Operator to bar New York hospital CEO, CFO and COO from expensing bi-yearly trips to Cayman Islands


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East Meadow, N.Y.-based Nassau Health Care Corp. officials expect to pass a resolution March 8 barring East Meadow-based Nassau University Medical Center officials from traveling to the Cayman Islands twice a year and charging the hospital for expenses incurred on the trip, according to Newsday.

George Tsunis, chairman of the board of Nassau Health Care Corp., which operates NUMC, told the publication the proposal is part of a series of resolutions to cut costs at NUMC, prevent corruption and make the public more aware of executives’ actions.

Nassau Health Care Corp. created a limited liability company, called NHCC LTD, in the Cayman Islands for tax purposes to self-insure for malpractice and general liability claims, according to the report. Company officials must meet outside the U.S. at least once a year to maintain the Cayman Islands location. NUMC’s CEO, COO, and CFO were all named to NHCC LTD’s board, and previously traveled to the islands for two weeks out of the fiscal year to discuss the company’s financial and operational activities.

Under the proposal, two NUMC executives will meet once a year for one day at an offshore location, such as a Canadian airport, to discuss the company’s activities.

The series of resolutions also calls for a reduction in the use of outside legal firms to handle internal legal issues, and to enact anti-nepotism disclosure requirements for hospital trustees, among other initiatives.

Nassau Health Care Corp. officials did not disclose how much the organization would save as a result of the proposed changes, Newsday reports.

Mr. Tsunis said as a safety-net hospital, NUMC should adhere to federal expense guidelines and not use taxpayer money to fund executives’ trips.

“[The proposed resolutions are] essential for credibility. The taxpayers of Nassau County need to be assured that we are protecting their tax dollars and operating at the highest ethical levels,” Mr. Tsunis told Newsday.


Tenet eliminates poison pill, adopts governance changes


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Dallas-based Tenet Healthcare announced March 5 that its board of directors has approved several changes to the company’s corporate governance.

Here are five things to know about the changes.

1. The board approved changes to Tenet’s bylaws that allow shareholders with a 25 percent stake in the company to request a special meeting. The move comes after the board approved amendments to the company’s bylaws in January that allowed majority shareholders to request special meetings.

2. Tenet approved a short-term shareholder rights plan in August 2017, which was designed to protect $1.7 billion in net operating loss carryforwards and ensure the board could protect all shareholder interests as it executed CEO and board changes. Under the poison pill, if any person or entity acquired 4.9 percent or more of Tenet stock, all holders of rights issued under the plan are entitled to acquire shares of common stock with a 50 percent discount.

3. Tenet terminated the poison pill March 5. “The board made this decision based upon the reduced value of the NOL shareholder rights plan following recent tax law changes and an increase in the company’s stock price since the NOL shareholder rights plan was adopted, as well as shareholder feedback,” Tenet said in a statement. The poison pill was originally slated to expire following Tenet’s 2018 annual meeting of stockholders, which is typically held in May.

4. Tenet announced March 5 that it also eliminated the executive committee as a standing committee of the company’s board of directors.

5. “The board of directors and management have spent considerable time in recent weeks engaging with shareholders representing a majority of our outstanding stock and we received constructive input regarding Tenet and our objective to lead with best corporate governance practices,” said Ronald A. Rittenmeyer, executive chairman and CEO of Tenet. “We believe the actions which we are taking today demonstrate our continued commitment to being responsive in a timely manner to shareholder feedback and to implementing measures that increase transparency and accountability.”


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Major shareholder wants more frequent oversight of Tenet’s board: 5 things to know


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Glenview Capital Management, which currently owns 17.8 percent of Dallas-based Tenet Healthcare, has submitted a proposal to Tenet that would amend the for-profit hospital operator’s bylaws to allow all shareholders to take action by written consent without a meeting.

Here are five things to know about Glenview’s proposal, which will be voted on at Tenet’s annual meeting.

1. In a letter to Tenet shareholders, Glenview said Tenet has been a “chronically underperforming company for decades,” and shareholders need the ability to take action by written consent.

“Just as a person in worsening health may need more frequent medical attention than a check-up once every 12-18 months, a chronically unhealthy company is likely to return to health quicker and with more certainty if its owners are allowed more frequent board oversight, and this is effectively accomplished through the ability to take action by written consent,” Glenview wrote in the letter to shareholders.

2. In addition to Tenet’s financial underperformance, Glenview said there are several other factors supporting the proposed change, including the board’s slow response to Tenet’s financial and operational challenges.

