Defending Millionaire Hospital CEOs
So it should be no surprise that the defenders of rich hospital CEOs are starting to rally. The Baltimore Sun published two letters defending the million dollar plus compensation received by many local hospital CEOs. But what arguments they made.
First, let us examine in detail the arguments made by Carmela Coyle, "president and CEO of the Maryland Hospital Association." She opened with this description of hospitals as organizations:
Famed management expert Peter Drucker said that health care is the most difficult, chaotic, and complex industry to manage today, and that the hospital is "altogether the most complex human organization ever devised."
Indeed, hospitals are not your typical business. Hospitals are places where lives are saved. They ease pain and suffering. Hospitals are open every minute of every day, driven by a mission of caring and rooted in their communities. Hospitals do not close up and move on when economic times get tough. This requires extraordinary dedication, commitment, talent, and leadership. And hospitals are governed by trustees--independent leaders from the communities hospitals serve.
She then briefly described her version of how hospital CEO compensation is set:
The compensation for hospital executives is determined by those boards and compensation committees who follow nationally recommended practices for setting contract terms, evaluating CEO performance, reviewing salary comparability data, setting and approving compensation, and ensuring the process is free from conflict of interest.
Then she provided this extraordinary description of what hospital CEOs do:
Perhaps the more important look is at what these hospital leaders do day in and day out for Marylanders:.
•Provide more than 88,000 Maryland jobs; most hospitals are the largest employers in their communities and they employ your friends and neighbors;
•Make health care available 24 hours a day, every day of the year, regardless of a recession, blizzards, physician and nurse shortages, or other obstacles;
•Bring you the latest technology and facilities so you, your family, and your neighbors can get the care they need, when they need it;
•Manage the uncertainties and vast change that health care reform will bring;
•Preserve your local hospital as the cornerstone of care in your community.
Hospitals are unique places, and it takes unique people to run them. Maryland is fortunate to have such leaders.
"Famed management expert Peter Drucker said...." - Appeal to Authority
Mr Drucker may be a management expert, but what expertise does he have in health care, medicine, or the health care environment? I actually agree that the hospital environment is "difficult, chaotic, and complex" in many senses, but would assert that it is the health care professionals in hospitals (doctors, nurses, other clinicians, therapists, technicians, etc) who are most expert at and primarily tasked with responding to these complexities (see below). I submit that the opening citation of Drucker is an example of an appeal to authority (chosen not because of his specific expertise in the relevant context.)
"Hospitals are places where lives are saved...." - Appeal to Emotion
Of course they are, and the general description of the hospital is true. However, who is it who (rarely) save lives, (hopefully often) relieve pain and suffering, and provide continuous service "every minute of every day?"
It is, glaringly obviously, the health care professionals listed above, admittedly assisted by a variety of staff who keep the lights on, make the food, clean the operating rooms, etc, etc. The most removed from the actual clinical care are the managers. The higher the managers are in the food chain, the less likely they are to have any contact with actual clinical care. I submit that most CEOs deal mainly with C-level officers and vice presidents, and interact mainly with them, spread sheets, PowerPoints, and emails. Given that hospitals do al these wonderful things, should not the support, credit, and frankly, pay go to those who actually do wonderful things, not sit in meetings and play with spread sheets?
I believe that this wonderful description of the hospital mission is mainly an appeal to emotion, designed to generate warm and fuzzy opinions about hospitals that make paying their detached top managers much more than the people who actually provide patient care more emotionally, but not logically palatable.
"And hospitals are governed by trustees...."
"The compensation for hospital executives is determined by those boards...."
- Begging the Questions and an Appeal to Common Practice
The description of how CEO pay is set merely describes a process, but does not explain why this process is likely to come up with the right result. It begs questions about hospital leadership and governance that we have discussed often, including whether boards populated by people with little understanding of health care, sometimes including leaders of financial firms who helped usher in the great recession, and sometimes including individuals with obvious conflicts of interest are likely to make decisions about executive compensation that ultimately support the hospitals' missions. It begs questions about the standards to which executive pay is compared, especially the phenomenon that all executives are above average (see this post). The implication that because a process is in place that follows the usual practice, the outcome must be good amounts to an appeal to common practice.
"what these hospital leaders do day in and day out...." -Appeal to Emotion and the Questionable Cause Fallacy
In one sense, this is just a more extreme version of the appeal to emotion used above. Furthermore, the bullet points are really about what hospitals and their health care professionals and support staff, not what their leaders do. It is the hospitals as organizations that provide jobs. It is the professionals and support staff who make the health care available every hour of every day. (Have you ever seen the CEO of a hospital caring for an acute patient at 2 AM? LOL.) It is the hospital that provides the technology and facilities. It is largely the health care professionals who manage uncertainties.
Suggesting that the few CEOs, sitting in their meetings and reading their spread-sheets, rarely directly interacting with health professionals, and virtually never actually involved in patient care, should get most of the credit for these good works insults the thousands of health care professionals who actually do the health care. It also amounts to an example of the questionable cause fallacy: the fallacy is that because the managers are somehow associated with actual health care, they cause the health care to happen. (Think how long a hospital could provide services if the health care professionals and support staff were to vanish. Think how long a hospital could provide services if the managers vanished.)
The second letter to the Baltimore Sun was by the chairman and CEO of Yaffe & Company, Inc, apparently a firm that consults on executive pay. This letter was even less to the point than that above. I invite our readers to discover its logical fallacies.
For a while we have been writing an informal series of posts about how logical fallacies may be deployed to advocate questionable health policy arguments, usually in a highly self-serving manner. Our most recent example was here. Most of the examples seemed to involve defenses of financial relationships among doctors and medical academics and drug and device companies, often written by people who themselves have financial relationships with such companies.
The question of huge compensation given to leaders of health care organizations, and related questions about the effects of their perverse incentives, impunity from negative consequences of their actions, status as a new aristocracy, etc on health care dysfunction are getting more attention in the media. So it should be no surprise that the defenders of the pay and power of these leaders are appearing. It probably, but regrettably should also be no surprise that the defenses are mostly illogical, and made by people with financial interests in continuing excess compensation for health care leaders.
Physicians, other health care professionals, those interested in health policy, and the public at large need to be continuously skeptical about health policy advocacy appearing in the media, especially by those who stand to personally gain from the results of the advocacy.
My just slightly tongue-in-cheek suggestion for a policy position that could address this issue would be mandatory training in logical and evidence-based thinking, specifically to include recognition of logical fallacies, beginning at least at the middle-school level for all Americans (and around the globe), reinforced for those in health care. (See the Nizkor Project site for a useful catalog of logical fallacies.)