In 1970, a Fortune magazine cover story warned the nation: “Much of U.S. medical care, particularly the everyday business of preventing and treating routine illnesses , is inferior in quality, wastefully dispensed, and inequitably financed.” That year, a Fortune editorial declared: “The time has come for radical change…The management of medical care is too important to leave to doctors who are, after all, not managers to begin with.”
This was the beginning of the revolution Paul Starr described in his Pulitzer-prize -winning 1982 book, The Social Transformation of American Medicine. In his final chapter, “The Coming of the Corporation,” Starr expressed his concern that “those who talked about ‘health care planning’ in the 1970s now talk about ‘health care marketing. Everywhere one sees the growth of a kind of marketing mentality in health care. And, indeed, business school graduates are displacing graduates of public health schools, hospital administrators and even doctors in the top echelons of medical care organizations.
“The organizational culture of medicine used to be dominated by the ideals of professionalism and voluntarism which softened the underlying acquisitive activity,” Starr wrote. “The restraints exercised by those ideals now grows weaker. The ‘health center’ of one era is the ‘profit center’ of the next.”
In this brave new world of the 1980s, corporate executives would become both the wealthiest and the most powerful actors on the new cultural stage. Hospital CEOs would haul home salaries that made neurosurgeons look like pikers. In health care, as in other industries, CEOs, not physicians, make the decisions, and their goal, Starr suggested, would no longer be better health, but rather, “the rate of return on investments.”
Earlier in the 20th century, many hospitals had been run by physicians.
Today, the vast majority are, as Starr predicted, run by MBAs and
other businessmen. Some CEOs have studied hospital administration.
Some do a fine job. The very best work well with the doctors in their
hospitals.
Rogue CEOs
But today, it is too easy for someone who knows little about
medicine—and cares less—to take charge of a hospital. Over at Health
Care Renewal, Dr. Roy Poses offers a striking example:
“Add this to our series of failed health care leaders, from the South Florida Sun-Sentinel:
‘A top Memorial Regional Hospital administrator caught up in a fraud
investigation in the Virgin Islands resigned this week after admitting
he spent time in a military prison and lied about it.
‘Rodney E. Miller, 36, who came to the Hollywood hospital less than a
year ago as chief operating officer and a rising star, never disclosed
he spent time in a Navy brig on theft charges, Frank Sacco, chief
executive of the South Broward Hospital District, said Thursday. Sacco
said when he confronted the man he hoped would one day succeed him,
Miller admitted his lie and quit the $370,000 job on the spot Tuesday.
‘Details of Miller’s past emerged in a series of stories published this
week by the Virgin Islands Daily News that outlined widespread alleged
financial abuses by Miller and others at Schneider Regional Medical
Center in the Virgin Islands. The newspaper, and an audit by the U.S.
Inspector General’s Office, found that more than $1 million was
improperly diverted to Miller’s personal accounts between 2002 and
2007. Also, he received $3.8 million in salary over several years while
patients went without basic needs for a lack of money, the newspaper
reported.
‘But it was Miller’s failure to disclose a "bad conduct" discharge from
the Navy that led to his departure from Memorial Regional, Sacco said.
Miller stole another serviceman’s credit cards in 1995 and went on a
spending spree, then concocted an elaborate scheme to cover his tracks,
the Daily News reported. He left the service in 1996 and his discharge,
after appeals, became official in 2000.
‘The information, including terms of his 10-month prison sentence and
allegations that he submitted fraudulent documents to investigators,
came from Miller’s service records, which are public under federal law.
No one from Memorial Regional or an independent search firm ever
verified Miller’s service, Sacco said…
‘Miller served as Schneider’s chief executive officer for five years
before accepting the job as head of the adult hospital at Memorial
Regional in October. The inspector general’s report was finished two
weeks before Miller was hired in Broward, but not released until Monday.
‘The audit, conducted jointly by the Inspectors General of the Virgin
Islands and the U.S. Interior Department, details an "alarming depth of
mismanagement" at the hospital by Miller, his top executives and the
board charged with overseeing their operations. Miller received more
than $1.3 million above his contracted pay scale.
‘Investigators were met with "secrecy and a deliberate concealment of
financial records" that forced them to seek subpoenas, according to the
audit.
"In a story in the Miami Herald, CEO Sacco was quoted, ‘we thought we had a rising star.’
“Not exactly,” writes Poses.
If this were merely the story of an outlaw CEO somewhere in the Virgin
Islands I would not be so concerned. But the recent history of some of
the largest U.S. hospital chains offers a rogue’s gallery of top
executives , particularly (but not exclusively) at for-profit
hospitals. Time and again these CEOs have been able to make the numbers
Wall Street is looking for only by “making them up.” To meet earnings
expectations, some medical centers bilked taxpayers by over-charging
Medicare. Others bribed doctors to “put heads on beds.” Still others
over-charged insurers and gulled investors. In the most harrowing
instances, healthcare providers resorted to kidnapping patients.
In one case a chain of psychiatric hospital kept its beds full by
setting targets for its hospital executives. They in turn targeted the
patients they needed: adolescents who had sought help from school
counselors, clergy and parole officers for emotional problems.
