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What Happens When "We'll Manage it the Way We Damn Well Want"

Back in the early days of <a href="http://hcrenewal.blogspot.com/">Health Care Renewal</a> (2005, to be exact), we first <a href="http://hcrenewal.blogspot.com/2005/06/well-manage-it-way-we-damn-well-want.html">wrote</a> about some very strange actions by the management of Phoebe Putney Health System.  At first, we noted that the Phoebe Putney responded to a reporter's inquiry about lavish travel expenses pertaining to the system's Cayman Islands health insurance subsidiary by saying, "We own it. We'll manage it the way we damn well want." Then the story got far more convoluted.  In 2006, we <a href="http://hcrenewal.blogspot.com/2006/03/pheobe-putney-accuses-whistle-blowers.html">wrote</a> about the over the top response to anonymous faxes challenged hospital management's commitment to the institution's mission.  The system CEO compared the fax senders to "terrorists."  After the local district attorney handed over his investigative records to hospital system private investigators, the investigators allegedly threatened a local accountant whom they accused of sending the faxes.  Allegations that the district attorney received campaign funding from and may have had other financial ties to the hospital system surfaced.  The district attorney indicted the accountant and a physician colleague on charges of burglary and assault in the absence of any police report of such crimes.  We commented that regardless of the outcomes of the legal case, the hospital system's management's actions seemed at variance with its stated mission. Now, in 2010, the case is in the news again.  Since our last post, <a href="http://www.ajc.com/news/georgia-politics-elections/ag-candidate-in-federal-285004.html">according to the Atlanta Journal-Constitution</a>, the prosecution of the accountant, Mr Charles Rehberg, and physician, Dr John Bagnato, failed.  The district attorney, Ken Hodges, <blockquote>provided the information gathered through the subpoenas to Phoebe Putney, which the hospital system used to file a civil suit against Rehberg and Bagnato -- a suit that was ultimately dropped. Rehberg then countersued Phoebe Putney, and that case was settled out of court for an undisclosed sum. </blockquote>Meanwhile, more ties between Hodges and the Pheobe Putney system turned up: <blockquote>Hodges' decision to run for attorney general elevated the case from a localized matter to one of statewide import. While still a prosecutor in Albany, Hodges received political contributions from Phoebe Putney executives and individuals connected to the hospital system, and his wife was hired as public affairs manager at Phoebe Putney's hospital in Albany. Since leaving the prosecutor's office in Dougherty County, Hodges has gone to work for the Baudino Law Group, which represents Phoebe Putney. According to records Phoebe Putney must file with the Internal Revenue Service, the hospital system paid Baudino more than $8 million for the fiscal year ending July 31, 2008, the most recent data available. </blockquote> Now, it is Rehberg who is suing Hodges, for abuse of power. "Charles Rehberg's suuit essentially accuses him and another prosecutor of filing criminal chargest that they knew to be based on fabricated information." A preliminary hearing took place yesterday. So, in summary, two individuals sent anonymous faxes that charged that the Phoebe Putney system failed "to fulfill its charitable obligations as tax-exempt entity."  Hospital system executives accused them of terrorism, and hospital system investigators allegedly threatened them.  However, a criminal investigation by a district attorney with alleged financial ties to the hospital system ended without any convictions.  A lawsuit by the system against the individuals was dropped.  A suit by the indviduals against the hospital system was settled by the system.  A suit by the individuals charging that the then district attorney abused his power by basing criminal charges on false information is pending.  So what did the hospital system's management's actions in this case have to do with the system's <a href="http://www.phoebeputney.com/about/default2.asp?pageID=typ0Sfe6656LsOVshL">stated values</a>? - <blockquote>Phoebe pursues its mission through a patient-centered environment of care reflecting high standards and promoting a balance of professional preparation and service, continuous improvement and based on core values where: * PEOPLE come first, are treated with dignity and respect, and diversity of culture and thought is respected. * RELATIONSHIPS are built on honesty and integrity. * REPUTATION is built on trust and pride. </blockquote> In fact, the Phoebe Putney management's pursuit of Mr Rehberg and Dr Bagnato seems diametrically opposed to these values, intended to crush all criticism of management by any means. Once again, we see leaders of once-respected not-for-profit health care institutions whose main goal seems to be consolidating their power and thwarting criticism. I say again, to truly reform health care, our health care organizations must be lead by those who put the institutions' missions ahead of their self-interest, who manage according to the mission rather than "the way we damn well want."

What Happens When "We'll Manage it the Way We Damn Well Want"

Back in the early days of Health Care Renewal (2005, to be exact), we first wrote about some very strange actions by the management of Pho...

