Sunday, December 09, 2018

Mission-Hostile Hospital Management: Quieter, but Still Pernicious After All These Years

Hospitals exist to take care of sick people, with the goal of making them better.  Hospitals employ and work with health care professionals, again who are sworn to put taking care of patients ahead of all other concerns.

However, since we founded Health Care Renewal, we have noted striking examples of hospital leaders threatening their hospitals' fundamental mission and/or health care professionals' core values, which we dubbed mission-hostile management.  We also saw mission-hostile management affecting the broader health care industry, particularly pharmaceutical and device companies.  Most recently, the most striking examples of mission-hostile health care related management appearing in the press have come from the Trump administration.

While journalists attention is focused on Trump et al, and coverage of other topics fades, bad management of hospitals has received less attention.  However, the problem has not vanished, nor become less important.  So here is my round-up of cases of mission-hostile hospital management from the recent past.

Hospitals Offering Better Care to Wealthier Patients

Hospitlas generally proclaim that they endeavor to care for all patients, regardless of their personal characteristics, or worthiness for care  Yet we have seen non-profit hospitals offering better care to those who can pay more.  

Preferential Treatment for Wealthy Foreign Nationals Seeking Organ Transplants 

A story from November, 2017 in ProPublica documented how some US hospitals seem to give preferential treatment to wealthy people coming from overseas specifically for organ transplants.  

Little known to the public, or to sick patients and their families, organs donated domestically are sometimes given to patients flying in from other countries, who often pay a premium. Some hospitals even seek out foreign patients in need of a transplant. A Saudi Arabian company, Ansaq Medical Co., whose stated aim is to 'facilitate the procedures and mechanisms of ‘medical tourism,’' said it signed an agreement with Ochsner Medical Center in New Orleans in 2015.

In particular,

Foreign patients generally are not entitled to the same discounts as those with private insurance or Medicare, the federal insurance program for seniors and the disabled. In 2015, for instance, the average sticker price for a liver transplant at NewYork-Presbyterian was $371,203, but the average payment for patients in Medicare was less than one-third of that, $112,469, according to data from the Centers for Medicare and Medicaid Services, which runs Medicare. In the case of Saudi Arabia, its embassy in Washington often guarantees payment for patients.

This is actually not a new pheonomenon. 

There have been scandals in the past about foreigners and organ transplants. In 2005, a liver transplant center in Los Angeles shut its doors after disclosing that its team had taken a liver that should have gone to a patient at another hospital and instead had implanted it in a Saudi national. The hospital said its staff members falsified documents to cover up the incident.

The University of California, Los Angeles, came under fire in 2008 for performing liver transplants on a powerful Japanese gang boss and other men linked to Japanese gangs, and then receiving donations afterward from at least two of the men. The hospital and its surgeon said they do not make moral judgments about patients.

We discussed the case of the Yakuza transplants most recently here.

Note that while foreign nationals seem to end up on the same waiting lists that US citizens may be on, the operation of these medical tourism programs implies that they are virtually guaranteed an organ, while US citizens are not. The preferential treatment of the medical tourists does not seem to stem from compassion, but rather from the larger fees they are willing to pay. 

Discouraging Organ Transplants for Patients Unable to Afford Expensive Anti-Rejection Drugs and Other After Care

A story from December, 2018 from Kaiser Health News published in the New York Times, suggested that most organ transplant centers will not take care of patients until they can show their ability to pay, usually to pay the "sticker prices." One case made public in November, 2018, brought this issue to light

Hedda Martin, 60, of Grand Rapids, was informed that she was not a candidate for a heart transplant because of her finances. It recommended 'a fund-raising effort of $10,000.'

The Times reporters found that this was not unusual.

Two years ago, Mr. Mannion, of Oxford, Conn., learned he needed a double-lung transplant after contracting idiopathic pulmonary fibrosis, a progressive, fatal disease. From the start, hospital officials told him to set aside $30,000 in a separate bank account to cover the costs.

Mr. Mannion, 59, who received his new lungs in May 2017, reflected: 'Here you are, you need a heart — that’s a tough road for any person,' he said. 'And then for that person to have to be a fund-raiser?'

Ms. Martin’s case incited outrage over a transplant system that links access to a lifesaving treatment to finances. But requiring proof of payment for organ transplants and postoperative care is common, transplant experts say.