National Medical Enterprises (NME) paid the counselors, clergymen and
parole officers bounty fees of as much as $2,000 to “recruit” patients
who were then hospitalized, often against their will, until their
insurance ran out. One 17-year-old was pinioned to his bed for months.
His only “mental health problem” (before he landed in the hospital) was
that his girlfriend had jilted him and he was depressed. By 1993, some
130 patients had brought suits against the NME, and it faced 14
separate federal and state investigations. But Richard Eamer, the entrepreneurial businessman who founded the chain, never went to jail.
Instead, he walked away with a lump sum of $2.66 million and the
promise of retirement payments of over $500,000 a year.
As for NME itself, an investment banker who was a friend of the founder
took over the business in 1994. He had no hospital experience, but he
knew how to merge and acquire. Before long NME became the $2 billion
Tenet Hospital Corporation, boasting 116 hospitals in 17 states.
Then, in 2002, came the FBI raid. Ultimately, Tenet would pay the
government $54 million to settle charges that the Redding Medical
Centers had billed Medicare and Medicaid for thouands of cardiac
procedures, including angioplasties and open-heart surgeries, that
according to an FBI affidavit, were, in many cases, completely
unnecessary. In the affidavit other cardiologists charged that in an
estimated one-quarter of the cases, the hospital’s rainmakers were operating on patients who had no serious heart problems whatsoever.
Some of those patients did not survive. Others were crippled. All
suffered some form of psychological trauma. Tenet admitted no
wrong-doing.
Redding had a sterling reputation. In 2002 its cardiac treatment center
received a five-star rating from HealthGrades, the Colorado-based
health care information company, for the fifth year running.
According to the FBI’s affidavit, local cardiologists had tried to
raise a red flag at Redding. One said that he warned Steve Schmidt, who
was the hospital’s chief executive at the time, of a “serious problem”
with unnecessary heart procedures as far back as 1998. Another
physician alerted Schmidt’s successor, Hal Chilton, during the summer
of 2001. He quoted Chilton’s response: “We have heard that, but we’re
not sure how to handle it.”
Neither Schmidt nor Chilton were physicians; nor did they have a degree in public health.
Jeffrey Barbakow, the investment-banker CEO who had created the Tenet
chain, did not go to prison. Instead, he left with his pockets
well-lined: $111 million that he had collected when he cashed in his
stock options, plus $1.3 million in severance and another $585,000 in
pro-rated salary for the year when the hospital system went down.
This brings me back to blogger-doctor Roy Poses, who reminds his
readers that he has argued, in the past, for “developing a licensure
process for leaders of health care organizations. Licensing doctors and
health professionals has been going on for a long time. But now leaders
of health care organizations, from hospitals to drug companies, have as
much if not more influence over health care, and hence the health and
safety of patients as do doctors. Yet,” Poses points out, “there are no
requirements that leaders of health care organizations have any
particular educational background, knowledge, commitment to health care
values, or, for that matter, that they have not committed crimes. Given
the scope of bad leadership discussed on Health Care Renewal, maybe a
licensing process for health care executives would at least ensure that
they have not served time in the brig for theft.”
This would be a excellent start.
In an article
titled “Physician as Hospital Chief Executive” published in Vascular
and Endovascular Surgery earlier this year, Robert E. Falcone, MD
Bhagwan Satiani, MD, MBA, go a step further, suggesting that, perhaps,
the management of medical care is so important that it should be left
to doctors. Or at the very least, they should be involved.
“As the pendulum swings back from lay leader to clinician leader, there
is a strong and appropriate opportunity for physicians to reinsert
themselves into a leadership role,” write Falcone and Satiani, who both
hail from the Ohio State University School of Medicine. “In fact, the
time has perhaps never been more appropriate than today. In a health
care system that is complex, troubled, and challenging, the physician
CEO brings a unique set of skills to the business of medicine. The
successful physician leader, however, must understand the business of
medicine as well as or better than he or she understands the practice
of medicine. Training, developing, and equipping our future
physician leaders with the necessary skill sets will be one of
medicines’ many challenges as it expands into the 21st century.” [my
emphasis]
Should either an M.D. or a degree in Public Health be a requirement for
becoming a hospital CEO? Probably not. There are many fine hospital
executives who possess neither degree. But I do think that all CEOs
should be required to work closely with a panel of the hospital’s
physicians, focusing on how they can collaborate to improve patient
safety and health. Physicians also should have a say in how hospitals
invest their surpluses: add on to the new wing and install whirlpool
baths in the maternity wards—or put the money into an infection control
program?
And I agree with Roy Poses: hospital CEOs should be licensed.
Electricians are licensed. Accountants are licensed. Common sense
dictates that someone running a hospital should be required to pass
exams showing, not just that he or she knows something about
“management and administration,” but that she has a solid grounding in
what matters to patients—how to reduce errors and lift the quality of
care.
There is no way to license against greed and to force empathy on others. We as a society get what we allow, and that is the bottom line answer.
Unless society begins to understand the real facts behind what a healthcare system can really achieve and begin to look at these real achievements from a social-moral standpoint, no licensing arrangement will change anything, IMO!
NG–
Certainly licensing CEOs will not reform healthcare.
But if done right, it could keep the real sleaze out of the business. (Hospitals have been attracting people who really should be selling used cars–or mortgages. People who don’t even pretend to know anything about hospitals or healthcare.)
