Covert's Anechoic Misadventures

We have frequently discussed how health care leaders' compensation seems to reflect the opposite of the pay for performance they often tout.  One example we discussed recently turns out to be even more vivid than we first discovered.

Last week we discussed the case of Mr Michael Cover, the CEO of the small, public Palomar Pomerado Health system in southern California, whose total compensation increased to over $1 mllion a year, while his hospital system was cited for severe, life-threatening medical errors.  The current and previous system board chairmen called his work "excellent, and " phenomenal," and asserted Mr Covert was "one of the nation's leading health administrators."

It turns out that a local weekly newspaper, the Community Paper, investigated Mr Covert's background in 2008, and what they found was not exactly the story of one of the nation's leading health administrators.  Let us summarize his record over 25 or so years.

1980s - Failure to Investigate the Michael Swango Case

As reported by the Community Paper:

Michael J Swango had received a surgical internship at Ohio State University in 1983. Nurses began noticing that apparently healthy patients on floors where Swango worked began dying mysteriously with an alarming frequency. One nurse caught him injecting some 'medicine' into a patient who later became strangely ill. The nurses reported their concerns to the administrators, headed by Michael Covert, but were met with accusations of paranoia. Only a perfunctory investigation was conducted.

In response to the board's inquiries, Surgery Director Dr. Larry Carey expressed misgivings about Swango, citing run-ins with hospital personnel and, specifically, the episode with several patients who became ill after treatment by Swango, one of whom died (and for whom Swango would later plead guilty to having killed).

At no time did Mike Covert, as executive director of the Ohio State University Hospital system, call in either University Police or Columbus, Ohio Police to investigate the matter, even though patients of Dr. Swango had died, even though documented observations and evidence had been submitted to the proper internal authorities.

Later, after Swango had been arrested in Illinois, the Ohio authorities got involved, however:

'It was only then,' says Dick Harp, Lead Investigator for the Ohio State University police department on the Michael Swango case, 'when the Quincy, Illinois, police department called us and told us they had this guy who had been a doctor at Ohio State and he had poisoned some people, that we got involved.' Harp said he contacted the Ohio State Hospital University staff and there appeared to be a collective effort to resist the investigation. They were not terribly cooperative, he said.

Eventually,

The Columbus Dispatch, Columbus, Ohio’s, daily newspaper, reported in a June 1985 article that as a result of the controversial fallout caused by this failure to notify police authorities, a new hospital policy was implemented. This, following an internal report concerning the allegations against Swango as well as a highly critical internal report against Dr. Swango.

Swango was convicted of aggravated battery for attempting to poison co-workers in Illinois, and in 2000 pleaded guilty to killing three patients, and is in jail for life.

In retrospect, Covert's resistance to investigating complaints about Swango does not seem to have exemplified excellent leadership.

The 1990s - Jury Findings of Illegal Revocation of Privileges

Mr Covert then moved to Kansas, and then to Sarasota, Florida to become CEO of Sarasota Memorial Hospital.

The Community Paper noted that Mr Covert and the Hospital lost a multi-million dollar lawsuit that alleged the they had illegally revoked a physicians' hospital privileges:

Dr. Flynn and his attorneys alleged, and proved, that Michael Henri Covert, president and CEO of Sarasota’s Memorial Hospital, and the Sarasota County Public Hospital Board, doing business as Sarasota Memorial Hospital, unlawfully and without just cause, revoked or terminated the medical privileges of a doctor at the hospital who specialized in pain management, and that they did so because the doctor had earlier (in 1994) filed and pursued a federal lawsuit. Secondly, the jury also found that the Hospital Board had additionally executed the revocation and termination of medical privileges for other than the filing of the federal lawsuit. Under Section II of the jury verdict they also found that the Sarasota County Public Hospital had terminated or revoked the doctor’s privileges as as a result of the doctor having exercised his freedom of speech rights.

Called to the witness stand, Michael Covert was clearly and thoroughly impeached by Plaintiff’s attorney, Tony Leon.

Impeachment is a lawyer’s fancy word that simply means the witness and his veracity is questioned. The witness is accused of not being honest in his actions and statements. Based on his testimony while being impeached, the jury then made their judgment, ruling against Michael R. Covert and the Sarasota Memorial Hospital, finding the Defendant had violated 28 U.S.C., Section 1983 (depriving the plaintiff of his constitutional rights of free speech) and the Plaintiff was entitled to damages.

The Community Paper story also alleged that Sarasota Memorial lost millions of dollars through an ill-advised subsidiary set up by Mr Covert to buy physicians practices.

