Starkman: Prominent Beaumont Cardiologist Calls for Ouster of Corporate Leaders

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

By Eric Starkman

Robert Safian, a prominent Beaumont cardiologist and professor at Oakland University William Beaumont School of Medicine, has sent a letter to Beaumont's board of trustees calling for the ouster of the hospital network’ top executives.

Dr. Robert Safian: "Leadership has crossed the line."

“In the coming days, you will learn a lot more … about our doctors, about our corporate leaders, about the Board, and about yourselves,” Safian’s letter concluded. The action-item is clear: corporate leadership must go. All of them. We need your help.”

Safian noted that Fox has “created a culture of fear and intimidation, and many Beaumont workers, including physicians, have been “forced out” after disagreeing with corporate decisions. This toxic culture has been progressively worsening over the last few years.”

Safian, whose been in practice for more than 40 years, also objected to “the bartering physician and nursing services to the lowest bidder, severely reducing supplies” and “mandating use of equipment against the will of physicians.”

The bartering reference is to a controversial anesthesia outsourcing contract Beaumont COO Carolyn Wilson gave earlier this year to a Texas-based firm that offers lower costs but isn’t highly regarded in the industry. Beaumont surgeons in recent months have been forced to delay or cancel surgeries because there wasn’t sufficient cleaning staff available to sterilize equipment. The mandating use of equipment refers to pressure on Beaumont’s orthopedic surgeons to use medical devices they feel are inferior, but the hospital gets substantial rebates if it uses them.

“Leadership has crossed the line in fiscal irresponsibility (malfeasance?)," Safian charged.

Sunday is the deadline for Beaumont to file its Form 990, an IRS document detailing the finances of nonprofits. The filing will include details of the compensation of Beaumont CEO John Fox and his other top executives. As well, Beaumont’s filing with Michigan’s attorney general relating to its since cancelled merger with Illinois-based Advocate Aurora will soon become publicly available.

Fox in 2017 and 2018 received nearly $6 million in compensation, and COO Carolyn Wilson received about $2 million, an amount many consider excessive for an eight-hospital system, particularly one that’s supposedly a nonprofit.  Paying Fox or Wilson that much or more for 2019 would spark outrage given that’s when the hospital network’s implosion began.

It was in the fall of last year that Marc Sakwa, a nationally renowned cardiologist and major fund raiser, and Jeffrey Alshuler, another prominent cardiac surgeon, resigned after becoming fed up with Fox’s leadership. Last December, Crain’s Detroit Business ran a detailed article about problems at Beaumont’s Trenton hospital, quoting a surgery department head as saying Beaumont was focused more on profits, than patient care.

Adding insult to injury, Beaumont paid 2019 bonuses about a month before the pandemic and Fox began waging a national media campaign warning the Covid crisis could irreparably imperil the finances of America’s hospitals. Beaumont received more than $323 million in taxpayer funds to compensate for lost revenues because of the pandemic.  In July, Beaumont reported that it had a cash reserve of $3.2 billion, compared with $2.1 billion in the same period a year ago.

Fox told the Detroit Free Press that Beaumont pays executive bonuses in March to comply with an IRS rule. That rule applies to for-profit companies.

CEO John Fox (Photo: Beaumont Health)

The Free Press quoted Michigan Congresspeople Andy Levin, Debbie Dingell, and Rashida Tlaib as being outraged that Beaumont paid its bonuses about a month before getting a taxpayer bailout. The three Congressional leaders have stood idly by as Beaumont implodes, though Levin vowed to stop the Advocate Aurora merger. Also remaining silent about Beaumont’s dramatic decline are Governor Gretchen Whitmer and Attorney General Dana Nessel.

