A Sale of One Residency Program - the Commercialization of Health Care and now Residents Treated Like "Assets"

We recently posted (here and here) about the decline and impending closure of a once major urban safety-net teaching hospital, the Hahnemann University Medical Center.  This was the final common pathway of a downhill progression for an over 170 year old institution.

[Hahnemann Hospital in 1925]

Since the 1990s, it had been a non-profit university academic medical center, which was then merged into a non-profit health care system (Allegheny Health Education and Research Foundation, or AHERF), which was mismanaged into a bankruptcy of historic proportions (look here).  After that, the hospital wound up part of the  for-profit Tenet chain.  Two years ago, after reportedly losing millions of dollars a year for its corporate owner, it was sold to a private equity group, Paladin Healthcare, and made part of their American Academic Health System LLC.   Now, the new owner decided it was losing too much money, and declared bankruptcy.

The final closure of Hahnemann left patients, often indigent or vulnerable, with no ready source of health care, and thousands of health care professionals and staff without their jobs.  New coverage of these events revealed in particular the plight of the hospital's nearly 600 house staff.

The Plight of the Residents

On July 10, 2019, a Medscape article summarized the state of play:

The 570 residents who started their programs just more than a week ago at Hahnemann University Hospital in Philadelphia, Pennsylvania, are scrambling to find new positions in light of the announced closing of the hospital.

Third year medical resident Thomas Sibert MD described their situation. He had:

just started his third year as an internal medicine resident at Hahnemann. Now, instead of focusing on finding a fellowship, he must simultaneously find another residency as well.

'The people we are counting on for recommendations are themselves also looking for jobs,' he told Medscape Medical News. 'The attendings have been endlessly supportive. They've been working for the fellows at the same time they're working for their residents interested in fellowships and looking for their own jobs.'

He described some of the worries the residents are facing.

Many have signed full-year leases for housing and some landlords have been unwilling to break them, he said. Because the areas near Philadelphia can only at this point — depending upon pending solutions — take a percentage of the displaced, others will need to move across the country and some states will require getting a new medical license with potentially months of background checks.
The consequences are especially severe for interns, Sibert said.

'They are going to enter their new hospitals with very little clinical exposure because the number of patients and the resources at Hahnemann have been so severely reduced,' he said.

A few days later, on July 15, a Philadelphia Inquirer article revealed another threat to some of the house staff:

Fifty-five Hahnemann University Hospital residents holding J-1 visas face the possibility of deportation if they cannot secure a position in an accredited program within 30 days of the hospital’s closure.

The visas enable foreign physicians to come to the U.S. for training at accredited medical schools.

The Solution: Sell the Residency?

The current and final owners of Hahnemann had a solution, of sorts.  The Philadelphia Business Journal reported their plan as of July 10, 2019, was to sell the residency program.

Hahnemann University Hospital and Tower Health said Wednesday they have entered into a letter of intent to transfer the majority of the residency and fellowship programs at Hahnemann/Drexel University to Tower Health.

Under the letter of intent, Tower Health will assume the responsibility for the continued training of the more than 550 residents and fellows in these programs — while giving those physicians-in-training the right to be placed in one of Tower Health’s six hospitals.

Also,

Tower Health said it will seek to hire the faculty who are currently training the residents and fellows to ensure continuity of the Hahnemann and Drexel training programs.

The July 15, Inquirer article noted that it really was a sale, not a "transfer,"

Tower Health has offered $7.5 million to buy Hahnemann’s 500-plus residency and fellowship slots, as well as the hospital’s Medicare ID number, which dictates the number of medical residents for which the hospital can receive federal funding.

However, that article also suggested that this plan might need some work. To begin, Tower Health had no structure to take on the complexity of the Hahnemann program:

But Tower has only eight accredited programs — significantly fewer than the 35 programs currently operating at Hahnemann, according to a court filing in the Hahnemann bankruptcy case. That’s a problem for many residents, but especially for those with J-1 visas.

'We are very concerned about them,' said Jaime Sanders, an anesthesiologist at Hahnemann. Under the terms of their visa, they cannot have any 'gaps' in their program, which will end when the hospital closes. Closure is slated for September.

Another question was would Tower have the faculty to teach and supervise the residents? On July 18, 2019, an Inquirer article noted that a lot of the Drexel University faculty who were involved in the Hahnemann residency program were slated to lose their jobs:

About 40 percent of Drexel University physicians and clinical staff will lose their jobs as a result of the planned closure of Hahnemann University Hospital, Drexel president John Fry announced in an email to the university staff Thursday morning.

Tower Health was supposed to take on some of them, but the details were unclear.

Fry said that Tower Health Medical Group will become the college’s new partner and will be able to offer approximately 60 percent of the 800 clinical faculty and staff within the program employment in their current jobs. Tower also expects to be able to offer about half of the remaining 40 percent comparable positions at similar pay at Tower locations in Reading, Chestnut Hill, and the Philadelphia suburbs, said Jill Tillman, CEO and associate dean of Drexel University Physicians.

The 800 clinical faculty and staff include 245 physicians who received severance notices on Thursday, though many of them will be offered employment through Tower, Tillman said. Tower has offered to keep all primary care physicians, she said, minimizing disruption to patients.

