Performance goals for hospital CEOs discourage change

A big problem with changing the focus of healthcare in the United States is that hospital chief executive officers are incented to produce profits for their institutions.

This chart from Kaiser Health News shows that the goals for most of the CEOs of major hospitals and health systems are profits. Growth and more specifically, admissions growth, are also mentioned.

It also lists CEO compensation figures, which are quite impressive. In addition to their hefty salaries, most CEOs also command large performance bonuses based on meeting financial goals.

According to Becker's Hospital Review, CEO pay has risen over 4% per year since 2009 with an increase of 4.8% this year.

All this in the era of the $546 charge for 6 liters of saltwater and the $73,002 charge for an emergency department visit for a urinary tract infection.

If you were a hospital CEO, why would you want to emphasize preventive care and outpatient services when your bonus is tied to profits, admissions and growth?

Everyone is entitled to make a living. And for sure most doctors do very well. But doctors are being squeezed on many fronts—declining reimbursements, need to purchase expensive and time-sucking electronic medical records software, more ICD codes, rising overhead to name a few. They are being forced to sell their practices to hospitals. Once the majority of physicians become hospital employees, their incomes will no doubt be squeezed further.

The public is demanding more accountability and transparency from hospitals and more emphasis on keeping people well rather than treating the sick.

Yet those who run hospitals have no reason to stress wellness and every rea$on not to. Don't look for anything to change soon.

Corporate speak taken to a higher level

I came across a wonderful example of corporate speak a couple of weeks ago and finally have the time to share it with you.

Having once worked in a large hospital which was thoroughly infused with all of the bad things about corporations including all of the jargon, I’ve always been a fan of the comic strip Dilbert. As evidenced by today’s (July 12) strip, the following is certainly Dilbert-worthy.

An article appeared in the Atlantic Wire about the continuing downfall of Research in Motion, the company that makes the once-vaunted BlackBerry. RIM badly misread the evolution of the smartphone and finds itself laying off 5000 employees and losing tons of money.

According to the story, the CEO of RIM had the following comment during a conference call about the companies plunging sales figures.

He said, "I am not satisfied with these results and continue to work aggressively with all areas of the organization and the Board to implement meaningful changes to address the challenges, including a thoughtful realignment of resources and honing focus within the Company on areas that have the greatest opportunities."

Fortunately, I do not own any RIM stock, but if I did I would not be reassured by a 48 word sentence that when read closely, says absolutely nothing.

I Missed My Calling: Hospital Execs’ Pay Astronomical

This is probably not news to many but according to data recently published by the Connecticut Health I-Team, hospital executives are being paid handsomely .

Figures from 2009-10 reveal that 18 executives in Connecticut, a state with only 30 hospitals, made over $1 million per year.

Some of these figures include retirement packages. The top earner was the outgoing president of Hartford Hospital, who made nearly $7 million, with “all but $1.1 million of it nontaxable and retirement benefits.”

Below is a table from the Connecticut Health I-Team showing the top 15 highest paid executives.

Some of the hospitals, Yale-New Haven, St. Raphael's and Hartford, are large. Most are between 300-400 beds, but #13 New Milford is only 85 beds.

I realize that hospital executives have a lot of responsibility, but usually when they make a mistake, no one dies. I doubt they are sued very often either.

When I am reincarnated, I thought I wanted to be a weatherman [See my blog about this here] or maybe a consultant (both jobs with good pay and no accountability), but perhaps hospital executive is the best choice.

Oh, and how’s your retirement package looking these days?

[This blog appeared on Sermo yesterday and 95% of doctors who voted felt that hospital execs were paid too much (surprise) and only 13% of doctors felt that their retirement situation was "all set."]