Too public?

The bed-bound patients at Tri-City Medical Center last Thursday afternoon could not have suspected the acrimony breaking out downstairs on floor L-L.

More than 200 doctors, nurses, aides and local residents crammed into a basement assembly room of the Oceanside hospital, most of them there to issue a challenge to the public district hospital's troubled board of trustees.

Their joint plea was a variation of the proverb, "Physician, heal thyself": Fix a failing governance system of elected board members, even it means merging with a rival hospital or going private. They begged the board to step back from its 1940s-style district hospital structure and launch a study of other ways to run a medical center.

Tri-City's elected board structure is so politicized and antiquated, critics say, that it is taking down a 52-year-old hospital with 397 licensed beds, generally high marks for patient care, the busiest emergency department in the region -- and flagging financial and patient numbers.

But Thursday was no afternoon for healing.

In a scene that was rowdy even by Tri-City board standards, trustees voted 4-3 against the proposed study, stirring loud boos and shouts of "recall" from an audience consisting largely of the hospital's own staff.

For many, the fallout brings to mind the question: Is Tri-City the victim of too much democracy?

Several longtime physicians and health care experts insist that the blame for Tri-City's ongoing business struggles rests firmly on its governance system and its board members. They say that the board's approach to leadership has failed to promote modern business practices or make sure its executive staff was meeting specific goals.

"We arrived at this place because of many wrong decisions over the years," said critical care pulmonologist Dr. Frank Corona, who has practiced at Tri-City since 1976 and worries about the recent defection of a major doctors group to a rival hospital. "How many times are we going to sustain major setbacks and survive?"

Such fears about Tri-City's financial vulnerability are well-founded, according to a four-month special project by the North County Times and the Center for California Health Care Journalism, a nonprofit program based at the University of Southern California's Annenberg School of Journalism.

The team's review of state data found that for more than a decade -- from 1995 to 2007, the latest year for which figures are available --Tri-City showed downtrends in patient growth and financial health.

Yet North County's other large hospital district, Palomar Pomerado Health -- which also has a publicly elected board -- grew rapidly and attracted hundreds of patients from Tri-City's home base.

So what is going on at Tri-City?

Election aftermath

The immediate trigger for the Thursday showdown was district voters' election in November of a new 4-3 majority on the Tri-City board that disagreed with the policies of 10-year President and Chief Executive Officer Art Gonzalez.

The board voted Dec. 18 without public explanation to place Gonzalez and the hospital's seven other top administrators on leave.

With no formal search, the new board majority brought in an interim CEO, Larry Anderson, a former Orange County hospital group executive.

In the past six weeks, the board has demoted its chairwoman and fired Gonzalez. Anderson fired the other seven top executives, apparently with the board majority's support. Then the chief nursing officer and the hospital district's law firm gave notice of their plans to resign.

The new majority's members -- Charlene Anderson, George Coulter, RoseMarie Reno and Kathleen Sterling -- cast the four votes Thursday against the study.

The ongoing turmoil is drawing widespread attention among hospital leaders nationally, said consultant James A. Rice, vice chairman of the Governance Institute, which educates health care boards and managers.

"The nation needs to look at this one, and is looking at this one," Rice said in a recent interview. "Could this happen elsewhere? And if it did, what are the consequences?"

Same governance, different results

Tri-City Medical Center is owned by the Tri-City Healthcare District, one of four public not-for-profit districts in San Diego County established after World War II to bring health care to rural areas.

Palomar Pomerado Health owns the 298-bed Palomar Medical Center in Escondido and the 95-bed Pomerado Hospital in Poway. The county's two other district hospitals have been leased to private firms and are no longer managed directly by elected boards.

PPH has fared far better financially than Tri-City in the past 15 years, and some credit its board members, who generally have more business and hospital administration experience and argue less with one another in public.

Some critics of Tri-City's governance point to the orderliness of the PPH board and contrast it with the Oceanside district's meetings, with their raucous climate and frequent arguments between trustees.

They say the Palomar board also is more likely to leave day-to-day management of the hospital to administrators -- that it nit-picks less and is less likely than Tri-City's board to pull items out of the so-called consent calendar, typically straightforward items due for approval, for time-consuming discussion by the full board.

In interviews over the past two weeks, several Tri-City board members acknowledged with surprising candor that interpersonal problems have plagued the board.

"Our board's not successful because we are unprofessional," said trustee Ron Mitchell, a certified public accountant from Vista who specializes in health care and has more business background than most of his board colleagues. "I don't think the skill levels on our board are good enough to operate a $300 million business."

Appointed vs. elected

He singled out San Diego County's two major private nonprofit hospital networks, Scripps Health and Sharp Healthcare, where board members are appointed, not elected, and can hold their meetings in private. The "skill set" of those board members trumps those of Tri-City board members, he said.