Of course Hospital CEOs should be licensed.And many should be doctors.
And while we’re at it more doctors shoud be in congress. The excesses (note excesses) of the legal mind is a plague upon the nation.
Dr. Rick Lippin
Southampton,Pa
ralippin@aol.com
Licensing a hospital CEO is a great idea. This way some sort of standardized credentials can be assured of prior to the CEO candidate being hired. I agree that licensing won’t solve the woes of healthcare but requiring some basic requirements is a nice idea. With regard to the MD option for healthcare administrators I think the rule of thumb should be who ever is best qualified. That being said there are plenty of nurse executives as well as MDs that could sit in the CEO slot and do quite well. Clearly I am showing my bias as an RN.
One item that I do think is important is to have a CEO who has had some clinical time taking care of patients. The business of healthcare is unique in many ways and the average Joe with a business degree I don’t think will fit the bill as well as a clinician with the right business training/qualifications.
In reference to the folks you mention in your blog that stepped out of line, you can get that with anyone. Bottom line should be a focus on patients and community health needs, not investor interests, nor specifically MD needs or nursing needs.
A shared governance model which would include nursing, medicine, and community members should drive strategic planning and provide direction for the CEO to implement.
you raise a great question, but I’m not convinced by your proposed answer. I’m groping for evidence that folks who are licensed actually do a better job of serving the public than others. there’s evidence that they’re paid more, partly because they control entry to the field. does a plumber or electrician, both licensed, serve the public better than a computer repair person from Geek Squad or the guy who cleans my gutters. it isn’t clear to me.
what is clear that these folks ought to be watched more carefully. but arguing that a hospital should be run by a doctor is like arguing that newspapers should be run by reporters or airlines by pilots. there’s little compelling logic there that I see.
Maggie,
With all due respect, I think both you and Roy Poses are off base on this one. The fact is that the non-profit hospital sector has its full share of scandals as well. Right here in NJ, there have been significant financial scandals involving both Saint Barnabas and UMDNJ. It is also important to note that fully 85% of all hospital beds in the U.S. are owned and controlled by non-profit institutions, and that has been the case for more than 20 years. In some states, there are few for profit beds or none at all. You are also aware, I’m sure, about very negative stories published by the Wall Street Journal in recent years involving aggressive billing and collection tactics toward the uninsured by Yale New Haven Hospital and, more recently, M.D. Anderson Cancer Center in Houston.
Most hospital CEO’s, whether they are MD’s or not, face enormous pressure from surgeons who generate much of the hospital’s most profitable business to acquire the latest and greatest diagnostic and operating room equipment so they can ply their trade with state of the art facilities. This medical arms race contributes significantly to higher medical costs and duplication of equipment. Much of the hospital industry earns a low single digit profit margin on revenues, in part because Medicare and Medicaid do not cover the hospital’s full costs according to them. Caring for the uninsured accounts for about 6% of costs for the hospital sector according to the Kaiser Family Foundation, though it is a much more significant factor for inner city safety net hospitals.
I’ll bet that if you looked at a large cross section of hospitals with CEO’s that are also MD’s vs. hospitals whose CEO’s are not MD’s, you would not find a systemic difference in either quality of care or financial performance. The CEO can play a very significant role in setting a cultural tone for a hospital and creating an atmosphere that encourages both teamwork and personal development. Paul Levy (who is not an MD) has clearly demonstrated this ability as CEO of BIDMC in Boston. I think an MD as CEO might be too quick to try to satisfy the desires of the doctors who practice at the hospital but may not be especially good at balancing budgets, improving operating systems or developing people. At the same time, some MD’s might make wonderful CEO’s. The bottom line is that I just don’t think this is an issue that lends itself to generalization one way or the other.
Ask anyone who has managed physician groups (me), most physicians have little business managing anything.
There are spectacular exceptions of course.
On licensing, nursing home administrators have been licensed for decades. Arguably this has improved quality, however….. with the big corporate takeover of nursing homes, administrators tend to have limited duties and the corporate office MBAs run the show (badly).
I have an MBA density theory, as the number of MBAs in the organization grows, the quality of care declines.
No easy answers here.
Ask anyone who has managed physician groups (me), most physicians have little business managing anything.
There are spectacular exceptions of course.
On licensing, nursing home administrators have been licensed for decades. Arguably this has improved quality, however….. with the big corporate takeover of nursing homes, administrators tend to have limited duties and the corporate office MBAs run the show (badly).
I have an MBA density theory, as the number of MBAs in the organization grows, the quality of care declines.
No easy answers here.
So much for the credential provided by the American College of HealthCare Executives (FACHE). I am stunned that many hospital CEO positions do not require this minimum credential which includes passing a psychometrically resourced exam. In the past additional requirements included case studies or thesis but these were recently eliminated as a requirement. Still it is a basic minimum indicating education, committment, experience and references.
Licensing is not a panacea. As medical malpractice and provider errors readily demonstrate among clinical practitioners. And MD CEO’s are equally not the answer. Management is a unique skill that can be learned by MD’s and MBA’s alike. At times it’s merely an ego-centric aspect of a particular institution that demands an MD/CEO. In reality it’s the skill set and experience that warrent the hospital CEO position not merely the license or credential.
