"Dreaming On" - The Illusions of the Leaders of Large Health Organizations, as Illustrated by Medtronic's Founder

On Health Care Renewal, we have posted story after story about amazingly well paid leaders of big organizations presiding over amazingly bad organizational behavior (including subversion of mission, conflicts of interest, deception, fraud, kickbacks, various other crimes and outright corruption).  Yet the leaders often seem curiously disconnected from what occurs on their watches, while they are sometimes hailed as "visionaries," and at times exude messianic confidence.

Medtronic's Founder on its Sacred Mission

A recent article appearing in an unexpected place provides an example of leaders' excess confidence in their own righteousness.  In the IEEE (Institute of Electrical and Electronics Engineers) Institute was a commentary by Earl Bakken, the founder of medical device/ biotechnology giant Medtronic, modestly proclaiming the "secrets of corporate success."

Keep in mind that while Mr Bakken founded the company, at age 91, while no longer its leader, he proclaimed, " I stay involved with my company."  As such, he remains proud of its mission statement,

In 1960, when corporate mission statements were rare, I wrote one that has never changed. It remains the company’s guiding principle. There are six tenets, but the first one is the most important: To contribute to human welfare by application of biomedical engineering in the research, design, manufacture, and sale of instruments or appliances that alleviate pain, restore health, and extend life.

Starting in the 1970s, I met with all new employees, explained our history and mission, and in each of their hands I placed a medallion imprinted with the mission statement. I encouraged them to live by it—at work and at home.

Note that the official mission also includes,

To strive without reserve for the greatest possible reliability and quality in our products; to be the unsurpassed standard of comparison and to be recognized as a company of dedication, honesty, integrity, and service. [ital added]

Apparently, he believes that under the "visionary leadership" and "astute direction" of the current, this mission remains central to the organization.

At Medtronic, we live our mission. It’s the basis for how we behave in relationship to our stakeholders, each other, our communities, and the world. But it also guides our relationships with ourselves. We live the Medtronic Mission every day in truly genuine ways by serving others. I am proud to have a mission that is so deeply woven into the fabric of this company that improves millions of lives throughout the world.

Here’s to dreaming on.

Honesty? Integrity? - the Company's 10 Year Track Record 

I hate to disillusion a 91-year old, but in light of the company's last 10 year track record, as discussed on Health Care Renewal, he does appear to be in a dream world.


Medtronic has provided our blog with lots of material, including some amazing stories about conflicts of interest (starting in 2006, here, here, here, here, here, here, here, here, nad here,) and revolving doors  (here, here, here, and here). 

The company has also made a series of legal settlements of various allegations of infamous behavior, in chronological order...
 
2006

- We discussed detailed and vivid allegations that Medtronic had been paying off doctors starting in 2003.
 - Medtronic subsidiary Sofamor Danek settled for $40 million allegations that it gave kickbacks to doctors in the form of sham consulting fees and lavish trips (look here).

2007

As Bloomberg summarized in 2014,

Medtronic agreed in 2007 to pay about $130 million to settle consumer suits accusing the device maker of hiding defects in its defibrillators.

 2008

- Medtronic subsidiary Kyphon settled a suit for $75 million and signed a corporate integrity agreement for allegations that it defrauded Medicare through a scheme that lead to excessive hospitalization for patients who received the company's spine surgery device (link here)

2010

Per the Bloomberg 2014 summary again,

The company agreed to a $268 million settlement of suits in 2010 over allegations that fractured wires in another line of defibrillators caused at least 13 patient deaths.

2011

-  Medtroinic settled for $23.5 million two other federal lawsuits alleging it paid kickbacks to encourage physicians to implant its devices (look here).

2014  

In June, we discussed a settlement Medtronic made of allegations that  Medtronic gave kickbacks (that is, bribes) to doctors to get them to use its cardiac devices.

2015

In April, 2015 we discussed three settlements made by Medtronic:
- Its subsidiary EV3 settled old allegations that it coached hospitals how to overbill the US government for procedures using its products
- The company settled allegations it gave kickbacks to physicians to induce them to use its neuromodulation devices.
- The company settled allegations it lied to the US military about US origins of its devices.

(And by the way, we will not belabor the contrast between the statement's committment to "recognize the personal worth of employees," and the gargantuan payments made to certain employees, that is, the top managers, all who got over $3.5 million in 2014, and the "visionary" CEO, who got over $12 million, look here. )

Summary

Someone needs to wake up Mr Bakken.  He may still believe in the mission statement, and wish that it is central to his company.  However, the track record seems to suggest that the mission statement has been honored often in the breach.

Perhaps the problem is that Mr Bakken is really much more detached from the company he founded than he now admits.  However, I worry that this immensely positive spin suggests that he, like many other health care oragnizational leaders, live in some sort of bubble into which no negative karma is allowed to penetrate.  Thus convinced of their own innate goodness, they can provide no check on continuing manifestations of corporate greed, most likely with the solace of the own fortunes they build up. 

IMHO, we need to break up these huge health care organizations which have become so big that those who run them cannot be in touch with what really goes on.  We need to reestablish the accountablity of leaders, and no longer allow them to get credit for all the good that happens, and dodge responsibility for all the bad.  True health care reform would entirely transform health care leadership, so that it can become well-informed, supportive of the mission, unconflicted, less self-interested, honest, and certainly law abiding. 

2:00 PM

Are Million Dollar Plus Business Trained Managers the Right People to Lead Health Care in the Time of Ebola?

You can guess my opinion on the answer.