'It happens every day,' said Arthur Caplan, a bioethicist at the New York University Langone Medical Center. 'You get what I call a ‘wallet biopsy.’'

Virtually all of the nation’s more than 250 transplant centers, which refer patients to a single national registry, require patients to verify how they will cover bills that can total $400,000 for a kidney transplant or $1.3 million for a heart, plus monthly costs that average $2,500 for anti-rejection drugs that must be taken for life, Dr. Caplan said.

Note again that the 'sticker prices' quoted above are much higher than those paid by US government health insurance programs, so this insistence on having enough money or coverage available to pay the sticker prices appears to discriminate against poorer patients who may not have the most deluxe insurance coverage.  Futhermore, it is likely that the actual costs to do the transplant and provide follow-up care are lower than the discounted prices, suggesting that the hospital are putting their revenue ahead of the mission to provide care to patients according to the patients' needs.

Expensive Concierge Care at Non-Profit Academic Medical Centers

We have previously discussed cases of non-profit academic hospitals offering deluxe services to patients able to pay hefty fees, despite their idealistic mission statements about serving the whole coummunity.  In March, 2018, the Michigan Daily discussed the latest version of such care offered by Michigan Medicine,

Michigan Medicine at the University of Michigan is currently launching Victors Care, a concierge medical care model aiming to deliver tailored health care access to a limited number of patients. These patients will receive specialized, convenient and optimized care with purchase of an annual membership fee to cover primary care services without copays or deductibles.

A number of faculty members took exception to this program in a letter addressed to top Michigan Medicine executives,

grievances listed in the faculty letter include: being unaware in the content of the Victors Care program invitation letter, video and website; discriminating against the underserved; promotional materials suggesting Victors Care patients will 'receive preferential treatment at Michigan Medicine based on ability to pay'; implication that if receiving Victors Care is quality care, receiving care from traditional primary care physicians is not quality; and a concern that Victors Care promotional materials and website recommend care that is not evidence based.

'We ask that the institution stop recruiting our patients to this program and advertising it as providing much better care than all the rest of our primary care clinics, the letter reads. 'Victors Care purports to offer ‘better’ health care to those with enough money to pay a large access fee. The University of Michigan is a public institution and our commitment is to serve the public, not a private few.'

The letter also includes direct quotations from Michigan Medicine faculty, one of which notes: 'This reinforces UM as an elitist institution catering to the wealthy.'
Note that Michigan Medicine is a creature of the University of Michigan, a non-profit, state-supported institution, although I cannot determine whether legally Michigan Medicine is a government entity, a non-profit corporation, or something else.  The mission statement on the organizational website is:

We advance health to serve Michigan and the world

It says nothing about providing better service to wealthier patients 

Hospital Spending Priorities Put Patients and Health Profesionals Last

Increasing Market Dominance Rather than Improving Affordability of Health Care

The problem was described in a February, 2018, NBC News article, entitled with the question:"Hospitals made $21B on Wall Street last year, but are patients seeing those profits?"

Some medical economists say that nonprofit hospitals are using lucrative Wall Street portfolios to fatten their bottom lines rather than lower what patients pay for health care.

'The tenor and the responsibility of hospital CEOs has now changed over time,' said Gerard Anderson, a professor of health policy, management and international health at the Johns Hopkins University Bloomberg School of Public Health. 'They focus on the bottom line and … they get performance ratings based on profitability,' he said.

In particular, the article suggested rather than using investment earnings to lower costs to patients,

Hospitals have an incentive to reinvest Wall Street income into growing their networks in order to compete. 'To acquire hospitals you need to have money. If you want to be the biggest hospital system in your community you have to have a lot of money,' Anderson said.

But bigger hospital networks don’t necessarily mean better, or cheaper, health care for patients.

Luxury Hotel Like Accoutrements Rather than Direct Patient Care Services

Furthermore, while the patients may literally see the results of lavish hospital spending, much of that spending has scant relationship to patient care. An  article in the Spectator, March, 2018, described the lavish ways many big non-profit academic medical centers spend their money.

The Emperor Nero would have felt at home in our hospitals.

