Passport to ... Fraud? - AmeriHealth Mercy Settles

Back in November, 2010, we discussed the relatively opulent pay and perks given to and conflicts of interest affecting leaders of Passport Health Plan, a non-profit, state (Kentucky) supported Medicaid managed care organization/ health insurer.  This seemed to be another case of health care organizational insiders putting their personal gain ahead of their mission, which was particularly unseemly because their mission was serving the poor. 

Now Passport Health is in the news again, and not in a favorable way, as per the Louisville (Kentucky) Courier-Journal:

Passport Health Plan’s main contractor has agreed to pay more than $2 million in damages to the Kentucky Medicaid program to settle a fraud investigation, Attorney General Jack Conway announced Wednesday.

The settlement with AmeriHealth Mercy Plan is the result of a nine-month investigation by the Attorney General's Medicaid Fraud Unit into alleged falsification of records by the company that entitled it to more than $677,000 in bonus money for good performance.

Conway said the investigation centered on an allegation from a whistleblower that AmeriHealth falsely reported data to the state Medicaid Services Department on the number of Medicaid recipients who received cervical cancer screenings in 2009. The false numbers allowed AmeriHealth to receive the bonus money under the terms of its contract.

We have discussed a variety of cases of leaders of health care organizations getting compensation or benefits that seemed disproportionate in their organizations' context. The usual justification seems to be that it takes such rewards to attract the excellent leaders needed by health care organization.

Here is another example of leaders who not only seemed to get excessive compensation and benefits, but whose performance seemed far from excellent.

Moreover, it suggests that compensation and benefits may actually have an inverse correlation to performance. Organizations whose stewards seem unrealistic about the talents of their hired managers, and dependent on material rewards to retain such managers may lack good stewardship. Leaders who find themselves rewarded beyond any reasonable evaluation of their work may learn the lesson that they cannot ask for too much. Meanwhile, the excess of their rewards may inspire increasing greed rather than increasing devotion to the mission, while the pay and perks increasingly place them in a bubble that insulates from the concerns of the common people who their organizations are supposed to serve.

As we have said before, far too often the leaders of not-for-profit health care institutions seem more interested in padding their own bottom lines than upholding the institutions' missions. They often seem entirely unaware of their duty to put those missions ahead of their own self-interest. Like the financial services sector in the era of "greed is good," health care too often seems run by "insiders hijacking established institutions for their personal benefit." True health care reform would encourage leadership of health care who understand health care and care about its mission, rather than those who see a quick way to make a small fortune.

PS - Also note that this is also another example of the sort of legal settlements of misbehavior by health care organizations that seems to have little deterrent effect, mainly because no individual who authorized, directed or implemented the bad behavior suffers any negative consequences.  See our discussion in these previous posts.  True health care reform would also hold leaders accountable for their organizations' misdeeds.

Post Title → Passport to ... Fraud? - AmeriHealth Mercy Settles

Some Call it "Tyranny" - Top Leaders of University of California (Including Leaders of Academic Medicine) Demand Bigger Pensions for Themselves

The state of California, and its flagship university system, the University of California, have been under extreme financial pressure lately. 

The 36 Executives' Demands

However, that apparently has not decreased the University's hired managers' and executives' sense of entitlement.  They are threatening to sue if their pensions are not increased.  As reported by the San Francisco Chronicle,

Three dozen of the University of California's highest-paid executives are threatening to sue unless UC agrees to spend tens of millions of dollars to dramatically increase retirement benefits for employees earning more than $245,000.

'We believe it is the University's legal, moral and ethical obligation' to increase the benefits, the executives wrote the Board of Regents in a Dec. 9 letter and position paper obtained by The Chronicle.

'Failure to do so will likely result in a costly and unsuccessful legal confrontation,' they wrote, using capital letters to emphasize that they were writing 'URGENTLY.'

Their demand comes as UC is trying to eliminate a vast, $21.6 billion unfunded pension obligation by reducing benefits for future employees, raising the retirement age, requiring employees to pay more into UC's pension fund and boosting tuition.

The fatter executive retirement benefits the employees are seeking would add $5.5 million a year to the pension liability, UC has estimated, plus $51 million more to make the changes retroactive to 2007, as the executives are demanding.

The executives fashioned their demand as a direct challenge to UC President Mark Yudof, who opposes the increase.

'Forcing resolution in the courts will put 200 of the University's most senior, most visible current and former executives and faculty leaders in public contention with the President and the Board,' they wrote.

Background to the Case
Here is the relevant background:

The roots of the pension dispute go back to 1999, five years after the IRS limited how much compensation could be included in retirement package calculations. But even after the IRS granted UC's waiver in 2007, nothing changed.

University executives were having troubles of their own that year.

President Robert Dynes resigned in 2007 after it was discovered that UC was awarding secret bonuses, perks and extra pay to executives. State auditors also found that UC's compensation practices were riddled with errors and policy violations.

UC officials also had become aware of another big problem: UC's pension obligations were about to outstrip its ability to pay retirees. Neither UC nor its employees had paid into the fund since 1990.

It took until this year for UC to act. In September, a retirement task force offered Yudof several options for closing the $21.6 billion gap - and one to widen it: increasing executive pensions.

Health Care Executives Included

Note that in addition to a bunch of finance officers and portfolio and asset managers, the demanding executives included quite a few leaders of the medical schools, and academic medical centers, including:

UC System's Central Office
Dr. Jack Stobo, senior vice president, health services and affairs

UCSF
Dr. Sam Hawgood, vice chancellor and dean, School of Medicine
Ken Jones, chief operating officer, medical center
Mark Laret, CEO, medical center
Larry Lotenero chief information officer, medical center
John Plotts, senior vice chancellor

UC Davis
William McGowan, CFO, health system
Dr. Claire Pomeroy, CEO health system, vice chancellor/dean, School of Medicine
Ann Madden Rice, CEO Medical Center

UCLA
Dr. David Feinberg, CEO of the hospital system; associate vice chancellor
Dr. Gerald Levey, dean emeritus
Virginia McFerran, chief information officer of the health system
Amir Dan Rubin, chief operating officer of the hospital system
Dr. J. Thomas Rosenthal, chief medical officer of the hospital system; associate vice chancellor
Paul Staton, chief financial officer of the hospital system

UC San Diego
Dr. David Brenner, vice chancellor for health sciences; dean of the School of Medicine
Tom Jackiewicz, CEO, associate vice chancellor of the health system
Dr. Thomas McAfee, dean for clinical affairs

UC Irvine
Terry Belmont, CEO, Medical Center

The Outraged Reaction
The executives' demands sparked anger on campus.

Dissenting members of the task force said it would be unseemly' to expand executive pensions. Tuition had just been increased by 32 percent this fall, and the regents were poised to raise it another 8 percent for fall 2011. They also voted to shift more money into the retirement fund from employees' pockets, as low-wage workers worried about retiring into poverty.

'I think it's pretty outrageous that this group of highly compensated administrators of a public university are challenging the president and the chair of the Board of Regents, said Daniel Simmons, chairman of UC's Academic Senate and a law professor at UC Davis.

'What outrages me the most is that these 36 people are blind to the fact that this is a public entity in dire straits,' said Simmons, who also served on the retirement task force and opposed the higher pensions.

The demands prompted outrage from politicians and editorialists. A few choice samples:

- The executives are "tarnishing the university's name with greed," editorial (UCLA) Daily Bruin.

