Impending Death of Hospitals

Thank God, You’re About to Be Treated by the Chief Transformation Officer!

You can’t believe your luck!

You’re in the back of an ambulance, its siren streaming as it pulls into the emergency entrance of Big Medical Center of Somewhere, America. You’re quickly rolled inside, in tremendous pain but still conscious. Up walks a physician in impeccable C-suite attire with a stethoscope draped over his neck.

God must be smiling on you, for you’re being taken care of by the highest-paid physician on the hospital’s payroll, yes, the top clinical integration/transformation executive!

What, you’re not lucky?

Hospitals are focusing their hard and few-earned dollars exactly where it counts, spending big bucks on the physician executives who will surely rescue them from nosocomial existential syndrome: chief officers of this or that trendy trend.

According to a recent report, here are the top earning lifesaving physician executives:

• Dr. Top Clinical Integration-Transformation Officer pulls in close to $600,000.
• Dr. Top Quality Executive earns a bit more than $460,000.
• Dr. Top Medical Informatics executive earns close to $380,000.

But don’t feel sorry for them having to spend so much time in meetings, drinking coffee, and having executive lunches. Those dollar figures are just the cash portion of their compensation.

Hey, I’d expect a lot of transformation for $600,000. Change is good, right? Just ask the physician I met from Venezuela. Oops.

Hundreds of hospitals are closing. Others left standing bemoan the fact that they’re broke and often blame it on their greedy contracted physician groups. “You want a stipend so that half your group doesn’t leave? What, are you crazy? We lost $4 million last year and now we have to hire a chief transformation officer and a few MDs who gave up medicine for informatics.”

Does anyone else find this funny? Does anyone else see this as not only rearranging the deck chairs on the post-iceberg Titanic, but spending to parachute in some extra caviar and champagne?

Still conscious as you’re rolled into the operating room and the team gathers around you (yes, you’re still awake . . . couldn’t afford those damn anesthesiologists) you’re baffled as the room gets dark, not light. And then you understand why: Dr. Top This-or-That wants to make sure that everyone can see her PowerPoint presentation, even you.

There’s never a shortage of money, only a question of priorities. And, it’s a heck of a question.

Comment or contact me if you’d like to discuss this post.

Mark F. Weiss

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What’s the Downside Risk for Hospital Executives?

A physician makes a mistake, commits negligence, and what’s the result? It can be horrific. Malpractice suit. Medical staff discipline. Medical board discipline leading even to loss of licensure. Reputation destroyed.

Now ask yourself what happens if a hospital executive, say the CEO of a publicly held hospital chain, commits the equivalent type of error, say loses a billion or two in a fiscal quarter, as did Community Health Systems in the fourth quarter of 2017. Investors call for the CEO, Wayne Smith, to resign. Last time I looked, he was still in the executive suite.

Or, look at the former CEO of Tenet Healthcare, Trevor Fetter. His strategy put the company into a nose dive. He was pushed out. After losing hundreds of millions, what penalty did he suffer? Penalty? He walked away with a $22.9 million severance package. Win if you win. Win if you lose.

These folks receive healthy compensation packages and big bonuses when things go well but never risk having to pay it back when something they caused blows up. In fact, in some cases, they still get what amount to additional bonuses in the guise of a severance package.

As you know, it’s hard to make a decision when you might have to pay a large price for it. It’s much easier to make decisions when there’s only an upside, that is, when there’s an upside if it succeeds and an upside if it fails.

One might argue that Mr. Fetter paid a price. He no longer had his job. But he still walked away with close to $23 million dollars and certainly didn’t have to pay back any of what he was previously paid. I don’t mean to pick on Fetter. I don’t own any Tenet shares and for all I know he’s a nice guy whose strategy just didn’t pan out for the shareholders. Instead, the point is the imbalance. Only others suffer the real downside.

The same notions of imbalance of impact, of an upside without a meaningful downside, infect the decisions of hospital executives at many scales. Like the decision of a community hospital CEO to force out a group of cardiac surgeons, say in favor of a new recruit much more likely to “play ball.” The group forced out takes their practice, and the hospital profits it generates, to a facility 7 miles away. The new recruit, now ensconced in the hospital-subsidized “cardiac clinic,” can’t get enough volume to keep busy. The CEO? He’s off looking for hospitalists.

Comment or contact me if you’d like to discuss this post.

Mark F. Weiss

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The Business of Healthcare

Why the Lack of Power Corrupts Absolutely: Dealing With Petty Bureaucrats

A few months ago, while waiting at the gate for a flight, I couldn’t help but notice a gate agent making some woman unpack and repack and unpack and repack her expandable carry-on suitcase because it was too wide to fit into the measuring “box” for carry-on luggage.

It was obvious from the gate agent’s face that she took sublime pleasure in the exercise of her “power.”

When I commented to her a few minutes later that I next expected her to make the woman remove her underwear, she responded, “no one gets on my flight unless I say so.”

The reality is that such mini-dictators, the peons of bureaucracy, are nearly replete of any actual authority. Frustrated by their inability to control their destiny, they act out their near total lack of authority by overcompensating within the one slice of power they have – in this case, the power to drive a woman close to tears because her suitcase had to be pushed into the measuring device instead of sliding right in.

You’ve run into these people. They’re at the DMV and the post office and the TSA.

And, they’re at hospitals: The petty midlevel “executives” who occupy places on an org chart that looks like IBM’s in the 1960’s or a plate of spaghetti. They are the bureaucrats who can say “no,” but who lack any authority to actually say “yes.”

Lord Acton commented that power tends to corrupt, and absolute power corrupts absolutely. It appears that the lack of actual power does the same.

The quiver required to effectively deal with these people includes multiple arrows. Some are polite, others are political, and more than a few are pointed. An effective strategy involves knowing when and how to get the petty bureaucrat to open the gate, when and how to get around him, and when and how to get him pushed out.

Comment or contact me if you’d like to discuss this post.

Mark F. Weiss

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