3. Although Tenet’s board approved amendments to the company’s bylaws in January that allow majority shareholders to request special meetings, Glenview argued shareholders still need action by written consent.

Glenview said the amendment to allow majority shareholders to call special meetings is “wholly impractical, clearly off-market, and sends a dangerous signal that the board may need additional feedback from shareholders to fully appreciate the cultural renaissance for which we mutually strive.”

4. Tenet said it is reviewing Glenview’s proposal. “We will make a recommendation to shareholders in due course,” Tenet said in a statement.

5. Tenet launched a $250 million cost reduction initiative last year, which involves divesting hospitals in non-core markets and cutting 2,000 jobs, or about 2 percent of the company’s workforce. The for-profit hospital operator ended the third quarter of 2017 with a net loss of $367 million on revenues of $4.59 billion. That’s compared to the same period of 2016, when the company recorded a net loss of $8 million on revenues of $4.85 billion.

Broward Health offers CEO job to indicted interim leader


Broward Health wraps up interviews with CEO finalists

The board of Broward Health rejected all four finalists for the chief executive officer’s job Wednesday and voted to give it to their current interim CEO, Beverly Capasso, who is under indictment.

Capasso, who earned $650,000 a year as interim CEO, faces criminal charges along with four other current or former Broward Health leaders over alleged violations of Florida’s open-meetings law in the firing of a previous interim CEO. But board members said she has done an excellent job restoring stability to the organization, with several strong hires in executive positions, and that none of the four finalists turned out to be the stellar candidate with whom they had hoped to fill the job.

At the meeting, none of them mentioned the indictments, focusing instead on Capasso’s efficiency in beefing up the system’s managerial ranks, its improved finances and the apparent end of the crises that had plagued it.

“I think she’s done an amazing job and has an amazing team,” said board member Steven Wellins.

The job of leading the five-hospital, taxpayer-supported system came open more than two years ago, when its last permanent CEO killed himself with a bullet to the chest. Since then, the system has been run by a series of interim leaders, as the board, which is appointed by Gov. Rick Scott, lurched from one hiring process to another, creating instability that affected everything from employee morale to the system’s bond rating.

The vote was 4 to 1 to give the job to Capasso, with board chairman Rocky Rodriguez dissenting from an action that he said would “corrupt the process” of hiring a new leader.

Nancy Gregoire, the newest board member, made the motion to offer Capasso the job, saying she would hold the position until the expiration of a federal oversight agreement, expected some time late in 2020. By then, she and other board members said, they hope Broward Health will have a strong enough national reputation to attract higher-quality CEO candidates.

Gregoire said in an interview that the indictment was a concern, but that the charges were only second-degree misdemeanors and that Capasso should be considered innocent until proven guilty.

“Certainly it bothers me,” she said. “However, I really believe that the four candidates we had to review were not the best thing for Broward Health right now. I’d hate to make a mistake and make matters worse.”

Several board members pointed to the mediocre scores the four finalists received from executives of Broward Health’s hospitals, who had met with the finalists. Their scores ranged from 1.7 to 2.9 on a 5-point scale.

Capasso, a registered nurse, rose through the ranks to become a hospital executive, eventually becoming chief executive of Jackson Memorial Hospital in Miami.

The job description distributed by Broward Health says the CEO position requires a master’s degrees. Capasso has one in health administration, but it’s from a defunct mail and online institution called Kennedy-Western University that federal investigators identified as a diploma mill, an institution that confers degrees for little or no academic work.

Former Broward Health board member Joseph Cobo denounced the decision to hire her. There’s talk that the whole process was a “sham,” he said, and that the plan was always to give Capasso the job.

“I have never, ever, in the 40 years I’ve been around this place, seen a staff more scared from the retaliation that has been occurring,” he said. “You need a change. Yes, there are some very good people in this organization. But a lot of people have been hurt.”

Capasso, a former Broward Health board member who lives in Parkland, was indicted along with Rodriguez, board member Christopher Ure, former board member Linda Robison and general counsel Lynn Barrett for allegedly violating the state’s open-meetings law in the secretive manner in which they handled the investigation and firing of previous interim CEO Pauline Grant. All have denied wrongdoing. The cases are pending.

The firing of Grant, one of the county’s highest-ranking black officials, gave a racial tinge to the debate over the CEO job, with many black leaders denouncing the move. But at the meeting Wednesday, five black clergymen, some of whom had criticized the board in the past, spoke in favor of giving the job to Capasso.

