healthy4u: financialization

CA Supreme Court upholds "whistleblower" protection for Modesto physician - and on replacing the abuser-favoring connotations of "whistleblower" with "Corporate Integrity Advocate"

"Whistleblower" is a term commonly used to refer to insiders in an organization who do not "go along to get along" or look the other way with regard to corruption and malfeasance. The connotation, of course, is that these individuals are "snitches" and "non-team players", in other words, the "bad guys."  They are then punished for their good deeds. (More on the term "whistleblower" below.) Here's one "whistleblower" who punished back: <blockquote class="tr_bq">California Supreme Court upholds whistleblower protection for Modesto physician By Ken Carlson February 20, 2014 <a href="http://www.modbee.com/2014/02/20/3201156/california-supreme-court-upholds.html">http://www.modbee.com/2014/02/20/3201156/california-supreme-court-upholds.html</a> The California Supreme Court ruled Thursday that a Modesto physician who challenged the termination of his hospital privileges has whistleblower protections. Dr. Mark Fahlen, a kidney specialist, filed a March 2011 whistleblower lawsuit in Stanislaus County Superior Court after Sacramento-based Sutter Health canceled his privileges to care for patients at Memorial Medical Center. Fahlen’s lawsuit claims that Sutter Central Valley Hospitals and Steve Mitchell, then the chief operating officer of Memorial, persuaded the Sutter Gould medical group to fire him and terminated his hospital privileges because of his complaints about insubordination and substandard care by hospital nurses.</blockquote> At least they didn't threaten to plaster his complaints to his forehead as occurred in Ohio (<a href="http://hcrenewal.blogspot.com/2013/07/hows-this-for-patient-rights-affinity.html">http://hcrenewal.blogspot.com/2013/07/hows-this-for-patient-rights-affinity.html</a>). <blockquote class="tr_bq">His attorney said the court decision guarantees that physicians have the same protections as hospital employees if they report problems that threaten to harm patients.</blockquote> That "guarantees protections" and "report problems that threaten to harm patients" have to appear in the same sentence at all is symptomatic of the most severe form of patient-be-damned dysfunction in this industry. <blockquote class="tr_bq">It’s “the biggest victory for patient rights since California’s health care whistleblower law was adopted in 1999,” said attorney Stephen Schear of Oakland. “In a hospital environment dominated by corporate giants too often more focused on protecting their marketing and brand name than patient health, today’s ruling will finally unshackle doctors from fear of retribution so they can protect patients.”</blockquote> Ditto my prior comment. <blockquote class="tr_bq">In a case closely watched by the hospital industry, the American Medical Association supported Fahlen with a “friend of the court” brief. The California Hospital Association and groups such as Kaiser Foundation Hospitals, Scripps Health and Dignity Health filed briefs on behalf of the defendants.</blockquote> That is rather indicative of the mindsets of those who filed briefs on behalf of the defendants. <blockquote class="tr_bq">... After he was given staff privileges at Memorial in 2004, Fahlen complained to administrators that nurses refused or failed to follow his patient care instructions. According to facts in the case, Fahlen had six clashes with nurses about patient care from August 2007 to April 2008. He told supervisors and administrators that nurses were insubordinate and that their care was substandard. One complaint was regarding a nurse’s refusal to transfer a patient to intensive care, delaying for five hours the appropriate level of care for the patient, the doctor said.</blockquote> What if the patient had died, I ask? <blockquote class="tr_bq">Mitchell, the chief operating officer, blamed Fahlen for his conflicts with nursing staff and contacted Sutter Gould’s medical director about Fahlen’s conduct. Sutter Gould cut ties with Fahlen in May 2008, causing his malpractice insurance to be canceled. Fahlen decided to start his own practice and arranged a meeting with Mitchell to talk about his hospital privileges. Mitchell wrote in an email to Memorial’s chief executive officer that Fahlen “does not get it,” meaning that he was going to lose his privileges. The CEO replied that it “looks like we need to have the medical staff take some action on his MedQuals!!! (or medical qualifications). Soon!” According to the lawsuit, Mitchell told Fahlen at the meeting that he should resign and leave town, or the hospital would report him to the Medical Board of California. Fahlen charged that a subsequent in-house investigation, and an executive committee decision not to renew his privileges, occurred in retaliation for his complaints about patient care.</blockquote> In other words, the doctor was a "disruptive physician" - a bad schoolboy who needed to be spanked - which was, of course, more important to the executives than maimed or dead patients. <blockquote class="tr_bq">Fahlen asked for a hearing, resulting in an October 2009 to May 2010 review by a six-physician committee at Memorial. The panel concluded that the evidence did not show he was incompetent or that his behavior had endangered patients. [But] Memorial’s board of trustees overruled the panel in early 2011.  [It's not hard to imagine that few if any on that board were themselves medical professionals - ed.]</blockquote> It's more likely in my view that this physician was ultra-competent. <blockquote class="tr_bq"> Sutter attorneys argued that the doctor first needed to exhaust other legal remedies before bringing the whistleblower lawsuit. The Supreme Court dismissed a previous expectation that doctors exhaust other remedies before filing suit with claims of retaliation. Such conditions would “seriously undermine the Legislature’s purpose to afford a whistleblower on a hospital medical staff the right to sue,” the Supreme Court’s opinion said.</blockquote> Next, a typical circular argument: <blockquote class="tr_bq"> Attorney Lowell Brown, who handles physician disciplinary cases for hospitals, said Thursday’s ruling will “change the rules of the game,” though additional court decisions will be needed to clarify issues. He predicted doctors will be reluctant to serve on hospital panels that review the competency or behavior of physicians. “The doctor can claim the action is being taken because he or she is whistleblowing,” Brown said. “No one ever produces evidence that a sham peer review has taken place. What we will see is sham whistleblower complaints about peer reviews.”</blockquote> Since sham peer review (see more at <a href="http://hcrenewal.blogspot.com/2009/10/sham-peer-review-could-this-bad-faith.html">http://hcrenewal.blogspot.com/2009/10/sham-peer-review-could-this-bad-faith.html</a>) is done secretly and behind closed doors, with protections, it's pretty hard to produce "evidence" of the type required in court. <blockquote class="tr_bq">... Fahlen said the ruling means that “doctors no longer have to choose between speaking out for their patients or continuing with their careers.”</blockquote> Again, this is an absolutely perverse choice foisted upon clinicians by corporatized, financialized medicine and its leadership. ------------ More on the term "whistleblower" itself. My attitude about that term is clear - the people who use it are attempting an ad hominem attack in one word.  It is a bad term, with bad connotations, and does not actually describe what the individual is attempting to accomplish. AHIMA's  Kim Baldwin Stried-Reich has a similar view, and a suggestion for replacement of that term with a more descriptive and non-abusable term: <blockquote class="tr_bq">"Changing Perception of ‘Whistleblowers’"</blockquote><blockquote>From  <a href="http://journal.ahima.org/2014/03/01/hipaa-whistleblower-protections-promote-information-governance/">http://journal.ahima.org/2014/03/01/hipaa-whistleblower-protections-promote-information-governance/</a> ... According to Kim Baldwin Stried-Reich, the former Speaker of the AHIMA House of Delegates, the new amendment to the HITECH-HIPAA Omnibus rule demonstrates both the increasing importance and value HIM professionals have today in ensuring both integrity and compliance with rules, regulations, and laws governing access and disclosure of health information within their organizations. Baldwin Stried-Reich is a privacy and compliance officer with the Lake County Physicians Association, in Waukegan, IL. She notes that while the new provision provides specific protections against disclosures reported to an oversight agency by whistleblowers and workforce members who are victims of a crime, she’s not so sure this new rule will encourage individuals, such as HIM professionals to speak-up and speak-out when or if they see evidence of systematic and ongoing non-compliance with federal mandates. One reason for this is the widespread use of the word “whistleblower,” which often carries negative connotations. She prefers the term “corporate integrity advocate.”</blockquote> "Corporate Integrity Advocate" clearly and unequivocally describes what the individuals - including those who write for blogs such as this one - are trying to accomplish. It is also a term that is rather hard for malfeasance-doers to use as ad hominem.. <blockquote class="tr_bq">“Perhaps if Health and Human Services had utilized another term, such as ‘corporate integrity advocate’ more individuals would understand what the intent of this new law is and that it is meant as an avenue individuals can choose to pursue if their professional integrity and ethics are not in alignment with the corporation’s any longer,” Baldwin Stried-Reich says.</blockquote> "Not in alignment with the lack of the corporation's integrity and ethics" is a more direct, and likely more accurate, way to put it. <blockquote class="tr_bq">A relevant example of this is evident in the settlement that Shasta Regional Medical Center (SRMC) entered into with the Department of Health and Human Services (HHS) following an investigation concerning the breach of PHI after senior-level executives intentionally disclosed protected information to the media on at least three separate occasions. The Shasta case demonstrates how and why corporate integrity advocates or whistleblowers are needed to facilitate change within their organizations when it is warranted, Baldwin Stried-Reich explains.</blockquote> That example is but the tip of the iceberg.  There are many posts on this blog alone dealing with the issues of <s>whistleblowers</s> Corporate Integrity Advocates (see the query link <a href="http://hcrenewal.blogspot.com/search/label/whistle-blowers">http://hcrenewal.blogspot.com/search/label/whistle-blowers</a>). The term "whistleblower" needs to be retired ASAP. -- SS

CA Supreme Court upholds "whistleblower" protection for Modesto physician - and on replacing the abuser-favoring connotations of "whistleblower" with "Corporate Integrity Advocate"

"Whistleblower" is a term commonly used to refer to insiders in an organization who do not "go along to get along" or look the other way with regard to corruption and malfeasance.The connotation, of c…

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19 Mar 2014

Putting Finance Executives in Charge of Health Care? - What Could Possibly Go Wrong?