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Why The Apple iPad Will Not Revolutionize, Change the Game, Transform or Create New Paradigms in Medicine Anytime Soon

Why The Apple iPad Will Not Revolutionize, Change the Game, Transform or Create New Paradigms in Medicine Anytime Soon

The announcement of the Apple iPad has been accompanied by the usual irrationally exuberant, buzzword-laden statements and bellicose grandi...

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More California Medical Centers Plagued by Quality Problems While Their Executives Get Bonuses for "Improved Patient Care"

Earlier this week, we <a href="http://hcrenewal.blogspot.com/2010/01/uci-medical-center-fails-inspection-uci.html">noted</a> that while executives at one University of California medical center were getting large bonuses supposedly for "improved patient health," the hospital was being cited for serious health care quality deficiencies.  Now, more stories have appeared that raise questions about the rationale for the generous bonuses handed out to multiple top hospital executives at University of California hospitals.  University of California - San Diego First, in alphabetical order by city, the San Diego Union-Tribune <a href="http://www.signonsandiego.com/news/2010/jan/27/three-hospitals-fined-for-mistakes/">reported</a> on penalties for poor quality care announced by the California Department of Public Health: <blockquote>UCSD Medical Center in San Diego was fined $50,000.... The state said the hospital staff failed to follow its surgical policies and procedures, which resulted in a patient having to have a second surgery to remove a foreign object — a guide wire that was left in the patient when a central venous catheter was inserted into the patient’s right femoral vein in the groin area in January 2009. The wire migrated into a chamber of the patient’s heart. The procedure was done by a first-year intern and supervised by a third-year resident. This marks the third time the state has penalized UCSD, with the first penalty issued in May 2008 and the second in May 2009. </blockquote> However, a few days earlier, the Union-Tribune had <a href="http://www.signonsandiego.com/news/2010/jan/22/bonuses-uc-medical-center-execs-okd/">reported</a>: <blockquote>Despite criticism from union leaders and rank-and-file employees, University of California regents yesterday overwhelmingly approved $3.1 million in incentive payouts to 38 medical center executives. The payouts mean, for instance, that former UC San Diego Medical Center CEO Richard Liekweg will receive $136,174 in performance pay for the last fiscal year, added to his base of $660,500. Regents justified the payments by noting that incentive programs are common in the health care industry, and necessary to compete for top talent. 'It’s the way this industry works,' said Regent William De La Pena, an ophthalmologist and medical director of eye clinics throughout Southern California. At UCSD Medical Center, 10 senior managers will receive a combined $754,650 for surpassing goals set in areas ranging from improved patient safety to increased revenue. The bonuses amount to 14 to 23 percent added to executives’ salaries. </blockquote> University of California - San Francisco Meanwhile, the San Francisco Chronicle <a href="http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/01/27/BA1U1BOD7C.DTL">reported</a> that a major University of California - San Francisco teaching hospital was also cited by the state Department of Public Health for quality problems: <blockquote>San Francisco General was fined $25,000 for leaving a piece of surgical gauze in a patient who underwent an eight-hour operation for two types of cancer in September 2008. The foreign object was discovered about three months later and was removed without surgery during an office visit. </blockquote> The Chronicle also <a href="http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/01/27/BA1U1BOI6U.DTL&type=health">reported</a> a possibly major breach in the confidentiality of patient records at the UCSF Medical Center: <blockquote>Medical records for about 4,400 UCSF patients are at risk after thieves stole a laptop from a medical school employee in November, UCSF officials said Wednesday. The laptop, which was stolen on or about Nov. 30 from a plane as the employee was traveling, was found in Southern California on Jan. 8. There is no indication that unauthorized access to the files or the laptop actually took place, UCSF officials said, but patients' names, medical record numbers, ages and clinical information were potentially exposed. The security breach is UCSF's second in recent months. Last month, UCSF officials