“From my understanding of talking with different individuals and having real heart-to-heart conversations, I think the current interim CEO and the team that she’s put together is taking the ship in the right direction,” said Pastor Allen B. Jackson, of Ark Church of Sunrise. “I think they are doing a great job bringing the ship through the storm and taking the ship where it needs to go.”

In explaining his opposition, board chairman Rodriguez said he didn’t believe in springing something at the 11th hour and that there had been an explicit and public understanding that Capasso would serve only on a temporary basis.

“We made a promise to this community that this was not going to happen,” Rodriguez said.

“But we’ve heard from the community,” Gregoire said.

“Well, they’re part of the community,” Rodriguez responded. “With all due respect, they’re a huge part of the community, but there’s other people in the community that are not here.”

Capasso was not present at the meeting, which was a special meeting called just to discuss the CEO issue. But she was in attendance at the subsequent regular meeting, where she said she would accept.

“I’m humbled and honored to accept the terms of the contract,” she told the board. “We have stabilized Broward Health. We will continue to stabilize Broward Health for our patients, our community and the 8,000 employees of Broward Health.”



10 ways compensation committees can best guide executive pay and performance


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As CEO incentive pay packages bring attention to transparency issues in executive compensation, a group of directors and chief risk officers from The Directors and Chief Risk Officers Group published a set of guiding principles for compensation committees around the governance of risk related to pay and performance.

The report aims to give a company’s board of directors and board-level compensation committees guidelines for the governance of risks linked to an organization’s compensation culture.

Here are 10 guidelines for compensation committees to best guide executive pay and performance, according to the report.

1. Compensation committees must fulfill both direct and indirect pay governance responsibilities to define the best compensation culture for the company. Under direct governance responsibilities, CEOs must establish and continually review company-wide compensation philosophy. To fulfill indirect pay governance responsibilities, a company’s executives must ensure adequate resources and processes are in place for the organization’s incentive plans.

2. Committees should emphasize incentive pay for corporate performance when designing and communicating the company’s compensation philosophy. Incentive pay for an individual’s performance must be carefully applied when it is appropriate to fulfilling the individual’s role.

3. A CEO’s total compensation should be driven by how they impact the long-term interests of the company, which includes how effectively the organization takes risk.

4. A company should minimize use of external benchmarking, or the comparison of its statistical data with other organizations in the same industry, for executive pay. Instead, companies should work to incorporate internally-focused pay evaluation for executive pay.

5. Incentive-based compensation should always be considered to be “at risk,” subject to deferral periods and influenced by the company’s long-term performance.

6. Compensation committees must continually use discretion in determining an executive’s final incentive pay package. In this way, committees must make rules for determining these pay packages subject to discretionary override when the compensation culture of the organization appears to be violated.

7. When considering performance reviews and compensation design for an organization’s CEO and individuals in the succession plan, the compensation committee must provide complete transparency to the entire board. This includes the board’s approval of full details of the CEO’s performance and any final awards given to the executive.

8. Compensation committees should obtain public certification that ensures their processes of governing pay risk and compensation philosophy are “fit for purpose,” which entails executing a statement that verifies a company has performed due diligence on its pay governance processes.

9. The members of a company’s compensation committee should have diverse backgrounds and experience, expertise in risk, finance, and management and should cross-populate the company’s risk and audit committees.

10. To ensure proper compensation risk governance, companies must incorporate collaboration, feedback and review among board committee’s and the firm’s social network to maintain a properly established compensation culture.

12 takeaways from the 2018 JP Morgan Healthcare Conference


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The recent breathtaking flurry of mega-mergers coupled with increasingly challenging market forces and an ever shifting political landscape has cast a cloud of confusion regarding where the U.S. healthcare delivery system is heading.

So, where do you go to find the map?

Every year, the JP Morgan Healthcare Conference provides an incredibly efficient snapshot of the strategies for large healthcare delivery systems, the hub for healthcare in the U.S. Most of these organizations are also the largest employers in their respective states. The conference took place this week in San Francisco with over 20 healthcare systems presenting, including Advocate Health Care, Aurora Health Care, Baylor Scott & White Health, Catholic Health Initiatives, Cleveland Clinic, Geisinger Health System, Hospital for Special Surgery, Intermountain Healthcare, Mercy Health in Ohio, Northwell Health, Northwestern Medicine, Partners HealthCare System, WakeMed Health & Hospitals and many of the other big name brands in the market. Each provided their strategic roadmap in a series of 25-minute presentations from their “C” suite. If you’re looking for the GPS on strategy and a gauge on the health of healthcare, this is it.

