Many people in healthcare erred in their conclusions about Sherif Abdelhak and the Allegheny Health, Education and Research Foundation. As a result, the famous "lessons learned from AHERF" ought to be re-evaluated.
Abdelhak, the deposed president and chief executive officer of Pittsburgh-based AHERF, and his entire board of trustees have been vilified by the healthcare press and academics for causing the largest bankruptcy ever in the not-for-profit healthcare arena. Abdelhak was personally accused of stealing hospital funds, living a grand lifestyle on hospital assets and overpaying himself and his executive staff. His board of trustees is thought either to have been asleep at meetings or willing companions to his excesses. Judging from the reaction, the average healthcare executive gets angry at the thought of this evil person doing his evil deeds.
Contrary to popular belief, most of these accusations are more supposition than truth. In a retrospective editorial on the story, the well-known and respected Pittsburgh Post-Gazette ("AHERF whimper-Its former CEO is sentenced on a single count," Sept. 8, Section B, p. 2) chided the naysayers as well as the state attorney general for what Shakespeare would say was "much ado about nothing."
After what was said to be the longest grand jury investigation in the history of the state of Pennsylvania, Abdelhak's 1,500 felony charges were reduced to one misdemeanor, to which he pleaded guilty only after being threatened with a lengthy and expensive trial. The misdemeanor was for misappropriating not-for-profit funds. As the editorial so aptly stated, Abdelhak used endowment money to pay nurses' salaries and to buy drugs for patients while AHERF was in the midst of collapsing; he didn't abscond with funds for himself.
Financial failure doesn't always stem from illegal acts, as many of the news stories about AHERF implied. After all, we live in a country where it is not a felony to unknowingly drive or lead a company into bankruptcy.
I worked for Abdelhak as a contract manager of a small hospital group south of Pittsburgh for nearly 10 years and attended almost all AHERF board meetings. Abdelhak was not a villain, though he had a huge ego and could be brutal in business dealings. In most ways, in fact, he was a gentleman. He was thoughtful and an excellent strategist who was, in my opinion, honest above reproach. If he stole anything from AHERF's coffers, the best efforts of the state of Pennsylvania and the federal Medicare program could find nary a shred of evidence.
The so-called lessons from AHERF, however, are based on this idea of collusion, theft and a sleepy-eyed board of trustees. Healthcare executives were supposed to have learned that if they didn't steal from their companies and had boards of directors that were reasonably awake during meetings, an AHERF-like crisis would probably never strike them.
I don't buy that. Abdelhak, for all of his extremes and faults, was not unlike many executives in healthcare-articulate, daring and in control of and respected by his board. I believe there is evidence that the AHERF board was eager and attentive to the issues before it.
Given those very different assumptions, we must retest what we think we have learned from the brief history of AHERF. If the system's management and board were very different from the portrait painted by prosecutors and the media, and in fact looked very much like those of other health systems around the country, then what happened at AHERF becomes more critical because, in fact, it might happen to anyone. Never say never.
Everyone associated with AHERF lost something in the downfall. I, like so many others, was stripped of a rather healthy executive retirement program. Abdelhak's wealth, whatever it was, has gone to defense attorneys. The AHERF trustees have suffered through embarrassment, even humiliation. A grand institution whose name was always synonymous with outstanding quality, as well as strength, is now a secondary partner to a larger parent.
Here's one lesson to be learned from the disaster: The time to stop Abdelhak and the roller coaster he was operating would have been at the zenith of his accomplishments, performance, power and respect. That is an impossible task even for the most concerned and astute board of trustees. Perhaps the failure to do so was because of the unusual nature of the man. Abdelhak was so bold he instilled in those around him the sense that he could do no wrong. Maybe because of this unwavering self-confidence, Abdelhak did not entertain criticism very well. No one wanted to take bad news or an opposing opinion to him.
Perhaps there is no lesson to be learned from AHERF. Only that it was such an unusual set of circumstances and that it is unlikely to occur again. In the end maybe it was a classic case of an honest, well-intentioned guy with a big ego who bit off more than he could chew.
Thomas Galinski is president and chief executive officer of Ohio Valley Health Services and Education Corp., Wheeling, W.Va.