More Signs of Organized Resistance? - Proposed Legislation for More Hospital Leadership Accountability

This year we note the beginning of action against the power of large health care organizations lead by hired executives and cronies who seem to put their self-interest and self-enrichment ahead of patients' and the people's health.  In 2013 we noted no confidence votes by medical school faculty (here), and university faculty (here) against academic leaders perceived as putting their power and wealth ahead of core values, actions by a state governor (here) and a big city mayor (here) against local health care systems perceived as putting their executives' enrichment ahead of their services to patients, and a union labor action (here) against a health care system perceived as putting executive enrichment ahead of adequate health insurance for low level employees.  We have posted about numerous examples of hospital (and other health care organization) executives receiving compensation far out of proportion to any realistic measure of their organizations' performance or positive effects on patients' or the public's health, and seemingly skimmed off the top of these organizations' budgets.

Now Modern Healthcare has reported about a bill in the California legislature aimed at supposedly not for profit hospitals that put money ahead of patients:

Officials with the California Nurses Association say the proposed law—AB 975—is an attempt to bring more accountability to money-making hospitals that use tax exemptions to turn tidy profits and give hefty salaries to executives.

Furthermore,

 Charles Idelson, spokesman for the California Nurses Association, said many profitable tax-exempt hospitals have lost the public's trust in recent years by making profits their top mission and paying salaries that allow executives to buy yachts while 'chipping away' at less-profitable services for women, children, the poor and mentally ill.

'What this bill does is, it really is an effort to increase transparency and make hospitals more accountable to the communities that they purport to serve,' Idelson said. 'Hospitals that are meeting their charity care obligation should welcome this process and understand that it is an opportunity to rebuild some of the public trust that they have lost through their other policies and practices.'

Hospital Leaders Deploy Talking Points, Including Logical Fallacies 

Perhaps predictably, hospital executives are not so happy:

'This is less about good public policy than it is about politics,' said Michael Hunn, chief executive for southern California hospitals at Providence Health & Services, which has five hospitals in the state. 'I would hate to see a political agenda further harm those that are marginalized in society,' Hunn said. 'No matter what the legislative and political process is, we need to keep in mind the human beings that it is our responsibility to care for.'

Note that Providence Health & Services is the ostensibly non-profit Catholic hospital system accused of putting paying executives multi-million dollar compensation ahead of giving low level employees minimally adequate health insurance as we posted here.  According to the organization's latest 990 form, Mr Hunn got $1,576,978 total compensation in 2011.  So one wonders which human beings he is feeling most responsible for?  Note also that the unsubstantiated allusion to a "political agenda," appears to be an appeal to ridicule, "a fallacy in which ridicule or mockery is substituted for evidence in an 'argument.'"  We have noted before how public relations flacks working for top executives of health care organizations seem to be very good at using such logical fallacies.  The argument Mr Hunn made seems essentially identical to an argument used against a lawsuit to end the tax exemption of a huge Pennsylvania hospital system that has apparently angered the communities which it is supposed to serve while paying its executives millions (look here).

In addition, 

Jan Emerson-Shea, spokesman for the California Hospital Association, said the bill's union backers were hiding their real agenda with 'red herring' issues like highly compensated executives and the superficial dissonance of not-for-profit organizations with healthy margins.

''Not-for-profit hospital' doesn't mean that you don't make a profit--all hospitals need to make a profit to keep the doors open,' Emerson-Shea said

Of course, that last assertion is not true.  Non-profit organizations need to avoid sustaining repeated losses to keep their doors open, but do not need to make any surplus to do so.  And the issue was not whether hospitals make small surpluses, but whether they behave like for-profit corporations, especially in regard to how well they pay hired executives.  So while protesting "red herrings," one spokesperson for hospitals, presumably for hospitals' hired executives, seemed to be arguing that the only alternative to a very large surplus and a very large reserve is a deficit.  By ignoring another obvious alternative, having a small surplus and a small reserve, this argument thus is derived from the logical fallacy known as the false dilemma.  The spokesperson also seemed to be arguing that a deficit inevitably leads to bankruptcy.  Of course prolonged deficits might lead to bankruptcy, but a single deficit would not necessarily do so.  Thus we see the logical fallacy known as the slippery slope. Note further that the argument used by the California executive here was again essentially identical to an argument used against a lawsuit to end the tax exemption of a huge Pennsylvania hospital system that has apparently angered the communities which it is supposed to serve while paying its executives millions.  So it looks like once again the hired executives and their public relations operatives have their talking points in line.   (See this post, from which our argument about the logical fallacies employed first in Pennsylvania came.)

Summary

It really is beginning to look like there is some sort of trend, albeit still small, towards organized resistance against the hired executives and cronies who have made themselves rich from large health care organizations, putting their self-interest and enrichment apparently before taking care of patients and serving the public's health.  As we have said ad infinitum....

Health care organizations need leaders that uphold the core values of health care, and focus on and are accountable for the mission, not on secondary responsibilities that conflict with these values and their mission, and not on self-enrichment. Leaders ought to be rewarded reasonably, but not lavishly, for doing what ultimately improves patient care, or when applicable, good education and good research. On the other hand, those who authorize, direct and implement bad behavior ought to suffer negative consequences sufficient to deter future bad behavior.

If we do not fix the severe problems affecting the leadership and governance of health care, and do not increase accountability, integrity and transparency of health care leadership and governance, we will be as much to blame as the leaders when the system collapses.