And again, where exactly would these faculty fit in at Tower Health?

that six-hospital system does not have all the accredited training programs it would need to accommodate Hahnemann’s 500-plus residents. The plan is also subject to approval by U.S. Bankruptcy Court, which has scheduled a hearing for Friday.

Drexel plans to eliminate certain health-care service lines as a result of the closure, Fry said.

In a separate email to staff on Thursday, Drexel senior vice president for medical affairs Daniel V. Schidlow provided some details about which medical services Tower would seek to retain. Family medicine and internal medicine, including primary care, would continue in their current Drexel Medicine practice locations. Tower wants to meet with physicians and clinical staff in emergency medicine, surgery, cardiology, and other specialties 'about employment opportunities' within Tower’s system.

Tower’s Chestnut Hill Hospital — its only property in Philadelphia — does not have a maternity unit, but Schidlow said Drexel’s obstetricians and midwives may be offered jobs within the Tower system.

Many of the residents were totally unconvinced that this plan would work, or that it had their interests at heart.  A Bloomberg article on July 19, 2019, described their plea to the bankruptcy judge,

The bankruptcy sale of Hahnemann University Hospital’s education program is treating more than 570 doctors as financial assets and threatening their ability to complete the final stage of their specialized medical training, a group of hospital residents told a judge overseeing the case.

About 20 hospital residents, most wearing medical coats bearing the Drexel University College of Medicine logo, asked U.S. Bankruptcy Court Judge Kevin Gross to force the hospital’s owner Philadelphia Academic Health Systems LLC to guarantee the doctors have continued access to the federal Medicare money that pays their salaries.

'The residents of Hahnemann are not assets,' said Dr. Raluca McCallum, a resident who spoke from a prepared statement in court on behalf of her colleagues. McCallum said the residents have continued to provide the highest level of patient care possible 'for Philadelphia’s sickest, poorest and most downtrodden population.'

Nonetheless, the judge seemed willing to use a market approach to decide the house staff's fate:

Gross gave the company permission to set up a potential auction for the residency program with an initial bid of $7.5 million from Tower Health, a health care company that owns hospitals in the region. They are an owner of hospitals and related medical facilities in the area.

Today, the Inquirer just reported that Tower did not win the bidding war for the residents and their program.

Hahnemann University Hospital’s residency slots fetched a $55 million winning bid from team of six local health systems at Thursday’s bankruptcy auction, topping bids by Tower Health and a California company that wants to reopen the Center City hospital.

Christiana Care Health System, Cooper University Health Care, and Main Line Health joined Einstein Healthcare Network, Jefferson Health, and Temple University Health System in the winning bid

This begs the question of how one could run a residency program currently populated by house staff based in Philadelphia that is split among six large hospital systems spread from Delaware to New Jersey.  Organizing something like that would be a huge, perhaps unprecedented undertaking.

Would former Hahnemann residents now shuttled around to destinations including multiple hospitals in six systems and three states feel even more like assets, or widgets?  As the man says, we shall see.


Was an Asset Sale the Plan All Along?

Given that Hahnemann had been placed under the tender protections of a for-profit hospital corporation along time ago, after it ended the abusive relationship with the failed AHERF (look here),  maybe it should not have been a big surprise that the finale would be asset sales.

An opinion piece in Bloomberg contained observations by Prof Alan Sager of the Boston University School of Public Health, including:

Hahnemann has posted operational losses every year from 2004 to 2018, a 'remarkable' record, said Sager, who reviewed public documents kept by Pennsylvania on hospital finances.

Yet despite sustaining such apparent "losses" for 14 years, Tenet seemed to not be interested in trying to turn the hospital around.  An article in the Inquirer from July 20, 2019, featured an interview with the president of Drexel University, whose medical school was tied to Hahnemann.  It stated,

When John Fry became president of Drexel University in 2010, he inherited a medical school that was hobbled by its relationship with Hahnemann Hospital, where aspiring doctors got hands-on training.

Serving mostly poor Philadelphians, the historic facility was struggling financially. Important maintenance kept on being put off, he said, and there was only 'passive interest' from the hospital’s for-profit owner, Tenet Healthcare Corp.

'We wanted a first-rate place to educate our students and treat our patients,' Fry said in an interview Thursday, "and we never had that.”

Why would Tenet continue to own and operate a hospital that lost money for 14 straight years without making any apparent effort to improve the situation?  In my humble opinion, there is only one explanation that makes sense.  The losses were an illusion, product of an accounting trick.  Tenet was extracting money from the hospital, possibly in the guise of administration/ management expenses charged to Hahnemann, as if the hospital was a stand-alone entity, not a subsidiary of Tenet.  Those charges led to a sham analysis that showed chronic deficits.  When Tenet got tired of stripping assets, or the assets available for stripping were drying up, it was time to sell.

After Paladin Healthcare, a private equity firm bought the hospital, asset sales were clearly in the cards.  A CBS News article featuring an interview with a disillusioned Hahnemann nurse recited what we already know about how private equity works, in health care as well as elsewhere. It included a discussion by an expert on private equity who explained why these firms are now so interested in health care:

The expectation that health care will provide a sure return in volatile economic times, said Eileen Appelbaum, co-director of the Center for Economic and Policy Research and an expert on private equity.

