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 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 Managers' Coup d'Etat in Health Care Appears Complete - a Study of Top Health Care "Influencers"

Introduction: the Managers' Coup d'Etat

As we wrote in 2006... in 1988, Alain Enthoven, an original member and driving force of the Jackson Hole group, published a short manifesto about "managed competition." (Entoven AC. Theory and Practice of Managed Competition in Health Care Finance. Amsterdam: North Holland, 1988.) This is now not easy to find (but see Amazon here).

In this volume, Enthoven expounded on his scheme to wrest power over health care from physicians and give it to managers and bureaucrats. Enthoven thought of physicians as part of a tightly organized "guild," that is, an economic alliance. His model for this was a pre-World War II document from a French medical society. Basically, he thought such guilds, which he believed to be in place in all Western democracies except in the UK and Scandinavia, were based on principles that were "not the natural expression of a free market in health care," (p.33) and furthermore, that the guild model associated with health insurance "makes it very difficult for government or private payors to control cost growth," (p.41) while they paradoxically "can also produce poor service (p. 42). To combat physicians' overwhelming economic power, Enthoven called for managers to use "tools they have found to counteract market failure." (p. 98) Finally, he suggested using a coordinated strategy to "break up the guild," noting that "overcoming the guild has not been easy in the United States.... However, the guild has broken down." (P. 122)

How much the guild has broken down, leaving health care leadership in the hands of managers, was illustrated by a recent research letter in the Mayo Clinic Proceedings (Logeman AL et al. Who Influences Health Care in the United States? A Study of Trends From 2002 to 2018. Mayo Clin Proc 2019; 94: 2360-1. Link here.)

Managers are Now the Most Influential People in Health Care

The authors studied the list of the 100 Most Influential People in Healthcare published by Modern Healthcare yearly since 2003. (The 2018 version is here.)   They stated that:

Because it receives wide reporting and limited critique, this list stands as a useful longitudinal account of who others perceive to be in a position to influence health care.

Then,

Using the published yearly list and the reported characteristics of the persons listed, we sought to determine the relative ranking over time, covering the period 2002 to 2018, of executives and administrators, academics and frontline advocates, and government officials. To achieve this, we determined the influencer’s sex and role (executive, member, independent, or other) as well as the sector from which each individual exerted their influence grouped into industry (nonprofit, for profit, payers, products, and providers), academia/advocacy, and government.

The results showed a striking trend over time.

There were 1700 persons named from 2002 to 2018, a minority of them women (range over the period, 17% to 28%). Most influencers are top executives from nonprofit health care provider organizations; their proportion has increased from 23% in 2002 to 72% in 2018, with an apparent substantial upward inflection in this trend since 2009 (Figure). This predominance appears to be at the expense of academics, advocates, and government officials.

A news article that featured an interview with Dr Victor Montori, the senior author of the article, noted in fact that the most recent (2018) list included quite a few CEOs of large for-profit health care corporations.

Among those topping the latest installment of the influential Modern Healthcare power index are the corporate heads of Amazon, Apple, Aetna, Humana, CVS and Minnetonka, Minn.-based United Health/Optum.

The authors concluded that

perceived influence over US health care of chief executives of health systems is increasing. To the extent that the ranking validly reflects influence, the sharp rise in the influence of chief executive officers at the expense of representatives of patients or health professionals may underscore the increasing industrialization of health care. It is not possible to find patients, patient advocates, clinicians, or clinician advocates at the top of this list. This trend placing health care influencers within C-suites, accountable to boards mostly comprising other corporate leaders, may explain the rise of business language and thinking

They suggested that it is possible that there is a

causal association between the concentration of executive influence and problems of patient care derived from efforts to optimize operational efficiency and financial performance, for example, clinician burnout, the heavy burden of treatment afflicting patients with chronic conditions, and the erection of barriers to care to optimize 'payer mix.'

Dr Montori also said in the interview

Americans increasingly find themselves in a corporate-centric healthcare echo-chamber, one in which the public will increasingly approach tough policy decisions having heard only the viewpoint from the top.

'The primary goals of CEOs are to advance the mission of their organization,' Montori says. 'If all that influences healthcare are the ideas of people who advocate for the success of their organizations, people who are not served by them will not have their voices heard.'

Furthermore, he suggested that the public may be befuddled by the current health policy debates, including those about universal health care and the possibility of reducing the power of commercial health insurance companies because

in the rest of the narrative all that they hear is about are the successes of biotech, the successes of tech companies, and the successes of healthcare corporations who achieve high levels of innovation thanks to the bold leadership of their executives. It's why we have been calling for greater awareness of the industrialization of healthcare for some time now

Summary

The new study by Longman, Ponce, Alvarez-Villalobos and Montori adds to the evidence that health care has been taken over by business-trained managers, and in the US, especially by large commercial health care organizations run by such managers.

Since we started Health Care Renewal, we have frequently discussed the rise of generic managers, which later we realized has been called managerialism.  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 in medicine, 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.  (Furthermore, it appears that the shareholder value dogma is just smokescreen to cover the real goal of managers, increasing their own wealth, e.g., look here.)  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.

Maybe someday the top "influencers" in health care will actually be people who know something about health care and actually care about patients' and the public's health. 

Note (25 November, 2019): this post was re-posted by the Naked Capitalism blog here. 

