Unfolding the Revenue Stream at Loma Linda University Medical Center
by T Joe Willey
Second in a Series on the Finances of Adventist Health Care Institutions
"Private nonprofit hospitals enjoy government-conferred advantages, including exemption from corporate income and property taxes, access to tax-exempt bond financing, and eligibility for private donations. Until the end of the 19th century, U.S. hospitals were almost exclusively donative institutions. Before that, the more affluent received care in physicians’ offices and at home." — Frank A. Sloan, Handbook of Health Economics (Elsevier Science, 2000)
When Jerry Fields (not his actual name) experienced loss of motor control in his right leg he wondered if it was from cancer in his spine. Then one night he sat bolt upright in bed at three in the morning. The bottoms of his feet were itching and he couldn’t move his toes. Maybe he had a brain tumor, he worried. He was afraid to go to a doctor. His fears took on more personalities than the state hospital for the insane. After a couple of months he no longer felt safe driving his eighteen-wheeler truck on the Interstate. It was the dispatcher at the trucking company, out of kindness, who convinced Jerry to go see a doctor, if he wanted to keep his job.
The doctor ordered an MRI scan of his lower back and reassured Jerry to stop worrying until he knew for sure what the problem was. Worrying never fit Jerry right.
A few days later the doctor's assistant called to make an appointment for Jerry to see a neurosurgeon. It was a simple obstruction, not a tumor. The MRI showed a small osseous “bubble about the size of a pea” growing slowly around the exit point of one of his lumbar motor nerves. This pea-sized foreign body was pressing against the nerve to cause the tingling, weakness, and pain in Jerry’s leg. The procedure to remove the growth involved minimal invasive surgery. It could be done as an outpatient procedure by inserting a scope into a small incision in his back and chipping away the growth.
A week later Jerry entered the hospital at six in the morning and two hours later was wheeled into the operating room. As he came through the door he saw a nurse standing over him ready to inject a sleep-inducing drug into his drip line. After that he did not remember anything. By noon he was awake; a bit groggy and unable to urinate. The neurosurgeon came by the recovery room and told Jerry that within a week he could return to work if there were no complications.
Back home he was soon feeling great and wondered why he had let fear like a scarecrow shadow his mind for so long. Later, while sitting on the porch with his grandchildren and watching them play in the front yard, he became fascinated with his own toes.
The hospital bill related to his lumbar surgery was $39,734. This did not include the surgeon’s bill for $3,200 and $1,400 from the anesthesiologist. The total for this minimal invasive surgery came to $44,334 — more than the down payment for his home. Fortunately, Jerry was covered by Blue Shield health insurance. Jerry paid a $500 deductible and Blue Shield negotiated the hospital bill to $6,200.
After passing through the experience Jerry believed what people were saying about the health care industrial complex costing more than three times what the military-industrial complex spends in Washington. Another view is that of the economists who say that hospitals need a substantial margin to maintain the essential public services which communities depend on. Hospitals have to cope with cost shifting and higher rates for insured patients. Obviously, there is more to the story.
In a nutshell, the operation of a hospital is capital intensive. Put another way, hospitals are engaged in a high-velocity money business. Diagnostic equipment, instruments, devices and supplies are expensive, generally with a short half-life. Also, nearly every aspect of hospital operations is government regulated. And the level of regulations is increasing (e.g. The Emergency Medical Treatment and Active Labor Act). Government payments for health care often fall short of actual costs and therefore represent a “cost” that is increasing. A portion of the cost of caring for Medicare and Medicaid patients must be passed on to fee-for-service payers whose rates are negotiable.
Also, hospitals are labor intensive. The cost of hospital workers represents nearly two-thirds of the total expenses. In addition, the makeup of the workforce is changing. There are long-term shortages of qualified and certified personnel. Recruitment of skilled workers means competitive pay rates. To top it off, pressures are mounting from the government to provide more charity for the uninsured and poor while at the same time to improve quality, accountability, transparency, efficiency and affordability.
Nonprofit Tax-exempt Hospitals
According to the American Hospital Association there are 2,903 not-for-profit hospitals in the country. These “nonprofit hospitals,” as I shall refer to them, represent approximately 60 percent of all U.S. hospitals. The primary advantage for nonprofits is that they pay no property or sales taxes and are able to acquire capital at low interest rates (usually through the tax-exempt bond markets). Nonprofits are often affiliated with religious groups or a particular faith is a key feature of their identity. Another 20 percent are public hospitals (belonging to some government) and the rest are for-profit hospitals.
The nonprofit status began during the infrastructure boom of the 1950s and 1960s when the Federal government offered subsidies to build hospitals. Getting the money required the hospitals to acquire a nonprofit status and promise to provide “community benefits.” The IRS standards allow broad latitude as to what is defined as a community benefit. In addition, hospitals, particularly ones run by a religious denomination, were somewhat better protected from litigation under the “doctrine of charitable immunity.” although this shield is another thing that is changing. The fundamental nature of the nonprofit hospital has evolved. Consolidations have taken place with excess revenues in the millions and many are now run by professional administrators using sophisticated computer models and consultants from the for-profit world. Today, many hospitals appear to run like large profit-making corporations, even though their intent is nonprofitability.
In an upcoming article in this series we will discuss how much “community benefit” Loma Linda University Medical Center (LLUMC), and a few other teaching hospitals provide to meet the standards for tax-exempt status and how it is accounted for. This is one area where nonprofit hospitals have drawn the ire of the public. There are a growing number of class action lawsuits against hospitals that fail to meet their charity care requirements because of aggressive debt collection practices against uninsured patients or the use of the facilities of a tax-exempt hospital to derive profits by physician groups. We will come back to this topic in the future.
Nonprofit hospitals come in three forms. They can be operated by a community, a government or a faith-based organization. LLUMC is a faith-based hospital affiliated with the Seventh-day Adventist Church. The Church does not directly operate the hospital since LLUMC is recognized by the IRS as a separate 501(c)3 organization with its own members (stakeholders identified in the bylaws) who elect the board of trustees. There are some occasions when the administration may attempt to legally claim religious exemption to certain laws that govern labor relations. [1] And even though LLUMC receives all of its service fees from the government, private insurance, related parties and donations, and is a teaching hospital with a commitment to scientific and research activities, its religious affiliation with the Adventist Church makes it a unique institution.
LLUMC is incorporated as a charitable organization under California’s Nonprofit Benefit Corporation law. The law requires religious corporations to not make any distribution of assets to members at any time (e.g., siphoning off charity’s excess revenues) and not lobby to influence legislation. The law allows LLUMC to discriminate in its hiring practices. For instance, the corporation can place only members of the Adventist Church in positions as executives and pastoral care personnel under the immunity provided by the California statute.
Furthermore, the California law allows LLUMC as a denominational institution to apply its religious doctrines, tenets and teachings in all positions connected with the provision of health care. [2] But it is quite likely that a patient can leave the hospital after inpatient or outpatient care without knowing the fundamental beliefs of the Adventist Church. Many staff physicians and the majority of the employees, including nurses, are not members of the church. Contrary to what you may have heard, there are many instances when staff and chaplains extend a spiritual hand to patients during their time of distress.
LLUMC’s parent company is Loma Linda University Adventist Health Sciences Center or LLUAHSC. The name was recently shortened to Loma Linda University Health. The LLUH board determines policies, salaries, and other matters for LLUMC. The board is composed of 20 members, all of whom are Seventh-day Adventist. Half are Union Conference presidents, officials or administrators of the denomination. They include Pastor Ted Wilson, president of the General Conference, and Pastor Lowell C. Cooper, a General Conference vice president who is chairman of the board. Another 16 denominational officials serve as board advisors. The actions of the board are published and consist mainly of progress reports, information about Federal and state initiatives in health care and new appointments. Dr. Richard H. Hart is president and chief executive officer of LLUH. Ruthita Fike is CEO and vice president for medical affairs of LLUMC.
The stated mission of the hospital “is to continue the healing ministry of Jesus Christ, ‘To Make Man Whole,’ in a setting advancing medical science and to provide a stimulating clinical and research environment for the education of physicians, nurses, and other health professionals." [3] Many faith-based institutions like LLUMC refer to some type of religious heritage and ministry of healing.
Revenues and Expenses
The report that follows explains the revenues and expenses of LLUMC. We will use audited financial statements, the IRS 990 tax report and a few other sources such as U.S. News and World Report. No single calculation tells the whole story of a hospital’s performance. We will simply take a broad view of revenues and expenses to show the hospital’s ability to create value and other assets. So we are not looking for trends or creating financial ratios that might provide deeper insights. [4]
For comparison purposes (to make the story more interesting) a snapshot will be made of the revenue (related to patient services) and expenses from a few other teaching medical centers, including UCLA, Stanford University, The Mayo Clinic, Baylor University, Massachusetts General (Harvard University) and The Cleveland Clinic. You see that all of these teaching medical institutions are afloat in money. [5]
How different is the Adventist brand name from these other teaching institutions when looking at the balance sheet? To begin, we will look at the input side in Table 1. The first column displays the number of licensed beds, and there may be some inaccuracy in these numbers because of consolidations. The "patient" column is the percentage of satisfied patients summarized from ten survey questions administered by The Centers for Medicare and Medicaid Services after they have left the hospital. [6]
In this list of teaching hospitals, LLUMC certainly has a good reputation in the community and many would even say a great reputation. According to U.S. News & World Report, LLUMC was ranked number one among the 41 hospitals in Riverside and San Bernardino counties. This was the third time in a row that LLUMC achieved this ranking. The hospital serves a metropolitan area encompassing more than four million residents, many of whom are vulnerable and medically underserved. They turn to LLUMC as a safety net for healthcare. UCLA was ranked number one for the entire state of California and Massachusetts General ranked number in the nation. Table 2 displays the revenues and expenses for these institutions as reported on the IRS 990 forms for 2011.
LLUMC purchased the membership interests of physician investors in a new 106-bed hospital in Murrieta, California, for $39 million and this expenditure reduced excess revenues to 2.05 percent. The salaries of the CEO of each institution are shown in the last column.
The Medicare Component
Medicare is a national social insurance administered by the Federal government. This program provides access to health insurance for Americans over sixty-five and younger individuals with disabilities. It pays for about 47 percent of all provided care in America. Medicaid is a health program for families with low incomes. This is the largest source of health care funding for the poor in the United States. Individuals who appear at LLUMC for treatment and are at 200 percent of the poverty line (defined by the Federal government) are eligible to participate in the program which is jointly funded by the state and Federal governments. Patient revenues for these two programs are shown for LLUMC in Graph 1. The government programs make up a significant part of LLUMC revenues. Graph 1 also includes the private insurance contributions and revenues from self-pay by uninsured patients.
If you add up all the highly inflated charges in the charge master from Stanford Hospital provided in the giant spreadsheet by Medicare it shows that Medicare only accounts for about 18 percent of the revenues for this teaching hospital. [7] In 2011, the audited statement from Stanford showed a combined revenue from all government programs of only 23 percent, but 65 percent from managed care health insurance programs and another 11 percent from the uninsured. There are differences in revenues among the teaching hospitals in this report which can be the results of many different influences, including adverse populations, community affluence, hospital policies, electronic health record technology, etc.
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For comparison purposes, Graph 2 shows the same information for Baylor University, UCLA Medical Center and The Cleveland Clinic. The government component (Medicare and Medicaid) is nearly equal in all three teaching hospitals, and slightly less than the national average. (Nationally, Medicare pays for 47 percent of patient care.) The Centers for Medicare and Medicaid contract with “fiscal intermediaries” to oversee billing and payments to hospitals. Consequently there are extensive auditing hoops each hospital has to pass through to get the reimbursements.
Teaching hospitals like LLUMC train future health care professionals, including physicians and nurses. These unique institutions also conduct research and improve diagnostic and treatment methods. Highly specialized services are concentrated in teaching hospitals. Patients with complications are often transferred to these hospitals. In general, teaching hospitals account for more than 50 percent of the overall cost of uncompensated hospital care and 50 percent of all Medicaid hospitalizations. As the economy worsens and health-care funding shrinks, these trends place more burden on these hospitals to provide for the low-income population. Teaching hospitals directly employ 2.7 million people and are often the largest employer in a community. There are 13,181 employees at the LLUMC. [8]
Special payments are given by Medicare to cover the costs of the educational and research role of these institutions. Medicare is the largest single program providing support for post-graduate medical education (not students in medical school). These Medicare payments are based on numbers of residents and interns during a base period at each institution. In 2011, a total of $3.2 billion was directed into graduate medical education (DGME) and another $15 billion directed into related, indirect costs of medical education (IME) based on the ratio of residents to hospital beds. [9] These payments are based on historical costs and directed to the institution, not individual residents. Beyond this brief description the program gets complicated. [10] In addition, because of its unique role in basic and clinical research, the National Institutes of Health award over two billion in research funding to teaching hospitals.
