Being a Health Care CEO Means Never Having to Say You Are Sorry - (Michael) Covert Edition

Physicians and other health care professionals are increasingly subject to various measures of their quality, productivity, and "value," and beholden to administrators, managers and bureaucrats.  The notion of health professionals being primarily accountable to patients and to professional standards has become old school.  Instead, the business school dogma of  "pay for performance" reigns. There is little evidence that putting health care under the control of administrators, managers and bureaucrats has been good for anyone but administrators, managers, and bureaucrats, but the burdens they have imposed seem to be a major reasons for increasing professional burn-out.

While health care professionals are thus subject to increasingly burdensome oversight by managers and administrators, it is not clear that those managers and administrators are taking their own medicine.  At best, they seem only accountable to each other.  And thus, their pay and power seem disconnected from any rational notion of their performance.

I recently stumbled upon a story illustrating how top health care managers can repeatedly get hired again and again despite major questions about previous performance.

A New CEO Position for Michael Covert

In June, 2014, the Houston Chronicle announced Mr Michael Covert as the new CEO of the Catholic Health Initiatives (CHI) St Luke's Hospital System,  and a new Senior Vice President of CHI.  It included the typical praise from top CHI leaders and stewards.

'Michael has the qualities, skill and professional background to help lead CHI through the many dramatic changes occurring today in health care,' Michael Rowan, Catholic Health Initiatives' president of health systems delivery and CEO, said in a written statement.

Leonard Tallerine, [apparently the former CEO of GoldKing Energy, which is currently in bankruptcy] chairman of the CHI St. Luke's Health board of directors, agreed.

'Michael's depth of experience has honed two key skills: communication and collaboration,' Tallerine said in a written statement.

I confess I missed that article, but I did see an article from mid-September, 2014, in the Chronicle documenting a rather uncritical interview with Mr Covert.  He did manage to boast of his previous success:

Q. What makes you the right guy ...?

A. It's because of my past experience. I've worked in an academic setting. I've worked in a Catholic hospital setting. I have run systems. I've worked for physicians. I've been doing it for a while. And I've had the fortune of some good success.

He also decried excess regulation in California ("we were so regulated");  promised to "develop relationships with our physicians that are strong"; promised "It's not going to be all about buildings"; boasted about "teams I've created"; and proclaimed "it's important for us to be strong on our quality, our finance, our patient engagement, our employee engagement."


So far, here we have yet another new top hospital system manager who seems to be a fount of excellence, at least according to those to whom he is supposed to be accountable.

However, the name Michael Covert rang a bell, and quick search of Health Care Renewal, plus Google revealed that his record is not quite as pristine as portrayed above. 


The Covert Record

Million Dollar Plus Compensation  Questionable Celebrity Endorsements, Quality Problems

Mr Covert first lit up the Health Care Renewal radar screen in 2010 because of his relatively large compensation, greater than $1 million per year, for the CEO of a not very large, nominally public hospital system, Palomar Pomerado.  At the time, the usual explanations were provided by the hospital district chairman, who happened to be a former hospital executive.  It later turned out that Mr Covert was the second most highly paid public official in the state of California.


As Mr Covert's pay became the subject of wider discussion, the hospital nurses' union weighed in with charges that Mr Covert had irresponsibly spent money on celebrity endorsements, particularly from a well known athlete who soon left California for New York. (Look here.)


Also, in 2011 the San Diego Union-Tribune reported that the two hospitals Mr Covert lead had been fined for significant errors/ quality problems in 2010, and had been fined before for such problems.

These facts did not seem aligned with the claims by the district hospital board that Mr Covert was a "phenomenal," "excellent" or "top" leader.  They also seemed to belie Mr Covert's recent discussion of being responsible about finance, employee engagement, or quality.  On the other hand, one can see why he dislikes regulation.

Alleged Obstructed Investigation of Murderous Fake Doctor in the 1980s

Later in 2011, a little big of digging on the internet suggested that Mr Covert had a long history of issues.  In 2008, the local Community Paper did an extensive investigation into his past.  We summarized it here.  First, the article charged that in the 1980s, as a top manager at the Ohio State University Hospital System, Mr Covert impeded the investigation into Michael Swango, a fake doctor working at that institution, who was ultimately convicted of murdering three patients.

At that time, Mr Covert seemed not so interest not merely in regulation, but in the laws of the land.

Illegally Revoked a Physician's Hospital Privileges in the 1990s

The Community Paper also found that the Sarasota Memorial Hospital illegally revoked a physician's privileges.  At the time, Mr Covert was CEO of that hospital.  The Community Hospital also alleged that Mr Covert's testimony at that trial was "thoroughly impeached."

What was that about strong relationships with physicians?  

Alleged Misrepresentation of Facts About Hospital Bond Issue

The Community Paper reported in 2007 that Mr Covert misrepresented facts in his advocacy for a large bond issue to support building a new hospital for the Palomar Pomerado Health District.

Responsible about finance? 

Dictatorial Management Style

The Community Paper interviewed multiple health professionals at Palomar Pomerado uncovering multiple charges that Mr Covert was a manipulative, egotistical and dictatorial leader.

Was this a way to develop wonderful teams? 

Another Lawsuit Claiming Improper Termination of a Physician's Privileges

Later in 2008, the Community Paper noted a lawsuit filed against Palomar Pomerado by a staff physician who also alleged that the hospital had improperly terminated his privileges.  I cannot find any record of how this was resolved.

Again, what was that about relationships with physicians? 

Palomar Pomerado Left in Debt

Mr Covert resigned from Palomar Pomerado in mid-2014 to head to his new position as CEO of Catholic Health Initiatives St Luke's Health System in Houston.  At that time, the San Diego Union-Tribune reported that after building an expensive new facility, Mr Covert would be leaving a hospital system deep in debt and with substantially worsening financial results.

Moody’s Investors Service, the bond rating agency that warned twice in two years of Palomar’s declining financial health, most recently in March. 'PH’s debt measures are among the weakest in Moody’s portfolio of rated public and not-for-profit health care organizations (debt measures exclude GO debt),' the agency said.

Palomar Health’s hospitals and clinics run at a loss; operating margin was negative 4.2 percent in the first half of fiscal year 2014, an improvement from minus 12.2 percent in the same period in 2013.

Worse, the district has cash problems. While improving, it’s still violating a bond covenant to keep enough cash for 80 days.

Didn't Mr Covert say something like it's not about the buildings?  Again, what happened to that emphasis on strong finance? 

And in general, looking at the whole section above, what did Mr Covert think was his "good success?"

Summary

The bureaucrats and managers to whom Mr Covert reported as CEO of Palomar Pomderado, and those to whom he will report as CEO of CHI St. Luke's thought he was brilliant.  Mr Covert proclaimed that he would engage employees, collaborate with physicians, and focus on quality and responsible finance, among other issues.  Yet Mr Covert seemed to leave in his wake as former leader of multiple hospital systems allegations of dictatorial leadership, irresponsible management of finances, deceptions, and opacity (even in the face of investigations of criminal behavior).  Mr Covert's previous hospitals paid fines for quality violations, went into severe debt, terminated physicians' privileges once allegedly improperly, and once illegally as found by a jury, and in one early case harbored a homicidal fake doctor.

Were the people who recruited and vetted Mr Covert bamboozled by his charm, to the point that they did not even bother to check the public record of his past performance?  Or were they, as managers and administrators, not apt to question a fellow member of their guild?

By the way, why did no one in the Houston media think to actually ask some hard questions about the latest star on the local health care management scene?

So why should we as health care professionals, or members of the public ever believe the managers and administrators who have taken over health care? Especially when they promise to improve quality and control costs by making everyone else responsible to them?

True health care reform would make health care leaders accountable for putting patients' and the public's health ahead of personal gain.  Generic managers following business dogma may not be the people to do this. 

