Heads They Win, Tails We Lose – Non-Revenue Hospital Executives Paid Generously After They Had been Proven the Door

On Well being Care Renewal, we’ve been decrying American well being care dysfunction since 2004.  For years, the US persistently has had the most costly well being care system of any developed nation.  For that exhorbitant worth, it offers at greatest medicocre entry to and high quality of care.  The newest (2017) worldwide comparability of well being programs produced by the Commonwealth Fund reveals that the US spends about 16% of its gross home product (GDP) on well being care, in comparison with lower than 12% spent by 10 different international locations.  The US ranked no higher than fifth on efficiency rankings measuring care course of, entry, administrative effectivity, fairness, and well being care outcomes.  It had the worst entry, fairness and well being outcomes.

Even provided that a few of the measures used are debatable, these are dismal outcomes.  No surprise US physicians are demoralized and burnt-out, as we first famous in our 2003 article. [Poses RM.   A cautionary story: the dysfunction of American well being care. Eur J Intern Med 14 (2003) 123–130. Hyperlink right here.] 

Well being care dysfunction is usually mentioned within the US, particularly since well being care reform grew to become a legislative precedence through the Obama administration.  The ensuing Reasonably priced Care Act (ACA, “Obamacare”) resulted in some enchancment in entry to medical insurance, however issues with entry, high quality and price stay.

It’s exhausting to know how such a dysfunctional system continues with out contemplating who advantages from it. One group who enormously profit is well being care organizational managers.  Now we have often mentioned their luxurious and ever growing pay.  Moreover, typically their pay appears wildly disproportionate to their accomplishments.  For instance, in June, 2017 we profiled the CEO of safety-net hospital who remodeled $1 million a 12 months from an establishment charged with caring for the poor.  His establishment demonstrated no nice achievements in medical care or bettering affected person outcomes.  In the meantime it was alleged that he tried to extend income through unethical means, and was even cozy with organized crime.  

Such govt compensation isn’t challenged, however when it’s, the responses are formulaic.  Justifications are made by public relations flacks who’re accountable to those executives, or the executives’ cronies on their boards of trustees.  As I wrote in 2015,  and in Might, 2016,  It appears almost each try made to defend the outsize compensation given hospital and well being system executives entails the identical arguments, thus suggesting they had been authored as public relations speaking factors. Extra examples seem right here, right here right here, right here, right here, and right here, right here and right here

They speaking factors are:
– Now we have to pay aggressive charges
– Now we have to pay sufficient to retain no less than competent executives, given how exhausting it’s to be an govt
– Our executives are usually not merely aggressive, however good (and must be to do such a troublesome job).

As we mentioned not too long ago, these speaking factors are simply debunked.  Moreover, not often do those that mouth them in assist of a selected chief present proof that they apply to that chief. Might so many extremely paid executives be so good?

As an alternative we now we current circumstances from the second a part of 2017 during which non-profit hospital executives got lavish compensation simply after they had been pressured out of their jobs.In alphabetical order by the states during which the hospitals are positioned…

Florida: Broward Well being Vice President Bought $214,008 After Allegations of Improper Funds Result in Resignation

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

Doris Peek resigned July 20 as senior vp of Broward Well being, which runs 5 hospitals and varied clinics, after a regulation agency employed by Broward Well being accused her of improperly directing almost $1.7 million to an organization owned by a outstanding Republican marketing consultant. On the time of the report, Broward Well being launched an announcement saying that it took the report ‘very critically’ and that ‘each particular person at Broward Well being is held accountable so as to uphold established authorized and moral requirements.’

Peek’s severance settlement, launched by Broward Well being in response to a public information request from the Solar-Sentinel, states that she is going to obtain $214,008, most of which represents six months’ severance and the remaining accrued depart.

Beneath the settlement, signed by Broward Well being interim chief govt officer Beverly Capasso, Peek might cooperate with any authorities investigators or regulators wanting into Broward Well being, a taxpayer-supported system legally identified because the North Broward Hospital District. However she promised to not take Broward Well being to courtroom and ‘not have interaction in any exercise both oral or written which disparage or adversely have an effect on Broward Well being.’

Such non-disparagement clauses are frequent in severance agreements, though they’ve been criticized for permitting employers to cowl up issues.

The hospital administration gave no clear cause for the generosity of the settlement.  