The Expense Side of the Ledger
We would like to think of hospitals in terms of compassion, patient care and dedication to community benefits. In fact, they are like businesses concerned with obtaining revenues to match expenses and looking for excess left over to improve patient services, etc. Graph 3 displays the major categories of expense for LLUMC. Related categories were combined in some instances and other less significant expenses left out.
Conclusion
At least one conjecture can be made from the financial information presented here. The community has a possible impact on the revenues and excess earnings of nonprofit hospitals. As an example, Stanford University Hospital uses a higher charge master than the other teaching hospitals. [11] In the 100 most common DRG procedures at Stanford, Medicare payments only represents 17 percent of the possible payments listed on the table supplied by Centers for Medicare and Medicaid Services. According to the 2011 data in this report, Stanford is the smallest teaching hospital with 477 beds compared to 815 at LLUMC (although there are other hospitals affiliated with Stanford). Yet Stanford generates $2.1 billion compared to LLUMC at $1.2 billion. Stanford shows the highest performance at 16.55 percent. Stanford's government reimbursements are the lowest at 22.59 percent and compare to 62 percent at LLUMC. The majority of revenues at Stanford come from managed care (with an inflated chargemaster) representing 65.57 percent after discounted fees for services. By keeping revenues up and expenses down Stanford in 2011 created an excess of $415 million compared to $24 million at LLUMC. These results may simply reflect less aversive populations in the Bay Area. The uninsured patients who were able to self-pay for medical care represent a higher number at Stanford (11.45 percent) than at LLUMC (8 percent). Baylor University had even higher revenues from self-pay patients than either Stanford or LLUMC. One observer quipped, "clearly LLUMC is performing as a nonprofit, benevolent corporation as expected by the government."
One thing is clear, “Each nonprofit hospital has its own values and challenges” in the complex world of delivering health care. Many of the forces and influences involved are difficult to manage.
T Joe Willey is the author of the recent Adventist Today article titled "Million-dollar Salaries in Adventist Healthcare" and "Tax-exempt Bonds and Secularization in Adventist Education."
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1. www.aaup.org/sites/default/files/loma-linda-university.pdf.
2. Arriaga v. Loma Linda University, 10 CAL. App. 4th 1556 (1992). See also Catholic Charities of Sacramento, Inc. v. Superior Court for the State of California in and for the County of Sacramento. Third Appellate District, Case No. C037025.
3. See the 990 Form filed with the Internal Revenue Service for 2011.
4. From 2000 to 2008 LLUMC’s revenues grew approximately forty-five percent.
5. Baylor University Hospital replaced USC Keck in this series because USC medical school is consolidated with the university financial statements.
6. Studies reported in the New England Journal of Medicine have been unable to identify significant relationship between patient satisfaction and quality of clinical care. (October, 2008).
7. Centers for Medicare and Medicaid Services of the Department of Health and Human Services. Ratio obtained by adding up Medicare payments and the charges for the 100 common procedures.
8. Becker’s Healthcare. 10 things to know About Loma Linda University Medical Center. July 25, 2012.
9. In Loma Linda University Medical Center v. Kathleen Sebelius, Secretary United States Department of Health and Human Services Case 1:08-cv-01520-HHK. Filed 02/06/2010 the medical center was given the opportunity through summary judgment to apply for funds that apparently were improperly filed or overlooked with the fiscal intermediary. The court determined that LLUMC’s failure to properly file claims was a likely flaw in the Provider’s internal process to ensure timely billing (In LLUMC v. Blue Cross Blue Shield Association/United Government Services. Dated May 9, 2008)..
10. AAMC. Medicare Payments for Graduate Medical Education. What Every Medical Student, Resident, and Advisor Needs to Know. January, 2013.
11. T Joe Willey. “To Make Man Whole” But It May Cost an Arm and a Leg. Adventist Today.
"There should be more equality between the wage of the minister and the physician than there has been" (2SM 201).
$1,179,000 salary for the CEO? How do we justify that, in light of the counsel God has given us? Are they any ministers today making that much money? I'm fairly certain none of the ministers in this conference make anywhere near that much.
Bob, how much would you pay the CEO if it were up to you?
Simple, Bob. The CEO isn't a physician. Ellen White didn't say anything about equality between ministers and hospital CEOs (That's a joke, BTW). Last I checked, ministers in the SDA denomination are around the eightieth percentile when it comes to salaries of Protestant clergy in America. If we followed Ellen White's counsel regarding pay equality between ministers and doctors, what do you think would happen? If you said, "We would either have an oversupply of ministers, being paid too much or an undersupply of doctors, being paid too little, depending on whether we lowered the income of doctors or raised the income of pastors," go to the head of the Economics 101 class.
Relatively speaking, we have an oversupply of clergy to staff churches in the SDA denomination, and an undersupply of Adventist physicians to staff Adventist hospitals in the denomination. So how would you propose to adjust pay differentials, Bob, if you want to correct that imbalance?
How do you justify the diffference between what a janitor or yard maintenance person earns and what a teacher earns? It's called the free market. In market economies, based on competition and personal choice, people are unequally prosperous. In controlled economies, based on cooperation and others deciding what's good for you, people are equally poor. Which would you prefer? Cooperation of course sounds better than competition, and it sure makes you feel a whole heck of a lot better. But isn't it more important to know how well something works than how it good it makes you feel when judging its effectiveness?
The statistics seem to indicate LLUMC does indeed serve a relatively ‘adverse population’ well, true to its mission. As to the justification of its executive pay it ranks the lowest comparing apple to apples. Now I learn why my Stanford bills are so high.
It's called Capitalism. Those with high demand skills and qualifications are able to capitalise on it and hold society ransom. When such behaviour this directly affects society, as in the case of healthcare, then it is a form of exploitation (extortion?) I would say. We used to play cops and robbers when we were kids. One famous line – well actually two – went like this. The Bad guy will say: "This is a stick up! (said with an American accent ☺)" … "Your money or your life?"
On the flip side, one has to note that higher taxes often force top earners to negotiate bigger pay packages in order to maintain their required take home. Who pays? The man on the street. It's a vicious cycle in my opinion.
The article illustrates Jerry Field's experience. RE: "Jerry paid a $500 deductible and Blue Shield negotiated the hospital bill to $6,200." How is it possible for the total bill of $44,334 to be negotiated right down to $6,200 by the health insurance provider if it isn't just good old fashioned major profiteering and exploitation taking place?
I have reason to believe that many Health Care Professionals/Providers are also major stakeholders in Private Health Care Insurance Schemes. I guess that's why they can laugh all the way to the bank, except of course, the Jerry Field's on the street!
In comparing what charts we have available with this article, it appears the administrative staff of more than 1 institution, not just LLUMC, is combined with LLUMC. It also appears that due to a "overabundance" of Medicare, MediCal and "non-insurance" patients (70%) vs other institutions with lower same figures, that the mission is being met and the admistration is only receiving what is fair to retain hard working individuals.We should let the individuals that "administer" keep their income, I wouldn't want their job or headaches!
"There should be more equality between the wage of the minister and the physician than there has been" (2SM 201).
There's a lot more statements on the subject than just this one. I think it unwise to use various reasonings to get around what it says.
Okay, Bob. So you think it is unwise to use "various reasonings" to get around the sage wisdom offered by SDA's founding prophetess, turned economist. Then how about dealing with reality instead of reason? How do you deal with the economic facts I pointed out above? Edward Reifsnyder asked a variant of the same question, and you ignored him. No you simply keep repeating this mantra as if it had some talismanic purpose. Do you think you could get a CEO for any hospital if you offered them a ministerial salary? How many Adventists students would go to medical school, incurring $250,000 in debt, if they were limited to a ministerial income? You could scarcely keep nurses.
I'm open to considering your idea. But piously repeating yourself, without offering support for your idea, sounds fatuous.
Salaries being "more equal than they have been" doesn't mean salaries should be equal. Lets say man 1 makes $100,000 a year and man 2 makes $10,000. The next year man 1 makes $90,000 and man 2 makes $20,000. Their salaries are more equal than they have been. They are not however…equal. If one wants to refute or affirm the quote from the SOP you would have to compare salaries of ministers and doctors when it was written and see if they are more/less/exactly equal today. Right now you are just having an argument where there is none.
No, Ben. I have argued economic realities. The fact is that we have an oversupply of SDA ministers to staff SDA institutions, and we have a huge undersupply of SDA medical personnel to staff Adventist institutions. What does that suggest to you about who is overpaid and who is underpaid – at least if you want to maximally staff SDA institutions with SDA personnel?
Does the fact that Ellen White criticized the disparity in pay between physicians and ministers mean that it was the inspired word of God? Didn't she offer any opinions or counsels that were simply her opinion? Did she offer a solution?
I could say that there should be more equality in wealth between Nigeria and the U.S. But that wouldn't tell you much at all about how I propose to get there. Maybe if the gospel was spreading so rapidly through the work of SDA professional clergy, there would be extremely high demand for more ministers which would lead to 6-figure salaries and great benefits being used to lure young Adventists into the ministry. How's that for a good solution that is perfectly consistent with the SOP concerns? Eliminate disparity the old fashioned way. Earn it. Make your services more valuable to those who purchase your services.
I didn't say anything about economics. Just tried to point out that more equal doesn't mean equal. If you are interested in discussing economic realities perhaps you should reply directly to the article, rather than create arguments with people that dont address what they are saying.
Okay – let's get past the word games. Feel free to insert the word "more" before the words "equal" or "equality" wherever I have used them, and I will still gladly stand by my points. Now that we are all talking about the same "problem" that Ellen White addressed, maybe you, Bob , Truth Seeker, or anyone else, can explain why you think her concern is applicable today, and how you propose that pay should be brought into greater parity.
Ben, you did say something about economics, even if you didn't use the word. And Ellen White made a statement about economics when she said ministerial and physician pay should be more equal. If I say two plus two equals five, and you say my math is bad, would it make sense for me to protest that I didn't say anything about math?
Nate, take a look at PK 61 ff. The problem is more about high wages than it is about equality, I think.
I have also read a statement somewhere that addressed those who would not work except for a stated large sum. She said that in the judgment an issue that would come up for these individuals was whether the value of their work really equalled the sum they demanded. If not, they would come up short. That's pretty sobering.
When the economy is suffering and prices are going up and people are having a hard time making ends meet, it seems wrong for any CEO to be making an extravagent killing, whether Adventist or not.
I'm not playing word games. By changing more equal to mean equal, you were. That's not symantics, its a major change. If person A said to person B "I'm more likely to kill you than a rabbit" they are probably not that threatening. If person A said to person B "I'm likely to kill you," that's incredibly threatening. I said something about words, but not economics. Sure there were some numbers but they didn't make any grand economic point. You ask me to explain why I think her concern is applicable today.
Where in any of my comments have I said her concern is applical to today? I was just trying to point out that you are making an argument that isn't there. Every subsequent reply has created more arguments that aren't there. Word games would be if I corrected you for saying it's hot when I really think lukewarm is more appropriate.
If you can't see how more equal and equal have very different implications in this situation, then I don't think it's beneficial to have an economic discussion with you. Try paying less on your taxes than the government asks. Tell them the amounts are basically equal and to quit playing word games. Should be a very revealing case study.
Nate: "But piously repeating yourself, without support for your idea, sounds fatuous." Sort of pejorative, isn't it?
I agree with Pickle and what more support does he need than the SOP?
Would Reifsnyder accept anything from the SOP? I don't know. If he is Ed, Jr I knew his father and I think he would, if still living, agree with Bob and me.
Maranatha
From a practical standpoint, since Loma Linda aka the College of Medical Missionary Evangelists is training physicians (and perhaps administrators) for service wherever God calls, being the head physician or CEO of a hospital in Papua New Guniea or some similar country will seem less attractive if $1,000,000+ is considered a normal annual salary. It's a bit like when Andrews University first got started. The school was purposely lacking some conveniences so that the students wouldn't expect to have all those conveniences in the mission field. In the army, boot camp isn't a plush resort lest soldiers learn to shun muddy trenches.
