Guest Post: Advocating Restoring the Leadership of Hospitals by Medical Professionals, Thus Reversing the Managers' Coup D'Etat

Health Care Renewal presents a guest post by Dr. Gene Dorio.  Dr Dorio  is a geriatric physician from the Santa Clarita Valley in California,  providing house calls to older adults.  He has been an advocate and whistleblower for his community leading several causes from attempting to preserve the hospital Transitional Care Unit for seniors in 2006, to today trying to allow admission of teens to the psychiatric unit.

He is President of the Los Angeles County Commission for Older Adults, an elected Assembly Member of the California Senior Legislature, serves on the Triple-A Council of California, and member of the Santa Clarita Valley Senior Center Advisory Board.

For 5 years, Dr. Dorio served on his hospital’s Medical Staff Executive Committee in several leadership roles including 3 years as Chairman of the Department of Medicine. 

 Doctors are highly trained medical professionals trying to survive in a complex sociopolitical system.  We have been pawns utilized by hospitals and government for our knowledge and skills, yet more recently expected not to have a voice or opinion.

As a physician in private practice for 40 years, changes in the past 10 years have been difficult.  It was hard for me to hear non-medical business administrators force cut-rate medicine compromising evidence-based patient care.

I was elected to the hospital Medical Executive Committee (MEC) seven years ago with the hope from the inside I could improve threats against patient care.  This did not succeed and the fury coming from the hospital intensified as the self-governing MEC was swallowed up by the Board of Directors and Administration.

Doctor voices protecting patients diminished, and many whistleblowers were left to defend themselves from bullying and attacks.  

Lies and insults persisted, and the only power I had was knocking out keyboard articles to social media as a shield.  Throughout the country, there were scant physicians in the same situation, so we networked the best we could to survive.  “Never give up” was our mantra.

Periodically murmurs could be heard, but it was always muffled.

This year in California, a law was introduced in the State Senate to keep hospital administrators from “practicing medicine without a license.”   Most doctors don’t know about it, but of course the state hospital association is diligently fighting it.

It can be seen here.  

At the end of April, I was asked to testify at the State Senate Health Committee, and this is what I provided:

===

Good morning Mr. Chairman and members of the California Senate Health Committee.

My name is Gene Dorio, and I am a geriatric physician in Santa Clarita serving my community for 34 years.

Until two years ago, I was on staff at a local hospital which is a non-profit, but run like a for-profit hospital.  For 5 years, I served on the Medical Staff Executive Committee in several leadership roles including 3 years as Chairman of the Department of Medicine.  

During my time there, I witnessed administrators use manipulative, clandestine tactics to capture each voting facet of the health facility, including the Board of Directors, contracted physician groups, and the Medical Staff so business people could make patient-care decisions.

At my hospital, business community members were appointed to the Board of Directors and provided lucrative contracts in exchange for their vote.  Bankers were given hospital accounts; a real estate agent was given property to rent; and a doctor was given space for a dialysis unit.

Exclusive Contracts were signed by physician groups for emergency room care, radiology, and operating room anesthesia.  The hospital could not technically practice medicine, but they coerced these groups with the threat of severing contracts if they did not adhere to their orders, or vote as told. Needless to say the administration got their votes, while the Medical Staff became only a shell of a self-governing body once devoted to improving patient care.

Eventually, the Medical Staff was taken over too, and our policies were changed to bring in more revenue—even when it was terrible for patients. My patients are geriatric, and at times clinging to life. Nonetheless, staff started to leave daily notes on my charts forcing me to discharge patients even though they were not ready to leave the hospital. These notes included a printed statement “Not a Part of the Medical Record” which was removed later by the Medical Records Department erasing hospital culpability.

Hospital administrators also knowingly wrote orders without doctor consent for Palliative Consults, to place patients on hospice care which financially benefits the hospital by getting them out of the hospital for care.  

They also made decisions about medications patients could receive. They decided not to use insulin pens as they were too expensive, and instead jeopardized diabetic patient care using multi-source insulin vials which are less precise and easily contaminated.  The presiding CEO was released from their previous hospital after violating State Medi-Cal laws substituting inferior anesthesia in the labor and delivery department.

Hospitals also hold regular “throughput” meetings for physicians, where they publicly display the number of referrals, expensive tests, procedures, and overall revenue that each doctor is generating. They talk about productivity and efficiency—not the quality of patient care.

Because I tried to advocate for my patients, my hospital privileges were constantly in jeopardy. Typically, privileges are renewed every two years.  For me, it was every 4 months.

If hospital administrator actions were truly to improve healthcare for our patients, I would have no qualms.  But instead through abusive tactics and bullying, they interfere with physician decision-making, and ultimately increase administrator salaries, bankroll retirement portfolios, and yearly bonuses.

SB 642 is an important step to removing hospital administrators from practicing medicine without a license.  Their surreptitious plans taking over a non-profit hospital for their own personal benefit must be thwarted by this law.

Patients have entrusted physicians to be guardians of their health.  We are professionals that have taken a solemn oath to provide care in the best interest of the patient.  Therefore, SB 642 will serve Californians by putting medical decision-making back into the hands of patients and their doctors.

Thank you.

===

I have never testified before a legislative body, but this is where my keyboard has brought me.  There needs to be more voices fighting for patient care diminishing hospital administration power.  Doctors must be part of the balance providing better healthcare to citizens of our country, but we must hear you speak!  

Follow that mantra, “Never Give Up!”

Gene Uzawa Dorio, M.D.

[Editorial Note] For background on the managers' coup e'etat, managerialism and related issues, see this post.

