The Vanishing CEOs

The Vanishing CEOs

By

Leonard Zwelling

http://www.houstonchronicle.com/news/houston-texas/houston/article/In-a-surprise-St-Luke-s-CEO-resigns-11251779.php

The fourth one is down.

This year alone, four of the leaders of major institutions in the Texas Medical Center, including the TMC itself, Hermann, MD Anderson and now St. Luke’s are gone. What’s going on?

When the leader of any business entity leaves, follow the money—and that usually means the money went out the door and then so did the CEO.

The specifics of each of these high level personnel changes are not really public record, but you can bet that the bottom line is the bottom line. Running a major provider of health care is not a great business to be in right now. Being the leader of such an entity is not a formula for job longevity.

First, in academics, costs are soaring and income is dropping. The amount being paid for each clinical encounter is down. Air conditioning and maintenance costs are up. The indirect costs paid on federal grants don’t cover the actual overhead of doing research and the NIH under President Trump is looking to curtail these funds even more. A move to limit RO1 grants to three per investigator was set aside by the NIH leadership, but there is still pressure from the Trump Administration to dial back the amount of money spent on basic research both in and out of biomedical science.

Then there is the massive uncertainty in the health care-industrial complex caused first by the ludicrousness of ObamaCare’s formula to reform the way we pay for health insurance, and then the Republican’s drive to repeal it. No one can predict what the future holds. Thus, the uncertainty in the insurance markets and upward pressure on premium, co-pay and deductible prices. Prices may be rising in the health care industry, but that doesn’t mean reimbursements from the insurers are keeping up. They aren’t. Everyone is trying to foist his or her costs off on someone else while augmenting his or her income as best as he or she can. The government isn’t helping. Market forces are blunted by the vast insurance intermediaries plus the fact that fully half of Americans get some part of their health insurance paid for by the government, and patients are caught in the vice of rising premiums, rising deductibles, larger co-pays, and less accessible care. What a mess!

In some ways I feel sorry for these guys (and it has been all guys) who have decided to move along or have been asked to do so.

The one I know something about is MD Anderson, of course, where the CEO’s unpopularity combined with his penchant for losing money because he spent way more than he ever made, and his megalomania with regard to curing cancer. He was a dismal failure and after just over five years, the UT System finally got its act together and admitted its mistake. We shall see what’s next for the number one place for cancer care in the country, but its children’s program has fallen from a high of being 12th in the national rankings to being 50th. MD Anderson probably has a climb in front of it and its new leader will have his or her job cut out for him or her.

The Texas Medical Center is still of unclear purpose besides shrubbery and parking. I am not sure what its next leader will need to do or be. Once there was strong leadership of the TMC that governed its growth and guided its management. That may happen again. But not yet. The recent striving to commercialize what was once a true center for the non-profit benefit of humanity can still be reversed.

Hermann and St. Luke’s are largely patient care entities. It is most unclear why the CEOs moved on. It’s not even clear if their moves were voluntary or promulgated from within although the St. Luke’s CFO abruptly left as well. (http://www.houstonchronicle.com/local/prognosis/article/A-week-after-CEO-s-ouster-St-Luke-s-CFO-11268360.php)

It is reasonable to assume that these are great jobs that can provide a platform for a man or woman to do well while doing good. So far, though, 2017 has proven to be a costly one for TMC leaders. And we are just hallway through the year.

Who knew the half-life of a TMC CEO was going to approximate that of a medical school dean?

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