Monday, June 20, 2005

"We'll Manage It the Way We Damn Well Want"

Phoebe Putney Health System is a health care system in Georgia, which boasts of "world-class medicine, hometown commitment." Its stated core values include "people come first," and "relationships are built on honesty and integrity."
Pheobe Putney was the subject of federal lawsuits, now dismissed, and state lawsuits alleging that it over-charged uninsured patients. It is one of the hospital systems that is now subject of congressional investigations of the not-for-profit status of hospitals and health systems. (See news article here.)
Now, the Atlanta Journal-Constitution has reported that top Phoebe Putney executives have run up lavish travel expenses for trips related to a for-profit subsidy. Pheobe Putney set up Grove Pointe Indemnity, based in the Cayman Islands, to provide the system with malpractice insurance. Top Phoebe Putney executives traveled to the Caymans, the Bahamas, and London, UK for Grove Pointe meetings. All travel was by private jet or first class on commercial airliners. Travel expenses included Cuban cigars, ($258 worth for one meal in London meeting), expensive beverages ($538 for one meal), and high-end accomodations (e.g., rooms at the Ritz in London, at 355 pounds sterling a night).
The Journal-Constitution asked Phoebe Putney Chief Financial Officer (CFO) Kerry Loudermilk about these expenses. Loudermilk first said what is lavish "is in the eye of the beholder." He responded to further questions about Grove Pointe, "We own it. We'll manage it the way we damn well want." A search of the GuideStar site for Pheobe Putney's 2002 Internal Revenue Service form 990 revealed that Grove Pointe had an income just under $2.5 million, and a total loss of just over $1.25 million in that year. Meanwhile, Loudermilk's total compensation was just under $3oo,ooo. He was one of eight executives who made more than $200,ooo. Three made over $300,000, and the system's CEO made nearly $600,000.
It will be interesting to see what the congressional investigation discovers about Phoebe Putney. Meanwhile, Loudermilk's response suggests that maybe the hired managers of this not-for-profit health care system feel a bit more ownership of it than they are entitled to. Although Pheobe Putney clearly owns Grove Pointe Indemnity, the managers of a not-for-profit do not own the organization. They should be running the organization in accord with its mission to benefit the public, which may not necessarily be the way they "damn well want." It's not clear that this job entitles them to smoke Cuban cigars on the health system's budget.


Anonymous said...

Most people don't know that it is illegal for US citizens to smoke Cuban cigars even if they didn't purchase them. An indictment is never gonna happen, but it would certainly be sweet revenge for this kind of arrogance.

Anonymous said...

According to the local press, Phoebe is now refusing to allow an audit of these bills. They had their board members look at it and said there were no problems. The Medical Staff voted to ask for a forensic audit by independent auditors and Phoebe said no.
It sounds to me as if lavish spending may not be the only problem with the Cayman accounts. It makes me wonder if perhaps they use is as a slush fund. It would be fairly simple to dummy up invoices, have the Cayman accounts pay the bills. If no one is allowed to look at the invoices how will we ever know if they are cheating the public or not?
Let's just say that you have an attorney who sends invoices for services related to insurance claims but never actually worked on anything. The invoice is paid and the attorney and the management split the money. Who would know? It would be too easy.