At St. Vincent’s Hospital in Worcester, Massachusetts, visitors immediately encounter a waterfall, trees, massive rocks, and a pathway for hospital-goers interested in a stroll all located underneath a glass atrium. The massive indoor nature preserve of sorts appears about half the size of a football field. It provides peace and tranquility in a place in need of such comforts.


IU Health in Indianapolis boasts a monorail-like People Mover that shuttles patients, families, employees, and anybody else who cares to ride between hospitals for free. Cedars-Sinai in Los Angeles offers deluxe maternity suites featuring such perks as access to a 'personal doula,' 'soft colors and recessed lighting to offer a soothing environment for laboring women,' and an 'in-room refrigerator stocked with complimentary chilled juices and bottled water.' Even hospitals labeled 'struggling' struggle to avoid lavish spending. The New York Post reported in 2016 that Brooklyn’s SUNY Downstate Medical Center paid consultants $83,000 for such frills as 'pricey rooms at the Carlyle Hotel on the Upper East Side, a booze-infused ‘team dinner’ at the Docks Oyster Bar in Midtown, and sticker-shock limo bills.'

True to the publication's ideology, the article blamed the spending on the government.  Obviously, though, it was hospital managers who made the spending decisions.

Hospital Board Members Meet in Cayman Islands While Budget for Employee Benefits Threatened

Hospital managers, even in hospitals meant to serve the poor, like to use the hospital budget for lavish perks.  For example, according to a report from Newsday from March, 2018, Nassau University Medical Center, is a "safety net" hospital which

treats low-income people, receives state aid even though Nassau County ended its subsidy several years ago. However, the county is liable for more than $242 million in hospital long-term debt if NHCC defaults.

Its finances have been challenged:

hospital finances continue to be tight as NuHealth faces tens of millions of dollars in liabilities for accrued employee time, health care and pensions.

'This is a cash cow without the cash,' [Chairman of the Board George] Tsunis said. 'We have a very perilous position here.'

Yet until then, hospital management continued

the practice of sending three hospital officials to the Cayman Islands for a week during Thanksgiving and a week in February to discuss the health care corporation’s offshore self-insurance facility, Tsunis said.

Like other hospitals, NuHealth set up a limited liability company called NHCC LTD in the Cayman Islands for tax purposes to self-insure for malpractice and general liability claims. The hospital’s chief executive officer, chief financial officer and chief operating officer are the company board members. To maintain the Cayman location, company officials must meet at least once a year outside the United States.

The hospital usually sent all three board members to the Cayman Islands twice a year, Tsunis said.

Now the hospital will send two people once a year to a meeting at an airport hotel ... in Canada.

So even when the bottom line was threatened, Caribbean jaunts for board members continued, apparently until they were caught 

Eliminating Faculty Retention Bonuses to Pay for Legal Liability Due to Alleged Mismanagement

While hospital managers may get lavish perks, when expenses go up they do not shrink from cutting the pay of their employees, even their most well-trained medical professionals.  For example, in January, 2018, McClatchey reported (here via the Charlotte Observer) that the University of New Mexico suspended its retention bonuses for anesthesia faculty because of the settlement it had to pay for a suit brought by 'a former dismissed problem resident.' However,

The woman said in the wrongful termination lawsuit filed in 2011 that she was raped in June 2009 by a post-doctoral fellow and anesthesiologist at the university. Afraid she’d face repercussions, she waited until September to report it to department higher-ups, the lawsuit said.

The lawsuit said officials 'discouraged' her from reporting the alleged assault to law enforcement officials to avoid damaging the school’s reputation.

The suit accused the university of failing to conduct an investigation into the allegations and of eventually terminating the resident, violating state laws, in 2011. The case was thrown out in 2013 but reinstated on appeal in 2015. UNM’s attorneys agreed to settle for an undisclosed amount in November, according to the NM Political Report.

So the suit alleged considerable bad management, as well as bad behavior by one anesthesia trainee,  but the money to settle it had to come out of senior physicians' compensation, not management's pockets.

Hospitals Threatening Health Care Professionals who Call for Patient Care Improvements that Might Cost Money

Hospitals depend on health care professionals to actually take care of patients. Health professionals swear to put patients and patient care first, while hospital managers have no such professional values, unless they are also health professionals.  Yet hospital managers have been known to threaten health professionals who dare differ with them on matters pertaining to patient care, particularly professionals who call for changes that would cost more money.

