New York TimesBy ANEMONA HARTOCOLLISJuly 15, 2014
Healthcare Renewalby Roy PosesJuly 17, 2014
Dr Herbert Pardes was once one of the best paid CEOs of a US non-profit hospital system. A new New York Times article reported that the hospital system continued to pay him millions after his retirement… In 2009, we first discussed the compensation given to Dr Herbert Pardes, the CEO of New York – Presbyterian Healthcare System, which appeared to make him one of the best paid, if not the best paid non-profit hospital system CEO in the US. His total compensation for 2008 was $9.8 million, according to the NY Post. While his compensation was lower in 2007, approximately $5.1 million, 9 other executives made over $1 million, and the 10 together made over $26 million. This amount was approximately 20% of the system’s total surplus, and 1% of its total budget. The Times reported that since then, Dr Padres continued to do very well financially,
Dr. Pardes’s compensation has consistently been among the highest of any New York hospital C.E.O. His compensation in 2011, his last year as chief executive, was $4.1 million, including base pay of $1.7 million and a bonus of $1.8 million.According to the Times, after Dr Pardes retired in 2011,
The next year, Dr. Pardes earned $5.6 million, which included $1 million in base salary, a $1.8 million bonus for his final year as chief executive and more than $2 million in deferred compensation, according to hospital tax records. That exceeded the amount earned by Dr. Pardes’s successor, Dr. Steven Corwin, who made $3.6 million that year. Three years after retirement, Dr. Pardes is still employed by the hospital as the executive vice chairman of its board of trustees, a position that compensation experts say is rare in the nonprofit world,…So the year after Dr Pardes retired, he made as much from what most people might have thought was his former employer as he did in 2007 as CEO, when he was one of the best paid non-profit CEOs in the country, and more than he made in 2011, the year of his retirement…
Herb Pardes From Wikipedia
Herbert Pardes [born c. 1932] is an American physician, psychiatrist, and the Executive Vice Chairman of NewYork–Presbyterian Hospital. He was previously president of Presbyterian Hospital; a few years after its merger with New York Hospital he became CEO of the combined entity, which was named NewYork–Presbyterian Hospital. He is a national figure in psychiatry and academic medicine. Prior to his retirement at New York Presbyterian, Pardes in 2008 was receiving compensation in excess of nine million dollars annually while CEO at the hospital along with other benefits.
Education and careerDr. Pardes received his Bachelor of Science degree summa cum laude from Rutgers University in 1956 and his medical degree from the State University of New York-Downstate Medical Center in Brooklyn in 1960. From 1978 to 1984, he was director of the National Institute of Mental Health [NIMH], where he strengthened the Institute’s research program and emphasized the need to increase research support for psychiatry. From 1989 he was president of American Psychiatric Association [APA]. He is a former Dean of the Columbia University College of Physicians and Surgeons. Before becoming dean, Pardes was chair of Columbia’s Department of Psychiatry, where he remains a professor…
I don’t know Dr. Pardes or much about his contributions to medicine/psychiatry, except that he’s held all the prestigious positions there are to hold over the course of his career. And I don’t have much to say about the NewYork–Presbyterian Hospital being willing to pay him those absurd amounts of money. He may be a great fund-raiser and/or administrator, but what they’re buying is at least in part, his prestige. My only comment is about his willingness to accept that kind of compensation.
In his commentary about the New York Times article, Dr. Poses goes through the various rationalizations for Pardes being paid that obscene amount of money. They’re in his blog post. I want to skip all of that. That money has to come from somewhere and the only possibility is the pockets of the patients or their insurance carriers. Oh by the way, NewYork–Presbyterian is a not-for-profit hospital system. By accepting that salary, he’s making the statement that medicine is a business first and foremost, part of the system we now have that contributes to the wealth inequity in our country, that contributes to the ridiculous rising cost of healthcare, that contributes to the feeding frenzy of the hospital corporations, the pharmaceutical and medical equipment industries, and the insurance/managed care goliaths.
Independent of his contributions and/or prestige, he took the same oath I did at the end of medical school, Primum non nocere – "First, Do no harm." By accepting that amount of compensation, he plants himself firmly among those forces that are skies-and-away the most harmful elements in healthcare today. He’s become one of the predators [just like the KOLs we talk about] – a "bought doctor." It makes perfect sense that I read about this in a blog called Healthcare Renewal…
“medicine is a business first and foremost, part of the system we now have that contributes to the wealth inequity in our country, that contributes to the ridiculous rising cost of healthcare, that contributes to the feeding frenzy of the hospital corporations, the pharmaceutical and medical equipment industries, and the insurance/managed care goliaths.”