ADDENDUM (29 September, 2014) - Thanks to the comment by Dr Howard Brody below, I corrected the statements about that Michael Swango was a fake doctor.  He did in fact have a real MD degree. 

The Continuing Mystery of the Fugitive Founder and Missing Money - What it Says About the Opacity of Offshore Medical Schools

The next chapter in the bizarre tale of the fugitive founder of an off-shore (from the US and Canada) Caribbean medical school, and his now convicted spouse, do not solve any mysteries, but raise larger concerns about the accountability, or lack thereof, of leaders of important health care organizations.

Introduction: the Fugitive Founder and Convicted Spouse

As we posted in October, 2013, drawing an amazing for us number of comments, the couple who founded two Caribbean medical schools which catered almost entirely to US and Canadian students ran into significant legal trouble.  Founder David Leon Fredrick and his wife, Dr Patricia Lynn Hough were indicted for tax evasion for failing to report income from the two medical schools they allegedly owned, and later sold.

The schools were Saba University School of Medicine, on Saba, and the Medical University of the Americas, on Nevis.  The initial legal proceedings revealed that while Saba University School of Medicine was apparently first set up by a non-profit foundation (or NGO) run by the couple, somehow it became for-profit owned by Mr Fredrick and Dr Hough, and Saba and the Medical University of the Americas were subsequently sold to a private equity group, Equinox Capital.

Before jury selection started, Mr Fredrick disappeared.  Dr Hough was eventually convicted of defrauding the US Internal Revenue Service, and income tax evasion, after trial testimony to the effect that the couple concealed money in a Swiss bank, got $36 million from the sale of the schools, and bought an airplane, two houses, and a condominium.

Left mysterious at that time were Mr Fredrick's whereabouts, where the money that the couple derived from the sale of the medical schools went, and how a school that began as a non-profit organization became a for-profit corporation owned by the couple.  The case should have lead to some concerns about the leadership and governance of the off-shore medical schools that now train increasing numbers of would be US and Canadian physicians.

However, after Dr Hough was convicted, there was little public discussion of these issues, at least until Dr Hough's recent sentencing.  (There were some interesting comments made on our blog post, many from anonymous erswhile defenders of Saba University and/or Mr Fredrick and Dr Hough.  While they expressed some interesting opinions, in my humble opinion they did not add any substantive facts to the discussion.)

Latest Developments in the Case

In the past few weeks the case got a little more public notice in terms of reporting of the legal proceedings leading to the sentencing of Dr Hough   They brought to light some additional contentions by the prosecution, which deserve some attention because after all, they won their case.

The Amount of Money the Couple Made


As reported by the Sarasota (FL) Herald-Tribune,  Dr Hough was sentenced to two years in federal prison, three years of supervised release, and to repay $15 million to the IRS.  In addition,

 Prosecutors say Hough and Fredrick sold the schools and associated real estate in April 2007 for more than $35 million. An IRS agent testified last Thursday that Hough also made more than $12 million in income from the two schools from 2003 until 2007.

How much Mr Fredrick made was not discussed since it was not relevant to Dr Hough's sentencing. 

The Effort that Went into the Plot

According to Bloomberg,

'Hough’s crimes were neither impulsive nor isolated but required sophisticated transactions, coordination with foreign bankers, annual lies to the federal government, and by her own admissions, trips to Switzerland,' prosecutors wrote in a sentencing memo on April 14. 'Hough made calculated decisions to cheat, over and over again.'

Also,

Prosecutors accused the couple of crafting their scheme with UBS AG (UBSN) banker Dieter Luetolf and Swiss financial adviser Beda Singenberger, both unindicted co-conspirators.

Singenberger, who was separately charged with helping 60 U.S. clients hide $184 million in offshore accounts, hasn’t responded in federal court in New York.

In more detail,

Prosecutors said the couple used an array of accounts in the names of businesses to hide their money and employed 'e-mails, telephone calls and in-person meetings to instruct Swiss bankers and asset managers to make investments and transfer funds from their undeclared accounts at UBS.'

The Mysteries Remain



Where Did the Money Go?

As noted above, the sale of the two medical schools netted Mr Fredrick and Dr Hough about $35 million.  Where that went is still unclear.

How Did Mr Fredrick and Dr Hough Become Owners of a Previously Non-Profit Medical School?

As noted above and in our previous post, Saba University School of Medicine began as a non-profit managed by Mr Fredrick and Dr Hough.  Somewhere along the way, the couple assumed ownership of the school.  There seems to be no record and no discussion of how this happened.  In the US, a conversion of a substantial non-profit, like a medical school, to a for-profit, ordinarily would require some regulatory approval and public discussion.  Furthermore, in most cases, non-profit conversions to for-profit would require some sort of protection of the assets of the former non-profit, often leading to a spin-off of a new non-profit foundation.   None of this apparently happened in this case (which admittedly did not occur in the US.)  How did Mr Fredrick and Dr Hough just take over a non-profit, sell it, and keep all the money involved?

Where is Mr Fredrick and Why did He Flee?

We need Sherlock Holmes for this. 


What Does This Case Say About the Leadership and Governance of Offshore Medical Schools?

So the latest details revealed suggest a fairly intricate plot by the American couple who founded two Caribbean medical schools.  The plot allegedly netted them millions, and now resulted in one of the couple remaining a fugitive, and the other convicted of federal crimes.

The biggest issue raised by this case, in my humble opinion, is not about financial crimes, tax-evasion, or the hiding of assets in Swiss banks.  It is about the leadership and governance of offshore Caribbean medical schools, and by extension, of academic medicine and health care.  In 2010, Eckhert documented that the number of offshore medical schools, "for-profit institutions whose purpose is to train U.S. and Canadian students who intend to return home to practice," but not to train physicians to practice in the countries in which these schools are located, was rapidly growing.(1)  By 2010, there were 33 such schools, 20 of which were new since 2000.

These offshore medical schools are not accredited in the US or Canada, and such accreditation is currently not required for individual graduates of such schools to be admitted to US house-staff programs or for US licensure.  So perhaps it is not surprising that little is known about these schools.

How they choose students, the qualifications, or even names of their faculty, their curriculum, how they supervise clinical training (which is mostly done by affiliated North American hospitals), and what happens to their graduates are boscure.  Eckhert attempted to describe what is known, but noted "variability exists in the availability of information on faculty; where data exists, it is noted that most of the permanent on-site basic science faculty are internationally trained, many have no documented medical education experience in the United States, and it is not uncommon for them to be OMS [offshore medical school] alumni."

Even less is known about who leads these schools, who if anyone is responsible for their stewardship, and even who owns them.  The current case suggests that Saba University School of Medicine was run by couple who mysteriously assumed ownership of the school after leading it as a non-profit organization, then sold it to private equity for millions in a transaction that eventually left one a convicted criminal and the other a fugitive.  Yet none of this came to light until the federal government launched an investigation not of offshore medical schools, but of offshore money laundering and happened to catch the couple in the investigational web. No regulatory process, no watchdog organization in the US or Canada, or on Saba apparently found this out until it was revealed in an investigation by the US federal government that had nothing specifically to do with health care or offshore medical schools.  This suggests that offshore medical schools now can be lead and run by anyone, qualified or not, honest or criminal, without any oversight or accountability.  

For example, even today little is known about the leadership of Saba University School of Medicine.  The school currently provides only minimal biographical information on its administration.  Its President is listed as Joseph Chu MD MPH, who appears to have the same educational credentials (MD from Georgetown, MPH from University as Washington) as one Joseph Chu who is apparently a Clinical Associate Professor of Epidemiology at the University of Washington.   Dr Chu's specialty and previous experience are not apparent.  Whether the Dr Chu at University of Washington is the same as the President of Saba is unclear.  If they are the same, how Dr Chu holds down these two jobs is not clear.

