, which may have been necessitated by bad spending decisions made by her or those who reported to her (look <a href="http://hcrenewal.blogspot.com/2012/06/university-of-miami-lays-off-800-cuts.html">here</a>).  The Faculty Protest All these shenanigans apparently finally succeeded in upsetting the faculty, as described in a <a href="http://www.miamiherald.com/2013/01/03/3166198/um-medical-school-names-new-coo.html">new article</a> in the Miami Herald.  The article's headline was about the resignation of the University of Miami Miller Medical School's second highest ranking executive in response to faculty anger: <blockquote class="tr_bq">Amid roiling faculty anger over drastic budget cuts, the University of Miami announced that the No. 2 executive at the Miller School of Medicine, Jack Lord, is 'stepping down.' </blockquote> Dr Lord was apparently taking the fall for the previous mass layoffs, some affecting faculty in 2012: <blockquote class="tr_bq">[Medical School Dean Pascal]  Goldschmidt defended his administration’s performance: 'Last year we had many challenging issues to fix, as do many medical schools in the U.S. Thanks to Jack Lord’s leadership and hard work by everyone at the Miller School, we have met those challenges and turned things around financially.'  The announcement comes after a tumultuous year in which the medical school suffered a severe financial crisis and its leaders responded with a major overhaul that included the layoffs last spring of over 900 full-time and part-time employees — moves that angered many professors. In a letter to faculty sent on Wednesday, Goldschmidt insisted the problems have been fixed. Goldschmidt credited Lord for helping improve the medical school’s finances, which showed a surplus of about $9 million for the first six months of this fiscal year — compared to a $24 million loss for the first six months of the previous fiscal year. Lord, a physician who had been an executive at Humana, became chief operating officer last March, as the restructuring plans started. </blockquote> However, the faculty's anger was not just directed at Dr Lord, who as noted above seemed to have been hired to take responsibility for the layoffs: <blockquote class="tr_bq">The change, announced by Dean Pascal Goldschmidt, comes as a petition circulates among tenured medical school faculty expressing no confidence in both Goldschmidt and Lord.</blockquote>In particular, <blockquote class="tr_bq">Meanwhile, several sources sent The Herald a copy of a petition being circulated among school faculty members who 'wish to express, in the strongest possible terms, the concern we feel for the future for our school of medicine.' The petition blamed 'the failed leadership of Pascal Goldschmidt and Jack Lord. ... We want to make clear that the faculty has lost confidence in the ability of these men to lead the school.'</blockquote> Furthermore, <blockquote class="tr_bq"> Many faculty members, who had spent decades at the medical school without seeing mass layoffs, were angry that the cuts were made without consulting them. A report by a faculty senate committee said medical school professors described the layoffs as 'unprofessional,' 'graceless' and 'heartless.' </blockquote> Yet there is no hint that Dr Goldschmidt, or President Shalala to whom he reports are yet affected by this protest.   Tenured Faculty Scared into Anonymity In fact, while the faculty are upset, they are also afraid. <blockquote class="tr_bq">The report contended that the internal turmoil had prompted some faculty members to consider leaving and that 'fear is widespread.' It also cited instances of employees suffering retribution for criticizing the administration. </blockquote>There is so much fear that the faculty constructed an elaborate mechanism to register protest while remaining individually anonymous. <blockquote class="tr_bq"> A half-dozen people closely connected to the medical school who requested anonymity told The Herald that they’ve heard that between 400 and 600 of the school’s 1,200 faculty have added their names to individual copies of the petition. The petitions are addressed to the chair of the faculty senate, Richard L. Williamson, a law professor. Williamson said last week he would not comment on how many had signed the petition because it