- "Very out of touch," by Governor Elect Jerry Brown; "truly living in an ivory tower...." while "people are suffering in the rest of the state and losing their homes," by Assemblyman Jerry Hill, D- San Mateo (per the San Francisco Chronicle)

- "Uncaring and divisive," "undercuts public support for one of California's most treasured institutions," "sending out its own special-interest message: what's in it for me," - editorial, San Francisco Chronicle.

- "despicable threat," the California Regents (UC board of trustees) should not "claim that lavish pension may be needed to recruit good people to UC. Good people don't threaten lawsuits against a cash-strapped sate to enrich themselves." editorial, Sacramento Bee.

- Governor-Elect B4rown should issue an executive order "to eliminate any position in the University of California system paying $245,000 a year or more," (thus effectively firing all the 36 complaining executives); "free taxpayers and students alike from the tyranny of those whose main objective during any time - tough or otherwise - is to keep milking the state for every penny the can squeeze out," editorial, Manteca Bulletin.

Summary

We have posted frequently about hired managers and executives of health care organizations receiving compensation and benefits out of all proportion to their apparent performance. The case of the demanding University of California executives is just one of many. However, what is really remarkable about this case is the reaction to it. We are hearing top leaders, including many of the top leaders of the state's medical schools and academic medical centers, called uncaring, greedy, and despicable by well-known politicians and in newspaper editorials, and we are hearing calls that they be fired, en masse.

Maybe we are at a tipping point.

Of course, hired health care managers and executives are not entitled to line their own pockets while patients and their other constituencies suffer during the great recession. They are not entitled to continually drive health care costs up while they enrich themselves.

However, apathy, learned helplessness, and the anechoic effect have let them promote themselves into a de facto new aristocracy (just like the hired managers and executives of some other non-profit organizations, for-profit corporations, and especially financial service corporations have turned themselves into the rest of that aristocracy.)

If we do not reclaim health care from these new oligarchs, we will all end up not just with expensive, difficult to access, mediocre health care, but under their tyranny.

Post-Script

This is just the latest example of the sense of entitlement displayed by the hired managers and executives of the University of California. Outrageous pay and benefits unjustified by any measure of performance for University of California's hired managers and executives has been grist for the Health Care Renewal mill since 2005.  A few samples:
-  The ranks of those paid more than $200 K rose much faster than those paid less, while lower paid employees endured a pay freeze, and the university cut its budget.  Managers got bonuses for extra work, while faculty did not.  Managers got housing allowances, and other perks.  (November, 2005) 
- UC-Irvine managers were paid lavishly while presiding over debacles involving transplant services  (liver transplants, November, 2005; bone marrow transplants, January, 2006; kidney transplants, January, 2006)
- UC - San Diego Chancellor was paid $359 K plus a bonus of $248 K for supposed full time work while serving on ten for-profit corporate and non-profit boards, including directorships of for-profit health care corporations that were conflicts of interest with her role overseeing the medical school and medical center.  This was the first case of what we later called the "new species of conflicts of interest" posted on the blog.  (January, 2006)
- UC - Irvine managers got bonuses while its medical center failed an inspection (January, 2010), as did managers at other UC campuses (January, 2010).

Maybe if these older stories produced more outraged, the current situation would not have occurred.

You heard it first on Health Care Renewal

Hat tip to Prof Margaret Soltan on the University Diaries blog.

Post Title → Some Call it "Tyranny" - Top Leaders of University of California (Including Leaders of Academic Medicine) Demand Bigger Pensions for Themselves

HHS Secretary Used Business Jet Meant for Emergencies to Stump for Medicare Drug Benefit Plan

In the Atlanta Journal-Constitution is this story about US Secretary of Health and Human Services (HHS) Mike Leavitt's use of "luxury Gulfstream III" business jet. It seems "Leavitt defended his use of the jet to visit more than 90 cities this year to promote the new Medicare prescription drug benefit and appear at state pandemic flu meetings." "Leavitt has used the jet to make 19 trips involving more than 90 cities, a total of 202 flight hours...." However, although Congress authorized Leavitt to use the jet, Representative Pete Stark (D-California), said "Congress' intent clearly was for Leavitt to use the jet in emergencies, not for public relations." "Taxpayers pay $252,000 a month for the CDC to have 24-hour access to the jet. It costs an additional $3,000 for every hour it's flown." Yet, "during two emergencies, Leavitt was using the jet and the CDC had to use a backup plane from its aircraft vendor."

"Leavitt said it would have been impossible to complete the 'breathaking challenge' of signing up millions of senior citizens for the drug benefit without using the jet." That's funny, I had not heard that it was Leavitt's job to personally sign up beneficiaries. Representative John Lewis (D-Georgia) felt strongly, saying, "I think this is unbelievably irresponsible and just dead wrong."

How undignified would it be for a cabinet secretary to fly around the country in commercial airliners, mixed in with ordinary tourists, middle managers, and physicians going to conferences. Some of those fellow passengers might even be eligible for Medicare. He might also actually have to eat some of those little pretzels out of the plastic bags, what an indignity. Shouldn't the Secretary of HHS feel entitled to live the luxury life-style? Remember, health care leaders are different from you and me, or so they would like to think.

Post Title → HHS Secretary Used Business Jet Meant for Emergencies to Stump for Medicare Drug Benefit Plan

"Packaging" Students for College, and Medical School Admission

Although this may seem a bit far afield for Health Care Renewal, the recent story of Kaavya Viswanathan, the Harvard student who quickly went from acclaimed novelist to being accused of plagiarism opened a new, and troubling window on how students are admitted to college, and even medical school.

The Harvard Independent reported that Ms Viswanathan wrote in the acknowledgements page of her now withdrawn novel, How Opal Mehta Got Kissed, Got Wild, and Got a Life, how she got "a helping hand from beginning to end," from Katherine Cohen. "Cohen is the founder and CEO of IvyWise, a private college-counseling firm perhaps best known for charging prices that would be exorbitant for all but a tiny sliver of Ivy-ambitioned parents."

Such services, and IvyWise in particular, were discussed as early as 2001 in New York Magazine . This article described "a prosperous new breed of private counselors who are helping the children of the rich attain their birthright of getting accepted to the Ivy League college of their choice despite the ever-mounting odds against them." Furthermore, "In order to enhance their chances of achieving glory (it goes without saying that their kids' SATs and GPAs are already in the steroid-enhanced range), families are chasing their dream by employing that most American of strategies for success -- marketing. 'I hear families use the word packaging,' says the mother of a senior at one of the city's most competitive girls' schools. ''We're packaging our daughter. The hair stands up on the back of your neck. They made an investment, and they want a return.'" These packaging services are capable of nearly taking over high-school students' lives for as long as their high-school career. The cost of the IvyWise platinum package (in 2001) was close to $30,000.

The Harvard Independent described the intensive involvement of such packaging services in students' lives. IvyWise's Cohen said, "I really look at everything going on in a student's life and plan everything from courses for four years to summers to outside activities and focus on strengthening whatever weaknesses (academic and personal) may come up." Furthermore, per the New York Magazine article, "The guidance counselor isn't above hitting up friends in high places for internships when a teenager's brag sheet could use a little fluffing." A follow-up article in the Harvard Independent declared, "perhaps the most striking aspect found in the wealth of coverage linked to on IvyWise.com is the intense level of control that the company's counselors had over clients' academic and social lives. Indeed, if Cohen did in fact limit herself to projecting already-present qualities in her clients, many of them must have walked into IvyWise's Manhattan offices with little or no sense of who they truly were." The article includes copious quotes from the Ivywise web-site that show how Ivywise may affect aspects of students lives from their weekend schedule to whether they attend summer camp, thus, "true selves do not go into sessions with Cohen so much as emerge from them."