Mass Exodus

Beaumont in recent months has seen a mass exodus of surgeons, sparked by Wilson’s decision to award a contract to a controversial anesthesiology outsourcing firm called NorthStar, effectively ousting more than 70 anesthesiologists with advanced fellowship training at Beaumont’s legacy Royal Oak, Troy, and Grosse Pointe hospitals and about 30 working at Beaumont’s campuses in Dearborn, Trenton, Taylor, and Wayne.

The majority of Beaumont anesthesiologists have declined offers to join NorthStar, which isn’t highly regarded among top-tier physicians in that specialty. The heads of Beaumont Royal Oak’s cardiology department in September sent a letter to the chairman of Beaumont’s board warning they didn’t have confidence in NorthStar’s ability to provide anesthesiology services of the caliber that Beaumont historically required. NorthStar is understood to be interviewing anesthesiologists that were rejected by the hospital in years past.

Surgeons at Beaumont’s southern hospitals also complain that NorthStar anesthesiologists aren’t of the caliber of those they replaced.

Fox on Thursday sent an email to employees informing them they’d receive a special $1,000 cash bonus and other benefits in recognition of their work and dedication. It would be a measure of Fox’s cluelessness if he believed that giving employees a $1,000 bonus would mitigate anger about compensation paid to him and his deputies.

If given the choice of Fox and Wilson getting fired or receiving a $1,000 bonus, I’m confident Beaumont employees would choose the former.

Here’s Safian’s letter:

Beaumont Hospital: Setting the Record Straight from a Doctor’s Perspective

Yes, I am one of those: I am a Beaumont doctor. And I am asking your indulgence to read what I have to write. I came to Beaumont in 1991; well, actually I was recruited from Harvard to join the Cardiology faculty by Bill O’Neill, a visionary leader who was the architect of one of the greatest cardiovascular programs in the world. Our system has dozens of great leaders like Bill. Bill left Beaumont many years ago to become the dean of the medical school at the University of Miami, but like all great leaders, he left a legacy of accomplishment that was perpetuated by others who remained at Beaumont, and carried on our traditions of excellence in patient care, clinical research, and education. Together with many others, I am one of those who remained, and I’ve had many roles over the last 30 years, including training about 70% of the cardiologists who practice at Royal Oak. These former fellows are now my friends, confidants, colleagues, and partners, and together we are the doctors who take care of you, your parents, your children, and your grandchildren. As your doctors, we feel an enormous responsibility to advocate for you, but what does that mean? It means that we will do everything in our power to ensure that you have the best medical care that we can provide, and if we cannot provide it because it is outside our specialty, then we will find it for you. Thankfully, Beaumont has a very broad reach, and whether your problem requires expertise in orthopedic surgery, oncology, urology, pediatrics, ophthalmology, or whatever…there are trusted, expert Beaumont doctors who are here to serve you.

So, if the things I’ve written are true, why are we hearing about so much turmoil at Beaumont? Why are community leaders demanding removal of the corporate leadership team? Please read on…

For the last 5-7 years corporate leadership has created a culture of fear and intimidation, and many Beaumont workers, including physicians, have been “forced out” after disagreeing with corporate decisions. This toxic culture has been progressively worsening over the last few years, yet the turmoil has peaked in the last few months as a result of two separate events: the proposed sale of Beaumont to Advocate Aurora and a looming crisis in the Department of Anesthesia, that is now spreading to other departments. As a result of the toxic culture, in 2020 alone, over 100 physician-leaders at Royal Oak will have relocated outside southeastern Michigan, provided verbal or written intentions to leave Beaumont, or will remain on staff but move substantial portions of their practices to other local institutions. In anonymous surveys, 75% of physicians and 98% of nurses at all eight Beaumont campuses expressed votes of no-confidence in corporate leadership. Many physicians and nurses are reluctant to sign letters or make public statements for fear of retaliation against them or members of their departments. In fact, the only public record of such physician dissatisfaction with corporate leadership was a “leaked” letter to the Chairman of the Board from the Chairman and Chief of my department regarding hospital (mis)management of the crisis in the Department of Anesthesiology. In my 30 years at Beaumont, and as the most senior physician in my department, I’ve never even heard of a vote of confidence being considered, let alone conducted on such a tremendous scale; if this was a democratic election, the entire corporate leadership team would have been voted out of office! Many community leaders and generous donors recognize these problems, and advocate for leadership change.