The stakes are high: PK 61 ff. identifies as a primary cause of Solomon's apostasy the loss of the spirit of self-sacrifice due to everyone following Hiram of Tyre's example of demanding, and getting, high wages. If these obscene salaries aren't reined in, it will result in a loss of the spirit of self-sacrifice at Loma Linda (assuming that hasn't already happened), which will then tend to lead to apostasy. That's the whole reason PK 61 ff. is there, to warn us about this kind of thing.
It's no wonder that health care today is so obscenely high. I got charged over $211 for a visit with a doctor that lasted 10 minutes at most. My next visit was at most an hour, including wait time in the lobby. $400+. No X-rays, no lab tests. I can imagine the opportunity for outreach if some self-sacrificing Adventist medical professional came here and opened a clinic, offering services to the public for a reasonable price.
Okay, Bob. I understand you don't like the relatively high cost of medical care. We would all like our medical care and insurance premiums to be cheaper. I'd like gasoline and auto repairs to be cheaper too. Have you hired a plumber lately? Do you know how the cost of higher education has skyrocketed in just the past fifteen years? It's gone up even faster than the cost of medical care. Welcome to America! Everything costs more. And…in case you forgot, everyone earns more and gets more government benefits.
I would strongly suggest that if you paid $211 for a brief doctor visit, you should be a better shopper. If I illustrated how outrageous the cost of groceries are by telling you that my grocer charged me $10 for an orange, what would you think? And if you found out that I actually only paid $1 for the orange, it wouldn't really matter what the price tag said, would it?
You say, "It's no wonder that health care is so obscenely high today." Do you know what portion of the health care dollar goes to pay executive salaries? How much do you really know and understand about the economics of health care? Free markets in medical care do exist where doctor visits are very reasonably priced. But there's a catch. You are responsible for payment in cash. Employer provided insurance, government insurance, and regulation of the insurance industry distort the medical care market place. You can change the system. You can make medical care more affordable. But then you're going to reduce the quality of care. Again, it's Economics 101.
The reality is that we live in the most prosperous country in earth's history; we enjoy the best medical care that has ever been available in history. Materially speaking, we are incredibly blessed. Yes, I know – Panglossian platitudes should not deter us from trying to make things better. But moral outrage is not a solution. It just makes you appear to have a rather loose grasp of the Tenth Commandment. What solutions do you have, and how do you justify them? It's easy to look at someone who makes more than you and complain, forgetting all the while about how unfair your own material prosperity and well-being is compared to other equally deserving humans who live in abject poverty.
If you found out that capping the salaries and benefits of Adventist health care executives at, say $500,000, would make absolutely no difference in the cost of your insurance premiums or the cost of your doctor visits, would it make you feel differently about the relative income inequality between CEOs and ministers? I suspect the answer is no. If so, you might want to look in your own heart and ask yourself if perhaps you are using Ellen White's protest to sanctify envy.
Most European nations have better outcomes and charges are less. It can be done, the U.S. needs to study their programs and maybe find out how they cover all their citizens and do it so well.
Elaine,
You've been hearing too much propoganda for Obamacare. Actual medical outcomes in Europe for senior citizens are sometimes barely better than in undeveloped countries because of resource allocation rules that prevent people above certain ages from receiving treatments without long waits. This means a lot of seniors are suffering incapacitation or dying when they suffer conditions that are routinely treated very quickly (and generally successfully) in the US.
Switzerland in particular has a system we could learn from here in the USA. They require insurance of their citizens but have several exchanges and multiple plans to choose from. By all reports it works well and people are happy with their care. Numerous clinical markers show better outcomes than ours. Hmmmm maybe we have heard of a similar plan for this country… I wonder how much their nonprofit hospital CEOs make? Particularly the ones that are church affiliated.
Mark,
There are three major differences between the health care systems in the US and Switzerland that explains the cost and quality differences: limits on medical malpractice, limits product liability lawsuits and less government regulation. The law in Switzerland does not allow medical malpractice lawsuits except in the most egregious cases. Product liability cases are also severely limited. Currently the combination of the first two accounts for more than 60% of the cost of total medical care in the US. Prior to Obamacare the cost of compliance with government regulations cost around another 20%. (Yes, without them our medical care would cost around one-fifth what it does today.) With the imposition of Obamacare the news is filled with stories about how compliance costs and taxes are sending costs into the stratosphere– and we're barely out of the starting gate.
These countries are also only the size of one of our states. That would seem to make a difference…..
William,
On what basis do you claim that 60% of the total cost of health care in the US comes from product liability and malpractice lawsuits? Where in any of the pie charts above is this 60% cleverly hidden?
Nate,
"I would strongly suggest that if you paid $211 for a brief doctor visit, you should be a better shopper." I called both options ahead of time and asked what I might expect to be charged. Getting an answer wasn't easy. Soon after, the newspaper here asked for sources who had had a difficult time getting estimates or who had been surprised at the bill.
It's the ease of getting loans longer than the biblical cap of 7 years that props up the price of housing. Similarly, insurance props up medical costs. "Free markets in medical care do exist …." Thus you have put your finger on a problem: U.S. medical care in general is removed from the free market, and that is in part why costs are so high.
"… make absolutely no difference in the cost of your insurance premiums …." I don't have health insurance, and I don't want it. "… perhaps you are using Ellen White's protest to sanctify envy." That would be weird, wouldn't it? Pointing out a blatant disregard of the divine counsel God sent us, because I want to blatantly disregard the divine counsel God sent us?
Well Bob, what divine counsel did God give us? Expressed disapproval of pay differentials is hardly counsel. The Bible tells us that God didn't like a lot of things that were going on in the world. But He didn't always prescribe a solution, and when He did, the solution was often not one that we could or would want to emulate as divine counsel for the 21st Century.
Do you think Jesus liked the economic, social, and political injustices that He saw in the world around Him? Do you think He was okay with seeing hunger and disease? So what did He do to change it? Not really a whole lot on a macro level, when one considers the power that was at His disposal. When He left this earth – after completing His mission (Really?) – there was, statistically speaking, just about as much injustice, hunger and disease as when He came.
What does that tell you about the counsel Jesus might give to the great "problem" of pay disparity between prosperous ministers and wealthy health care workers? Maybe He would tell you, since this is a burden on your heart, to go, sell everything you have, and give it to the poor, "destitute" minister. Or maybe He would tell you, as He challenged the young man in Luke 12, who merely sought fairness and justice, "Who appointed me to be a judge or arbiter between [the haves and the have-nots]?" I really don't know. So maybe, instead of pious condemnation, you could share with us what you think God's Spirit is calling you to do to address the problem in a way that will build His Kingdom.
There are many ways to reduce pay disparity. I suggested the old fashioned way the other day. What do you think of that? I also pointed out that disparity in wealth between Nigeria and America is very unfortunate. But that doesn't give us a clue as to whether and how God is calling us to address the situation.
Nate,
Perhaps you haven't read the counsel we have on remuneration. Have you read PK 61 ff. as I suggested? If you think this is only about pay disparity, you're missing the larger point.
"… you could share with us what you think God's Spirit is calling you to do to address the problem in a way that will build His Kingdom." Sure. Speaking out about this issue, right here. And the ideal practical solution is the same today that it was c. 1906: "Others received the message given to them, turned to God with full purpose of heart, and learned to abhor their covetous spirit. So far as possible, they endeavored to set a right example before the people by voluntarily reducing their wages" (2SM 178).
Perhaps T. Joe Willey can give us a CPI-adjusted comparison between pay scales when we had this problem before compared with now.
Ah, so you're shifting the focus a bit I see. The issue now is "high wages" and self-sacrifice – not relative pay inequity. You think ministers are self-sacrificing and health care workers are not? You think wealthy Kingdom-seeking health care workers should share their income with materially comfortable Kingdom-dwelling ministers. Is that it? What does the fact that one person works for lower wages than another have to do with self-sacrifice? The minimum wage worker in America in 2013 lives in luxury compared to to the highest paid person in Ellen White's or Solomon's day.
What are you doing in your own life, Bob, to reduce incentives for others to seek market rates for their work? Do you think if the denomination took Ellen White's counsel to mean that the salaries of health care professionals should be drastically cut, it would engender the spirit of self-sacrifice that you say is needed? Do you honestly think that you will shame high paid workers into volutarily accepting less than they are worth for the sake of the "work" by braying your jeremiads and imprecations on this website? That's really building God's Kingdom isn't it?
If you really want to do something that might make a difference, why don't you follow Christ's example? He didn't just reduce His wages. He took no income at all. Do you have a story to tell about working in a job where they were willing to pay you $100,000 a year, but you only took $50,000, or even $25,000, because that was all you needed to live on, and you wanted to do your part to reduce income inequality? Talk is cheap, Bob. If you would change the world – or even change hearts and minds – you ought to start by changing yourself rather than preaching class envy.
Nate,
What gives? I see not one single comment on PK 61 ff. in what you wrote. And you appear to be trying to undermine the counsel God gave us, rather than trying to find ways to implement it.
"Do you honestly think that you will shame high paid workers into volutarily accepting less than they are worth …." Less than they are worth? You honestly believe that the Loma Linda CEO is worth $1,179,000 a year just because that is what he is getting paid? I do not. Any institution or business can decide to pay anyone a sum that far exceeds their "worth," simply because they can, out of greed, even if it puts the institution or business in the red.
"The Lord will have faithful men who love and fear Him connected with every school, every printing office, health institution, and publishing house. Their wages should not be fashioned after the worldling's standard" (PM 239-240). Nate, tell us, is Loma Linda's CEO's pay "fashioned after the worlding's standard"? Yes or no?
Administrators in Adventist Healthcare stopped debating the executive wage issue following the decision by the General Conference officers to move to a compensatory model based on market rate. Over the two days in April 1989, the discussion was intense, breaking away at least on two occasions and asking God for Divine guidance. Also, many Ellen White statements were read. While the vote was the result of considerable cajoling on the part of Elder Neal Wilson, then General Conference president (apparently his son is infected with the same leadership bug), the decision was made by the church officers to further advance the healthcare institutions into a commercial and competitive world. Actually, before this decision was taken up these institutions were already at arms length from ownership by the Seventh-day Adventist Church.
At the time, one of the key arguments favoring market rate salaries appears to have been made on the basis that no church funds or tithe money supported the healthcare institutions. So it appears to me that at least one lesson can be learned from this action. Church leaders do not give uniform acceptance of all of the "guidance" found in the writings of Ellen White. Writings under so-called inspiration have differennt currencies. Obviously, Bob Pickle does not abide this viewpoint. On the other hand, Alden Tompkins, an expert on the writings of Ellen White does not apply uniform inspiration to Ellen White but uses a concept what I call "spot inspiration." (see Alden Thompson. Hard Questions, Honest Answers. Review & Herald. 1991). Over time any prophet embedded in a different culture or times, while attempt to be relevant to all issues raised during their time eventually becomes irrelevant for future generations. That is just the nature of inspiration. Consequently, contemporary forces push against any uniform dogma of inspiration. For example, there are many guidance issues in the Bible that are no longer valued or endorsed by modern societies, except by a few fanatics. Maybe I wanted to stone my son for talking back to me when he was a boy, but after thinking about it I admired his courage and we related to it in a more modern disciplinary approach than stoning.
Cheers
tjoe
Very helpful, informed perspective, tjoe. Thank you. And thank you for the hard work you have invested in researching and bringing us this series of interesting, informative, and timely articles!
Ellen White wrote in an era when Adventists expected the Lord to return any moment—ergo, to lay up treasure, even to harvest the potatoes in the field, could be seen as a denial of faith in the imminently proximal return of Christ. To live on a bare subsistence, while giving any discretionary resources to promote the gospel, still casts its cultural afterglow over our times, and some writers here believe with everything they have that this is the way things should ideally be in the church today, not only among church employees, but among laity too (that they may not always walk the walk they profess in their talk is yet another topic).
Times change, and Adventist culture morphs. But of one thing we can be absolutely sure—there will be those who resist change in the name of conservatism and go through exaggerated mental hijinks to decry the mores of the age and the corruption of the times (and I do not defend our times as better or worse than what has gone before, though I think esthetically we would be far ahead if we outlawed production of those monstrous conveyances known as SUVs, even if it meant relearning how to hitch up a horse!).