Local Rhode Island columnist Mark Patinkin summarized it nicely, "If your kids are applying to Ivy League schools but don't have such an agency behind them, the Kaavya's of the world have the advantage." "So Kaavya wasn't just another 'student' applying to Harvard. She was an elaborately packaged 'pitch.'" He concluded, "once, standout kids in America achieved success through hard work. Today, instead, they are carefully packaged for success by adults."

The results are suggested by another article in New York Magazine, appropriately entitled, "Generation Xerox,"

But there’s something fundamentally untoward about the cynical lessons that such a makeover process teaches the kids who go through it—especially when it seems to work.
We’ve forged a society in which misrepresentation is routine, encouraged, obligatory. For all her sweet Hogwarts dreams, an observant, canny, IvyWised-up kid is bound to draw certain conclusions about the way the real world works.
[the student] had already come to understand that her success so far was not just a matter of talent and discipline but of buying the right connections, cutting deals for behind-the-scenes assistance, cunning.

So how is this relevant to Health Care Renewal? As noted above, the IvyWise packaging process does seem to teach the cynical acceptance of misrepresentation, a notion that may be at the root of many of the stories on Health Care Renewal. Presumably, this lesson may be transmitted informally not just to students "packaged" by one service or another, but to others exposed to them.

More directly, some of the Ivywise packaged students may have already gone on to careers in medicine or health care. Finally, Ivywise offers to "counsel" students who apply to medical school. How often medical students have been packaged by one "counseling" service or the other, and the effects thereof, have yet to be investigated.

Post Title → "Packaging" Students for College, and Medical School Admission

More About UMDNJ Leaders Feathering Their Own Nests

Has it really been almost three weeks since we posted about the University of Medicine and Dentistry of New Jersey (UMDNJ)? UMDNJ now is operating under a federal deferred prosecution agreement with the supervision of a federal monitor (see most recent posts here and here.) We had previously discussed allegations that UMDNJ had offered no-bid contracts, at times requiring no work, to the politically connected; had paid for lobbyists and made political contributions, even though UMDNJ is a state institution; and seemed to be run by political bosses rather than health care professionals. (See post here, with links to previous posts.)

There are yet more revelations about how UMDNJ leaders feathered their own nests.

Some concern one New Jersey State Senator Wayne R Bryant (Democrat - Camden County). According to the Philadelphia Inquirer, "in 2003, the college's School of Osteopathic Medicine in Stratford created a program-support coordinator job for Bryant. Investigators are looking into allegations that Bryant improperly used his position as Chairman of the Senate's budget committee to direct millions in state funds to the school." Furthermore, "legislative sources say that as the state budget was finalized last June, Bryant steered a last-minute $2.7 million to the Stratford school for debt service. In addition, Bryant also paved the way to increase a state allocation to UMDNJ's Robert Wood Johnson Medical School in Camden, for a total of $7.8 million, as well as a $5 million appropriation for the Newark campus' Neurosciences Institute...."

Others arise out of more findings by the federal monitor who is now overseeing UMDNJ. According to the indefatigable Newark Star-Ledger, the monitor's latest report has more about Dr R Michael Gallagher, the former Dean of the School of Osteopathic Medicine (mentioned above). "Investigators concluded that the osteopathic school near Camden systematically falsified profit and loss statements - at Gallagher's direction - to show the headache center [which Gallagher ran] was making money, thus making Gallagher, whose salary is $381,854, eligible for the annual bonus." Also, the investigators reported that Gallagher "submitted travel expenses to the university for reimbursement that had already been picked up by drug companies." The report also included a variety of lavish expenses for which Gallagher was reimbursed by UMDNJ, such as an expensive leather computer case for his wife, a night at the Waldorf for Gallagher and his wife, and the now familiar meals at exepnsive restaurants and country clubs.

Also according to the Star-Ledger, the monitor alleged UMDNJ Trustee Donald Bradley, who is also Newark City Council President, pushed UMDNJ to "further his political activities." He persuaded UMDNJ to underwrite a gala affair entitled "Keep the Dream Alive." It cost over $22,000, including $2550 for a martini bar and ice sculptures. "The event apparently violated state policy, which prohibits publicly funded institutions from holding receptions honoring any state employee - which would have included the UMDNJ staffers who were celebrated at the event - or expenses for alcoholic beverages...." Bradly also applied pressure to secure jobs for favored people at UMDNJ. "Bradley would often personally accompany people he recommended for jobs on interviews. Among those were his daughter-in-law, who was hired and subsequently fired." Finally, the monitor questioned "whether Bradley forced UMDNJ to sublet medical office space it leases at 194 Clinton Avenue in Newark to Chandrakant Patel, a physician and contributor to Bradley who operated Universal Industrial Clinic until he lost his medical license." "Top [UMDNJ] administrators were told they should provide physicians and medical imaging equipment to enable Patel to establish a federally qualified health clinic at the site. According to the report, the city council president told one that if she assisted in the effort, he could make 'go away' a separate city lawsuit against UMDNJ...." "UMDNJ has never tried to collect $75,000 in real estate taxes Patel was obligated to pay under the token lease...." The University was never even paid its symbolic lease payment. "It is owed $3 by Patel."

UMDNJ has unfortunately become a prime example of how the leadership can bring a once respected health care organization low by putting their own interests ahead of the institution's mission. At least we can hope that the ongoing clean-up will provide a model for how to clean up other errant health care organizations. Once again, my sympathy is with the dedicated UMDNJ staff who have tried to soldier on through all of this, and of course with the patients who still need to go to UMDNJ for their health care.

Post Title → More About UMDNJ Leaders Feathering Their Own Nests

A Tale of Three Ironies: University of Miami's Janitors Still Have No Health Insurance

There are no lack of ironies in an emerging story about the University of Miami.

There has been an ongoing dispute involving the university, and a company called Unicco with which it contracts to provide janitorial services, and the Unicco's local employees. The Service Employee's International Union (SEIU) has been trying to organize the janitors. Recently, in one of its statements, a janitor who has worked for at the university for 25 years and makes $6.80 an hour claimed, "I was here the first time the university formed a committe to talk about our wages. I was making barely over minimum wages then, and I still am now." (See the Miami Herald story here.)

The union has just taken a strike authorization vote. In support of the vote, a worked at the university's down-town medical campus, which includes Jackson Memorial Hospital, said, "I am expected to clean the medical facilities at Jackson without safety equipment, without gloves, without training, and without health insurance, all for $6.40 an hour." (See the South Florida Business Journal article here.)

So the first irony is that the maintenance workers at the University of Miami medical center do not have health insurance provided by their employer.

What makes this story more interesting is how impetus built for the recent escalation of this dispute.

Two weeks ago, the New York Times ran a relevant article (available here, but requires subscription to view.) Was the article about health care policy? Not really. It was a Times Magazine profile in "The Way We Live Now" series about University of Miami President Donna Shalala, the former Secretary of Health and Human Services in the Clinton administration, and one of the principal advocates of Clinton's health care reform plan, which was meant to provide universal health care insurance.

