Monday, August 23, 2010

Making a Community Health Agency into the Leaders' Private Sand-Box

As we predicted, it seems that the US Internal Revenue Service's (IRS) increased reporting requirements for not-for-profit organizations are leading to more examples of the coziness now prevalent among the top leaders of such organizations.  The latest entry in this new parade comes from a story in the Bradenton (Florida) Herald about a not-for-profit community health agency whose mission is to provide health care to the poor and disenfranchised:
Providing medical services to the indigent and uninsured in Manatee and Sarasota counties has financially benefitted some of Manatee County Rural Health Services Inc.’s officers, board members and their families, records show.

The nonprofit agency has paid nearly $2 million in recent years to businesses owned by board members, officers, employees or their relatives, according to tax documents obtained by the Bradenton Herald. And its chief executive officer, Walter “Mickey” Presha Sr., has long been the highest-paid CEO of any such agency in Florida: His salary last year was $433,000 — $140,000 more than that of his closest counterpart, records show.

The article listed multiple examples self-dealing by the top leaders of Rural Health Services.
According to tax returns filed since 2004, Rural Health has paid:

- $558,121 to John Lewis, a board member, for optometry services.

- $536,591 to The Pinnacle Group of West Coast Florida Inc. for construction, maintenance and repair work. One of its principals is Trina Presha-Rosier, Presha’s daughter.

- $344,766 to The Lawn Authority of Manatee County Inc. for lawn care maintenance at the agency’s facilities. Wardell Jackson, the agency’s vice president of support services, is a principal in the business.

- $387,673 to A to Z Complete Property Management Inc. for janitorial cleaning and maintenance services. It is owned by Chris Mullinex, the agency’s facilities director.

- $96,000 to R & L Healthcare Advisors, whose principals include Marc Lazarus, a board member, for consulting services.

- $44,242 to More Power Properties and Investments LLC, co-owned by board Chairman J. Garry Lowe, for storage of agency files and equipment and the purchase of a modular building.

Leaders of rural health offered mostly the usual explanations:

>>As long as we say it is not a conflict, it is not a conflict<<
According to a conflict of interest statement that board members are required to sign, Rural Health prohibits them, management and their families from having any 'beneficial interest or substantial obligation to' any entity engaged in business with the agency. But some have been able to bypass that prohibition because of this loophole: 'Unless it has been determined by the board, on the basis of full disclosure of facts, that such interest does not give rise to a conflict of interest.'

>>We, our relatives, and our firms are the best possible source of the services<<
Jackson, Mullinex and Presha-Rosier’s businesses won competitive bids, which are reviewed by a board committee and approved by the full board, Lazarus said. Presha said he is not involved in reviewing bids for construction projects that his daughter might seek.

The agency chose to do business with the three board members’ companies because of special circumstances, agency officials said.

Lewis is one of Manatee Rural Health’s founders and has overseen its optometry services since the beginning. Lowe offered the storage space for less than what commercial storage facilities charged, then sold one of the storage buildings to Manatee Rural Health for a reduced price. And Lazarus has 36 years’ experience in the health care field, including as an executive at Sarasota Memorial Hospital.

They were hired because they provide needed services at a lower cost, thus allowing the agency to spend more money on patient care, officials said.

>>Trust us, because we are wonderful people<<
'It’s always disclosed to the board, so we always have the opportunity to not do it,' said Juanine Lowery, a board member since 1984. 'It hasn’t been a problem. It’s always been competitive.'

And a slightly more coherent version of that:
'Everything’s checked out and vetted,' Lazarus said. 'The arrangements are as good as or better than what we could get on the open market.'

The explanation for the CEO's out-sized salary should come as no surprise. He got that high salary because

>>I am a wonderful CEO and I deserve it<<
Rural Health board members also defend Presha’s $433,000 salary, which makes him the highest-paid chief executive officer of any federally qualified community health center in Florida. His job performance, managerial skills and the organization’s complexity and size are all reasons he makes the top salary, board members say.

Of course, the CEO himself thinks he is a wonderful CEO and deserves it:
'I know what I do,' said Presha, who said he took a pay cut to take the Manatee Rural Health job in 1984 and has turned down job offers with higher salaries since then. 'If I could do it for free, I would do it for free. But I earn my keep.'

So here we have another case of the cozy leadership of a not-for-profit health care organization, who all think they are doing just a wonderful job, who never seem to question their own actions, and who all believe all their buddies are also doing just a wonderful job. So naturally, since they are all such wonderful people doing a wonderful job, we should not begrudge them a few dollars here and there.

Of course, if they were the leaders of a privately held company that made widgets, it would be their own money that they are spending, and maybe no on else should care.

Even if the amounts involved seem relatively small relative to some of the cases that appear on Health Care Renewal, we should care particularly about how the leaders of Manatee County Rural Health Care Services throw around money (to each other), because of the nature of the organization's mission, as described by CEO Presha himself:
MCRHS has served the poor and underserved in our communities with the mentality of a 'provider of choice.'

Our group is not only compassionate, but also innovative,....

It is truly unseemly for a not-for-profit community health care organization dedicated to serving "the poor and undeserved" lead by people so complacent about their own entitlement.

So to repeat what I have written before, in my humble opinion, this sort of coziness, this sort of fuzziness at the boundaries of institutional duties and personal interests, may be a fundamental reason that our current health care system has become so solicitous of the interests and prerogatives of its leaders, and so cold to the needs of patients and the values of professionals.

The need for more transparent, accountable leadership of health care who explicitly are subject to clear ethical rules was never more apparent.

Stay tuned as more and more cases like this appear....

1 comment:

Anonymous said...

This post highlights what I see as one of the major cost drivers in medicine: The disjointed nature of service delivery. Every state is made up of multiple counties and every county has a medical group. Even regional medical service providers may only cover three or four counties.

The math then becomes simple, multiple the amount of the excess by the number of counties by the number of states. Whoops! No matter what number you start with the end number is rather large. Add in hospitals and the number gets even larger.

A recent post on another blog covered the fully integrated medical services provided in Grand Junction, Colorado. A regular commentator was able to call a person involved and the system works in part because they were able to mitigate the financial interest of the hospital.

Unfortunately we are going to find very few situations where an administrator is going to put their financial interest behind the interest of the organization or the community they serve. This is the job of the board and when they themselves benefit from self dealing, there is no one left to control cost.

Steve Lucas