Furthermore, the natural conservative tendencies (including my own sentiments) are NOT to dis-remember, or disbelieve, the lessons of the past. While I do believe that changing times do modify the context of prophetic/predictive/consultative writings such as Ellen White's, I do (perhaps unnecessarily) ask myself, "What would she counsel if she were here with us today, facing the challenges as we face them now?" My sense is that she would probably encourage today's medical professionals to count themselves blessed and to donate large percentages of their wealth to an array of redemptive ministries and charities. I remember back a few years when our family returned from mission service abroad, Dad was overwhelmed by the amount of money offered him to run a clinic for Adventist health care here in the US, and he insisted that he would not serve unless that salary were cut by 20 percent. I don't unearth this bit of family lore to elevate our family to some kind of role-model status, but I think it may illustrate the serious thinking of a jungle doctor fresh from the tropics of South America in saying to any and all, "I did not take medicine to obtain wealth; I became a physician to serve and to do so in a fashion that all my patients and fellow church members can see reflected in my lifestyle."
Dad was a man of few words, but he thought things through fairly carefully, and I suspect he came very close in fact to economically walking the walk of Ellen White's talk regarding the need to live in a fashion somewhat equidistant between the extremes of acquisitiveness and penury…. Moderation of lifestyle is a very strong theme in the traditions of our Church, especially in the later 19-century writings of our founders.
Good thoughts, Ed. Although, I would have counseled your father to take the salary offered and donate whatever he thought was excessive to a cause that would use it most effectively. If that cause was the clinic, great. But it probably was healthy for the institution to plan remuneration and allocate resources in such a way that it would not become dependent on an expectation that employees would not expect to be paid their full salaries. I strongly suspect that Ellen White would counsel the Church to divest itself of many of the institutions which have served it so well and so proudly. They are, to a very significant degree, beholden to the "worldlings." (What a great word, Bob.)
Why do so many love to return to "what would EGW say" about all sorts of conditions we are faced with today. The past is past and there cannot be rules that were made to answer questions more than a century ago to be expected to apply today. We would not do this in other important decisions but it seems that people are so lacking in confidence of the ability to make decisions today that they wish to search and hope to find something she has written than can be applied to every modern situation today.
God gave us minds to reason and the ability to learn from the past; to become better educated in business so that we will be have more understanding of how to make decisions without resorting to the "urum and thumum" the OT prophets turned to for guidance.
The extra-biblical inspired writings of Sr White are more reliable and edifying than the soothsaying’s and worldviews of post modernists. The neglect of the Spirit of Prophecy books has led to the demise of Adventism in some quarters where her inspired writings are lightly esteemed, mocked or entirely disregarded. Unbeknown to many, this neglect shows in the lackluster superficial form of godliness, which some call progress.
It really isn't necessary to dig up EGW writings to defend the idea that too much greed at the top has adversely affected all quarters of our society, not just our church. We are a microcosm of that society and since greed has become an accepted norm in upper management throughout our culture we see the same in our institutional leaders. "If you can get it, go for it" seems to be defended by all who are inside that circle of prosperity, and all sorts of reasons can be advanced to defend that mentality. I don't need EGW or anyone else to nudge my soul to say that it is wrong when so many are struggling in formerly good jobs that now pay subpoverty level wages. I don't even need Jesus to tell me that this is not the right way. If we truly care about our fellow man we will try to do what is the best for all of humanity and not just for ouselves. I am no pious monk who has mastered this, but I certainly live at a level of comfort much below previous indulgence both by economic circumstance AND by choice. I could and should probably do more in that regard to reduce my carbon footprint etc, but it doesn't take a rocket scientist to see how greed has caused or contributed to significant hardships in our world as those with power exploit those without it. Just because you can does not mean you should. At a time when the common tactic is to cut costs by laying off people, cutting their hours and benefits and at the same time jacking up your own salary it is refreshing to see the examples of folks who chose a different path. Like the founding CEO of Costco who lived comfortably on a small salary by comparison of his peers and lavished a generous benefits package on his very happy employees while growing a very successful company. Wouldn't it be nice to see our flagship church institutions setting that kind of example? The old mantra is so true: power corrupts, and the more power the more corruption we see, in almost every corner of our world. Capitalism is a wonderful mechanism to produce great wealth, but if left to human greed without any checks and balances it goes off the tracks and the result will be yet more revolution and upheaval, as we have seen so many times before. The church is not immune to that process. I am not advocating a Soviet planned economy, but I am saying we could do much better than we have at caring for all the folks in our system who have given their careers to our church. I have close family who work as teachers and preachers and I can tell you they are neither comfortable nor secure in their financial situation, and it is getting worse at a steady pace. The system will collapse if trends continue in this direction. Castigating those who raise these concerns is not a solution to this problem. Perhaps searching our souls for the remnants of our concience is a place to start.
The tithe from a annual pay of one million can probably support the salary of one minister and a half. Executive compensation is a hot topic and healthcare institutions most likely do not rank high compared with Wall Street firms. Let us be grateful that some of our members are in positions of high compensation. I suspect that finance in their hands are less likely to be wasted on self indulgence. Rather than bemoaning 'unjust' pays let us not neglect to educate our youth to be faithful stewards in industries with potentially high compensation.
T. Joe,
It would be interesting to determine whether none of the c. 1890's Battle Creek San revenue was derived from tithe. Kellogg maneuvered things such that none of the revenue could be be used to advance the work out of state, as I recall. Thus the work was hindered, since that means was needed elsewhere. If the fact that revenue is not derived from tithe justifies violating divinely inspired counsel now, then it should have justified it back then too.
Philip,
We can't use such considerations to justify blatant disobedience. Indeed, Dr. Luke made such a high salary that the Apostle Paul had to support him by making tents. Apparently, Dr. Luke was following the example of Jesus more closely than some of today's Adventist health professionals, i.e. he wasn't making $1.179 million a year.
Ted Wilson has repeatedly called for revival and reformation. If there never are any efforts to bring the payscale of health workers back into line with the divine counsel God gave us, then it is possible that "revival and reformation" was nothing more than a nice sounding term.
How about equalizing all ministers' pay across all world Divisions?
Ed,
I think it would be an error to label this a mere cultural issue. I mentioned above Dr. Luke receiving financial assistantance from Paul. See AA 352. Was it the culture of those times that physicians didn't make that much? "And a woman having an issue of blood twelve years, which had spent all her living upon physicians" (Luke 8:43). So really, times haven't changed much at all. Healthcare was expensive back then, and it is expensive now. But both the Great Physician and Dr. Luke operated differently.
Cultural changes would have no bearing on the dire spiritual effects referred to in PK 61 ff. I think we really have to come to grips with the spiritual effects of a loss of the spirit of self-sacrifice in the work.
T.Joe,
I have heard that board members of our health institutions receive remuneration. Is this true? If so, how much? On what basis would a church administrator receive pay for such board positions when he is already being paid as a church administrator? If they are being paid, when did that practice start, and does it have any connection with the 1989 meeting you referred to?
Greetings Bob
I have downloaded many 990's of healthcare nonprofit institutions, including Adventist ones. And saw no instances where outside board members received remunerations connected to the reporting organization. Once in a while you will see perhaps a few hundred dollars which I presume is related to travel costs…I think you can be secure…there is no movement of revenues to outside board members…much different from for profit corporations where board members can be issued stock and payments. Nonprofits also rarely loan money to either board members or key or executive persons. Ocassionally you will observe loans to executives, mostly used for relocation purposes. The 990 also shows family members of the board that receive remuneration
"Nate, tell us, is Loma Linda's CEO pay 'fashioned after the worldling's standard'? Yes or no?"
Pray tell, Bob, what is a "worldling?" My, but I do love that word – WRRRLDLNG! Say it slowly. Feel its sinewy consonants. Let that "W" purse your lips. Then let the other consonants follow, slowly stretch the muscles of your lips, your tongue, your nose – even your cheeks, into a sensuous, sinister sneer. Even if you have no idea what the word really means, doesn't it just feel insidiously EVIL? Little did I know that Ellen White was a regular Shakespeare, though certainly not in the "worldling" sense.
Okay, enough fun. Now let me try and answer what I presume to be your question, Bob: Yes, I agree that the Loma Linda CEO's pay is indexed in some way to the marketplace. But here's a question in return for you: What minister, teacher, nurse, secretary, janitor, security guard, courier, respiratory therapist, etc., employed by denominational institutions does not also have his/her pay "fashioned after the worldling's standard?" Please cite for us the divine guidance as to when the "worldling's standard" should and should not be used to guide denominational pay standards.
Doesn't it make more sense, from the perspective of freedom and Christian witness, to pay employees at least close to market rates, and then anticipate that they will exhibit, in their stewardship, a spirit of generosity commensurate with their blessings? Or would you prefer, Bob, that we pray for God to handle "greedy" high income health care workers the way that He dealt with Annanias and Sapphira? By the way, do you happen to know how much of her income the Loma Linda CEO donates to charity? Is that important, or are you not comfortable with that possibility because it is too hard for the church to police and enforce?
Maybe, to make sure that the proper spirit of generosity and self sacrifice is present among church workers, all denominational institutions should have all SDA employees, when they are hired, agree that, as a condition of employment, they will have a portion of their income sequestered and "donated" back to the Church. This could be a sliding scale, dependent on relative pay inequality among various categories of employees. I've got it! I know what we need – a Seventh-Day-Adventist Paymaster General who can find other-worldly standards after which to fashion the compensation of SDA employees of denominational institutions! Yes, I'm certain that this will lead to the Josianic reform that the Church so desparately needs.
The materialist's cant is that inequality equals injustice. The greater the inequality, the greater the injustice – and, the greater the evil to which the inequality must be attributed. The underlying assumption of course is that in a good and just world, equality is the most natural, harmonious state of being (utopian pre-being). If true, God is surely the most unjust tyrant in the history of the cosmos. For there is no evidence that He has ever had great regard for equality, either in creation or in His interventions in the natural order. Why so many Christians persist in twisting a positive moral mandate from the injunctions of the Tenth Commandment is something I have never understood.
Well I find it very interesting how rapidly this discussion morphed from the complexities of funding a large health care institution to the topic of compensation for physicians and health care executives. Perhaps because the latter topic deals with numbers that are more within the comprehension of most of the commenters?
So permit me a few observations on the latter topic based on my own experiences and those of close friends and relatives.
1) Greed and Envy are two sides of the same coin. Someone else's Greed does not justify my Envy. I know people who have large incomes who choose to give substantial portions of their time and/or money away, resulting in modest net worths. I know people with modest incomes who have been able to accumulate substantial net worths by careful investment. Who is hoarding and who is generous? How closely do Greed and Envy correlate with how much money you earn or control?
2) Do not confuse executive compensation with compensation of practitioners of the learned arts. Most physicians earn a fraction of what these hospital administrators earn.
3) If you work for a non-profit entity you have to take your compensation in salary and benefits. Most highly compensated executives prefer to take most of theirs in various forms of equity participation which have preferential tax treatment in the USA.
4) In addition to their (modest) salaries, SDA pastors and teachers in North America have excellent educational and medical benefits.
5) I know two young ladies who both graduated Magna Cum Laude from SDA colleges in three years. One chose not to go to LLU (or any other medical school) because she did not want to wait until she was in her 40s (or possibly longer) to be able to pay off her debts. The other chose to go to LLU and will probably complete her professional training sometime in her early 30s. I do not know how long it will take her to liquidate her debt. Both are committed Christians, yet God has led them along different paths toward different ministries.
6) I know a NIH Fellow in his late 30s whose medical training is not yet complete. Courtesy of scholarships and taxpayer funding he basically has no educational debt. Due to his chosen specialty and benevolent disposition he will probably never accumulate very much wealth. God willing someday he may make a major contribution to the healing arts.
6) How many pastors are prepared to spend their 20s and even their 30s in post-graduate education before they can take a "regular" job? And perhaps another 10 to 20 years paying-off their educational debts?
Jim,
I think you are right that it is difficult for people to comprehend the scale and complexity of finances at a large medical facility. I have an MBA and still find it challenging to understand.
Does LLU have an endowment program to directly offset a portion of student tuition in the medical arts schools?
Greetings William:
You raise a good point, i.e., "I have an MBA and still find it challenging to understand." I presume you have reviewed audited statements from LLUMC or the EMMA application for tax-exempt bonds for the institution. Move over to The Mayo Clinic and you will see quite a difference again in complexity. All of these teaching hospitals are different.