was 'an internal matter' and may never become public. He said the number of those who know how many have signed is 'extremely small and none of them will talk.' Three sources told the Herald that faculty are sending individually signed copies of the petition to the senate chair with the understanding that Williamson would not reveal their names to UM administrators. </blockquote> Summary <div style="color: black; font: 10pt sans-serif; height: 1px; overflow: hidden; text-align: left; text-transform: none; width: 1px;"> Read more here: http://www.miamiherald.com/2013/01/03/3166198_p2/um-medical-school-names-new-coo.html#storylink=cpy</div><div style="color: black; font: 10pt sans-serif; height: 1px; overflow: hidden; text-align: left; text-transform: none; width: 1px;"> Read more here: http://www.miamiherald.com/2013/01/03/3166198/um-medical-school-names-new-coo.html#storylink=cpy</div><div style="color: black; font: 10pt sans-serif; height: 1px; overflow: hidden; text-align: left; text-transform: none; width: 1px;"> Read more here: http://www.miamiherald.com/2013/01/03/3166198/um-medical-school-names-new-coo.html#storylink=cpy</div><div style="color: black; font: 10pt sans-serif; height: 1px; overflow: hidden; text-align: left; text-transform: none; width: 1px;"> Read more here: http://www.miamiherald.com/2013/01/03/3166198/um-medical-school-names-new-coo.html#storylink=cpy</div>  So, up to half of the University of Miami's medical faculty may be so upset with the current administration, apparently in part due to faculty and staff layoffs after questionable decisions by administrators some of whom may have lived large at university expense, that they essentially voted no confidence.  Yet the faculty are afraid to put their own names on their protest. So this is not just a story about allegedly incompetent university executives, and about the contrast between the rewards such executives get and the results of their dubious management.  It is also a story about how the executives' power now threatens a bed-rock value of academia, the ability of faculty (and by extension, staff and students), to speak freely, even if that speech offends the university's management.  In this case, while apparently hundreds of faculty condemned the administration for autocratic, incompetent, self-serving actions, they all feared what that same administration could do to them if their identities were known. In the last few years there has been a lot of prattle about the "flat organization," and there have probably been at least a few small high technology start ups that really were run on a collegial basis.  However, as we have shown again and again, throughout the corporate world, extending to health care corporations, and then to non-profit health care organizations, top management insiders have assumed more power and <a href="http://hcrenewal.blogspot.com/search/label/executive%20compensation">paid themselves better and better </a>at the expense of all others (look <a href="http://hcrenewal.blogspot.com/2009/12/compensation-madness-insiders-hijacking.html">here</a>).  Even now in universities, which used to be examples of collegiality, and were run in somewhat democratically  by their faculties, faculty are obviously afraid to challenge the hired managers.  Clearly, universities in which faculty cannot disagree with management are not going to be able to exercise the free enquiry that is core to their academic role.  In a health care context, why should anyone trust medical schools or academic medical centers run as tin-pot dictatorships by some hired executives?  Clearly, real health care reform would restore free speech and free enquiry to academic medicine. Hat tip to Prof Margaret Soltan <a href="http://www.margaretsoltan.com/?p=38728">on University Diaries</a>. <div style="color: black; font: 10pt sans-serif; height: 1px; overflow: hidden; text-align: left; text-transform: none; width: 1px;"> Read more here: http://www.miamiherald.com/2013/01/03/3166198/um-medical-school-names-new-coo.html#storylink=cpy</div><div style="color: black; font: 10pt sans-serif; height: 1px; overflow: hidden; text-align: left; text-transform: none; width: 1px;"> Read more here: http://www.miamiherald.com/2013/01/03/3166198/um-medical-school-names-new-coo.html#storylink=cpy</div>