According to the Times, Shalala lives in a 9000 square foot mansion (owned by the university), with mango trees in the garden. She drives a Lexus (hybrid, naturally). She owns a 29 foot boat, but doesn't get to use it much. She has house-hold help who makes her bed for her.

After the Times article was published, a Washington Post commentator wrote,

Note to the Haves: When involved in a labor dispute, skip the luxury home profile.

Then the story hit the blogsphere. Wonkette's post on the story was entitled, "Let Them Eat Mangoes."

So the second irony is obvious.

But there is a third irony.

Not reported by any newspaper, so far, is another responsibility Shalala now has. In her spare time, Shalala is a director of UnitedHealth Group, the parent company for the UnitedHealth managed care organization, and hence has a fiduciary duty to the UnitedHealth. This company's mission statement includes,

UnitedHealth Group is a diversified health and well-being company dedicated to making the health care system work better. The company directs its resources into designing products, providing services and applying technologies that:
* Improve access to health and well-being services;
* Simplify the health care experience;
* Promote quality; and,
* Make health care more affordable.

The benefits received by directors are as follows, per United's 2005 proxy statement,

Directors who are not Company employees receive an annual retainer of $30,000, a $1,500 fee for attending each Board meeting in person ($750 for attending by telephone), and a $1,000 fee for attending each committee meeting in person ($500 for attending by telephone). Directors also receive the standard fee for attendance by telephone if they are unable to attend a meeting, but receive an update by telephone prior to or after the meeting. In addition, we pay the Chairman of each of the Audit Committee and the Compensation and Human Resources Committee an annual retainer of $5,000.
We provide health care coverage to current and past directors who are not eligible for coverage under another group health care benefit program or Medicare.
Non-employee directors also receive grants of non-qualified stock options under the UnitedHealth Group Incorporated 2002 Stock Incentive Plan (the “Stock Incentive Plan”). Under the Stock Incentive Plan (and terms approved by the Compensation and Human Resources Committee with respect to non-employee director grants made pursuant to the Stock Incentive Plan), our non-employee directors receive three types of option grants: (1) initial one-time grants of non-qualified stock options to purchase 36,000 shares of our common stock; (2) quarterly grants of non-qualified stock options to purchase 5,000 shares of our common stock; and (3) conversion grants made pursuant to an election by a director to convert annual retainer and meeting attendance fees into options to purchase our common stock.
The initial grants are made automatically on the date the eligible director is first elected to the Board of Directors and become exercisable over the following three years at the rate of 12,000 shares per year. The quarterly grants are made automatically on the first business day of each fiscal quarter and become exercisable immediately upon grant. The conversion grants are made on the day of each regularly scheduled Board meeting and become exercisable immediately upon grant. The number of shares covered by a conversion option will equal four times the amount of the retainer and meeting fees foregone, divided by the fair market value of one share of our common stock on the date of grant.

According to the proxy, Shalala had received options for 30,000 shares of stock by 2005.

Gotta love those mangoes.

Post Title → A Tale of Three Ironies: University of Miami's Janitors Still Have No Health Insurance

UMDNJ: "A Blank Slate for Complete Debasement of Fundamental Governance"

The barrage of news about the University of Medicine and Dentistry of New Jersey (UMDNJ) continues. We have posted repeatedly (most recently here and here) about the multiple scandals at UMDNJ, which resulted in the University signing a deferred prosecution agreement with the federal government, and accepting federal monitoring of its operations, and most recently the state Governor seeking the resignation of the UMDNJ President.

More Revelations

After she moved to Pennsylvania, 70 miles from Newardk the unpaid head of the UMDNJ volunteer advisory board, Mary E Mathis-Ford, was provided rides in a chauffeured Lincoln Town Car to and from board meetings. The rides were 70 miles each way. The total cost was nearly $70,000, more than the price of new Lincoln Town Car. When the Newark Star-Ledger confronted Mathis-Ford about the trips, she cried, saying "I did not know about the cost. They never said anything to me until you called. I'm embarassed." This is a small, but vivid example of the unrestrained spending of the former leaders of UMDNJ.

According to the Gloucester County Times, NJ State Senator Wayne Bryant (D- Lawnside) resigned his part-time position as "program support coordinator" with UMDNJ. The position apparently involved university development, that is, money raising. Sen. Bryant was also the chair of the Senate Budget and Appropriations Committee, and thus had personal influence over the UMDNJ budget. According to the Bergen County Record, "the university failed to provide information requested under the state's Open Public Records act relating to any memos, reports, or other paperwork that Bryant produced during his three years as a 'program support coordinator.'" Furthermore, "critics had long questioned how the powerful senator, who chairs the finance committee, could be on the payroll while at the same time parceling out its state funding." This is a not so small, and very vivid example of conflicts of interest affecting health care organization leaders.

Bad Consequences

Our posts on UMDNJ up to now have focused mainly on reports of mismanagement by and corruption of the leadership of the institution. Now the consequences of these governance failures are becoming apparent.

UMDNJ University Hospital suddenly announced a budget shortfall, and the layoff of almost 140 employees, according to the Newark Star-Ledger. NJ Governor Jon Corzine immediately froze the lay-offs, and advanced $6.8 million of state funding to the hospital. However, although the state had previously allocated $36.8 million in extra funding to the hospital, that money has apparently vanished. "The money went to the university, which operates the hospital, but it's unclear how much - if any - of the funds ended up in the hospital budget, according to administration officials and others." My comment is that there are all sorts of ways for bad and corrupt leadership to cost an institution money, by spending it on themselves, by frequent ill-considered management decisions, and by demoralizing employees and thus lowering productivity. Thus it should be no surprise that the chronically bad leadership at UMDNJ should lead to all sorts of financial short-falls. But outside of Health Care Renewal, does anyone talk about mismanagement by and corruption of leaders of health care organizations as a cause of rising health care costs?

Meanwhile, UMDNJ researchers, perhaps feeling newly emboldened to speak up, have complained that a dysfunctional institutional review board (IRB) at the Newark campus had needlessly delayed or obstructed research projects, again per the Newark Star-Ledger. One example was the "expedited review" of a research project that took six months. A more striking example was the termination of a project by Prof Norman Ende who was injecting cord blood into diseased mice. The IRB claimed that Ende's work was in "serious and continuing noncompliance." However, the role of the IRB is to protect human research subjects. They usually have not say about animal research. The last time I checked, mice were considered animals. The former president of the faculty organization at the medical school called the IRB "inefficient, inflexible, and vindictive." In my humble opinion, it is no surprise that a badly lead organization would have badly lead sub-components.

The Beginnings of Reform

New NJ Governor Jon Corzine has asked for the resignation, en masse, of all senior administrators at UMDNJ, according to the Newark Star-Ledger. "Corzine said the resignations, affecting as many as 25 high-ranking executives, were the quickest way to begin reforming a university that runs without even the most basic of internal oversight." Furthermore, the Governor said,

It was out of control. Simply, the control structure didn't work. The fact that they never had any board review for (any expenditure) under $100,000 was a blank slate for complete debasement of fundamental governance. However it got designed, whenever it got designed, it was designed to make sure the board really was a figurehead.

Meanwhile, the federal monitor for UMDNJ, Judge Herbert Stern, hired an accounting firm to do a forensic audit of UMDNJ.