A US News and World Report <a href="http://health.usnews.com/health-news/hospital-of-tomorrow/articles/2014/01/28/wanted-hospital-ceos-without-health-care-experience">article</a> affirms what we have <a href="http://hcrenewal.blogspot.com/2013/12/health-care-experience-hospital-ceos.html">previously written</a>, that those charged with the stewardship of US hospitals are even more inclined now to hire top managers with little or no health care experience or credentials.  Putting Finance Managers in Charge They particularly seem to favor executives drawn from the world of finance. Just to make it really clear, the exposition started with the article title, <blockquote class="tr_bq">Wanted: Hospital CEOs Without Health Care Experience </blockquote> The article drew on some of the figures about executive hiring which we <a href="http://hcrenewal.blogspot.com/2013/12/health-care-experience-hospital-ceos.html">discussed</a> in December, 2013, <blockquote class="tr_bq">It’s expected that two-thirds of hospital CEOs hired this year will have little to no health care experience, according to Black Book Rankings, which last year conducted a poll of 1,404 human resource officers and board members of health care organizations</blockquote> However, the new article profiled some examples, <blockquote class="tr_bq">.When Carlos Migoya was hired in May 2011 to run Jackson Health System, Miami-Dade County’s safety net hospital system, he had no health care experience. A career banker, Migoya took over.....</blockquote> Also, <blockquote class="tr_bq">Mike Keating, CEO of Christ Hospital in Cincinnati, previously was an investment banker.;Robert Meyer, president and CEO of Phoenix Children's Hospital, came from the consulting world;... </blockquote> The article stressed that hospital boards think a background in finance is particularly valuable. <blockquote class="tr_bq">Hospital board and HR directors are looking for non-industry productivity, business development and financial management experts with heavy technological expertise. </blockquote> Also, <blockquote class="tr_bq">[executive vice president and managing principle at Cejka Executive Search. Paul]  Esselman  notes that boards increasingly 'are looking at leaders from managed care, the payer side or from finance or banking.'</blockquote> Why Hospital Boards Favor Finance Executives <blockquote class="tr_bq">banking, like health care, is heavily regulated and that two decades ago banking went through significant consolidation, which hospitals today face.</blockquote> So, <blockquote class="tr_bq">[ managing partner of Black Book Rankings Doug] Brown says leaders that come from productivity-focused fields and sectors that have endured consolidation are particularly suited for running hospitals today. Those in financial services may prove useful in today’s climate, as 'there are a lot of troubled hospitals,' he says.</blockquote> As we <a href="http://hcrenewal.blogspot.com/2013/12/health-care-experience-hospital-ceos.html">noted before</a>, the article suggested that those who hire hospital executives think their most important challenges s included  - <blockquote class="tr_bq">'Communication is now more important than ever,; says Paul Esselman</blockquote> <blockquote class="tr_bq">the opportunities come in delivering its service or business lines to ever-expanding distribution channels.</blockquote> <blockquote class="tr_bq">says [former investment banker Mike] Keating. 'The key in health care is how you go about executing and executing well.'</blockquote> <blockquote class="tr_bq">[former banker Carlos] Migoya put in place operational reforms, including bringing in 'a lot of people with for-profit experience' to maintain expense controls, monitor operations, collect payments more quickly and pay its own bills sooner to gain prompt-payment discounts. Then, 'we realigned procurement,' he says, adding 'we motivate our procurement department with incentives,' which 'dramatically improved' Jackson Health’s process, time and costs. Meanwhile, the system outsourced pharmaceutical management, saving $15 million a year.... </blockquote> Note that these examples are all about management process and financial outcomes, NOT about clinical processes, quality of care, or patient outcomes.  (The only mention of anything close to clinical management was a plan to outsource same.) Left unsaid is that the boards charged with the stewardship of hospitals are now mainly composed of business executives, often heavily weighted with those in finance.  Summary - What Could Go Wrong? Of course, former bankers, and others from the world of <a href="http://hcrenewal.blogspot.com/search/label/finance">finance </a>may not really know much about clinical work, quality of care, or patient outcomes.  They may not have been picked because they care about such issues, nor socialized with the "patient first" mantra which health professionals are supposed to support.  Worse, it seems that those who choose hospital executives may not be thinking about the recent history of finance.  True, it shares with health care the presence of regulation and increasing consolidation.  However, as we all started to realize in 2008, the leaders of finance helped bring on the worst financial crisis since the great depression.  More than five years since the beginning of this new great recession, US median income is dropping adjusted for inflation, while income inequality has tremendously increased.  Finance executives have been prime proponents of <a href="http://hcrenewal.blogspot.com/search/label/financialization">financialization</a>, the theory that increasing shareholder value, which really seems to translate into increasing organizational short term income and increasing executive compensation are more important than any other outcomes.  Thus seems to correspond to the discussion above about financial and management objectives sans any notion of what is good for patients. Even more disturbing is all the anecdotal evidence that business management, particularly in finance, has been gripped by overarching greed.  Pope Francis called it the "idolatry of money."  (look <a href="http://www.washingtonpost.com/business/economy/pope-francis-denounces-trickle-down-economic-theories-in-critique-of-inequality/2013/11/26/e17ffe4e-56b6-11e3-8304-caf30787c0a9_story.html">here</a>). In his graphic <a href="http://www.nytimes.com/2014/01/19/opinion/sunday/for-the-love-of-money.html">memoir</a> of his days as a successful Wall Street trader, Sam Polk called it wealth addiction, .  <blockquote class="tr_bq">I noticed the vitriol that traders directed at the government for limiting bonuses after the crash. I heard the fury in their voices at the mention of higher taxes. These traders despised anything or anyone that threatened their bonuses. Ever see what a drug addict is like when he’s used up his junk? He’ll do anything — walk 20 miles in the snow, rob a grandma — to get a fix. Wall Street was like that. In the months before bonuses were handed out, the trading floor started to feel like a neighborhood in 'The Wire' when the heroin runs out.</blockquote> He was not the first to describe wealth addiction: <blockquote class="tr_bq"> Wealth addiction was described by the late sociologist and playwright Philip Slater in a 1980 book, but addiction researchers have paid the concept little attention. Like alcoholics driving drunk, wealth addiction imperils everyone. Wealth addicts are, more than anybody, specifically responsible for the ever widening rift that is tearing apart our once great country. Wealth addicts are responsible for the vast and toxic disparity between the rich and the poor and the annihilation of the middle class. Only a wealth addict would feel justified in receiving $14 million in compensation — including an $8.5 million bonus — as the McDonald’s C.E.O., Don Thompson, did in 2012, while his company then published a brochure for its work force on how to survive on their low wages. Only a wealth addict would earn hundreds of millions as a hedge-fund manager, and then lobby to maintain a tax loophole that gave him a lower tax rate than his secretary.</blockquote> Physicians swear oaths to put patient care ahead of all else.  While we may be far from perfect in our adherence to these oaths, I would like to think that when health care organizations were lead by health professionals, many tried to put patient care first  Yet professional managers, not health care professionals now lead health care. .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>). As we noted <a href="http://hcrenewal.blogspot.com/2013/09/a-plague-of-bureaucrats-now-10-per.html">here</a>, the growth continued, so there are now 10 managers for every US physician. The managers who first took over health care may have had some health care background.  Now it seems that health care managers are decreasingly likely to have any health care background, and increasingly likely to be from the world of finance.  Can anyone seriously believe that finance managers taught to put short-term revenue first, and who may often be wealth addicts who practice the idolatry of money in charge of health care is going to improve anything other than those same managers' wealth? As I have said before,  true health care reform would put in place leadership that understands the health care context, upholds health care professionals' values, and puts patients' and the public's health ahead of extraneous, particularly short-term financial concerns. We need health care governance that holds health care leaders accountable, and ensures their transparency, integrity and honesty. But this sort of reform would challenge the interests of managers who are getting very rich off the current system.  So I am afraid the US may end up going far down this final common pathway before enough people manifest enough strength to make real changes.