'Health care is a major area of investment for private equity,' Appelbaum said. 'They look at health care the way they used to look at supermarkets. They said, 'People have to eat, so this is safe investment.' Now they are saying that about health care.'

However, the private equity playbook may spell doom for the health care organizations such firms acquire:

Private equity funds acquire companies that are struggling or distressed yet still have value. PE executives then direct management to make operational changes in order to boost a business' performance. The goal is to turn around the businesses and eventually sell them for a profit.

But private equity firms also tend to raise money by issuing debt from their target company, which critics say can make it tougher for a struggling company to make a recovery. In the worst cases, critics say, fragile businesses can be pushed into insolvency by their new debt burdens.

The reason Tenet bought Hahnemann after the AHERF bankruptcy, and the reason Paladin was willing to buy the hospital from Tenet may have been all about the value of the real estate involved, not the health care or medical education the hospital provided.

But in Hahnemann's case, economist Appelbaum said, it appears the hospital was bought for the value of its real estate, not for its mission to provide care to low-income Philadelphians. The hospital is located near a burgeoning arts district in central Philadelphia, as well as Temple University, which makes the land valuable to developers.

'It's the first time I know for a hospital being bought by a private equity company in what appears to be a pure real estate play,' she said.

Again, the article highlighted the steps that neither Tenet nor Paladin took that might have kept the financially ailing hospital - if indeed it was - afloat.

To make Hahnemann a financially viable hospital, its management could have taken several steps, such as buying hospitals in wealthier, suburban neighborhoods, which would have diversified its revenue. It could have also opened smaller, urgent care clinics, which are increasingly popular with patients, she said. "They did none of those things," she said. 'Surprise, surprise, the hospital tumbled more and more into the red, then 18 months later they went to bankruptcy.'

In any case, in the private equity model, once the decision was made to declare bankruptcy, the residency program became just another, and relatively inconsequential asset to be sold.  The residents, and faculty, like the patients, were just subjects of collateral damage.Why shouldn't they all be outraged?

Graduate Medical Education Adrift in a Sea of Commercialized Health Care

In 2007, Dr Arnold Relman wrote(1) that physicians' core values are threatened:

Endangered are the ethical foundations of medicine, including the commitment of physicians to put the needs of patients ahead of personal gain, to deal with patients honestly, competently, and compassionately, and to avoid conflicts of interest that could undermine public trust in the altruism of medicine.

These threats arose from "the growing commercialization of the US health care system." This has been abetted by physicians who accept "the view that medical practice is also in essence a business." Thus, "the vast amount of money in the US medical care system and the manifold opportunities for physicians to earn high incomes have made it almost impossible for many to function as true fiduciaries for patients."

Since 2007, nothing has stopped the march to an ever more commercially focused US health care (non-)system.  Meanwhile, the mission of taking the best care of each patient, and thus necessarily providing adequate education to health care professionals, fades into the rear view mirror.

Although the original argument for the commercialization of health care came from neoliberalism, (or market fundamentalism) especially in its dogma that:

harshly reinstated the regulatory role of the market in all aspects of economic activity and led directly to the generalisation of the standards and practices of management from the private to the public sectors. The radical cost cutting and privatisation of social services that followed the adoption of neoliberal principles became a public policy strategy rigorously embraced by governments around the world(2)

 Yet, as Prof Sager pointed out in the Bloomberg article,

'This is a symptom of the underlying anarchy that pervades U.S. healthcare,' Alan Sager, a professor of health law, policy and management at the Boston University School of Public Health, said referring to the plan to shut Hahnemann. 'Nobody is accountable for identifying the hospitals that are needed for the public. There is no free market and there is no government accountability.'

Neoliberalism may seem like a lot of economic mumbo jumbo, but ask the patients and staff of the former Hahnemann University Medical Center, and the house staff and faculty of its former residency program about its impact.

If only we could go back to a time when hospitals were non-profit community and/or academic institutions, when for-profit hospitals and the commercial practice of medicine was banned, when anti-trust laws were enforced to prevent ever growing corporations from enforcing ever growing power.  If only...

Such drastic changes, however, would all greatly threaten those who have become wealthy off the current system.  Think of the former CEO of AHERF, the current CEO of Tenet, the owner of Paladin Healthcare, and indirectly, all those plutocrats and oligarchs out there.

However, unless the public is willing to discomfit these plutocrats and oligarchs, what happened to Hahnemann and its residency program will likely soon seem like a trivial problem compared to what will come next. 


References

1. Relman AS. Medical professionalism in a commercialized health care market. JAMA 2007; 298: 2668-2670. [link here]

2.  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.

"Like Watching a Slow Train Crash": AHERF to Hahnemann & Drexel, Part Deux

The Hahnemann Tragedy: Not All That Anechoic, But How Relevant Anyway?

There are so many health policy narratives right now entering new phases: CMS's head slamming the very idea of a public option; prescription drug costs; the opiate crisis now including both the Sacklers and J&D--all repeatedly subjects of this blog. So my dander's up over all these things more than something maybe unique to one town. Personally I'm finding it hard to stop and cone down on something that's for now mainly affected the U.S. Delaware River Valley. Philadelphia in particular.