At University of Miami, Faculty Without Confidence in their Hired Managers Afraid to Identify Themselves

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09 Jan 2013

No Skin in the Game - A Private Health System for the Very Rich

We have <a href="http://hcrenewal.blogspot.com/search/label/executive%20health%20plans">noted</a> occasional hints that the very rich may have a separate health care system which may shield them from the vicissitudes of our dysfunctional health care system. A broader hint came in an <a href="http://online.wsj.com/article/SB10000872396390444620104578008182459803120.html">interview</a> in the Wall Street Journal. The Company  The subject of the interview was Leslie Michelson, the CEO of Private Health Management.  The activities of the company were defined somewhat vaguely, <blockquote class="tr_bq">an ultra high-end company that borrows from concierge medicine, managed care, applied-sciences research and information technology while fitting into no neat category. The best analogue might be the investment and tax specialists that the affluent employ to run their finances; Mr. Michelson does the same for their health care. 'Like private wealth management, just far more important,' he quips in his modern Beverly Hills offices, all green glass and steel, white walls, white floors.</blockquote> The Clientele The company manages health care for a select clientele: <blockquote>Private Health caters to 'high net worth individuals' and to businesses that retain its services for their executives as a benefit. Mr. Michelson says he serves between 12,000 and 15,000 clients, 'principally in private equity, hedge funds, professional and financial services firms.' </blockquote>Note that the clientele seem to come mainly from the ranks of top executives of financial firms, probably some of the richest of the rich in the US. Rapid Response Team for Acute Illness Private Health Management's most distinctive service is the rapid response team it can "parachute in" to provide care for an acute illness, <blockquote>whenever one of its patients has a medical emergency or complex condition, say, a traumatic brain injury or newly diagnosed cancer. A personal-care team parachutes in, led by a clinician employed by the company, and compiles a brief on the patient. They centralize and digitize the patient's medical records, usually dog-eared paper piles that can run to thousands of pages. Research scientists immerse themselves in the latest findings and treatment regimens for the particular condition involved. </blockquote><blockquote>Tests are double-checked—biopsy tissues are sent to an outside pathologist, MRIs to another radiologist. For an era of targeted therapies, Private Health runs a full battery of molecular diagnostics 'to sequence the entire three billion base pairs of somebody's DNA in a couple of hours,' Mr. Michelson marvels. </blockquote><blockquote>The goal is to ensure an accurate diagnosis and lay out all the treatment options. Private Health functions as a kind of running, independent second opinion. </blockquote>Physician Network In addition, Private Health Management provides access to a network of ostensibly the very best physicians, <blockquote>Mr. Michelson built a series of proprietary algorithms to distinguish 'the few who are the very best' from 'the many who are very good,' based on 'the factors that predict excellence.' For example, the premier caregivers for metastatic cancer are usually academic researchers on the cutting edge, not general oncologists. The best orthopedic surgeons perform many procedures as they master the clinical learning curve, ideally for a single injury. </blockquote><blockquote>His referral database includes 2,200 specialists across 160 medical fields, 'reified into far finer groupings of disease than is standard practice.' He says that 'the world becomes so much clearer when you are able to identify the physician with the deepest and narrowest expertise in exactly what you need.' </blockquote><blockquote>Mr. Michelson says doctors like to belong to his informal network because they're 'interested in excellence and what we stand for.' </blockquote>However, next, <blockquote class="tr_bq"> He adds, with more than a little euphemism, 'In a world in which 98% of the conversations are about cost containment, it's a joy for them to have somebody who's focused on enhancing quality only.' No doubt true, though it probably doesn't hurt that providers also like to have a relationship with his client base, the sort of people who become university patrons or donate a hospital wing.</blockquote>This raises the question of whether doctors in his network may exhibit some greed along with their putative excellence. Questions Begged About How it Works The article actually devoted more space to Mr Michelson rationalizing his business as part of his overall interest in reforming health care than to discussion of how it works and what its implications are.  The short description of the processes above actually raised more questions about how the Private Health System works than it answered.  Some examples are: how could an optimal rapid response team be quickly mobilized given that the nature of acute illnesses may not be immediately apparent?  How would such a team interact within a hospital setting, or does the company have its own parallel hospital system?  What about the rest of medicine and health care outside of acute and intensive care, particularly primary care and management of chronic disease?  How does the referral data base function, and how would a classification that seems focused on the "narrowest expertise" cope with patients with multiple common illnesses or patients with undefined or undiagnosed problems?  These begged questions suggest there may actually be much more to the Private Health Management system than was discussed in the article. Perhaps instead the care provided by Private Health Management might not actually result in better outcomes for its patients.  Consider some other questions: given how hard it is to assess physician performance and measure quality of care, how can Private Health Management be assured that its physicians are really the best of the best?  Given the apparent financial incentives for participating in the system, would the doctors who most appreciate these incentives be likely to provide the best care?  Would the apparent bias of the system toward high technology and super specialized care, would the system over-treat most of its patients?  Summary and Implications Nonetheless, the article provides more evidence that the US has a secretive parallel health care system for the very rich.  The most important implication is that such a system could protect the very rich from the access problems and bureaucratic annoyances that plague ordinary patients in larger dysfunctional health care system.  By thus having "no skin in the game," those among the very rich who are not themselves directly involved with health care would have little reason to care or want to do anything about the problems besetting the larger health care system.  Since the very rich have become increasingly politically powerful, the absence of such interest or motivation for change among them would make true health care reform much more difficult.  If there is a parallel health care system for the very rich, its real effects on health and health care are unknown.  As best as I can tell, the very concept is almost entirely anechoic except for our very limited <a href="http://hcrenewal.blogspot.com/search/label/executive%20health%20plans">discussions </a>on Health Care Renewal.  The subject cries out for investigative reporting, and consideration by health care policy, research, and ethics experts.