All I know is Dr. Tom Royer from Christus is my favorite hospital CEO. I’ve never heard any other hospital administrator speak so forcefully about quality and what it really means, and then actually do something to improve quality at his hospital, even if it means sacrificing the bottom line. He gave a talk at the HFMA Conference 2 months ago that left half the audience speechless. I don’t know if his having an MD affected his viewpoint, but I don’t think it hurt.
It’s not the degree they have, the college they graduate from or whether they have MD after their name that makes good hospital leaders.
The missing piece is the lack of accountability they currently have for providing quality care. It continues to be the big elephant in the room that everyone is ignoring. My husband, who works in the manufacturing field has an old saying:
“In God we trust…..everyone else must produce data.”
Our current system has the priority/focus on profit data and a lack of focus on quality outcome data.
If hospital presidents were held accountable to the following types of outcome data (and then it was publicly reported), then we’d know if they are excellent hospital leaders or not:
What are your mortality rates by surgery and treatment type?
How many patients had an unexpected transfer to the ICU?
What is your infection mortality rate?
How many patients developed infections after they were admitted?
How many medication or other errors occurred?
What are you doing to be sure they don’t happen again?
What are your C-Section, Induction, Epidural rates?
How many complications occurred as a result of these treatments?
What is your maternal and infant mortality rate?
What are your RN to patient ratios?
I could keep going, but you get the idea.
They will continue to pull in high 6 figure salaries with no accountability for quality until…….well, until we start holding them accountable to the data.
Thanks Maggie for an inspiring post that has drawn a series of impassioned comments
As someone who has written 2 books on healthcare collaboration, I agree with you that CEOs should work closely with a panel of the hospital’s top clinical physicians to focus on how they can improve care for their communities and put limited resources to the best use.
Physicians are not monolithic; the ones who have earned the respect of their colleagues for their clinical judgment are the physician champions that CEOs need to hear from.
Excellent post and pertinent questions. However, I’m in the camp with the responders who believe that patient care organization senior administrators (CEO and COO) must be licensed and ideally should come from the ranks of licensed healthcare professionals, which include nurses.
Nurses with graduate education and experience in leadership and management are fully capable of running all sizes and types of inpatient and patient care facilities. Indeed, there are certification standards of practice via the ANCC for nursing administration, basic and advanced. The American Nurses Association calls for the chief nurse officer to have attained the masters degree at a minimum, as well as specific post-graduate education and experience in leadership and management principles.
What I believe has failed is the pure application of a for-profit business model to health CARE. This one size fits all approach hasn’t resulted in adequate affordability, access and desired health outcomes in the service population. And with organization leaders steering the ship without a clinical frame of reference, all stakeholders are under served, and as you cite, many times, the captain is taking bribes, is heading for the shoals, and the ship capsizes or suffers major damage.
Dr. Rick, Mike,jimjaf, Barry
Dr. Rick — I agree, I wish more doctors were in Congress . ..
Mike– You write:
“One item that I do think is important is to have a CEO who has had some clinical time taking care of patients. The business of healthcare is unique in many ways and the average Joe with a business degree I don’t think will fit the bill as well as a clinician with the right business training/qualifications.”
I agree. Even if a hospital administrator isn’t an M.D. (or a R.N.–also a good idea) I do think that he must some experience in patient care, if only as part of training to be an administrator.
It seems to me that traning should include something like a month or two spent on various wards–and in the ER–at night and on week-ends as well as during the day.
Recently a hospital administrator/blogger described going to the hospital at night, walking around, seeing what was happening at night as an important part of being a hospital administrator. I agree.
You also write: “In reference to the folks you mention in your blog that stepped out of line, you can get that with anyone.”
Here I disagree. Different careers/professions and degrees attract different types of people.
I don’t know if you’ve spent a lot of time shopping for homes or apartments, but if you have, you may have noticed that a startling percentage of people who get real estate licenses don’t seem dedicated to truth-telling.
Over the years I’ve rented, bought and sold five properties, and while I’ve met a few real estate agents who I genuinely liked, overall the experience has not given me great faith in humanity.
For a number of years, I worked on Wall Street (writing about finance and social policy for Barron’s) and rode the subway with a great many young MBAs at the end of each day.
Overhearing their conversations I would say that an enormous number seemed to focus on beating someone else out of money, a promotion, etc. A very competitive, not very compassionate group. (Jokes about bag ladies, etc.) Not a high set of standards regarding business ethics. This is not true of everyone, but “Greed is Good” was (and is) the general theme–especially among people under 50. (An older group of Wall Streeters had different standards. But they’re dying off. )
This is why someone with a Wall Street background might not make an ideal hospital administrator. He is likely to see a hospital as a profit center.
Mike, you also suggest: “A shared governance model which would include nursing, medicine, and community members should drive strategic planning and provide direction for the CEO to implement.”
This is what the board of a non-profit hospita tended to be–in the past, before so many hospitals become so corporate, and so money-driven.
There are still hospitals that are run this way, but not as many.
jimjaf–
In my experience, licensed electricians and plumbers are more reliable than someone you find in the yellow pages to fix your computer.
I’ve had some truly terrible experiences with computer technicians–until I bought a warantee with my Dell computer.