Heads They Win, Tails We Lose - Non-Profit Hospital Executives Paid Generously After They Were Shown the Door

On Health Care Renewal, we have been decrying American health care dysfunction since 2004.  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.  The latest (2017) international comparison of health systems produced by the Commonwealth Fund shows that the US spends about 16% of its gross domestic product (GDP) on health care, compared to less than 12% spent by 10 other countries.  The US ranked no better than fifth on performance rankings measuring care process, access, administrative efficiency, equity, and health care outcomes.  It had the worst access, equity and health outcomes.

Even given that some of the measures used are debatable, these are dismal results.  No wonder US physicians are demoralized and burnt-out, as we first noted in our 2003 article. [Poses RM.   A cautionary tale: the dysfunction of American health care. Eur J Intern Med 14 (2003) 123–130. Link here.] 

Health care dysfunction is commonly discussed in the US, especially since health care reform became a legislative priority during the Obama administration.  The resulting Affordable Care Act (ACA, "Obamacare") resulted in some improvement in access to health insurance, but problems with access, quality and cost remain.

It is hard to understand how such a dysfunctional system continues without considering who benefits from it. One group who greatly benefit is health care organizational managers.  We have frequently discussed their luxurious and ever increasing pay.  Furthermore, often their pay seems wildly disproportionate to their accomplishments.  For example, in June, 2017 we profiled the CEO of safety-net hospital who made over $1 million a year from an institution charged with caring for the poor.  His institution demonstrated no great achievements in clinical care or improving patient outcomes.  Meanwhile it was alleged that he tried to increase revenue via unethical means, and was even cozy with organized crime.  

Such executive compensation is rarely challenged, but when it is, the responses are formulaic.  Justifications are 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. 

They 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).

As we discussed recently, these talking points are easily debunked.  Additionally, rarely do those who mouth them in support of a particular leader show evidence that they apply to that leader. Could so many highly paid executives be so brilliant?

Instead we now we present cases from the second part of 2017 in which non-profit hospital executives were given lavish compensation just after they were forced out of their jobs.In alphabetical order by the states in which the hospitals are located...

Florida: Broward Health Vice President Got $214,008 After Allegations of Improper Payments Lead to Resignation

As reported by the Broward County (FL) Sun-Sentinel first on August 7, 2017,

Doris Peek resigned July 20 as senior vice president of Broward Health, which runs five hospitals and various clinics, after a law firm hired by Broward Health accused her of improperly directing nearly $1.7 million to a company owned by a prominent Republican consultant. At the time of the report, Broward Health released a statement saying that it took the report 'very seriously' and that 'every individual at Broward Health is held accountable in order to uphold established legal and ethical standards.'

Peek’s severance agreement, released by Broward Health in response to a public records request from the Sun-Sentinel, states that she will receive $214,008, most of which represents six months’ severance and the rest accrued leave.

Under the agreement, signed by Broward Health interim chief executive officer Beverly Capasso, Peek may cooperate with any government investigators or regulators looking into Broward Health, a taxpayer-supported system legally known as the North Broward Hospital District. But she promised to not take Broward Health to court and 'not engage in any activity either oral or written which disparage or adversely affect Broward Health.'

Such non-disparagement clauses are common in severance agreements, although they have been criticized for allowing employers to cover up problems.

The hospital administration gave no clear reason for the generosity of the agreement.  

Asked why Broward Health would agree to such a payment, considering the highly critical contents of the report, Broward Health’s public relations agency, EvClay Public Relations, released this statement: 'It is the policy of Broward Health to not discuss severance agreements.' Pressed on the reason for this, the agency provided this statement: 'We respect the privacy of our employees.'

Given the placement of the non-disparagement clause in the agreement it is worth considering that the interim CEO, Ms Beverly Capasso, who approved the contract, was also under a cloud at the time it was written. The Sun Sentinel had previously reported,

The new chief executive of Broward’s largest public hospital system holds a master’s degree in health administration from a defunct university that has been identified by federal investigators as a diploma mill.

Beverly Capasso, who was just awarded a $650,000 annual salary to run Broward Health, received the degree from Kennedy-Western University, a mail and online institution based in California and Wyoming that closed in 2009 after failing to gain accreditation. Her resume invokes the degree at the very top, giving her name as 'Bev Capasso RN, BSN MHA.'

Furthermore, soon after the severance agreement was announced, the Sun-Sentinel reported more resignations among Broward Health management,

Two more top Broward Health executives quit this week, deepening the leadership turmoil at the taxpayer-supported hospital system.

Dionne Wong, senior vice president for human resources, and Mark Sprada, interim chief executive of Broward Health Medical Center in Fort Lauderdale, both resigned. 

And in the months since, other major management problems became apparent.

The resignations come after Broward Health’s credit rating was lowered last month by S&P Global Ratings, which cited weak financial results and the leadership turmoil at the troubled system, legally known as the North Broward Hospital District.

After that, the hospital system was also alleged to have given a no-bid contract to 21st Century Oncology, allegedly with the involvement of Florida governor Rick Scott (News-Press, September 25); and  has been under grand jury investigation for violations of the open meeting law (Sun-Sentinel, September 26).

Ms Peek was allegedly involved in improper contracting.  While Ms Peek may not have been responsible for all the additional trouble and turmoil at the hospital system, she surely participated in it.  On the other hand, there is no obvious offsetting evidence of the brilliance of her management.    Why reward her with such a generous severance package?