Which is just the point that Dr. Poses, HCR's intrepid editor, recently made here around the closure of Hahnemann. (Its counterpart, Medical College of Pennsylvania Hospital, was closed by 2004.) Why has this major loss of a local health asset been so anechoic, a term I coined decades ago? Or has it actually been anechoic beyond the DelVal? Dr. Poses has urged me to blog on the Allegheny and Hahnemann debacles and their sequellae. It now occurs to me I can offer a useful extension, if not corrective, to his Part One on the events leading to the present demise of what's often been Philly's hospital and training venue of last resort, Hahnemann University Hospital.

Herewith, Part Deux. I lived through the whole sordid mess as a clinician and educator. I did so before, during, and after the late, unlamented, Allegheny University of the Health Sciences (a branch of Pittsburgh's AHERF) and its most important recent partner, Drexel University College of Medicine (DUCOM). Tellingly, we should call them frenemies, never true and trusted partners despite protestations to the contrary.

(To get ahead of the story only a bit: by the late 1990s, Drexel had inherited the bulk of academic and out-patient assets from Abdelhak's "AHERF East" expansion. Much less has been written or understood about Drexel's role in this narrative.)

So here's a perspective that will, I think, offer at least a little something new for everyone who trudges through it. It runs long.

Back, then, for a moment, to the "anechoic effect." Interestingly, the demise of Allegheny and now that of Hahnemann haven't lacked for echoes. Much has been written--indeed, the literature's so rich I'll only cite the most important milestones here--about it, and attention was fitfully paid nationally. The documentary trail is rich locally. But not only there. Look in peer reviewed widely read world wide including one exhaustive monograph out of a major university press. Or put ["tenet healthcare" hahnemann philadelphia] into a search engine, omitting the square brackets.

In what follows I yield to the impulse to pepper official accounts with my own and colleagues' observations, up to and including some insalubrious details. For some of these there is really nothing to cite. Thus, since I'm peppering, feel free to take my account with a grain of salt. Remind, me, however, to come back to the question: if the story was really not anechoic--let's say at worst hypoechoic--why do folks still not pay attention? Is there something unique about the Philadelphia setting, or are there lessons-learned that can be applied to other's settings?

After all, it wasn't exclusively (to coin a phrase) just The Philadelphia Story. From the outset, it was a statewide story, soon becoming a national story with the 1998 bankruptcy and consequent incursion of Tenet Healthcare, a for-profit out of Texas and California. Also it was always a money story, where "follow the money" goes back way beyond Bob Woodward and Carl Bernstein. Money stories are almost always generalizable. And yet ... I'm still not sure about this one.

All the basic facts of history below are easily checked, when provided for readability sans citation or link, via any good search engine.

Early Days.

Start at two ends of the same state of Pennsylvania, truly a "swing state" in so many ways, long before it joined Wisconsin in tipping the nation into chaos in 2016. By the early 1990s two things were clear. Pittsburgh had the state's most aggressive yet in another sense most defensive health care institution in what became the Allegheny Health, Education and Research Foundation, AHERF. It arose out of both the feared domination of Pitt and the ambition of a group of physicians and administrators led by a pre-AHERF hospital cafeteria director, post-AHERF jailed petroleum pirate, the late Sherif Abdelhak.

Abdelhak was not the only buccaneer involved in the story, though, either before, during, or after the 1998 bankruptcy. The crimes--or, rather, let's be careful, "departures from accepted norms"--of Abdelhak and his immediate Pittsburgh cronies were the worst. To keep his newly-cobbled-together statewide medical school afloat by the mid-90s, he'd already started quietly raiding any number of foundations, gifts, pensions and endowments that had supported worthy activities. (I participated in a class action suit around one of those.) Such activities continued uninterrupted for a while, with only faint rumbles heard early on at the institution Abdelhak had merged into the oddly-styled "MCP♦Hahnemann College of Medicine," and then its immediate progeny AUHS: Allegheny University of the Health Sciences.

AUHS's President Sherif Abdelhak gave the plenary lecture to the Association of American Medical Colleges (AAMC), the Cooper Lecture, in 1996, joining pre-bankruptcy luminaries such as Paul Beeson and Uwe Reinhardt beforehand and (post-bankruptcy) Clayton Christensen or Rita Charon in this prestigious venue. Everyone in 1996 was keen to hear, without cynicism, how he was pulling off his entrepreneurial hat trick. Cynicism came considerably later.

It was never clear to me whether it was AUHS or more broadly AHERF that suddenly and traumatically landed on the auction block in 1998. Long before their merger, both of the predecessor medical schools, Medical College of Pennsylvania and Hahnemann, each with its own wholly-owned non-profit teaching hospital, had been pressured financially and mismanaged. No one was all that surprised that they acceded to merger, even though no one was all that happy about the strange bedfellows that resulted. By the mid-1990s, Philadelphians already knew the city was over-medicalized both clinically and educationally.

The two most salient characteristics of this shotgun marriage were its "T" and "W" on a SWOT quad chart. Do the math: its main strength, such as it was and still the case in Philly real estate circles, was location. The medical schools and hospitals were rather dilapidated then and now. But at least Hahnemann offered a prime location just north of what was to become the Convention Center district. So the "S" was not so amazing despite a few additional clinical assets over the years (assessed at length here and here).