Finally, there will now be an enquiry at the national level into the goings on at UMDNJ. The US Senate Finance Committee, lead by Senator Charles Grassley (R - Iowa) and Senator Max Baucus (D - Montana) are on the case, according to the Newark Star-Ledger. Said Sen. Grassley, "federal health care programs are already stretched to their limit. Any dollar that goes to waste, fraud or abuse doesn't help a person in need." Said Sen. Baucus, "there needs to be a full explanation of the problems that have been uncovered...."

I still have not seen any statement of concern, dismay, or anger, though from any national "opinion leaders" in health care about UMDNJ (or any of the other cases we have been following lately on Health Care Renewal), much less any interest in improving the governance of health care organizations. Nonetheless, our voices will continue to cry out in the wilderness....

Post Title → UMDNJ: "A Blank Slate for Complete Debasement of Fundamental Governance"

California [Bad] Dreamin' - More Troubles at UCI

There is a continuing drip, drip of unfavorable stories about management problems at the University of California - Irvine medical center, and simultaneously about the lavish pay and perks awarded to University of California (UC) managers in general.

UCI

As the media continue to investigate the University of California - Irvine (UCI), more disturbing stories have come to light. (Our last post about problems at UCI was here.)

Alleged Misrepresentation Regarding the Liver Transplant Program - The Orange Country Register alleged that top UCI managers misrepresented how the medical center's liver transplant program was going to be lead to stave off a recommendation that the program be closed. In May, 2004, the United Network for Organ Sharing (UNOS) announced its intention to have the program shut down. In July, 2004, a delegation from UCI, including the hospital CEO Ralph Cygan, medical school Dean Thomas Cesario, and transplant surgeon Marquis Hart met with UNOS personnel, and assured them that Hart would become the full-time, on-site director of the program. Based on this, UNOS rescinded its recommendation to close the program. But Hart never worked full-time at UCI. Instead, he continued to shuttle from his full-time position at University of California - San Diego (UCSD). The Register said, "it would not be until Medicare auditors went to UCI on July 19, 2005, investigating a patient complaint that regulators discovered Hart was not there. The auditors said they were told Hart was 'in surgery all day' at his primary transplant center where he serves as medical director." Neither Cygan, Cesario, or Hart agreed to talk to the Register about the meeting and its aftermath.

A UNOS official said, "if there was a change, and the member knew that they had provided information to the committee that changed, I think the committee would expect (an) update." US Senator Charles Grassley (R - Iowa), chair of the Finance Committee, said, "here, it appears that an institution represented that it had hired a full-time transplant surgeon, when this apparently was not the case. This apparent misrepresentation raises concern about any disservice to patients in need of organ transplants and whether much-needed corrective action to the transplant facility was postponed."

The Kidney Transplant Program - The Los Angeles Times now has found problems with the UCI kidney transplant program, to accompany previous stories about problems with liver and bone marrow transplants. The Times found that the kidney program accepted many fewer kidneys (8.7%) than other programs (averaging 25.9% - 31.2%). The rate of patients getting transplants (16.5% from 1999 to 2001) was slower than the national rate. Although the program now has a full-time director, for over a year it had no full-time on site physicians. UCI was first warned in 2002 by the US Center for Medicare and Medicaid Services (CMS) about its kidney transplant program. It just got another warning from CMS.

The Radiology Residency - The Los Angeles Times just reported that an applicant was accepted into a specially created position in the UCI radiology residency program soon after his father pledged a $250,000 donation to the radiology department. Dr Fong Tsai, chair of radiology, and the resident's father both "denied the donation was given in exchange for the son's residency position." However, the father "said he began discussing a donation with Tsai in early 2004. He said he and Tsai discussed his son's desire to join UCI's residency program but never in connection with the donation." Nonetheless, bio-ethicist Arthur Caplan of the University of Pennsylvania opined, "it looks like the prospect of donations may have shaped their assessment of the candidate's admissibility. I hope not, but it looks that way."

UC Pay and Perks

Stories continue to pop up about top UC managers collecting more in pay and perks than had previously been publicly disclosed.

UC-San Diego Chancellor Mary Anne Fox - the San Diego Union-Tribune found that during her first year, Chancellor Fox received "far more than the $350,000 salary disclosed when she was hired." Her total compensation was actually nearly $700,000. It included a payment of "$248,000 for a sabbatical she had earned at her previous university, but did not take."

UC-Berkeley Chancellor Robert Berdahl - The San Francisco Examiner found that when he resigned, "he was given a yearlong leave at this chancellor's salary with the understanding he would return to teaching. Now Berdahl says he'll leave in May - after teaching one semester - to run an academic trade group. But UC officials said he won't have to pay back the $355,000 he earned on leave because UC made 'an exception to policy.'" Commented UC-Berkeley journalism Professor William Drummond, Vice-Chair of the Academic Senate, "This is a completely different system of rewards than I or my faculty colleagues operate under."

An editorialist at the Sacramento Bee said it well,

The perks, payoffs, and golden parachutes provided to top University of California administrators are outrageous, and they reflect a culture of excess and lax oversight created by none other than the UC Regents.
The perks and payoffs have gotten out of hand, especially at a time when UC campuses have seen cuts and tuition raised in recent years. The Regents need to assert control over the process, but it is doubtful they will. This board no longer runs the university system. The chancellors do. In recent years, UC chancellors have created their own fiefdoms and power structures, turning the regents into mere figureheads.

Concentration and abuse of power? And its effects in the health care realm can be seen at UCI.

Post Title → California [Bad] Dreamin' - More Troubles at UCI

A Tap on the Wrist for Conflicts of Interest at the University of California

A follow-up on our posts (most recently here) on the University of California, which discussed lavish benefits given to top managers at the University, even when their performance was far from superlative.

From the ACTA Online blog, and the San Jose Mercury News, MRC Greenwood, former Provost of the University of California, violated university policy, according to a University of California (UC) internal investigation. Greenwood, the second highest ranked UC official, was accused of conflict of interest because she gave a highly paid administrative job to Lynda Goff, a "close friend" who was also her business partner. Greenwood claimed that this was just a technical error on her part, because she was in the process of dissolving the offending business partnership when she got Goff the job. The UC report stated, "At the time of Dr. Goff's career appointment, Provost Greenwood and Dr. Goff still had an ongoing business relationship, which included joint ownership in a house and a listing as co-mortgagees on a bank loan for the house."

Nonetheless, no penalties will be assessed against Greenwoood, who had been allowed to resign and then collect her administrative salary during a 15 month leave. Instead, after the leave, when she returns to her full-time faculty position at UC, she will be rewarded with $100,000 of research support.

Furthermore, the Healthy Policy blog suggests that the conflict of interests in this case may have been rather more severe than reported in the media.

The 'friend and business partner' is actually (or at least was) Greenwood's lesbian partner, and when faculty (especially those non-tenured, who've gotten a bad deal with pay in the last five years) accused her of neoptism and misusing funds, Greenwood returned with claims of homophobia.

Combining this story with those below of Roger Williams Medical Center and the University of Medicine and Dentistry of New Jersey suggests a disturbing trend. Executives of academic health care organizations seem loathe to penalize their fellow administrators for unethical behavior, even when such behavior is clear cut. Thus they fail to be wise stewards of their organizations' missions, and hence fail in their duty to the public.

Perhaps if we publicize enough of these cases, we can attract more leaders with integrity and functioning spinal cords into health care, and set up governance systems that are transparent, accountable, representative, and honest.