The Dell technicians I’ve dealt with on the phone and who have come to my home have been, by and large, efficient, well-trained and smart.
I once told a Dell technician what a good experience I’ve had with them and he said “Yep, we’re certified–and probably certifiable . .” (I had said it must be pretty difficult talking to very very frustrated computer users all day.)
My point is that Dell must put them through some sort of testing and training program. And also sometimes listens in on their calls. This is a form of “licensing”–you’re licensed to be a Dell technician.
I also agree that people who are licensed–like plumbers and electricians–charge more. They have a cartel, and tend to limit the number of people who can become part of the brotherhood.
OFinally, on why it might be a good idea (though not necessary) for more doctors to run hospitals and more pilots to run airlines is that doctors and pilots have a respect for safety issues that others don’t.
These days, too many airline exectives have cut way back on maintenance. Talk to an American Airlines pilot about this–I did after 4 or 5 flights were delayed for hours because of mechanical problems.
And M.D.s also have taken an oath to put patients first. Clearly, some M.D.s take that oath more seriously than others. But I do think that M.D.s R.N’s and other health professionals tend to be a self-selecting group with a little more concern about patients than most businessmen –who can too eaisly view them as “cusomters.”
As one physician/reader once said on this blog
“I would go out of my way for a patient in a way that I wouldn’t for a ‘”customer.’
Barry-
Yes not-for-profits, like for-profits, have engaged in aggressive billing and collecting practices.
But that is quite different from a) operating on patients who don’t need an operation
b) bribing doctors to hospitalize patients who don’t need to be hospitalized c)giving hospital CEOs targets of how many beds must be filled (regardless of he community’s needs) and paying enormous bonuses to keep those beds full d)keeping two sets of books–one to show to Medicare, one with the real numbers … I could go on.
You’re right –that hospital in N.J. was a mess. And there’s another non-profit hospital scandal today in L.A.
But if you look at the billions of dollars that for-profits have paid in fines and to settle lawsuits–and compare that to the amounts paid by not-for-profits (adjusting for the fact that there are many more not-for-profits) you’ll understand why many people have grown to hate for-profit hospital stocks.
Finally because the industry was presented to WAll street as get-rich-quick agressive growth industry it has attracted some really sleazy operators. At Barron’s, I interviewed a number of them.
Part of the problem, I think is that the big for-profits are chains, and the executives running the home office have little contact with (or interest in) medical care. Often they are quite cynical.
While talking about quality, one for-profit CEO said to me: “Frankly, our patients have absolutely no idea whether or not they’re getting quality care. They know if they like the view from their rooms. They know if they like the nurses . . .the carpeting . . .how they feel about the food. That’s it.”
And he wasn’t a crook. Just a businessman who viewed his customers through the prism of believing that “there’s a sucker born every day.” (Change the carpeting, build a bigger parking lot, and you don’t have to worry about investing in health IT, infection rates, etc.)
In terms of how for-profits treat patients, we know that they charge more and on the whole outcomes are not as good. (There has been reserach on this published in “Health Affairs”)
Finally, when it comes to “patient dumping: “Nationwide, for-profit hospitals had a significantly higher rate of violation (1.7 times higher) than not-for-profit hospitals.”
I agree about Paul Levy– I read his blog and like him. I also know a COO in NYC who I greatly respect.
But I also have been at meetings/conferences with hospital CEOs who I found truly appalling–people who vehemently denied that there were errors in their hospitals, even when I knew this was absolutely untrue.
Physician CEOs may lean in the direction of pleasing doctors, but that isn’t such a bad thing — often what doctors are complaining about is patient care: not enough nurses, etc.
Dr. Rick, Mike,jimjaf, Barry
Dr. Rick — I agree, I wish more doctors were in Congress . ..
Mike– You write:
“One item that I do think is important is to have a CEO who has had some clinical time taking care of patients. The business of healthcare is unique in many ways and the average Joe with a business degree I don’t think will fit the bill as well as a clinician with the right business training/qualifications.”
I agree. Even if a hospital administrator isn’t an M.D. (or a R.N.–also a good idea) I do think that he must some experience in patient care, if only as part of training to be an administrator.
It seems to me that traning should include something like a month or two spent on various wards–and in the ER–at night and on week-ends as well as during the day.
Recently a hospital administrator/blogger described going to the hospital at night, walking around, seeing what was happening at night as an important part of being a hospital administrator. I agree.
You also write: “In reference to the folks you mention in your blog that stepped out of line, you can get that with anyone.”
Here I disagree. Different careers/professions and degrees attract different types of people.
I don’t know if you’ve spent a lot of time shopping for homes or apartments, but if you have, you may have noticed that a startling percentage of people who get real estate licenses don’t seem dedicated to truth-telling.
Over the years I’ve rented, bought and sold five properties, and while I’ve met a few real estate agents who I genuinely liked, overall the experience has not given me great faith in humanity.
For a number of years, I worked on Wall Street (writing about finance and social policy for Barron’s) and rode the subway with a great many young MBAs at the end of each day.