(Ironically, in the books just cited, institutional biographies were commissioned for joint sesquicentennials and both were published hard on the heels of bankruptcy. They reward reading. And yet, from such a reading you'll perhaps come away with the impression: "say what?!? you combined two med schools reeling from such radically different traditions and thought culture clash wouldn't impact the result?)

And there, along with failure to invest, lay a critical weakness. Culture matters. The medical cultures clashed with each other, with the new parent university, and with the business cultures of Tenet and its successor.

In retrospect and probably in prospect, the opportunities for the new medical school and the hospital--what remained Hahnemann University Hospital because subsequent hospital owners wanted to differentiate it from Drexel's academic receivership--were few and far between. That's because the threat, and this is crucial, was something that may in fact be unique to Philadelphia.

Because of its history--and this is a decidedly mixed blessing with certain blandishments that persist pleasantly to this day--Philadelphia was always an over-medicalized place since the onset of its gradual but inexorable post-19th century and -industrial decline. For generations, depending on how you count, it had either five or six medical schools, each with its own elaborate teaching hospital plant, not to mention myriad other smaller hospitals. Encroaching further were suburban hospitals in the 20th century and outpatient surgical centers in the 21st. Each poached lucrative business away not just from Hahnemann but from all the university hospitals. Something had to give, an event now playing out at the bottom of the health-care and -education food chain.

Hahnemann was situated in a location, journalists now observe, with one of the least favorable payer bases of any central Philadelphia hospitals. Only the now-defunct Philadelphia General Hospital over in West Philly, still there as recently as the 1970s along with the Civic Center where Strom Thurmond held forth in 1948, was poorer. (PGH and the Civic Center are now wiped from the face of Google Maps, supplanted by grand edifices built by ever-expanding Penn-affiliated organizations.)

When the bankruptcy hit AHERF, having stripped the former organizations' academic assets, was ill-equipped to attract investment or do much other than give up the ghost. It had essentially been a health care Ponzi Scheme. Below I connect the dots with larger national trends described in a key article published over the name of Penn's university president. But before I do that let me describe some of the highlights, or lowlights, of the early years after AHERF went into receivership.

Brokering a Deal

In 2019 Philadelphia will now "de-medicalize" some more, through the long-overdue shift of the medical school and clinical training facilities to a new east-central Pennsylvania location. But unlike the present circumstance, in the late 1990s it was deemed unacceptable for all those hospital employees and all those jobs and all those patients to lose their places in the Philly firmament.

The politicians swung into action, casting about for some cure for the institutional patient.

Those figures--let's simply name Ed Rendell and Arlen Specter for starters--saved the patient by dismembering it. They'd always go on to say there was no choice, and it's probably true. The inpatient facilities went to an out-of-state, for-profit organization as I already mentioned.  Clinical training and health undergraduate programs (medical and many others) went to Drexel. The serial name changes I described above continued. The jewel in the rather rusty crown, the med school, soon became Drexel University College of Medicine under Constantine Papadakis, the late Greek-born engineer and the university's then-President, .

What followed was a striking litany of unforced errors. Had both Tenet and Drexel not made so many mistakes, it's possible the endgame just might have gone a different way. We'll obviously never know with any certainty.

The Next Chapter: Greek Tragedy

What happened next is at least as important as anything AHERF miscreants did in sealing the fate of both institutions. It was not just Tenet against Drexel. It was also Drexel against Drexel.

It's hard to know which of these sets of conflicts was most consequential in weakening the edifice after the bankruptcy. In either case it's important to understand that there not two but three boards, three administrator-coteries, and three financial silos. Drexel quickly erected a "firewall" between its health schools and its traditional West Philadelphia campus, with disastrous results.

Start with Tenet against Drexel. It's fairly easy to dispose of this conflict, since as Poses points out, ruthless business thinking immediate took hold for Hahnemann University Hospital. Make concessions and collaborate with clinical research planning? Not a chance. Tenet rushed to hive off its information technology out of reach of Drexel, installing an incompatible EHR. Some Tenet lawyer may come after me and berate me for ignoring "how much we at Tenet did for Drexel," but I can assure you and her that on balance, most decisions were made to streamline, not to say strip bare, Hahnemann activities such that Drexel research languished at the Hahnemann campus. Ironically it was only hold-overs from certain AHERF-era grants such as the tobacco settlements and the Robert Wood Johnson Foundation that helped tide medical school departments over, at least for a while.

We come, then, to "Drexel versus Drexel." In some ways these conflicts were even more pernicious. The firewall between the two sides of the river promoted such a trend. After all, mimicking the sins of the Tenet fathers, the two Drexel "silos" themselves rushed to hive off their own IT groups one from the other. (This has since been reversed, a healthy dose of too-little-too-late.) Not without some justification, the Drexel "original" board was paranoid that Drexel Med would bring down its new foster-parent institution.

And foster child is what Drexel Med, and for a while its corollary health schools, became. Papadakis, the engineer-entrepreneur, had already made his main focus the dilapidated West Philly campus. So he emphasized physical development over everything else, neglecting even his own West Philadelphia faculty almost as much as that of the medical school. With one or two notable exceptions he hired poor administrators. One of them, an early medical school dean, mimicked Abdelhak by embarking on a relationship with a medical student. (Abdelhak's now-physician wife later divorced him. It seems uninteresting what happened to the medical dean and the weather girl-turned-med-student who went on to become his wife.) Ironically, the best administrators at Drexel Med were those already present when Drexel took over. But not many stayed on to help.