Losing the trial and losing the money again hardly seem to be the mark of an outstanding leader.

21st Century - Alleged Misrepresentations to Secure Government Funding

Mr Covert became CEO of Palomar Pomerado in 2003. In 2007, the Community Paper reported:

Mike Covert, the president and CEO of the Palomar Pomerado Health District, was quite active in promoting Proposition BB which would deliver $496 million dollars to the district to aid in building a new hospital. It suggested further that Mr. Covert was so active that he and his minions may have, in fact, made substantial misrepresentations in order to persuade the electorate to pass the bond issue. We also documented how the cost overruns had run up to $1.2 billion dollars (from an original projected cost of $753 million). This figure was later trimmed back to $990 million. Further, the downtown business community was concerned that a major promise that was made about importing the administrative staff to the existing downtown Palomar Hospital campus might not be kept. If that promise was broken then downtown Escondido might well become a ghost town.

That story lead the paper to inquire further.  Further, misrepresentations are not the mark of an excellent leader.

2008 - Alleged Dictatorial Management Style

Reporters found:

Talking with medical staff, newspaper reporters from Columbus, Ohio, and Sarasota, Florida, and with medical staff here in North San Diego County, a picture of an energetic, eager, impatient, egotistical, demanding, and often angry chief executive emerges. It was interesting that a parallel term was used by medical staff in Sarasota and in Escondido to describe Mr. Covert’s management style. 'He’s a Little Hitler,' was the common expression used by both medical communities.

According to several medical staffers at Sarasota Memorial Hospital, Covert was not well liked, was described as manipulative and that he would do anything to get his way. Former board member Catherine Bowles, who had been at odds with the board and Covert testified at Dr. Flynn’s trial that 'people who complained about patient care were not warmly received by a majority of the board.' Nor, it is said, by Mr. Covert.

A number of others who know him, both within the medical community as well as within the Escondido community at large, agree that he is a highly egotistical man. He has to have things done his way. He is very good at playing politics and is also very good at playing hardball with contracted medical service suppliers.

Yet another doctor gave a somewhat contrasting view: 'He’s affable on one hand . . . a very good salesman; in front of a group he’s almost evangelical in his passion . . he almost bowls you over. Makes me kinda question someone who has so much zeal like . . 'I’m right.''

'Like all CEO’s, he’s very egotistical. He wants to have total control over everything, including the doctors.'

It is said he wields departmental administrative assignments as a tool and dangles the financial remuneration of them, ranging from as little as $10,000 to as much as $150,000 a year, as an incentive to fall in step with his wishes.

A number of doctors who practice at the Escondido campus of Palomar Medical Center confided to us, off the record, that they feared Covert.

One doctor complained, 'Covert is trying to take over as dictator of the hospital. There is supposed to be a separation between the hospital, the medical staff and the administrator. If you have the administrator making all the decisions then all decisions are made on money issues rather than what is best for the patient or the patient population. This poses a threat to the medical population and harms the quality of medical care. Covert is simply Hitler reborn.'

Another doctor agreed, saying, 'At most hospital districts, administrators don't normally show up at Medical Executive Meetings unless invited . . . but here, administrators are present at closed meetings. They should not be privy to private medical meetings/discussions and they tend to dominate the meetings.'

Again, a "brilliant" leader who is manipulative, rebukes criticism, and dictatorial?

2008 - Contrasting Praise from the Board

While the physicians questioned his management style, just as we noted this year, the then board chairman was effusive:

You and your readers need to know that Covert is one of the most highly regarded executives in the industry. He has received a number of very prestigious awards. Some of them puts him in the company of surgeon generals, such as C. Everett Koop. He has held high executive and board membership in national organizations.

At that time, the board chairman claimed that when Mr Covert was hired, after having been recommended by a national search firm, none of the issues noted above had come to light. 

2008 - The Temporary End of the Story

The Community Paper story ended on a disquieting note, suggesting that even the extensive results of their investigation recounted above were not complete, and that there might be grounds for a criminal investigation:

There are many other comments from physicians, other leads to follow in pursuit of the rest of this story. However, we, as a weekly newspaper, have neither the time nor resources to explore the labyrinthine depths of hospital administration committees, subcommittes, advisory councils, etc. Side financial agreements, whether or not their are 'kickback' arrangements within the hospital structure. That additional research and reporting would be better left to someone who has the resources, such as a Grand Jury.

I could find nothing to suggest any further investigation ensued. There appears to have been no local reaction to the Community Paper story. As we noted above, instead Mr Covert got a raise, and is currently getting over $1 million a year in total compensation.