Overhearing their conversations I would say that an enormous number seemed to focus on beating someone else out of money, a promotion, etc. A very competitive, not very compassionate group. (Jokes about bag ladies, etc.) Not a high set of standards regarding business ethics. This is not true of everyone, but “Greed is Good” was (and is) the general theme–especially among people under 50. (An older group of Wall Streeters had different standards. But they’re dying off. )
This is why someone with a Wall Street background might not make an ideal hospital administrator. He is likely to see a hospital as a profit center.
Mike, you also suggest: “A shared governance model which would include nursing, medicine, and community members should drive strategic planning and provide direction for the CEO to implement.”
This is what the board of a non-profit hospita tended to be–in the past, before so many hospitals become so corporate, and so money-driven.
There are still hospitals that are run this way, but not as many.
jimjaf–
In my experience, licensed electricians and plumbers are more reliable than someone you find in the yellow pages to fix your computer.
I’ve had some truly terrible experiences with computer technicians–until I bought a warantee with my Dell computer.
The Dell technicians I’ve dealt with on the phone and who have come to my home have been, by and large, efficient, well-trained and smart.
I once told a Dell technician what a good experience I’ve had with them and he said “Yep, we’re certified–and probably certifiable . .” (I had said it must be pretty difficult talking to very very frustrated computer users all day.)
My point is that Dell must put them through some sort of testing and training program. And also sometimes listens in on their calls. This is a form of “licensing”–you’re licensed to be a Dell technician.
I also agree that people who are licensed–like plumbers and electricians–charge more. They have a cartel, and tend to limit the number of people who can become part of the brotherhood.
OFinally, on why it might be a good idea (though not necessary) for more doctors to run hospitals and more pilots to run airlines is that doctors and pilots have a respect for safety issues that others don’t.
These days, too many airline exectives have cut way back on maintenance. Talk to an American Airlines pilot about this–I did after 4 or 5 flights were delayed for hours because of mechanical problems.
And M.D.s also have taken an oath to put patients first. Clearly, some M.D.s take that oath more seriously than others. But I do think that M.D.s R.N’s and other health professionals tend to be a self-selecting group with a little more concern about patients than most businessmen –who can too eaisly view them as “cusomters.”
As one physician/reader once said on this blog
“I would go out of my way for a patient in a way that I wouldn’t for a ‘”customer.’
Barry-
Yes not-for-profits, like for-profits, have engaged in aggressive billing and collecting practices.
But that is quite different from a) operating on patients who don’t need an operation
b) bribing doctors to hospitalize patients who don’t need to be hospitalized c)giving hospital CEOs targets of how many beds must be filled (regardless of he community’s needs) and paying enormous bonuses to keep those beds full d)keeping two sets of books–one to show to Medicare, one with the real numbers … I could go on.
You’re right –that hospital in N.J. was a mess. And there’s another non-profit hospital scandal today in L.A.
But if you look at the billions of dollars that for-profits have paid in fines and to settle lawsuits–and compare that to the amounts paid by not-for-profits (adjusting for the fact that there are many more not-for-profits) you’ll understand why many people have grown to hate for-profit hospital stocks.
Finally because the industry was presented to WAll street as get-rich-quick agressive growth industry it has attracted some really sleazy operators. At Barron’s, I interviewed a number of them.
Part of the problem, I think is that the big for-profits are chains, and the executives running the home office have little contact with (or interest in) medical care. Often they are quite cynical.
While talking about quality, one for-profit CEO said to me: “Frankly, our patients have absolutely no idea whether or not they’re getting quality care. They know if they like the view from their rooms. They know if they like the nurses . . .the carpeting . . .how they feel about the food. That’s it.”
And he wasn’t a crook. Just a businessman who viewed his customers through the prism of believing that “there’s a sucker born every day.” (Change the carpeting, build a bigger parking lot, and you don’t have to worry about investing in health IT, infection rates, etc.)
In terms of how for-profits treat patients, we know that they charge more and on the whole outcomes are not as good. (There has been reserach on this published in “Health Affairs”)
Finally, when it comes to “patient dumping: “Nationwide, for-profit hospitals had a significantly higher rate of violation (1.7 times higher) than not-for-profit hospitals.”
I agree about Paul Levy– I read his blog and like him. I also know a COO in NYC who I greatly respect.
But I also have been at meetings/conferences with hospital CEOs who I found truly appalling–people who vehemently denied that there were errors in their hospitals, even when I knew this was absolutely untrue.
Physician CEOs may lean in the direction of pleasing doctors, but that isn’t such a bad thing — often what doctors are complaining about is patient care: not enough nurses, etc.
save-the-rust belt, Jonathan, Mike C, Lori, Ken Cohn, Annie
Thank for your comments –and welcome to those who are new to the blog.
save-the-rust-belt–Probably you are right: the majority of M.D.s may not be good managers.
But I would guess that 15 to 20 percent of MDs and RNs (who really know what goes on in hospitals) would be.
People with an MPH in public health also usually have a real commitment to public health–which is essential for a community hospital.
Jonathan–
I agree: some hospitals want an M.D./ CEO because they think it adds prestige value. That’s merely PR.
But as others have said, I do think a hospital CEO needs some real close-up experience with hospitals, whether as part of his training, or because he is a healthcare professional.
MIke C– Would I be able to find that talk somewhere online?