This statement has been used in some form for some time. The reality for many of us is that around 1980, as the WW II veterans started to retire, we saw this rise in simple application of financial principles where raising marginal unit cost, deferred compensation, and complex tax planning put those in education and medicine ahead of almost any other industry in terms of pay.
Additionally we saw doctors and patients being expected to respectively take a pay cut in the form of lower reimbursement and pay more for less service. This created a conflict that served those higher in the food chain by putting a face on the problem that was not theirs, thus allowing them to continue the deception.
Interestingly a cash, retainer, or other direct pay medical practice is able to charge less and offer better service due to the elimination of these outside expenses. While this does not eliminate the need for insurance to cover catastrophic issues the per-month expense is often less for the patient and more financially and professional satisfying for the doctor.
We have now reached a point where the self limits of a past generation have been lost. Financial gain at all levels of an organization and personal satisfaction is the driver in almost everyone’s life.
The 25 year old of today, with large student debt, feels entitled to a large home, granite countertops, and the walls of this home to be the color palate they would have chosen.
The 50 year old doctor of today, having just paid off their student loans, feels the need to generate enough money in the next 15 years to maintain their current life style in retirement.
The 65 year old doctor of today cannot figure out how his practice is now run by an office administrator, and he receives no respect from staff and patients. His financial outlook is one of continued work.
My reality is that we have all been manipulated to “feed the monster” we call American medicine. Looking at cost and outcomes there can only be one conclusion; we pay too much, for too little, and receive less than optimum care in the pursuit of profit for some unseen entity called administration.
Steve Lucas
Steve–Are you talking about something like Qliance where you pay a monthly fee for unlimited primary care and they sell you drugs at discounted rates? I ask, because I have been deterred from getting *needed care by high out-of-pocket costs. They seem to be good at avoiding unnecessary hospitalizations which is great. But if I had to pay $200 every time I went to a doctor, I’d think twice and might wind up getting really sick.
Thank you for this post. I remain both bewildered and angered how so many either minimize, dismiss, or pathologically rationalize that people who profit (and note that is a much different term/concept than making a living) while doing so in less than admirable and appropriate ways, making excess amounts of money “is the American way”. Which is why there is more disdain and disgust of America among other countries these days, not that other countries do not have scoundrel profiteers, but, the pervasiveness and excess of greed seen here in America I feel trumps most other country’s patterns.
Especially when it happens in health care. I will go to my grave knowing I am more right than wrong that when health care providers are focused on “profiting”, even if it is allegedly equal to the provider’s motivation to provide care, the two are inherently incongruent and consequences will arise in the long term. I have given up trying to explain my point at Thehealthcareblog.com as the sheer volume of profiteers that frequent the site just either shout me down or just pontificate with word games and smearing definitions.
I have said this before, but maybe with more time it might finally sink in to be a bit effective: shame and humility are powerful tools in getting people to rethink their choices and actions, but, if we just shrug these interpersonal efforts aside, at some point the antisocial way will just become “THE WAY” of life. And if that endpoint is reached, well, when in Rome, eh folks?…
I think some who argue with me about what is antisocial or not, well, maybe reread what the definition is at least per the DSM 4 (forget the DSM 5, frankly I feel written by an antisocial element and thus minimizing the disorder in the manual to feed the efforts to shield it’s impact further) if not from other sources such readers give validity to in considering the personality.
When President Bill Clinton had heart surgery at the New York Presbyterian Hospital in September 2004, Herbert Pardes chaired an elaborately staged press conference that shamelessly capitalized on the celebrity of the patient. At the time Pardes was president and CEO of the New York Presbyterian Hospital and New York Presbyterian Healthcare System. Rounded up for the infomercial team were the chief of cardiology, the chief of cardiothoracic surgery, and Robert Kelly, the senior vice president and COO of New York Presbyterian Hospital/Columbia Medical Center.
A reporter asked Pardes how much the procedure was likely to cost. Pardes tossed the hot potato to Kelly, who gave a major lowball estimate – something in the neighborhood of $5-10 thousand (I forget the exact amount). Kelly and Pardes both had to know that the charges would be a minimum of $100,000 for coronary bypass surgery. I should know because I had recently had the procedure at UCLA. I recall being shocked in the moment at this dissembling by leaders of American Academic Medicine, Inc.
EastCoaster,
There are a number of new business models being tried in the market. Some are cash for time or specific tests or consultations i.e. blood sugar, medication review, and vaccinations.