revealed that a faculty physician responding to an Internet 'phishing' scam potentially exposed the personal information of about 600 patients. </blockquote> However, despite these obvious quality problems, the San Francisco Business Times <a href="http://sanfrancisco.bizjournals.com/sanfrancisco/stories/2010/01/18/daily68.html">reported</a> <blockquote>University of California regents approved $500,000 in bonuses to six top officials at the UC San Francisco Medical Center, part of a package of $3.1 million in payments to 38 hospital executives across the UC system. In an interview last week with UCSF Chancellor Susan Desmond-Hellman, she said that the executive bonuses were tied to meeting specific performance goals, such as reducing clinical infections and increasing satisfaction ratings by patients. She also pointed out that additional payments of $14.3 million to the UCSF Medical Center’s 6,600-strong workforce were approved earlier. The UCSF officials awarded bonuses were: * Mark Laret, chief executive officer, $181,227; * Ken Jones, chief financial officer, interim chief operating officer, $89,162; * Larry Lotenero, chief information officer, $66,045; * John Harris, chief strategy and business development officer, $63,196; * Susan Moore, finance director and interim chief financial officer, $53,261; and * Sheila Antrum, chief nursing/patient care services officer, $49,280. </blockquote> Summary So, in summary, multiple executives at three major University of California medical centers received generous bonuses.  The rationale for these bonuses, given out at a time when the university system was under major financial constraints, was that they were incentives for exemplary performance and patient care.  Yet almost simultaneous with announcement of the bonuses were news reports indicating serious patient care problems at the same medical centers.  The point I am NOT trying to make is that the care at any of these medical centers is bad.  The examples of quality problems were limited.  I am sure that many other major medical centers hae had such quality problems as well.  However, the cases cited above were sufficient to argue that the care at these medical centers was not outstanding, not exemplary.  Yet, the bonuses were awarded not for acceptable performance or average quality.  Their rationale was exceptional performance and quality.  Thus, the rationale for the performance bonuses seems at best naive, if not foolish.  I would suggest, instead, that the sorts of bonuses given out at the University of California are a product of the current management culture that has been infused into nearly every health care organization in the US.  That culture holds that managers are different from you and me.  They are entitled to a special share of other people's money.  Because of their innate and self-evident brilliance, they are entitled to become rich.  This entitlement exists even when the economy, or the financial performance of the specific organization prevents other people from making any economic progress.  This entitlement exists even if those other poeple actually do the work, and ultimately provide the money that sustains the organization.  Although the executives of not-for-profit health care organizations generally make far less than executives of for-profit health care corporations, collectively, hired managers of even not-for-profit health care organizations have become richer and richer at a time when most Americans, including many health professionals, and most primary care physicians, have seen their incomes stagnate or fall.  They are less and less restrainted by passive, if not crony boards, and more and more unaccountable.  In a kind of multi-centric coup d'etat of the hired managers, they have become our new de facto aristocracy.  Or as we wrote in our previous post, executive compensation in health care seems best <a href="http://hcrenewal.blogspot.com/2009/12/compensation-madness-insiders-hijacking.html">described as Prof Mintzberg</a> described compensation for finance CEOs, "All this compensation madness is not about markets or talents or incentives, but rather about insiders hijacking established institutions for their personal benefit." As it did in finance, compensation madness is likely to keep the health care bubble inflating until it bursts, with the expected adverse consequences. Meanwhile, I say again, if health care reformers really care about improving access and controlling costs, they will have to have the courage to confront the powerful and self-interested leaders who benefit so well from their previously mission-driven organizations.  It is time to reverse the coup d'etat of the hired managers.