The ACP Leadership Stands Up to Health Care Dysfunction: A Good Beginning, but the Problems May be Even Bigger than They Realize

Introduction: Health Care Dysfunction Has Been With Us for a Long Time

The American College of Physicians (ACP) is the largest physician specialty society in the US.  So it was news when outgoing ACP  President Dr Robert M McLean's article, "Battling the Hydra of the Medical-Industrial Complex" in the ACP Internist, decried "the dysfunction that has become our [health care] system's status quo" and noted "how our health care delivery system is so dysfunctional and fragmented."

[Gustave Moreau, Hercules and the Lernaean Hydra, Art Institute of Chicago]

Better late than never. We have been decrying health care dysfunction since 2003, and on this blog since 2004.

To better understand health care dysfunction, I interviewed doctors and health professionals, and published the results in Poses RM.   A cautionary tale: the dysfunction of American health care.  Eur J Int Med 2003; 14(2): 123-130. (link here).  In that article, I postulated that US physicians were demoralized because their core values were under threat, and identified five concerns:

1. domination of large organizations which do not honor these core values
2. conflicts between competing interests and demands
3.  perverse incentives
4. ill-informed, incompetent, self-interested, conflicted or even corrupt leadership
5.  attacks on the scientific basis of medicine, including manipulation and suppression of clinical research studies

After that my colleagues and I have tried to raise awareness of these and related issues, now mainly through the Health Care Renewal blog.  We also set up FIRM - the Foundation for Integrity and Responsibility in Medicine,  a US non-profit organization, to try to provide some financial support for the blog.

Now the ACP seems to have embraced some of our concerns.

Putting Financial Concerns and Management Dogma Ahead of Patients

Dr McClean started by asserting that:

Smart minds have taken business models to the extreme in health care-related corporations. Decisions on resource allocation or new initiatives are driven by the critical concept of return on investment (ROI).

Also

budget items that we know are clinically necessary for better patient care don't get resourced and as other initiatives of dubious clinical value move forward, all due to the omnipotent ROI calculation.

Furthermore,

Corporations of many types (insurance, pharmaceuticals, pharmacy benefit managers, and medical devices, to name just a few) are making millions and billions in profits that are pulled out of the health care system instead of being used to provide better care to our patients.

These are clearly major issues.  Let me take this opportunity to enlarge upon Dr McClean's essay, based on our experience writing for Health Care Renewal.

Dr McLean briefly noted the problem of "business models" driving health care leaders' decision making. This has been called managerialism. As discussed in an article from the June, 2015 issue of the Medical Journal of Australia (which we noted here)
- businesses of all types are now largely run by generic managers, trained in management but not necessarily knowledgeable about the details of the particular firm's business, and in a health care context, not necessarily having any experience or background in biomedical science, medicine, health care, or public health
- this change was motivated by neoliberalism (also known as economism or market fundamentalism)
- managerialism now affects all kinds of organizations, including health care, educational and scientific organizations
- managerialism makes short-term revenue the first priority of all organizations
- managerialism in health care undermines the health care mission and the values of health care professionals


Managerialism is not limited to the list of organizations mentioned by Dr McLean.  

Managerialists are often greatly influenced by currently fashionable management dogma.  A dominant dogma in management is that pursuit of shareholder value comes before all else, and thus that the pursuit of short-term revenue comes before all else. Managerialists running nominally non-profit organizations, like non-profit hospitals, still often put short-term revenue ahead of all other concerns.  As we posted here in 2012, quoting Lazonick:

in 1983, two financial economists, Eugene Fama of the University of Chicago and Michael Jensen of the University of Rochester, co-authored two articles in the Journal of Law and Economics which extolled corporate honchos who focused on 'maximizing shareholder value' — by which they meant using corporate resources to boost stock prices, however short the time-frame. In 1985 Jensen landed a higher profile pulpit at Harvard Business School. Soon, shareholder-value ideology became the mantra of thousands of MBA students who were unleashed in the corporate world.

Lazonick added:

When the shareholder-value mantra becomes the main focus, executives concentrate on avoiding taxes for the sake of higher profits, and they don’t think twice about permanently axing workers. They increase distributions of corporate cash to shareholders in the forms of dividends and, even more prominently, stock buybacks. When a corporation becomes financialized, the top executives no longer concern themselves with investing in the productive capabilities of employees, the foundation for rising living standards for all. They become focused instead on generating financial profits

Thus the influence of business thinking on health care (and public health) leadership is even greater than what Dr McLean discussed.

Furthermore, Dr McLean issued the following apologia:

We cannot blame health care system executives solely for this ROI focus; they are merely playing by the existing rules of the game, dysfunctional as those rules are

In  my humble opinion, they do not deserve the only blame.  However, hospital system executives are part of the larger community of executives who run pharmaceutical/ biotechnology/ device companies, health insurance companies, organizations that provide direct patient care, consulting firms, medical societies, health care charities, etc, etc, etc  Most of them have been trained in these "rules of the game." 

These executives often reap considerable personal benefits from these rules.  For example, hospital system executives, even those of non-profit hospital systems, have become rich in the currently dysfunctional health care system. Our latest example of hospital executive compensation that seems wildly disproportionate to the value of their work appeared here in 2019.

We have long contended that a major reason for health care dysfunction is perverse incentives, including those that allow top health care leaders to become rich by putting money ahead of patient care.  We have presented case after case supporting this point.

The plutocratic compensation given leaders of non-profit hospitals is usually justified by the need to competitively pay exceptionally brilliant leaders who must do extremely difficult jobs.  Yet even leaders whose records seem to be the opposite of brilliance, or whose work does not seem very hard, often end up handsomely rewarded.

Other aspects of top health care managers' pay provide perverse incentives.  While ostensibly tied to hospitals' economic performance, their compensation  is rarely tied to clinical performance, health care outcomes, health care quality, or patients' safety.  Furthermore, how managers are paid seems wildly out of step with how other organizational employees, especially health care professionals, are paid.