One model that seems to gaining traction is a $75 – 100 fee for unlimited office visits to a practice that has limited size, say 600. This allows same day visits and basic office test.
All the models seem to focus on a generic first medication regiment and will give information so that the patient can ask their insurance company for reimbursement.
Like any business model there are those who will try to game the system or take advantage of the patient. Old habits die hard. They will charge a monthly fee and not cut their practice size, or have relationship with testing facilities or hospitals that then pay in some form a kickback.
When you eliminate the expense of insurance most doctors find an immediate reduction in overhead of 50%. A coder, computer, software updates, and refusal or waiting for payment creates a tremendous overhead for the office.
Funny, but when you eliminate outside forces from the doctor/patient relationship cost go down, patient satisfaction goes up, and people are healthier.
Steve Lucas
Dr. Pardes knows how to play the game for the highest monetary reward. His talents as a doctor or administrator are irrelevant. There are many such at the tops of US corporations. That is why CEO pay is such a scandal.
But, yeah, in healthcare, even more so.
Sickening at a non-profit. If it were a corporation and pay was tied to performance or cashing out options, I could live with it.
Of course, non-profit is just a tax status and has become one of the latest tricks to hide this kind of chicanery. Look at some of the salaries at charitable organizations.
Although the focus here is on Dr. Pardes it is important to keep the general trends in mind. That was partially captured by these NYTimes graphics:
http://www.nytimes.com/2014/05/18/sunday-review/doctors-salaries-are-not-the-big-cost.html
Business rhetoric suggests that executives somehow “deserve” that pay even though there are no “pay-for-performance” metrics or even productivity measures for CEOs. The CEO literature suggests that engineers tend to make the best CEOs and I am not aware of any healthcare CEO who is an engineer.
If anything is a part of the supermanager culture discussed by Piketty in his book “Capital” and the general idea that CEOs should now be paid at historically high multiples relative to their employees. There is an obvious problem applying that theory to a service industry with some highly paid employees.
Had to go and ruin that all by bringing up a Marxist…as if there aren’t rent-seekers in socialism…witness the EHR vendors…and Bill Gates profiteering off Common Core…
I don’t blame Pardes either, any one of us would take that money if it were offered…I blame the people who rubber stamped that insanity…
The problem is the chummy board, much like the chummy careerist environment in academia.
The doctors on salary ought to demand a 20 raise immediately and picket at the house of the board members if they don’t get it.
Marxist or not his book contains an impressive amount of independently verifiable data – like the following statement based on income and corporate compensation records:
“….the vast majority (60 to 70 percent based on what definition one chooses) of the top income hierarchy of the top 0.1 percent of income hierarchy in 2000-2010 consists of top managers. By comparison, athletes, actors, and artists of all kinds make up less than 5% of this group. In this sense, the new US inequality has much more to do with the advent of “supermanagers” than with that of “superstars.” (p 303).
I know. It’s just that I’ve had it with hipster intellectuals dropping his name as they reach for a Pabst Blue Ribbon.
He does have a point. One reason this happens is because of boards, an SEC requirement. I would prefer compensation decisions for public companies to be made by principal shareholders.
That doesn’t solve the problem of nonprofits. For them sunshine is the best disinfectant. I can’t wait for the blowback from donors after reading this article. BTW the American Cancer Society and United Way execs also have outrageous salaries that few people know about.
What scares me is that some people like Paul Krugman (a wannabe hipster Pinketty quoting intellectual if there ever was one) would use this to impose 90 percent tax rates on people like you and me that have nothing to do with this problem.
Again, why are so many almost literally burying their heads in their hands, if not the sand, when having to face the antisocial/sociopathic basis to what is behind leadership in business, politics, and community organizations? Honest, fair, hard working people do not strive for positions of leadership and control just to make a buck. They inherently do it for want to see the system be better, see the people get more opportunity, and instinctively are in charge for a limited time because the honest and fair person does their time and then acknowledges it is time for the next generation, the next colleague who has worked up the ladder and is ready but cautious to take charge.
And in health care, no one who has a healthy soul thinks about profiting. They know that is an inherent contradiction to what providing care is about. But, the business model has won through the persistent and insidious nature of those selling it seeing how much money is in the service. At the end of the day today, there are no true innocents to who have been screwed by this mindset getting entrenched: providers as a whole want the bucks the administration is getting without any real risk or effort, patients want free care when someone has to pay for the service and goods, and insurers want to make sure shareholders stay satisfied because insurance is a business, even though their product is lives.