One thing I keep hearing from "insiders" is the problem that the board at LLUHC (Formerly LLUAHSC) is composed of a large number of busy-with-church affairs members (mostly at the Union, NAD and GC). The complaint is that they are not business trained nor are they experienced in hospital management, etc. What can they bring to the table of management? For instance, you will notice that The Mayo Clinic board chairman is also the CEO of Best Buy and many other board members are deeply experienced business people. There are a few on LLUHC's Board, of course, who are quite naturally savvy, but only a few have a deep business background. That is enough said since I have not researched the affairs of the LLUMC Board or observed myself how it operates (board minutes do not carry much detail along important lines of discussion). As you know, the public face or ego is very important to maintain in church motivated organziations. I'm sure with your MBA degree you recognize the value of a good education in business and economics. Unfortunately, individuals without this training do not have an experience to evaluate the creativity and business insights they are missing.
I have found that business is the most creative things that humans do, more than education, or engineering, or psychology, etc. (I have been on the board of several billion dollar organizations based in NYC and California and have observed this creativity first hand, plus I was an owner of a business about as large as LLUMC in gross payroll) Business leaders at the top have the most creative tools invented by mankind available for sales and marketing, economics, management constructs and ideas, the reach and limitation of money, business computer models and software, public corporation regulations and business law, people and human resources, tax administration, presenting products and public acceptance, etc. And as you point out hospital administration is increditably advancing and complex (and unique). There are specific accounting rules that apply to hospitals on top of the government regulations, not found in other businesses.
Cheers
tjoe
PS: One take away from this article (I hope you saw) was the paperthin residuals left over after expenses for LLUMC (you can be underwater without knowing it in these conditions). The hospital maintains a line of credit and can go to the bond markets (I don't expect the Church could foot the bill for bankruptcy). But as you will learn in an upcoming article LLUMC already carries a little more than $700 million in long-term debt and interest and is facing the forced construction of a new hospital by 2020 that is estimated to cost more than $1.2 billion. Frankly, you have to admire the administration of LLUMC for keeping the doors open and maintaining the education of medical students, nurses and graduate residents in the face of such challenges. All this while serving the medical needs of the community. John Harvey would be impressed (I'm quite sure).
T Joe,
There is an old truism in business management that "If you want to manage a business well, hire someone who knows how to manage a business well." That is why most corporate boards are dominated by people who are successful business managers. Not SDA-affiliated institutions. The history of poor decisions driven by ministers sitting on the boards of church-owned corporations is long and their failures many.
Paper-thin bottom lines on corporate financial statements are more frequent than many people realize. Politicians may enjoy demonizing oil companies because of their "huge" profits while overlooking that many industries enjoy much higher profit margins. WalMart, Apple Computer and a long list of multi-billion dollar businesses each have a higher profit margin than the big oil companies that report larger profits just because of their total cash flows. Given a slow economy and the growing burden of government regulations it is amazing that hospitals, oil companies and other industries are surviving.
In five different posts above, I referenced PK 61 ff which warns of the serious spiritual dangers of a loss of the spirit of self-sacrifice due to demanding and receiving high salaries. I don't see, though, where anyone has yet commented on that passage or that principle. It's an important issue that should be addressed.
I know the cost of living is high in California, but I highly doubt that it requires a salary of $1.179 million to make ends meet if the spirit of sacrifice still lives.
Certainly one might expect that if a church worker is receiving an exorbitant salary, his giving is increased. But I do know that sometimes what happens is that a large share is merely buried in the earth in the form of more grandiose possessions that aren't really needed.
I'm curious, Bob. Just what does it take to make ends meet in California if the spirit of sacrifice still lives? It seems pretty clear that you have the answer. Inquiring minds want to know.
What's next on your agenda – obesity in high places in the Church, and the loss of a spirit of self-sacrifice, not to mention temperance, due to demanding and receiving too much food?
Bob ….. I don't see any evidence that anyone here on the AT blog is a Union, NAD or GC official who sits on the Board of Trustees and can answer your question or concerns (whatever). This is probably the place where you are least likely to find someone with authority to comment or satisfy your inquiry. You need to make your cognitive dissonance known to someone who can soften your concerns or get you to understand why Ellen White is irrelevant (or unispired) on this contemporary issue. No one here actually voted or reviewed the "high salary" you speak about. Probably the best would be to go to the top….Pastor Ted Wilson (GC President) or Ricardo Graham (Pacific Union Conference) who are voting members of the Board of Trustees…they would be your best bet….I don't have any better suggestion unless you want to picket these institutions. The list of board members can easily be found on the 2011 tax report 990 for all the Adventist healthcare institutions. Loma Linda University is actually consistently lower than others. There are more than fifty executives over a million dollars in "total compensation" (see T Joe Willey. Million-dollar Salaries in Adventist Healthcare. Adventist Today. Spring 20-13). Good luck.
Cheers
tjoe
Nate & T.Joe,
Still no comment on PK 61 ff. That being so, it seems obvious that the spiritual principles outlined in those pages are still pertinent today, and applicable to the situation at hand.
Nate,
What's the point? T.Joe exposes a blatant and extreme disregard of divine counsel, and you want to quibble over exactly where to draw the line, and use sarcasm? What not just accept the divine counsel God gave us for what it is without trying to belittle, especially if you have no response to PK 61 ff?
T.Joe,
"You need to make your cognitive dissonance known to someone who can soften your concerns or get you to understand why Ellen White is irrelevant (or unispired) on this contemporary issue." What exactly is that supposed to mean? What cognitive dissonance? PK 61 ff. and may other places say what they say. Irrelevant? Uninspired? Why in the world would I want to find someone out there to convince me to become an apostate as it pertains to the Spirit of Prophecy?
T.Joe,
Amos 3:7 Surely the Lord GOD will do nothing, but he revealeth his secret unto his servants the prophets.
Do you also think Amos is irrelevant or uninspired re: the above statement, and that God changed His mind regarding remuneration for church workers without sending us a prophet to tell us about it?
PK 61 ff. describes how Hiram demanding and receiving high wages led to everyone doing so, which led to a loss of the spirit of sacrifice, which led to apostasy. What exactly do you disagree with in that description? You do believe that Solomon built the temple, and hired Hiram to help, don't you?
And so it has been since the beginning of human history, Bob. Needs and desires for material goods and comforts drive humans to acts of great creativity and benevolence, as well as acts of terrible destruction and evil. Life expectancy in the West, where people expected to pay and be paid based on value, merit, and achievement, went from just under 50 at the turn of the Twentieth Century to nearly 80 in just one-hundred years, despite two devastating world wars.
As tjoe has pointed out, different times and circumstances lead to reordering of our values and priorities. We always need to be open to re-examining and remodeling those values and priorities, recognizing that our own times and circumstances will soon be dust. None of us want to leave our children and grandchildren shackled in structures we have built, which they can neither escape nor modify. Imagine if the prophetic vision of Christianity had remained captive to the harsh, autocratic God who looms large in Old Testament prophetic perceptions.
If "divine counsel" told you that two plus two equals five, what advice would you have for us? I not aware of a correlation between particular income levels/expectations and the spirit of sacrifice. Recent research suggests that values play a larger role in the spirit of "sacrifice," at least in America, than does the reality of market demands and expectations (cf., Who really Cares, by Arthur Brooks).
I am of course aware that the perception of an urgent, common cause can and does draw like-minded people together in a spirit of so-called "self-sacrifice." But intense emotional investment in selectively advancing a particular feature of an historic identity group agenda in the name of self-sacrifice can often appear, from other angles, to be little more than sententious self-advancement.
Check the news today and see how the secular business community is up in arms about the outrageous CEO pay in all areas of industry. While overall salaries are only up some 5% since the 1970s, CEO pay is up over 870%. Is it any wonder people are outraged? There is simply no justification for this. It is simple greed. It will cause large publicly traded companies (like Oracle) to falter just as surely as it will contribute to loss of faith in our church's health institutions. T Joe's analysis shows that LLU is in a poor area of California serving a poor population, and paying it's managers world class CEO pay is simply bad management and greed combined.
Well, Mark. Certainly those stats suggest that something besides normal market forces are in play here. But "simple greed" as an explanation is probably…well…simple, to put it kindly. Had you purchased 100 shares of Apple stock back in 1982, for $160, those shares, at 2009's split-adjusted share prices, were worth around $92,000, a staggering 57,400% return. And if you had sold those shares a year ago, your return would have been even greater. How's that for greed?
It certainly feels good, I'm sure, to vent. And there are plenty of things to vent about in a society where bigger always seems better, and command and control economics are expected to sove all inequities and injustices. But "It's not fair!" begs an intelligent analysis of health care CEO pay. One aspect of such an analysis would probably avoid comparing apples to oranges. There are complex factors that have resulted in sprawling medical centers negotiating for tens and hundreds of thousands of patient lives that generate revenue flows in the billions. This kind of economic leviathan demands levels of expertise and connectedness that only come with experience. How much has the cost of health care gfone up since 1970? Have you taken a look at the costs of higher education, which have risen even faster than the costs of health care?
I don't think you can just look at a number or set of numbers and say, "That's wrong!" unless you are also prepared to thoughtfully address and understand how we got there. Most of us have a hard time understanding how it is that you can go from greed to a million dollar a year salary. I admit to being as greedy as the next guy. But I've never been able to greed my way into a high salary. Just how do you do that? Am I just not greedy enough?
Nathan, my observation is that the vaunted experience and expertise you often reference as critical to proper leadership in the Adventist Health System has been gained primarily through employment in that same system. There are many million plus earners in upper management at AHS who have nothing more than a four year degree and have no experience other than their work for AHS.
I suspect timing, including the loosening of compensation guidelines by the GC, and friendly (captive) boards are the primary reason for sky-rocketing compensation in the church (?) health system.
I think the step from greed to health care salaries that are orders of magnitude greater than a minister's pay is a fairly simple one, at least judging from the number of ministers who have jumped ship so to speak to take the first offer they get to go from preaching or managing other church entities to health care positions. It is the great reward many seem to pine for as they trudge along in less stratospheric jobs. There is a long list I could recite but you already know them I am sure. The question is, if managing such huge conglomerates is so complicated and difficult are we well served by having ministers and teachers in those positions who perhaps added an online MBA to their resume? I think that answer is obvious. So the arguments defeat each other. Either we need supermanagers who are super trained and therefore justify super salaries, or we are wasting huge resources padding the retirement funds of those who found a niche to wealth not available to most church workers but who are ill trained for such high pressure positions. One way these managers tend to survive the pressures of the big league is by contracting out all major decisions to consultants and we all know how that business is thriving. Another waste of resources in my opinion.
One other thought on your post Nate: the fact that education costs and health care costs have skyrocketed since the 70s is all the more reason why an overall salary average going up only 5% is so outrageous and why so many of our own preachers and teachers are living near poverty level subsistence. Many have actually seen their pay go down or benefits cut, however you want to look at it. CEOs (with a few notable exceptions) certainly have not made life better for the average American, to the contrary in fact. The fact that those with disposable income to invest in stocks may have benefited from the rise of equity values does nothing for the average worker who supplied the bulk of the labor that allowed those companies to be successful. The old tradition of company presidents sweating bullets to take care of their employees short and long term security seems to have been lost in this generation of greed and dot.com instant wealth. Sadly this attitude has crept into our health institutions as well. The wealthy are isolated in their comfortable corner offices and when not working are away at their second and third vacation homes. They never see the world where the rest toil away for less and less, ignoring their own health concerns because they can't afford to miss work or pay for care that has gotten too expensive for even what is left of the middle class.
Mark,
You have legitimate reasons about social justice of pay discrepancy. This is an issue that needs to be addressed at a national or even global level. How could the concern of the 99% be addressed in this country? Do our legislators have the stemina or courage standing up to special interests? How much control can our government exert on private industries? What are the causes or conditions that lead to the current state of discripancy? Do you have any idea how more equitable market forces can be developed for more equitable executive compensation?
Meanwhile in our market economy talent has a price tag. If it is not out of line comparing apple with apple we have no choice but to pay that price.
Paying someone a minister's salary to run a healthcare system as complex as the LLUMC would certainly instill no salary or no work of many employees in a hurry. As for the patients they can go to the County Hospitals.
Burt, Mark, Philip – your responses to my last comment seem, for the most part, quite reasonable to me. I have previously conceded that I am not arguing the appropriateness of seven-figure incomes in SDA health care. Mark's concern about high salaried executives hiring even higher paid consultants to make key decisions has bothered me as well.
We certainly need engaged, knowledgeable boards that not only demand accountability, but have the expertise to evaluate performance and make defensible cost-benefit decisions. But let's not think ourselves into high moral dudgeon before we know the right questions to ask and have some answers. The platitudes and tropes of class warfare do not perform those tasks well.
