A Hospital CEO Censors the Internet, Only to See "the Handwriting on the Medical Chart"

The Fort Worth (Texas) Star-Telegram just ran a six-part series about the misfortunes of the JPS Health Network, a large county hospital network and health care system. The story had several twists. (See this page for links to the latter part of the series and related articles. The first three parts are here, here and here. )

The series emphasized the overcrowding and long waits, problems with equipment and the physical plant, and jaded, demoralized staff that unfortunately fit stereotypes of underfunded public hospitals. Here are some quotes from the introduction to the first part of the series:

The waiting room reeked. Along a crowded hallway, patients lay in beds, with only a thin curtain for privacy. Nurses readying for a new case in surgery noticed blood, bone and globules of fat on the walls and floor and stuck to wheels of carts.

They were greeted last year at an overburdened emergency department where the staff could be robotic and hardened to patients. Sometimes, inexperienced nurses evaluated the sick and suffering.

Some patients were shuffled to a stifling back room to wait. Medical records, crucial lab results -- even patients -- got lost. Staff didn't notice when one Alzheimer's patient walked home in 100-degree heat. Another patient was dismissed because doctors didn't get lab results indicating a life-threatening disease.

The trauma center was described as a war zone. Operating rooms as chaotic. In too many places, instruments were broken, rooms dirty, linens threadbare.

These problems sound unfortunately typical of an impoverished public hospital system trying to care for even more impoverished patients.

But there were several twists to the story. The first is that hospital system executives were instrumental in setting in motion the discovery of these problems, but they then apparently first tried to ignore what was discovered.

Many of the problems were revealed by reports by InSight Advantage, a Houston-based consulting firm paid more than $600,000 by hospital system managers to assess the system's care and condition. However,

[The reports] were never presented to the JPS board. The Star-Telegram recently obtained a copy.

When [JPS Health Systems CEO David] Cecero was asked about the reports' findings, he said he couldn't answer: He hadn't read the documents or been briefed on them.

'I don't think it's my job or my role to read every report that comes through this organization,' he said. 'That's why we have an executive team.'

JPS board Chairman Steve Montgomery said he was unaware of the InSight Advantage study until the Star-Telegram raised questions about it. Then he asked for a copy.

The second twist is that while the reports painted a picture of a (sadly not atypically) impoverished hospital system trying to take care of even more impoverished hospital patients, the Star-Telegram claimed that JPS was far from impoverished.

From the first part of the series:

Boosted by tax funding other local hospitals don't get, JPS has been racking up fat surpluses -- nearly $97 million last year alone.

But the cash has not helped a dedicated core of doctors and nurses overcome the system's callousness, ineptitude and filth. JPS is a hospital that many of its own doctors wouldn't recommend.

In the past six years, Tarrant County property taxpayers have anted up $1.3 billion on the premise that the mission of the public hospital is to treat the indigent and needy. But a four-month Star-Telegram examination found that the Hospital District has squandered opportunities to improve care and compassion as it has chased insured patients pursued by every other Tarrant hospital.

As trash cans overflowed, so did the district's bank accounts. The district's investments swelled to $381 million last year, earning $22 million in interest. But nurses scrambled during surgeries for instruments that low-paid assistants couldn't identify.

Over five years, JPS grabbed $232 million from one federal program for the poor, and administrators said they banked much of it. Meanwhile, needy Tarrant County residents sometimes waited months for appointments, and others went without care because they could not afford the co-payments.

In a supplement to the series appeared:

Net income at JPS Hospital has quadrupled since 2001, and the hospital's investment funds have more than doubled. The nonprofit hospital in 2006 achieved a healthy 16 percent return on equity, the common measure of a hospital's profitability. In comparison, Harris Methodist Fort Worth earned a return on equity in 2006 of 7 percent.


FY 2001, 2002, 2003, 2004, 2005, 2006
Net income (in millions) $17.4, $25.0, $25.0, $45.1, $54.1, $77.7
Investments (in millions) $112.2, $132.6, $159.5, $111.4, $118.0, $255.0
Source: Medicare cost report information from Cost Report Data Resources and American Hospital Directory

It also seemed also that the hospital had become particularly good at raising its "rack rates," that is, the fees it charged uninsured patients (while it negotiated substantial discounts for patients whose insurance companies paid on their behalf.)