I can understand the leadership of the ACP may feel very uncomfortable challenging the executives of hospitals in which most of the ACP membership's patients receive care.  Nonetheless, we need to reconsider the downsides of a health care system in which paying generic managers enough to make them rich now seems to be the leading goal of hospitals.

Private Equity as an Egregious Example

Dr McClean noted the

entry of private equity and venture capital firms into the health care space and the expansion of pharmacy chains into retail health clinics.... whose leadership] see ripe potential to disrupt the dysfunctional status quo quasi-marketplace, increasingly treat patients like consumers, develop systems of improved efficiency, at least on the surface, and in the process destroy or undermine the patient-physician relationship.

We have been writing about the nefarious role private equity has been playing in health care since 2010.  Private equity firms have been buying up for-profit hospital systems and other firms that employ physicians to provide direct patient care, like physician staffing firms.  They also may own medical education institutions, including offshore medical schools that  train physicians for the US (and Canada), and even for-profit medical schools in the US (look here).

We first discussed the perils of private equity takeovers of hospitals here in 2010, and of physicians providing direct patient care as employees of corporations owned by private equity here in 2011.   The private equity business model seems particularly unsuitable for organizations which provide patient care, as we discussed in some detail in 2012.

For a quick modern summary of why it is bad to have private equity involved in direct patient care, see Merrill Goozner writing in Modern Healthcare, September 5, 2019,

The private equity business model in healthcare parallels other industries: Use highly leveraged private capital to roll up a number of small firms into one entity, with the private equity firm providing collective management. In addition to hefty fees for arranging the transaction (generally 1% to 2% of the purchase price), the private equity firm typically demands a 20% return on its investment after paying interest on the debt.

After three to seven years, assuming all goes well in achieving the promised efficiencies, the private equity firm and its junior partners (who are the specialty physicians in this latest wave of takeovers) earn a windfall by taking the company public or flipping it to another set of private equity investors. If things don’t work out as planned, the firm cuts its losses and declares bankruptcy (most of its capital will have been recouped through the 20% annual returns).

The management company has two paths to achieve its financial targets. It can either reduce costs sharply or look for ways to increase revenue.

A private equity firm running a hospital is likely to be even more focused on putting short-term revenue ahead of all else, including patient's and the public's health, and ahead of health care professionals' safety and welfare.

The Role of Corporate Propaganda and Disinformation

Dr McClean noted:

The disinformation media blitz has already begun. Organizations with altruistic-sounding names such as Partnership for America's Health Care Future, a coalition representing insurers, pharmaceutical companies, and hospitals, assert that we should 'build on what's working in our health care system.' Do you remember the success of the Health Insurance Association of America at turning public opinion against the Clinton health plan back in 1994, using its year-long advertising campaign of 'Harry and Louise' commercials in which a couple expresses dismay at their dwindling insurance options and rising costs? We should expect a new generation of that type of commercial in the near future. 

Again, this is a severe, long-standing issue that involves are more than just health care insurance companies and related issues.

We had previously noted that promotion of health policies that allowed overheated selling of overpriced and over-hyped health care products and services included various deceptive public relations practices, including orchestrated stealth health policy advocacy campaigns.  Third party strategies used patient advocacy organizations and medical societies that had institutional conflicts of interest due to their funding from companies selling health care products and services, or to the influence of conflicted leaders and board members.  Some deceptive public relations campaigns were extreme enough to be characterized as propaganda or disinformation.

As of 2019 we noted the participation of foreign powers, some potentially hostile, in the dissemination of health care related disinformation.  Even more disturbing, we began to see the dissemination of health care related disinformation by the executive branch of the US government under the Trump administration (look here).   In particular, disinformation is distorting the conversation about and maybe the response to coronavirus (look here). 

Thus countering the negative, and now often dangerous effects of propaganda and disinformation in health care and public health will require taking on far more bad actors than just health care insurance companies.

Conclusion: Issues Not Discussed

We have been cataloging aspects of US (and sometimes global) health care dysfunction for a long time.  There are many more issues than those about which Dr Cleary wrote.  In late 2019 I provided an updated summary of them. Reprinting it here would double the length of this post, so let me simply summarize the list of topics

Threats to the Integrity of the Clinical Evidence Base

Deceptive Marketing

Distortion of Health Care Regulation and Policy Making


Bad Leadership and Governance

Abandonment of Health Care as a Calling
 
Perverse Incentives Put Money Ahead of Patients, Education and Research

Cult of Leadership

Managerialism

Impunity Enabling Corrupt Leadership

Taboos

We strongly welcome the active participation of the ACP in the fight against health care dysfunction. Unfortunately, it may turn out to be a much more difficult and complex task than many would expect.

Now that health care dysfunction is in the headlines, we hope health care and public health professionals, patients, and all citizens will have a much more vigorous response to it.  US health care dysfunction was always part of the broader political economy, which is now troubled in new and dangerous ways.  We do not have much time to act.

If not now, when?

If not us, who?  

The Terribly Difficult Things Health Care CEOs Must Do to Make the Big Bucks: Back-to-Back Meetings, Complicated Schedules, Fatiguing Driving?!

On Health Care Renewal, we have been decrying American health care dysfunction since 2004 (look here).  For years, the US consistently has had the most expensive health care system of any developed country.  For that exhorbitant price, it provides at best medicocre access to and quality of care.

We have long contended that a major reason for health care dysfunction is perverse incentives, including those that allow top health care leaders to become rich by putting money ahead of patient care.  We have presented case after case supporting this point.  So what do health care CEOs have to do to make so much money?

The Hardest Part of CEOs' Days

A recent post in Beckers Hospital Review discussing what "the brightest executives in the healthcare industry" think are the hardest parts of their days.  Here is the summary, edited for brevity:

1. Andrew Agwunobi, MD, CEO UConn Health (Farmington, Conn.): 'when we lose, or are facing the possible loss of good talent.'