I cringe when I read that pay disparities need to be addressed at a national or global level. It is usually government regulations and policies that interfere with the markets by creating perverse incentives that lead to irrational wages and pricing. That is especially true in health care. I could make many times what I do if I practiced corporate compliance law. Why? Because government regulations have made economic life so complicated and unpredictable that highly regulated businesses have to hire $750 an hour lawyers to figure it all out and avoid the traps set by regulators who are more interested in generating revenues through penalties and fines than in actually protecting the public. Query: If I was one of the select few lawyers competent to do that kind of work, would it make me an even greedier lawyer than I already am if I accepted the going rate of $750 an hour to practice corporate compliance law?
I'm not sure Philip, what you mean by equitable market forces. Market forces are, by definition, not concerned about equity. They respond to the law of supply and demand. Certainly government has an important role, not as a player, but as the enforcer of a level playing field. The market isn't at all perfect. It's just way better than other systems that have been tried. Whether it operates as it should in SDA executive healthcare pay, I cannot say. I am simply not prepared, as some of you seem to be, to say that even if it does operate – even if 7-figure compensation packages are reasonable and necessary to recruit capable top executives – it is outrageous to pay them what the market indicates they are worth.
Nathan, no disagreement from me on allowing the market to dictate as long as crony capitalism is not the driver.
Nathan,
When I say the problem needs to be addressed at the national or global level, I meant the scope of the problem. Yes, governments and forces of the market led us to where we are. I was a bit idealistic that what led us to where we are could be reformed at those levels to enhance more equitable compensations. The difficulty about equity is it will involve comparing apples with oranges. CEO’s large compensation of non-performing financial firms comparing with CEO’s of health care institutions on tight budgets yet providing acceptable services to communities with positive employee satisfaction certainly do not sound equitable. One can reason that capitalistic market is efficient hence adjustments to equity are automatic although it may take time. The adjustment process comes when feedbacks of current state of compensation is perceived as out of line. My question is what would encourage, enhance, or speed up market adjustment (equitable market forces) for equity. Of course one big question that remains is whose criteria of equity are the gold standard.
Mark, as to "super-training," I am not one who believes in a correlation between degrees and competency. I could no more inculcate the skills necessary to successfully run a large company in a formal degree program than I could impart to my son the skills necessary to become an NBA player by basketball camp immersion. Good judgment, common sense, and emotional IQ are rare commodities, not usually developed or revealed in the classroom. Those who achieve the pinnacle of financial success in health care managment usually have reached that level only after decades of experience in the field. My law degree and license did very little to develop the skills I have honed to become a valuable trial lawyer. Nor can personal greed account for the hourly fee clients pay for my services.
Actually, on rereading your last post, I'm not sure why I thought your comments seemed reasonable. It was your first comment, not the second, that seemed reasonable. I think I will resist the temptation to respond in kind to your emotional Marxist outburst. Let me simply share my bedrock conviction that it is not the average laborer who has produced the wealth which makes America's "99%" the envy of the world. It is imagination, creativity, and willingness to take risks – the mind – which produces wealth. The "average" laborer has simply been the unintended beneficiary. And it is the rule of law, equal application of that law, and respect for personal liberty, that create the conditions for wealth production. I do not work for the average American, nor do I feel an obligation to the average American, whoever that is. Do you? The "old tradition…" is a myth of your imagination. The wealthy always fare better in tough economic times, especially if they advance the agendas of the ruling elites, as we see today, where implementation of anti-free market policies by the current administration are widening the wealth gap, and creating more and more barriers to entrepreneurship and competitiveness. Did a poor man ever offer you a job?
If we have knowledge and information about executive compensation in SDA health care – not just raw numbers to jinn up emotional reactions – an intelligent, productive conversation about what constitutes a reasonable salary for an SDA health care executive might be possible. But if you don't believe in free market economics, and if your beginning point is Marxist assumptions, then the slogans of envy and class warfare will make communication with actual ideas difficult to impossible.
Nate,
Somewhere along the way you decided my response was an emotional outburst, and Marxist at that. Not sure how that was telegraphed by what was written but it certainly was not emotional nor an outburst, and I do not consider myself a Marxist. I am a believer in free markets as long as the playing field is really level. That is not what we have today. I am not one who advocates redistributing hard earned wealth, legally obtained. But it does seem that crony capitalism is a widespread problem and probably a factor in our church institutions as well. I have no dog in the Bush vs Obama wars since both seem to me to have been rather poor leaders at solving problems, although at least Bush did not have an obstructionist Congress blocking him at every turn (then again maybe that would have helped!). At any rate it seems to me the cry of class warfare is the first red herring that is thrown up whenever any discussion of inequities in our system come up. It is not class warfare to discuss problems affecting one class of our society more than another although that term is used repeatedly on certain news networks to distract from the real problem. I don't buy it. And I am able to have a perfectly intelligent conversation about our church's and society's problems with an unlevel playing field without it being class warfare. I am for all classes. But there was a time when we had a much more successful middle class in this country and we were much better off for it. Too much power is now concentrated at the top end and that is the reason for much of the problem we see with outrageous salaries for those in corner offices who are laying off folks in middle and bottom positions so they can preserve a bigger bonus for themselves. That is not warfare to discuss, just a simple observation of what I see in all corners of our culture, including our health care institutions. Phillip asked what we can do about it, and frankly not much until we start getting a truly democratic representative government again. All we have now are congressmen (and possibly supreme court justices) who are bought and paid for by special interest groups with power and money to do so. Until we fix that issue we are doomed to continue this trend of more for the rich and powerful and less for everyone else. As for our church institutions I do not see an easy fix either.
Nate,
I still don't see where you have addressed the principles brought out in PK 61 ff. Further, since you state, "I not aware of a correlation between particular income levels/expectations and the spirit of sacrifice," you must not have read it yet. I would really appreciate your comments on the serious spiritual issues behind high salaries in God's work, after reading those few pages.
I realize about how 1989 affected this topic. But were the previous CEO's before the current one also paid such enormous salaries? Was there a time when the CEO of LLU also served as the CEO of LLUMC?
Mark, Your statement that the average worker provides the labor that enables the owner/executive to live in idyl comfort is straight out of Marx. The "average worker" is a non-existent, abstract mascot incontinently used by Marxists to create enmity and distrust between management and employees. In free markets there is always a very large gap between the high earning owners/key executives and employees further down in the hierarchy. And politicians who want to get elected always try to exploit that gap, as if it were ipso facto evidence of injustice, in order to justify transfers of wealth and power to the do nots/have nots – their primary base of political support. In command and control economies, the wealthy are the political ruler/apparatchiks of the state and the corrupt financial brokers who not only depend upon the rulers, but also keep them in power.
This gap really did not start growing in America until 2008, and its growth has not been particularly significant – at least not statistically – considering we have been in a serious recession, attended by a deluge of costly, job killing regulations. The time of the so-called Robber Barons was an era of huge growth in prosperity for all Americans (Read The Myth of the Robber Barons by Burton Fulsom). Nowhere is the gap which you decry more evident than in the entertainment industry and in professional sports, where differentials in roles and skill sets cannot account for enormous differences in compensation. How do you explain that reality – simple greed? Yes, let's stipulate that professional athletes and entertainers are greedy. But their greed doesn't account for pay differentials, does it?
I agree with you about the importance of the middle class to a healthy economy and a healthy political order. But I also believe that a healthy middle class depends heavily upon free markets. Where I think we might sharply disagree is on the question of whether market-driven mega-compensation for top corporate executives contributes to economic hardship for middle class employees. I would love to have that discussion…perhaps elsewhere.
And I wholeheartedly agree with you about the need for truly representative government where politicians cannot be bought by union and corporate interests, and then punt complex, incoherent legislation, written by anonymous lackeys and civil servants, to unelected, unaccountable regulators for interpretation and enforcement.
In reality, were it not for morally corrosive government handouts to the able-bodied, and grossly underfunded, unrealistic entitlements (ditto for public employee pension plans, which make "public servants," who often only work nine months a year, and retire in their 50's or early 60's, the largest class of multi-millionaires in America), there would be far more money flowing in the stream of private commerce, where the laws of supply and demand fuel creativity and direct resources to productive, profitable, stable employment opportunities. Would that narrow the gap? Unlikely. Would it raise the tide for everyone on the playing surface? Most definitely!
As I have conceded, SDA health care executive pay scales may well be influenced by cronyism. But unless all other hospitals, that pay their top executives 7-figure compensation, suffer from the same unholy alliances, I am disinclined to make that a working assumption. You'll get no argument from me, Mark, over the principles you profess to believe in. I just think some of the conclusions you reach are the result of leading with your emotions rather than your principles. Where is the unlevel playing field in health care? How has the rule of law been violated? What evidence exists that cronyism accounts for pay scales? None of those principles were designed to prevent or ameliorate unequal outcomes. So why does unfairness and gross inequality of outcomes figure so prominently in your arguments?
The unlevel playing field in healthcare is the power that high paid executives have wielded recently to commandeer group practices that are hospital based or too small to negotiate a fair price for their services. Our hospital decided in the pinnacle of the real estate bust that they could pay us 30% less for our ED services while asking us to do more with less nursing help. We really had no options but to work second jobs or more shifts at this pospital because none of us could sell our homes and move to a better position elsewhere. Other groups, anesthesia, and several small practices in town were treated similarly. On the one hand they were laying off staff and giving us the short end due to the "terrible economic situation" they claimed to face, while still taking in ever larger salaries for themselves, and it turns out still making 50 million or so dollars in "profit" that was buried somewhere as a nonprofit hospital. This is the sort of sleazy maneuvering we have come to expect from CEOs. So yes that has no doubt influenced my perspective, and given me some empathy toward the "worker class" I am a part of. Maybe for you that makes me a Marxist, but for me it just has uncovered the hole in the rotten apple. Greed, plain and simple. Patients are getting significantly poorer healthcare that is more risky as a result. I have no problem with exorbitant CEO pay if they are successful at making peoples lives better with good jobs at fair pay and relatively secure careers and in taking good care of patients, but when they sacrifice all of those things to keep their bonus big and getting bigger I do have a problem with that playing field.
“Marx,” “Marxist” (or “socialist”) are the rhetorical trump cards that are used to blunt the criticism of greed and its effects.
Rather than arguing the merits of greed or exploitation or denying the existence or realities of greed and/or exploitation, the invocation of the bogeymen of Marxism and socialism, or synonymous political or ideological labels are the inevitable, necessary rhetorical weapons of choice.
The longer I live the more I appreciate the intellectual candor of Gordon Gekko.
I very much appreciate and understand the perspective that leads you to feel very frustrated at those who wield economic power against you, Mark. I also appriciate the ability to discuss these issues with a specific context, rather than dueling with generalities. But I think you misunderstand what is generally meant by a level playing field.
What "a level playing field" clearly does not mean is that there will be no winners and losers. Nor does it mean that the rules of the game will not change. There have been many changes in the rules of the health care game. The idea of health insurance gained traction in the 1920's and '30's. Non-taxable employer coverage was approved by the IRS in the post WWII era when employers were competing for employees. Medicare and Medicaid then came along. Then laws were passed mandating that hospitals provide emergency care for all comers, regardless of ability to pay. And your subspecialty of medicine was very much a beneficiary of that rule. Finally, as costs escalated out of control, HMOs and PPOs provided opportunities for business people to make lots of money controlling and bending the cost curve down. The rules changed; the weather changed. And with those changes, new players took the field, with different skill sets and priorities to take advantage of altered conditions.
One of those conditions, as you point out, was the sub prime mortgage crisis. Forward-looking CEOs had to plan for the economic realities presaged by that meltdown. Apparently the hospital and you believed that there were other ED physicians out there who would be willing and able to do the work for 30% less than you were being paid. That sounds to me like a pretty level playing field for all ED physicians. Had the hospital been willing to continue paying you 30% more than other similarly qualified individuals would take to do the work, Why wouldn't that have suggested an uneven playing field? Why wouldn't that have been cronyism?
Of course those who control large revenue streams tend to get paid more. And when a CEO can cut or stabilize the spiraling cost curve of an organization, while maintaining quality, that CEO is worth a lot of money. Why is it sleazy for an organization to try and reduce the costs of goods and services as much as it reasonably can? Had you gone to your hospital with a credible proposal that, for a large sum of money, you would reduce, by a much larger amount, the cost of running its ED, while maintaining an acceptable level of care, would it not have been prudent for the hospital to accept your proposal?