Putting Finance Executives in Charge of Health Care? - What Could Possibly Go Wrong?

A US News and World Report article affirms what we have previously written, that those charged with the stewardship of US hospitals are even more inclined now to hire top managers with little or no he…

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30 Jan 2014

Health Care Experience? - Hospital CEOs Don't Need No Stinkin' Health Care Experience

It looks like the complete takeover of health care by generic managers is nigh.  Who Are Now Candidates to be Hospital CEOs? On PRWeb is a <a href="http://www.prweb.com/releases/2013/12/prweb11421983.htm">summary</a> of data about what sort of CEO candidates hospitals' boards of trustees are seeking: <blockquote class="tr_bq">A Black Book Rankings poll of 1,404 healthcare provider organizations’ human resources officers and board members revealed the developing trend affecting the way headhunters will seek candidates. Black Book estimates that two-thirds of CEOs hired in 2014 will have little to no healthcare sector experience, in favor of non-industry productivity, business development and financial management experts with heavy technological expertise. </blockquote> From where are the new CEOs coming? <blockquote class="tr_bq"> Among survey respondents, the most intriguing new hospital CEO candidates are emerging from the Venture Capital, Private Equity industry (idealized by 42% of survey participants), Finance and Accounting (40%), Banking (32%), Technology (22%), Marketing and Sales (19%), Not-for-Profits ( 14%), and Pharma/Biotech (12%).</blockquote> Note that the CEO candidates did not seem particularly intimidated by running a hospital without any relevant experience, knowledge, or possibly values. <blockquote class="tr_bq"> 94% of new CEOs without extensive hospital backgrounds indicate they do not believe healthcare expertise is required for replacing other senior leadership team members after a management overhaul.</blockquote> Why Are Health Care Naive CEOs Increasingly Common? What is causing the attractiveness of candidates without background in, knowledge of, to particular agreement with the values of health care? <blockquote class="tr_bq">'An outside hire will not have developed hospital management skills from within or understand an organization's unwritten rules at first, but that’s not a bad thing either as more hospitals face fresh ideas to avoid bankruptcy, expedite smoother consolidations, conquer payment reform, and productivity issues,' said Doug Brown, Managing Partner of Black Book™.</blockquote> In addition, <blockquote class="tr_bq">A new CEO’s first decisions are often distruptive to a hospital’s staff, particularly the incumbent management team. 'An outsider's perspective on hospital operations will be controversial but often credited in several facility turnarounds for bolstering organizational financial stability, and ultimately profitability,' noted Brown.</blockquote> It is not just Mr Brown's opinion, <blockquote class="tr_bq">89% of board members hiring outsiders agree that broad business operational expertise and singular vision pays off with fresh perspectives on efficiencies, value, cost savings, and the goodwill to the community.</blockquote> What particular circumstances might prompt hospital boards to look for health care naive CEO candidates? <blockquote class="tr_bq"> 'Hospitals facing stalled growth or new competitive challenges need fresh thinking. Hiring internal candidates with the same norms and values as your current team will not meet the long term strategic growth needs of the hospital organization. Relevant outside thinking makes a valuable contribution, enhancing business vitality, longevity and sustainability. Staying contemporary, revitalizing your brand, enhancing products and expanding into new markets all begin with the next person you interview and add to your senior leadership team,' added Brown.</blockquote> By the way, similar surveys suggest the same trend affecting other parts of health care, <blockquote class="tr_bq">Payers, chains, ancillaries, ACOs, support firms, vendors, medical product manufacturers and pharmaceutical firms are tapping other business’ top talent, a major shift from the 'healthcare industry experience only' mindset for executive placement that has prevailed since the 1970’s, according to corresponding Black Book 2013 surveys.</blockquote> Discussion  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>). As we noted <a href="http://hcrenewal.blogspot.com/2013/09/a-plague-of-bureaucrats-now-10-per.html">here</a>, the growth continued, so there are now 10 managers for every US physician. Health care went from being controlled by clinicians to controlled by a growing volume of managers.  Most of these managers were <a href="http://hcrenewal.blogspot.com/search/label/generic%20managers">generic</a>, 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.  They also have been trained in theory of <a href="http://hcrenewal.blogspot.com/2012/04/health-care-dysfunction-explained-by.html">maximizing shareholder value</a> (even though non-profit health care organizations have no shareholders), which actually means maximizing short-term revenue (<a href="http://hcrenewal.blogspot.com/search/label/financialization">financialization</a>), and then using that revenue as an excuse to <a href="http://hcrenewal.blogspot.com/search/label/executive%20compensation">plutocratic pay packages for management</a>. The survey results above say the takeover is nearly complete.  The majority of top hospital management recruits are now generic.  It appears that the majority of top management recruits  in health insurance, medical device, pharmaceutical, and other health care corporations are also now generic  The reasons for their recruitment suggest that those exerting stewardship over hospitals are completely abandoning interest in improving health care, patients' outcomes, clinical practice, or anything related.  Instead, look at the wording (highlighted in color thus above) reflecting their concerns. This is all about <blockquote class="tr_bq"> productivity issues long term strategic growth business vitality revitalizing your brand efficiencies  cost saving profitablity</blockquote> Nobody is talking about quality of care, improving practice, patients' outcomes, public health, or about honesty, integrity, and particularly not about putting patients first. Instead, it is now going to be all about the money.  So of course the US has the most expensive health care (non) system in the world, and that system manages to at best be mediocre by nearly every measure of health outcomes.  I say once again that true health care reform would put in place leadership that understands the health care context, upholds health care professionals' values, and puts patients' and the public's health ahead of extraneous, particularly short-term financial concerns. We need health care governance that holds health care leaders accountable, and ensures their transparency, integrity and honesty. But this sort of reform would challenge the interests of the generic managers who are getting very rich off the current system.  So I am afraid the US may end up going far down this final common pathway before enough people manifest enough strength to make real changes.

Health Care Experience? - Hospital CEOs Don't Need No Stinkin' Health Care Experience

It looks like the complete takeover of health care by generic managers is nigh. Who Are Now Candidates to be Hospital CEOs? On PRWeb is a summary of data about what sort of CEO candidates hospitals' b…