"All of us probably would never be asked to be on the Scripps or Sharp boards," Mitchell said, "because none of us is probably qualified."

However, the notion that a private, nonprofit board automatically brings with it smarter, more business-minded members rankles not only some other Tri-City board members, but also some colleagues at Palomar Pomerado Health.

"There's absolutely no reason that a public board cannot be effective and work as well as any other hospital board," said Dr. Marcelo Rivera, a nine-year member of the PPH board.

When Tri-City's board took shape in the 1950s, it was run largely by members of the business community, said Larry Hatter, a well-known Oceanside leader who recently sold his local insurance and financial business.

Over the years, Hatter has noticed a decline in board members with business experience.

"No disrespect intended, but they (business people) would have a better acumen of managing money …" Hatter said. "Health care in this country, and the delivery of it, it's scary, and it comes down to managing assets."

By contrast, the board at PPH includes two former high-level hospital administrators, a nurse with a master's degree in business administration, two physicians and a physical therapist. None of Tri-City's board members has a formal background in health care management.

On-the-job training

PPH has taken steps to further educate its board members, and President and CEO Michael Covert has invited some key health care experts to speak to them about acute care.

"Our goal was to make sure that our board had an appreciation for the issues," he said.

The Tri-City board added regular strategy sessions to its board meetings last year at the urging of board member Mitchell, and guest speakers talked about topics such as demographics and health care, said Tri-City spokesman Jeff Segall.

Those sessions fell by the wayside after the new board majority was elected in November and put the eight top executives on leave.

Some veteran health care providers can remember when PPH board members were the ones having "public food fights." They turned for help to the Governance Institute, a San Diego-based national organization that aids health system boards and other health care leaders.

Governance consultant Rice counseled the PPH board in 2000 and 2001, and helped develop a booklet on board responsibilities, including a checklist for would-be board candidates titled "Practical Traits for Key Governance Players." Among the suggested traits: diplomacy skills and ability to make decisions by consensus. Today, PPH board members are generally seen as team players.

Then, several years later, Rice was called in to aid the Tri-City board.

"I go up, and I'm dumbfounded that they have security guards at board meetings," Rice said. "They said, 'There are some interpersonal things … .' " He worked with individual board members on strategies, but adds, "There was a checkered outcome."

League steps in

Even a decade ago, the Tri-City board was viewed as so dysfunctional that the local League of Women Voters spearheaded an initiative to increase its size from five to seven members. Voters passed the measure, but the problems didn't go away.

Now, the league is closely monitoring the governance debate, said Mary Crowley, director of local action for the 250-member league post in northwest San Diego County.

"We're concerned that the district hospital as it is now cannot continue like that," Crowley said. "We do know that the governance has to be looked at and re-evaluated, and that all options need to be on the table."

The leaders of two large North County community clinic networks agree.

"Health care has moved faster than the governance structure has. In general, you have a situation that perhaps could be a victim of an arcane structure," said Irma Cota, CEO of North County Health Services in San Marcos, which operates 10 clinics in the area with 262,000 patient visits a year.

An appointed board, Cota said, would draw "individuals with the expertise to run a multimillion-dollar business."

Barbara Mannino, CEO of neighboring Vista Community Services in Vista, said that she, too, believes the hospital would gain important business acumen with appointed trustees.

Key decisions

Several executives in both districts point to some key business decisions where Tri-City lost out.

Palomar was designated the region's trauma center in 1987, nudging Tri-City aside. Then PPH garnered two important Kaiser Permanente managed-care contracts in 1998 and 2004, meaning that Kaiser patients in the Tri-City district began traveling east to see physicians aligned with Palomar.

These and other decisions played a role in Tri-City's unusually slow patient growth between 1995 and 2007, even as North County emerged as one of California's fastest-growing regions.

The Oceanside hospital grew 3 percent in that period, compared with 44 percent at PPH's two hospitals, Palomar Medical Center in Escondido and Pomerado Hospital in Poway, according to an analysis of state data conducted by the USC journalism center for the North County Times. The center's analysis shows that many patients in Tri-City's primary care area have turned to Palomar for care.

Tri-City area residents aren't the only ones who have moved to other hospitals.

A 65-doctor group once aligned with Tri-City recently signed on with Scripps Memorial Hospital-Encinitas, a move that alarmed managers at the Oceanside hospital.

As of Jan. 1, the Mission Park Medical Group began referring their patients to Scripps for in-patient and out-patient procedures, a move that Tri-City officials acknowledge has cost them roughly 25 percent of their surgical patients and significantly hurt hospital revenue.