Hence, Drexel versus Drexel. Drexel Main Campus mimicked AHERF in many ways in looting the medical school, taxing it heavily. Perhaps the worst example of this, a truly damaging sort of virtual taxation, was Papadakis running roughshod over the internal processes of the struggling DUCOM. At one critical juncture, he required an estimable new dean, who'd followed the fine gentleman described above, to eliminate all searches for replacement department chairs, as their predecessors headed for the exits. He froze all the acting chairs in place, resulting in a further weakening of the administrative infrastructure. This should have been a quitting issue for many--but most had already booked because of Abdelhak and his earlier regime. And indeed soon thereafter that new dean, Richard Homan, who'd just had every single one of his chair searches shot out from under him, did leave for a much better deanship elsewhere.

The remaining departmental structures were, and even now remain, riddled with inadequacies and opportunities for outright fraud. Last time I checked, about six months to a year ago, heads were still rolling as a result. Over on the Main Campus there is a new president who, while an improvement over Papadakis, focuses on new buildings, which, of course, attract new money.

Echoes Are Heard

In 2004, at the end of a decade at the University of Pennsylvania during which she had her own battles with the health-school leaderships, its scientist-president Judith Rodin published an influential piece in AAMC's widely-read flagship publication, Academic Medicine. Giving credit where due, it was "contributed to" and likely co-authored or first-drafted by philosopher administrator Stephen Steinberg, to whom Rodin gave brief thanks in a footnote. Without once mentioning Allegheny it was a far-seeing autopsy of much that was going wrong in American medicine, typified--I know this from talking to Steinberg--by Allegheny, down to that moment when Rodin left Penn to head up the Rockefeller Foundation. It's worth re-reviewing now, fifteen years later.

Rodin and Steinberg noted how they'd seen the "terrifying perils of the vertically integrated academic health system, ... the University of Pennsylvania's newly created integrated health system [and] how dramatic shifts in federal policies and market forces threatened to take down our health system—and the rest of the university with it." She adverted to how, just

... as Penn led the way in the creation of the nation's first vertically integrated health system in 1993, so, too, were we among the first to feel the full effects of dramatically increased insurance claim denials and delays, and reduced Medicare payments, both overall and for medical education, that followed in the wake of the Balanced Budget Act of 1997. At the same time, we were providing $100-million per year in unreimbursed or underreimbursed indigent hospital care. As a result, the University of Pennsylvania Health System lost $350 million from 1997 to 2000, created $800 million in debt, and its bond rating was downgraded by Moody's Investors Services from Aa3 to A1, while the outlook for the university's higher AA rating was changed from “stable” to “negative.”

So the times were tough all up and down the food chain.

Rodin and Steinberg went on to prescribe Penn's "cure," not as novel as she implied but still emerging from an abyss hence now able to prescribe a "sow's-ear-to-silk-purse" transformation.

At that point, we faced the same fundamental choices as many of our peers: risk serious financial and educational damage to the rest of the university by continuing to absorb the Health System's deficits; eliminate the threat to the university's financial health by spinning off, selling, or otherwise separating the Health System from the university; or strategically plan and manage our way out of the financial crisis, and do so in a way that would make us less vulnerable to future potential perturbations.... [We] had to consider two separate—but ultimately related—questions. First, why were we in the business of integrated academic medicine, and why on earth would we want to stay in it, given the—by then obvious—risks? Second, if we were going to stay in it, how would we make it work, for our patients, for our faculty, and for our students, and—both academically and financially—for the university as an institution? Ironically, the answer to both questions was more and better integration—just the strategy that got us into so much trouble—but applied very differently this time. Applied more horizontally, and less vertically.

In other words, "we zig when they zag." But of course, Drexel, like other local schools (notably Jefferson, still today expanding with the absorption of Philadelphia University) was trying its damndest to do the same thing. At least Drexel was claiming to try to integrate, undertaking steps including adding schools of law and business and reintegrating information technology. So it boils down I think to "how rich were you when you started," and "how many unforced errors"? Winners get to write the history. Those at the bottom of the food chain, if they drop off, don't get to. No surprises here. Drexel (and others) were trying to integrate "horizontally." But with a lot less money, a lot less reputation, and no real cushion.

Next, in 2011, an eminent sociologist-historian, the late Judith Swazey, published a lengthy history of the Allegheny-Hahnemann disaster. In Merger Games, Swazey, per one reviewer

vividly document[ed] fundamental patterns inherent in practically all corporate reorganizations and mergers, and dissects why they succeed or fail. Because of these highly important and ever so timely lessons, the information in this book should ... reach the widest possible audience and to that end it should be made into a movie. It has all the ingredients of a terrific box office success. [Editorial note: not!!!] And at the same time it should be made into a Harvard Business School case study because these lessons ... need to be understood by tomorrow's organizational leaders.