2. Wael Barsoum, MD, CEO of Cleveland Clinic Florida (Weston): 'if I hear about an issue that came up with a patient where they felt like we could've done better. It is hard to read letters that said we didn't do something up to their expectations.... these reports and issues are very rare' 

3. David Dill, CEO of LifePoint Health (Brentwood, Tenn.): 'shaking the nagging feeling that I didn't get everything done that I need to, mainly because I didn't mark 10 things off a list like I used to'

4. Suresh Gunasekaran, CEO of University of Iowa Hospitals & Clinics (Iowa City): 'We hold ourselves to a very high standard ...  sometimes, very rarely, we don't hit that standard.... I take a lot of personal responsibility for those failures

5. Tom Jackiewicz, CEO of Keck Medicine (Los Angeles): 'Since it takes awhile to get on my calendar, I need to ensure I am managing my own emotions to maintain my focus so everyone gets the attention they deserve'

6. Dr. Divya Joshi, CEO of OSF HealthCare's Children's Service Line (Peoria, Ill.): 'when an initiative gets stuck and is unable to move forward because there are so many people involved or options to pursue....  Beyond that, I would say when I don't have the answer to something.'

7. Ketul Patel, CEO of CHI Franciscan (Tacoma, Wash.): 'days full of meetings that are back-to-back'

8. Chris Van Gorder, CEO of Scripps Health (San Diego): 'there are bad things that happen occasionally. That burden falls on me.... when something happens to a patient that shouldn't have happened or if one of my employees is attacked by a patient, those days are difficult'

9. Prathibha Varkey, CEO of Yale New Haven (Conn.): Health's Northeast Medical Group. 'driving between the different practices,... driving can be physically exhausting'

10. Kevin Vermeer, CEO of UnityPoint Health (West Des Moines, Iowa) 'when I must make tough decisions that impact people's lives'

11.Andrea Walsh, CEO of HealthP artners (Bloomington, Minn.). 'juggling priorities on my calendar'

12. Jeff Welch, CEO of Florida Medical Center and Tenet's Miami-Dade Group (Fort Lauderdale, Fla.): 'making sure that everything our organization does is for the betterment of the patient and the community'

13. Albert Wright, PharmD, CEO of WVU Hospitals and WVU Health System (Morgantown, W.Va.): 'it's just keeping everybody rowing in the same direction. The other challenge is that we've been on this huge growth boom ... .Trying to keep up with the growth has been a challenge because you want to help others and save some of these challenged hospitals, but you have to grow at a pace that is safe and people can keep up with'

Things are tough all over.  As a physician, I am unimpressed.  I do realize that some of the lists above included vague references to "bad things that happen," "issues that come up," not hitting a "standard," making "tough decisions," etc.  However, without further detail, I wonder if these refer to anything  comparable to the urgent  issues and decisions that doctors and nurses can face on any given day?

Many of the issues cited with more specificity seem trivial, to be charitable.  So the hardest part of being a CEO could be not completing your daily to-do list; attending back-to-back meetings; trying to focus on people with whom you meet; driving around a lot; or juggling calendar priorities?

These are not exactly the sort of hardship postings that seem to demand lavish compensation.



The Money They Make

Yet we have noted that CEOs do get lavish compensation.  The CEOs above who complained of the most trivial hardships, who have to wrestle with busy schedules, multiple meetings, and heavy traffic etc are often paid ... millions.  Consider the following examples, which are  based on the most recent compensation data I could find:

David Dill, whose worst day would be one in which he did not check off his to-do list, is in line for a $25 million dollar plus golden parachute (look here).  According to Salary.com, his total compensation in 2017 was $5,372,271. It may be higher now.

Tom Jackiewicz, whose worst day would be one in which he had to manage his emotions to focus on people with whom he was meeting, had a total compensation of $2,322,895 reported on the USC 2019 form 990.

Prathibha Varkey, whose worst day involved a lot of driving, made $187,024 reportable compensation from Yale New Haven Health Services Corporation, $748,096 reportable compensation from related organizations, and $226,128 other compensation, totaling $1,161,248 according to the Yale Health Service Corporation form 990 from 2019 via ProPublica.

Andrea Walsh, whose worst day was one in which she had to juggle priorities on her calendar, made $1,085,956 as Executive Vice President for Marketing in 2017, the last year for which full 990 data is available from HealthPartners via ProPublica.  Her current compensation is likely more.

The things you have to do to bring in those big bucks.

For Comparison, The Hardest Parts of Physicians' Days
 
So let's see... in my clinical career as an academic general internist, I faced 100 hour work weeks as an intern.  From internship through my career as a hospital-based educator, I had to cope with numerous life-threatening medical emergencies, numerous acute situations in which bad decisions could lead to patients unnecessarily dying or ending up disabled or chronically ill.  I had to tell patients they had incurable illnesses, and console the family those who were dying.  Furthermore, many other doctors have had more difficult lives.  Think about what trauma surgeons do every day, just for one example.

I am sure my colleagues in nursing could come up with their own harrowing lists.


On a personal level, there were many times I would have given anything for a day when the worst problem I had to encounter was a full schedule, boring meetings, or being stuck in traffic.


So tell me again why hospital CEOs make the big bucks, often much bigger than those made by health care professionals in the same institution?

Summary

Inflated executive compensation in health care is rarely challenged, but when it is, the responses are formulaic.  Justifications are usually made by public relations flacks who are accountable to these executives, or the executives' cronies on their boards of trustees.  As I wrote in 2015,  and in May, 2016,  It seems nearly every attempt made to defend the outsize compensation given hospital and health system executives involves the same arguments, thus suggesting they were authored as public relations talking points. Additional examples appear here, here here, here, here, and here, here and here. 

