Tenet Healthcare Corp. is cutting top executives and expenses at its Detroit Medical Center to make it conform to the management policies that are more similar to its other 79 hospitals, Crain's has learned.
This week, Karen Fordham, president of Huron Valley Sinai Hospital in Commerce Township and a Crain's 40 under 40 honoree in 2014, resigned. Fordham, who declined to comment Friday to Crain's, took over at Huron Valley in 2014 after Andrei Soran was appointed DMC's COO. Soran left last year for a top job at a California hospital system.
Also recently departed are DMC Pioneer ACO Executive Director Roger Wiseman and David Bach, DMC's longtime vice president of pharmacy. Emery King, the former television anchor and DMC's longtime communications director, is gone after Tenet decided not to renew his contract.
Bach had been with DMC since 2000 and is an associate professor of clinical pharmacy practice at Wayne State University. Wiseman was also senior vice president for population health and on the team that recently reached an 18-month contract with the medical school after more than six months of contentious negotiations.
Sources familiar with the situation who spoke on condition of anonymity also told Crain's that at least five other top executives have been notified they may be leaving soon as well. Crain's has been unable to reach Wiseman, Bach or King for comment.
Earlier this week, Crain's also confirmed that top DMC cardiologist and quality manager Cindy Grines has decided to leave in April to take a top academic and clinical services job at 21-hospital Northwell Health System in New York.
Grines said she has been considering leaving DMC for some time for other opportunities because of growing concerns she has over her belief that Tenet has a diminished commitment to research and education.
On Fordham, Grines said: "Karen was a wonderful CEO. Exceptional person and accomplished a lot. Huron Valley has some of the highest quality and patient satisfaction scores in Michigan." Grines is vice president of academic and clinical affairs at DMC's 3-year-old Cardiovascular Institute.
Like many investor-owned hospital systems, the management philosophy of the Dallas-based chain is to minimize the number of major decisions made at local operating units, employ a lean local executive operating staff, standardize and centralize administrative operations at corporate headquarters as much as possible, experts say.
"Tenet has a lean philosophy of management staff," said Jeff Goldsmith, president of Health Futures Inc., a Charlottesville, Va.-based consulting firm. "There are only a handful of academic medical centers like DMC in the investor-owned world."
Goldsmith said most investor-owned chains historically haven't done a good job at managing large, complex academic medical centers because of the great amount of teaching and research that are traditionally part of large teaching hospitals. DMC is one of the exceptions, he said.
"DMC is quite unlike anything else that Tenet owns," said Goldsmith, adding that DMC appears to be a core Tenet asset. "It is not a community hospital" that fits into the mold of Tenet's community-hospital operating style.
Goldsmith said he doesn't know if Tenet is moving to centralize operations away from DMC. "It is hard to centralize clinical. You have medical directors and department heads that are in a clinical relationship with Wayne State" medical school.
But over the past six months, Tenet hospital operations President Eric Evans and other regional executives have been closely evaluating financial data and employee performance at DMC. Newly installed DMC CEO Tony Tedeschi, M.D., who was appointed earlier this month to replace Joe Mullany, who resigned earlier this month, also has been meeting with and evaluating staff.
Tenet executives have concluded DMC needs to further cut expenses to increase profitability and to standardize and move some administrative services to regional or corporate offices, sources at DMC said. The evaluation process is not complete, sources said.
Tenet officials in Dallas on Friday were unavailable for comment. DMC officials have not responded to several requests for comment about the management changes.
DMC has nearly completed its five-year, $850 million construction and maintenance building project that has transformed its downtown Detroit campus. As the state's largest provider of Medicaid and indigent care, DMC has been improving profitability the past four years under Mullany, helped by the Patient Protection and Affordable Care Act, or Obamacare.
But sources told Crain's that Tenet wants to take further steps to reduce expenses and improve profitability at DMC. Tenet does not release individual hospital financial data.
The moves by Tenet at DMC are seen by experts as part of a companywide effort to realign its national hospital operations into fewer regions, flatten and streamline corporate operations.
Over the past 18 months, Tenet also has been cutting costs and selling assets in an attempt to stop the freefall of its stock price, which has tumbled to around $20 from about $60. Tenet has replaced and promoted a number of executives at its regional and hospitals the past year.
While its outpatient and data consulting subsidiaries are profitable, hospital operations have dragged down Tenet's operating margins below that of any other large investor-owned chain, analysts have said.
Last October, Tenet reached a settlement under which it will pay $513 million to resolve a federal criminal and civil investigation tied to kickbacks involving Medicaid. Earlier this month, Tenet's former senior vice president of operations in Georgia and South Carolina, John Holland, was indicted by the U.S. Justice Department for his alleged participation in the health care fraud scheme that totaled more than $400 million in inappropriate payments.
Since 2000, Tenet has paid more than $2 billion in federal fines, including a fraud scheme in 2006 in which it paid $900 million in federal fines.
Sources said another reason Tenet may be reining in more local decision-making at its hospitals and regional offices to guard against future fraud. Over the years, Tenet's executives have spent thousands of hours in anti-fraud training sessions to learn what is ethical conduct and what is illegal conduct.
"DMC cuts executive ranks again as owner Tenet seeks to reduce costs, standardize corporate services" originally appeared in Crain's Detroit Business.