Post Title → A Tap on the Wrist for Conflicts of Interest at the University of California

More Trouble in the OC: Golden Parachutes for UC Leaders, and "Malfeasance" at UCI

Last month, we posted about two inter-related stories from the University of California (UC) system.

The first was about lavish pay and other compensation given to many top UC administrators, while state support of the system shrunk, and fees paid by students grew. But UC leadership argued that high pay was needed to attract top quality executives.

This rationale was challenged by the second story, about the collapse of the University of California - Irvine (UCI) liver transplant program, amid charges of mismanagement. That campus, of course, was lead by highly paid executives at the time.

In the last month, local newspapers have followed up on both stories, providing yet more details about just how well UC leaders were recompensed, with as little public notification as possible; and about just how badly UCI was mismanaged, despite the excellent compensation of its leaders.

UC Pay and Perks

More stories surfaced about favorable treatment of particular UC managers.

• Former UC - Davis Vice Chancellor Celeste Rose was asked to resign. When she threatened to sue for race and gender discrimination, the university quickly agreed to a settlement entitling her to two years of salary ($205 K per year), and other payments totalling nearly $500 K. Yet despite policies that the UC Regents must approve settlements worth more than $250 K, or salaries over $200 K, the Regents were never told of these arrangements (per the San Francisco Chronicle).
• Former UC Provost MRC Greenwood was charged with violating conflict of interest policies by hiring Lynda Goff, a friend and business partner, first as an executive assistant, then in academic affairs at a salary of $192 K. In addition, Winston Doby, UC Vice President for Student Affairs, who reported to Greenwood, hired Greenwood's son into a specially created internship position. When these events came to light, the university launched an investigation, but permitted Greenwood to resign her administrative position before it was completed, agreeing to give Greenwood 15 months of leave at her $ 301 K salary (per the San Francisco Chronicle).
• In 1993, UC policy required the Regents to approve paid leaves for more than three months granted to top administrators after they left their jobs. In 1994, then UC President Jack Peltason promised to completely stop awarding year long paid vacations to departing administrators. Yet UC again began awarding paid leaves upon departure in 2003. In the past 13 months, in addition to the cases above, former UC - Berkeley Chancellor Robert Bardahl and former Lawrence Berkeley National Laboratory Director Charles Shank were awarded prolonged leaves at more than $300 K each per month. Former state Senator Quentin Koop, who tried to put an end to paid leaves, responded, "It's a betrayal. You can't depend on the probity of university leaders." State Senator Abel Maldonado (R - Santa Maria) said, "This perpetual lack of transparency needs to end." (per the San Francisco Chronicle).

The Los Angeles Times wrote,

UC is far too inclined to use public money as a slush fund - and ... it will take more than a legislative committee or even the outside audit that UC is finally launching to fix matters.
When revelations first arose this fall about millions of dollars in perquesites given to UC administrators, this page cautioned that though they should be thoroughly investigated by an outside body, running a prestige university is costly and most of the expenses might be justified. That's still true. But these early examples show that UC administrators have a disquieting tendency to run a loose ship, and run it by their own, rather than state or university rules. Such shenanigans hardly enhance the universities' prestige. Furthermore, UC President Robert C. Dynan has strenuously resisted closer oversight or public transparency.
It will take sustained, outside scrutiny of UC - by auditors hired by the Legislature, rather than the regents - to remind UC executives that they are accountable to the public for each costly decision.

The Mess at University of California - Irvine

Meanwhile, the problems at UCI continued to demonstrate that lavish compensation of UC executives has not bought superlative performance.

A Los Angeles Times investigation revealed how hospital leadership permitted the UCI liver transplant service to dwindle to one run by a single, and increasingly embattled surgeon, Dr Sean Cao. Liver transplant services are rated by their outcomes, particularly their overall survival rate. The unit's survival rate was considered to be under the norm. So, "improving the statistics became the mission of the program.... But with so few surgeries, a single death in the operating room could drastically skew the survival rate - a mathematical misfortune of small transplant programs." Therefore, "with so much riding on each operation and so few people to bear the responsiblity, the program was driven to dysfunction by a paralyzing fear of failure, and an obsession for keeping up appearances."

Hospital administrators had been warned by the United Network for Organ Sharing (UNOS) that the program needed to expand, and "both the Dean's office and hospital management appear[ed] to understand." But the program was never enlarged. Similarly, despite recommendations made in 2003 to develop a computerized data base for the program, in 2005 the hospital was still writing a request for proposals to develop the database (per the Orange County Register).

After Dr Cao left, the Los Angeles Times reported that the hospital was only able to secure a part-time liver transplant surgeon. Dr Marquis Hart, based at UC San Diego, 90 miles away, agreed to help. But UCI Medical Center CEO Dr Ralph Cygan "provided false information to keep the unit running." He assured federal regulators "that UCI had recruited a full-time transplant surgeon to revive the program." Government regulators met Cygan and left "with the clear impression that Dr. Hart would be leaving UC San Diego and moving full time to UCI." UCI administrators also told their staff that Hart was key to reviving their program. On their web-site, they said "Dr. Hart is an experienced transplant surgeon who comes to us from UC San Diego Medical Center," without noting that he came to them only about one and a half days a week.

Furthermore, as federal inspectors scrutizined UCI Medical Center, other problems appeared. The center's dermatology program is on academic probation (per the Orange County Register).

And the Register also reported that the leaders of the Center's cardiology division, Dr Jagat Narula and Dr Mani Vannan, lack US board certification in cardiology and even in internal medicine. Narula and Vannan also failed to get California medical licenses. The former head of the division, Dr Michael Brodsky, charged, "It's because UCI can't attract good doctors to come and work here." Narula had briefly run the cardiology program at Hahnemann University Hospital, but "left amid accusations that the program was floundering." Narula's successor there said, "There were financial problems in the division and concerns about the way it was being run administratively." Nonetheless, "Narula has gone on to be among the five highest-paid UCI employees. In the 2004-05 fiscal year, he earned $400,000, more than the dean...." Brodsky concluded,

The whole thing is embarassing. It shows that this liver business is not one isolated phenomenon. It's just another example of continuing malfeasance.

Conclusions
One of the UC Regents had argued that if a university can't offer lavish pay, "you don't get to look at the best people in the market." (See our post here.) If the UCI leadership are "the best people in the market," I hate to think what the other people in the market look like.
Instead, the UC cases suggest that lavish executive pay and perks at health care organizations, rather than being necessary to attact good leaders, actually correlates with bad leadership. Perhaps executives who are most concerned about their personal financial advancement are less likely to be devoted to the academic and health care mission.

Post Title → More Trouble in the OC: Golden Parachutes for UC Leaders, and "Malfeasance" at UCI

More on UMDNJ: "New Jersey - It's Worse Than You Can Imagine"

It's getting hard to keep up with the bad news coming out of the University of Medicine and Dentistry of New Jersey (UMDNJ), now operating under a federal deferred prosecution agreement. (See most recent post here, with links chaining back to a now voluminous set of posts.)