The talking points are:
- We have to pay competitive rates
- We have to pay enough to retain at least competent executives, given how hard it is to be an executive
- Our executives are not merely competitive, but brilliant (and have to be to do such a difficult job).

Yet the examples above suggest that the work of a top health care manager hardly is as difficult as that of a health care professional.  And as we have discussed, these talking points are otherwise easily debunked.  But that certainly has not stopped executive compensation from rising year after year. 

The plutocratic compensation given leaders of non-profit hospitals is usually justified by the need to competitively pay exceptionally brilliant leaders who must do extremely difficult jobs.  Yet even leaders whose records seem to be the opposite of brilliance, or whose work does not seem very hard, often end up handsomely rewarded.

Other aspects of top health care managers' pay provide perverse incentives.  While ostensibly tied to hospitals' economic performance, their compensation  is rarely tied to clinical performance, health care outcomes, health care quality, or patients' safety.  Furthermore, how managers are paid seems wildly out of step with how other organizational employees, especially health care professionals, are paid.

Exalted pay of hospital managers occurred after managers largely supplanted health care professionals as leaders of health care organizations.  This is part of a societal wave of "managerialism."  Most organizations are now run by generic managers, rather than people familiar with the particulars of the organizations' work. 

That CEOs would view the minor travails of bureaucratic life as so significant suggests how deep they are within their managerialist bubbles, and how little they understand and relate to what their organizations actually are supposed to do, provide health care on the ground to real patients. 

Rather than putting patient care first, paying generic managers enough to make them rich now seems to be the leading goal of hospitals. I postulate that managerialism is a major reason the US health care system costs much more than that of any other developed country, while providing mediocre access and health care quality.

Improving the situation might first require changing regulation of executive compensation practices in hospitals, improving its oversight, and making hospital boards of trustees more accountable.  But that would be just a few small steps in the right direction

True health care reform might require something more revolutionary, the reversal of the managers' coup d'etat, returning leadership of health care to health care professionals who actually care about patients and put their and the public's health first, ahead of their personal gain.  Of course, that might not be possible without a societal revolution to separate managers from the levers of power in government, industry, and non-profit organizations. Remember the most salient example of managerialism now for most people in the US is a an executive with a Wharton business degree as the President of the United States.

The Rise of the Suits - First Hints of Managerialism in Health Care

Tom Mueller just published a monumental work on whistleblowing, Crisis of Conscience - Whistleblowing the an Age of Fraud

The introductory chapter starts with the TMAP/ Risperdal/ Johnson and Johnson case.  We first posted on this case in 2006 here.  Briefly, as revealed by whistleblower Allen Jones, Johnson and Johnson subsidiary Janssen was accused of conducting a campaign of deception, which we labeled a systematic stealth marketing campaign, to push use of the  anti-psychotic drug Risperdal (risperidone).

Crisis of Conscience includes a substantial amount of material on whistleblowing in health care, drawn from interview with many in the field, including Steven Aftergood, Elliot Aronson, Elin Baklid-Kunz, Alison Bass, Max Bazerman, Sara Miron Bloom, Donna Boehm, Lori Brown, Diane Burton, Richard Condit, Daniel Fessler, Skip Freedman, Adrian Furnham, Susan Gouinlock, Mark Greenberg, Eric Havian, Jim Helmer, Marianne Jennings, Erika Kelton, Don Kettl, Brian Knutson, Steve Kohn, Sheldon Krimsky, Jeanne Lenzer, Harry Lewis, Harry Litman, Iain McGilchrist, Cheryl Eckard Mead, Tom Melsheimer, Russell Mokhiber, Mickey Nardo, Cliff Palefsky, Robert Prentice, Jim Ratley, Lesley Ann Skillen, Lynn Stout, Skyler Swisher, Paul Thacker, Janine Wedel, Marlan Wilbanks, Scott Withrow and Lin Wood.  It also includes material supplied by yours truly.

I am taking this opportunity to provide brief excerpts showing the very earliest beginning of my realizations that health care professionals were losing control of medicine, and health care.

The Early Days of Managerialism

1978, during my internship, from the haze of sleep deprivation, remembered with emotion

In October 1978, Dr. Roy Poses, an intern at the University Hospital in Boston’s South End, the teaching hospital of Boston University, had just completed the first twenty-five hours of another brutal, sleepless shift. 'People were horrendously overworked,' Poses remembers. 'You walked in at seven a.m. and worked to seven p.m. the next day, with about two hours of sleep— no night floats, no day floats, no hours restrictions.' Waiting for an elevator, eyes glazed and head bowed with fatigue, he wondered how he’d get through the day. When the elevator finally arrived, he stepped on, and found himself surrounded by men and women whose perfumes and colognes contrasted with the alcohol and disinfectant of the ward he’d just left, much as their tailored business suits contrasted with his body fluid–flecked, sweat-soaked scrubs. Conversation ceased. The well-groomed visitors were all watching him.

'It took me a while to figure out who they were,' Poses remembers. 'They certainly weren’t doctors or patients. They were too well-dressed to be vendors. I thought they might be bankers.' Eventually he understood: these were the hospital’s financial executives, just arriving for their day’s work in the management suite on the top floor. 'I felt like rubbing up against them and saying, ‘Go ahead, folks, take a whiff! I’m the guy you’re paying minimum wage to keep this f***in’ place running.’ 

Sorry, but to this day, it inspires anger.  As Mueller later noted

This was Poses’s first encounter with managerialism, which has seen financial managers take control of major hospital chains and other healthcare providers. He initially believed that the problem was limited to Boston University. 'I just assumed that the chief of medicine and the chief of surgery ran most hospitals, and that the business people worked for them, to keep the finances straight.' In fact, at that point CEOs, CFOs and COOs were a rarity at hospitals. 'There might have been an ‘executive director’ or a ‘hospital superintendent,’'  Poses remembers, 'but he was a retired doctor, and his office wasn’t too grand. There were ‘hospital administrators,’ but you’d only contact them if the lights went out or there were no linens on the beds.' However, as he moved to other posts at university medical centers in Pennsylvania, New Jersey and Virginia, before ending up at Brown University medical school in 1994, he found the same widening gulf between the values of medicine and the methods of hospital leaders, most of whom were skilled in capital rather than health.

