The recent CEO turnover at beleaguered Mount Sinai Medical Center in New York City reflects the turmoil physicians are experiencing in the top spots of numerous hospitals in that city. Yet several physician CEOs say that rather than being intimidated by the complex financial challenges in New York, qualified physician executives are emboldened by the chance to show off their talents.
In late March, Kenneth Davis, M.D., dean of the Mount Sinai School of Medicine, replaced Kenneth Berns, M.D., as president and CEO of the medical center when Berns stepped down after only one year on the job. Berns had inherited a system disentangling itself from a failed merger with NYU Hospitals Center, a union engineered by his predecessor, John Rowe, M.D., now chairman and CEO of Aetna.
Because so many New York institutions have academic affiliations, with faculty engaged in teaching and research as well as patient care, boards traditionally have selected physicians to lead them. Indeed, 13 New York City hospitals currently have physician CEOs.
In the hot seat
But a confluence of factors, including unsuccessful mergers, deregulation and declining reimbursements, has left many of the city's hospitals with anemic bottom lines and physician executives in the hot seat.
"It might scare more timid people, but not physician leaders," says Robert Glickman, M.D., dean of the NYU School of Medicine and CEO of NYU Hospitals Center. Glickman is a Brooklyn native and the second of three generations of New York physicians in his family. "Aggressive physician executives want to try their skills in the New York area," he says.
Herbert Pardes, M.D., is president and CEO of the New York-Presbyterian Healthcare System, whose New York-Presbyterian Hospital is the nation's largest physician-run hospital. Despite $30 million in losses from federal reimbursement cuts, and a proposed $1.1 billion cut in the state Medicaid budget, Pardes says his hospital and others in New York remain "jewels in American medicine."
"The feds need to understand good things have happened at New York hospitals that benefit the rest of the country," Pardes says. "My worry is that we not squeeze the funding to a point they can't deliver that way or can't attract the best people in medicine."
The high numbers of uninsured, immigrants and older people in New York City-populations that require substantial healthcare but don't always have the resources to pay for it-add to the pressures of lower payments triggered by deregulation. Also, New York's high cost of living pervades the entire system.
"Very few New York hospitals ever made more than a 2% margin," says Daniel Sisto, president of the Healthcare Association of New York State. "The problem a new administrator faces isn't so much losing money as it is access to capital has basically vanished and the balance sheets have been so badly eroded. There is little flexibility and few resources to apply to solving the problem."
Consequently, Sisto says, New York is not viewed as a career opportunity for aspiring young administrators. However, turnaround artists late in their careers may feel they can afford to take a chance, he says.
"While the challenges are enormous, the rewards-I don't mean compensation, I mean awards of achievement-are equally impressive," agrees Kenneth Raske, president of the Greater New York Hospital Association.
Beginners need not apply
Spencer Foreman, M.D., who helped turn around struggling Montefiore Medical Center during his 17-year tenure as president and CEO, contends that it takes at least a decade for hospital CEOs to organize a team, develop a strategy and see it through to completion.
"New York City is the most complicated urban environment in the United States," Foreman says. "What is required in Brooklyn may be entirely different than in Staten Island. Organizations really have to develop strategic plans that match their assets with their opportunities and that deal with their challenges."
The jobs are not for beginners, Foreman says, but the right people can tackle them.
"These institutions are not unmanageable, they are just unmanaged," he says. "An experienced executive can get his or her arms around these places, and I believe they can be made very successful."