Lori– A very good point. If a hospital CEO can answer your questions–and is willing to do so honestly (with
inspectors spot- checking his answers)–this is a good CEO. At that point, I don’t care what his degree is or isn’t.
These are the questions that the Joint Commission should have been asking –and hasn’t been for some 20 years. As we discussed on another thread not long ago, the new Medicare law says that the Joint Commission will no longer have a monopoly on hospital accreditation.
I’m hoping that others will be holding hospitals accountable for quality and safety.
Ken–thanks for the kind words. I agree completely.
Annie–
You write: “Nurses with graduate education and experience in leadership and management are fully capable of running all sizes and types of inpatient and patient care facilities. Indeed, there are certification standards of practice via the ANCC for nursing administration, basic and advanced. The American Nurses Association calls for the chief nurse officer to have attained the masters degree at a minimum, as well as specific post-graduate education and experience in leadership and management principles.
What I believe has failed is the pure application of a for-profit business model to health CARE.”
I agree. As I’ve said I don’t think that hospital CEOS Must have a M.D. R.N, or MPH. But I do think they need what you call “a clinical frame of reference.”
Hospitals are very, very different from other businesses.
.
We should stop treating healthcare as a business to make a profit of, and return it to the status of public service: much as law enforcement or fire fighting. Get rid of fee for service, and pay physicians an hourly wage just like nurses, respiratory therapists, and other health care providers.
Panacea–
Thanks for you comment, and welcome to the blog.
Yes, I do think we should view health care as a public service.
I also believe that health care professionals should be well-paid because the training required is long and rigorous–though I also think we should pay for their education, so that they don’t come out of school with such high debts that they need enormous salaries.
And definitely, salary is much more rational than fee-for-service
I would agree that physicians salaries should be commensurate with their training. Becoming a doctor is a long hard road, and docs deserve to be paid well. Paying for their schooling is also attractive to me as a health care provider (nurse) because I understand the costs involved, IMHO is a great idea.
But it would not be fair to pay for doctors schooling, and not nurses given the nursing shortage. Or teachers, given the shortage of qualified teachers.
We do need to value these services more than we do. We don’t value health care, law enforcement, or education until we need it. That’s why corporate CEO’s get away with what they do. They can charge what the market will bear from sick people who want to feel better, and that gives them a tremendous advantage over society as a whole.
Maggie, the only source of the speech I could find was on the HFMA website in downloadable format:
http://www.iplaybackhfma.com/product/1024/74
Downloads are $15, unfortunately.
It was something else. At HFMA, where every speech is about how to wring out the last 1/10th of a percent on your margin, he challenged the audience to think about whether they’d prefer an error-free hospital with a lower bottom-line, or a more profitable hospitals plagued with medical error. Another quote that jumped out: “The health care industry tolerates mediocrity, encourages mediocrity and rewards mediocrity.” Something to that effect. And he just went on like that for 45 minutes. It was amazing.
“But I would guess that 15 to 20 percent of MDs and RNs (who really know what goes on in hospitals) would be.”
Maybe 5% of MDs, and partially in their defense, management requires a totally different mindset than medicine. It is tough to acquire both skill sets.
RNs are some of the best line managers in health care, I have worked with some fabulous surgical managers, but the nature of the job makes a broad strategic view difficult.
There are exceptions to every rule, of course.
Maggie:
An interesting post. I come to it late because your feed had dropped from my system and I picked it up from Lynch Ryan:
I am a CEO. I have an MBA to go along with my technical degree in accounting. I am also a licensed CPA. I have been in management learning and progressing for 30 years as of next year. Am I better at it now than in my first management job? A lot better. Could I run a hospital today? Sure. I would surround my self with knowable people and develop a climate where we could produce the best possible outcome that we were directed to by “THE BOARD OF DIRECTORS” who hired me. Read the article in the current Forbes magazine about the non-engineer; non-Japanese who is turning Sony around. Read Gerstener’s book on turning around IBM. Read W Edward Deming, an engineer by training, on management (numerous books) or Peter Drucker with a Ph.D. in Law considered the “Management Guru”. You need to do your homework. Management is a like medicine, more art than rote. Practice, practice practice; study, study, study.
Anybody with the skills, intelligence, correct attitude, courage, work ethic and desire to do so may be able to become a good manager. Whether they are a doctor, engineer, CPA, nurse, Indian chief, attorney (see Herb Kelleher at Southwest Airlines), scientist or what ever. There technical skills don’t make them a good manager and you don’t have to be a doctor to oversee a hospital. You don’t have to be an engineer to oversee a manufacturing plant. Etc. It may help, it may hurt you. If you rely on your technical skills that are rusty, out of date, and in poor state of repair instead of using the best and the brightest it will hurt.
I no longer attempt to do complex tax returns, I am out of practice and I have not kept up on all the changes in the law. For me to attempt to do an audit after not doing one for 30 years would be malpractice. It is impossible to keep up with technical career matters, like medicine or accounting, while working full time as a manager (read CEO). I have people who are far better at doing the technical work than I am and probably better than I every was at doing it. But being a compulsive reader I keep up on the advances in management science and practice, the changes in generational workers, the changes in employee benefit law and practice (that is why I subscribe to a workers compensation blog among many others). I read the Journal of Accountancy every month but I also read the daily newspaper, Forbes, Fortune, Inc. and other business magazines as well. I am fully up to date on management as a technical career. Where I am weak I hire or consult with proven experts that I have vetted over the years.