More Resignations

To start with the ironic - in an email sent last week, Marykate Noonan, Director of the Office of Business Conduct at UMDNJ, reminded all employees of newly introduced mandatory ethics training:

Recipients: All Employees
Delivery Priority: Standard
M E M O R A N D U M
DATE: December 15, 2005
TO: All Employees of UMDNJ
Cc: Dr. John Petillo, President, UMDNJ
FROM: Marykate Noonan, DPM - Director, Office of Business Conduct
RE: Mandatory Ethics Training for ALL New Jersey State Employees
____________________________________________________________________
Executive Order 41, issued by Acting Governor Codey, requires ethics training for ALL employees of New Jersey State Authorities, of which UMDNJ is one. There are two ways in which to take this training. The Executive Commission on Ethical Standards will conduct on-site ethics training at all our campuses during the month of January. The dates and times of this training will be announced shortly. The alternative way to take this ethics training is to use the State of New Jersey's on-line training modules. This on-line training MUST be completed by December 31, 2005.

The irony is that Noonan just resigned, along with two other top managers at UMDNJ who had allegedly in involved in questionable activities there, according to the Newark Star-Ledger.
Vivian Sanks-King, vice president for legal affairs, formerly recipient of $280,000 a year in salary, a $36,500 performance bonus, and the use of a 2002 Buick Park Avenue, resigned. The Star-Ledger reported that US Attorney Christopher Christie alleged Sanks-King "conspired" to cover up overbilling of Medicare and Medicaid.
Noonan earned $119,600 a year, received a $11,381 bonus last year, and drove a 2000 Dodge Intrepid supplied by UMDNJ.
Deidre Henry-Taylor, head of compliance at University Hospital in Newark, resigned, giving up her salary of $117,488 a year. Her bonus last year was $10,263.
Golden Parachutes Revealed
Another Star-Ledger article revealed that other top managers who had resigned recently received previously undisclosed "golden parachutes." It took the threat of a law-suit for UMDNJ to reveal this information to the newspaper.
James Archibald, former senior vice president for administration and finance, received two years worth of salary, at $285,312 a year, health and pension benefits, secretarial services, and the use of a Chevrolet Suburban SUV with an option to buy, plus a gas card and cell phone. "Federal investigators have subpoenaed a series of records tied to Archibald, whose name figures prominently in memos and other documents related to questions internally about the legality of UMDNJ's Medicare and Medicaid filings." Archibald now works at Drexel University College of Medicine, where he is Senior Vice President for Health Sciences.
John Ekanius, former vice president for government and public affairs, received one year of his $180,525 salary, health benefits, secretarial services, a laptop computer, and use of a car. Ekanius was named in a federal subpoena seeking documents. Ekanius also now works at Drexel, as Associate Dean for External Relationships and Strategic Development.
Sidney Mitchell, president of University Hospital, will receive two years of his $418,470 salary. Mitchell was also the target of a subpeona. He is still on the UMDNJ payroll, and is also currently president of Pascack Valley Hospital in Westwood.
The newspaper also noted that the severance packages included clauses that "the recipients make no comments or statements that might disparage UMDNJ, and with other confidentiality clauses." Such clauses may not be legal given UMDNJ's status as a state institution. And to add more irony -- the initiator of the policy on severance packages was apparently James Archibald, himself.
More Local Comments

The mess at UMDNJ continues to incite local commentary (although I have yet to find any reaction from farther than New York state.)

According to the Glocester County Times, NJ state legislator warned that UMDNJ may face a crack-down by the legislature. "They have to do the right thing and bring people in to clean this thing up. If they don't get their house in order, I think you're going to see the Legislature take some action."

And Jeffrey Page, a columnist for the Bergen County Record had plenty of choice words.

The feds are looking into a stinking little mess in which the University of Medicine and Dentistry of New Jersey may have double-billed the federal and state governments....
You can do nothing to avoid the stink when reading the UMDNJ story. Nor, of course, could you be accused of extreme cynicism if, after reading about the mischief at UMDNJ, you had sent [Acting Governor] Codey an urgent e-mail suggesting the five finalists [for new NJ state slogan] be scrapped and that the slogan be 'New Jersey: It's Worse Than You Can Imagine.'

But more seriously, Page suggested one small remedy.

When physicians take the Hippocratic Oath they swear to conduct their medical lives honorably. A pure life will bring doctors the blessing of God and the respect of their peers and the public. 'But should I trespass and violate this oath, may be reverse be my lot,' they conclude grimly.
Clearly, UMDNJ administrators should have to swear a similar oath - and suffer a similar reversal of their lots should they falter.

Getting the leaders of health care organizations to openly, publicly embrace a clear code of ethics would be one small step in the right direction, and not just for UMDNJ.

Post Title → More on UMDNJ: "New Jersey - It's Worse Than You Can Imagine"

Pharmaceutical company executive luxury

While I cannot vouch for the accuracy of this Cafe Pharma post (a site for pharmaceutical sales and marketing professionals) regarding the luxuries afforded to Pharmaceutical Company executives, I can vouch for having to watch the Merck helicopter take off and land periodically, since the commuter train station I now use to commute to my university faculty position is literally 100 yards from the helipad. The chopper is used by executives to commute between sites in West Point, PA, Rahway, NJ and Whitehouse Station, NJ, distances I frequently drove on a regular basis.

The choppers, which resemble this but in white, are very familiar to those who reside in the vicinity of Merck sites and observe them in flight. Hardly a day passes when I, in walking in the nearby park or shopping in the vincinity, fail to see the familiar Merck chopper in the sky.

With today's technologies in videoconferencing and teleconferencing, one could question whether the considerable expense of helicopters (vs. limos with conferencing facilities) has a justifiable ROI.

I also am aware of former Pharma executives at other companies who lived cross-country from where they worked and who 'commuted' to work on jets the way line employees commute to work on the subway.

In my opinion, if you want to work at a company, Pharma or otherwise, then move yourself to the area where the worksite is located, instead of wasting operational dollars as if you were royalty.

-- SS

Post Title → Pharmaceutical company executive luxury

Leadership Living Large at the University of California

The San Francisco Chronicle published a series on how the leaders of the University of California (UC) system are compensated. (Links to the multiple articles are below).

In general, the proportion of system employees who made the largest salaries grew faster than total system employment. Total employment grew about 1% a year for the last two years. The number of employees with salaries greater than $200,000 grew 14.4% in 2004 (compared to the previous year), and 13.4% in 2005. Meanwhile, employees with the lowest salaries endured a pay freeze.

A report by Mercer Human Resource Consulting showed that UC pay for administrators was 15% lower than that at peer organizations. A University regent used the Mercer report to argue that "the senior folks at UC are under market, and there are a lot of bad things that can happen from that. You don't get a look at the best people in the market. It is almost like there is a Marxist notion that it is bad that we give raises to people to bring people to market rate."

However, the Mercer comparison only took into account salaries, not other monetary and non-monetary compensation. Yet, the Chronicle reporters noted that some top officials got more than even what UC dubbed their total compensation. A total of $871 million in bonuses, administrative stipends, relocation, and other payments went to 105,482 employees, with the bulk, about $599 million going to 8500 employees who got at least $20,000 more than their regular salaries.

These payments included special incentives for employees who took on extra work, e.g. an Associate Vice Chancellor at UCLA who got $37,000 as an "incentive award" in addition to a $183,400 salary; relocation allowances, e.g., the Dean of the UCLA Law School got a $270,000 housing allowance in addition to his $290,000 salary and payment of his moving expenses; housing and car allowances, e.g., the acting human resources director at Los Alamos National Laboratory got $83,383 for rent, car lease, and living expenses in addition to a salary of $161,000; administrative stipends, apparently yet another term for extra payments for some special administrative work; and revenue sharing, referring mainly to physicians who get a cut of the clinical revenue they bring in.