For comparison, most US schools provide extensive information about their leadership.  Just as an example, see the introductory page on the Dean of the University Washington medical school.

Even less is known about the stewardship or governance of Saba University School of Medicine.  Many US medical schools have their own boards of trustees who are supposed to provide stewardship. For example, the UW board is here.  Their membership is generally known.  Furthermore, most US medical schools report to university leadership, again whose identity is known, and are subject to governance by a university board of trustees.  We have certainly criticized the leadership and governance of US academic medicine.  At least, however, it is possible to find out the names of the people responsible. 

However, while Saba University School of Medicine is still apparently owned by Equinox Capital according to the latter's website, to whom Dr Chu reports at Equinox Capital is unclear.  Whether Saba has a board of trustees, or any such similar stewardship mechanism, is unclear.  So who is ultimately accountable for Saba is unclear.  Probably just as unclear is who leads, who stewards, and who is accountable for the leadership of most other offshore medical schools.

While Eckhert wrote in 2010 that the increasing presence of offshore medical graduates in the US "obligates U.S. medicine to take a closer look at these educational programs," no such scrutiny has occurred since then.  While offshore medical schools account for the training of an increasing proportion of US (and presumably Canadian) physicians, we know next to nothing about their leadership and governance.  This seems to be just another part of the decreasing accountability of the leadership of US health care, and the increasing opacity of the governance and stewardship of US health care organizations.  True US health care reform would make leadership transparent and accountable.         

Reference
 1.  Eckhert NL.  Private schools of the Caribbean: outsourcing medical education.  Acad Med 1010; 85: 622-630.  Link here. 

The Adventures of the Purloined Bequest, the Resident Heiress, and the Hidden Hospital System

The game is afoot again.  A series of recent articles in the media described a series of cases whose mysterious interrelationships Sherlock Holmes might have appreciated.

The Purloined Bequest

A singular article in the Wall Street Journal, entitled "Judge Rules in Case of Fortune Tied to Buffett," first made this case explicit, but some background is required to understand it.

The story focused on Long Island College Hospital, in Cobble Hill, Brooklyn, New York.  [Full disclosure: this story got my attention particularly because I grew up nearby in Brooklyn, and was born at that hospital, which was also the local hospital my parents often used.]   LICH has long been the major community hospital for downtown Brooklyn.

The story appeared to begin in 2011, per the WSJ,

 In 2011, Judge [Carolyn] Demarest approved the merger of LICH and SUNY Downstate on the condition it would keep the charitable hospital going. As part of the deal, the hospital transferred properties to Downstate estimated to be worth as much as $1 billion collectively, according to a previous court order.

The merger was supposed to keep LICH in operation as a community hospital and provider of acute care to the poor.  However, things did not work out.

 This year, however, Downstate announced plans to shut the hospital, leading to protests from Brooklyn residents and local politicians.

'It is clear that the premise upon which this Court authorized the transfer of assets has been defeated,' Justice Demarest wrote in her Aug. 20 decision, adding that Downstate had breached its contractual obligations. She cited a 'legal and moral responsibility' to correct her earlier error in approving the merger.

She directed Downstate to return all assets to the hospital's previous owner, Continuum Health Partners Inc., which subsequently said it couldn't take the reins. The court is expected to review other proposals.

The judge also discovered that hospital management had been raiding an large endowment fund intended for other purposes,

A New York state judge ruled this week that a struggling Brooklyn hospital must repay tens of millions of dollars it borrowed from an endowment set up by early investors with billionaire Warren Buffett.

The ruling aims to rectify the previous use of the money by Long Island College Hospital, which is hurting financially and was scheduled to close. Mr. Buffett in July told The Wall Street Journal that his late friends, Donald and Mildred Othmer, would have felt 'betrayed' at the way the funds were spent.

Apparently,

 The Othmers, natives of Omaha, Neb., who later lived in Brooklyn, were longtime friends of Mr. Buffett's, and each invested $25,000 with the billionaire in 1961.

When they died—he in 1995 and she in 1998—they gave away a fortune estimated at $780 million, including the $135 million permanent endowment for the hospital. The Othmer wills stipulated the interest on the endowment could be used for operating expenses but the principal should be held 'in perpetuity.'

In a series of court-approved transactions that began in 2000, the hospital borrowed from the funds repeatedly to meet short-term obligations and cover debts.

The hospital argued that the money was necessary to keep the hospital afloat, which it said the Othmers would have wanted. The transfers depleted most of the endowment, a result that came to light after the Journal wrote about the situation in July.

New York Times and Brooklyn Daily Eagle articles focused on the question of whether SUNY/ Downstate intended to close the hospital so it could sell its apparently valuable real estate assets in a now fashionable neighborhood, but not on how the hospital fell into these dire straits.


There seem to be some lingering questions -

-  If the losses and borrowing began in 2000, or earlier, who was responsible for them, given the current owners have only been in place since 2011?

Note that the phrasing in the article above ("the hospital argued that the money was necessary to keep the hospital afloat") suggested that before SUNY took over, the hospital was independent.  However, the article mentioned, albeit only briefly in passing, that the hospital had a previous owner, Continuum Health Partners Inc.

-  How were the losses explained when they occurred, and what was the rationale for  borrowing from restricted endowment as a response, instead of, for example, direct efforts to minimize losses or increase capital and revenue?

Note that the article implied that when SUNY acquired LICH, it acquired some very valuable real estate.  Why did the previous management of LICH not consider selling off some of this real estate to resolve its debts?

-  Did mismanagement of the hospital lead to excess losses, and did borrowing funds from the principle of the hospital's endowment to offset these losses amounted to more mismanagement?
 

Meanwhile, a second even more bizarre story about another New York City hospital almost simultaneously got media attention.

The Resident Heiress

The case first made it into the media in 2012, when the tabloid New York Post reported,

Beth Israel Medical Center milked reclusive copper heiress Huguette Clark for more than $13 million in fees, donations and even a priceless painting during her 20-year stay as a patient — and greedy executives angled for $125 million more, her relatives allege in shocking new court filings over Clark’s estate.

The alleged shakedown was illuminated in an e-mail in which hospital board member and former CEO Dr. Robert Newman referred to Clark as 'the biggest bucks contributing potential we’ve ever had,' according to court papers.
He told a colleague her 'potential has been overwhelming[ly] unrealized.'

At one point, he suggested to Clark that she pay nearly one-third of her estimated $400 million fortune to keep the now-shuttered Beth Israel North on the Upper East Side open so she could keep living in the room she had refused to leave for 15 years despite being in good physical health, the papers allege.

But instead of addressing Clark’s crippling anxiety, hospital honchos played on her fears, engaging in 'a concentrated effort, orchestrated at the highest board and executive levels,' to get her money, court documents obtained by The Post allege.

Clark’s death last year at age 104 set off a battle over her estate. Her distant relatives claim lawyer Wallace Bock, accountant Irving Kamsler, private-duty nurse Hadassah Peri and the Beth Israel administrators manipulated the feeble Clark for her money.

The nurse, who received cash and gifts from Clark, stands to inherit nearly $34 million and Clark’s priceless doll collection in the now-disputed will. Beth Israel is to get $1 million.

The Paris-born Clark inherited her money from her father, William, a rail and mining baron and former US senator whose wealth rivaled the Rockefellers’.

She went to Beth Israel North in 1991, when she was 85, after a doctor found her emaciated and ill in one of her three sprawling Fifth Avenue apartments.

She spent the last two decades of her life in dismal hospital rooms with the shades drawn and door shut even though there was 'no medical basis for keeping her' past the first few months, documents show.

Clark was 'the perfect patient' for the hospital, her relatives charge, noting, 'She required no medical care, possessed enormous wealth, paid over $800 a day for her room, and became progressively more dependent on the hospital.'