More California Medical Centers Plagued by Quality Problems While Their Executives Get Bonuses for "Improved Patient Care"

Earlier this week, we noted that while executives at one University of California medical center were getting large bonuses supposedly for ...

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Drowning our Sorrows in Ketchup: Novartis Settles, Appoints Former Heinz Executive CEO

Here's the latest corporate health care marcher in the legal settlement parade, as <a href="http://online.wsj.com/article/SB10001424052748703906204575026963160833710.html">reported in the Wall Street Journal</a>. <blockquote>Swiss drug giant Novartis AG said its U.S. subsidiary struck a plea agreement with U.S. investigators to resolve criminal allegations regarding the company's promotion of the epilepsy drug Trileptal, and agreed to pay a $185 million fine. Federal investigators have been carrying out civil and criminal investigations of Novartis' marketing of the drug, including allegations that it promoted the drug for uses for which it is not approved by the Food and Drug Administration, an illegal practice known as 'off-label' marketing, Novartis said in a statement Tuesday as it announced fourth-quarter results. To resolve criminal allegations, Novartis said it agreed to plead guilty to a violation of the U.S. Food, Drug and Cosmetic Act, and to pay a fine of $185 million.</blockquote> It has become a drearily familiar ritual. We have now <a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements">discussed</a> numerous instances of large health care corporations pleading guilty to criminal charges and/or settling civil allegations of unethical behavior.  In the current case, like nearly all the others, the corporation will pay what seems to be a huge fine.  However, the amount is a pittance compared to the corporation's revenue, and is likely to be viewed as only a small cost of doing a very lucrative business by corporate executives.  In very few cases does any individual suffer any negative consequence for approving, ordering or implementing the unethical behavior.  Thus, I would argue that these cases remind us how unethical the health care "business" has become, but the way they have been resolved will fail to deter future bad behavior.  A large fine's impact can be spread among share-holders, employees, and clients/ customers/ patients, and hence poses no threat to executives planning the next bit of unethical behavior.  In fact, the most notable aspect of the current case is that the corporation involved in not run out of the US, but rather out of Switzerland, showing that this pattern is not exclusively an American one. There is an interesting juxtaposition to this case, however.  At the same time this settlement was announced, Novartis <a href="http://blogs.wsj.com/health/2010/01/26/new-novartis-ceo-cafepharma-reader-former-heinz-exec/">disclosed</a> its new CEO.  A Wall Street Journal <a href="http://online.wsj.com/article/SB10001424052748703906204575027083891374688.html">commentary</a> opined, that the " New Novartis Chief Needs Surgery Skills."  Ironically, the new CEO is hardly a surgeon.  <a href="http://www.novartis.com/downloads/newsroom/corporate-press-kit/7j_CV_Joe_Jimenez_EN.pdf">Here</a> is a summary of his background. <blockquote>Mr. Jimenez began his career in the United States at The Clorox Company, and later served as president of two operating divisions at ConAgra. In 1998, he joined the H.J. Heinz Company, and was named President and Chief Executive Officer of the North America business. From 2002 to 2006, he served as President and Chief Executive Officer of Heinz in Europe. Before joining Novartis, he was a NonExecutive Director of Astra-Zeneca plc, United Kingdom, from 2002 to 2007; and was an advisor for the private equity organization Blackstone Group, United States. Mr. Jimenez joined Novartis in April 2007 as Head of the Consumer Health Division and was appointed to his present position in October 2007. Mr. Jimenez graduated with a bachelor’s degree from Stanford University in 1982 and with an M.B.A. from the University of California, Berkeley, in 1984.</blockquote> I would guess that all that expertise marketing ketchup will come in handly preventing the need for more settlements of illegal marketing practices.  Seriously, we have <a href="http://hcrenewal.blogspot.com/2009/12/on-automobile-and-health-care-companies.html">discussed</a> the logic and evidence behind the assertion that health care corporations ought to be run by people with relevant experience and values.  We wish Mr Jimenez well, but hope that he realizes that if he is to prevent future events that could throw his company into disrepute, he ought to lean heavily on people who understand medicine and biomedical science, and who support physicians' core values. More broadly, I again suggest that real US health care reform would need to deal with both these issues.  We need to have rigorous regulation of health care organizations that has the power to deter unethical behavior that may risk patients' health.  We need to have leaders of health care organizations who actually understand health care and share its values.  Two hat tips to the PharmaGossip blog (<a href="http://pharmagossip.blogspot.com/2010/01/meet-joe-jimenez-new-ceo-at-novartis.html">here</a> and <a href="http://pharmagossip.blogspot.com/2010/01/novartis-says-us-unit-to-pay-fine.html">here</a>).

Drowning our Sorrows in Ketchup: Novartis Settles, Appoints Former Heinz Executive CEO

Here's the latest corporate health care marcher in the legal settlement parade, as reported in the Wall Street Journal . Swiss drug gian...

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As Records Go Digital, Cultures Clash, Bringing to Life Secrets the Health IT Companies Don't Want You to Know