In another way, of course, Swazey's reception, or lack thereof, may prove Poses's point. People don't pay much attention. Why?  Perhaps just simple hubris. They avert their eyes if there's the least rationale to do so, a plight now afflicting our entire country. It may have been just too easy, too glib to think of Philadelphia as overmedicalized, someone needing to drop off the rotten bottom of the food chain, bad managers making it worse--God knows they did!--and free-standing schools of health having little ballast during times of economic stress. In any case another reviewer, one who lived through it as I did, long before Hahnemann died went onto the Amazon website and described the experience in terms of "watching a slow train crash."

Impact on Patients

Well, not just the patients. Consider faculty members, many of whom have devoted decades to teaching subjects like anatomy or admitting to Hahnemann and accumulating significant coteries of devoted patients. Those patients aren't going to follow some fine physicians, or the ones who elect to migrate, out to Berks County, Pennsylvania.

Just yesterday I spoke to someone knowledgeable about the impact on the area's preeminent medical school, Penn, in terms of eye patients. This individual described to me a tripling of the numbers of patients appearing at the walk-in clinic, in almost overnight fashion. Imagine having to deal suddenly with three times the number of emergency walk-ins, triage them, get them to appropriate consultants. In time the impact will likely be diffused and absorbed, just as happened two generations ago with the  1977 closure of Philadelphia General Hospital. Nothing entirely new here. And yet, to say "move on, folks, nothing to see here," as some might be tempted to do, would be a shame.

Conclusion

In this account I've added some textural detail to the knock-on effects of the Allegheny bankruptcy. It's rich with irony. So many questions about what I have included actually remain unanswered. To what extent were Drexel administrators complicit with those from Tenet in insuring the slow steady decline of the involved institutions.

One thing is certain. Only in the past year and a half to two years, give or take, have some of the errors been addressed. For example, a clever strategy was only recently put into effect to undo the effects of Drexel's freeze on the hiring of department chairs based on real searches for quality. A number of chairs, some well meaning but most less than fully adequate, have finally been pushed out. Just in time for Drexel Med to move to another part of Pennsylvania, and for the heirs of its hospitals to give up the ghost entirely.

Do Health Care Managers Think "L'Organisation de la Sante C'est Moi?"

The thinking behind a comment that recently appeared on this blog bears examination beyond the reply I added in our "comments" section.

An anonymous commentator, responding to a post that addressed questions raised in the media about managers who left the troubled University of Medicine and Dentistry of New Jersey (UMDNJ) to work for Drexel University Medical School, wrote,

Through Drexel leadership, the medical school just finished an outstanding LCME review, a very good match, outstanding board scores and fiscal solvency.

"Through Drexel leadership?" Based on my experience in medical education, I would argue, instead, that the people most responsible for good results in an accreditation review, in placing students into residencies, and in board examinations are the students themselves (especially related to the latter two), and the faculty who taught them. Medical school managers, of course, help provide the infrastructure and manage the financing that enables medical education to succeed. But giving the management first credit for educational results is somewhat grandiose. Managers may deserve more credit for fiscal solvency. But so do the students who pay the tuition, and the hard-working health care professionals and support personnel who actually do most of the work.

We have posted previously about how health care managers and bureaucrats seem to believe that what they do is central and more important than anyone else's work to their organizations.

For example, see this post which quotes the Chief Financial Officer (CFO) of Pheobe Putney Health System, "we'll manage it the way we damn well want."

Also, see this post about how the merger with UnitedHealth Group resulted in rich rewards for Pacificare executives. Wall Street analysts thought that the executives were deserving of huge financial rewards for the "risk" they took in trying to turn around a troubled health care company. However, it was their stock-holders who were at financial risk. The executives were paid employees, whose salaries were no more, and possibly less at risk than any other employees if the corporation were to fail.

The attitudes in these three cases seem analogous to that attributed to the French King Louis XIV, "l'etat c'est moi." Managers' apparent beliefs that they are of the most central importance to the medical school, the hospital system, or the managed care company negate the contributions of all the other dedicated people who make these organizations work. The managers perhaps believe that they in effect are owners of these organizations, which, of course, they do not actually own.

This notion that "l'organisation de la sante c'est moi" may represent some of the garbled thinking underlying our presently mismanged health care system.

(I apologize to all and sundry if I have made any errors using the French language. My language education was unfortunately stunted.)

The Cloud Spreads from UMDNJ

The cloud from ongoing problems at the University of Medicine and Dentistry of New Jersey (UMDNJ) is starting to spread over other institutions.

We have posted extensively at the troubles at UMDNJ, which now is operating under a federal deferred prosecution agreement with the supervision of a federal monitor (see most recent post here.) We had previously discussed allegations that UMDNJ had offered no-bid contracts, at times requiring no work, to the politically connected; had paid for lobbyists and made political contributions, even though UMDNJ is a state institution; and seemed to be run by political bosses rather than health care professionals. (See post here, with links to previous posts.)

The Philadelphia Inquirer just reported that New Jersey Governor Corzine is proposing substantial ($169 million) cuts in state higher education funding affecting all state colleges and universities, not just UMDNJ, because he believes that the problems at UMDNJ reflect systemic problems with the management of all New Jersey higher education. He said, "frankly, the UMDNJ issue tells me there may be management weaknesses. UMDNJ tells me the institutions are not as disciplined as we would like...." Furthermore, if the colleges and universities try to make up the cuts with tuition increases, not management cuts, Corzine is threatening to re-organize the entire state higher education effort.