'Beth Israel had a plan to subtly, but ever so persistently, court Huguette for the purpose of garnering gifts and ultimately do a will in favor of the hospital,' court papers claim.

This case also seems to be about wealthy donors and hospital executives.  Yet what makes it most bizarre are the circumstance of Ms Clark's hospital stay.  As a former intern, resident, fellow, and teaching hospital attending, I can attest that most hospital administrators are concerned, if not obsessed, with discharging patients quickly.  Hospital stays are currently paid by most insurers according to the patients' diagnoses, but not their length of stay.  Long stays cost hospitals money.  Furthermore, unnecessarily long stays use up resources that could better serve acutely ill and injured patients.  Yet Ms Clark stayed an astounding 20 plus years, without any obvious medical rationale.  No hospital official contested the fact that Ms Clark stayed that long in the NY Post article.

Furthermore, in a 2013 New York Times article, the hospital's lawyer, defending a parallel attempt to recover the money donated to the hospital, wrote

 Beth Israel had provided Mrs. Clark with 'a well-attended home where she was able to live out her days in security, relative good health and comfort, and with the pleasures of human company.' Besides, he said, the amount of money she gave to Beth Israel was “not very large considering her vast wealth.”

Furthermore, a member of the Beth Israel fund-raising staff wrote in a memo disclosed during litigation,

 She was well enough by then to go home to her spacious apartment at Fifth Avenue and 72nd Street, overlooking Central Park, Ms. [Cynthia L] Cromer said, but 'she asked if she might stay in the hospital longer: she feels comfortable and safe, and her apartment is being renovated.'

Never mind that the fundamental mission of the hospital is to provide acute care for the sick and injured, not to provide comfortable retirement housing. But hospital managers are apparently on record acknowledging that the hospital was basically providing Ms Clark with services that are normally available in a retirement community, not services that acute care hospitals normally provide anyone   There is no evidence that the hospital ever provided similar services to any other patients. 

The obvious mystery, then, is

- why no one at the hospital, no doctor, nurse, or manager, or no visitor, regulator, accrediting agency, insurer ever questioned why the hospital was providing a long-term residence to a former patient?

No answer to the question has appeared in any coverage I have seen of this case, including a September, 2013,.NY Times followup article on the occasion of the case nearing trial. 

In the absence of a creditable explanation for this strange distortion of the hospital mission,

- is there any other conclusion than that its purpose was to extract a large amount of money from a vulnerable, rich, but no longer acutely ill former patient?

This would suggest an unusual but monumentally unethical kind of hospital mismanagement.

So we have two recent stories about major, unusual, apparently severe mismanagement by hospital executives.  These stories were reported as if they were independent.

However, buried in the original NY Post article, but unmentioned in either of the major NY Times articles, however, was a hint of how this case and that above of the purloined inheritance appeared to be linked.

The Hidden Hospital System

The NY Post article referred thus to the Beth Israel CEO who allegedly pushed Ms Clark for contributions,

 Newman, former CEO of Continuum Health Partners, Beth Israel’s parent organization, took the unusual step of offering to help Clark complete a will so 'some faceless bureaucrat of the government' wouldn’t get his hands on her estate, court papers say.

Quick Watson, did you see that?

Continuum Health Partners was the "parent organization" of Beth Israel Hospital during at least some of the time Ms Clark was in residence there.  Continuum Health Partners also was the "previous owner" of Long Island College Hospital during at least some of the time it apparently was suffering large losses and its endowment was being depleted.  So were both these stories really about the same organization, the same hospital system?

Digging a little further, per its own LinkedIn page,

 Continuum Health Partners, Inc. was formed in 1997 as a partnership of three venerable institutions — Beth Israel Medical Center, St. Luke's Hospital, and Roosevelt Hospital.

So while the hospital system did not exist when Ms Clark first entered Beth Israel Hospital, the heiress' "care" was under the control of the organization apparently from 1997 to the day she died.

Furthermore, as noted in a 2011 Chronicle of Higher Education article, available from Innovative Resources Group Inc,

 If there was a honeymoon after the merger of Long Island College Hospital, in Brooklyn, with Continuum Health Partners, in New York in 1998, few remember it. The bickering began early and dragged on for years, but divorce didn’t seem inevitable until the doctors went public.

So the hospital system called Continuum Health Partners took over Long Island College Hospital in 1998 and held it for 13 years.  Furthermore, apparently LICH was part of Continuum Health Partners during the time when its losses rose and the Othmer bequest was depleted.  For example, from the CHE article,

  Several physicians told a crowd gathered outside the hospital’s entrance in 2008 that Continuum had withheld money from the 150-year-old institution, needlessly cutting patient services and endangering the hospital’s future.

Also in 2008, the Brooklyn Heights Blog reported this response to a question about finances from the Continuum Health Partners CEO, Stanley Bazenoff,

 LICH faces an immediate fiscal crisis. Unless action is taken quickly, he said, LICH will not have cash on hand to meet payrolls and other current expenses. He ascribed LICH’s problem to three factors. First, the hospital carries a heavy debt burden–approximately $150 million in long-term bonds financed through the New York State Dormitory Authority and $25 million in short-term commercial paper–which results in annual debt service (including interest and amortization) cost of approximately $22 million. Second, LICH has an operating deficit, presently about $40 million on an annual basis,...

Denis Hamill, a columnist for the New York Daily News, made this accusation in a February, 2013, editorial:

Under Continuum, the once-profitable LICH ran up $300 million in debt from pure administrative malpractice. And then Brezenoff brokered the smelly SUNY Downstate merger, with state taxpayers absorbing the $300 million debt.

So it certainly looks like there is an argument that Continuum Health Partners, under its CEO, Stanley Bazenoff, was responsible for the manipulation of pseudo-patient and rich heiress Hughette Clark to secure a large donation, and the nearly simultaneous depletion of Long Island College Hospital's finances, including a large bequest that was supposed to be untouchable.

Not surprisingly, Mr Bazenoff, described by Mr Hamill as

a ruthless powerbroker ... whose nickname at LICH is Darth Vader 

and

a quintessential member of what muckraker Jack Newfield called The Permanent Government of New York  

also seems to have gotten rich in his position as leader of Continuum Health Partners, along with his other top managers.   The blog LICH Watch found these results from the system's 2009 IRS 990 report,

here are some highlights, figures for Continuum employees who, hm, earned more than a million dollars for the year:

Chandra Sen, MD, $2,109,204
Stanley Brezenoff, $2,014,413
Kathryn C. Meyer, Esq. $1,049,807
John Collura, $1,307,556
Gail Donovan, $1,365,354

 A 2011 New York Post article stated,

 Stan Brezenoff, CEO of Continuum Health Partners, overseeing such hospitals as Beth Israel, St. Luke’s and Roosevelt, pulled in about $3.5 million. 

 So this leads to yet more mysteries, first about the individual cases when viewed as occurring within one large hospital system:

-  Why were Long Island College Hospital's finances addressed as if it were an independent entity, when it was in fact just a subsidiary of Continuum Health Partners? 

-  Why was Continuum Health Partners role in the hospital's enlarging debt and depleting endowment not discussed?

Similarly,

-  Why was the bizarre treatment of Hughette Clark attributed to "Beth Israel executives," but not Continuum Health Executives, when Beth Israel was also just a subsidiary of Continuum Health? 

Then there is the larger mystery,

-  Why have these two cases been discussed as completely independent, when they appear to be part of a pattern of conduct by Continuum Health Partners management?

Summary

While we continue to see cases, some amazingly bizarre, suggesting mismanagement and unethical management of hospitals and hospital systems, there seems to be an amazing lack of curiosity about how they occurred and what their implications may be.  This lack of curiosity is so profound that no one seems to have noticed that two vivid and strange cases getting prominent media notice in the same city and the same time involved the same large hospital system. 