Requested why Broward Well being would comply with such a fee, contemplating the extremely vital contents of the report, Broward Well being’s public relations company, EvClay Public Relations, launched this assertion: ‘It is the coverage of Broward Well being to not focus on severance agreements.’ Pressed on the explanation for this, the company supplied this assertion: ‘We respect the privateness of our workers.’

Given the position of the non-disparagement clause within the settlement it’s value contemplating that the interim CEO, Ms Beverly Capasso, who authorized the contract, was additionally beneath a cloud on the time it was written. The Solar Sentinel had beforehand reported,

The brand new chief govt of Broward’s largest public hospital system holds a grasp’s diploma in well being administration from a defunct college that has been recognized by federal investigators as a diploma mill.

Beverly Capasso, who was simply awarded a $650,000 annual wage to run Broward Well being, acquired the diploma from Kennedy-Western College, a mail and on-line establishment primarily based in California and Wyoming that closed in 2009 after failing to realize accreditation. Her resume invokes the diploma on the very high, giving her identify as ‘Bev Capasso RN, BSN MHA.’

Moreover, quickly after the severance settlement was introduced, the Solar-Sentinel reported extra resignations amongst Broward Well being administration,

Two extra high Broward Well being executives stop this week, deepening the management turmoil on the taxpayer-supported hospital system.

Dionne Wong, senior vp for human assets, and Mark Sprada, interim chief govt of Broward Well being Medical Middle in Fort Lauderdale, each resigned. 

And within the months since, different main administration issues grew to become obvious.

The resignations come after Broward Well being’s credit standing was lowered final month by S&P International Rankings, which cited weak monetary outcomes and the management turmoil on the troubled system, legally often known as the North Broward Hospital District.

After that, the hospital system was additionally alleged to have given a no-bid contract to 21st Century Oncology, allegedly with the involvement of Florida governor Rick Scott (Information-Press, September 25); and  has been beneath grand jury investigation for violations of the open assembly regulation (Solar-Sentinel, September 26).

Ms Peek was allegedly concerned in improper contracting.  Whereas Ms Peek might not have been answerable for all the extra hassle and turmoil on the hospital system, she certainly participated in it.  Alternatively, there isn’t a apparent offsetting proof of the brilliance of her administration.    Why reward her with such a beneficiant severance bundle?

Georgia: South Georgia Medical Middle CEO Will Get Greater than $2M After Allegations of Violations of Open Assembly Legislation Result in Termination

As reported by the Valdosta (GA) Each day Instances, July 6, 2017,

The previous South Georgia Medical Middle CEO can be paid greater than $2 million over the following three years, for doing nothing.

Raymond Snead was ousted as CEO in March, however he’ll keep on the payrolls for some time, based on his termination letter.

The April 19, 2017 letter, successfully firing Snead, referred to as the ouster a ‘termination with out trigger.’

The hospital will proceed to pay Snead $650,000 per 12 months — his base annual wage — for the following three years, the letter says. He’ll additionally get a $2,000 automobile allowance every month throughout that interval.

The native Hospital Authority, which governs the hospital, additionally gave Snead and his spouse the choice to obtain well being advantages for the three years. He took the supply, mentioned Sam Allen, Hospital Authority chairman.

Nonetheless, it seems that this govt additionally had not beforehand coated himself in glory, definitely not enough to justify this stage of post-employment compensation.

Snead grew to become CEO in September 2015, and the hospital had been beneath hearth for poor administration practices beneath his watch.

There additionally was a serious situation with an obvious subordinate of Snead’s on his watch.

Snead’s ouster got here on the heels of the resignation of hospital legal professional Walter New.

New, together with your complete Hospital Authority, acquired into hassle in 2016 when the group held a closed assembly with out the general public’s data, which is a violation of Georgia regulation.

Moreover, Metropolis Councilman Robert Yost

has referred to as repeatedly for the resignations of Hospital Authority members, saying their mismanagement has induced the hospital nice hurt. ‘They’ve run the ER into the bottom. They’ve run off docs, nurses and common workers, some who’ve labored there for 25 to 30 years,” he mentioned on the June 22 Metropolis Council assembly.

‘They’ve intimidated workers and handled them like filth. When it’s time to reappoint the Metropolis of Valdosta’s representatives on this authority, I say let’s make sure that they’re all reappointed.’