No Skin in the Game - A Private Health System for the Very Rich

We have noted occasional hints that the very rich may have a separate health care system which may shield them from the vicissitudes of our dysfunctional health care system. A broader hint came in an…

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24 Sep 2012

University of Miami Lays Off 800, Cuts Research Funding, Builds New Presidential Mansion

Despite the trillions of dollars flowing through the US health care systems, prominent not-for-profit health care organizations seem to be complaining more often that the money going to them is not enough.  The Lay-Offs and Research Cutbacks Recently, for example, the University of Miami announced that its medical center would have to tighten its belt.  In April, <a href="http://www.miamiherald.com/2012/04/24/2765289/um-medical-school-cutbacks-coming.html">according to</a> the Miami Herald, <blockquote>University of Miami President Donna Shalala announced Tuesday that the medical school will take 'difficult and painful but necessary steps' next month to reduce costs, including staff cuts.In a letter to employees, she called the cuts 'significant' but provided no details about how many employees might be laid off. 'The process will take place in stages, and affected employees will be notified during the month of May,' Shalala wrote. 'Reductions will not impact clinical care or our patients and will primarily focus on unfunded research and administrative areas.' Shalala said the cuts were necessary because of 'unprecedented factors' including the global downturn of 2008, decreased funding for research and clinical care, plus cutbacks in payments from Jackson Health System. The Jackson reductions 'have had a profound effect on our finances,' she wrote.</blockquote> Placing the blame for the medical school's financial problems on Jackson Health System, the local safety-net health system, did not sit well with that organization's leadership. In another Miami Herald <a href="http://www.miamiherald.com/2012/04/17/2753691/jackson-health-system-chairman.html">story</a>, its chairman stated that the real problem might be: <blockquote>'investments that they have made that may or may not have panned out,' including the purchase in 2007 of Cedars Medical Center, across the street from Jackson Memorial, for a price that several experts say was far too high.</blockquote> In fact, we discussed <a href="http://hcrenewal.blogspot.com/2011/06/embedded-networks-of-influence-in.html">here</a> allegations that the University of Miami Medical School's purchase of a facility that was renamed the University of Miami Hospital adjacent to Jackson was meant to take insured patients from that already struggling facility. Nonetheless, the Medical School proceeded with its cuts, which resulted in 800 layoffs (see Miami Herald story <a href="http://www.miamiherald.com/2012/05/08/2789495/um-laying-off-800.html">here</a>.) The next Miami Herald <a href="http://www.miamiherald.com/2012/05/12/2795449/university-of-miami-job-cuts-could.html">story</a> suggested that the cuts would disproportionately impact worthy researchers, for example, <blockquote>When Nobel Laureate Andrew Schally arrived in South Florida six years ago, he was greeted with great fanfare and named a distinguished professor of pathology at the University of Miami medical school. Now he says his work is one of the many casualties of the school’s budget slashing. Schally says UM told him several weeks ago that his annual funding of $150,000 for research would end May 31, part of widespread cuts in the medical school that could eliminate up to 800 jobs this month and trigger major reductions in research. 'I was shocked... We developed so many drugs for the university,' Schally says. 'They are killing the goose that laid the golden egg.'