CEO’s are hired and do not exist in a vacuum. If you have a problem with the CEO’s running hospitals suggest possibly that Directors who hire them need to be licensed. That would make more sense. As far as a felon turning up as a CEO somebody did not do the proper due diligence and needs to be dealt with appropriately, probably the Chairman of the Board needs to resign. There are fabulous CEOs and terrible ones. There are fabulous doctors and terrible ones. We know that the licensing boards in this country do a terrible job of weeding out terrible doctors. Do you think a CEO licensing board would do a better job? I don’t think so.
Hospitals that are poorly run will suffer in the long term. I know that does not help patients in the short term. The market works. Poor management will yield poor results and in the end the Board will change management or the organization will fail to other market pressures.
More government regulation is not the answer. Greater market pressure is the answer. The invisible hand of the market always works unless blocked by government fiat. It may be slow but it is inexorable.
Good to read your post again I am going to add you back to my list with your permission.
Regards,
Charles Read, CPA
CEO/President – Custom Payroll Associates, Inc.
CEO Chairman – Charles J Read, Inc.
President – Shahan & Read, Inc.
President – Custom Financial Planning, Inc.
President – Payrollonabudget.com
President – RMARK Services, Inc.
P.S. If you really want to make a difference by licensing any job, please think about licensing Congressmen and Congresswomen. How refreshing to be able to see their test scores or a standardized test!
Charles–
Thanks for your comments.
I am familiar with the management books you cite (I used to be a financial reporter.)
But let me suggest that as a business, a hospital face unique challenges.
Most of your customers do want to be there. Many cannot pay for the service you are providing–and so won’t.
If they are seriously ill, you have no choice but to accept them as customers. (And from society’s point of view, this makes sense; as a society, we are not willing to see dying bodies stacked up on sidewalks outside hospitals.)
The government will pay for many of your services–but it won’t always pay the full amount that it cost you to deliver the service. The amount the government and private insurers pay will vary year to year, making it very difficult to plan.
See this post by Paul Levy, CEO of a Boston hospital to get an idea of the problems you face at Budget Time: http://runningahospital.blogspot.com/2008/08/budget-time.html
In addition, the service you are providing–health care–is not a commodity.
Much will depend on the culture of an individual hospital–and the people there–as to whether you deliver a high quality product.
For instance, the Mayo Clinic in Rochester Minnesotar delivers very high quality care. When Mayo has attempted to duplicate its systems in other places, the quality has been good, but often not nearly as good as in Rochester. (see http://www.dartmouthatlas.org)
This is the difference between healthcare and manufacturing Toyotas. Once Toyota figures out an efficient way to manufacture high-quality Toyotas with few errors, it can come pretty close to duplicating those systems in many factories.
This is not true of health care.
It is labor-intensive which means that you are in constant danger of human errors. Some can be reduced with checklists, new systems, etc. But when procedures require 1,500 steps, you will find that eliminating errors is all but impossible.
And everything depends on co-operation and collaboration among humans who may or may not like each other. Hospital polictics are about as complex as politics in the Roman Catholic Church.
P.S. to Charles–
You might think “Well if staff aren’t co-operating with each other, and aren’t collaborating, some of them should be fired.”
But you can’t fire the nurses–unless they are criminally negligent (and few are)–there is a huge shortage of nurses willing to work in hospitals in this country, and you’re probably already 10% understaffed.
You can’t “fire” the doctors because most of them don’t work for you. They work for themsleves–and bring patients to your hospital only if you are very, very nice to them. (Even if they are very, very rude to your nurses, who are always threatening to quit.)
If you annoy the doctors, they take their patients elsewhere, and you have empty beds. Which means that you can’t service your debt.
Hospital CEOs should be licensed, redux
There are too many rogue CEOs out there: “Electricians are licensed. Accountants are licensed. Common sense dictates that someone running a hospital should be required to pass exams showing, not just that he or she knows something about “management and
Save-the-Rust-Belt and MikeC- Thanks for the comments
Save -the Rust-belt: you wrote “RNs are some of the best line managers in health care . . .” I can easily imagine that’s true-
– It would be interesting to see what would happen if more RNs began running hospitals
Mike C– Thanks; I will download it.
Nurses are omitted from this post, but they are prepared to assume senior executive roles in all types of healthcare organizations.
Indeed, the ANCC’s Magnet Recognition program includes specific competencies for nursing leaders, and these might have some wider application to apply to the ethics and behavior of hospital CEO and COO positions.
http://www.nursecredentialing.org/Magnet.aspx
Annie–
You’re right –I didn’t mention nurses and should have.
Someone else mentioned that many nurses have very good management skills. They are trained to work with others–and to supervise others–while, traditionally, doctors have been trained to be
Lone Rangers.
Medical training for doctors is I think, (I hope) changing as more and more doctors are going to working for hospitalsl or multi-specialty group practices.
I always appreciate input from nurses on this blog. They know so much about healthcare–and what needs to be repaired–but their
voices are rarely heard outside of their own professional organizations.
Thank you.
Really this information is very helpful and we are great recruit hospital executives.
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