Georgia: South Georgia Medical Center CEO Will Get More than $2M After Allegations of Violations of Open Meeting Law Lead to Termination

As reported by the Valdosta (GA) Daily Times, July 6, 2017,

The former South Georgia Medical Center CEO will be paid more than $2 million over the next three years, for doing nothing.

Raymond Snead was ousted as CEO in March, but he’ll stay on the payrolls for a while, according to his termination letter.

The April 19, 2017 letter, effectively firing Snead, called the ouster a 'termination without cause.'

The hospital will continue to pay Snead $650,000 per year — his base annual salary — for the next three years, the letter says. He’ll also get a $2,000 car allowance each month during that period.

The local Hospital Authority, which governs the hospital, also gave Snead and his wife the option to receive health benefits for the three years. He took the offer, said Sam Allen, Hospital Authority chairman.

However, it appears that this executive also had not previously covered himself in glory, certainly not sufficient to justify this level of post-employment compensation.

Snead became CEO in September 2015, and the hospital had been under fire for poor management practices under his watch.

There also was a major issue with an apparent subordinate of Snead's on his watch.

Snead’s ouster came on the heels of the resignation of hospital attorney Walter New.

New, along with the entire Hospital Authority, got into trouble in 2016 when the group held a closed meeting without the public’s knowledge, which is a violation of Georgia law.

Furthermore, City Councilman Robert Yost

has called repeatedly for the resignations of Hospital Authority members, saying their mismanagement has caused the hospital great harm. 'They have run the ER into the ground. They have run off doctors, nurses and regular employees, some who have worked there for 25 to 30 years,” he said at the June 22 City Council meeting.

'They have intimidated employees and treated them like dirt. When it is time to reappoint the City of Valdosta’s representatives on this authority, I say let’s make sure they are all reappointed.'

'… (They) have again made very bad business decisions on our behalf and they should all be fired.'

Again, it seems that Snead's management was the opposite of brilliant, yet he was allowed to walk away with a multi-million dollar severance package. 

North Carolina: Nash UNC Health Center CEO Will Get More than $1M After Concerns about Revenue Losses and Patient Safety Lead to Retirement

As reported by the Rocky Mount (NC) Telegram, July 16, 2017, Larry Chewning the CEO of Nash UNC Health Care retired

with around $1 million since he has an ironclad two-year rolling contract, according to multiple sources familiar with the situation but not authorized to speak publicly on the matter.

Chewning didn't deny the amount he is receiving....

However, it turns out that he did not actually retire, but,

was asked to step down late last month by the local hospital board but was allowed to announce he was retiring.

The hospital was hardly transparent about the facts of the case, which were futher confused by (perhaps deliberately) complicated corporate relationships:

Inquiries into Chewning's salary and severance package led the Telegram on a goose chase involving lawyers, public relations spokesmen and uninformed officials.

Beginning with Chewning, there has been a series of refusals to disclose the salary of the top executive at a publicly-owned hospital in a state-owned network of hospitals. Drilling down, it was discovered that all the CEOs in the UNC system except for the UNC Medical Center in Chapel Hill are employed by Rex Hospital, a privately-owned hospital in Raleigh.

'I am legally precluded from disclosing any information from my employment agreement with Rex Hospital,' Chewning said, including the contact information for Don Esposito, Rex Hospital's general counsel.

Esposito referred the Telegram to Alan Wolf, the media relations manager for UNC Health Care and UNC REX Healthcare.

'We comply with all legal requirements, but it's not our practice to disclose salary information, for competitive and privacy reasons,' Wolf said. 'Mr. Chewning is employed by Rex Hospital Inc., which is not a North Carolina governmental entity and therefore is not subject to Chapter 132, the Public Records Act.'

How public hospitals can have CEOs who are employees of a separate, private hospital system was not explained.

Even local government officials were kept in the dark.

Nash County officials said they understood that's they way it had to be, but none of them knew the CEO was being paid through Rex, which makes their salaries private.

Furthermore,

At least one member of the local hospital board said they don't understand how the process works and isn't sure how the hospital will get a new CEO. 'As part of the management agreement, UNC Health Care provides Nash with a CEO,' Wolf said. 'Having a centralized management team gives UNC Health Care more control over decisions and operations at its affiliated hospitals.'

But the hospital CEOs "provided" by state institution UNC all are employed by Rex?

Perhaps all this secrecy just added to the cognitive dissonance created when considering how Chewning's lucrative retirement package might have been related to events that lead up to Chewning's retirement:

Chewning's exit comes after the hospital has been losing money and in the wake of a negative patient safety report. Chewning will remain with the hospital while his replacement is sought, according to his retirement announcement.

So Chewning's management was hardly brilliant.  Yet those responsible for hospital governance were not only happy to let the CEO walk away with a munificent retirement package, they also did their best to obscure the facts of the matter

Ohio: Ohio State University Werner Medical Center CEO Receiving More than $1M Per Year as Senior Consultant After Complaints by Physicians Lead to Resignation

According to the Columbus (OH) Dispatch, August 16, 2017, after Dr Sheldon Retchin, the CEO of Ohio State University Wexner Medical Center resigned in May, but

from his resignation, which was announced on May 10, through June 30, Retchin was still paid the CEO and executive vice president salary and benefits for performing 'transitional duties,...