</blockquote>The President's New House The headline of another Miami Herald <a href="http://www.miamiherald.com/2012/05/28/2821494/um-presidents-house-sells-for.html">story</a> last week suggested that things had gotten so bad that the cuts were even going to affect top university leadership's lifestyle: <blockquote>UM president’s house sells for $9 million</blockquote> We had <a href="http://hcrenewal.blogspot.com/2006/02/tale-of-three-ironies-university-of.html">posted</a> about University of Miami President Donna Shalala's lavish university funded living conditions a while ago. Now it seems she would be giving up <blockquote>'tropical ambiance,' 4.6 acres of lush gardens, and a prestigious Gables Estates address.</blockquote> This "rare piece of Florida history" also had <blockquote>a guest room created specifically to host the Dalai Lama during His Holiness’ visits to South Florida.</blockquote> So can we conclude that the University is really tightening its belt when its President is forced to move out of such a lush environment? Not really. In fact, Ms Shalala may be moving to even more plush surroundings, courtesy the university's supposedly challenged budget: <blockquote>The 32-acre Pinecrest development, built on land donated to the university by UM law grad-turned-philanthropist Frank Smathers Jr., exclusively houses UM faculty. Shalala will now join their ranks as both boss and neighbor. Decades ago, the grounds were home to Smathers’ Arabian horses and world-renowned mango collection. The UM-built homes are clustered in the center one-third of the acreage 'to safeguard the botanical integrity of the estate,' according to the university’s website. The remaining land is dominated by lush plants and fruit groves, and is maintained by Fairchild Tropical Botanical Gardens.</blockquote> In particular, <blockquote>“It’s a very bold house,” Taylor said of Shalala’s new digs. “It’s a dominant house in the neighborhood.” Taylor said the all-white exterior of the new home is a noticeable contrast to the more-earthy tones of other houses nearby. The university is calling it the 'Ibis House' after UM’s beloved (and also all-white) mascot. Shalala’s new home will sit on a quarter-acre of land — dramatically less property than she enjoyed before. On the plus side, Shalala, just as in her old home, will enjoy about 9,000 or so square feet of interior space, and an in-home elevator connecting the first and second floors. The new home is also situated in a unique gated community that offers a community clubhouse, tennis courts and pool, and meticulously landscaped gardens.</blockquote> Was anyone really expecting that Ms Shalala would have to find her own housing, like the 99 percent have to? Summary So here we have another example of how the notion of CEO exceptionalism has filtered down from large for-profit corporations to even non-profit, ostensibly mission-oriented health care institutions. Leaders of health care organizations are now deemed to be so important, at least in the eyes of their hired public relations staff, that they must be given every luxury. Perhaps if housed in any space smaller than 9000 feet, Ms Shalala would be so confined as not be able to think great thoughts anymore, like how many layoffs would be needed to sufficiently cut costs. Worse, maybe without such free housing, she would just decide that the institution would not be showing enough gratitude, and so her amazingly brilliant leadership would have to seek new pastures. Maybe, on the other hand, Ms Shalala's new house is just another demonstration how health care has become dominated by leadership whose own compensation and privilege seems to come before the mission., and sees no problem in asking for "difficult and painful" cuts from those who do the real work on the ground while building itself new mansions. So as usual, it is time to say that true health care reform would foster leadership  that upholds the core values of health care, and focuses 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.