How do their strategies differ? What direction are they heading in? There is a great line from Alice in Wonderland that goes, “If you don’t know where you’re going, any road will take you there.” You would think that line applies perfectly to the U.S healthcare system, but the good news is it actually doesn’t.

While the exact destination for everyone is TBD, the direction they are heading in is actually pretty clear and consistent. It turns out that they are all using a very similar compass, which is sending them down a similar path.

So, what are the roadside stops health systems consider absolutely necessary to be part of their journey to creating a more viable and sustainable value-based business model?

Based on the travel plans for over 20 of the largest and most prestigious healthcare delivery systems in the country, here’s your GPS and list of 12 things you “must do” on your journey.

1. You Must Scale

Clearly the headline at #JPM18 was the flurry of major announcements regarding major mergers. With that said, two of the mergers were front and center: teams were there to present from Downers Grove, Ill.-based Advocate and Milwaukee-based Aurora, which will be a $10 billion organization with 70,000 employees, as well as San Francisco-based Dignity Health and Englewood, Colo.-based Catholic Health Initiatives, which will be a $28 billion organization with 160,000 employees. The size and scale of these mergers is pretty stunning. While the announcement of these and the other recent mega-mergers has forced many into their board room to determine what the deals mean to them, the consensus at the conference was this: There are a number of different paths forward to achieve scale. Some, like Baylor Scott & White in Texas, have aggressive regional expansion plans. Others are betting on partnerships to provide the same or even more value. Taking a pulse of the room, two things were clear. The first is there is no definition of scale any more in this market. The second is that, despite this flurry of mergers, “getting really big” is not the only destination.

2. You Must Pursue “Smart Growth” and Find New Revenue Streams

Running counter to the merger narrative in the market, Salt Lake City-based Intermountain provided a good overview of the movement to what is called an “asset light” strategy of “smart growth.” This is a radically contrarian approach to the industry norm, which is the capital intensive bricks and mortar playbook of buying and building. As part of their strategy, Intermountain will open a “virtual hospital” delivering provider consultations and remote patient monitoring via telehealth. The system will also launch a number of healthcare companies every year, leveraging their considerable resources in a manner they believe will produce a higher yield. Other health systems outlined a similar stream of initiatives they have in motion to diversify their revenue streams and expand their business model into higher margin, higher growth businesses. One example is Cincinnati-based Mercy Health, which achieved strong growth and leverage via their investment in a revenue cycle management company. Advocate in Illinois formed a partnership with Walgreens. Together, they now operating 56 retail clinics and Advocate has made a significant impact on driving new patients and downstream revenue to their system. The bottom line is all now recognize that they must think and act differently to be able to continue to fund their clinical mission and serve their community.

3. You Must Measure and Manage Cost and Margins

While some are moving aggressively to get scale, everyone is looking to more effectively use the resources they have and get more operating leverage. Margin compression was a consistent theme, with many systems now moving into consistent, stable operating models around managing margins versus launching reactionary initiatives when they find a budget gap. What is emerging is a new discipline and continuous process around managing cost and margins that is starting to look similar to the level of sophistication we have seen in the past for revenue cycle management. To that end, there has been major movement in the market to implement advanced cost accounting systems, often referred to as financial decision support, which provide accurate and actionable information on cost and help organizations understand their true margins as they take on risk-based, capitated contracts. Some during the conference referred to it as the “killer app” for the financial side of driving value. Regardless of what you call it, all are moving aggressively to understand the denominator of their value equation.

4. You Must Become a Brand

Investing in and better leveraging their brand has become a strategic must for health systems. The level of sophistication is growing here as providers shift their mental model to viewing patients as “consumers.” Aurorain Wisconsin cited their dedicated Consumer Insights Group and outlined their “best people, best brand, best value” approach that has been incredibly effective both internally and externally. At the same time, the bigger investments for many health systems relative to brand are more on brand experience than brand image, with a focus on understanding and radically rethinking the consumer experience. As an example, at Danville, Pa.-based Geisinger, close to 50 percent of ambulatory appointments are scheduled and seen on the same day. And every health system is making meaningful investments in their “digital handshake” with consumer, creating and leveraging it via telehealth as well as mobile applications to enhance the customer experience.

