Secrets From a Hospital CEO: How Big Hospital Chains Suck Money Out of Your Local Community
"There’s a lot of dark corners we need to shine a spotlight on."
I’ve always been fascinated by the mission statement of Dignity Health, which says the giant nonprofit hospital chain is “committed to furthering the healing ministry of Jesus.”
I spent the first five years of my career in full time ministry, so that gets my attention. But as I say in my book about powerful health care companies: judge them by their actions, not their words.
Dignity fulfills the “healing ministry of Jesus” by paying dozens of its executives over $1 million a year, according to its 2022 tax form. Its CEO made more than $35 million!
I guess Jesus was underpaid!
All this while about 100 million working Americans are saddled by medical debt and many people go without medical treatment because they can’t afford it.
Reasonable people can disagree about how much is too much for a hospital administrator’s salary. I also don’t mean to single out Dignity, because many health care companies pay their executives millions.
I’m bringing up Dignity’s salary largesse because it relates to today’s Q&A with Brian Brannman, who I met when I covered health care for the Las Vegas Sun newspaper.
Brian came to University Medical Center, the public hospital in Las Vegas, in 2008, and eventually became its CEO. UMC had its share of struggles and I always appreciated his candor when I interviewed him for stories.
Brian went on to become the CEO at one of the city’s other hospitals, Dignity Health’s St. Rose Dominican Hospital, Siena Campus. He also served as a senior vice president for Dignity, which gave him further insight into the hospital chain. In this conversation he shares how some of the corporate practices at Dignity had a harmful effect on the Las Vegas community.
Brian later did a three-year stint with health insurance behemoth UnitedHealthcare. He’s well informed about how the health care system operates – and he’s dismayed.
Our Q&A is important for any employer, benefits advisor, or working American who’s concerned about the high cost of health care. We must understand the health care system so that we can protect ourselves from paying more than we should.
I edited my conversation with Brian for clarity and length. Brian provides his email at the end of the article if you’re interested in working with him to improve the problems we’re facing.
How would you describe what you’re seeing in our health care system?
I get extremely frustrated with what’s going on. Our health care system has become a mess. The people who need access to care can’t afford it. And there are dedicated professionals – all the people trying to provide care – who are hamstrung by what they have to do to get paid for the work they’ve done. People who are really caring, brilliant professionals, are being driven out of the business.
I don’t want to be melodramatic, but health insurance companies are using a diabolical approach, to use a broad brush, to scoop up as much money as they can from employers and employees, and then figure out how not to pay it back. They’re financial organizations who happen to use health care as a venue to generate funds. But really it’s not about health care. It’s about sucking up a bunch of money that they use for investments to make grand returns and provide stunning sarlies to people – while making it excruciatingly difficult for people to get care they need, and making it extremely difficult for providers to get paid for their work.
Why are you speaking out about this now?
I want to do something and make a positive impact. I don't need to run something or have my name on something. But I feel like there's some fundamental problems and issues. There's an obligation to share whatever I’ve learned and be as forthright about things as I can. There’s a lot of dark corners we need to shine a spotlight on. People are being bamboozled by a lot of crap these days.
Tell us about your experience working for Dignity Health.
Dignity Health is a not-for-profit that’s supposed to be a ministry. But it’s operated like a for-profit. It shifted from being about the mission to being about the money.
I quickly learned at Dignity Health that it’s all about the margin. It became clear that the direction was not really about caring as a not-for-profit health system for the indigent and using the money you generated from caring for well-insured folks to care for the uninsured folks. No, you gotta make money. Suddenly it’s about the corporate infrastructure in San Francisco that’s rented real estate in the most expensive district of the city, down next to the ballfield, where Dignity has corporate boxes, and everybody on Friday afternoon wore baseball jerseys and went to the game.
Our gross revenue at the Nevada Dignity Health hospitals was about $700 million and our net was probably $60 million. From that Dignity Health taxed us $20 million a year, skimmed off the top out of the Nevada market and funneled to corporate, where the VPs were making $1.5 million a year. Everyone is living large. But I'm being told, “Geez, now that we’ve taken our corporate contribution off, you’re not making the margin we thought. Your hospital isn’t carrying its weight.”