That base salary was $1.1 million.

[To make full disclosure, note that I was a colleague of Dr Retchin's when we were both young  faculty members in the Department of Internal Medicine at the Medical College of Virginia from 1987 - 1994.]

Thereafter,

a contract obtained by the The Dispatch on Tuesday shows that, since July 1, Retchin has been serving as senior advisor to the president for health policy at a base salary of $500,000 annually.  The university is also making a $600,000 annual contribution to a retirement plan for Retchin, who will hold the position for two years.

So his total compensation would be at least $1.1 million a year for two years post-retirement.  Also,

the new contract says he will be paid a 35 percent performance bonus.

The rationale for this new position per university spokesman Chris Davey was that

Retchin will make important contributions to Ohio State.

'Sheldon Retchin is a nationally known leader in health-care policy,' Davey said. 'During his two-year administrative appointment, he will advise the university concerning the critical issues of health-care reform, Medicaid policy and data-driven improvements to health outcomes.'

Left unsaid is that $1.1 million a year seems like greatly inflated compensation for a health policy adviser.

Also left unsaid were the circumstances surrounding Dr Retchin's departure.

Complaints against Rechin surfaced after a May 1 letter signed by 25 leading physicians criticized his leadership.  That was followed by a letter from five doctors representing the senior leadership of the medical center's Neurological Institute.  Another group of 14 physicians, who head clinical departments at the medical center, had engaged in discussions with top university l eaders.

Upon Retchin's resignation, the university issued a statement in which it said that allegations raised in the letters were untrue.  That prompted another critical letter from leaders in the College of Medicine's Department of Internal Medicine.

A report from a local television station's news department provided further details about why the physicians declared no confidence in Dr Retchin

Dozens of doctors and professors have written letters expressing 'no confidence' in the CEO of Ohio State's Wexner Medical Center.

10TV has obtained three letters from three different groups of doctors and staff members, including department chairs and senior leadership.

They all described problems with management and morale that they said are damaging care and endangering patients and issued a 'Vote of No Confidence' in CEO Sheldon Retchin and his leadership team.

They accused Retchin of a 'management style that is inconsistent with the University's values of excellence, integrity, transparency and trust' and of fostering a culture where physicians have been described as 'lazy' and the program called 'a complete mess.'

It has led to what they call a 'dramatic impact on morale' and 'an increasing number of faculty resignations.'

They said the consequences reach beyond the walls of the Wexner citing an ongoing shortage of doctors which in their words, 'endanger(s) patient safety and lowers the quality of care,' adding to the stress of remaining faculty.

Furthermore,

In the first letter, 25 staffers who signed it said they represent many more employees, but limited the number signing out of concern for retaliation.

They complained of threats against faculty leaders who don't 'get on board' with the plans of medical center leadership.

From the information publicly available, I cannot tell whether the complaints about patient safety and quality of care are valid.  Certainly, however, Dr Retchin's management was questionable.  Creating this degree of anger among the physician staff of an academic medical center hardly seems the mark of brilliant leadership.  Yet Dr Retchin, like the other executives above, seems to have been generously rewarded after he was forced out.

Summary

The plutocratic compensation given leaders of non-profit hospitals is usually justified by the need to competitively pay exceptionally brilliant leaders.  Yet even leaders whose records seem to be the opposite of brilliance often end up handsomely rewarded.  Thes are examples of perverse incentives.

Other aspects of top health care managers' pay provide perverse incentives.  While ostensibly tied to hospitals' economic performance, their pay 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, espeically health care medical 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.  The best current example is the election of a business executive with an MBA to the Presidency of the United States.

Rather than putting patient care first, paying managers sufficiently 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. 

How Managerialsm/ Generic Management Damaged the American Red Cross

The American Red Cross is a storied non-profit organization.  It provides disaster relief, provides a major part of the US blood supply, and has important public health teaching functions, such as teaching cardio-pulmonary resuscitation (look here).  Nonetheless, its operations have become increasingly controversial.  ProPublica has been investigating them for years.  The latest ProPublica report, entitled "The Corporate Takeover of the Red Cross," showed how this renowned organization has suffered under generic management/ managerialism, providing another case study showing how bad generic management and mangerialism are for health care and public health.

We have frequently posted about what we have called generic management, the manager's coup d'etat, and mission-hostile management. Managerialism wraps these concepts up into a single package.  The idea is that all organizations, including health care organizations, ought to be run people with generic management training and background, not necessarily by people with specific backgrounds or training in the organizations' areas of operation.  Thus, for example, hospitals ought to be run by MBAs, not doctors, nurses, or public health experts.  Furthermore, all organizations ought to be run according to the same basic principles of business management.  These principles in turn ought to be based on current neoliberal dogma, with the prime directive that short-term revenue is the primary goal (sometimes in the for-profit sphere called the shareholder value principle, look here.)

The ProPublica article showed how the leadership of the American Red Cross was given over to generic managers; how they ran the organization based on generic business management principles; and how the results were bad for the organization's mission.  I will address each point with quotes from the article, and add the commentary that was lacking in a straight investigative journalistic report.

The New Leaders were Generic Managers

The New CEO is a Generic Manager who Specialized in Marketing

Gail McGovern became Red Cross CEO in 2008.  Her academic background was in the "quantitative sciences."  Her first job was as a computer programmer. Then,

McGovern climbed steadily through the ranks at AT&T. By the mid-1990s, she was head of the company’s consumer markets division....