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20 Dec 2013

Guest Post: Incompetent Management Breeds Demoralized Physicians

Health Care Renewal presents a guest post by <a href="http://imh.utmb.edu/about-us/faculty/howard-brody">Dr Howard Brody,</a> John P McGovern Centennial Chair of Family Medicine, Director of the Institute for Medical Humanities at University of Texas - Medical Branch at Galveston, and blogger at <a href="http://brodyhooked.blogspot.com/">Hooked: Ethics, Medicine and Pharma</a>.  Danielle Ofri, a prominent internist/author at Bellevue in New York, started a recent <a href="http://danielleofri.com/an-epidemic-of-disillusioned-doctors/">op-ed</a> piece, “Last week I was ready to quit medicine."  <div class="MsoNormal">She described an encounter most physicians can relate to—a 15-minute appointment slot, a new patient who spoke only Bengali, a long and complicated problem list, a bag containing 18 different medicines, two forms that had to be filled out by the doctor on this day’s visit, and a computer that froze while she was trying to keep up with the electronic charting. She described how, 45 minutes into the supposedly 15-minute visit, she had a phone in one ear with the Bengali translator and tech support on hold in the other ear.</div><div class="MsoNormal"> </div><div class="MsoNormal">Ofri’s plaint caught my attention because I had recently put up a <a href="http://hcrenewal.blogspot.com/2013/05/guest-post-physician-rebels-against.html">guest post on Health Care Renewal</a> about another highly skilled, caring physician who was seriously considering quitting practice. This led me to write a <a href="http://www.utmb.edu/newsroom/article8763.aspx">column</a> for some of our local newspapers about demoralized doctors</div><div class="MsoNormal"></div> <div class="MsoNormal"> </div><div class="MsoNormal">In the space allowed in an op-ed column, you can’t go into great depth in analyzing a complicated situation. So here’s what I would have wanted to say.</div><div class="MsoNormal"> </div><div class="MsoNormal">We can list all the management failures that this encounter represents. I won’t even start with the electronic record as that’s such a frequent theme in this blog. Who scheduled such a patient for a 15-minute visit? Where is the pharmacist who could have done a better job of going through all the lady’s medicines? Where is the staffer who could have filled out the forms for Dr. Ofri to sign? This is just to scratch the surface.</div><div class="MsoNormal"> </div><div class="MsoNormal">There are two things worrisome about this long list of management failures. If the goal of the health care system is actually to take good care of patients, then it seems obvious that Dr. Ofri, who wanted to try to provide high-quality care, had roadblock after roadblock thrown in her way.</div><div class="MsoNormal"> </div><div class="MsoNormal">Cynics will protest that this system obviously has no interest in quality patient care and seeks only to maximize revenue. If that’s so, is it really true that a board-certified MD is the most efficient labor source for keyboarding data into a computer, filling out paper forms, and doing all the other busy-work tasks that Dr. Ofri had to juggle? Can anyone really believe that this management structure supports either quality care orefficient resource use?</div><div class="MsoNormal"> </div> If the management of U.S. hospitals was severely understaffed or underpaid, then we could perhaps forgive such lapses. But we know that while the growth of physicians in the U.S. has been slow, the number of administrators has grown by leaps and bounds [The number of health care managers increased by 726% from 1983-2000 while physician numbers increased by 39%, look <a href="http://hcrenewal.blogspot.com/2005/04/growing-proliferation-of-managers.html">here</a> - Ed]  . And we know that at least at the high end, these managers are paid <a href="http://hcrenewal.blogspot.com/search/label/executive%20compensation">munificent sums</a>, and are lauded for their supposed genius (look <a href="http://hcrenewal.blogspot.com/2013/06/no-blues-but-lots-of-green-for-st-louis.html">here</a> for example).    <div class="MsoNormal">So we appear to have a system that is slowly (in some cases rapidly) driving the best doctors out of practice, and yet somehow imagines that everything is going all right and there’s no problem—or if there’s a problem, it’s those whining doctors.</div><div class="MsoNormal"> </div><div class="MsoNormal">All us medical educators know that when we ask the first-year class how may of them have been told by practicing physicians that they’re making a big mistake coming to medical school, the majority will raise their hands. Yet the managers of America’s health systems apparently believe that they can go on demoralizing good practitioners and nothing bad will happen.</div><div class="MsoNormal"> </div><div class="MsoNormal">This may sound as if I am saying that health care managers are all evil people, but that’s an unfair characterization. These folks are simply trying to do what our society tells them. As I <a href="http://hcrenewal.blogspot.com/2012/03/golden-calf-explains-how-economism-lead.html">explained</a> some time ago, most of our popular and political discourse has been captured by a belief system that can be variously called neoliberalism, market fundamentalism, or <a href="http://hcrenewal.blogspot.com/search/label/economism">economism</a>. The ideology can be summarized as a quasi-religious faith in the so-called “free market,” steadfast opposition to government regulation of the market, and opposition to just about any form of taxes (for more on the nature of economism, look <a href="http://theeconomismscam.blogspot.com/2012/09/economism-primer.html">here</a>.)</div><div class="MsoNormal"> </div><div class="MsoNormal"></div><div class="MsoNormal"> </div><div class="MsoNormal"> Among other things, this ideology teaches us that everything important in our society can be accurately captured in objective measures of “productivity” and “efficiency.”  [This is akin to the "shareholder value" theory of management (look <a href="http://hcrenewal.blogspot.com/2012/04/health-care-dysfunction-explained-by.html">here</a>), or "<a href="http://hcrenewal.blogspot.com/search/label/financialization">financialization</a>." - Ed]  Once one has mastered the basic concepts taught in MBA school, there’s no need to learn anything about health care and what makes it a unique activity; there’s no basic difference between providing health care and flipping burgers at McDonalds or making widgets. [We have called this <a href="http://hcrenewal.blogspot.com/search/label/generic%20management">generic management</a>. - Ed.]. And so we get the crazy style of management well documented on this blog, not because of personal nastiness or ill will, but due to the ideological Kool-Aid everyone has been drinking for several decades now. </div><div class="MsoNormal"> </div><div style="margin-bottom: .0001pt; margin: 0in;">Today’s physicians seem to be like the proverbial frog being boiled in the pot of water because the heat was turned up so gradually the frog never figured out it needed to jump. [That is, they are suffering from "<a href="http://hcrenewal.blogspot.com/search/label/learned%20helplessness">learned helplessness</a>." - Ed] Dr. Ofri herself seems to represent a typical frog. Why? Perhaps it’s the style of the blog or op-ed writer to start off with a downer and then try to end on an upbeat note. Or perhaps it’s the natural physician’s tendency to stay away from policy questions. I’m not sure.</div><div style="margin-bottom: .0001pt; margin: 0in;"> </div><div style="margin-bottom: .0001pt; margin: 0in;">After starting us off with this hard-hitting description of a dysfunctional system, Dr. Ofri ends by opining that things are going to be better in the future because more women are entering medicine and because today’s medical students are more tech savvy. She gives herself credit for managing to forge a bond with the patient because they sat together and faced this adversity. She cites an upbeat study, “when asked what was the most satisfying aspect of medical practice, the number one answer was relationships with patients. This is what keeps us going on even the most trying of days.”</div><div style="margin-bottom: .0001pt; margin: 0in;"> </div>Dr. Ofri gets full credit for remembering the importance of relationships, and feels that she bonded more firmly with her patient because they went through all this together. How about a word, though, about the people behind the curtain, who are responsible for all that she and her patient had to go through, and who don’t seem to have a clue how bad it is and what it all means?  <div class="MsoNormal"> </div><div class="MsoNormal">Dr Howard Brody </div>

Guest Post: Incompetent Management Breeds Demoralized Physicians

Health Care Renewal presents a guest post by Dr Howard Brody, John P McGovern Centennial Chair of Family Medicine, Director of the Institute for Medical Humanities at University of Texas - Medical Br…

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30 Jul 2013

The Financialized Medical Center - Executives of Non-Profit Wake Forest Baptist Medical Center Make an "Investor Call," but Have no Investors