In a recent interview with the North County Times, Tri-City interim CEO Anderson, whom the board selected in January, accused both Scripps and PPH of "poaching" patients from his hospital.

Yet some say that Tri-City trustees and executives have only themselves to blame for losing Mission Park doctors to Scripps.

Dr. Louis Hogrefe, the medical group's chief medical officer, recalled that during negotiations, Tri-City did little to keep the group from changing affiliations.

"I think that maybe there wasn't enough realization on Tri-City's part that they needed to take care of the doctors to make sure, in the long run, that the financial performance was where it needed to be," Hogrefe said.

Competitive responses tried

Tri-City's executives and board tried earlier to compete with the region's other health care providers.

Former CEO Gonzalez, who oversaw Tri-City from 1999 until Dec. 18, when the board put him on leave, initiated a plan to shore up relations with local medical groups.

He won board approval in 2005 for a new $6.7 million outpatient surgery center on the Oceanside hospital campus, trusting the district would rent offices to individual doctors.

Affluent Carlsbad became another target, since it sits on the district's southern border just four miles from Scripps Encinitas. In 2008, Gonzalez's management team, working with a private investor, built a $40 million wellness center, including a $10 million office building for primary care doctors whom the team hoped would send patients north to Tri-City instead of south to Scripps.

Both attempts stumbled.

The proposed new surgery center never attracted enough interest from doctors to get off the ground. The project has been canceled.

Though the wellness center is flourishing, the planned nearby doctors' offices stand empty. Anderson, Tri-City's interim CEO, says that he is working on plans to fill the offices. He vows to compete more effectively with PPH and Scripps than his predecessors.

Gonzalez declined comment last month, saying he was prevented from addressing any Tri-City issues under a settlement struck with the board and its attorneys in April.

Tri-City board member Mitchell said the board should have anticipated losing those physicians to Scripps and fought to keep them.

"We should be dealing with our strategic plans. What are we going to do in three, five, 10 years?" he said. "Instead, we arrive at today. We don't have any strategy. Scripps takes one of our major physician groups and expands their hospital. Instead, we're bickering about our administrators."

Financial planning

Reno, now the Tri-City board's vice chairwoman, said that some Tri-City board members may not know as much as they should about hospital finances.

"I really feel we have been a little lax in our financial planning area," she said.

Others blame local politics as a cause for the board's dysfunction. They point to what they call grandstanding by some Tri-City board members, who often turn to address their comments to the television camera in the board room, not to onlookers seated right in the room. Tri-City's meetings appear on a local cable television station; PPH's meetings are not televised.

Under state law, reporters and camera crews can attend the meetings of both district boards, while such meetings at Scripps and Sharp, each private entities, occur behind closed doors.

Such public scrutiny has its downside, say board members, physicians and others. Competing hospitals learn swiftly about plans and problems, and tensions among board members are magnified on television screens and in newspaper headlines.

"The press jumps on it, and, oh boy, here's another twist, and someone gets their 15 minutes of fame," said PPH board treasurer Ted Kleiter, a retired hospital administrator. "Our warts are right out there in the open. If Sharp, or Scripps, or University, or Children's have warts, they can keep them inside their doors, and the public doesn't get to hear them."

Still, Kleiter said, he prefers serving on a public board. He and his colleagues, he said, are more aware that they are responsible to the public, not just to the organization.

"There are people out there, friends I play golf with, belong to Kiwanis with, go to church with: 'Ted, how's the new hospital going? What's going on at Pomerado?'…" Kleiter said. "I revel in that. I enjoy that. I think that sort of holds my feet to the fire."

Yet some Tri-City board members say that egos can cloud their public mission.

"I don't know if people get caught up in the power of it, but they lose sight of the fact that as an elected official, you're there to do the will of the people. That's sort of a hard thing to discern sometimes," said Tri-City trustee Anderson, one of the four-member majority elected in November.

"Sometimes," she added, "I think we need to be gonged."

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Authors

Deborah Schoch

Senior writer Deborah Schoch reports on hospitals and health care delivery, nursing homes, environmental health and food. Her most recent articles have examined patient safety andhospital infections. She was a founding writer with the Center’s pilot project. Schoch spent 18 years as a staff writer at the Los Angeles Times, covering public health and the environment. She was a member of the Times newsroom teams that won Pulitzer Prizes for breaking news in 1992 and 1994. Schoch graduated from Cornell University and was a Nieman Fellow at Harvard University in 1999-2000, studying science, law and policy. Her work at the Center has won several honors, including first place in the 2010 Awards for Excellence in Health Care Journalism, from the Association of Health Care Journalists. She sits on the AHCJ board’s Right-to-Know Committee, which works to improve access to public health records.

© 2014 California Healthcare Foundation Center for Health Reporting

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