Health care organizations seem to become ever larger.  Such enlarging organizations can concentrate their power, dominate their "markets," and hence increase their revenues and the compensation of their top hired managers.  Without any countervailing force, they push seemingly inexorably towards oligopoly and then monopoly.

Furthermore, the cases of the purloined bequest and the resident heiress show that ever larger organizations with ever more complex structures are ever better at hiding the accountability of their top hired managers.  We have previously noted, e.g. a case in which a subsidiary of GlaxoSmithKline pleaded guilty to crimes involving production of adulterated drugs, thus shielding GSK and its management from responsibility, how subsidiaries of large corporations may plead guilty to crimes, thus absolving their parent organizations and its managers of any blame.

In the current cases, it seems that somehow a large health care system was able to avoid accountability by letting its component hospitals appear to be independent.  Yet it is the larger system that was booking the revenue and making millionaires out of its hired managers.  This seems to show how concentration of power into ever more complex organizations can be used to enhance the anechoic effect, making mismanagement and those accountable for it ever more obscure.

As we have said until blue in our collective faces, if we do not hold the real leaders of health care accountable for their actions and the actions of their organizations on their watches, we can expect continued misbehavior, and hence continued health care dysfunction.  

It's appropriate to conclude with this, a video of Jeremy Brett in A Scandal in Bohemia, from the first season of the show as first shown on PBS.

Executive Compensation as "Legal Corruption" - and the Continuing Example of the Troubles of Wake Forest Baptist

"Legal corruption" was the description of current executive compensation practices appearing, of all places, in the Wall Street Journal.  The arguments, by Henry Mintzer of the Desautels Faculty of Management at McGill University, apply to health care, and provide a counterpoint to the usual talking points that are trotted out whenever a top health care manager, or his cronies, feels the need to justify his or her compensation. 

A Rigged Game with Other Peoples' Money

Prof Mintzer's arguments start with the assertion that executive bonuses are hopelessly rigged in favor of the managers who receive them.  In particular:

•  They represent gambling with "other people's money," in this case, "the stockholders [of large public corporations] not to mention the livelihoods of their employees and the sustainability of their institutions"

• Bonuses are given just based on the appearance of winning, for example, when a company's stock goes up short term, regardless of long-term results.

• Bonuses are given even when the company may lose, for example, the "golden parachute," or severance package that even executives forced to resign or retire may receive.

• Bonuses are given for actions that at best only provide potential gains for the company, for example prior to a merger, but before it is known that the merger will be successful

• Bonuses are given just for showing up, that is, "retention bonuses."

Thus he contended that bonuses inspire executives to be gamblers in a game rigged in their favor.

Based on False Assumptions

Furthermore, he argued that the current system of executive compensation is based on false assumptions.  These include:

"A company's health is represented by its financial measures alone - even better, the price of its stock." 

However, as Prof Mintzer noted:

Companies are a lot more complicated than that. Their health is significantly represented by what accountants call goodwill, which in its basic sense means a company's intrinsic value beyond its tangible assets: the quality of its brands, its overall reputation in the marketplace, the depth of its culture, the commitment of its people, and so on.  

I would note that this applies especially in health care, and more especially to organizations that provide direct patient care.  No hospital system, for example, could function at all without a corps of dedicated health professionals, physicians, nurses, therapists, etc. 

Furthermore, Prof Mintzer wrote,

All too often, financial measures are a convenient substitute used by disconnected executives who don't know what else to do—including how to manage more deeply.  Or worse, such measures encourage abuse from impatient CEOs, who can have a field day cashing in that goodwill by cutting back on maintenance and customer service, 'downsizing' experienced employees while others are left to 'burn out,' trashing valued brands, and so on. Quickly the measured costs are reduced while slowly the institution deteriorates 

This is obviously particularly pernicious in health care, a field in which institutions are complicated, and dependent on the efforts of some very highly trained and specialized people well beyond the management suite. 

"Performance measures, whether short or long term, represent the true strength of the company." 

Prof Mintzer pointed out the lack of accurate measures of the overall performance of a company or organization. 


"The CEO, with a few other senior executives, is primarily responsible for the company's performance."  

Prof Mintzer asked,

In something as complex as the contemporary large corporation, how can success over three or even 10 years possibly be attributed to a single individual? Where is teamwork and all that talk about people being 'our most important asset?'

More important, should any company even try to attribute success to one person? A robust enterprise is not a collection of 'human resources'; it's a community of human beings. All kinds of people are responsible for its performance. Focusing on a few—indeed, only one, who may have parachuted into the most senior post from the outside—just discourages everyone else in the company.

Again, this is obviously particularly the case in health care organizations, especially those that provide direct patient care.

Leading to the Worst Possible Leaders and Leadership

Finally, Prof Mintzer argued that the current system is designed to promote the worst possible leadership, leading likely to the worst possible outcomes.  He opened with

 Executive bonuses—especially in the form of stock and option grants—represent the most prominent form of legal corruption that has been undermining our large corporations and bringing down the global economy. 

Our argument has been that the current leadership of health care is similarly bringing down our health care system.

He later noted that current compensation practices mainly function to select out the worst possible leaders:

 executive compensation these days reinforces a class structure within the enterprise that is antithetical to its effective functioning. Because of its symbolic nature, executive compensation as currently practiced sends out the worst possible signal to everyone in the enterprise.

Furthermore,

bonuses can serve one purpose. It has been claimed that if you don't pay them, you don't get the right person in the CEO chair. I believe that if you do pay bonuses, you get the wrong person in that chair. At the worst, you get a self-centered narcissist. [Or even a full-fledged, if non-violent, psychopath, as noted here - Ed] At the best, you get someone who is willing to be singled out from everyone else by virtue of the compensation plan. Is this any way to build community within an enterprise, even to foster the very sense of enterprise that is so fundamental to economic strength?

Accordingly, executive bonuses provide the perfect tool to screen candidates for the CEO job. Anyone who insists on them should be dismissed out of hand, because he or she has demonstrated an absence of the leadership attitude required for a sustainable enterprise.

Of course, this might thin the roster of candidates. Good. Most need to be thinned, in order to be refilled with people who don't allow their own needs to take precedence over those of the community they wish to lead.

It will be interesting to see if anyone attempts a logical refutation of Prof Mintzer's arguments.  My guess is that we will see little response, based on the usual public relations dictum that it is best not to acknowledge one's detractors, even if they are right.  Furthermore, I predict that what responses there are will partake heavily of logical fallacies.

Finally, it is worthwhile to think about Prof Mintzer's points when assessing the arguments made in favor of particular executives' outsized remuneration. 

An Example - Continued Riches for Wake Forest Baptist Executives

Outsize Executive Compensation Continues

A few weeks ago, we noted that the leaders of this large medical center, while previously proclaimed as visionaries, and enjoying enlarging compensation, seemed to have lead the institution to a financial crisis due to difficulties with a poorly chosen or implemented electronic health record system. 

One follow up story updated compensation information and provided the official management rationale for the ongoing largess.  The redoubtable Richard Craver wrote in the Winston-Salem Journal,

Wake Forest Baptist Medical Center provided its top executive, Dr. John McConnell, an 11.9 percent raise in salary during 2011 to $983,777, although his total compensation dropped 18 percent, the center reported Wednesday as part of an annual regulatory filing.

McConnell was paid $2.04 million in total compensation, compared with almost $2.5 million for 2010. Although Wake Forest Baptist operates on fiscal years that end on June 30, the pay for its top executives is required to be listed on a calendar-year basis.

The main difference between the 2010 and 2011 compensation totals for McConnell was $461,575 he received as a one-time payment that replaced the retirement benefits he forfeited upon leaving the University of Texas Southwestern Medical Center in Dallas. McConnell was required to work at Wake Forest Baptist for two years to receive the one-time payment.

Keep in mind that in 2008-9x, Dr McConnell made a total of just over $700,000, so his compensation in 2011 was about three times that.