The demise of health care probably has several origins, but the largest and most sustaining in causing havoc and ruin was what managed care was able to accomplish in the ’80s-90s without so much a struggle by physicians and other providers who should have had conscience to say “NO” to the profit mongering by insurers. No, doctors fairly much resembled the Jews basically walking into the gas chambers, they inherently believed no one could be so cruel and unjust.
Welcome to the most powerful addiction in America, folks, money. How many people have either endured serious morbidity or just plain died and will continue to be sacrificed for someone making a buck, versus those taking a chemical?
Don’t look to this failed leadership across the land for an honest and direct answer, not when more cash is still up for grabs! People talk about wanting and needing change, but, who has the guts to stand up and say “enough”, and at least try to shame and humiliate those who just cheat and lie!?
Every psychiatrist who belongs to the APA and yet claims they are caring and invested providers, you disgust me on two levels: you are either clueless, or a hypocrite, and probably both. The APA is a fraud, and if they had fairly much no members, who the hell is going to listen to them? And those around here who don’t belong and have colleagues who do, what do you say to them? Yeah, I know, shame and humility are long gone as a concept in America circa 2014.
Just like the feigned outrage by our leaders for the murders of people on MH17. Thugs count on the continued silence of good men and women. Boy, that trend has so much traction in civilized society the past 70 years or so, the pavement it rides is down to dirt.
And non provider readers, you should be very concerned, as doctors and other providers finally realize a soul cannot be bought, when all who care and desperately try to prevail finally relent and leave health care, who are you going to be left with for treatment?
I leave you with Dr Hendricks from “Atlas Shrugged” for what could be the most realistic answer:
“I have often wondered at the smugness with which people assert their right to enslave me, to control my work, to force my will, to violate my conscience, to stifle my mind—yet what is it that they expect to depend on, when they lie on an operating table under my hands? Their moral code has taught them to believe that it is safe to rely on the virtue of their victims. Well, that is the virtue I have withdrawn. Let them discover the kind of doctors that their system will now produce. Let them discover, in their operating rooms and hospital wards, that it is not safe to place their lives in the hands of a man whose life they have throttled. It is not safe, if he is the sort of man who resents it—and still less safe, if he is the sort who doesn’t.”
Ain’t pretty to read, hmm?
Dr. Hassman, for me it gets back to the fact that doctors in the community are masters of the classroom, and fools on the playground. In this hypothetical roundtable, who is the dupe who will get the worst end of the deal: politician, hospital administrator, attorney, insurance administrator, academic KOL physician, private practitioner? The question answers itself.
The private practitioner tempted to socialism as a cure for overpaid CEOS will soon find his own taxes raised. This is what happened with the banking industry, they did fine and profited from criminality, it was the bourgoise that got clobbered. Not Soros, not Buffett, not the superrich. Who suffers when taxes are raised on the 1-5%? Soros? Buffett? The free criminal Corzine? Drop in the bucket. These guys never talk about taxing net worth, did you ever notice? Or the family of four making 200K in Los Angeles struggling to send their kid to a decent school? Who feels the pain of a tax increase? People trying to get ahead, not those already ahead.
The solution to this Pardes scam is to ask the board members some serious questions and determine their conflicts of interest.
All of this segues quite nicely into a major them of this blog…which is that elite circles of connected entitled people with career ambitions are doing a lot of dishonest secretive work that is highly unethical (see DSM, CATIE etc.). This is why medical research and especially psychiatric research is compromised.
BTW, interesting how the names of past Presidents of the APA keep coming up in connection with big sleazy payouts.
i am not an apologist for Pardes nor his income.
His compensation is part of the phenomenon of several decades in which executive income has increased by gargantuan proportions while the incomes of everyone else has been minimal growth or if you are at the low end no growth at all
i do not like this situation
NY Presbyterian is a multi-billion dollar organization and if it were a for-profit organization his income would be substantially greater….the non-profits do lag behind the for-profits
Dr O’Brien: to me you just reinforce this is a time and age where being a “mensch” only invites more abuse and disdain by the antisocial element pervasive in leadership, until proven otherwise, unfortunately.
It is one of the Alinsky rules, make your opponent stay in his boundaries while the Alinsky-ite has no boundaries. And a lot of physicians just instinctively stay passive and overly diplomatic, like that will win them “brownie points” with the observers. Just ammunition for the antisocial element.
In Dr Nardo’s more recent post after this, he noted there is no sociopathic element to the creation of DSM 5. I agree overall, but, the slimy profiteering that is now being exposed is not simply careless narcissism either.
How much disruption and harm has to occur before you have to propose there is an antisocial element at hand? People only want to ignore or deflect these possible truths could be at hand by providers.