5. You Must Operate as a System, Not Just Call Yourself One

One clear theme at #JPM18 is different organizations were at different points along the continuum of truly operating as a system vs. merely sharing a name and a logo. There are a number of reasons for this, but you are increasingly seeing tough decisions actually being made vs. just kicking the can down the road. There has been a great deal of acquisitions over the last few years coupled with a new wave of thinking relative to integration that is more aggressive and more forward-looking. This mental shift is actually a very big deal and perhaps the most important new trend. Many health systems are heavily investing in leadership development deep into their organization to drive changes much faster.

6. You Must Act Small

The word “agile” is quickly becoming part of everyone’s narrative with health systems looking to adopt the principles and processes leveraged in high tech. Chicago-based Northwestern Medicine is an example of an organization that has grown dramatically in the last five years, now approaching $5 billion in revenue. At the same time, they have still found a way to operate small, leveraging daily huddles across the organization to drive their results. The team at Raleigh, N.C.-based WakeMed has achieved a dramatic financial turnaround over the last few years, applying a similar level of rigor yielding major operational improvements in surgical, pharmacy and emergency services that have translated into better bottom line results.

7. You Must Engage Your Physicians

Employee engagement was a major theme in many of the presentations. With the level of change required both now and in the future, a true focus on culture is now clearly top of mind and a strategic must for high-performing health systems. That said, only a handful articulated a focus on monitoring and measuring physician engagement. This appears to be a major miss, given that physicians make roughly 80 percent of the decisions on care that take place and, therefore, control 80 percent of the spend. One data point that stood out was a 117 percent improvement in physician engagement at Northwestern. Major improvements will require clinical leadership and a true partnership with physicians.

8. You Must Leverage Analytics

Many have reached their initial destination of deploying a single clinical record, only to find that their journey isn’t over. While health systems have made major investments big data, machine learning and artificial intelligence, there was a consistent theme regarding the need to bring clinical and financial data together to truly understand value. Part of this path is the consolidation of systems that is now needed on the financial side of the house with a focus on deploying a single platform for financial planning, analytics and performance. The primary focus is to translate analytics not just into insights, but action.

9. You Must Protect Yourself

As organizations move deeper into data, there is increased recognition that cybersecurity is a major risk. Over 40 percent of all data breaches that occur happen in healthcare. During the keynote, JP Morgan Chase CEO Jamie Dimon shared that his organization will spend $700 million protecting itself and their customers this year. Investments in cybersecurity will continue to ramp up due to both the operational and reputational risk involved. Cybersecurity has become a board room issue and a top-of-mind initiative for executive teams at every health delivery system.

10. You Must Manage Social Determinants of Health in the Communities You Serve

Perhaps the most encouraging theme for healthcare provider organizations was the need to engage the community they serve and focus on social determinants of health. As Intermountain shared: “Zip code is more important than genetic code.” To that end, Geisinger refers to their focus on “ZNA.” They have deployed community health assistants, non-licensed workers who work on social determinants of health and have implemented a “Fresh Food Farmacy,” yielding a 20 percent decrease in hemoglobin A1c levels along with a 78 percent decrease in cost. Organizations like ProMedica Health System in Ohio have seen similar results with their focus on hunger in Toledo. WakeMed has an initiative focused on vulnerable populations in underserved communities that has resulted in a significant decrease in ER visits and admissions and over $6 million in savings.

11. You Must Help Solve the Opioid Epidemic

The opioid issue is one that healthcare professionals take very personally and feel responsible for solving. It came up in virtually in every presentation, and it’s an emotional issue for the leaders of each organization. This is good news, but the better news is that they are taking action. As an example, Geisinger invested in a CleanState Medicaid member pilot that resulted in a 23 percent decrease in ER visits and 35 percent decrease in medical spending, breaking even on their investment in less than 10 months. While many would rightly argue that the economic rationalization isn’t needed for something this important, the fact that it’s there should eliminate any excuse for anyone not taking action.

12. You Must Deliver Value

The Hospital for Special Surgery in New York is the largest orthopedics shop in the U.S. and a great example of how value-based care delivery is taking shape. Perhaps the most revealing stat they shared is that 36 percent of the time, patients receive a non-surgical recommendation when they are referred to one of their providers for a second opinion. This is exactly the type of value-based counseling and decision-making that will help flip the model of healthcare. Some systems are farther along than others. Northwestern currently has 25 percent of its patients in value-based agreements, but other systems have less. As the team from Intermountain re-stated to this audience this year, “You can’t time the market on value, you should always do the right thing, right now.” Well said.

It’s time to get started or get moving even faster.

As the saying goes, “It’s the journey, not the destination.”

Happy trails.