I left Dignity Health when I had a difference of opinion with the corporate leaders about whether I would lay off nurses. Our hospitals were profitable but they wanted me to meet whatever metric so the corporate guys would get their bonuses. They told me I needed to cut costs, which meant eliminating providers. But we were doing fine. We agreed that I would resign.
How did it hurt the Las Vegas community to send the money to Dignity’s corporate office?
If you weren’t paying for all that heavy corporate overhead there’s a lot more that could have been done to expand local programs to care for the underserved. But the model is built to suck all the revenue out. They were very much doing what the for-profit hospitals do. Squeeze it down at the patient care level. And generate revenue that goes to corporate stuff and high revenues, bonuses and perks and things that should be plowed back into health care as a mission or a service. Health care is a calling, not a business. You’ve got to be businesslike to get it done, but it’s a calling. It’s more visible with the for-profit guys but at least they are up front about it.
The corporate leaders in a nonprofit hospital are no different than they are in the government or the private sector. The guys at the top of the pyramid believe they are the smartest guys in the room. They think the folks at the ground level don’t understand the big picture. It goes from providing better care locally, like in Phoenix or Las Vegas, and it gets flipped to how do we keep the corporate entity supported and happy. Instead of all these resources available to support all these providers on the ground, you flip it the other way. All these local hospitals are suddenly feeding up to support the corporation. That’s where you lose it.
Do you think the corporate leaders see the harm of extracting all this money from local communities?
I think people get jaded or become cynical because they see how the reimbursement works. It’s easy for people to become detached. The patient I’m taking care of isn’t paying for their health care. We kick money up. All of us are pitching in a little bit. It goes into this fund. It feels disconnected from the patient, and you’ve got holes where people can do unnecessary stuff, overtreat, overtest, because people don’t feel they’re being compensated fairly, so they jigger the system to figure out how to get paid what they think they’re worth. You’ve got a huge amount of money there and a huge number of people who have detached themselves from the fact that they’re caring for Mrs. Jones and her care. It’s the “big insurer” and “government” that becomes this monolithic thing full of money. So I’m going to use Mrs. Jones to tap into that trough of money as much as I can. The incentives are all wrong. Rather than make sure Mrs. Jones gets the care she needs to have life liberty and happiness, the emphasis is on this huge trough of money. They figure if they don’t take it, the money will go to the guys running Cigna or United.
Why don’t the corporate health care executives change, so they could do more benefit for the public?
I think the people who would be at the head of those organizations that would ask those questions get culled from the herd. The CEOs and COOs promote people that look like them. If you’re going to survive in an HCA or Catholic Health System or Dignity Health, you learn how to get ahead. At some point you let your moral compass spin, and you take a deep breath and say, you know, I’m making a base salary of $650,000 a year and there’s a 40% bonus for short term gains and another 20% bonus for long term gains, which means I can do a lot for my family.
“At some point you let your moral compass spin…”
I think unfortunately you surrender yourself to that. It’s easy to do. It’s alluring. But once you get into it you realize you grabbed ahold of a porcupine and can’t get loose from it without getting stuck more.
Will the health care power players ever find a way to provide better health care at a lower price?
No. The reason the health care costs in the rest of the world are where they are is because the government has understood it’s a public good. Unfortunately, with our political financing system, the people who are nose deep in the trough have a disproportionate interest in keeping it where it is. They are making so much. There are some people who want to keep the chaos. As long as there’s chaos no one can figure out what’s going on and then they reap the benefit of that. Right now it’s just the pigs at the trough and they’re taking advantage of the chaos.
What’s the solution for employers and patients who are paying for this?
The employers and people purchasing health care need to be better educated. They’re so smart about everything else they buy in their supply chain, and they seem to be grossly ignorant. We need to bring the employer and the employees together and create something better.
What are you doing now?
I’m doing some consulting. I don’t want to just stop and walk away from it.
If people have ideas on how we might be able to collaborate and pull together good people who want to move this in the right direction, email me at brian.brannman@gmail.com.
Meme of the week
I’m having fun using memes to educate and satirize the health care system. Connect with me on LinkedIn to get the latest. And a special shout out to my son Cody, who got me started with the memes and makes a lot of them, including the one above. If you want some memes that boost your brand — Cody is open for business! Let me know and I’ll introduce you!
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