I strongly disagree with your implication that a hospital, or any other business, including the church, should be an employee benefit organization (And by the way, if it is, the Loma Linda CEO must be doing a marvelous job, because LLUMC consistently ranks at or near the top in surveys of best employers to work for in the Inland Empire, based on employee surveys.). Obviously employee satisfaction is important to the quality of service and the profitability of an organization. But that is not the goal of a company. The goal is to produce the best possible product at the lowest possible price. And that means negotiating for the best prices on labor costs.
Professionals in the private sector do not enjoy civil service protection. Physicians at Loma Linda have contracts which must be renewed on an annual basis. That's not exactly job security. My clients could call me tomorrow and ask me to turn over their files to another law firm. Our security and job satisfaction comes from knowing that we are providing excellent service at a competitive price. If I learned that my clients could obtain my services from someone else in the region for 30% less, I would conclude that I must be charging too much. Would it not be reasonable and compassionate of them to offer me an opportunity to reduce my rates by 30% before taking their business elsewhere?
Your response is that quality of care and service is suffering. That may well be. But whether the trade-off is acceptable is the call of the entity that has the legal responsibility to provide emergency services to the community and still maintain prudent margins. Unfortunate and frustrating as it was for you, what you describe seems to be a good example of markets working as expected. Of course I realize that much negative can be said about large networks having control over tens and hundreds of thousands of patient lives. But that's another discussion. The more the government intervenes, the less free markets become, and the less power the individual has. But those who clamor for reduced costs, equality and universal access can't very well complain when people who have the right skills sets and connections take advantage of the new rules created to achieve those goals. Blame the rules and try to change them within the democratic process. But don't morally castigate those who get wealthy following the rules and taking advantages of the incentives created by the rules.
I agree with you Nate that these are calculated decisions based on what the system has been set up to allow in our secular society. So in that sense yes it is a level playing field to some degree. And though it has created tremendous difficulty for me since I was caught in a real estate jam with no options but to take a second job or default on my mortgage, at least I have a job (I should say two jobs!). The part that is most germaine to this thread is the fact that we are discussing church institutions who have a stated mission to serve mankind and especially to serve those who are having difficulty in life. That is pretty clear as a mandate from the New Testament and over the decades our institutions and other church institutions have done a noble job of serving the underserved in sometimes very difficult circumstances. So postulating from what sounds like a strictly business position about what serves the institutions bottom line as being the only goal worth striving for still rings hollow to me. As I have stated, wealth is not evil or good in itself. I am happy for people who are able to succeed grandly in life. But when they do so while managing church institutions who profess to have a mission to serve the poor, and they do it by cutting staff and salaries, by forcing people to work fewer hours and limiting benefits, all to protect the profit margin of a "nonprofit" hospital and by so doing justify their own huge salary, that seems morally dubious. If we are talking about for profit hospitals, no problem. But to risk lives by cutting staff to the bone and further is unethical, no matter how many times they claim no loss of quality or ability to deliver best practice care. All of us who work in these places know that is a big lie, and to claim it raises even more questions about the moral turpitude of those who do so. People do die for lack of adequate staff to care for them, especially in the Emergency Department. And many more suffer worse outcomes than they should for the same reason. How do you justify that? Just the cost of doing business? I can't abide that.
Why are you even talking about a "level playing field"? Has anyone ever found one? No, because they exist only in the illusions and delusions of philosophers. What matters in business management is not searching for a "level playing field" but how effective you are at managing in whatever conditions exist. The results of the search by politicans and others for that illusory "level playing field" is that it has only become more difficult for businesses to prosper and employ more people.
What is an "employee benefit organization?" I have an MBA and have never heard of one.
A "level playing field," William, is a meataphor. And like most metaphors, it cannot be taken literally. But I think it is generally understood to connote a meritocracy where hard work, knowledge, and skills, producing quality products and services that people want and need, at competitive prices, are the primary determinants of success.
You may not have heard the term – "employee benefit organization" – but I'm, sure you have seen the reality, if you've ever seen how Adventist conference offices or educational institutions often operate. I use it to refer to organizations without real competitors, that offer an actual or perceived essential function, where employees, as long as they don't make waves, are pretty much left alone, and not held to high performance standards for efficiency or for the actual quality of the goods or services they offer. One of the key features of such organizations is that management has little real authority to effect behavior and policy changes that run counter to the wishes/needs of the employees. Of course government is the most glaring example of an EBO.
Nathan,
Thanks for clarifying.
Can you show me anywhere that a "level playing field" exists per your description under the heavy burden of government regulation?
I'm still scratching my head to understand the concept of the EBO. No need to explain further.
You're right of course, William, from a purist perspective. Each alteration in the playing conditions, it could be argued, unlevels the field. How well the analogy applies depends on whom you consider the players to be. Using Mark's personal situation, it sounded to me, at least as between himself and other E.D. physicians competing for jobs, it sounded to me like there was a level playing field. Or at least the playing field didn't disadvantage him. If, on the other hand, the playing field is the medical care model, and the players are all who compete for scarce resources on that playing field, then certainly the field is not level. Mark could be either the beneficiary and the victim, depending on what other players you are looking at.
Once again, Mark, we're back to abstractions and nostalgia for the good old days that probably never were. Everyone I know in health care is trying to be as efficient as possible, in anticipation of the coming ACA tidal wave, the motto of which is: "The Poorer Providing Equally Poor Medical Service to All" – brought to you by a growing army of well-paid, unionized federal bureaucrats who will make you want to hug those nasty, overpaid CEOs that you now demonize.
How long do you think Adventist health care would last if it had to depend on offerings to survive financially? I don't know of many physicians, or other health care workers for that matter, who voluntarily accept less than market rates for their services. Do you? Please tell us which medical care providers should work for missionary wages with no other thought in mind than saving lives in exchange for basic food, shelter and clothing?
I'm sure it should come as no surprise to you, Mark, to learn that probably at least 95% of Americans, who are worse off than you financially, would make the same arguments to cut your compensation even further. Of course lives are always at stake whenever there is an attempt to effect greater efficiencies and cost savings in essential services. The ability to do as much or more with less may, at least in theory, increase the ability of the hospital to provide equal access to more patients, thereby making some diminution in quality an acceptable trade-off. So who gets to make those decisions? Do you seriously believe that cutting back the salaries of CEOs will affect those decisions? Before your salary was cut, was the CEO making too much? Had you been able to negotiate a 30% pay increase because of an emergency physician shortage, instead of a 30% cut, would you be complaining about the morality of CEO compensation?
At all levels, the medical industry is being forced to do more and more with less and less. Tens of thousands of government jobs, along with over a hundred new federal agencies are being created to make this happen. Billions of dollars each year will be diverted from direct patient care to management of the care providers and distribution of serivces. And you're worried about CEO pay? You can be dismissive of profit margins. But non-profits are businesses too, and they have to maintain acceptable margins to stay in business. With billion dollar revenue streams, those margins must be maintained in the tens of millions each year. A hospital that decides to pay physicians above-market rates can end up with millions of dollars in fines, as The White Memorial Hospital recently learned the hard way.
Now you can argue that anyone can be successful at preserving and expanding market share in that kind of economy – that it doesn't take a million dollars, or even half a million to lure an executive into these shark-infested waters, with little job security. But that's an economic argument, not a moral argument. Or you can argue that the "Church" should find some ideological mission metric, as it tried to do in the Merikay Silver case, by which to index the wages of all who work in Adventist health care to some transcendent standard. But it seems foolish and petulant of you to jump back and forth between different principles to give moral and righteous credibility to your Somebody Done Somebody Wrong Song.
You crack me up Nate! Good thing that as an ER doc one of the essential requirements is to have very thick skin, so I take no offense at your somewhat over the top jabs at my "foolishness and petulant" remarks. Your points are well taken and like most arguments there is a sliver of truth to what you say. Of course in my situation you can adjust all sorts of variables and say what if…. but I can only deal wth what actually happened and what exists now, not what could have been. I know this, my institution used to aim high, believing that quality of care was the paramount driver of success, both in serving the population well, and in securing a viable future for the institution. Everything else turned on that principle: be the best and people will come, they will be happy, and recommend your services to others, which in turn breeds a cycle of success for everyone from the janitor to the CEO. At that time our CEO was a nun from the Sisters of Providence and I am quite sure she was not making today's CEO money. The institution thrived, growing steadily to be the major provider of healthcare not only in our town but in our entire region. The moment we started worrying about the business model more than the quality of care we started to fall down, both in quality and in our bottom line. Coincidence? I doubt it. Quality cars are built by companies who push that standard no matter what, both in good economies and bad, and they survive because they produce a quality product that seems to find customers in all conditions. Healthcare is also something that will attract people who perceive a quality product and like you said, that is the most level of playing fields. Produce something that people want and deliver it at a fair price (not always the lowest price) and success will follow. This idea that good CEOs are the ones who can cut cut cut the quickest and deepest to give a better quarterly statement is so shortsighted in the long run. We have become an ADD society where we reward those short sighted tactics with high pay and delude ourselves into thinking we are just getting our efficiency up. Meanwhile the quality keeps slipping and sooner or later the public will see that the emperor has no clothes. Perhaps you can imagine having some chest pain and going to the ER to discover that you are having a big MI and not enough staff to care for you…cath lab has to wait because it is too expensive to keep staff on standby while your myocardium dies cell by cell. There is no free lunch. If we value human lives (and that is a big IF for many CEOs today) then we have to do the right thing even when it is expensive. Personally I believe a church institution who does that will be rewarded for doing the right thing in the face of a society who does not care, has no long term vision, and only rewards short term gain. We are supposed to have a long view of life, and padding the CEOs pocket while cuts are in effect everywhere else makes no sense, either from a business model or from a values/morals model. Then again, maybe I am just being petulant!
I am truly sorry to read how deeply dissatisfied you are with your work environment, Mark, and to see how you have come to demonize the decision-makers in your hospital. It is particularly unfortunate that you cannot escape to a better situation without an unacceptable trade-off. I can't imagine how miserable it would be to feel trapped in such an environment.
I suppose my perspectives are also very much influenced by my work environment. I feel incredibly honored to be trusted to handle legal matters for Loma Linda. From top to bottom, I have had very positive experiences with executives, physicians, nurses, and support staff. I see them as deeply committed to serving the surrounding communities while burdened with great financial challenges. So naturally, though I don't know whether their compensation is too high or too low, I am generally defensive for health care executives, and I take umbrage when you generalize from your personal situation to pass judgment on other people in other health care settings.
The other day I heard an interesting contrast between the way liberals and conservatives see the world. "Liberals are moved to anger by what they see as wrong in the world; conservatives are moved to gratitude by what they see as right in the world." Of course neither perspective excludes the other. But I do think we can choose the perspective from which we see "the slings and arrows of outrageous fortune." I suspect that you may be well acquainted with folks at Loma Linda who have a sharply different perspective of the environment here than I do. And that reflects the reality that we tend to find in other places fuel to feed the perspectives from which we view the world that we live in. At the risk of sounding Panglossian, its tough for your heart to be filled with anger and gratitude at the same time. One always crowds out the other.
To the extent that your “interesting contrast between the way liberals and conservatives see the world” is true, what do you think motivated the likes of Theodore Roosevelt, Mahatma Gandhi and Martin Luther King, Jr.? Did they seek to reinforce their gratitude about what was “right in the world,” or were they moved to change what they saw as wrong in the world?
(Clearly there are other historical figures about whom I could have asked the same.)
Of course, Stephen, my "contrast" is a gross generalization which, even if it contains truth, has a multitude of exceptions. Nor did I mean to suggest that those who seek to change what is wrong in the world are somehow deficient in gratitude. I do think that contemporary liberals totalistically repudiate of all cultural, political, and religious sources of moral authority. The result is a mindset that is only grateful for that which can be molded to fit the beds of utopian progressivism – a mindset that demonizes and/or marginalizes all who resist the "gracious" invitation of Procrustes.
The liberal reformism of the individuals you mention was strongly permeated with a deep and abiding faith in the ability of virtuous individuals to rise above their circumstances in the fertile soil of liberty. They believed in freedom and equality of opportunity, not dependency and equality of outcome. Theirs was not an everybody-gets-a-ribbon-world.
T.R. loved America and Western Civilization not simply for what it might become, but for what it was and had been. The reformers you mentioned drew on generally accepted religious and moral authority to advance natural rights and liberties which were cherished by traditional Christians. They shamed Christians by holding up the mirror of their deepest values. Today's reformers demonize traditional Christian values as they attempt to make equality for the sake of equality their god. I don't think any of the reformers you mentioned would be comfortable with where those who claim their mantle have taken their values.