<div style="text-align: justify;">Yes, as records go digital, cultures clash: the culture of medicine, and the culture of the Barbary pirates. The following story perhaps brings to life much of the advice from a candid HIT vendor (who happens to also be a physician) in my post "<a href="http://www.ischool.drexel.edu/faculty/ssilverstein/failurecases/?loc=cases&sloc=secrets">10 Secrets the EHR Companies Don't Want You to Know</a>": <blockquote><a style="font-weight: bold;" href="http://www.healthnewsflorida.org/index.cfm/go/public.articleView/article/15794">As Records Go Digital, Cultures Clash</a> By Sammy Mack, Health News Florida Jan 22, 2010 A group of Broward County doctors looking to switch to electronic medical records say the result has been a massive headache: surprise charges, inadequate training and even blocked access to patient files. ... Experts say a culture clash between mid-career physicians and tech-savvy software vendors can translate into mismatched expectations. They tell the buyer to beware. And with federal incentives now in play, they say there is bound to be further conflict. “I get upset just talking about it,” said Dr. Arleen Richards, a Plantation physician and one of the doctors who signed a contract with Castranova. [An IT supplier - ed.] "When you look back in retrospect, you’re like, ‘how did this happen?’"</blockquote> Physicians are too trusting of IT salespeople, that's how. I recommend considering an IT purchase as you would consider purchasing a used car. <blockquote>Richards says Castranova promised a cheap, easy piece of software that would increase efficiency in filing insurance claims. The price tag: $10,000 plus the cost of some new computers. ... After signing up, Richards learned she would have to pay a $2,500 licensing fee for each provider in her office, to qualify for the stimulus funds. In addition, she said Castranova hit her with almost $15,000 in charges to install new computers--charges she didn't authorize. [cf. Secret #5: Determining how much a specific EHR costs is going to be difficult, and you are going to be nickel-and-dimed every step of the way! - ed.] </blockquote> $10,000 for the software, plus previously undisclosed per-user licensing fees and $15,000 to install what are probably commodity computers available at Newegg for a few hundred dollars? If true, the term for this "gotcha" is: ripoff. <blockquote>Castranova said he doesn’t understand how she could think the computer charges were unauthorized. After all, he said, someone had to let him into her office to install the machines. </blockquote> A contract that clearly specifies such "materials and labor costs" is the standard when, say, a plumber fixes your toilet. This is especially true when those costs exceed the cost of the product itself, the software. These IT added costs should always be presented to clients up-front, above board, in writing and in a manner that could not cause misconceptions or buyer's remorse. If this did not occur here, then that is a problem. <blockquote>Another of the doctors in a tiff with Castranova, Fort Lauderdale internist Paul Preste claims Castranova didn't provide adequate training after installing the electronic records system. Preste's office manager, Donna Golden, said there was a day-long training and that Castranova’s employees came to the office on a number of occasions, but she noted some practitioners had to start from scratch after decades of paper records.</blockquote> One day of training on a complex information system? That is a joke. <blockquote>In another complaint against Castranova, Dr. Linda Kaplan said she too was surprised by charges on her invoice. When they first met, Castranova recognized her as a former medical editor at the local NBC television affiliate. She said he offered to waive her software and training fees if she would endorse the product [cf. Secret #3: Even that EHR-using physician you've been referred to may have been paid off! -ed.] Kaplan agreed, but she said she was unimpressed with the system once it was installed in her Hallandale Beach office. She was reluctant to drum up business when she wasn't a satisfied customer. Kaplan said Castranova was displeased with her lackluster endorsement and locked her out of some 600 patient records on his server. He billed for the software system anyway. [cf. Secret #6: Your patient data will be a bargaining chip to prevent you from leaving an EHR company! - ed.] </blockquote> </div><div style="text-align: center;"><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgkkwlG8x41-1_Q97iOZjDPOaNUINunJLrXCtL9GdpLt9OoRxMcwI-EJ1kX1KAUOp0tQMCJ06cISJMrzcui-YIvOUKqzEkqsD5-ufzOMvV5_U2L190VjOwcjpJ0mLtRMd2VK8gMYRU3jCEM/s1600-h/barbary.jpg"><img alt="" border="0" id="BLOGGER_PHOTO_ID_5430782036562852914" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgkkwlG8x41-1_Q97iOZjDPOaNUINunJLrXCtL9GdpLt9OoRxMcwI-EJ1kX1KAUOp0tQMCJ06cISJMrzcui-YIvOUKqzEkqsD5-ufzOMvV5_U2L190VjOwcjpJ0mLtRMd2VK8gMYRU3jCEM/s320/barbary.jpg" style="display: block; margin: 0px auto 10px; text-align: center; cursor: pointer; width: 163px; height: 240px;" /></a>"We are holding your patient information hostage. Pay up." </div><div style="text-align: justify;"> I sincerely hope for this vendor's sake that none of those 600 patients suffers an adverse outcome during the "records blackout." This information is not exactly chopped liver. Here is perhaps the most concerning statement in the article: No agency tracks electronic medical records disputes, but experts said feuds like these are not uncommon ... Linda McMullen of the Florida Medical Association said she's starting to hear similar stories of spats between doctors and software vendors. As the government pushes health IT on to unwary physicians, physicians need to educate themselves on the wiles of the IT profession ... fast. (HC Renewal and my <a href="http://www.ischool.drexel.edu/faculty/ssilverstein/medinfo.htm">academic site</a> on HIT dysfunction are two examples of where to start.) Advice in the article: <blockquote>Maxwell, the software consultant, said doctors can avoid some of the grief by thoroughly researching their options before buying an electronic records system. She encouraged medical offices to shop around and set a five-year budget that includes the cost of scrapping a system if it doesn't work out. Draw up an exit strategy for retrieving data if something goes wrong, she counseled. And get expert help reviewing contracts. [I note that data migration is never cheap, and never easy - ed.] "The people that have had problems just went out and bought one (electronic medical records system)," she said, as opposed to researching the software and the company behind it.</blockquote> Fine advice. However, this reality belays the arguments about health IT being a deterministic convenience, saving money and improving efficiency. IT is often a headache and a <a href="http://en.wikipedia.org/wiki/The_Money_Pit">money pit</a> in and of itself. Physician buyer beware, indeed. -- SS Addendum Jan. 31: Also see <a href="http://hcrenewal.blogspot.com/2010/01/as-records-go-digital-cultures-clash_31.html">my comments on a Huffington Post Investigative Fund story</a> about physician HIT buyer's remorse. </div>

As Records Go Digital, Cultures Clash, Bringing to Life Secrets the Health IT Companies Don't Want You to Know

Yes, as records go digital, cultures clash: the culture of medicine, and the culture of the Barbary pirates. The following story perhaps br...

