Starkman: Michigan's AG Dana Nessel Losing Excuses for Ignoring Beaumont Implosion

September 22, 2020, 6:22 PM

The writer, a Los Angeles freelancer, is a former Detroit News business reporter who blogs aStarkman Approved.

By Eric Starkman

Attorney General Dana Nessel (Photo: State of Michigan)

It’s becoming increasingly harder for Michigan Attorney General Dana Nessel to continue doing nothing about the accelerating implosion of Beaumont Health, the state’s biggest and once nationally respected health care network.

Although Nessel in a July 23 news release made clear she isn’t entirely certain of the nonprofit companies her office is responsible for regulating, she indicated in a Crain’s Detroit Business commentary last week that she’s aware that protecting charitable donations falls within her bailiwick.

“Our role is to ensure that Beaumont’s charitable assets continue to be utilized in the manner they were designated,” Nessel said. “That means we are authorized to protect the donations, endowments, etc., made to Beaumont to make sure the money is used to appropriately.”

It seems reasonable to expect that Nessel might take a break from her network appearances to bolster her national profile and review a letter more than 20 donors sent to the company’s board of directors last week expressing concern about Beaumont’s decline.

Cry of Leadership

“While we know that the ‘pandemic’ has put additional burdens on health care, one can readily see that other institutions have not suffered the loss of reputation and affiliations with professionals that Beaumont has,” the letter said. “This too is a cry of leadership to be exercised, fiduciary duties to be discharged. Answers are required and action is needed!”

The letter called on the board not to consider Beaumont’s proposed merger with Chicago-based Advocate Aurora until Beaumont’s “crisis” is addressed. The letter stopped short of demanding the firing of CEO John Fox, COO Carolyn Wilson, and chief medical officer David Wood Jr. as Beaumont donor and prominent Michigan attorney Mark Shaevsky recently demanded in a passionate five-page letter to Nessel.

John Fox and Carolyn Wilson

The two-page letter from the 20-plus Beaumont donors, which Shaevsky didn’t sign, contained multiple references to the board’s “fiduciary responsibilities,” including a responsibility to ensure  Beaumont’s hospitals adhere to their missions to provide quality health care services to the communities they serve.

The multiple fiduciary references would normally be viewed as a legal threat, but any action against the board would typically be initiated by the attorney general. Nessel so far has demonstrated no public resolve to hold Beaumont’s board accountable for the implosion of its hospital network.

Among signers of the letter, the contents of which were first reported by Crain’s Detroit Business, was Warren Rose, whose family has supported Beaumont across three generations. Beaumont’s oncology center bears the Rose family name and it’s readily understandable why they likely aren’t pleased.

Dr. Peyman Kabolizadeh

Peyman Kabolizadeh, a nationally renowned physician and a leading authority on Proton radiation therapy for treating cancer patients, is among the dozen prominent Beaumont doctors that have resigned in recent weeks. Proton therapy is more targeted and allows patients to undergo fewer radiation treatments.

Donors Warren and Carol Ann Rose

The cancer center has also been adversely impacted by layoffs and job eliminations, causing staff shortages in diagnostic areas, such as radiology, endoscopy, and nuclear medicine, which in turn delays patient care and treatment. Beaumont’s oncology surgeons were recently told they would no longer be given blocks of operating room time to book procedures, making scheduling considerably more difficult and possibly causing patient treatment delays.

A department source said a Rose family donation was also to be used to renovate the first-floor patient area but claimed that hasn’t yet happened.

Beaumont spokesman Mark Geary ignored Deadline Detroit’s request for comment. 

CFO Cindy Rios

Beaumont’s Director of Oncology is Cindy Rios, who also is CFO of Beaumont Royal Oak.

In addition to an MBA, Rios holds an accounting degree. Beaumont CEO John Fox also is an accountant, as are several members of Beaumont’s board.

Rios’s LinkedIn profile shows no previous oncology or clinical experience. Before joining Beaumont in April of last year, she was CFO of a for-profit, 250-bed community hospital located in rural Virginia.

By comparison, Beaumont Royal Oak has more than 1,000 beds, is a regional trauma center, and until recently was among the busiest surgical centers in the country. In addition to losing surgeons, surgeries at Royal Oak have increasingly been cancelled because of a shortage of staff to sterilize equipment.

The CEO of Beaumont Royal Oak is Nancy Susick, who holds a nursing degree and earns about $1 million dollars a year, according to the most recently available regulatory filings.

Max and Debra Ernst Heart Center

Max and Debi Ernst also signed the donor protest letter to the Beaumont board. The Ernsts donated $5 million to fund Beaumont Royal Oak’s outpatient heart center. They made the gift to support the efforts of Marc Sakwa, Beaumont’s former chief of cardiac surgery and other renowned surgeons. Sakwa, who was born and raised in Metro Detroit, quit Beaumont last December because he was fed up with the hospital’s management.

As Deadline Detroit reported Friday, the heads of  cardiovascular medicine at Beaumont Royal Oak sent a letter to corporate chair John Lewis saying they have “serious concerns” about the low cost outsourcing company that will manage anesthesiology services at the hospital in January.

No Confidence

A recent survey of more than 1,500 Beaumont doctors, especially those at Beaumont Royal Oak, revealed the majority have no confidence in CEO Fox and his management team.

In her Crain’s Detroit Business commentary last week, Nessel insisted there’s nothing she can do to prevent Beaumont from giving itself and its $2 billion cash reserve to Advocate Aurora for free until the board files the necessary paperwork requesting formal approval. Nessel’s column made no mention of Beaumont’s implosion, which is widely known and has been reported in Crain’s.

Nessel promised that hearings will be held to review the Advocate Aurora merger.

Nessel must also approve the merger of Community EMS, Beaumont’s not-for-profit ambulance  division, with Superior Air Ground Ambulance Inc., a for profit company based in Chicago.  

“This deal appears to involve the sale of certain nonprofit assets to a for-profit entity,” Nessel said.

Community EMS is definitely a nonprofit. Nessel’s uncertainty about the company’s tax status revealed the level of scrutiny her office affords nonprofits.

Reach Eric Starkman at Beaumont employees and vendors are encouraged to reach out, with confidentiality assured. 

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