The benevolent board of the medical center saw to it that Dr McConnell got money for all sorts of reasons:

McConnell received $384,203 in bonus and incentives in fiscal 2010-11. The center said the amount reflects the achievement of clinical quality, academic and financial goals set by the board of directors. The bonus was down $115,797 from fiscal 2009-10 primarily because the center reduced the potential percentage of the incentive compensation from 75 percent of his base salary to 53 percent.

McConnell received $38,511 in other reportable compensation, which the center listed: as $8,797 in annual dues for Forsyth Country Club and Rotary Club membership, defined as for business purposes; $16,500 qualified deferred compensation; $3,612 in after-tax life-insurance deduction; and $9,602 in an automobile allowance.

 He also received $619,002 in contributions to retirement plans, including a supplemental executive retirement plan solely for McConnell’s benefit.

One wonders why, given his salary and bonus, Dr McConnell could not afford to pay dues to the country club and rotary on his own, or for his own car expenses, or to provide for his own retirement, for that matter?

Other executives also continued to do very well:

Donny Lambeth, former president of N.C. Baptist Hospital, received $2.47 million in total compensation. Lambeth served as president of Davie County Hospital and Lexington Medical Center before retiring last year. He is now serving as an N.C. House representative.

Lambeth’s $495,595 in base salary represented an 8 percent decrease related to his reduced job responsibilities. His bonus and incentive compensation was down 2 percent to $181,988. The bulk of Lambeth’s compensation was $1.62 million related to a fully vested deferred compensation upon his retirement.

Dr. Thomas Sibert, president of Wake Forest Baptist Health and chief operating officer, received a 14 percent increase in total compensation to $1.13 million, including $631,297 in salary (up 15.7 percent) and $234,540 in bonus and incentive compensation (up 41.3 percent). Sibert took over his role in September 2010.

Edward Chadwick, chief financial officer, received a less than 1 percent increase in total compensation to $979,420. His salary rose 4.6 percent to $527,216, while his bonus and incentive compensation fell 5 percent to $189,929.

Russell Howerton, chief medical officer, was paid $295,714 in salary, $300,786 in bonus and incentive compensation and $657,025 in total compensation. Doug Edgeton, former president of Piedmont Triad Research Park (recently renamed as Wake Forest Innovation Quarter), received $490,485 in salary, $162,367 in bonus and incentive compensation and $710,729 in total compensation.

The Chief Information Quietly Departs, with Some More Money

Meanwhile, Mr Craver also reported the quiet departure of the executive who presided over the troubled implementation of the EHR,

The chief information officer for Wake Forest Baptist Medical Center is stepping down, effective May 31, the center confirmed Friday.

Sheila Sanders has served in that role, as well as vice president of information technology, since being hired in 2009 to direct the center’s overhaul of its IT system.

She is leaving at a time when the center is struggling financially and operationally with implementing the Epic electronic health records system — one of the largest overall projects Wake Forest Baptist and most health care systems have undertaken in recent years.

Note that Ms Sanders was well rewarded for her questionable efforts,

Sanders was paid $333,961 in salary, $89,145 in bonus and incentive compensation and $464,543 in total compensation in 2011, according to a regulatory filing that Wake Forest Baptist made public Wednesday. The center’s executive-compensation data typically is about 18 months old when released.

In terms of salary, Sanders ranked sixth among the center’s 27 listed management officials. 

It was clear that Ms Sanders ought to have been directly responsible for the EHR implementation,

 The center said Sanders’ duties included clinical information, administrative, business, academic and research support systems, as well as core IT functions that include a central IT help desk, email, computer desktop support, IT security and telecommunications.

Nonetheless, the extremely well-paid top leadership did not seem to have hard feelings.

Dr. John McConnell, the center’s chief executive, said in a statement that Sanders decided in January to take 'a brief career break' after completing major portions of the overhaul. He said Sanders is relocating to Florida to spend more time with her family.

Wake Forest Baptist spokesman Chad Campbell stressed it was Sanders’ decision to leave her positions, and it was not related to Epic, which went live in September on the center’s main campus.

Also,

'We are deeply grateful to Sheila for her numerous contributions that will serve the medical center for years to come,' McConnell said. McConnell said senior IT officials will manage day-to-day IT operations with his oversight while the center conducts a national search for her replacement.

But to reiterate,

 The center said May 2 it had launched another round of 'multi-million dollar' cost-cutting measures that will last through at least June 30, the end of its 2012-13 fiscal year, related to fixing Epic revenue issues.

 Perhaps any attempt to saddle the chief information officer with responsibility would point out the lack of responsibility imposed on even higher level and better paid executives for apparently approving and authorizing her previous work.

The Usual Talking Points

Instead, the official statement from hospital system management about top executives' compensation trotted out the usual talking points in defense of all this lavish pay,

Wake Forest Baptist said in a statement explaining its executive compensation packages that as an academic medical center, it requires management with 'a special set of skills and experience to manage relationships with physicians and researchers, the university, its patients and community. … It takes proven talents possessed by a small group of health care executives.'

'Compensating executives, as we do all of our employees, competitively and appropriately, is crucial to the success of Wake Forest Baptist and to Northwest North Carolina.'

In addition,

 Baptist said its executive compensation is based primarily on comparisons with 32 academic medical centers, including Duke University Hospital and UNC Hospitals. 

With regard to Dr McConnell's special retirement plan,

'This is a common benefit for executives at academic medical centers and health systems to encourage retention and provide competitive retirement benefits,' the center said in its statement.

We first listed the talking points here, and then provided additional examples of their use here, here and here.   The official administration discussion above does seem to include: 
- 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.

Left out was any evidence about the executives' performance, much less their degree of responsibility for their institution's performance.  Why the few top paid executives should continue to get credit for the institutions' supposed, but unspecified successes, while escaping any accountability for its failures (including the looming problems with its commercial health care information technology) was of course not mentioned. 

So here is a great, current example of how top health care executives are gambling with other peoples' money, in a game rigged so that they always win.  As long as we continue such perverse incentives in health care, they will continue to inspire leaders to line their own pockets at the expense of our health care institutions, and ultimately to the detriment of patients' and the public's health. 

Conclusion

So let me conclude with Prof Mintzer's conclusion,

All this compensation madness is not about markets or talents or incentives, but rather about insiders hijacking established institutions for their personal benefit.

Too many large corporations today are starved for leadership—true leadership, meaning engaged leadership embedded in concerned management. And the global economy desperately needs renewed enterprise, embedded in the belief that companies are communities. Getting rid of executive bonuses, and the gambling games that accompany them, is the place to start.

NYU Faculty Vote No Confidence in their President

Faculty at large American universities, in which most of the country's medical schools and teaching hospitals are embedded, are becoming increasingly concerned about the leadership and governance of their organizations, and whether the universities are putting their academic (and clinical) missions ahead of other concerns, like making money and rewarding top executives.

In January, 2013, we discussed a an informal, anonymous vote faculty at the University of Miami medical school expressing no confidence in their dean and his chief lieutenant.

The NYU No Confidence Vote

The faculty of a major component of another big US university have just openly voted no confidence in their president, and are raising questions about their board of trustees.  The setting was New York University.  Some background comes from a New York Times article this month:

 Embarking on an ambitious expansion at home, constructing a network of new campuses around the globe, wooing intellectual superstars and raising vast amounts of money, John Sexton of New York University is the very model of a modern university president — the leader of a large corporation, pushing for growth on every front.
 

To some within N.Y.U., Dr. Sexton is a hero who has transformed the university. The trustees have thanked him by elevating his salary to nearly $1.5 million from $773,000 and guaranteeing him retirement benefits of $800,000 a year.

But to others, he is an autocrat who treats all but a few anointed professors as hired help, ignoring their concerns, informing them of policies after the fact and otherwise running roughshod over American academic tradition, in which faculty members are partners in charting a university’s course.