Recap: Managerialism

Since we started Health Care Renewal, we have discussed the rise of generic managers, which later we realized has been called managerialism, quite a bit. 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.

We noted an important article in the June, 2015 issue of the Medical Journal of Australia(1) that made these points:
- businesses of all types are now largely run by generic managers, trained in management but not necessarily knowledgeable about the details of the particular firm's business
- this change was motivated by neoliberalism (also known as economism or market fundamentalism)
- managerialism now affects all kinds of organizations, including health care, educational and scientific organizations
- managerialism makes short-term revenue the first priority of all organizations
- managerialism undermines the health care mission and the values of health care professionals


Generic or managerialist managers by definition do not know much about health care, or about biomedical science, medicine, or public health.  They are prototypical ill-informed leadership, and hence may blunder into actual incompetence.  They are trained that they have a right to lead any sort of organization, which breeds arrogance.  These managers are not taught about the values of health care professionals.  Worse, they are taught in their business style training about the shareholder value dogma, which states that the main objective of any organization is to increase revenue.  Thus, they often end up hostile to the fundamental mission of health care, to put care of the patient and the health of the population ahead of all other concerns, which we have called mission-hostile management.  Finally, arrogance and worship of revenue allows self-interested and conflicted, and even sometimes corrupt leadership. 

Managerialists may be convinced that they are working for the greater good.  However, I am convinced that our health care system would be a lot less dysfunctional if it were led by people who actually know something about biomedical science, health care, and public health, and who understand and uphold the values of health care and public health professionals - even if that would cost a lot of very well paid managerialists their jobs.

 Reference

1.  Komesaroff PA, Kerridge IH, Isaacs D, Brooks PM.  The scourge of managerialism and the Royal Australasian College of Physicians.  Med J Aust 2015; 202: 519- 521.  Link here.

Marketers Want Even More Control Over Hospitals

Once, a long time ago, in a galaxy far away, doctors and hospitals did no marketing, and pharmaceutical marketing was restricted to health care professional audiences.  Now, in the US, we have  often seen the negative effects of exuberant  marketing, often deceptive, on the health care system.

A Marketer Pushes More Marketing Influence on Hospital Management

Yet, in a post in the Marketing Insider section of MediaPost, a writer lamented that marketing does not have enough influence within hospitals.

About 10% of hospital budgets are designated for marketing. It’s been that way for years, with stagnant year-on-year growth.

That is in contrast to ... Amazon, of course:

Amazon reported record profits in 2018, earning $10.1 billion in net income compared with just $3 billion the prior year. Amazon ranked as the nation's fourth-largest advertiser in 2017, spending an estimated $3.4 billion in U.S. advertising and promotions.

It goes beyond Amazon, though:

Amazon is not the only company appropriately valuing marketing. Many modern consumer-focused enterprises are moving from seeking maximum ROI to actually transforming the marketing value chain.

IMHO, this shows how managers who run, or at least pontificate about running hospitals do not seem to have an idea what hospitals actually do.  How does a hospital, the locus for providing care to sick and injured people, care provided by highly trained health care professionals sworn to put patients' values ahead of all other concerns, compare to a web-based retailer, or to most "consumer-focused enterprises?"

Furthermore, the post pushes the value of marketing beyond just raising awareness of or promoting a product,

Part of the reason hospital systems are starting to spend more on marketing is that the function is broadening. Marketing teams are being asked to take on more strategic tasks, from managing the hospital’s brand and reputation to operationalizing patient engagement.

Traditionally, patient experience falls under the purview of quality or safety. But in the last decade, health systems have seen the marketing department’s impact on the patent experience, even going so far as to have marketing report to the chief patient experience officer.

One might think that the typical patient who comes to a hospital wants to experience an improvement in their condition, their symptoms, their function, reduction of their pain, or sometimes the remission or even cure of their problem.  I do not see how any rational person seeking a fun experience would choose to go to a hospital.  What marketing has to do with health care quality or safety completely escapes me.

The Rationale: a Misinterpretation of  the Social Determinants of Health

The rationalization for involving marketers in patients' experiences was:

Leaders are seeing that the care they provide accounts for just 20% of patients’ optimal outcomes. The rest is attributable to factors like social determinants of health. Today, if hospital systems want to keep patients healthy, they have to influence experiences patients have outside the hospital walls.

The notion that marketing by a hospital would be an optimal way to positively influence social determinants of health is bizarre, to use a polite term.  To quote an article entitled "Beyond Health Care: The Role of Social Determinants in Promoting Health and Health Equity" published by the Kaiser Family Foundation,

Social determinants of health include factors like socioeconomic status, education, neighborhood and physical environment, employment, and social support networks, as well as access to health care. Addressing social determinants of health is important for improving health and reducing longstanding disparities in health and health care.

What could hospital marketing do to affect such factors?  Instead, the writer explained:

Hospitals and health systems are moving beyond simple outreach and using the principles of marketing — such as segmentation, personalization and meeting consumers where they are — to engage patients in changing behavior and getting them invested in their own well-being.

Health systems must ensure that every time a patient interacts with their brand, that interaction keeps patients engaged and satisfied and delivers on the fundamental promise that they make to their patients: making and keeping them well.

Again, what has that to do with socioeconomic status, education, neighborhood and physical environment, employment, and social support networks? Rather than talking about social factors, the writer appears to be talking about some efforts to change individual patients' behavior.