The Market Made Us Do It: Increasing Low Level Employees' Health Plan Deductible While Paying Executives Millions

A small news item from the Seattle public radio station, KUOW, provides our latest example of the contrasts between how hired executives and "regular" employees are treated even at non-profit health care organizations, and between these organizations' actions and their stated missions. 


Hospital Employees Strike Against Reductions in their Health Insurance


The report was about a small job action going on at a single hospital.  Ironically, the strike is over the employees' own health insurance. 

Along with housekeepers, nursing assistants and other staff, surgical technologist Bob Wilson is a member of the Service Employees International Union local 1199NW.

'You see all the guys on TV that hand the doctor the scalpel? That’s me,' he said from the picket line on Friday. 'We’re out here because we think we deserve affordable health care.'

The union and Providence St. Peter have been in contract negotiations since last summer. SEIU represents about one fourth of the hospital's employees.

In January, employees' health insurance changed. The union says the higher deductibles and out of pocket expenses hurt for a union whose median member makes $31,000 a year.

I’m forgoing care,' Wilson said. 'I’m not going and seeing a doctor unless I absolutely have to. A lot of people here at Providence are doing the same thing: They’re trying to save their money.'

An piece on the Huffington Post further described the strikers' concerns about the new health plans' deductible amounts:

The employees' new $3,000 annual deductible for families is 10 percent of the average worker's pay and a sharp boost from the $750 yearly deductible in their previous health plan.

Millions for Hired Managers 


The first contrast is between the strikers' relatively low pay and modest insurance coverage with the compensation given to the hospital system's top managers.  Per KUOW,

Providence St. Peter is part of Providence Health & Services. The Catholic organization runs hospitals in five western states. Its headquarters is in Renton.

Furthermore,

The union says Providence can afford to do better given what it pays its CEO, John Koster.

The union just learned of Koster’s 2011 pay on Thursday after reading Providence’s latest filing with the IRS. Providence reported Koster’s compensation as $6.4 million, up from $3.1 million in 2010.

Also,

Providence’s IRS filing reveals that 19 employees of the Catholic ministry earned at least $1 million in 2011. Eight of those employees earned at least $2 million. The top five executives earned more than $3 million each.

Note further that the organization's filing acknowledged that some of its most highly compensated employees received "first-class or charter travel," "tax indemnification and gross-up payment[s]," discretionary spending account[s]," "housing allowance[s] or residence[s] for personal use," and "payments for business use of personal residence." 


Serving the "Poor and Vulnerable?"

The second contrast is between the hospital system's stated mission and how it treats different kinds of employees.  The Providence Health & Services web-site states:

Providence Health & Services is a not-for-profit Catholic health care ministry committed to providing for the needs of the communities it serves – especially for those who are poor and vulnerable. Providence Health & Services continues a tradition of caring that the Sisters of Providence began more than 155 years ago.

It does not seem unreasonable to claim that low level employees making about $31,000 a year given a health plan with a $3,000 deductible are likely to become poor and vulnerable were they to be unlucky enough to sustain any major illness or injury.

The Market Made Us Do It

However, instead of considering its mission, Providence Health & Services spokespeople invoked the market as justification for its less than generous health plan versus its exceedingly generous pay of top managers.  

In an email to KUOW, "Providence officials" described its contract offer and health plan as "competitive with other health care providers."

Regarding its compensation practices,

 In an email, Providence spokeswoman Colleen Wadden said Providence sets its compensation the same way, whether it’s for housekeepers or executives: Base salaries are set at the middle of the market.

Note that we have discussed the "market made me do it" justification for huge executive compensation from health care organizations as a talking point that is used again and again by public relations operatives and board members (e.g., look here).  Its use in this case, though, is particularly unfortunate. 

Summary

In this example, we have a huge health system (with over $3.6 billion in revenue in 2011) whose mission is to be a "Catholic health care ministry" that serves the "poor and vulnerable" also claiming that the almighty market means it must pay its executives more than one hundred times what it pays its lowliest employees, compensate them with first class travel, tax gross-ups, and so forth.  Moreover, presumably this dictatorial market also makes sure this ministry cannot provide its lowliest employees with health insurance that seems sufficient to prevent them from becoming poor and vulnerable should a severe illness strike.  

Maybe Providence Health & Services executives and public relations people should read what one prominent Catholic theologian wrote (here, and see this post) about the market in health care:

Hospitals and other facilities 'must rethink their particular role in order to avoid having health become a simple 'commodity,' subordinate to the laws of the market, and, therefore, a good reserved to a few, rather than a universal good to be guaranteed and defended,' 

That theologian was the current Pope Emeritus, Benedict XVI. 

So this is a new, vivid example of how leaders of big health care organizations may preach about the mission while acting to put their own self-interest way ahead of that mission.

 As we have said until blue in the face,...

Health care organizations need leaders that uphold the core values of health care, and focus on and are accountable for the mission, not on secondary responsibilities that conflict with these values and their mission, and not on self-enrichment. Leaders ought to be rewarded reasonably, but not lavishly, for doing what ultimately improves patient care, or when applicable, good education and good research. On the other hand, those who authorize, direct and implement bad behavior ought to suffer negative consequences sufficient to deter future bad behavior.

If we do not fix the severe problems affecting the leadership and governance of health care, and do not increase accountability, integrity and transparency of health care leadership and governance, we will be as much to blame as the leaders when the system collapses.