'He has a very evangelical sense of purpose,' said Andrew Ross, a professor of social and cultural analysis, 'that does not extend beyond the concept that the university should be an entity of his own making.' 

'I think,' he added, 'when other administrations see that they say, Well that’s what leadership should be. And when faculty see that they say, That is not what university leadership should be. It’s the style of a maverick C.E.O.'

The debate over Dr. Sexton’s presidency will come to a head this week. The faculty of the university’s largest school, Arts and Science, has scheduled a five-day vote of no confidence. Given Dr. Sexton’s international stature, the vote may serve as the most important referendum yet on the direction of American higher education. 

President Sexton lost the no-confidence vote, as noted in another NY Times article a week later:

The vote, 298 to 224 (with 47 abstaining), took place via electronic balloting from Monday through Friday. Full-time tenured and tenure-track professors were asked to respond to the statement: 'The faculty of Arts and Science has no confidence in John Sexton’s leadership.' Voter participation was 83 percent.

Top Executives Usurp Power from Faculty

An op-ed in the NY Times by a leading dissenting faculty member further explained the issues.  He charged that the President ignored faculty concerns about an ambitious plan to expand the physical plant of the university:

How did Dr. Sexton lose the confidence of so many faculty members? By ignoring us. Of course, many professors everywhere feel overlooked by today’s generation of jet-setting university presidents. But we have very specific complaints: above all, Dr. Sexton has consistently refused to address concerns about plans to expand N.Y.U. offices and dorms into the part of Greenwich Village south of Manhattan’s Washington Square Park, where many of us live. 

This expansion plan is known as N.Y.U. 2031, indicating the year in which all the building will be complete. The very name told us that we’d be living on a construction site for a couple of decades.

Not surprisingly, this did not go over very well with many faculty members. We were also concerned about where the money would come from to pay for this expansion, as no business plan for the project has been made public.

Thirty-nine departments and schools passed resolutions last year against the 2031 plan. These resolutions were typically passed unanimously or nearly unanimously. And yet Dr. Sexton’s response was a deafening silence.

Academic Values, Particularly Academic Freedom and Free Speech Ignored

Furthermore, the faculty were concerned about plans to expand the university overseas to nations not known for their vigorous support of academic freedom and free speech:

 Many of us are also concerned with Dr. Sexton’s plans to expand N.Y.U. overseas, including branch campuses in Abu Dhabi and Shanghai, with inadequate faculty involvement or oversight. It is doubtful that faculty members would have chosen to build campuses in countries where academic freedom, and free speech generally, are so parlous. 

Executives Enriching Themselves at University Expense

Finally, the faculty were concerned about top university executives immodestly enriching themselves from the coffers of a non-profit university:

As the faculty vote approached, more trouble arose for Dr. Sexton in the form of news reports about lavish compensation for NY administrators.  The central but by no means sole figure in this scandal is Jacob J Lew, the Obama administration’s new Treasury secretary, who worked at N.Y.U. in the early 2000s for a salary that eventually reached $900,000, larger even than Dr. Sexton’s at the time. 

Mr. Lew received loans to buy a nice home, which apparently were largely forgiven. He also received a severance of some $700,000 when he left for a well-paid position at Citigroup. Severance? For someone who leaves voluntarily?

 Dr. Sexton himself is to receive a salary of more than $1.4 million this year, and a 'length of service' bonus of $2.5 million in 2015. (Full disclosure: the university gave me a set of mugs when I completed 25 years of teaching.) And he will receive $800,000 a year after he retires. 

Other top administrators make similarly extravagant salaries. Some experts believe there may even be something illegal in the way Dr. Sexton has rewarded them; N.Y.U.’s chapter of the American Association of University Professors has asked New York States’s attorney general to investigate. 

All of which raises a question for many N.Y.U. faculty members: Should administrators be able to enrich themselves like this at educational institutions? N.Y.U. is not a Wall Street firm, but a tax-exempt university that gets millions in taxpayer dollars, not least from student loans. In fact, our students have the highest total debt load of any university in the country. Rather than expanding, or paying huge salaries to top administrators, why doesn’t N.Y.U. do more to help its alumni pay off their debts?

Forsaking the Academic Mission

An article in Inside Higher Education underlined how the dispute is really about the mission of the university in this brave new corporate era:

As Rebecca Karl, an associate professor of East Asian studies and history recently told Inside Higher Ed, 'We’ve become very critical of the whole idea of ‘expand or die,’ which of course is a corporate maxim, but we don’t understand why it needs to become our maxim.'

Also,

 Mark Crispin Miller, a professor of media, culture and communication in NYU's Steinhardt School of Culture, Education and Human Development, who has been an outspoken critic of the Greenwich Village plan [said]. 'The fact is we see NYU as a school, we see our mission as educational. Sexton and the trustees who support him view NYU as a bundle of assets whole value they will apparently do anything to maximize on paper. We believe that this approach is destroying this university.'

By the way, maybe in retrospect the trustees' role should not be so surprising.  Back in 2011 we posted about a group of extremely rich corporate and finance leaders who attacked critics of their growing power as "imbeciles," among other terms.  Several of the individuals featured in the news article which inspired this post were trustees of New York University.  These included   Kenneth Langone and John Paulson.  A quick look at the list of current trustees shows that it includes  many top leaders of finance firms, including firms whose actions were alleged to have helped cause the great recession/ global financial collapse or have been subsequently accused of other financial shenanigans, e.g., Steven S Miller, a Vice President of JP Morgan Chase, and Maurice Greenberg (a life trustee), former leader of AIG, E John Rosenwald Jr (a life trustee), Vice Chairman Emeritus of JP Morgan Chase, and William R Salomon (a life trustee), honorary chairman of Citigroup.

Summary

In summary, the issues that inspired the no-confidence vote against the President of New York University appeared to be allegations that university:
-  administration usurped power, particularly from the faculty
-  administration used this power to put corporate priorities, like expansion for its own sake, and increasing short-term revenue ahead of the academic mission
-  administration took advantage of their power to enrich themselves
-  trustees, who are supposed to exert stewardship that ensures the university upholds its mission, instead aided and abetted all this

All of these should be very familiar issues to Health Care Renewal readers.  We have discussed the rise of generic managers of health care organizations, trained supposedly in general management skills, but not in health care, and indifferent at best to the values of health care professionals.  At times their power has gotten so great as to constitute a manager's coup d'etat.   We have discussed how managers of health care organizations often put short-term revenue ahead of all other concerns, sometimes called financialization.  In doing so, they may end up perpetrating mission hostile- management.  We have discussed how managers are able to command often outrageous levels of  executive compensation.   Boards of trustees, who are supposed to exert stewardship over the organization, and see that its leadership upholds its values, often come from management backgrounds themselves, and are at best clueless about, if not hostile to the mission. 

It is time for university faculty to defend their institutions' mission.  Students, alumni, and patients at academic medical centers, medical school clinics, and of academic health professionals ought to be equally fervent in support of the academic and academic health care missions.  Academic medicine needs to be lead and stewarded by people who understand that mission, value it, uphold it, and are accountable for that.  These leaders and stewards should eschew management fads, cronyism, and excess personal enrichment.

Maybe the vote of no confidence at NYU is a small step on the path back to the academic and academic medical missions.  But do not expect those who are enriching themselves in the current system to go quietly.

ADDENDUM - see also this post by Prof Margaret Soltan on the University Diary blog.

Minimizing Legal Liability or Upholding the Mission? - the Markingson Case Redux

There are new, and troubling developments in the long running case of Dan Markingson, the psychiatric patient and research subject who committed suicide while enrolled in a trial of anti-psychotic drugs at the University of Minnesota nearly 10 years ago.