However, the KFF article made a clear distinction between social determinants of health and individual health behaviors, while asserting that social determinants of health may influence individual behaviors, but not necessarily the other way around:

While there is currently no consensus in the research on the magnitude of the relative contributions of each of these factors to health, studies suggest that health behaviors, such as smoking, diet, and exercise, and social and economic factors are the primary drivers of health outcomes, and social and economic factors can shape individuals’ health behaviors. For example, children born to parents who have not completed high school are more likely to live in an environment that poses barriers to health such as lack of safety, exposed garbage, and substandard housing. They also are less likely to have access to sidewalks, parks or playgrounds, recreation centers, or a library.4 Further, evidence shows that stress negatively affects health across the lifespan5 and that environmental factors may have multi-generational impacts.

Thus, to argue that hospital marketing could influence individual patient behaviors and thus positively affect social determinants of health makes no sense.

Summary: Managerialism, Again

I applaud the writer's implication that

hospital systems want to keep patients healthy

(As an aside though, hospitals cannot want anything, but the people who work in them can.)

But however well intended, or at least rationalized, marketers pushing their greater involvement in patient experience, even if it is not self-serving, seems like just another push for the managerialism that already haunts health care. 

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.

We noted an important article that in the June, 2015 issue of the Medical Journal of Australia(1) that made these points about managerialism:
- businesses of all types are now largely run by generic managers, trained in management but not necessarily knowledgeable about the details of the particular firm's business
- this change was motivated by neoliberalism (also known as economism or market fundamentalism)
- managerialism now affects all kinds of organizations, including health care, educational and scientific organizations
- managerialism makes short-term revenue the first priority of all organizations
- managerialism undermines the health care mission and the values of health care professionals

Managerialism may be a major cause of  mission-hostile management. In non-profit hospitals, mission-hostile management threatens care of vulnerable patients, particularly by prioritizing hospital revenues, and the financial self-interest of management over patient care. Note that the rise of the manager-leader occurred at a time when management schools increasingly preached 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).  For example, an 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.

Managerialists may be convinced that they are working for the greater good.  However, I am convinced that our health care system would be a lot less dysfunctional if it were led by people who actually know something about biomedical science, health care, and public health, and who understand and uphold the values of health care and public health professionals - even if that would cost a lot of very well paid managerialists their jobs.

 Reference

1.  Komesaroff PA, Kerridge IH, Isaacs D, Brooks PM.  The scourge of managerialism and the Royal Australasian College of Physicians.  Med J Aust 2015; 202: 519- 521.  Link here.

Another Missing Link Discovered: 1969 IRS Rule Change Allowed US Hospitals to Discriminate Among Patients Based on Ability to Pay

Prelude: the Suits in the Elevator

Another long night on call of my interniship was over.  Having managed to wolf down breakfast and brush my teeth, disheveled and in unwashed scrubs I stumbled into the elevator on my way to the wards.  In it were some of well-groomed people in nice suits.  They looked at me with wrinkled noses, oozing disdain.  I wondered who they were: pharmaceutical representatives?  Somewhat troubled, I disembarked the elevator and went to work, just another house-staff cog in the teaching hospital patient care machine.  The suits went up to the management floor.  Later I would learn they were top hospital executives....

Introduction: the Rise of Health Care Dysfunction

Despite some protestations to the contrary (e.g., here), the US health care system has been plagued by dysfunction.  According to a recent Commonwealth Fund study, the US was ranked 11 out of 11 in health care quality, but 1 out of 11 in costs.  Traditionally, health care reform has targeted ongoing problems in the cost, accessibility and quality of health care, but reform efforts have yielded little improvement.  (For example, recently the Accessible Care Act seems to have improved access, but hardly addressed cost or quality.)

In the early 2000s, before we started Health Care Renewal,  we encountered lots of disgruntled health care professionals who thought that health care was going off the rails, but had no idea what to do about it.  Some crude qualitative interviews, and a lot of delving into news stories about health care dysfunction suggested a number of factors that seemed to enable increasing dysfunction, but were not much discussed.  They included threats to the integrity of the clinical data base, including manipulation and suppression of clinical research; deceptive marketing; distortion of health care regulation and policy making; bad leadership and governance; concentration of power, abandonment of health care as a calling, perverse incentives putting money ahead of patient care, teaching, and research; the cult of leadership; managerialism; impunity enabling corruption; and taboos preventing honest discussion. (Look here for details.)

As a medical student, I was idealistic, thinking it was all about taking care of patients in a humane way, based on science. Was I just completely naive?  Others, however, have described health care in the US from the end of World War II into the 1960s as underfunded, but earnest in pursuit of the mission.  It was also a very human affair, not based in large organizations and big business.  Physicians practiced as individuals or in small groups.  Hospitals were local, community-based charitable organizations or teaching hospitals tied to single medical schools.  Insurance was largely provided by regional non-profit organizations or the government. 

We seem to have stumbled down a dark path since those days. Now everything revolves around huge hospital systems and for-profit corporations.  Physicians are now largely corporate employees.  It is all about money.  And we have the most most expensive health care system in world.  How did we get from there to here?

Early on, many of the people we met seemed to insist that it was all inevitable.  Some changes admittedly were not too hard to explain.  For example, after government started providing insurance to the elderly and poor, and research spending ramped up, costs rose, and in the Nixon administration the government outsourced cost control to commercial managed care.  By the 1980s, as Ludmerer wrote in Time to Heal (p 365), under pressure from managed care:

The field of hospital administration became more tightly affiliated with programs of business administration, and hospital administrators increasingly held M.B.A. degrees.  The new hospital administrators assuemed business titles (president or chief executive officer rather than superintendent or director), demanded and received corporate levels of compensation, and retained hordes of management consultants....

Now I could recognize those suits in the elevator.