Summary

A more complete look at the record of one CEO of one small, public hospital system suggests even more discrepancies between his ever increasing remuneration, justified by ongoing effusive support by his board, and a record that at best suggests multiple questionable management decisions and multiple bad results.

Note that even though considerable information was available on the public record that should have lead to questions about his leadership, this information remained relatively anechoic, and the questions were not repeated.  We have found that very few have been willing to question or investigate the powers that be in health care, and that direct or implied concerns about how health care is lead tend to be anechoic.

This case demonstrates the sorts of problems in health care governance and leadership that we started Health Care Renewal to discuss. Perverse incentives and poor oversight seem to encourage leadership by the wrong people, hired for the wrong reasons, to do the wrong thing.

There is again an ongoing discussion in the US about the costs of health care. Bad leadership of health care organizations is not only directly costly, but leads to huge indirect costs as the results of bad, if not sometimes corrupt decisions. As Matthew Holt pointed out in a comment on our earlier post on Palomar Pomerado, it is not that the case above is an outlier. It is likely just a better documented version of what is going on throughout health care.

Yet outside of a few lonely bloggers, not many people talk about bad leadership and bad governance as fundamental, major causes of our ongoing health care crisis.

We say again, true health care reform will require having health care leadership and governance that displays accountability, integrity, transparency, and honesty.  But first, we have to be willing to openly discuss bad, that is unaccountable, opaque, dishonest, and corrupt leadership. 

Hat tip to our own Health Care Renewal blogger Dr Scot Silverstein for finding the 2008 Community Paper story (see his comment here).

Should a "Phenomenal" $1 Million CEO be Accountable for "Errors that Caused Severe Injury or Death?"

A recent story with some local color once again illustrates the cognitive dissonance evoked by current patterns of compensation of health care leaders.

Let me start chronologically.

The Stratospheric Compensation of the CEO, and Its Justification

In 2009, the compensation given to the CEO of the Palomar Pomerado Health, a public health system in the vicinity of San Diego, California, provided some headlines. As reported then by the San Diego Times-Union,

Palomar Pomerado Health CEO Michael Covert has received a 26 percent — or $154,000 — pay raise.

The increase, approved by the hospital district’s board of directors last month, is retroactive to July 1, the beginning of the fiscal year, board Chairman Bruce Krider said.

The increase brought Covert’s pay from $582,000 a year to $736,000 a year.

Not unexpectedly, the hospital system board chair had an explanation:

Krider said Covert has done a 'phenomenal job' of improving the quality of care and charting the district’s future, but is underpaid compared with five California hospitals that generate gross revenues of $357 million to $457 million a year.

By 2010, it was apparent that Mr Covert's compensation was even larger than it appeared above. As reported then by the San Diego Times-Union:

The top official at Palomar Pomerado Health, a public agency serving health-care needs in Poway and Escondido, receives in excess of $1 million in compensation per year.


Michael Covert, who has run the North County hospital district since 2003, receives a base salary of $736,000 a year. Retirement, bonuses and other benefits push Covert’s total pay past $1.1 million.

The compensation package is in the median range of his private and nonprofit counterparts and places Covert among the elite among public employees.

At that point, the system's board chairman gave a similar justification:

Bruce Krider, the health-care district chairman, said Covert does an excellent job managing a complex enterprise that includes two major hospitals. Covert juggles the interests of staff, physicians, patients, volunteers, board members and other stakeholders, he said.

'A million dollars sounds pretty good to anybody, but my view is, pay a lot and expect a lot,' said Krider, a management consultant who also is a former hospital executive. 'You can’t have some mediocre public servant. You need somebody that has got vision, that can see the issues that are most important and put it all together.'

Later in 2010, when it turned out that Mr Covert was the second most highly paid government official in California (and the most highly paid official was facing criminal charges), the Times-Union reported:

'We have to compete for talent with all of the for-profit and nonprofit health systems,' said Theodore Kleiter, a former hospital administrator who is now chairman of the Palomar Pomerado Health board of directors. 'If you want the top management, that’s what you have to pay.'

Kleiter said Covert is one of the nation’s leading health care administrators and noted only 3 percent of the district’s $480 million budget comes from taxpayers.

'The people in our area expect the best and we’re trying to provide that,' Kleiter said

Also, per the Los Angelest Times a few weeks later:

Officials at the hospital strongly defended his pay.