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UCI Medical Center Fails Inspection, UCI Executives Get Bonuses

Back in the early days of Health Care Renewal, we had many occasions to write about problems with the leadership of the University of California - Irvine (UCI) medical school.  Starting in late 2005, we posted  about various management problems at the institution, involving its liver transplant service, cardiology division, and bone marrow transplant service, (see posts <a href="http://hcrenewal.blogspot.com/2005/12/more-trouble-in-oc-golden-parachutes.html">here</a> and <a href="http://hcrenewal.blogspot.com/2006/01/even-more-trouble-in-oc-uci-bone.html">here</a>) which lead the new chancellor of the campus to "acknowledge a failure of leadership and accountability" (see post <a href="http://hcrenewal.blogspot.com/2006/04/some-themes-emerge-from-problems-at.html">here</a>.) Slightly more recently, we noted the almost 20 year history of questionable financial relationships that involved one of UCI's "biggest stars" in clinical researach and several pharmaceutical companies (see post <a href="http://hcrenewal.blogspot.com/2006/08/yet-more-trouble-in-oc-psychiatrist.html">here</a>).  Then, in 2007, we wrote about some strange contracting practices involving UCI and a local orthopedic practice (see post <a href="http://hcrenewal.blogspot.com/2007/03/strange-contracting-at-uci.html">here</a>). So it was deja vu all over again when last week the Los Angeles Times <a href="http://www.latimes.com/news/local/la-me-uci22-2010jan22,0,4604550.story">reported</a> about the latest batch of problems at UC Irvine Medical Center: <blockquote>Federal investigators found scores of problems at UC Irvine Medical Center during a fall inspection that again put the troubled hospital's Medicare funding at risk, according to report released Thursday. In an 85-page report on their surprise October inspection, regulators said they observed poor oversight and mistakes by UCI doctors, nurses and pharmacists, leading to inadequate care that in some cases harmed patients. Among the findings: * An 82-year-old man was mistakenly given a narcotic patch by a medical resident, without approval of doctors or pharmacists. The patch led to an overdose that required emergency intervention and may have contributed to his death a week later. * A patient in the neuropsychiatric unit fell twice in three days and despite yelling 'Help me, doctor, help me,' suffered a head injury and had to be taken to intensive care. * An on-call resident did not respond to repeated emergency pages from nurses in the neurological intensive care unit, where a patient with an irregular heartbeat languished for more than an hour. * Pharmacists failed to monitor and store drugs correctly, allowing nurses to carry narcotics in their pockets and inject patients without proper oversight. The report comes a year after investigators from the Centers for Medicare and Medicaid Services documented repeated examples of poor oversight at the hospital and threatened to cut Medicare funding. In July, Medicare officials issued a finding of immediate jeopardy after investigators discovered that five UCI patients had received overdoses because nurses using pain medication pumps were not properly trained. UCI officials immediately began training nurses to use the pumps, the finding was lifted within 24 hours and the hospital submitted a plan of correction. </blockquote>However, the 2010 continuation of the sad tale of UCI adds an interesting contrast. <blockquote>UCI nurses said Thursday that many of the latest problems stem from understaffing and other cost-cutting, even as the facility turned a $54.2-million profit last year and the chief executive earned an $83,250 bonus. 'This is a problem of money. To provide extra training, extra staffing, is money,' said Beth Kean, California Nursing Assn. director for UC nurses, including 1,000 at UCI. Terry A. Belmont, who took over as the hospital's chief executive last year, disputed that the facility was understaffed. </blockquote>The new wrinkle in the UCI saga seems to be that now the leadership of UCI has been raking in bonuses while the mismanagement of the organization apparently continues. Indeed, also last week several California newspapers reported on a series of bonuses granted to the top executives of the University of California system.  For example, <a href="http://www.latimes.com/news/local/la-me-uc22-2010jan22,0,487236.story">per the Los Angeles Times</a>, <blockquote>The University of California regents Thursday approved the controversial payment of $3.1 million in performance bonuses to 38 senior executives at UC's five medical centers. The regents emphasized that the payments were linked to improved patient health and stronger hospital finances and said they were important tools to attract and retain talent. They said the bonuses were part of a 16-year-old plan funded by hospital revenue, not state funds or student fees. An additional $33.7 million is distributed among 22,000 lower-ranking medical employees. However, union activists denounced the executive bonuses as unconscionable as other parts of the university were coping with pay cuts and layoffs. 