Next,

McGovern left AT&T in 1998, then spent four years at Fidelity Investments, where she was promoted to be the head of the retail mutual fund and brokerage business. Then came six years as a marketing professor at Harvard Business School....

On the other hand, she apparently had no specific experience, training or expertise relating to the mission of the Red Cross, and specifically no experience, training or expertise in public health, health care, blood banking, or disaster relief.

She Believes in the Primacy of Marketing

Her academic writings spell out her theory of corporate leadership. 'In many organizations, marketing exists far from the executive suite and boardroom,' she and her coauthors wrote in an article for the Harvard Business Review. Companies that make this mistake are doomed to 'low growth and declining margins.'

One could argue that perhaps in the long run, a good product that sells itself might be better for a manufacturing firm than a temporarily persuasive marketing campaign.  Even so, the mission of the Red Cross is not first to grow and make more money, or even to sell products, but instead it is

The American Red Cross prevents and alleviates human suffering in the face of emergencies by mobilizing the power of volunteers and the generosity of donors.

She was Hired by the Red Cross to Promote Generic Management with Emphasis on Marketing

Ms McGovern was hired at a time when the dogma that business managers ought to run everything was becoming very prominent.

McGovern, selected after a global search by a headhunting firm, was seen as a candidate who would bring private-sector methods to the nonprofit. 'Isn’t it great that we have someone that really has had that business expertise in developing and working with a brand and recognizing the power of it?' [Red Cross Board Chairwoman Bonnie] McElveen-Hunter told the Washington Post at the time.

Note that the Chairwoman of the Board of Governors herself was

a wealthy Republican donor appointed by President George W. Bush in 2004

According to Wikipedia, she is a businesswoman whose undergraduate degree was in business, who worked for Bank of America and then founded Pace Communications, and who also has no discernable experience or expertise in health care, public health, or disaster relief.

The ProPublica article did not suggest that Ms McElveen-Hunter or anyone else really thought through how a generica manager practicing managerialism would actually benefit the mission of the Red Cross.

The CEO Recruited Other Generic Managers

Soon after she joined the Red Cross, McGovern recruited executives who had worked with her at AT&T and Fidelity....

Furthermore, 

As part of her effort to run the Red Cross more like a business, McGovern recruited more than 10 former AT&T executives to top positions. The move stirred resentment inside the organization, with some longtime Red Cross hands referring to the charity as the 'AT&T retirement program.'

Again, one would expert a generic manager to feel most comfortable amongst others of her ilk.  Again, any consideration of whether running the Red Cross "more like a business" would improve its success as a charity was not evident.

The New Generic Managers Relied on Generic Management Dogma

The new generic managers conceived of their job as "a corporate turnaround that would touch every aspect of the charity's finances and operations."

They Established Centralized Control

The work of the Red Cross was traditionally done by local chapters. The new generic managers sought to decrease their independence from "corporate."  So,

Each of the Red Cross’ more than 700 chapters had its own bank account, tracked its own volunteers, and ran its own computer system. McGovern hoped to realize considerable savings by consolidating these back-office functions, creating what she dubbed 'One Red Cross.'

The notions that different chapters might face different challenges, and hence that flexible local control might do better addressing these challenges than would centralized top-down command were not apparently considered.

They Cut Costs, Particularly Through Cutting Employee Benefits and Laying Them Off

and hence tried to enhance short-term revenue:

She also got to work cutting costs: there was a round of layoffs; she killed the charity’s generous pension program and suspended matching contributions to employees’ retirement accounts.

Also,

When McGovern was hired as CEO, there were over 700 Red Cross chapters across the country. Today, there around 250, though some former chapter offices stayed open even as they were folded into other chapters. The Red Cross declined to say how many offices it closed.

Over the course of McGovern’s tenure, the number of paid employees fell from around 36,000 to around 23,000 and the Red Cross today spends several hundred million dollars less a year than it did in 2008. (Most of the staff cuts were from local chapters, not the blood business, though the Red Cross declined to provide a breakdown.)

Cost-cutting, especially by cutting compensation to and benefits of line employees, is a central mantra of current business management.  The effects these cuts have on the morale and performance of the remaining employees, and the downstream effects on the organization are generally ignored.  The specific implications for a charity meant to uphold a mission were not discussed.  

They Focused on Marketing and Public Relations

Early on,

McGovern laid out a vision to increase revenue through 'consolidated, powerful, breathtaking marketing.'

'This is a brand to die for,' she often said.

In addition,

The Red Cross’ chief of fundraising, a former colleague of McGovern’s from Fidelity, told the assembled officials that the organization should attract far more than the $520 million in donations it was bringing in annually. 'Strength of brand,' his PowerPoint said, 'justify results in $1-2 billion range.'

Also, CEO McGovern chose Jack McMaster to run the public health training operation,

 praising McMaster to Red Cross staff as a master marketer and a trusted former colleague [at AT&T].

As an aside, actually,

After leaving AT&T, he took a job in 1999 as CEO of a Dutch telecom company called KPNQwest. In just a few years, he had run it into what Reuters called a 'spectacular collapse,' prompting a bankruptcy, a storm of lawsuits, and comparisons to Enron. Just months before the company went under, McMaster publicly boasted that it was poised for dramatic growth.