Meanwhile, the Inquirer also reported that questions are being raised about former UMDNJ managers who wound up at Drexel University College of Medicine in Philadelphia. We had previously posted about two fomer managers who wound up at Drexel after receiving golden parachutes from UMDNJ. James Archibald, former senior vice president for administration and finance at UMDNJ, is now Senior Vice President for Health Sciences at Drexel. John Ekanius, former vice president for government and public affairs at UMDNJ, is now Associate Dean for External Relationships and Strategic Development. The Inquirer reported that Archibald had arranged one of the famous "no-bid contracts" at UMDNJ, with the late, politically connected Ronald A. White, former fund raiser for New Jersey's former Governor Jim McGeevey. Drexel also hired David L Printy as chief operating and business development officer at the medical school. He left a year later after a "problem" he had with the US Securities and Exchange Commission (SEC) in 1996 was revealed, which had lead to a 10 year ban from working in the securities field.

Drexel was the successor institution to the former Allegheny University of Health Sciences (AUHS), part of the Allegheny Health Education and Research Foundation (AHERF). As the Inquirer pointed out, "Allegheny leaders spent tens of millions of dollars in restricted medical endowments to keep the money-losing system afloat. That resulted in a 2002 plea and a 11 1/2 - month sentence for Allegheny's head, Sherif Abdelhak. (For a somewhat more detailed history of the AHERF debacle, see the article I wrote for the RI chapter newsletter for the Amercian College of Physicians.) The Inquirer quoted a former assistant US attorney re Drexel's relationship to AHERF, "when you are the successor to a company that has gone through the tumultuous times with law enforcement like Allegheny, there should be lessons learned and a desire to reestablish credibility, not only with regulators, but with the public at large."

Yet, in addition to Printy's "issue," there were other issues raised about Archibald after he became the leader to which Drexel's medical school reported. Archibald's only experience with health care had come during his management career at UMDNJ. Before then he was the Chief Financial Officer (CFO) for SEPTA, the Philadelphia municipal transit system. The Inquirer stated, "Archibald's style and lack of medical credentials angered many on the Drexel faculty." "In March, 2004, nearly all of the 23 [Drexel] department chairs signed a letter to [Drexel President] Papadakis, seeking Archibald's demotion.... 'The dean must be empowered to be the unquestioned leader' they wrote.... The letter stated that the atmosphere of the school had 'become one of both dysfunction and distrust.'" 18 months later, the new dean of the medical no longer had to report directly to Archibald. The Inquirer article was silent about whether the Drexel medical school faculty still feel the institution's atmosphere is characterized as dysfunction and distrust.

The new Governor of New Jersey has realized the existence of widespread mismanagement in our formerly trusted and revered health care and educational institutions, and the consequences such mismanagement may have. I hope the President of Drexel, which only acquired a medical school due as a consequence of mismanagement, and worse, at Allegheny, now realizes that not everyone who fell into health care management in the last 20 boom years necessarily should continue in these roles.

Addendum: Some quick Google searching revealed that Ms. Susan Mettlen, formerly vice president for information services and technology at UMDNJ, who became Chief Information and Technology Officer for Drexel medical school, was forced to resign her position of vice chancellor for information infrastructure at the University of Tennessee in 1998 after questions were raised about her relationship with a company that sold software to the school. Maybe the people who oversee the managers of health care organizations should learn how to use Google.

Addendum (4/7/2006): The Philadelphia Inquirer published a letter from Joseph Jacovini, chair of the Drexel University Board of Trustees, in response to the article cited above:

The reputation of a university is its most important asset. Your Page One headline ("N.J. probe may touch Drexel's reputation," March 24) unfairly imputes a Drexel association with this matter. Simply stated, the facts of the article do not support the headline and your newspaper has improperly impugned Drexel's reputation.

The situation at the University of Medicine and Dentistry of New Jersey is not a Drexel story. It is not related to any actions at Drexel by James Archibald, senior vice president for health sciences, or any of the former UMDNJ employees hired. I should not have to make this clear, except that your article was misleading. The financial management of Drexel University is beyond reproach.

Drexel began operating the College of Medicine in 1998 with the support of Gov. Ridge and Mayor Rendell after the catastrophic Allegheny bankruptcy, saving 13,000 jobs and an irreplaceable medical resource. The college today is strong both financially and academically, earning the highest possible evaluation from its accrediting body and attracting a high caliber of applicants.

As long as your readers know the facts, they will understand that Drexel's reputation as one of the most successful and respected universities in the nation is unassailable. We are owed an apology and a retraction.

Note that Jacovini did not dispute the facts about Archibald, or any other administrators from UMDNJ who were hired by Drexel, that appeared in the original Philadelphia Inquirer story. The concerns I raised above were not about the financial management of Drexel, but about Archibald's alleged involvement with a no-bid contract at UMDNJ, and the protests against him by Drexel Department chairs based on his lack of any direct health care experience or credentials, which they apparently felt were not appropriate for a Vice President for Health Sciences, to whom the Dean of the Medical School and all faculty reported.

Note further that Jacovini, the Chairman of the Dillworth Paxson law firm, is also on the board of directors of Corcell, a health care corporation that provides cord blood stem cell banking services.