'This is appalling to do this when they are telling the lowest-paid workers to stay in poverty,' said Lakesha Harrison, president of the American Federation of State, County and Municipal Employees Local 3299, which represents about 20,000 UC workers, including hospital technicians and campus custodians. Some of the union's members get bonuses of about $300 a year, Harrison said. In contrast, the payments to the 38 senior managers range from about $30,100 to nearly $219,000. The incentives were awarded after the UC medical center system met such targets as reducing catheter-related infections and saving money through group purchases of supplies, officials said. Among the payments approved Thursday by the regents in San Francisco were $218,728 to UCLA Medical Center Chief Executive David Feinberg, on top of his $739,695 base salary; $181,227 to UC San Francisco medical center Chief Executive Mark Laret, on top of $739,700 in pay; and $87,000, in addition to his $580,000 salary, for John Stobo, the UC system's senior vice president for health sciences. </blockquote>Corroborating the assertion that the bonus plan is not new is a <a href="http://www.universityofcalifornia.edu/news/compensation/payroll2008/table3.pdf">document</a> that lists executive compensation at the University of California in 2008. (2009 data does not yet seem to be available on the web.) This document noted the following bonuses paid to University of California - Irvine medical leaders in 2008: - Susan J Rayburn, Executive Director of Clinical Enterprise - Base Salary= $212,700, Bonus=$28,401 - Lisa M Reiser, Chief Patient Care Services Officer - $243,000, $26,507 - Eugene Spiritus, Chief Medical Officer - $310,000, $38,373 - Patricia D Thatcher, Executive Director - HR and Customer Service, Medical Center - $197,547, $17,542 - Cynthia A Winner, Chief Ambulatory Care Officer - $238,200, $24,371 - Maureen L Zehntner, Associate Vice Chancellor/ Chief Executive Officer, Medical Center - $555,000, $74,432 Note that Dr Spiritus, the Chief Medical Officer, did not mention that he was a 2008 bonus recipient when he defended bonuses given to UCI leaders in the LA Times article, <blockquote>'Everybody's fallible. We just have to make sure we have the right processes in place' to catch errors, said Dr. Eugene Spiritus, UCI Medical Center's chief medical officer. Spiritus also defended the compensation for hospital managers, saying they need to stay competitive in order to attract and keep talented managers, especially given the cost of living in California. </blockquote> F Scott Fitzgerald wrote, "the very rich are different from you and me."  These days, it is executives and managers who are very different from you and me.  Physicians are beginning to dread the notion of "pay for performance," which may mean tiny increases in fees paid to physicians who uncritically follow wooden-headed guidelines based on over-simplified notions of disease, poor measurement schemes, and manipulated and suppressed clinical data.  However, for health care organization executives, "pay for performance" seems to mean lavish bonuses only tenuously related to any rational notion of performance.  In the example above, it seems that multiple UCI executives earned bonuses for their management of clinical affairs at the medical center in 2008, and at least the medical center CEO earned a bonus in 2009 for "improved patient health" while outside review of the medical center's performance in 2009 revealed "scores of problems" sufficient to threaten withdrawal of Medicare funding.  One wonders about the basis for all the millions in bonuses that have been paid to University of California executives over the years? In fact, the executive "pay for performance" programs that started in the for-profit corporate world, and now are prevalent in not-for-profit health care organizations, seem to reflect the culture of executive entitlement now so prevalent in the US (and maybe most developed countries.)  First, executives claim credit for any improvements in their organizations, while the workers in the trenches who actually accomplished the improvements get chump change.  Second, when things go wrong, the workers face salary cuts and lay-offs, while the executives' total compensation never seems to go down.  As we <a href="http://hcrenewal.blogspot.com/2009/12/98-million-dollar-man.html">mentioned before</a>, executive compensation in health care seems best described <a href="http://hcrenewal.blogspot.com/2009/12/compensation-madness-insiders-hijacking.html">as Prof Mintzberg described compensation</a> for finance CEOs, "All this compensation madness is not about markets or talents or incentives, but rather about insiders hijacking established institutions for their personal benefit." As it did in finance, compensation madness is likely to keep the health care bubble inflating until it bursts, with the expected adverse consequences. Meanwhile, I say again, if health care reformers really care about improving access and controlling costs, they will have to have the courage to confront the powerful and self-interested leaders who benefit so well from their previously mission-driven organizations.