This suggests that McGovern placed far more priority on hiring "master marketers" than finding trustworthy leaders.   Of course, a CEO who is mainly a professional marketer may see marketing as central to whatever organization she is running.  The notion that the Red Cross had such a wonderful brand because it used to do wonderful things did not apparently occur to the new generic marketers.  Furthermore, the notion that even "master marketing" may not hide the undermining of the organization's mission also did not occur.   

They Suppressed Opinions They Did Not Want to Here

As discontent among staff rose (see below), leading to anguish expressed on social media,

critical posts later disappeared from the Facebook page. Moderator Ryan Kaltenbaugh reminded participants that the group was intended to be 'a POSITIVE forum sharing ideas, stories, pictures, links, videos and more across our great country.'

'[P]lease (please) refrain from posting your negative personal views,' he continued.

To a leadership obsessed with marketing, appearance may have seemed to be everything.  Yet again, suppressing the bad news does not make what generated it disappear.

They Paid Themselves Very Well 

We have often discussed how executive compensation in health care now seems to rise beyond any level that could be justified by the executives' actions and performance.  A central problem with managerialism seems to be that now top managers can virtually set their own pay.  Thus, they have become value extractors, more focused on their own enrichment than their organizations' ultimate success.  The ProPublica article did not explicitly discuss executive compensation except after the failure of the expansion plans by the "master marketer" McMaster,

Amid layoffs in the division last year, bonuses given to McMaster and his team raised eyebrows within the Red Cross, a former headquarters official said.

In a statement, the Red Cross said the bonuses were appropriate because the division hit 'strategic milestones' including establishing 'a national tele-service platform and national sales and service delivery models.'

Regardless, the division failed to reach its real goal, expansion of its business.

Furthermore, there is evidence that during the reign of McGovern, the top managers as a group have been very well paid, especially given that they were running a charity whose good works are largely supported by contribuations and the taxpayers.  We noted in a 2011 post that

In 2009, then CEO Gail McGovern received over a million in total compensation, $1,032,022 to be exact. Its President for Biomedical Services got $850,489. Its Executive VP for Biomedical Services got $596,309. Twelve other executives got more than $250,000. Of those, ten got more than $350,000.

Since then, while Ms McGovern's compensation has actually declined, the number of very well paid managers has actually grown.  According to the organization's latest available IRS Form 990 filing, for 2013, Ms McGovern had total compensation of over $597,000, and 15 managers had total compensation over $250,000, of these, 10 were over $400,000.

So despite all the problems afflicting the Red Cross (see below, and the larger ProPublica series), the top managers still managed to pay themselves very well.

The Results were Bad

The Marketers' Best Laid Plans Led to Declining Contributions

The "master marketer" did not do so well.

McMaster laid out how the CPR unit would attract more customers while at the same time hiking prices for classes and training materials in CPR, swimming, and babysitting. He believed the Red Cross brand justified higher prices than were being charged around the country.

Customers voted with their wallets. When prices rose, many simply switched to lower-cost providers.

'We thought if we raised prices, American Heart [Association] would probably raise prices, and life would be good,' McGovern said at a 2013 employee town hall meeting, referring to the Red Cross’ competitor in the CPR class business. 'Didn’t happen.'

Also,

 'A halfway competent market analysis would have told you that the bulk of our business was in selling to small businesses who viewed us as a business expense,' recalled one former chapter executive director. 'When the massive price increases arrived, it was too much and customers bailed.'

This illustrates that the generic managers did not even achieve their business goal, increasing sales and increasing revenue.  What did they care, though, if the bonuses still rolled in? 

Centralized Control, Benefit Cuts, Layoffs, and the Marketing Focus Wounded Employee Morale and Discouraged Volunteers

Those who push generic management practices often seem blind to their adverse effects.  So,   

 Many of those who taught classes — including volunteers who did the work for free — quit after being turned off by headquarters’ poor communication and insistence on centralized control.

Also,

But much like the organization’s paid staff, many of its volunteers appear deeply disillusioned. An internal survey obtained by ProPublica found volunteers around the country had a satisfaction rate of 32 percent this year — down 20 points from last year.

Furthermore,

Driving the alienation, longtime employees and volunteers say, is a gulf that has opened up between McGovern’s executive suite and the rank and file who have spent decades in the mission-focused nonprofit world.

She has surrounded herself with a tight-knit group of former telecom colleagues, they say. 'They’re all people from the period when AT&T imploded,' said one former senior official. 'The priorities seem to be a reflection of what that team is comfortable with: sales and marketing.'

An internal assessment previously reported by ProPublica and NPR said national headquarters’ focus on image slowed the delivery of relief aid during Hurricane Isaac and Superstorm Sandy. Officials engaged in 'diverting assets for public relation purposes,' according to the assessment. 

The Red Cross depends on its staff and volunteers to do the work.  What did the brilliant generic managers and master marketers think would happen if they fired lots of staff, drove volunteers to quit, and disillusioned those who remained?

Layoffs and Cutback Reduced Capacity to Respond to Disasters

One example was the response in West Virginia
 

In West Virginia, where several chapters have been shuttered, emergency management officials said the group’s response to recent disasters has been anemic. After a recent water shortage caused by a chemical leak, the charity declined to provide any help to residents, the Register-Herald of Beckley reported. Local officials described that as business as usual for the charity. When a tornado hit in the southern part of the state, the Red Cross’ inadequate response left scores of victims without enough food, according to the newspaper.