‘… (They) have once more made very dangerous enterprise selections on our behalf and they need to all be fired.’

Once more, evidently Snead’s administration was the alternative of good, but he was allowed to stroll away with a multi-million greenback severance bundle. 

North Carolina: Nash UNC Well being Middle CEO Will Get Greater than $1M After Considerations about Income Losses and Affected person Security Result in Retirement

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

with round $1 million since he has an ironclad two-year rolling contract, based on a number of sources conversant in the scenario however not licensed to talk publicly on the matter.

Chewning did not deny the quantity he’s receiving….

Nonetheless, it seems that he didn’t truly retire, however,

was requested to step down late final month by the native hospital board however was allowed to announce he was retiring.

The hospital was hardly clear in regards to the info of the case, which had been futher confused by (maybe intentionally) difficult company relationships:

Inquiries into Chewning’s wage and severance bundle led the Telegram on a goose chase involving attorneys, public relations spokesmen and uninformed officers.

Starting with Chewning, there was a collection of refusals to reveal the wage of the highest govt at a publicly-owned hospital in a state-owned community of hospitals. Drilling down, it was found that all of the CEOs within the UNC system apart from the UNC Medical Middle in Chapel Hill are employed by Rex Hospital, a privately-owned hospital in Raleigh.

‘I’m legally precluded from disclosing any data from my employment settlement with Rex Hospital,’ Chewning mentioned, together with the contact data for Don Esposito, Rex Hospital’s normal counsel.

Esposito referred the Telegram to Alan Wolf, the media relations supervisor for UNC Well being Care and UNC REX Healthcare.

‘We adjust to all authorized necessities, nevertheless it’s not our apply to reveal wage data, for aggressive and privateness causes,’ Wolf mentioned. ‘Mr. Chewning is employed by Rex Hospital Inc., which isn’t a North Carolina governmental entity and due to this fact just isn’t topic to Chapter 132, the Public Information Act.’

How public hospitals can have CEOs who’re workers of a separate, non-public hospital system was not defined.

Even native authorities officers had been saved in the dead of night.

Nash County officers mentioned they understood that is they manner it needed to be, however none of them knew the CEO was being paid by means of Rex, which makes their salaries non-public.


At the least one member of the native hospital board mentioned they do not perceive how the method works and is not positive how the hospital will get a brand new CEO. ‘As a part of the administration settlement, UNC Well being Care offers Nash with a CEO,’ Wolf mentioned. ‘Having a centralized administration workforce provides UNC Well being Care extra management over selections and operations at its affiliated hospitals.’

However the hospital CEOs “supplied” by state establishment UNC all are employed by Rex?

Maybe all this secrecy simply added to the cognitive dissonance created when contemplating how Chewning’s profitable retirement bundle might need been associated to occasions that lead as much as Chewning’s retirement:

Chewning’s exit comes after the hospital has been dropping cash and within the wake of a damaging affected person security report. Chewning will stay with the hospital whereas his substitute is sought, based on his retirement announcement.

So Chewning’s administration was hardly good.  But these answerable for hospital governance weren’t solely completely satisfied to let the CEO stroll away with a munificent retirement bundle, in addition they did their greatest to obscure the info of the matter

Ohio: Ohio State College Werner Medical Middle CEO Receiving Greater than $1M Per Yr as Senior Advisor After Complaints by Physicians Result in Resignation

Based on the Columbus (OH) Dispatch, August 16, 2017, after Dr Sheldon Retchin, the CEO of Ohio State College Wexner Medical Middle resigned in Might, however

from his resignation, which was introduced on Might 10, by means of June 30, Retchin was nonetheless paid the CEO and govt vp wage and advantages for performing ‘transitional duties,…

That base wage was $1.1 million.

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


a contract obtained by the The Dispatch on Tuesday reveals that, since July 1, Retchin has been serving as senior advisor to the president for well being coverage at a base wage of $500,000 yearly.  The college is additionally making a $600,000 annual contribution to a retirement plan for Retchin, who will maintain the place for 2 years.

So his whole compensation could be no less than $1.1 million a 12 months for 2 years post-retirement.  Additionally,

the brand new contract says he can be paid a 35 % efficiency bonus.

The rationale for this new place per college spokesman Chris Davey was that

Retchin will make essential contributions to Ohio State.