We recently discussed the uncomfortable situation of Wake Forest Baptist Medical Center, the non-profit health system/ academic medical center of Wake Forest School of Medicine.  The organization suffered acute monetary losses after a problem plagued roll out of its new electronic health record.  Presiding over this mess were some extremely well paid executives who had been hailed as "visionaries" by their own public relations people. (Look <a href="http://hcrenewal.blogspot.com/2013/05/executive-compensation-as-legal.html">here</a> and <a href="http://hcrenewal.blogspot.com/2013/05/clouded-visionary-leadership-wake.html">here</a>.) An Even Bigger Financial Loss The resourceful Richard Craver, <a href="http://www.journalnow.com/business/business_news/local/article_52778d60-d2f5-11e2-aeb0-001a4bcf6878.html">writing</a> in the Winston-Salem Journal, just documented that the financial losses due to this cybernetic chaos now seem even bigger, <blockquote class="tr_bq">The center said Monday in a report submitted to bond agencies that it had a $62.8 million operational loss and an overall loss of $3.2 million in the third quarter of fiscal year 2012-13, which ended March 31. Stock investment gains of $54.6 million helped offset much of the operational revenue loss. Still, the operational loss was $13.2 million higher than the $49.6 million it reported Dec. 31. At that time, the center reported $7.4 million in overall excess revenue because of investment gains.  </blockquote>A Call to Non-Existent Investors   That, however, was not the big news.  Mr Craver further noted, <blockquote class="tr_bq">Wake Forest Baptist chief executive Dr. John McConnell and chief financial officer Edward Chadwick held an<a href="http://emma.msrb.org/ER677717-ER525248-ER927930.pdf"> investors call</a> on Monday to discuss the financial performance. It is the third such presentation of the fiscal year, according to the Municipal Securities Rulemaking Board’s <a href="http://www.emma.msrb.org/">www.emma.msrb.org</a> website.</blockquote> Mr Craver noted that there was something distinctly odd about this.  <blockquote class="tr_bq">The investor call represents a potential blurring of the lines between how not-for-profit hospitals and corporations operate, which also includes executive compensation as a hot-button topic. Analysts said the call is comparable to an earnings warning that corporations provide when they try to soften the negative reaction from a poorer-than-projected financial performance. Wake Forest Baptist did not comment when asked how long has it made investor calls and who receives notifications of the presentations. According to <a href="http://emma.org/">emma.org</a>, the center did not have investor calls listed prior to the first quarter of the current fiscal year. A search of Wake Forest Baptist’s public website did not find any references to investor calls or quarterly and annual financial reports. Spokesman Chad Campbell said the quarterly financial calls are in the public domain.</blockquote> While US publicly traded for-profit companies usually do schedule quarterly conference calls with investors to inform them about recent developments, Wake Forest Baptist Medical Center is clearly not a publicly held for-profit company.  It is a non-profit organization.  Non-profit organizations do not have investors or shareholders, For-profit corporations also may do periodic calls with bondholders.  Wake Forest Baptist Medical Center does have bondholders.  But the <a href="http://emma.msrb.org/ER677717-ER525248-ER927930.pdf">posted notice</a> for the call discussed above clearly refers to an "investor call," not a bondholders call.  One can now listen to the call (+1 855 859 2056, conference ID 90279604), and when I did, I heard the call was introduced by the operator, and by the Wake Forest Baptist Medical Center CFO as an "investor call."   A Financialized Mindset? So what in the world is going on here?  So why would its CEO and CFO make a quarterly call to "investors?"  The idea is absurd on its face.  Mr Craver was able to find one person to comment, who seemed to assume that the calls were truly "investor calls," not mislabeled calls to bondholders: <blockquote class="tr_bq">Ken Berger, president and chief executive of Charity Navigator, said a not-for-profit hospital holding an investors call 'is the antithesis of why a nonprofit exists.' 'Nonprofits are not supposed to be trying to maximize shareholder value, but maximize their benefit to the communities they serve,' Berger said. 'Transparency is great, whether corporation or nonprofit, for shedding light on financial performance.' 'In this instance, the investor call doesn’t represent full transparency, but only represents more morphing of a not-for-profit into a for-profit organization where only a select few investors are chosen to have access to pertinent current information.' </blockquote>My guess is that Mr Berger got it right.  It may be that the top executives of Wake Forest Baptist Medical Center have the mindsets of executives of a big for-profit corporation in an era of <a href="http://hcrenewal.blogspot.com/search/label/financialization">financialization</a>.  <a href="http://economix.blogs.nytimes.com/2013/06/11/financialization-as-a-cause-of-economic-malaise/">In the New York Times Economix blog</a>, Bruce Bartlett, an economist who has served in the administration of two Republican Presidents, Ronald Reagan and George HW Bush, and has worked for two Republican legislators, Jack Kemp and Ron Paul, cited financialization as the big largely anechoic reason for the global economic malaise.  He wrote, <blockquote class="tr_bq"> According to <a href="http://web.williams.edu/Economics/wp/BakijaColeHeimJobsIncomeGrowthTopEarners.pdf">research</a> by the economists Jon Bakija, Adam Cole and Bradley T. Heim, financialization is a principal driver of the rising share of income going to the ultrawealthy – the top 0.1 percent of the income distribution. Research by the University of Michigan sociologist <a href="http://cas.umkc.edu/econ/economics/faculty/wray/631Wray/Week%207/Krippner.pdf">Greta R. Krippner</a> supports this position. She notes that financialization exacerbates the well-known problem of corporate ownership and control: while corporate assets are owned by shareholders, they are controlled by managers who often extract an excessive share of corporate profits for themselves.</blockquote>  As we have <a href="http://hcrenewal.blogspot.com/2012/04/health-care-dysfunction-explained-by.html">discussed</a>, for a generation business schools have taught managers that there primary goal is to maximize shareholder value, which has been interpreted to mean short-term financial performance.  Large corporations now give top managers tremendous incentives to maximize such performance, such that top managers have become rich, often the richest members of society.  Many top managers of health care organizations now come from a business background, and health care managers, even of non-profit organizations, also get large incentives.  Note also that the two executives on the "investor call" both had outsize compensation in 2011, the latest year for which the non-profit Wake Forest Baptist Medical Center has released the disclosure form (990 form) required by the US government.  The CEO, Dr McConnell, received over $2 million, while the CFO, Mr Chadwick, received just short of $1 million. (Look <a href="http://hcrenewal.blogspot.com/2013/05/executive-compensation-as-legal.html">here</a>.)  So it looks like they have a good reason to continue to operate a financialized organization so they can keep extracting sufficient revenue to make themselves rich. Clearly, though, if we want our health care organizations to preserve and protect patients' and the public health, we need them to be lead by leaders who care much more about health care than about short-term revenue and making themselves rich. As we have said endlessly,  true health care reform would put in place leadership that understands the health care context, upholds health care professionals' values, and puts patients' and the public's health ahead of extraneous, particularly short-term financial concerns. We need health care governance that holds health care leaders accountable, and ensures their transparency, integrity and honesty.

The Financialized Medical Center - Executives of Non-Profit Wake Forest Baptist Medical Center Make an "Investor Call," but Have no Investors

We recently discussed the uncomfortable situation of Wake Forest Baptist Medical Center, the non-profit health system/ academic medical center of Wake Forest School of Medicine. The organization suff…

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13 Jun 2013

Guest Post: A Physician Rebels Against Micromanagement by "'Leadership-Trained' Management Extenders"

Guest Post: A Physician Rebels Against Micromanagement by "'Leadership-Trained' Management Extenders"

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09 May 2013

"Why Do We Always Need to Blame Somebody?" - An Investment Banker Pushes Back Against Health Care Leadership Accountability