Another was the response in northern California,

In Northern California last year, the Red Cross shuttered the Napa County chapter and laid off disaster relief staff, according to an internal PowerPoint presentation. Then, in September, a drought-fueled fire swept through the area, consuming more than 75,000 acres and 1,200 homes.

Because of the issues with the Red Cross’ shelter, nearly all of 1,000 displaced people at the Napa County Fairgrounds — including the elderly, new mothers and children, and anyone with a pet — ended up sleeping outside in tents, cars or RVs. The problems were first reported by the Press Democrat newspaper.

Also,

Local officials were furious. They say the Red Cross showed up lacking basic supplies such as Band-Aids, portable toilets, and tarps to protect against the rain. Instead the group’s volunteers handed out Red Cross-branded bags of items that weren’t urgently needed like lip balm and tissues.

The Red Cross responders were inexperienced and, according to residents, not enough of them spoke Spanish, the language of many of the fire victims.

In general, as told by former Red Cross volunteer Becky Maxwell, a self-described "die-hard Red Cross person for 25 years," who quit after becoming increasingly frustrated,

'McGovern has fired almost all of the trained and experienced volunteers and staff,' Maxwell told ProPublica, replacing them 'with people who have absolutely no knowledge of what the Red Cross is or does in a disaster. Not only is she setting these people up to fail but she is compromising the service delivery that is so important to the clients.'

Summary

The Red Cross Board of Governors, largely composed of well paid business managers (e.g., a former Vice Chairman of Goldman Sachs, a senior vice president of Eli Lilly, the chief financial officer of Home Depot, the executive vice president of Target), decided that a generic manager using a managerialist approach could cure the organization's perceived ills.  The new CEO, who lacked any obvious experience or training relevant to the Red Cross mission, hired her former cronies at AT&T and Fidelity as managers.  The new team cut costs, laid off employees, centralized management, and focused on marketing.  The apparent results were fewer, less experienced, upset staff; fewer volunteers; declining interest in public health training products; and worsening disaster response.

Thus, once again, generic managers and managerialism have laid low a formerly proud charity.  Unfortunately, this one also happens to have vital public health and disaster relief roles that have now been severely compromised.

Based on previous experience, it should come as no surprise that generic managers who do not know much or care much about public health and health care, and who rely on a one-size fits all management dogma uninformed by the public health or health care context or public health or health care values will end up undermining patients' and the public's health.

The real surprise is that the generic managers have up to now had no problem maintaining the managers' coup d'etat, that is, their iron grip on the leadership of most public health and health care organizations.

To prevent our ongoing downward spiral, we need to reverse the managers' coup d'etat, and return leadership to those who understand health and health care, support their values, and are willing to be accountable for doing so. 

ADDENDUM (17 December, 2015) - This post was republished on the Naked Capitalism blog. 

"The Scourge of Managerialism" - Generic Management, the Manager's Coup D'Etat, Mission-Hostile Management Rolled Up, as Described by Some Men from Down Under

I just found an important article that in the June, 2015 issue of the Medical Journal of Australia(1) that sums up many of ways the leadership of medical (and most other organizations) have gone wrong.  It provides a clear, organized summary of "managerialism" in health care, which roughly rolls up what we have called generic management, the manager's coup d'etat, and aspects of mission-hostile management into a very troubling but coherent package.  I will summarize the main points, giving relevant quotes.

Recent Developments in Business Management Dogma Have Gravely Affected Health Care

Many health practitioners will consider the theory of business management to be of obscure relevance to clinical practice. They might therefore be surprised to learn that the changes that have occurred in this discipline over recent years have driven a fundamental revolution that has already transformed their daily lives, arguably in perverse and harmful ways.

These Changes Have Been Largely Anechoic

these changes have by and large been introduced insidiously, with little public debate, under the guise of unquestioned 'best practice'.

See our previous discussions of the anechoic effect, how discussion of facts and ideas that threaten what we can now call the managerialist power structure of health care are not considered appropriate for polite conversation, or public discussion

Businesses are Now Run by Professional Managers, Not Owners

The traditional control by business owners in Europe and North America gave way during the 19th century to corporate control of companies. This led to the emergence of a new group of professionals whose job it was to perform the administrative tasks of production. Consequently, management became identified as both a skill and a profession in its own right, requiring specific training and based on numerous emergent theories of practice.

These Changes Were Enabled by Neoliberalism (or Market Fundamentalism, or Economism)

Among these many vicissitudes, a decisive new departure occurred with the advent of what became known as neoliberalism in the 1980s (sometimes called Thatcherism because of its enthusiastic adoption by the Conservative government of Margaret Thatcher in the United Kingdom). A reaction against Keynesian economic policy and the welfare state, this 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, including successive Liberal and Labor governments in Australia.

Note that this is a global problem, at least of English speaking developed countries.  The article focuses on Australia, but we have certainly seen parallels in the US and the UK.  Further, note that we have discussed this concept, also termed market fundamentalism or economism.