University of Miami Lays Off 800, Cuts Research Funding, Builds New Presidential Mansion

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06 Jun 2012

Passport to ... Fraud? - AmeriHealth Mercy Settles

Back in November, 2010, we <a href="http://hcrenewal.blogspot.com/2010/11/living-high-life-on-money-to-treat-poor.html">discussed</a> the relatively opulent pay and perks given to and conflicts of interest affecting leaders of Passport Health Plan, a non-profit, state (Kentucky) supported Medicaid managed care organization/ health insurer.  This seemed to be another case of health care organizational insiders putting their personal gain ahead of their mission, which was particularly unseemly because their mission was serving the poor.  Now Passport Health is <a href="http://www.courier-journal.com/article/20110126/NEWS01/301260140/1010/features/Passport+Health+Plan+contractor+pays+$2+million+to+settle+fraud+investigation">in the news</a> again, and not in a favorable way, as per the Louisville (Kentucky) Courier-Journal: <blockquote>Passport Health Plan’s main contractor has agreed to pay more than $2 million in damages to the Kentucky Medicaid program to settle a fraud investigation, Attorney General Jack Conway announced Wednesday. The settlement with AmeriHealth Mercy Plan is the result of a nine-month investigation by the Attorney General's Medicaid Fraud Unit into alleged falsification of records by the company that entitled it to more than $677,000 in bonus money for good performance. Conway said the investigation centered on an allegation from a whistleblower that AmeriHealth falsely reported data to the state Medicaid Services Department on the number of Medicaid recipients who received cervical cancer screenings in 2009. The false numbers allowed AmeriHealth to receive the bonus money under the terms of its contract.</blockquote> We have discussed a variety of cases of leaders of health care organizations getting compensation or benefits that seemed disproportionate in their organizations' context. The usual justification seems to be that it takes such rewards to attract the excellent leaders needed by health care organization. Here is another example of leaders who not only seemed to get excessive compensation and benefits, but whose performance seemed far from excellent. Moreover, it suggests that compensation and benefits may actually have an inverse correlation to performance. Organizations whose stewards seem unrealistic about the talents of their hired managers, and dependent on material rewards to retain such managers may lack good stewardship. Leaders who find themselves rewarded beyond any reasonable evaluation of their work may learn the lesson that they cannot ask for too much. Meanwhile, the excess of their rewards may inspire increasing greed rather than increasing devotion to the mission, while the pay and perks increasingly place them in a bubble that insulates from the concerns of the common people who their organizations are supposed to serve. As we have <a href="http://hcrenewal.blogspot.com/search/label/executive%20compensation">said before</a>, far too often the leaders of not-for-profit health care institutions seem more interested in padding their own bottom lines than upholding the institutions' missions. They often seem entirely unaware of their duty to put those missions ahead of their own self-interest. Like the financial services sector in the era of "greed is good," health care too often seems run by <a href="http://hcrenewal.blogspot.com/2009/12/compensation-madness-insiders-hijacking.html">"insiders hijacking established institutions for their personal benefit."</a> True health care reform would encourage leadership of health care who understand health care and care about its mission, rather than those who see a quick way to make a small fortune. PS - Also note that this is also another example of the sort of <a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements">legal settlements</a> of misbehavior by health care organizations that seems to have little deterrent effect, mainly because no individual who authorized, directed or implemented the bad behavior suffers any negative consequences.  See our discussion in <a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements">these previous posts</a>.  True health care reform would also hold leaders accountable for their organizations' misdeeds.

Passport to ... Fraud? - AmeriHealth Mercy Settles

Back in November, 2010, we discussed the relatively opulent pay and perks given to and conflicts of interest affecting leaders of Passport Health Plan, a non-profit, state (Kentucky) supported Medicai…

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10 Feb 2011

Some Call it "Tyranny" - Top Leaders of University of California (Including Leaders of Academic Medicine) Demand Bigger Pensions for Themselves