The article noted that ordinary faculty do not get extra money for taking on additional teaching duties.

Furthemore, some of these extra payments apparently were never subject to oversight. "Even UC regents typically don't find out about the extra pay. Although UC policy generally requires regents to approve salaries above $168,000 at public meetings, UC administrators are usually free to give employees other compensation on their own."

Some administrators also generated considerable "outside income," while they ostensibly worked full-time for the university. For example, the Dean of the UC - San Francisco Medical School, David Kessler, not only recieved $540,ooo in "total compensation," a relocation allowance of $125,000, and $30,000 for rent, but also earned "tens of thousands of dollars for serving on advisory boards for several firms, including Fleishman-Hillar, the public relations firm." In addition, the Chancellor of UCSF, Michael Bishop, "had more than a dozen sources of moonlighting income - including lectures, research, and consulting - in addition to his annual salry of $358,899."

Many officials had additional non-cash benefits. These included: free or subsidized housing, some of it palatial; jobs for spouses or significant others; and free entertainment, travel, and parties.

Top leaders live in university owned mansions, with all expenses paid and services provided by UC. At the very top, UC President Robert Dynes and his wife live in a 13,000 plus square foot mansion on 10 acres, with an extensive staff. The upkeep of the estate, including landscaping, cleaning, and hired help, cost $294,559 in 2003. Landscaping alone cost more than $19,000.

Although commonly justified by the need for these officials to entertain, the reporters noted that many of the lavish homes that house top UC officials are the site of only a few events a year.

During a time when the UC system sustained a 15% cut in state funding, increased student fees by 79% ($3429 to $6141) in the last four years, and froze salaries of lower level employees, these increasingly lavish salaries, other financial compensation, and perks suggest an organization more attuned to benefiting its top leaders than maintaining the morale of its other employees, and fulfilling its mission to its students and other stake-holders (including patients of its teaching hospitals and clinics). Furthermore, leaders splendidly isolated in their fully-staffed dachas may rapidly forget what the interests of ordinary students, patients, faculty, and employees might be.
Links
Services cut for students as high-pay jobs boom 2,275 university employees earned more than $200,000 during the last fiscal year
Free mansions for people of means UC system spends about $1 million yearly on upkeep

UC piling extra cash on top of pay 8,500 top staffers pulling down at least $20,000 each in bonuses, compensation

Other perks include parties, gifts, travel

Post Title → Leadership Living Large at the University of California

Leaders with Chauffeurs

After I posted about the ongoing troubles at UMDNJ (here), one of my faithful correspondents notified me that I had left off a telling detail. According to the Newark Star-Ledger, not only are some of the University's trustees pushing for reassessment of bonuses paid to managers, but also of other lavish perks.
In particular, "UMDNJ's policy in fact specifically provides cars for the president, senior vice president, all deans, the head of University Hospital and the CEO of University Behavioral HealthCare. At least six have drivers.... Overall, 20 administators are currently provided with cars."
Those at the very top get luxury automobiles, and chauffeurs to drive them. For example, Darlene Cox, the CEO of University Hospital, rides in a "new, $36,485 Chrysler 300M, provided by the institution. The car - a favorite of hip-hop moguls - [note, probably indicating it is a 300C, not 300M] is chauffeured by an EMS worker." Vivian Sanks-King, vice president for legal management, only gets a "late-model Buick Park Avenue luxury seda that cost the university $33,149." Also, "the school provides [President John] Petillo with a Lincoln Navigator that costs $58,000."
I think this issue is of particular importance because providing a car and driver is the sort of perk that isolates leadership from the real world in which their constituents live. UMDNJ is a state-supported school, and hence partially funded by taxpayers. In addition, its primary constituents are students and patients. Nearly all taxpayers, students, and patients have to think about how they will get to work, or anyplace else. Of course, they also have to pay for this transportation. Top UMDNJ officials just have to snap their fingers (figuratively) for their drivers. Leaders who lose sight of the day to day lives of their constituents are less likely to uphold the mission of their not-for-profit organization to serve these constituents.

Post Title → Leaders with Chauffeurs

King/Drew's New Managers' "Liberal Spending"

We posted a while back about the ongoing troubles at King/Drew Medical Center in Los Angeles. Long viewed as a symbol of progress for poor and minority patients in the city, the Medical Center had fallen on very hard times, attributed to bad management that for a long time hid behind the banner of the hospital's reputation in the community.
Eventually the County of Los Angeles brought in Navigant Consulting to run the hospital. But now that company appears, as per the Los Angeles Times, to have exhibited "a pattern of liberal spending normally off-limits to those working on the public dime." The County Department of Health Services plans to reject about $300,000 of the firm's $1.3 million in travel and related billings. The Times uncovered instances of bills submitted for the wrong person, for trips that were never taken, twice for the same trip, for apparently personal travel, and for first-class seats. The Navigant project executive for King/Drew, Kae Robertson, blamed it on Navigant's own accounting office, and the County's insistence on paper recipts.
Meanwhile, Navigant was supposed to "re-instill a sense of accountability among employees...."
Furthermore, "many of Navigant's stated goals at King/Drew remain unmet," including restoring the hospital accreditation from the Joint Commission on Accreditation of Healthcare Organizations.
It is amazing that a second generation of hospital administrators, specifically hired to clean up past abuses at a hospital which serves a predominantly poor patient population, felt they deserved to fly first-class at the taxpayers' and patients' expense.

Post Title → King/Drew's New Managers' "Liberal Spending"

"Fiscal Mess at Hospital in Westchester"

The tragedy along the Gulf Coast has, of course, not lead to any moratorium on dysfunction in health care, so here we go again....
The New York Times reported on a state audit of dysfunctional Westchester Medical Center. The good news was that "the audit uncovered no corruption or fraud." But instead,

We found that the management has been awful. They had a weak board that was asleep at the switch and a management that converted a $2.6 million dollar surplus in the year 2000 into a cumulative deficit of $207 million at the end of 2004.

Furthermore, the Times reported that "hospital administrators submitted required monthly reports to county officials that drastically understated expenses and liabilities." In addition, "the audit also showed that former executives at the hospital were spending lavishly on things like restaurants, hotels and florists - with scant controls or documentation - as the medical center's finanaces were deteriorating." And, "the Westchester County Health Care Corporation, which governs the hospital, had virtually no policies regarding the use of corporate credit cards, according to the audit. Auditors found a total of $111, 957 in 2002 and 2003 that was not properly documented on cards used by 11 administrators."
I wonder how many of the troubled health care institutions we have noted in Health Care Renewal would have even worse results if they ever were subject to a detailed audit. Because Westchester Medical Center functions under local government supervision, it could be held accountable by means of such an audit. But most of the organizations we have mentioned on this blog are not so accountable, and have never had to face a post hoc inquiry of this sort. If only they could be made to do so.
By the way, Westchester Medical is the same institution that hired Joseph Pisani as a Senior Vice President for financial planning in 2003, hailing him as a leader of "gravitas," only to fire him in 2005 when it turned out he was involved in charges of Medicaid fraud, later settled, at Staten Island University Hospital. (See our post here.)
As we have noted before, the cumulative effect of this sort of mismanagement of major health care institutions across the country might begin to account for some of the rising costs, declining access, stagnant quality, and disgruntled health professionals that health care policy researchers and experts seem helpless to explain.

Post Title → "Fiscal Mess at Hospital in Westchester"