However, the roots of the huge changes that happened in the US from the end of World War II to now were frequently unexplained.  Why could not business oriented management still put patients first? Why were the new managers so ill-informed, ignorant of or even hostile to the health care mission, self-interested, conflicted or even corrupt? Why did regulation of health care seem so big, yet so ineffectual?  Why were the prices of some goods and services so far beyond any value that they could have provided?  Etc, etc, etc.

Since the early 2000s, we have learned more about the historyof health care dysfunction, and also stumbled upon some missing links that added to the explanation. 

For example, we have discussed:
- how market fundamentalist lawyers challenged the power of medical associations to enforce medical ethics, allowing the commercialization of medical practice (look here)
- how government failure to enforce the responsible corporate officer doctrine allowed the impunity of health care corporate management (look here)
- how an obscure AMA committee (Resource Based Relative Value Scale Update Committee, or RUC) took control of the government process for setting physician payments, hugely favoring payments for procedures and invasive treatments.

This week, we found another missing link.

An Obscure IRS Rule that Allowed Hospitals to Discriminate Among Patients According to Ability to Pay

On March 5, StatNews published a commentary by Patrick Masseo entitled "IRS Rule Changes Helped Create a Payment-Focused Hospital System."  It noted

Often overlooked are small regulatory changes, such as adjustments to Internal Revenue Service codes over the past 70 years, that have allowed hospital care to evolve from a charitable mission into a profit-driven industry.

The historical background is

In 1956, as hospitals were evolving into centers for medical interventions, the Internal Revenue Service issued Revenue Ruling 56-185, which applied solely to hospitals. This ruling was the first to allow hospitals to qualify for federal tax exemptions if they fulfilled qualifications related to providing health care. That represented a deviation from the previous requirement of affiliation with a religious institution or fulfilling another charitable purpose.

Revenue Ruling 56-185 established four criteria that a hospital must fulfill to qualify for 501(c)(3) tax-exempt status:

- be organized as a nonprofit charitable organization for the purpose of operating a hospital for the care of the sick

- be operated to the extent of its financial ability for those not able to pay for the services rendered and not exclusively for those who are able and expected to pay

- not restrict the use of its facilities to a particular group of physicians and surgeons, such as a medical partnership or association

- net earnings must not benefit directly or indirectly any private stakeholder or individual

Through criteria 2 of Revenue Ruling 56-185, the IRS — not the legislative, executive, or judicial branches of government — mandated that tax-exempt hospitals must provide care to patients who were unable to pay without an expectation of payment.

 However, for reasons that remain unclear,

  

In 1969, the IRS issued Revenue Ruling 69-545, which updated the federal tax exemption requirements for hospitals. This ambiguous ruling, written as a case example rather than a defined list, included a subtle change of language that permitted tax-exempt hospitals to restrict access to care depending on a person’s ability to pay. For many individuals, that meant their health insurance status. According to Revenue Ruling 69-545, a hospital that operates as described as follows (emphasis added) would qualify:

The hospital operates a full time emergency room and no one requiring emergency care is denied treatment. The hospital otherwise ordinarily limits admissions to those who can pay the cost of their hospitalization, either themselves, or through private health insurance, or with the aid of public programs such as Medicare. Patients who cannot meet the financial requirements for admission are ordinarily referred to another hospital in the community that does serve indigent patients.

This language is a subtle yet monumental contradiction of the IRS’s original 1956 guidance, which stated that a 501(c)(3) hospital 'must not, however, refuse to accept patients in need of hospital care who cannot pay for services.'

Revenue Ruling 69-545 was neither an act of Congress nor a flashy executive order, yet it laid the foundation for the U.S. health care system to become driven by payment, a privilege of the rich and a necessity continually out of reach for the poor.

There was almost no public discussion of its change and its implications

The year after this ruling appeared, The Tax Lawyer, a publication of the American Bar Association, described the 1969 rule change as 'representing a shift by the [Internal Revenue] Service from requiring the admission of a substantial number of charitable cases in order to qualify for exempt status.'

A 1971 paper written by Marilyn G. Rose for the Catholic University Law Review correctly forecast the implications of this new ruling. 'Most importantly, this tax policy [Revenue Ruling 69-545] operates as unwise health policy by perpetuating and enlarging the gulf between the health care available to the rich and that available to the poor,' Rose wrote.

Beyond those publications, I found little evidence of journalistic coverage of the 1969 rule change. Only a handful of academic papers on it were published between the 1970s and the 1990s.

New IRS rulings have not substantially changed the effects of the 1969 ruling.  Since 1969, but especially in the last 30 years, we have seen increasing evidence of hospital leaders' hostility to the traditional mission that put patient care ahead of all else, including revenue generation.  Instead, even in non-profit institutions, leaders have appeared to adopt the shareholder value dogma propogated by business schools, putting revenue ahead of all else (look here).  Of course, as revenue goes up, hospital management has been able to command even greater compensation.  When revenue generation is the main goal, perverse incentives drive ignorance, conflicts of interest, even crime and corruption.

And yet it took 50 years to discover this missing link.

And it raises further questions.  Who was responsible for the 1969 regulatory change?  What was the motivation for it?  Why did it attract so little attention at the time?  Why did nobody really notice it for 50 years?
 
Discussion

Those who are ignorant of history... are unlikely to be able to fully challenge its effects.

As we learn more about the hidden history that explains where we are today, a bigger meta-question is why there has been so little curiosity about the roots of our current health care (and broader political economic) dysfunction, at least until now.

When people do not look to answer questions, it  may be that they fear what they will find.  

While we try to push for all the reforms that are so badly neeed, we are handicapped by our ignorance about how our current troubles came to be.  We must vigorously seek reform while simultaneously vigorously investigating why the world went wrong. 

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.

Also,

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.'

Summary

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.