More Trouble in the OC: Golden Parachutes for UC Leaders, and "Malfeasance" at UCI

Last month, we posted about two inter-related stories from the University of California (UC) system.

The first was about lavish pay and other compensation given to many top UC administrators, while state support of the system shrunk, and fees paid by students grew. But UC leadership argued that high pay was needed to attract top quality executives.

This rationale was challenged by the second story, about the collapse of the University of California - Irvine (UCI) liver transplant program, amid charges of mismanagement. That campus, of course, was lead by highly paid executives at the time.

In the last month, local newspapers have followed up on both stories, providing yet more details about just how well UC leaders were recompensed, with as little public notification as possible; and about just how badly UCI was mismanaged, despite the excellent compensation of its leaders.

UC Pay and Perks

More stories surfaced about favorable treatment of particular UC managers.

• Former UC - Davis Vice Chancellor Celeste Rose was asked to resign. When she threatened to sue for race and gender discrimination, the university quickly agreed to a settlement entitling her to two years of salary ($205 K per year), and other payments totalling nearly $500 K. Yet despite policies that the UC Regents must approve settlements worth more than $250 K, or salaries over $200 K, the Regents were never told of these arrangements (per the San Francisco Chronicle).
• Former UC Provost MRC Greenwood was charged with violating conflict of interest policies by hiring Lynda Goff, a friend and business partner, first as an executive assistant, then in academic affairs at a salary of $192 K. In addition, Winston Doby, UC Vice President for Student Affairs, who reported to Greenwood, hired Greenwood's son into a specially created internship position. When these events came to light, the university launched an investigation, but permitted Greenwood to resign her administrative position before it was completed, agreeing to give Greenwood 15 months of leave at her $ 301 K salary (per the San Francisco Chronicle).
• In 1993, UC policy required the Regents to approve paid leaves for more than three months granted to top administrators after they left their jobs. In 1994, then UC President Jack Peltason promised to completely stop awarding year long paid vacations to departing administrators. Yet UC again began awarding paid leaves upon departure in 2003. In the past 13 months, in addition to the cases above, former UC - Berkeley Chancellor Robert Bardahl and former Lawrence Berkeley National Laboratory Director Charles Shank were awarded prolonged leaves at more than $300 K each per month. Former state Senator Quentin Koop, who tried to put an end to paid leaves, responded, "It's a betrayal. You can't depend on the probity of university leaders." State Senator Abel Maldonado (R - Santa Maria) said, "This perpetual lack of transparency needs to end." (per the San Francisco Chronicle).

The Los Angeles Times wrote,

UC is far too inclined to use public money as a slush fund - and ... it will take more than a legislative committee or even the outside audit that UC is finally launching to fix matters.
When revelations first arose this fall about millions of dollars in perquesites given to UC administrators, this page cautioned that though they should be thoroughly investigated by an outside body, running a prestige university is costly and most of the expenses might be justified. That's still true. But these early examples show that UC administrators have a disquieting tendency to run a loose ship, and run it by their own, rather than state or university rules. Such shenanigans hardly enhance the universities' prestige. Furthermore, UC President Robert C. Dynan has strenuously resisted closer oversight or public transparency.
It will take sustained, outside scrutiny of UC - by auditors hired by the Legislature, rather than the regents - to remind UC executives that they are accountable to the public for each costly decision.

The Mess at University of California - Irvine

Meanwhile, the problems at UCI continued to demonstrate that lavish compensation of UC executives has not bought superlative performance.

A Los Angeles Times investigation revealed how hospital leadership permitted the UCI liver transplant service to dwindle to one run by a single, and increasingly embattled surgeon, Dr Sean Cao. Liver transplant services are rated by their outcomes, particularly their overall survival rate. The unit's survival rate was considered to be under the norm. So, "improving the statistics became the mission of the program.... But with so few surgeries, a single death in the operating room could drastically skew the survival rate - a mathematical misfortune of small transplant programs." Therefore, "with so much riding on each operation and so few people to bear the responsiblity, the program was driven to dysfunction by a paralyzing fear of failure, and an obsession for keeping up appearances."

Hospital administrators had been warned by the United Network for Organ Sharing (UNOS) that the program needed to expand, and "both the Dean's office and hospital management appear[ed] to understand." But the program was never enlarged. Similarly, despite recommendations made in 2003 to develop a computerized data base for the program, in 2005 the hospital was still writing a request for proposals to develop the database (per the Orange County Register).

After Dr Cao left, the Los Angeles Times reported that the hospital was only able to secure a part-time liver transplant surgeon. Dr Marquis Hart, based at UC San Diego, 90 miles away, agreed to help. But UCI Medical Center CEO Dr Ralph Cygan "provided false information to keep the unit running." He assured federal regulators "that UCI had recruited a full-time transplant surgeon to revive the program." Government regulators met Cygan and left "with the clear impression that Dr. Hart would be leaving UC San Diego and moving full time to UCI." UCI administrators also told their staff that Hart was key to reviving their program. On their web-site, they said "Dr. Hart is an experienced transplant surgeon who comes to us from UC San Diego Medical Center," without noting that he came to them only about one and a half days a week.

Furthermore, as federal inspectors scrutizined UCI Medical Center, other problems appeared. The center's dermatology program is on academic probation (per the Orange County Register).

And the Register also reported that the leaders of the Center's cardiology division, Dr Jagat Narula and Dr Mani Vannan, lack US board certification in cardiology and even in internal medicine. Narula and Vannan also failed to get California medical licenses. The former head of the division, Dr Michael Brodsky, charged, "It's because UCI can't attract good doctors to come and work here." Narula had briefly run the cardiology program at Hahnemann University Hospital, but "left amid accusations that the program was floundering." Narula's successor there said, "There were financial problems in the division and concerns about the way it was being run administratively." Nonetheless, "Narula has gone on to be among the five highest-paid UCI employees. In the 2004-05 fiscal year, he earned $400,000, more than the dean...." Brodsky concluded,

The whole thing is embarassing. It shows that this liver business is not one isolated phenomenon. It's just another example of continuing malfeasance.

Conclusions
One of the UC Regents had argued that if a university can't offer lavish pay, "you don't get to look at the best people in the market." (See our post here.) If the UCI leadership are "the best people in the market," I hate to think what the other people in the market look like.
Instead, the UC cases suggest that lavish executive pay and perks at health care organizations, rather than being necessary to attact good leaders, actually correlates with bad leadership. Perhaps executives who are most concerned about their personal financial advancement are less likely to be devoted to the academic and health care mission.