In Medscape, from October, 2017, Dr John Mandrola described the plight of employed physicians who dare protest actions by their hospitals' managers:

The need to keep one's job decreases a worker's candor. Seniority offers little protection. Look at what happened to an esteemed surgeon who spoke out on double-booking in the OR. Hospital leaders fired him.

The irony of the employed-clinician model is that many embraced it for job security but have ended up feeling more vulnerable than before. And feeling vulnerable means making less noise. The danger is obvious: Clinicians become clock-punching workers rather than leaders; bad policies persist; outlier doctors continue working unabated, and low morale becomes the new normal.

In November, 2018, the New York Daily News reported a graphic example of a hospital CEO threatening to fire a nurse who complained about staffing levels:

Brooklyn Hospital CEO Gary Terrinoni, along with several other executives and department heads, were updating the nursing staff about the hospital's future a month ago when Terrinoni launched into what sources described as a nasty screed.

'Are you all tired?' Terrinoni mockingly asked the nurses, according to a letter distributed by the New York State Nurses Association.

When no one offered a response, Terrinoni singled out one veteran RN, who at first politely tried to deflect his question. After more prodding, she answered that the biggest problem they faced was understaffed shifts.

'That's what I'm talking about! Look at your attitude!' Terrinoni allegedly erupted. 'Then you don't need to be here. Go find another job!

When the 13-year Brooklyn Hospital vet noted she had more than a decade on the job, Terrinoni only grew more agitated, the union said.

'I don't care if you've been here ten years or 30 years,' he allegedly said. 'You can leave if you don't like it here.'


Recently we have seen many examples of mission-hostile management by political appointees to health care related leadership positions in the Trump administration.

However, while the political conflagration in Washington, DC has pulled journalists away from the health care beat, we continue to see examples of bad, and particularly mission-hostile management of non-profit hospitals that threatens care of vulnerable patients. Such management tends to prioritize hospital revenues, and the financial self-interest of management over patient care.

Some recent examples of related posts included one from 2017 in which we discussed a New York hospital CEO who seemed to put revenue generation in support of his own very generous paycheck ahead of quality of care and patient safety (look here).  Also, the revered Mayo Clinic seemed to let patients with more remunerative commercial insurance coverage get attention before poor patients who have only government insurance, despite its stated mission "providing the best care to every patient" (look here).

Mission-hostile management in hospitals, pharmaceutical companies, or government agencies seems to have been enabled by several factors. 

Managerialism is the belief that trained managers are better leaders of health care, and every other sort of organization, than are than people familiar with the particulars of the organizations' work.  Managerialism has become an ascendant value in health care over the last 30 years.  The majority of hospital CEOs are now management trained, but lacking in experience and training inmedicine, direct health care, biomedical science, or public health.  And managerialism is now ascendant in the US government.  Our president, and many of his top-level appointees, are former business managers without political experience or government experience.  

The rise of the manager-leader occurred at a time when management schools increasingly preach the dogma that maximizing shareholder value, usually equivalent to maximizing short-term revenue, should be the first, if not the only goal of all managers (look here).  A recent article on the miseducation of Sheryl Sandberg, Facebook's chief operating officer, asserted that

Harvard Business School, like much of the M.B.A. universe in which Sandberg was reared, has always cared less about moral leadership than career advancement and financial performance.

The article recounted a recollection of a case discussion which included Jeff Skilling, the now disgraced former CEO of Enron

in which the students were debating what the C.E.O. should do if he discovered that his company was producing a product that could be potentially fatal to consumers. 'I’d keep making and selling the product,' he recalled Skilling saying. 'My job as a businessman is to be a profit center and to maximize return to the shareholders. It’s the government’s job to step in if a product is dangerous.' Several students nodded in agreement, recalled LeBoutillier. 'Neither Jeff nor the others seemed to care about the potential effects of their cavalier attitude. . . . At H.B.S. . . . you were then, and still are, considered soft or a wuss if you dwell on morality or scruples.'
Boards of directors or trustees, which are now often dominated by managers, are inclined to financially reward organizational managers for increasing revenue.  Hospital boards rarely are so interested in improving patient care or public health.  So the result is mission-hostile management, which is very bad for patients' and the public's health

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.  And these days, such reform would also challenge the interests of many people in top positions in the US government.  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.

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