The state of California, and its flagship university system, the University of California, have been under extreme financial pressure lately.  The 36 Executives' Demands However, that apparently has not decreased the University's hired managers' and executives' sense of entitlement.  They are threatening to sue if their pensions are not increased.  As reported <a href="http://articles.sfgate.com/2010-12-29/news/26349177_1_uc-employees-uc-system-higher-pensions">by the San Francisco Chronicle</a>, <blockquote>Three dozen of the University of California's highest-paid executives are threatening to sue unless UC agrees to spend tens of millions of dollars to dramatically increase retirement benefits for employees earning more than $245,000. 'We believe it is the University's legal, moral and ethical obligation' to increase the benefits, the executives wrote the Board of Regents in a Dec. 9 letter and position paper obtained by The Chronicle. 'Failure to do so will likely result in a costly and unsuccessful legal confrontation,' they wrote, using capital letters to emphasize that they were writing 'URGENTLY.' Their demand comes as UC is trying to eliminate a vast, $21.6 billion unfunded pension obligation by reducing benefits for future employees, raising the retirement age, requiring employees to pay more into UC's pension fund and boosting tuition. The fatter executive retirement benefits the employees are seeking would add $5.5 million a year to the pension liability, UC has estimated, plus $51 million more to make the changes retroactive to 2007, as the executives are demanding. The executives fashioned their demand as a direct challenge to UC President Mark Yudof, who opposes the increase. 'Forcing resolution in the courts will put 200 of the University's most senior, most visible current and former executives and faculty leaders in public contention with the President and the Board,' they wrote. </blockquote> Background to the Case Here is the relevant background: <blockquote>The roots of the pension dispute go back to 1999, five years after the IRS limited how much compensation could be included in retirement package calculations. But even after the IRS granted UC's waiver in 2007, nothing changed. University executives were having troubles of their own that year. President Robert Dynes resigned in 2007 after it was discovered that UC was awarding secret bonuses, perks and extra pay to executives. State auditors also found that UC's compensation practices were riddled with errors and policy violations. UC officials also had become aware of another big problem: UC's pension obligations were about to outstrip its ability to pay retirees. Neither UC nor its employees had paid into the fund since 1990. It took until this year for UC to act. In September, a retirement task force offered Yudof several options for closing the $21.6 billion gap - and one to widen it: increasing executive pensions.</blockquote>Health Care Executives Included Note that in addition to a bunch of finance officers and portfolio and asset managers, the demanding executives included quite a few leaders of the medical schools, and academic medical centers, including: <blockquote>UC System's Central Office Dr. Jack Stobo, senior vice president, health services and affairs UCSF Dr. Sam Hawgood, vice chancellor and dean, School of Medicine Ken Jones, chief operating officer, medical center Mark Laret, CEO, medical center Larry Lotenero chief information officer, medical center John Plotts, senior vice chancellor UC Davis William McGowan, CFO, health system Dr. Claire Pomeroy, CEO health system, vice chancellor/dean, School of Medicine Ann Madden Rice, CEO Medical Center UCLA Dr. David Feinberg, CEO of the hospital system; associate vice chancellor Dr. Gerald Levey, dean emeritus Virginia McFerran, chief information officer of the health system Amir Dan Rubin, chief operating officer of the hospital system Dr. J. Thomas Rosenthal, chief medical officer of the hospital system; associate vice chancellor Paul Staton, chief financial officer of the hospital system UC San Diego Dr. David Brenner, vice chancellor for health sciences; dean of the School of Medicine Tom Jackiewicz, CEO, associate vice chancellor of the health system Dr. Thomas McAfee, dean for clinical affairs UC Irvine Terry Belmont, CEO, Medical Center</blockquote>The Outraged Reaction The executives' demands sparked anger on campus. <blockquote>Dissenting members of the task force said it would be unseemly' to expand executive pensions. Tuition had just been increased by 32 percent this fall, and the regents were poised to raise it another 8 percent for fall 2011. They also voted to shift more money into the retirement fund from employees' pockets, as low-wage workers worried about retiring into poverty. 'I think it's pretty outrageous that this group of highly compensated administrators of a public university are challenging the president and the chair of the Board of Regents, said Daniel Simmons, chairman of UC's Academic Senate and a law professor at UC Davis. 'What outrages me the most is that these 36 people are blind to the fact that this is a public entity in dire straits,' said Simmons, who also served on the retirement task force and opposed the higher pensions.