One of the many dramatic stories generated by the destructive Hurricane Sandy illustrated, oddly enough, the influence of big finance on American academic medicine. Vivid video showed patients being carried down darkened stairways after flooding and a power failure at Langone Medical Center in New York (for example, see<a href="http://www.cnn.com/2012/10/30/health/sandy-hospital/index.html"> this CNN story</a>.)  Amazingly, all the patients survived, thanks to heroic work by health care professionals and first responders.  CNN noted, "Some 1,000 staff members -- doctors, nurses, residents and medical students -- along with firefighters and police officers evacuated the patients." The medical center suffered significant damage beyond that caused by the blackout.  A New York Times <a href="http://www.nytimes.com/2012/11/10/nyregion/damage-from-hurricane-sandy-could-cost-nyu-langone-millions.html">story</a> about the problems was entitled, "A Flooded Mess that was a Medical Gem."  It noted the hospital's basement flooding destroyed major equipment like MRI machines, a linear accelerator and a gamma knife.  An animal research facility was destroyed and most of the animals died.  A renovated lecture hall and the library were ruined. What Went Wrong? However, soon after the debate began about why the hospital flooded and power failed.  A Bloomberg <a href="http://www.businessweek.com/news/2012-10-30/new-york-hospital-evacuates-patients-as-sandy-hits-power">story</a> stated,   <blockquote class="tr_bq">New York University Langone Medical Center, the 705-bed hospital in lower Manhattan that assured city officials it was ready for Hurricane Sandy, stood dark and empty a day after the storm rolled through. </blockquote> That story raised questions whether hospital leadership gave adequate priority to infrastructure like generators, or put too much emphasis on spending likely to produce more rapid rewards. <blockquote class="tr_bq">Blame is being placed on the building’s outdated backup power system, which has raised concern that aging infrastructure at U.S. hospitals has created a risk for similar outages that jeopardize patient care. 'Hospitals are careful to get the latest and greatest medical equipment, but then they don’t spend on the infrastructure,' Michael Orlowicz, a principal at consulting company Lawrence Associates LLC, said....</blockquote> A story on ProPublica (<a href="http://www.salon.com/2012/11/01/why_do_hospital_generators_keep_failing/">available on Salon</a>) noted, <blockquote class="tr_bq">Experts say such failures are troubling but not entirely surprising. Dr. Arthur Kellermann founded the emergency department at Emory University and headed it from 1999 to 2007. Now, he’s Paul O’Neill-Alcoa Chair in Policy Analysis at RAND Corporation think tank. The other night, as the NYU evacuation was unfolding, he tweeted, 'Hospital preparedness and well-functioning backup systems are a costly distraction from daily business, until they are needed. Like now.' In an email interview with ProPublica, Kellermann elaborated: 'I have no doubt when the hospital assured the Mayor that their backup systems were ready, they believed they were. They were wrong. What I find most remarkable about this story is that [more than seven] years after Hurricane Katrina, major hospitals still have critical backup systems like generators in basements that are prone to flooding.'</blockquote> Similarly, a <a href="http://www.reuters.com/article/2012/11/03/storm-sandy-hospitals-idUSL1E8M1LR620121103">Reuters story</a> included another quote from Dr Kellermann, <blockquote class="tr_bq">'I've been asking hospitals to look at their own survivability' after a natural or manmade disaster, 'and I just can't get it on their radar screens,' said Dr. Art Kellerman,...</blockquote>  It added, <blockquote class="tr_bq">For hospital administrators trying to keep their institutions in the black, disaster-resistant infrastructure is expensive and lacks the sex appeal of robotic surgery suites and proton-beam cancer therapy to attract patients. 'People don't pick hospitals based on which one has the best generator,' Kellerman said. </blockquote> The notion that hospital leaders may put short-term revenue ahead of long-term infrastructure development, even when such development might be critical for patient safety, should not surprise <a href="http://hcrenewal.blogspot.com/">Health Care Renewal</a> readers.  Hospitals are often lead or influenced by those who believe maximizing short-term revenue should be the main goal of all management, an over-generalization of the idea promoted in business schools for a generation that business leaders should maximize "shareholder value," which has come to be defined as short-term stock price (see <a href="http://hcrenewal.blogspot.com/2012/04/health-care-dysfunction-explained-by.html">this post</a>).   Who Defended the Disaster Planning  In response to this or anticipated criticism, leaders of Langone Medical Center deployed.  Not unexpectedly, one was Richard Cohen, the vice president for facilities, as reported by ProPublica, <a href="http://www.huffingtonpost.com/sheri-fink/nyu-hospital-evacuation_b_2072362.html">via the Huffington Post,</a>   <blockquote class="tr_bq">After Hurricane Irene, officials at NYU Langone Medical Center spent several million dollars protecting its backup power system from flooding, according to Richard Cohen, vice president of facilities operations. The hospital removed a fuel tank and a set of emergency generators at street level and chose to depend on what Cohen termed an 'extremely modern, extremely reliable' system of rooftop generators. The hospital also built a new, flood-resistant house for pumps that draw fuel from the hospital's sealed underground tank and feed it to the generators that make electricity when New York City's power fails. One vulnerability remained, and it proved to be the system's Achilles Heel. A portion of the hospital's power distribution circuits, which direct the generated electricity out into various areas of the hospital, were located in the hospital's basement. 'It's like what happens when you have a flood in your basement and the electrical panel is in your basement,' Cohen said.</blockquote> Oops.  Why a crucial component of the system meant to protect the back up power system from threats including flooding was placed in an area at risk from flooding was not clear.   Only one story I could find (<a href="http://www.nytimes.com/2012/11/10/nyregion/damage-from-hurricane-sandy-could-cost-nyu-langone-millions.html?smid=tw-nytimeshealth&seid=auto">in the NY Times</a>) included a response by the Dean of the Medical School and CEO of the Medical Center Dr Robert I Grossman. <blockquote class="tr_bq">At this point, Dr. Grossman said, he could only theorize as to why the generators had shut down. All but one generator is on a high floor, but the fuel tanks are in the basement. The flood, he said, was registered by the liquid sensors on the tanks, which then did what they were supposed to do in the event, for instance, of an oil leak. They shut down the fuel to the generators.</blockquote> Oops again.  Why an effort to flood proof the hospital included an undeground fuel tank which could not be operated if water got near it was also not clear.  The most voluble defender of the hospital's management proved to be one Mr Kenneth Langone.  As noted in a <a href="http://blogs.wsj.com/metropolis/2012/10/30/among-the-patients-at-evacuated-hospital-a-benefactor/">blog post</a> in the Wall Street Journal, Mr Langone is the medical center's "board chair and benefactor."  In fact, as the NY Times <a href="http://www.nytimes.com/2008/04/16/nyregion/16donate.html">reported</a> in 2008, <blockquote class="tr_bq">Kenneth G Langone, a billionaire financier and founder of Home Depot, is giving another $100 million donation to New York University Medical Center, matching the one he made anonymously in 1999.  In return, the university plans to name the medical center the N.Y.U. Langone Medical Center,....</blockquote> The WSJ blog post asserted, <blockquote class="tr_bq">Langone said the hospital 'frequently' tested its generators and they had passed the tests, and the hospital was prepared for a 12-foot storm surge. 'We anticipated 12-foot surges, which we knew we could handle. We got 14-foot surges,' he said. Some of the hospital generators were in the basement, which flooded. Langone acknowledged that the generators were 'not in the right location,' but that was an artifact of aging facilities undergoing an extensive upgrade. 'They’ve been there for years,' he said of the generators in the basement. As part of a $3.2 billion modernization, NYU Langone was planning on buying new generators and locating them in better locations than the basement, Langone said.</blockquote> Oops one more time.  Mr Langone seemed to only offer inertia as an excuse for why some generators remained in the basement after an effort to flood proof the back up electrical system. Langone was quoted in the CNN story mentioned above, <blockquote class="tr_bq">Kenneth Langone, the chairman of the hospital's board of trustees who also happened to be a patient there until he was discharged Tuesday morning, said that regulations require the generators to be tested regularly and that they've worked every time. Langone said the hospital is in the midst of an 'enormous' building campaign. The generators are going to be replaced in a renovation, he said.</blockquote> In a Bloomberg <a href="http://www.bloomberg.com/news/2012-10-30/chairman-langone-was-nyu-hospital-patient-in-storm-evacuation.html">story</a>, Langone was quoted again, <blockquote class="tr_bq">'We believed the machines would work, and we believed everything we were told about the scope and size of the storm,' Langone said.</blockquote>  In that story, he tried to deflect attention from tha apparent infrastructure failure, and presumably the responsibility of the organization's leadership for it, to the efforts of health professionals, <blockquote class="tr_bq">'The backup generators failed, it’s that simple, but the story here is the magnificence of the effort of all of our people and what they did,' Langone, 77, said yesterday.... </blockquote> He also defended the relatively silent Dean and medical center CEO, <blockquote class="tr_bq">'What this dean has done is nothing short of spectacular, in every respect,' Langone said of Grossman. 'So last night God decides to give us a test and our machines failed.' </blockquote> The story ended with yet another of his attempts to deflect attention to management's responsibility, <blockquote class="tr_bq">'Machines fail, airplanes take off in great shape and they have malfunctions,' Langone said. 'Why do we always need to blame somebody for something that could just have happened? Why not write a story about what people did because things happened? Let’s be a little positive once in a while.' </blockquote> And in the <a href="http://www.wnyc.org/blogs/wnyc-news-blog/2012/nov/10/nyu-chairman-says-hospital-shut-down-sandy-was-configured-code/">WNYC News Blog</a>, Langone appeared yet again with this apologia,  <blockquote class="tr_bq">He said hospital pumps failed, because they were overwhelmed by an event that was 'unprecedented' and 'an act of god.' 'The generators are on the seventh floor, and the fuel supply is in cement vaults in the basement, where they're supposed to be according to code,' Langone said. 'Moisture sensors shut down the pumps, but they did what they're supposed to do.'</blockquote> Summary Certainly the survival of all the former patients at Langone Medical Center due to brave efforts by health care professionals and first responders ought to be celebrated.  From the discussion so far, it is not clear whether the infrastructure failures were unavoidable due to the scope of a huge natural disaster, or whether the failures were the results of poor planning and insufficient attention to and investment in infrastructure.  Celebration of personal and professional dedication, however, ought not to distract from determining what lessons could be learned about making health care infrastructure safer in cases of natural disaster.  It also ought not to distract from concerns about management accountability.  In this day and age, it is not surprising that no executive at Langone Medical Center would accept any responsibility for an effort to protect its electrical back-up power from flooding that included an underground fuel tank which would be shut down if any water affected it.  However, these executives are rewarded handsomely supposedly for their "spectacular" leadership.  (Dean Grossman received $1,744,780 in the 2010-2011 period according to the NYU Hospitals Center 2010 form 990.  That document listed four other executives who made over $1 million.)  One would think they would at least try to substantively address how their patients got put into such a precarious situation. It is surprising that the silence from management was supplanted by the opinions of a very wealthy board chairman who paid hundreds of millions for some of the improvements to the hospital that were destroyed by the storm, but improvements that may not have included fully flood proofing the hospital's back up electrical system.  Why he may well be disappointed about the loss of what he spent so much to build, it is not clear why his opinions about technical aspects of disaster preparation should replace responses from those who were responsible for disaster preparedness.  After all, Mr Langone, while very wealthy, has no evident expertise in engineering, science, or anything pertaining to protecting infrastructure from natural disasters.  (Mr Langone's <a href="http://csis.org/expert/kenneth-g-langone">biography</a> showed his background seems to be only in investment banking and finance.)  One wonders whether Mr Langone's prominence in the discussion suggests how influential the views of investment bankers, versus those of health care professionals, engineers and scientists, have become in the operation of health care systems. Again, it appears that the culture of <a href="http://hcrenewal.blogspot.com/search/label/finance">finance</a> has intruded progressively into the cultures of health care and academics during an era in which finance has been increasingly irresponsible, as shown by the global financial collapse and our current economic woes.  Instead, true health care reform would develop leadership and governance that upholds health care professionals' values rather than worshiping short term revenue.