The benefits of the sale of Beaumont to Advocate Aurora have never been convincingly presented to the medical staff, other than the huge payout for corporate leadership. In general, physicians were skeptical and opposed the deal, since we didn’t have any confidence in corporate leadership’s recommendations. We learned more about the financial implications of this sale from Mark Shaevsky, and despite the fact that corporate leaders blame the collapse of the sale (and everything else) on the COVID-19 crisis, most in the real world recognize that there was overwhelming opposition. For now, the deal seems to be off the table.

For our system, however, the greatest problems relate to irreconcilable differences between corporate leadership and the medical/nursing staff. The primary difference relates to corporate pursuit of a 4% profit margin (to secure bonuses for the C-suite), compared with doctors and nurses who pursue what is best for our patients (based on our Hippocratic oath). So here’s a question: Is there something inherently egregious about pursuing profit? Are profit and patient care incompatible? Even though I don’t have a Wharton MBA, my initial reaction is that there’s nothing wrong with profit; so what’s the big deal? The big deal is this: In a health care system, patient care is the top priority…period. Anything that sacrifices care, in terms of access to care or safe and quality care, is counter to our mission as a hospital system. So, if corporate leadership advocates for physicians and nurses, promotes new program development, increases patient access to new treatments, and brings more patients to the system, I would say that profits generated by that strategy can be reinvested in the system and further improve access to patient care. That’s what great leadership should do for a health system.

But what about a leadership team that cuts costs? Well, it seems to me that cutting costs, particularly unnecessary costs, is also fiscally responsible. But when hospital leadership cuts costs by cutting essential services, forcing physician leaders out of the institution, failing to support unique programs, bartering physician and nursing services to the lowest bidder, severely reducing supplies, mandating use of equipment against the will of physicians, and instituting any other “cost-saving” strategies that are anti-patient, then leadership has crossed the line into fiscal irresponsibility (malfeasance?). And to use financial hardship as a justification for cuts, and then to receive financial incentives to make such cuts, is ethically and morally reprehensible. And that’s where Beaumont’s corporate leadership has brought us today.

The crisis in the Department of Anesthesia was created by corporate leadership in a gamble to prioritize profit over patients; it was completely unnecessary, was totally avoidable, has upset the personal and professional careers of hundreds of Beaumont anesthesiologists and CRNAs, and has created a situation in which the quality of our specialty anesthesiology services in 2021 will be much lower than what we have experienced for the last 3 decades...and to what end? Many physician leaders peer through this window and see our future characterized by deeper cuts, contraction of programs, loss of patient services (for example, transplant surgery, pediatric surgery, cardiovascular surgery), declines in safety and quality metrics, inability to recruit thought-leaders to our system, loss of support from the donor community, sacrifices in resident/fellow training, loss of support for education of OUWB medical students, loss of research support, decline in research productivity…basically a loss in all the meaningful parameters that has made Beaumont great. But at least the spreadsheets will show a 4% margin, and corporate leaders will receive their bonuses.

In the coming days, you will learn a lot more…about our doctors, about our corporate leaders, about the Board, and about yourselves. The action-item is clear: corporate leadership must go. All of them. We need your help.

Robert D. Safian MD
The Lucia Zurkowski Endowed Chair for the Center for Innovation and Research in Cardiovascular Disease.
Professor of Medicine, OUWB School of Medicine.

Reach Eric Starkman at eric@starkmanapproved.com. Beaumont employees and vendors are encouraged to reach out, with confidentiality assured. Also, if you wish to support Deadline Detroit's independent journalism please sign up for a $3 a month membership or a one-time donation.

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