Per the third part of the series:

Since 2001, JPS has aggressively pushed up its retail prices, outpacing the rate of increases at eight other Texas hospitals that the Star-Telegram examined. Seven years ago, the hospital's retail price was $1 for every 73 cents in costs, according to reports that JPS filed with the federal government. By 2006, JPS was charging $1 for about every 28 cents in costs - a markup of 257 percent.

This strategy may have been designed to increase Medicaid reimbursement.

JPS officials are frank about saying that the increases were driven by the opportunity to maximize Medicaid revenue, and they don't apologize for that. As JPS' burden of charity care has grown, and as the federal government has clamped down on rates Medicaid pays, administrators say they have had to strategize ways to draw more money from supplemental government funds.

Unfortunately, the higher the "rack rates," the higher the bills faced by uninsured patients, patients who are likely to be poorer than insured patients.

Chief Financial Officer Gale Pileggi says that she is aware the higher charges hurt some people and that the hospital is trying to deal with the dilemma.

The JPS board, she says, understands that 'it has to find a way to help the working poor who still cannot afford the hospital charges.'

JPS board Chairman Steve Montgomery said hospital officials have told him that few people charged at the full rate actually pay the entire bill.

'It's what truly helps me sleep at night,' Montgomery said.

But at many hospitals, some patients do get slapped with the highly inflated retail rate, said Glenn Melnick, a hospital pricing expert at the University of Southern California in Los Angeles. About 5 to 10 percent of all hospital patients are asked to pay the full retail price, he said.

'One of the biggest implications of these rising charges is that while they were driven by hospitals trying to increase their revenue from Medicare and Medicaid, they have this very nasty effect of generating highly excessive prices for the uninsured,' Melnick said.

In addition, the high charges undermine people's faith in hospitals and healthcare, he said.

The third twist occurred after the first stories of the Star-Telegram series appeared. The newspaper's blog reported:

But JPS employees won't be able to read the rest of the series online - not at least while they are at work.

JPS Chief Executive David Cecero and Chief Financial Officer Gail Gale Pileggi decided to block internet access to the Star-Telegram.com site.

'It was a decision that was discussed with the administration, being Mr. Cecero and Gail Pileggi, and how to deal with news issues and how many people have the right to read and do things during the work day,' said JPS spokesman Robert Earley, senior vice president of public affairs and advocacy.

Despite JPS' censorship, dozens of blog postings on the stories were made by people identifying themselves as JPS employees.

JPS Board Chair Steve Montgomery called the move 'stupid.'

Perhaps it should not be a surprise that a CEO whose latest move his board chairman called "stupid" lost his job soon after, although with the now de rigeur generous severance package (again, per a Star-Telegram article):

JPS Health Network CEO David Cecero was surprised by the board decision on Wednesday to cut ties with him, it's only because he refused to read the handwriting on the medical chart.

County taxpayers will have to pay him $775,268 whether he leaves his office tomorrow, on Sept. 30 or at the end of July 2009, as the terms of his negotiated leave-taking call for.

So add David Cecero to our gallery of failed health care executives, hospital and health care system division. His regime shows again how current health care leaders may pursue financial objectives at the expense of access, quality, cost control (for patients, if not for executives), and staff morale. As the Star-Telegram put it, 'the handwriting was on the wall' because

The district might be in the best financial shape it's ever witnessed, but the core mission of providing care to an expanding universe of indigent patients has suffered in the process.

Meanwhile, the story also showed when bad news appears, the first impulse many health care executives now have is to ignore it, their second, to censor it, but not to deal with its cause.

Once again, I will argue that to put patients first, we need to make the governance of health care organizations, starting with not-for-profit hospitals and academic institutions, more representative of key constituencies, accountable, transparent, and subject to clear codes of ethical conduct.

Hat tip: Schwitzer Health News blog.