"Why Do We Always Need to Blame Somebody?" - An Investment Banker Pushes Back Against Health Care Leadership Accountability

One of the many dramatic stories generated by the destructive Hurricane Sandy illustrated, oddly enough, the influence of big finance on American academic medicine.Vivid video showed patients being ca…

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16 Nov 2012

More Reasons to Doubt How CEOs are Chosen and Paid

Health Care Renewal is about problems with the leadership and governance of health care organizations.  Since the global financial collapse/ great recession began in 2008, it became evident that the problems we saw affecting health care leadership were similar to problems affecting other large organizations, notably financial firms.  Recently, I spotted a series of articles that raise more questions about how business leaders, and by extension, leaders of health care organizations are chosen and paid. Doubts about Generic Managers We have often questioned the wisdom of having health care organizations lead by people with little if any direct health care experience, little knowledge of health care on the ground, and little commitment to health care's core values.  We have called such leaders <a href="http://hcrenewal.blogspot.com/search/label/generic%20managers">generic managers</a>. A New York Times <a href="http://www.nytimes.com/2012/09/23/business/ceos-and-the-pay-em-or-lose-em-myth-fair-game.html">article</a> by Gretchen Morgenson from September, 2012, cited new academic work that questioned the abilities of generic managers.  The <a href="http://irrcinstitute.org/pdf/Executive-Superstars-Peer-Benchmarking-Study.pdf">source article </a>was Elson CM, Ferrere CK.  Executive superstars, peer groups, and overcompensation - cause, effect and solution.  Ms Morgenson summarized, <blockquote class="tr_bq">Mr. Elson and Mr. Ferrere conclude, contrary to the prevailing line, that chief executives can’t readily transfer their skills from one company to another.</blockquote> Furthermore, Ms Morgenson interviewed Mr Elson, who said, <blockquote class="tr_bq">But we found that C.E.O. skills are very firm-specific. C.E.O.’s don’t move very often, but when they do, they’re flops.</blockquote>Also, <blockquote class="tr_bq"><div itemprop="articleBody">But there is little evidence, according to Mr. Elson and Mr. Ferrere, that a hot market exists for interchangeable chief executives. First, they note numerous academic studies indicating that C.E.O.’s selected from within a company perform better than outsiders, especially in the creation of long-term shareholder value. </div><div itemprop="articleBody"> </div><div itemprop="articleBody">'There is no conclusive empirical evidence that outside succession leads to more favorable corporate performance, or even that good performance at one company can accurately predict success at another,' the authors conclude. 'In short, executive skills cannot pass the most basic test of generality: transferability.' </div><div itemprop="articleBody"> </div><div itemprop="articleBody">To be sure, this flies in the face of the widely held view that skilled managers have become generalists and are therefore far more interchangeable than in previous years. Proponents of this thesis argue that top managers today can accumulate a broad knowledge of economics, finance and management science, giving them the ability to manage any type of company effectively. Technological advancements also give chief executives access to untold amounts of data about a particular company that in previous times would have taken years to amass and synthesize, this view holds. </div><div itemprop="articleBody"> </div><div itemprop="articleBody">But the data on actual C.E.O. moves raises questions about just how portable C.E.O. skills really are. The Delaware paper cites several studies indicating that relatively few chief executives land new top jobs elsewhere. One study, a 2011 analysis of roughly 1,800 C.E.O. successions from 1993 to 2005, found that less than 2 percent had been public-company chief executives before their new jobs. </div></blockquote>This data and these observations seem to broadly apply to business executives, but there is no reason to think they do not apply to executives of health care corporations.  Furthermore, given that on its face, health care is less like making automobiles than, say, the restaurant business is, there is no reason to think doubts this raises about the abilities of generic managers should not be even bigger in health care, and should apply not just to for-profit, but to not for profit corporations.  Yet the trend in health care seems to increasingly favor generic managers of not just for-profit health care corporations, but also hospitals and hospital systems, non-profit health insurers and managed care organizations, health care charities, disease advocacy groups, and even medical associations, medical schools, and their parent universities.   Doubts about Executive Compensation Peer-Group Benchmarking We have often posted about<a href="http://hcrenewal.blogspot.com/search/label/executive%20compensation"> amazingly generous compensation</a> given to top leaders of health care organizations.  Health care corporate CEOs can make tens of millions of dollars, occasionally even more.  While CEOs of not for profit health care organizations make less, they still now can makes millions of dollars.  Ms Morgenson called the usual justification for these huge amounts of compensation the "pay-'em-or-lose-'em" myth. <blockquote class="tr_bq">Corporations are forever defending big executive paydays. If we don’t pay up, the argument goes, our sharpest minds will jump to our rivals. </blockquote>This notion, or myth, depends on the argument that generic managers are the best managers, which appears to be largely unsubstantiated, as we noted above. <blockquote class="tr_bq"> In other words, the argument that C.E.O.’s will leave if they aren’t compensated well, perhaps even lavishly, is bogus. Using the peer-group benchmark only pushes pay up and up. </blockquote> Furthermore, <blockquote class="tr_bq">Importantly, the study disputes the notion that executive pay today is a result of an efficient bidding process for finding and retaining a scarce and valuable commodity: managerial talent. 'In essence, this process creates a model of a competitive market for executives where it otherwise does not exist,' the authors wrote. 'Through the operation of a market, it is argued, wages are bid up to an executive’s outside opportunities.' </blockquote> Instead, as noted above, since the skills needed to run one sort of company or organization may not readily transfer to other companies and organizations, even seemingly similar ones, such a market does not exist.     Incentives Based on Short-Term Financial Results We have also previously discussed (look <a href="http://hcrenewal.blogspot.com/2012/04/health-care-dysfunction-explained-by.html">here</a>) how contemporary economic dogma suggest that the only measure of success of a for-profit corporation is "shareholder value," which has come to mean the stock price over the short term.  There is reason to think that this focus on short-term economic performance has also become the major measure of success of health care organizations.  Another word for this phenomenon is <a href="http://hcrenewal.blogspot.com/search/label/financialization">"financialization."  </a> An <a href="http://www.independent.co.uk/news/business/comment/anthony-hilton-how-bonuses-make-bosses-reluctant-to-invest-in-the-future-8163804.html">op-ed</a> in the UK Independent questions this focus because of its economic effects.  Anthony Hilton wrote about the views of Andrew Smithers, <blockquote class="tr_bq">His starting point was that the economy was floundering because of inadequate demand. Personal spending is flat for obvious reasons but the real culprit is the companies who are hoarding cash and refusing to invest. Others have noticed the cash hoarding but explain it away by saying we live in uncertain times and companies will start investing again once they become more confident about the economic outlook. Smithers disagrees fundamentally with this. He says companies are not investing because executives are bonused to deliver short-term profits. Costly spending on investment projects is therefore anathema to them. Investment may deliver long-term prosperity but by that time they will have left the company. It also depresses short-term profits while they are still there. We have in the last two decades, under the mantra of shareholder value and aligning the interests of management with shareholders, created a new breed of management incentivised to believe that what is good for them is good for the business. They dislike investment because it reduces their bonuses . They don't invest surplus cash. They hoard it or they use it to buy back their own company's shares. When the majority of the managements in publicly quoted companies start behaving this way, as they now do, we have a serious problem. They are sitting on cash which is the equivalent of six per cent of GDP. This deadweight of unused resources prevents lift-off and threatens to leave the economy forever trapped in the mire. Smithers says this behaviour by management is a structural change — meaning it is something which won't go away. It makes this down- turn different from all that have gone before.</blockquote>There is no reason to think that health care corporations are not hoarding money in the sense described above.  If so, they may be failing to invest in drugs or devices that would have helped patients in the future. Because of the limited reporting required of large health care non-profit organizations in the US, it may be very hard to tell if they are similarly hoarding money, but if they are, the effects again might be to fail to provide patients long-term benefits they might otherwise have enjoyed. The Ultimately Self-Destructive Outcome Meanwhile, <a href="http://www.nytimes.com/2012/10/14/opinion/sunday/the-self-destruction-of-the-1-percent.html">writing in</a> the New York Times, Chrystia Freeland, the author of Plutocrats: the Rise of the New Global Super-Rich and the Fall of Everyone Else, explained why picking the wrong leaders  and paying them too much may be bad for everyone.  We have noted that an increasing fraction of the wealthiest one percent of the US are current and former corporate executives.  Ms Freeland wrote how domination by an increasingly wealthy and powerful elite usually dooms the countries they dominate. <blockquote class="tr_bq">what separates successful states from failed ones is whether their governing institutions are inclusive or extractive. Extractive states are controlled by ruling elites whose objective is to extract as much wealth as they can from the rest of society.</blockquote>So <blockquote class="tr_bq">it is the danger America faces today, as the 1 percent pulls away from everyone else and pursues an economic, political and social agenda that will increase that gap even further — ultimately destroying the open system that made America rich and allowed its 1 percent to thrive in the first place.  </blockquote> Furthermore, <blockquote class="tr_bq">It is no accident that in America today the gap between the very rich and everyone else is wider than at any time since the Gilded Age. Now, as then, the titans are seeking an even greater political voice to match their economic power. Now, as then, the inevitable danger is that they will confuse their own self-interest with the common good. The irony of the political rise of the plutocrats is that, like Venice’s oligarchs, they threaten the system that created them.</blockquote>So it is not merely that overcompensating generic executives has likely been one of the major reasons our health care is so expensive, inaccessible, and mediocre.  The larger problem of overpaying under skilled executives threatens to destroy our whole society.  How cheerful Summary The way forward seems clear.  It is just blocked by the interests of the rich and powerful elite which our current foolish policies have created. In a health care context, leaders of organizations should only be those with clear knowledge of, experience in, and commitment to the values of health care.  Their compensation should be reasonable, and based on their ability to uphold these values first, with financial goals clearly second, and short-term financial goals probably not at all.  Pay should not be bench-marked to compensation of leaders of other organizations, especially not of vastly different kinds of organizations. Whether there is any chance of such changes happening while corporate boards of directors, and non-profit boards of trustees are dominated by executives of other organizations is doubtful.  Thus we also need to change the governance of for-profit health care corporations to clearly reflect the long-term interests of the stockholders, who will only prosper if in the long run their companies provide products and services that help patients at a fair price and with minimal risks.   Thus we further need to need to change the governance of health care non-profits to reflect the needs of patients, their communities and other key constituencies.  That should keep us all busy for a while.