If liberals see themselves as living and seeing the world with a grateful heart, I rejoice. Whatever one's political philosophy, living with bitterness and resentment is terribly corrosive. It is simply my sense that conservatives seem more likely to have a baseline level of joy and gratitude than liberals. But I certainly wouldn't want to have to prove it.
If there is anything I have learned in my life it is that there is no benefit in trying to color everything and everyone as a liberal or conservative. Life is so much more complex than Fox and MSNBC have tried to make it. And don't get me started on the loud foolishness on talk radio. The left has no patent on foolishness and likewise the right has its own silly positions on so many topics. The world does not care about this aritificial line we have drawn in modern America. I grew up thinking I agreed with most conservative positions but have come to see life as more nuanced and complicated than those simplified world views. So to generalize that all liberals are ungrateful and bitter while all conservatives are grateful and happy seems a bit naive. I am not a bitter person, although I strongly disagree with how many nonprofit institutions professing to stand for religious principles have chosen to treat their people.
As for my own situation, there are still many wonderful nurses and colleagues that have weathered the storms with me, and we now are like a band of brothers who have been to war together. And of course the actual time treating patients in crisis is the greates reward of all, and one that no administrator has been able to take away from me. I am most grateful for that!
As for LLU, I wish it all the best. My son is getting a good education there in the LLUSM and my daughter is there in the School of Nursing. So I am certainly a supporter of LLU!! It is my alma mater and my father's as well. We have a long history there. But despite my support for this place, I will speak up for what I see as poor management by the board in allowing these salaries to get out of hand. Only in an economy where all of the many employess and professionals are also thriving is that kind of compensation appropriate. I love how CEOs can justify cutting everyone's salary or job except their own. Such human greed should not be allowed at LLU or at any other religious institution who's motto and creed is to serve the poor and needy. I certainly agree that sometimes cuts have to happen in order for the institution to remain viable, but that should include the CEO's pay and not just everyone else's.
You’re right about seeing and labeling “everything and everyone as a liberal or conservative.” (It is deep-seeded in my man Nathan’s way of thinking and assessing things however.)
I believe it causes significant blind spots.
Your argument, Mark, is that the laws of economics should be suspended in tough financial times. It is emotionally compelling, but unworkable and dangerous in practice. Once you go down that road -once you decide that your moral compass, rather than the laws of supply and demand, should determine appropriate wages and prices if all are not "thriving" – it will not be long before no one is thriving except the powerful elite who possess the most intimidating moral compasses.
Don't be too quick to accuse someone of greed because they earn more than $1 million a year. There are plenty of people looking at you as a physician and thinking you are greedy because your income is so much higher than their income.
I agree with you William, in the big scheme of things I have not much to compain about for myself. Although it was difficult to absorb a 30-35% cut, at least I still have a job (or two), and many others have suffered much more, including loss of assets like homes etc. My point is only that it is morally reprehensible to be cutting everyone below you while you take a bigger and bigger salary, and get rewarded for your cutting skills because of a better bottom line for the institution. If you ask your employees to sacrifce that much you should be willing to sacrifice a little at least to show some concern and empathy for your staff. This is true in commerce generally but in health care it is even more serious because you can cut to the point that you are killing people who come in to be cared for in crisis. There is simply no justification for that in my mind.
There was indeed a time when the pendulum was too far off the other end and unions were too strong, but we are off the opposite end now, where corporate power is so strong that the bottom 90% feel powerless to control their destiny. No job security, pay cuts to the point of real hardship for many (not myself) and no hope for a solid future. So while we can argue cold economic theory with supply and demand calculi, there is a human side to it that a church organization that professes to exist because it cares about God's children should add into that calculus. We can be WalMart if we want, but that is not what our professed values say.
Mark,
I sympathize with you about getting a pay cut. The range you described is pretty severe. I work for the Army and tomorrow is my first of 11 furlough days that will produce a net 16% cut in my pay in this last quarter of the year. We will adjust and may have to dip into our "rainy day fund" a bit, but we'll get through it.
There is plenty of injustice and unfairness in our world. We can complain about it and maybe we can do something about it. But complaining without seeing what you can about it just raises your stress level and takes a toll on your health. Have you considered that perhaps in these circumstances God is giving you new opportunities for ministry that you did not have before? I've had plenty of times where God sent me to help someone and after leaving realized that my troubles were nowhere near as severe as the situation I had just seen.
Mark, the pendulum has always swung too far one way or the other from someone's point of view. That's what happens in free markets when humans are in charge – even decent, well-intentioned humans. That's why we can't invest our passions, our faith, or our hopes in human systems. If inequities in wealth distribution are leading Americans to "feel powerless to control their destinies," what we have is a spiritual problem, not a problem of material inequities. Only by refocusing on Christ and the gospel will your feelings of control over your destiny change.
Economic conditions change for reasons that are usually complex and poorly understood. Those changes are always accompanied by negatives, creating, in the minds of those who feel the adverse impact, the perception of correlation and the need for top-down, immediate solutions. We don't trust markets and free people to make the necessary corrections. So we give too much power to policy experts who always oversimplify the elements of the problem in order to sell their snake oil solutions. And when the solutions don't work, or even worsen the problems, the "experts" demonize, as saboteurs, those who opposed their agenda, and now say, "See, we told you so." (c.f. Obamacare)
It is government policy and cultural assumptions that have led to the situation which you blame on CEO greed. You have difficulty blaming that system because it has been shaped and guided under the banner of "social justice," which sanctifies all who march under it, and justifies anything done in its name. That system produced thousands of deca-millionaires during the sub-prime mortgage crisis. It produced tens of thousands of multi-millionaire physicians as employer provided pre-tax health insurance increased demand during the '50's and the first decades of medicare. And it is producing thousands of multi-millionaire business executives who have the skill sets and experience to guide what has become fully institutionalized, highly regulated medical care delivery.
The fact that there may be a very few noble individuals in society, who refuse to accept the compensation that they are offered, does not mean that those who do accept handsome compensation, which an independent Board determines is reasonable, are any greedier than you or I. I never cease to be amazed by the inverted moral reasoning that leads some to blame individuals when systems are responsible, and then to blame systems when individuals should be held morally accountable.
I don't believe that the "bottom 90%" in the health care industry feel the powerlessness that seems to have gripped you, who are without a doubt in the top 5%. But to the extent they are powerless, it is not because CEOs are receiving million dollar compensation packages. It is because government policy, as William Noel has pointed out, is placing too high a premium on such skill sets, and making it increasingly impossible for a truly competitive market to exist in health care, or in many other sectors of the economy.
The human side, of which you speak, is freedom, not elitist notions of material fairness. Ironically, the more that fairness and relative equality rely for their realization on coercive interventions, the less control individuals feel and have over their economic destinies.
Well Nate we have certainly beaten this topic to death haven't we. I do understand that government has played a large role in determining the forces at play in healthcare, most of it bad even with mostly good intentions. Governments in democratic societies are supposed to represent the will of the people but sadly the root of many of our misdirected policies stem from the muscle being wielded by very powerful special interests like insurance and pharmaceutical companies who are so large that they can literally buy off our politicians to get the votes they want. That has brought us largely to this point.
But I have always come out best in my life when I listen to my moral compass and follow its direction and it seems to me to throw that out the window as you seem to advocate would turn us all into cold calculating business machines that are all out to screw each other for what we can get for ourselves. In a pure market economy that is really the guiding principle isn't it? As a follower of Jesus I cannot discard the social gospel that his life exemplified and that many others have demonstrated to great effect. So I will happily sew up that smelly drunk and deal with all manner of street people and their problems knowing that nothing is coming back to me in compensation because I do believe that is the right thing to do, and what Jesus would want me to do. As long as there are still a few paying customers to keep my bills paid I will be happy, knowing that when I leave this place there will be some I have touched for the better, even saving some lives along the way. That is really reward enough! What other people feel they are justified in taking from a stressed system is up to them.
We certainly have beaten this topic to death, Mark. On that we most surely agree. As to Jesus' life exemplifying the "social gospel," I could not disagree with you more strongly. But no sense opening up another topic.
Insurance and pharmaceutical companies were certainly not the prime movers behind Obamacare. They simply tried to get the best deals they could out of a hackneyed bill that Obama and the Left were bound and determined to shove down the throats of the American people, regardless of the corruption neccesary to achieve that goal or the desires of the American people. Why is it that when you name powerful special interests, Mark, you never seem to think of trial lawyers, teachers' unions, public employee unions, academia, and the mainstream media? These organizations seem to be far more effective at buying politicians and getting politicians elected than insurance and pharmaceutical interests.
As to your statement that you sew up and treat indigent patients knowing nothing is coming back to you in return, I'm not sure of your context. If you are doing that in a hospital setting as an E.D. physician, you are being disingenuous. You do indeed get paid, even if not by the patient, and you are required by law to provide that care. I'm glad you think you are doing what you do because it is the right thing to do. But I think we should all be concerned when our belief that we are doing the right thing allows us to condemn others for not doing what we think is the right thing to do. I've never suggested that you should throw out your moral compass. I have only argued that a moral compass – particularly your moral compass – is the wrong instrument for understanding and addressing compensation differences in the medical care industry. Most sin is committed when people are wielding a moral compass. We do most of our sinning when we're right.
A note of clarification on how I earn my paycheck might help illuminate how my group is indeed providing a large chunk of free care to indigent patients. Our hospital serves as the region's referral center for both complex medical cases as well as indigent care as a Catholic hospital committed to serving the poor. My group used to get a stipend from the hospital as compensation for some of that free care we were giving to a large percent of our patient population. That is what was pulled out from under us when we were given the choice of accepting this new contract or walking. Since none of us could easily walk, we stayed and took on more work here at this hospital and elsewhere. That was the 30% cut that came as a sudden change, not phased in or stepped over time. So while we in emergency medicine are required to see all comers as you rightfully note, most facilities have mechanisms in place to compensate those in practice who pick up that free care. Surgeons and many other specialists are given stipends for taking trauma call etc. So in my case it is not a stretch to say that there are many times when I take care of people knowing there is no monetary compensation for it. But as I also said, there ARE other compensations that are meaningful to me.
You seem to want to create political lines to divide up the write and wrong side of our democracy. That is what I strongly disagree with, although I do agree that many of those other special interest groups (such as trial lawyers etc) have also had a detrimental effect on our system. It seems unlikely to me however that the ones you mentioned have had nearly as much overall effect on our system as large industrial groups and mega corporations, who have so much more money to throw around.
I am quite sure I do plenty of sinning both when I am right AND when I am wrong. Come on up north and lets take a day on the dock and solve all of these problems Nate! I am sure we can get it done in an hour or two!!
I don't think there are right and wrong sides of our democracy. There's nothing wrong with our democracy. There is a lot wrong with the federal government's attempts to destroy our democracy through over zealous federal agencies, regulators, executive orders, and the courts.
Cultural values have become deeply polarized and politicized in America as special interests have created new rights and judicially commandeered our democracy in order to enforce those "rights." Legislatures bought with government funded special interest groups and public employee unions have delegated to regulators the function of law making that is the constitutional responsibility of democratically elected and accountable legislators.
I don't create political lines. I simply recognize political biases and agendas reflected in the tendency to demonize those who disagree with "progressive" sentiments as greedy, racist, sexist, homophobic, xenophobic, etc., etc. I would love to see politics be relatively unimportant in our lives. Unfortunately, it looms larger and larger as more and more power is consolidated in government and the politically favored. Do you really think that is the result of power wielded by corporate America and the tens of thousands of businesses like mine who want less, not more regulation???
So you think that large corporations are responisible for impoverishing those who they depend upon to purchase their products? You think large corporations love the 40% growth in the federal government that has occurred in recent years; the 50% growth in food stamps; the near doubling of the national debt, ad out-of-control deficits??? The fact that you continue to focus on large industrial groups and big corporations, insisting that they have more money to throw around than other special interest groups only underscores the political bias which you deny.
I'm sure we can easily solve all these issues and come to a mushing of the minds with no more than half an hour on the dock. That's because that's all it will take for our wives to push us in the lake.
Your last sentence is the absolute truth! Nate and I have certainly taken over this thread so please forgive us TJoe, and thanks for your work in bringing this foggy subject to light and looking forward to more… In the meantime I will keep working on Nate's blind spots! =)