Managerialism Provides a One-Size Fits All Approach to the Management of All Organizations, in Which Money Becomes the Central Consideration

The particular system of beliefs and practices defining the roles and powers of managers in our present context is what is referred to as managerialism. This is defined by two basic tenets: (i) that all social organisations must conform to a single structure; and (ii) that the sole regulatory principle is the market. Both ideas have far-reaching implications. The claim that every organisation — whether it is a mining company, a hospital, a school, a professional association or a charity — must be structured according to a single model, conforming to a single set of legislative requirements, not so long ago would have seemed bizarre, but is now largely taken for granted. The principle of the market has become the solitary, or dominant, criterion for decision making, and other criteria, such as loyalty, trust, care and a commitment to critical reflection, have become displaced and devalued. Indeed, the latter are viewed as quaint anachronisms with less importance and meaning than formal procedures or standards that can be readily linked to key performance indicators, budget end points, efficiency markers and externally imposed targets.

Originally conceived as a strategy to manage large and increasingly complex organisations, in the contemporary world, no aspect of social life is now considered to be exempt from managerialist principles and practices. Policies and practices have become highly standardised, emphasising market-style incentives, devolved budgets and outsourcing, replacement of centralised budgeting with departmentalised user-pays systems, casualisation of labour, and an increasingly hierarchical approach to every aspect of institutional and social organisation.

We have frequently discussed how professional generic managers have taken over health care (sometimes referred to as the manager's coup d'etat.)  We have noted that generic managers often seem ill-informed about if not overtly hostile to the values of health care professionals and the missions of health care organizations.

Very Adverse Effects Result in Health Care and Academics

In the workplace, the authority of management is intensified, and behaviour that previously might have been regarded as bullying becomes accepted good practice. The autonomous discretion of the professional is undermined, and cuts in staff and increases in caseload occur without democratic consultation of staff.   Loyal long-term staff are dismissed and often humiliated, and rigorous monitoring of the performance of the remaining employees focuses on narrowly defined criteria relating to attainment of financial targets, efficiency and effectiveness.

The principles of managerialist theory have been applied equally to the public and the private sectors. In the health sector, it has precipitated a shift in power from clinicians to managers and a change in emphasis from a commitment to patient care to a primary concern with budgetary efficiency. Increasingly, public hospital funding is tied to reductions in bed stays and other formal criteria, and all decision making is subject to review relating to time and money. Older and chronically ill people become seen not as subjects of compassion, care and respect but as potential financial burdens. This does not mean that the system is not still staffed by skilled clinicians committed to caring for the sick and needy; it is rather that it has become increasingly harder for these professionals to do their jobs as they would like.

In the university sector, the story is much the same; all activities are assessed in relation to the prosperity of the institution as a business enterprise rather than as a social one. Education is seen as a commodity like any other, with priority given to vocational skills rather than intellectual values. Teaching and research become subordinated to administration, top-down management and obsessively applied management procedures. Researchers are required to generate external funding to support their salaries, to focus on short-term problems, with the principal purpose being to enhance the university's research ranking. The focus shifts from knowledge to grant income, from ideas to publications, from speculation to conformity, from collegiality to property, and from academic freedom to control. Rigid hierarchies are created from heads of school to deans of faculties and so on. Academic staff — once encouraged to engage in public life — are forbidden to speak publicly without permission from their managers.

Again, we have discussed these changes largely in the US context.  We have noted how modern health care leadership has threatened primary care.  We have noted how vulnerable patients become moreso in the current system, e.g., see our discussions of for-profit hospices.  We have discussed attacks on academic freedom and free speech, the plight of whistle-blowers, education that really is deceptive marketing, academic institutions mired in individual and institutional conflicts of interest, and the suppression and manipulation of clinical research.  We have noted how health care leaders have become increasingly richly rewarded, apparently despite, or perhaps because of the degradation of the health care mission over which they have presided.

The Case Study

The article provided a case study of the apparent demise of the Royal Australasian College of Physicians as a physician led organization, leading to alleged emphasis on "extreme secrecy and 'commercial in confidence," growth of conflicts of interest, risk aversion on controversial issues.  When members of the organization called for a vote to increase transparency and accountability, the hired management apparently sued their own members.

Authors' Summary

Whether the damage done to the larger institutions — the public hospitals and the universities — can be reversed, or even stemmed, is a bigger question still. The most that can be said is that even if the present, damaging phase of managerial theory and practice eventually passes, its destructive effects will linger on for many years to come.

My Summary

I now believe that the most important cause of US health care dysfunction, and likely of global health care dysfunction, are the problems in leadership and governance we have often summarized (leadership that is ill-informed, ignorant or hostile to the health care mission and professional values, incompetent, self-interested, conflicted or outright criminal or corrupt, and governance that lacks accountability, transparency, honesty, and ethics.)  In turn, it appears that these problems have been generated by the twin plagues of managerialism (generic management, the manager's coup d'etat) and neoliberalism (market fundamentalism, economism) as applied to health care.  It may be the many of the larger problems in US and global society also can be traced back to these sources.

We now see our problems in health care as part of a much larger whole, which partly explains why efforts to address specific health care problems country by country have been near futile.  We are up against something much larger than what we thought when we started Health Care Renewal in 2005.  But at least we should now be able join our efforts to those in other countries and in other sectors.   

ADDENDUM (30 October, 2015) - This post was republished on the Naked Capitalism blog.  See the comments, which are particularly interesting and important.  

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.

Musical Diversion

We have to leaven this dismal post with the 1980 live version of "Down Under" by Men at Work