</blockquote> The demands prompted outrage from politicians and editorialists. A few choice samples: - The executives are "tarnishing the university's name with greed," <a href="http://www.dailybruin.com/index.php/article/2011/01/with_the_uc_in_crisis_senior_executives_should_be_helping_to_fix_the_budget_instead_of_demanding_a_f">editorial (UCLA) Daily Bruin</a>. - "Very out of touch," by Governor Elect Jerry Brown; "truly living in an ivory tower...." while "people are suffering in the rest of the state and losing their homes," by Assemblyman Jerry Hill, D- San Mateo (<a href="http://articles.sfgate.com/2010-12-30/bay-area/26350890_1_uc-system-higher-pensions-uc-execs">per the San Francisco Chronicle</a>) - "Uncaring and divisive," "undercuts public support for one of California's most treasured institutions," "sending out its own special-interest message: what's in it for me," - <a href="http://articles.sfgate.com/2010-12-30/bay-area/26350890_1_uc-system-higher-pensions-uc-execs">editorial, San Francisco Chronicle</a>. - "despicable threat," the California Regents (UC board of trustees) should not "claim that lavish pension may be needed to recruit good people to UC. Good people don't threaten lawsuits against a cash-strapped sate to enrich themselves." <a href="http://www.sacbee.com/2011/01/02/3290033/editorial-uc-executives-offer.html">editorial, Sacramento Bee</a>. - Governor-Elect B4rown should issue an executive order "to eliminate any position in the University of California system paying $245,000 a year or more," (thus effectively firing all the 36 complaining executives); "free taxpayers and students alike from the tyranny of those whose main objective during any time - tough or otherwise - is to keep milking the state for every penny the can squeeze out," <a href="http://www.mantecabulletin.com/news/article/19725/">editorial, Manteca Bulletin</a>. Summary We have posted frequently about hired managers and executives of health care organizations receiving <a href="http://hcrenewal.blogspot.com/search/label/executive%20compensation">compensation</a> and <a href="http://hcrenewal.blogspot.com/search/label/executive%20life%20style">benefits</a> out of all proportion to their apparent performance. The case of the demanding University of California executives is just one of many. However, what is really remarkable about this case is the reaction to it. We are hearing top leaders, including many of the top leaders of the state's medical schools and academic medical centers, called uncaring, greedy, and despicable by well-known politicians and in newspaper editorials, and we are hearing calls that they be fired, en masse. Maybe we are at a tipping point. Of course, hired health care managers and executives are not entitled to line their own pockets while patients and their other constituencies suffer during the great recession. They are not entitled to continually drive health care costs up while they enrich themselves. However, apathy,<a href="http://hcrenewal.blogspot.com/search/label/learned%20helplessness"> learned helplessness</a>, and the <a href="http://hcrenewal.blogspot.com/search/label/anechoic%20effect">anechoic effect</a> have let them promote themselves into a de facto new aristocracy (just like the hired managers and executives of some other non-profit organizations, for-profit corporations, and especially financial service corporations have turned themselves into the rest of that aristocracy.) If we do not reclaim health care from these new oligarchs, we will all end up not just with expensive, difficult to access, mediocre health care, but under their tyranny. Post-Script This is just the latest example of the sense of entitlement displayed by the hired managers and executives of the University of California. Outrageous pay and benefits unjustified by any measure of performance for University of California's hired managers and executives has been grist for the Health Care Renewal mill since 2005.  A few samples: -  The ranks of those paid more than $200 K rose much faster than those paid less, while lower paid employees endured a pay freeze, and the university cut its budget.  Managers got bonuses for extra work, while faculty did not.  Managers got housing allowances, and other perks.  (<a href="http://hcrenewal.blogspot.com/2005/11/leadership-living-large-at-university.html">November, 2005</a>)  - UC-Irvine managers were paid lavishly while presiding over debacles involving transplant services  (liver transplants, <a href="http://hcrenewal.blogspot.com/2005/11/university-of-california-irvine-shuts.html">November, 2005</a>; bone marrow transplants, <a href="http://hcrenewal.blogspot.com/2006/01/even-more-trouble-in-oc-uci-bone.html">January, 2006</a>; kidney transplants, <a href="http://hcrenewal.blogspot.com/2006/01/california-bad-dreamin-more-troubles.html">January, 2006</a>) - UC - San Diego Chancellor was paid $359 K plus a bonus of $248 K for supposed full time work while serving on ten for-profit corporate and non-profit boards, including directorships of for-profit health care corporations that were conflicts of interest with her role overseeing the medical school and medical center.  This was the first case of what we later called the "new species of conflicts of interest" posted on the blog.  (<a href="http://hcrenewal.blogspot.com/2006/01/california-nightmares-more-troubles-at.html">January, 2006</a>) - UC - Irvine managers got bonuses while its medical center failed an inspection (<a href="http://hcrenewal.blogspot.com/2010/01/uci-medical-center-fails-inspection-uci.html">January, 2010</a>), as did managers at other UC campuses (<a href="http://hcrenewal.blogspot.com/2010/01/more-california-medical-centers-plagued.html">January, 2010</a>). Maybe if these older stories produced more outraged, the current situation would not have occurred. You heard it first on Health Care Renewal Hat tip to Prof Margaret Soltan <a href="http://www.margaretsoltan.com/?p=28524">on the University Diaries blog</a>.

Some Call it "Tyranny" - Top Leaders of University of California (Including Leaders of Academic Medicine) Demand Bigger Pensions for Themselves

The state of California, and its flagship university system, the University of California, have been under extreme financial pressure lately. The 36 Executives' DemandsHowever, that apparently has no…

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03 Jan 2011

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