‘Sheldon Retchin is a nationally identified chief in health-care coverage,’ Davey mentioned. ‘Throughout his two-year administrative appointment, he’ll advise the college regarding the vital problems with health-care reform, Medicaid coverage and data-driven enhancements to well being outcomes.’

Left unsaid is that $1.1 million a 12 months looks like enormously inflated compensation for a well being coverage adviser.

Additionally left unsaid had been the circumstances surrounding Dr Retchin’s departure.

Complaints towards Rechin surfaced after a Might 1 letter signed by 25 main physicians criticized his management.  That was adopted by a letter from 5 docs representing the senior management of the medical heart’s Neurological Institute.  One other group of 14 physicians, who head medical departments on the medical heart, had engaged in discussions with high college l eaders.

Upon Retchin’s resignation, the college issued an announcement during which it mentioned that allegations raised within the letters had been unfaithful.  That prompted one other vital letter from leaders within the School of Drugs’s Division of Inner Drugs.

A report from an area tv station’s information division supplied additional particulars about why the physicians declared no confidence in Dr Retchin

Dozens of docs and professors have written letters expressing ‘no confidence’ within the CEO of Ohio State’s Wexner Medical Middle.

10TV has obtained three letters from three completely different teams of docs and workers members, together with division chairs and senior management.

All of them described issues with administration and morale that they mentioned are damaging care and endangering sufferers and issued a ‘Vote of No Confidence’ in CEO Sheldon Retchin and his management workforce.

They accused Retchin of a ‘administration model that’s inconsistent with the College’s values of excellence, integrity, transparency and belief’ and of fostering a tradition the place physicians have been described as ‘lazy’ and this system referred to as ‘an entire mess.’

It has led to what they name a ‘dramatic affect on morale’ and ‘an growing variety of college resignations.’

They mentioned the implications attain past the partitions of the Wexner citing an ongoing scarcity of docs which of their phrases, ‘endanger(s) affected person security and lowers the standard of care,’ including to the stress of remaining college.


Within the first letter, 25 staffers who signed it mentioned they symbolize many extra workers, however restricted the quantity signing out of concern for retaliation.

They complained of threats towards college leaders who do not ‘get on board’ with the plans of medical heart management.

From the data publicly out there, I can’t inform whether or not the complaints about affected person security and high quality of care are legitimate.  Actually, nevertheless, Dr Retchin’s administration was questionable.  Creating this diploma of anger among the many doctor workers of an educational medical heart hardly appears the mark of good management.  But Dr Retchin, like the opposite executives above, appears to have been generously rewarded after he was pressured out.


The plutocratic compensation given leaders of non-profit hospitals is normally justified by the necessity to competitively pay exceptionally good leaders.  But even leaders whose information appear to be the alternative of brilliance typically find yourself handsomely rewarded.  Thes are examples of perverse incentives.

Different facets of high well being care managers’ pay present perverse incentives.  Whereas ostensibly tied to hospitals’ financial efficiency, their pay isn’t tied to medical efficiency, well being care outcomes, well being care high quality, or sufferers’ security.  Moreover, how managers are paid appears wildly out of step with how different organizational workers, espeically well being care medical professionals, are paid.

Exalted pay of hospital managers occurred after managers largely supplanted well being care professionals as leaders of well being care organizations.  That is a part of a societal wave of “managerialism.”  Most organizations are actually run by generic managers, reasonably than folks conversant in the particulars of the organizations’ work.  The very best present instance is the election of a enterprise govt with an MBA to the Presidency of america.

Somewhat than placing affected person care first, paying managers sufficiently to make them wealthy now appears to be the main aim of hospitals. I postulate that managerialism is a serious cause the US well being care system prices rather more than that of another developed nation, whereas offering mediocre entry and well being care high quality.

Bettering the scenario would possibly first require altering regulation of govt compensation practices in hospitals, bettering its oversight, and making hospital boards of trustees extra accountable.  However that might be only a few small steps in the best route

True well being care reform would possibly require one thing extra revolutionary, the reversal of the managers’ coup d’etat, returning management of well being care to well being care professionals who truly care about sufferers and put their and the general public’s well being first, forward of their private achieve.  In fact, that may not be potential with no societal revolution to separate managers from the levers of energy in authorities, business, and non-profit organizations. 

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