"There's this notion that because you're a public agency you should hire less-talented people than private companies, and if we followed that idea, PPH would not be where it is today," hospital spokesman Andy Hoang said. "We must compete for the best physicians, nurses and executives to provide the highest level of care. The community deserves that."

So, do we see a pattern here? According to one board chairman, Mr Covert had "vision," was doing an "excellent job," a "phenomenal job."  Furthermore, the chairman gave Mr Covert credit, apparently sole credit, for improving quality of care within the system, and noted how he was responsible apparently for all that was done by everyone who worked in or was associated with the hospital.  That board chairman was a "management consultant", and "former hospital executive."  The next chairman thought Mr Covert was "top management." and one of "the nation's health care administrators."  That chairman was "a former hospital administrator."  Finally, a paid hospital spokesman insisted Mr Covert is one of the "best executives."

Celebrity Endorsements and Fines for Medical Errors

On the other hand, once more reported by the Times-Union, some community residents, including hospital nurses, were not convinced that Mr Covert's performance was so unequivocally brilliant:

More than 200 community residents signed petitions raising questions about the salary paid to the chief executive at Palomar Pomerado Health and other business practices at the medical organization.

'Your highest priorities should be improving the health of our residents ... Out of control executive pay, costly celebrity spokespeople endorsements and out-of-district clinics (are) a waste of public funds,' the petition states.

The signatures were collected by nurses concerned about the compensation package and other issues over the past months.

By the way, concerning the issue of celebrity endorsements:

The district signed former San Diego Chargers running back LaDainian Tomlinson to a $2 million promotional contract before he signed with the New York Jets, a marketing plan that was criticized by some employees.

And this week, there was more reason to think that all is not so "phenomenal" at Palomar Pomerado.

The San Diego Union-Tribune just reported about California hospitals fined by the state for serious errors affecting patient care. 

Five San Diego County hospitals were fined a total of $300,000 for errors that caused serious injury or death to patients, state regulators announced Thursday.

The penalties were levied for leaving a retractor inside one patient and a 28-inch guide wire inside another after surgery, giving two deadly drug overdoses, and leaving a patient unattended who fell and then died from a fractured skull.

Palomar Medical Center in Escondido, Pomerado Hospital in Poway and Scripps Memorial Hospital in La Jolla were each fined $75,000, the highest fines among 12 California hospitals penalized by the state on Thursday. All three had been cited at least twice before, prompting the higher penalty.

Note that the previous citations came in 2010, the year in which Mr Covert's compensation exceeded $1 million.
Of course, medical errors are unfortunately not rare. I suspect that while we may be able to reduce them, they cannot always be avoided. I do not mean to condemn these hospitals, nor the people who work there.

In one sense, it would be silly to expect Palomar Pomerado Health to be perfect, for errors and mistakes never to be made there. It also would be silly to blame the system's CEO for everything that went wrong there.  It would be silly, except that the justifications given for the comparatively stratospheric compensation given to the CEO of this government funded health care organization implied that he was nearly perfect, and he was responsible for all the good that went on within the organization.

Summary

So here again we see an example of a health care leader who is nearly god-like, is responsible for all the wonderful things that his organization does, and is therefore worthy of pay sufficient to make him rich, at least according to the board of directors to whom he is supposed to report.  On the other hand, there seems to be no real evidence of the CEO's near divinity, and if he is supposed to be responsible for all the wonderful things his organization does, he also ought to be responsible for its errors and mistakes. 

In fact, comparatively high executive compensation justified by hyperbole seems more likely to indicate a board that is not sufficiently independent to exert stewardship than an executive who is truly exceptionally brilliant.  Lack of such stewardship, in turn, may lead to lack of executive accountability and hence poor rather than brilliant outcomes for the health care organization. 

So here is the latest example of CEO disease.  As it becomes more prevalent, health care leadership becomes more disconnected, unaccountable, and self-interested.  The increasing prevalence of CEO disease in health care may explain why costs keep increasing, access keeps declining, and quality and safety are stagnant.


As I have said before,.... health care organizations need leaders that uphold the core values of health care, and focus on and are accountable for the mission, not on secondary responsibilities that conflict with these values and their mission, and not on self-enrichment. Leaders ought to be rewarded reasonably, but not lavishly, for doing what ultimately improves patient care, or when applicable, good education and good research.

 If we do not fix the severe problems affecting the leadership and governance of health care, and do not increase accountability, integrity and transparency of health care leadership and governance, we will be as much to blame as the leaders when the system collapses.


We need to launch a crash program to prevent CEO disease and cure existing cases, before it kills off our health care system.