More Reasons to Doubt How CEOs are Chosen and Paid

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15 Oct 2012

The Rise of the Corporate Physician, and the "Metastasis of Big Corporations"

Public discussion has raised more questions over the last few months about physicians taking care of patients as corporate employees.  More Physician Practices Taken over by Large Corporations This year, more stories have appeared about large corporations taking over physician practices.  In February, there was an account of efforts by competing nominally non-profit health insurance company Highmark and nominally non-profit hospital system UPMC in Pittsburgh in a "race to gobble up private physician practices," <a href="http://triblive.com/x/pittsburghtrib/news/health/s_783579.html#axzz28uYAnXKh">per the Pittsburgh Tribune-Review</a>.  In March, the Washington Post <a href="http://www.washingtonpost.com/national/health-science/doctors-in-private-practices-are-now-joining-hospital-staffs/2012/02/14/gIQAEFz07R_story.html">featured</a> a first-person account of what it is like for a physician in a private practice to try to hold out against the trend towards corporate practice.  In May, the Los Angeles Times<a href="http://articles.latimes.com/2012/may/22/business/la-fi-davita-healthcare-partners-20120522"> noted</a> how for-profit dialysis provider Da Vita purchased a large, but already for-profit operator of physician groups.  In October, Reuters <a href="http://www.reuters.com/article/2012/10/08/us-unitedhealth-takeover-amil-idUSBRE8970E120121008">reported</a> how the recently announced acquisition by giant for-profit insurance company UnitedHealth of the biggest Brazilian for-profit managed care company will result in UnitedHealth owning an operating a Brazilian network of hospitals and clinics. Concerns about Concentration of Market Power and Prices In an increasingly financialized country, the media has featured concerns that the trend towards corporate physician practice might result in increasing market power for a few large corporations, and hence increased prices.  For example, in August, Anna Wilde Matthews <a href="http://online.wsj.com/article/SB10000872396390443713704577601113671007448.html">reporting</a> for the Wall Street Journal, noted <blockquote class="tr_bq"> Hospitals say the acquisitions will make health care more efficient. But the phenomenon, in some cases, also is having another effect: higher prices.  As physicians are subsumed into hospital systems, they can get paid for services at the systems' rates, which are typically more generous than what insurers pay independent doctors. What's more, some services that physicians previously performed at independent facilities, such as imaging scans, may start to be billed as hospital outpatient procedures, sometimes more than doubling the cost.   The result is that the same service, even sometimes provided in the same location, can cost more once a practice signs on with a hospital. Major health insurers say a growing number of rate increases are tied to physician-practice acquisitions. </blockquote> As Ms Matthews also <a href="http://online.wsj.com/article/SB10000872396390444433504577649523985288422.html">reported</a> for the Wall Street Journal, state regulators are beginning to worry about acquisitions of doctors' practices by hospital systems may drive up prices. <blockquote class="tr_bq">California's attorney general has launched a broad investigation into whether growing consolidation among hospitals and doctor groups is pushing up the price of medical care, reflecting increasing scrutiny by antitrust regulators of medical-provider deals. </blockquote>Concerns about Care Quality Concerns about whether physicians who must practice under the command of corporate executives will be able to put patient care ahead of corporate interests are also appearing, but not yet as prominently. For example, Steve Twedt, writing for the Pittsburg Post-Gazette in September, <a href="http://www.post-gazette.com/stories/business/news/patients-may-suffer-as-doctors-switch-practices-health-systems-654855/">looked into </a>whether the multiple practice acquisitions by the area's two biggest ostensibly non-profit health care corporations might affect patient care.  He first noted "competition between Highmark and UPMC for doctors, and health care overhaul that is steering doctors into larger systems...."  Then he suggested that this has lead to marked discontinuities in patient care when physicians switch employment, <blockquote class="tr_bq">Out of the blue, people will learn their doctor has left a practice with little or no explanation, and without a forwarding address. When a physician effectively disappears, the cause usually is tied to the physician's employment contract, says a local health care attorney.</blockquote>These cases of apparently vanishing physicians may be due to the contracting practices of physician employers, particularly large health care corporations.  The lawyer Mr Twedt interviewed explained, <blockquote class="tr_bq">most physician contracts now contain clauses that prohibit doctors from soliciting patients if they leave a practice. While it's not always clear what constitutes 'solicitation,' it generally means departing physicians cannot contact their patients to invite or entice patients to follow them to their new location. They also cannot take their patient list with them, since that is property of the practice. 'I would imagine the doctor wouldn't contact them because he can't, or he doesn't have their address,' said Mr. Cassidy. Contracts also often require that doctors cannot practice medicine within 10 miles of the previous practice office, and sometimes the required distance is even greater. Nor can they give out information about the practice they're leaving. Violating these contract terms could mean a financial penalty, such as loss of severance pay.</blockquote><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;">Finally, and most troubling, cardiologist blogger Dr Melissa Walton-Shirley<a href="http://blogs.theheart.org/melissa-walton-shirley-blog/2012/9/16/will-everyone-be-anointed-with-the-oil-of-hospital-acquisition-god-help-us-all"> recounted</a> in some much more colorful language some consequences of cardiology practices which were acquired by large hospital systems.  She noted...</div><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"> </div><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;">Referral Decisions Influenced by Management Edicts, but Maybe Not Patients' Needs</div><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"> </div><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;">Physicians may be</div><blockquote class="tr_bq"><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;">sweating bullets over whether they are going to hit their benchmarks to retain their salaries. My anxious friends are now calling me for more referrals and more practice support.  They take any transfer I give them.... </div></blockquote>They may <blockquote class="tr_bq"> morph from human flesh into a Rubik's cube of relative value units (RVUs), the formula through which all future salaries and bonuses are calculated.</blockquote> Resulting Loss of Continuity <blockquote class="tr_bq">Independent cardiologists opened office doors to find their patients who were anticipating decisions on timing of defibrillators, caths, or medical therapy had undergone testing at other facilities. Those tests were interpreted by cardiologists who were in no way connected to their care, their referrals to unfamiliar testing venues now incentivized by hidden contractual microformulas. They were evaluated far away from the familiar eye of their long-time cardiologists. </blockquote> Summary Back in the day, most physicians who took direct care of patients did so out of practices they or other physicians ran and owned.  The majority of physicians who took care of physicians as employees worked for the military or the Veterans Administration, or took care of patients only part-time as faculty of medical schools.  In a country increasingly prodded by market fundamentalism, the last few years has seen a major change in health care:  more and more physicians are taking care of patients as employees of large corporations, more often for-profit.  I should add, though, that the recent push towards corporate practice was not just due to market fundamentalism, but also seems to in part be due to provisions of the recent attempt at US health care reform, the Affordable Care Act, which called for care by large organizations called accountable care organizations (ACOs).   However, like some other major changes in health care in the US over the last few years pushed by the increasing dominance of large corporations, this one happened without any rigorous assessments of whether the benefits for individual patients or public health would outweigh the harms, and justify the costs.  Justified by the realization, now mostly forgotten, that health care is nothing like an ideal free market (look <a href="http://hcrenewal.blogspot.com/2010/08/how-fallacy-of-perfect-health-care.html">here</a>), direct health care used to be almost entirely provided by health care professionals, often working in small, non-profit community hospital settings.  In fact, the American Medical Association used to condemn the corporate practice of medicine.  In addition, the corporate practice of medicine used to be illegal in many US states (look <a href="http://hcrenewal.blogspot.com/2009/06/why-did-us-physicians-give-up-their.html">here</a>). We have changed all that, without too much thought, and without any rigorous assessment.  Now it seems increasingly likely that these changes are just increasing health care costs, and probably will cause worsening patient care and will worsen patients' and the public's health.  As Dr Melissa Walton-Shirley wrote more vividly, <blockquote class="tr_bq">Monopolies never meant to be planted in gardens so small grew like bull thistles, literally overtaking all the good things that small community medicine had to offer. They are now barely recognizable small towns with the crabgrasslike metastasis of big corporations....</blockquote> Will there be time to rethink this headlong rush before our health care options are restricted to that provided by one of a few huge corporations?   True health care reform would reverse the trend to organize health care within ever larger, more bureaucratic, more monolithic, more dominant organizations.  Such reform is unlikely to happen until we see the nadir produced by the current bandwagon.

The Rise of the Corporate Physician, and the "Metastasis of Big Corporations"

Public discussion has raised more questions over the last few months about physicians taking care of patients as corporate employees. More Physician Practices Taken over by Large CorporationsThis year…

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10 Oct 2012

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