Summary of the Case

A good quick summary of this case just appeared in the Center for Law and Bioscience blob out of the Stanford Law School. 

Dan Markingson – a vulnerable, psychotic young man – was forced to choose between enrolling in a Pharma-funded drug study or being involuntarily committed (in other words, locked up).  A UMN [University of Minnesota]  doctor enrolled him in the study despite having just determined that Dan 'lack[ed] the capacity to make decisions regarding [his] treatment,' rendering it highly unlikely that Dan could have given valid informed consent to participate.  As Dan's mother, Mary Weiss, observed his mental condition deteriorating, she repeatedly tried to have Dan removed from the trial – at one point asking  'Do we have to wait until he kills himself or someone else before anyone does anything?'  But the UMN co-investigators in the drug study refused to terminate his participation.  Shortly after Ms. Weiss made her desperate plea, Dan Markingson killed himself by cutting his own throat.

Our most recent (2011) post on the case was here.  In it we also noted that there was reason to think:
-  The design of the controlled trial was flawed.
-  Financial conflicts of interests may have influenced the trial investigators' actions, particularly their questionable enrollment of Mr Markingson in the trial and their retention of him in it despite his apparent clinical deterioration.
Despite that, when bioethicists and the University of Minnesota called for a new investigation of the trial and what happened to Mr Markingson, the university rebuffed them.

Worse, as detailed in a 2012 post in the Center for Law and Bioscience blog, not only did university officials rebuff this call, but the university general counsel, who had been operating at the heart of this case, appeared to threaten the leading bioethicist dissident, Dr Carl Elliott:

 After Carl Elliott, the University of Minnesota bioethicist, refused to drop the matter, Rotenberg asked the university’s Academic Freedom and Tenure Committee to take up the question of '[w]hat is the faculty[’s] collective role in addressing factually incorrect attacks on particular university faculty research activities?' – a question that appeared both to accuse Elliott of 'factually incorrect attacks' and to call for some unspecified action to 'address' them.  Other faculty, including the president of the Minnesota chapter of the American Association of University Professors, viewed this as an attempt to intimidate Elliott into silence.  If so, it backfired.  The story ended up in the press, putting the Markingson case back in the public eye and once again making the University of Minnesota look really bad.

New Evidence Unearthed

In 2013, Dr Elliott made public what may be important new evidence in the case.  As summarized by the Minneapolis Star-Tribune,

The professor, Carl Elliott, says he has obtained consent documents for two separate schizophrenic patients that appear to be exact copies — not just in the subjects’ apparent replies, but in the positions of the lettering on the pages.

Elliott said it is improbable that separate patients would provide identical responses to the questionnaire, which includes open-ended questions about the risks and requirements of clinical research. And that, he said, raises questions about whether the university was really examining patients to determine their ability to consent to research.

 One crucial question about the case is how a patient who was actively psychotic - out of touch with reality - could give true informed consent to participation in a drug trial.  These new documents suggest major irregularities in the process used in the trial to assure that patients did give informed consent. 

Furthermore, as reported by the Minnesota Daily, other documents that Dr Elliott found suggested problems with records that related to whether study investigators would have had legal authority to access Mr Markingson's medical records, also suggesting major problems with trial administration. 

These documents, unknown until recently, suggest new concerns with how the study in which Mr Markingson was enrolled, and during which he died, was run.  Yet, the University of Minnesota's official response to them, once again orchestrated by university counsel Mark Rotenberg, attacked the legitimacy of the documents (and indirectly, attacked Prof Elliott again), as reported by the Star-Tribune,

the university’s general counsel, Mark Rotenberg, challenged the authenticity of the documents and disagreed that study recruiters failed to obtain proper and independent consent from mentally ill patients.

'I am challenging these allegations directly,' he said. 'We have no reason to believe the consent forms were prepared inappropriately.'

As Matt Lamkin wrote in the Stanford Law and Bioscience blog,  the University's responses all through this case have been focused  not on the welfare of patients, maintaining the trust of research participants, or the integrity of clinical trials, but on the legal defense of  the University and its leaders

Despite all this (and much more), the University has never acknowledged any errors or taken any disciplinary action related to the Markingson case and has repeatedly rejected calls for an independent investigation.  That’s probably because from the start the University has handled this case as a litigation matter.  Rather than trying to determine whether there were problems with the way its personnel treated Markingson, the University has focused on minimizing its potential liability.  Accordingly, the University appears to run every inquiry related to the case through the office of its General Counsel, Mr. Rotenberg.  When Carl Elliott (my mentor as a grad student at UMN) wrote a damning article about the case in Mother Jones, the University’s response came from Rotenberg.  When UMN bioethicists called on the University’s Board of Regents to launch an independent investigation, the Regents deferred to Rotenberg.  Not surprisingly, he declined.

When you turn to your lawyer, you’re going to get a particular kind of response.  The GC isn’t in a position to take an objective look at the circumstances.  He’s an advocate.  His role is not to make sure the client has conducted itself ethically, but to minimize the client’s risk.  Asking your lawyer to respond to allegations of wrongdoing is like asking your PR flacks to do so.  Their job is to make their clients look good, not to make sure they’ve acted properly.

Note that this still begs the question of who the client is.  Is it the university, or the university's leaders?

Furthermore, as Mr Lamkin pointed out, the general counsel would appear to have a conflict of interest.  It may be he has an interest in defending his own actions, as well as those of his client(s), whether they are the university, its leaders, or both. 

In addition to Mr. Rotenberg’s role as the University’s top defender and advocate, there is another reason he cannot impartially consider requests for an investigation: the General Counsel’s Office is an important player in some of the disturbing events at issue.  As noted above, Rotenberg himself has been accused of attempting to intimidate and silence the bioethicist who has most doggedly sought an investigation.  The University’s lawyers are also responsible for the disgraceful silencing of Markingson’s mother, Mary Weiss.  After avoiding liability by arguing the University was immune from suit, these lawyers then threatened to force Weiss – whose son had died in a University doctor’s 'care – to pay the University’s legal costs of some $57,000.  The University used that threat as leverage to get Weiss to forgo an appeal of the trial court’s decision.

So as the University continues to refuse any new consideration of this this seemingly never-ending case, Dr Elliott has posted an online petition calling for an outside investigation.   We will see how Mr Rotenberg reacts to this.

Summary


A very troubling aspect of this case is that it has shown that the university leadership has seemed to care, at best, more about fending off litigation than upholding the university's mission.  The mission of the university is supposed to be discovering and disseminating the truth in a spirit of free inquiry.  Added to the mission of medical schools and university teaching hospitals is taking good care of patients, and putting the patients' interests ahead of all other concerns.  Yet, in this case, university leaders have not seemed to care whether in their haste to push back legal liability they were stepping on their faculty's academic freedom and free speech, the integrity of the medical research done at the university, and most importantly the rights of their patients and research subjects.  Furthermore, it is not clear whether they mainly feared the impact of litigation on the university, or how litigation might actually end up holding them accountable.

As Dr Judy Stone wrote in her Scientific American blog,

  it appears that UMN believes, as do many other institutions, that protecting itself from scandal and its consequences comes first and foremost and that, like the big banks, that it is too big to be punished.

Again, note that UMN cannot itself believe or protect.  People acting ostensibly on its behalf may have been protecting themselves from scandal, and believing that the size and status of their institution gave them, the leaders, impunity.

The case of Mr Dan Markingson is a continuing reminder that to reform health care, health care organizations need to be lead by people who put the health care mission first and are willing to be accountable for that mission.   I hope that eventually there is an honest investigation of this case, and a commitment to reform based on its conclusions.

See additional thoughts from Dr Howard Brody on the Hooked: Ethics, Medicine and Pharma blog, on the 1BoringOldMan blog, on the Periodic Table blog, and last but certainly not least, many comments by Dr Carl Elliott on the Fear and Loathing in Bioethics blog.