UCI Medical Center Fails Inspection, UCI Executives Get Bonuses

Back in the early days of Health Care Renewal, we had many occasions to write about problems with the leadership of the University of Califo...

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The Price is What?

Many in the US believe that a free market in health care is a good idea.  Some actually assert that the US health care system amounts to a free market.  More evidence against that assertion was provided this week by an <a href="http://www.projo.com/health/content/HOSPITAL_PAYMENTS_01-20-10_8BH60G0_v16.3a66162.html">article</a> in our local paper, the Providence Journal, by Felice Freyer. For the first time ever, the Rhode Island state health insurance commissioner published a report comparing what insurers pay different hospitals for the same services: <blockquote>If you had surgery at Kent Hospital, your insurer would pay Kent significantly more than if you had the exact same procedure at South County Hospital –– even if the same doctor did the work. On average, Kent is getting paid nearly twice as much as South County for inpatient care, according to a new report from the health insurance commissioner that is causing a stir across the state’s health-care industry. It is well-known that hospitals get paid different amounts for the same services. But the report, for the first time, reveals the winners and losers, and quantifies the disparities –– with numbers showing the differences to be greater than many people thought. The factor determining which hospitals are paid the highest rates, according to the report, is whether the hospital is part of a group. Such hospital systems have the clout to negotiate higher prices than independent hospitals. 'We’ve never had this kind of data [before],' said Christopher F. Koller, state health insurance commissioner. 'The results and analysis show that higher payments to hospitals are associated with system affiliation, and the current contracting method does not appear to encourage the fair treatment of providers.' There is no evidence connecting higher pay to higher quality, he said. </blockquote> What is striking is the reason why such a comparison has never appeared up to now: <blockquote>Koller’s report shines a flashlight beam into the murky world of hospital finance. Hospitals negotiate privately with insurers to establish how much they will be paid for each service. These talks are largely unregulated, and always private, so that no hospital knows exactly what its neighbor is being paid. All are forbidden by contract to reveal their rates. Koller collected data from Blue Cross & Blue Shield of Rhode Island and UnitedHealthcare of New England concerning payments to 11 acute-care hospitals in 2008. He is the first public official to obtain this confidential information, saying he was entitled to it because a 2004 law requires him to promote the affordability of health care and ensure the fair treatment of providers. </blockquote> Thus, the prices of commonly used medical services provided by hospitals were largely secret. On obvious requirement for the function of a free market is price transparency. When making a purchasing decision, one needs to know what prices different sellers charge. In a recent <a href="http://online.wsj.com/article/SB10001424052748703652104574652242436408008.html">commentary</a> in the Wall Street Journal, Alan S Blinder, a Princeton economics professor, and former Vice Chairman of the Federal Reserve Board, described the basic requirements of a free market: <blockquote>When economists first heard [movie character Gordon] Gekko's now-famous dictum, 'Greed is good,' they thought it a crude expression of Adam Smith's 'Invisible Hand' — which is one of history's great ideas. But in Smith's vision, greed is socially beneficial only when properly harnessed and channeled. The necessary conditions include, among other things: appropriate incentives (for risk taking, etc.), effective competition, safeguards against exploitation of what economists call 'asymmetric information' (as when a deceitful seller unloads junk on an unsuspecting buyer), regulators to enforce the rules and keep participants honest, and—when relevant—protection of taxpayers against pilferage or malfeasance by others. When these conditions fail to hold, greed is not good. </blockquote> Clearly, one cannot have appropriate incentives when prices are secret. Secret prices are also a glaring example of "asymmetric information." (Hospitals know what different insurance companies pay them for specific services, but not what the companies pay other hospitals for those services. Insurance companies know what they pay to different hospitals for the same services, but not what other companies pay. Patients, physicians, policy-makers and the public heretofore had no idea what any hospital was paid by any insurance company.) The question begged is why neither hospitals nor health insurance companies wanted to make the prices public. One wonders if it were fears of looking incompetent (by paying to much, or charging to little), or worse, of revealing collusion. One also wonders if it were fears of revealing how anti-competitive is the current way of doing business.  At the time of data collection, Rhode Island had only two health insurers.  As noted above, large hospital networks got the highest prices.  Price differences did not obviously relate to quality of care, or costs of teaching programs.  Note that we previously <a href="http://hcrenewal.blogspot.com/2009/01/scorpions-in-bottle-shook-hands-secret.html">discussed</a> secret agreements between a dominant health care insurance company and the largest hospital system in our northern neighbor, Massachusetts, and how these agreements resulted in payments to that system far greater than those paid to any other hospital.  I suspect that secret deals resulting in wide pricing discrepancies are the rule, rather than the exception in the US, and that such deals overwhelmingly favor the largest organizations, but not the best care.  As we have been saying repeatedly since we started <a href="http://hcrenewal.blogspot.com/">Health Care Renewal</a>, the leadership of the large organizations that now dominate health care lacks accountability and transparency, and often fails to exhibit integrity and honesty.  Deliberately concealing price information obviously is an example of failing to be accountable and transparent.  Now that the events have conspired to slow the US health care reform juggernaut, maybe we can reconsider whether meaningful health care reform can be accomplished without improving accountability, integrity, transparency and honesty of health care oganizations and their leaders.

The Price is What?

Many in the US believe that a free market in health care is a good idea. Some actually assert that the US health care system amounts to a f...

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