It is nothing less than astounding to watch or hear colleagues deny they are either being preyed on or just set up by peers in medicine. Jews could not believe they would be gassed, yeah, a harsh and extreme analogy, but, why does history repeat itself, even if in lighter shades?
Ignorance, denial, and incompetence are my three choices as best explanations. Food for the antisocial. That is my take.
No, not truly sadistic sociopathic, in the sense that they enjoyed hurting people, but pretty damn narcissistic (while ironically, getting rid of the term narcissistic personality disorder, which I find amusing) in defending their fiefdoms and money flows.
Antisocial PD as defined in DSM4 really refers to blue collar criminal behavior. Bernie Madoff may not technically meet the DX but what he did was sociopathic. There isn’t a good description of the sociopath in the white collar milieu. But they do exist. The best term we have is malignant narcissist.
The debate over whether or not they are sociopaths is immaterial to the morality of the actions. Most people in prison are narcissists not sociopaths.
For a description of the sociopath in the white collar milieu check out the 2007 book Snakes in Suits – When Psychopaths Go to Work by Paul Babiak and Robert D. Hare. Dr. Hare authored a classic assessment instrument for psychopathy.
Thanks for that tip…I will probably order that…looks interesting…
Let’s keep in mind that these numbers are rounding errors compared to the scam that is health care IT…including the dysfunctional web site and the EHR reptiles on K Street…
Sociopathy can be acquired and sociopathic behavior can be and is rewarded handsomely, especially in corporate businesses; which are people without conscience and with few restraints.
If the human race could only learn one major lesson in this century it should be how to recognize sociopathy and thwart it. When your boss tells you that your job is to nail people to crosses, and break their legs to make their dying quicker when it’s getting close to quitting time, then you work in a pathological, anti-social, and dehumanizing job that will corrupt you and will torture people, often for arbitrary “reasons”.
In the feverish dreams of unfettered capitalism, all that matters is that private companies can profit increasingly, regardless of the public good and human dignity. It’s a sickness that sickens as many people as it can for the love of money.
I’d worry more about sociopaths in politics. It’s easier to keep those in business in check. Unless they are well connected to politicians. Like K St. or investment banks.
And if you’re worried about capitalism, the unfettered small business kind leads to less sociopathy than the crony kind, which a huge problem right now.
The NY-Presby issue is nothing compared to what “bundlers” are getting away with.
I’ll remember that, Dr. O’Brien, the next time a corporation pollutes a large swathe of oceans, pollutes all the rivers in a coal producing state; or generates a disaster on the level of Bhopal, then escapes responsibility by changing the company name.
I pay attention to who I vote for and watch them, thank you.
The next time corporations murder 100 million people in the name of an ideology I will remember that. You really want to do a spreadsheet of Mao vs. Bhopal?
I grew up in a coal producing state when adults were realists….no one wanted coal mining shut down.
Love these boards where groups of urban professional people, most probably making well over 100K, whine about the evils of capitalism.
Utopia is not an option. This also applies to drug development. Nancy Pelosi is not going to come up with a better antidepressant. A businessman or woman who is greedy might.
BTW, let’s keep in mind that Pardes didn’t “hurt” anyone. He took a salary for doing nothing. If someone were stupid enough to give me that money for doing nothing, I would take it. So would you. The anger ought to be directed to the board. BTW, where is the proportional anger toward the website contractor who took billions from us taxpayers involuntarily? We had no choice in that. We can choose not to donate to Presby. This illustrates my point perfectly. We are not captive to sociopathic capitalists, unless they are rent seekers or monopolists. Pollute a river, that’s destruction of the commons, you get fined or jailed. Check out some of the rivers and lakes in former Soviet Russia, including the Aral Sea. Oh wait, you can’t, they destroyed it.
Just want to point out that the scam aspect to healthcare IT is not particular to healthcare — software companies have been selling vaporware to corporations for many decades.
Generally, executives who are clueless about evaluating software but susceptible to lies and enticements (and sometime actual kickbacks) from software sales reps make the purchasing decisions. Once the software is installed, egos are involved and nobody wants to admit there’s been a mistake. Wash, rinse, repeat.
Sociopathy in software sales is truly an underappreciated phenom. The Obama care website is a classic example. California government seems to be particularly vulnerable (probably because of SV lobbying) to bad payroll and systems management software.
I think medical IT is particularly onerous, though. They really talk down to doctors. The whole idea of health information on the Internet is absurd. Your health data should be on an encrypted thumb drive. But there’s no procurement scam in that.