The senior cardiologist at Southfield, Mich.-based Beaumont Health has joined hundreds of other top doctors, nurses, donors and community leaders in calling for the ouster of CEO John Fox, COO Carolyn Wilson and Chief Medical Officer Dr. David Wood.
In a letter last week to the Beaumont board and its Chairman John Lewis, Dr. Robert Safian, told board members that "leadership has crossed the line of fiduciary irresponsibility."
Safian, who along with an eight-member group of leading employed and private specialists at eight-hospital Beaumont met with board members previously to present their case, said Fox has "created a culture of fear and intimidation."
He said many Beaumont workers, including physicians, "have been forced out after disagreeing with corporate decisions. This toxic culture has been progressively worsening over the last few years."
Safian was a leader among Beaumont's doctors in the debate over the merger deal with Advocate Aurora, joining other doctors to meet with top management and the board to discuss their concerns about the planned deal, which was called off last month.
Over the past year, a growing number of Beaumont doctors, nurses, donors, employees and trustees have spoken out against corporate decisions as Beaumont managers have sought to cut costs, outsource physician and nursing services, sell nursing homes and an ambulance company, and propose mergers with out-of-state health systems.
The proposed merger between Beaumont and Advocate Aurora Health, a 28-hospital health system based in Illinois and Wisconsin, was the final straw for many of Beaumont's supporters.
The two health systems announced in mid-August that further merger talks would be postponed until the pandemic is over. On Oct. 2, the system boards said they had mutually terminated the merger but left the door open next year to reassess the situation.
Some doctors and donors still fear Fox and Lewis plan to resurrect negotiations with Advocate next year to complete the merger. This is a primary reason, they say, Fox and the current management team need to be terminated and a new management team installed.
In a Nov. 16 statement to donors and trustees, which Beaumont spokesman Mark Geary said Fox wrote, he discussed relationships with donors, trustees and physicians. Fox also reiterated that the merger with Advocate Aurora is off.
During the summer, several physician groups and nurses presented the board with petitions expressing overwhelming "no confidence" in Beaumont's management team. In September, a 25-family donor group first asked the board to address concerns by providers.
Safian and the doctor group he represents said in the letter to the board that there are multiple reasons why top management should go. At the top is Beaumont cost-cutting, which he said has been done primarily in an effort to keep profit margins above 4% in order for top executives to receive additional financial bonuses at the end of the year.
In the Beaumont statement, Fox said "the only reason we need a reasonable margin is so that we can fund our capital and clinical programs to make them technologically current with up to date medical equipment."
Safian's letter also decried the outsourcing of anesthesiology physician and nursing services "to the lowest bidder" and "mandating use of equipment against the will of physicians." Beaumont has contracted with Texas-based NorthStar Anesthesia to serve seven of its eight hospitals. Nearly half of Beaumont's anesthesiologists and about 90% of its certified registered nurse anesthetists at its three northern hospitals have refused to sign contracts.
Fox said it is false that Beaumont is bringing in lower-quality anesthesiologists and CRNAs to replace those who decline to contract with NorthStar.
"We certainly believe that is not the case," he said in the statement. "Our percentage of fellowship trained anesthesiologists will actually be greater going forward than it has ever been in the past. Areas of fellowship subspecialty training that are important for us to maintain and frankly grow include cardiac, pediatrics and critical care."
Safian said those decisions have resulted in more than 100 veteran physicians, including top heart surgeons Marc Sakwa and Jeffrey Altshuler, and nurses leaving or taking their business to competing hospitals.
"In the coming days, you will learn a lot more … about our doctors, about our corporate leaders, about the board, and about yourselves. The action-item is clear: corporate leadership must go. All of them. We need your help."
While Fox's statement didn't respond directly to Safian's letter to the board, he said Beaumont highly values physicians.
"Some have postured that Beaumont believes physicians are easily replaced and somehow not valued," Fox said. "That is absolutely false and frankly makes no sense. Experienced clinicians are extremely valuable and are very difficult to replace for some very obvious reasons."
Fox said Beaumont is fortunate to have many experienced physicians in many departments.
"To the extent that we have 'lost' valuable physicians, as indicated in the press, there were unique circumstances associated with each one of those physicians," Fox said. "There has been no large scale 'exodus' of physicians as intimated in some media stories."
About two weeks ago, a group of major donors, including at least 30 families who have given to all eight of Beaumont's hospitals, sent a second letter to the Beaumont board asking it immediately fire Fox and other top leaders and start a process to appoint a new management team.
The donors also threatened to withhold future charitable donations to Beaumont if the board chooses to continue to support Fox. Two donors told Crain's Detroit Business Monday they cannot stand by and see Beaumont's reputation be continually tarnished and potential quality be reduced as top doctors and nurses leave for competing hospitals because of cost cutting efforts.
"We appreciate the support our donors provide and we do value them," Fox said in a statement. "Net philanthropy funds between 5% to 6% on average of our capital budget for the last three years. Our capital budget has averaged $260 million a year for the last three years."
Beaumont on Monday filed its 2019 IRS Form 990, which details the financial year for nonprofits like Beaumont and also provides compensation and bonuses paid out to Fox, Wilson, Wood and other corporate leaders.
In 2019, Fox earned total compensation of $6.75 million, including base salary of $1.89 million and bonus payments of $2.6 million. Wood earned $1.53 million, including $727,137 in base salary and $411,478 in bonus payments, according to the Form 990 for Beaumont Health.
Wilson, who was listed on the William Beaumont Hospital Form 990, earned $2.03 million.
Crain's has also requested a copy of the nonbinding letter of intent to merge Beaumont and Advocate Aurora Health signed earlier this year from Beaumont at the Michigan attorney general's office. However, an AG spokesman said Beaumont has not notified the office that it has terminated the LOI.
"To date we have not received a copy of the letter terminating the letter of intent and until we receive this letter our confidentiality agreement with Beaumont Health still stands as it relates to the materials they submitted," AG spokesperson Kelly Rossman McKinney said in an email Monday to Crain's.
In each of the 2017 and 2018 years, Fox was paid a total of nearly $6 million in compensation. Wilson received about $2 million in total compensation.
Last week, Fox sent an email to the system's 38,000 employees informing them they'd receive a special $1,000 cash bonus and other benefits in recognition of their work and dedication.
Several nurses and doctors told Crain's they were outraged by the token offering. They say management receives much higher bonuses and has understaffed them at a time COVID-19 is spiking again and they are overwhelmed with patients.
This story first appeared in our sister publication, Crain's Detroit Business.