Introduction

News and opinions about Ebola virus are swirling around the US, fueled by a tragic epidemic in West Africa, and fears that more infections could appear here.  On October 6, 2014, I posted my concerns that despite a tremendous amount of confidence expressed by government officials and health care leaders, our dysfunctional health care system might have trouble containing Ebola virus.  Less than two weeks later, my concerns do not seem so extreme.  The first patient to be diagnosed with Ebola virus in the US has died.  Two nurses who cared for him now have the virus.

There seem to be millions of words on paper and on the internet about Ebola appearing every day.  So I certainly do not want to try to deal with the problem in all its aspects.  I do want to revisit a particular set of issues from my October 6 post: the hazards posed by generic management deluded by business school dogma running health care institutions in the time of Ebola.  In particular, my focus is the management of the US hospital at which one patient died, and two nurses were infected, based on what has come out since October 6.

The Incoherence of Hospital Leaders

On October 6, we noted that the hospital, Texas Health Presbyterian, part of the Texas Health Resources hospital system, had issued conflicting and confusing statements about why the first Ebola patient, Mr Thomas Eric Duncan, was sent home from the hospital when he first presented.  The first specific statement by hospital managers was that there had been a problem with the hospital's electronic health record (EHR), as had been suspected by my fellow Health Care Renewal blogger, InformaticsMD.  Then the hospital retracted that statement, but provided no explanation with which to replace it.

Since then, there have been more inconsistencies in statements made by hospital managers.

Fever or No Fever?

First hospital managers said Mr Duncan arrived without a fever, but then review of his medical records indicated his temperature was as high as 103 degrees F while he was in the hospital, a fever high enough that it might reasonably have prompted admission given his other symptoms, even if Ebola was not a concern.  (See this Dallas Morning News story.)

Readiness for Ebola Patients?

Hospital managers assured the public they were ready for Ebola virus patients, e.g., in the Dallas Morning News story of September 30, 2014, 

When Ebola arrived, they were ready.

The staff at Texas Health Presbyterian Hospital of Dallas did a run-through just last week of procedures to follow if the deadly virus landed in Dallas.

'We were prepared,' Dr. Edward Goodman, an epidemiologist at Texas Health Presbyterian, said Tuesday in a news conference. 'We have had a plan in place for some time now in the event of a patient presenting with possible Ebola. We are well-prepared to deal with this crisis.'

Presbyterian said it is following recommendations from the U.S. Centers for Disease Control and Prevention and the Texas Department of Health in responding to the patient, described as being 'critically ill' at the hospital in northeast Dallas.

All precautions are being taken to protect doctors, nurses and others in the hospital, officials said.

Sadly, this statement soon seemed, as one politician once said, inoperative. an October 14 Washington Post article described how hospital health professionals had to essentially make up their procedures as they went along.

The hospital that treated Ebola victim Thomas Eric Duncan had to learn on the fly how to control the deadly virus, adding new layers of protective gear for workers in what became a losing battle to keep the contagion from spreading, a top official with the Centers for Disease Control and Prevention said Tuesday.

'They kept adding more protective equipment as the patient [Duncan] deteriorated. They had masks first, then face shields, then the positive-pressure respirator. They added a second pair of gloves,' said Pierre Rollin, a CDC epidemiologist.

Also,

He said the hospital originally had no full-body biohazard suits equipped with respirators but now has about a dozen. Protocols evolved at the hospital while Duncan was being treated, he said: 'Collecting samples, with needles, then you have to have two people, one to watch. I think when the patient arrived they didn’t have someone to watch.'

Worse, in the last 24 hours, there have been reports by anonymous people said to be nurses at Texas Health Presbyterian that the hospital was clearly not ready, per the Los Angeles Times,

The nurses' statement alleged that when Duncan was brought to Texas Health Presbyterian by ambulance with Ebola-like symptoms, he was 'left for several hours, not in isolation, in an area' where up to seven other patients were.  'Subsequently, a nurse supervisor arrived and demanded that he be moved to an isolation unit, yet faced stiff resistance from other hospital authorities,' they alleged.

Duncan's lab samples were sent through the usual hospital tube system 'without being specifically sealed and hand-delivered. The result is that the entire tube system … was potentially contaminated,' they said.

The statement described a hospital with no clear rules on how to handle Ebola patients, despite months of alerts from the U.S. Centers for Disease Control and Prevention in Atlanta about the possibility of Ebola coming to the United States.

'There was no advanced preparedness on what to do with the patient. There was no protocol. There was no system. The nurses were asked to call the infectious disease department' if they had questions, but that department didn't have answers either, the statement said. So nurses were essentially left to figure things out on their own as they dealt with 'copious amounts' of highly contagious bodily fluids from the dying Duncan while they wore gloves with no wrist tape, flimsy gowns that did not cover their necks, and no surgical booties, the statement alleged.

'Hospital officials allowed nurses who interacted with Mr. Duncan to then continue normal patient-care duties,' potentially exposing others, it said.

In response, the official hospital statement (authored by one Wendell Watson, "a Presbyterian spokesman," according to the AP) contained vague assurances, but no specific responses to the allegations,

'Patient and employee safety is our greatest priority, and we take compliance very seriously,' the hospital said in a statement. 'We have numerous measures in place to provide a safe working environment, including mandatory annual training and a 24-7 hotline and other mechanisms that allow for anonymous reporting. Our nursing staff is committed to providing quality, compassionate care, as we have always known, and as the world has seen firsthand in recent days. We will continue to review and respond to any concerns raised by our nurses and all employees.'

So while hospital officials (and local and national politicians and government leaders) kept up reassuring statements that our sophisticated, high-technology hospitals were totally ready to deal with a disease like Ebola, the reality appeared far different. 

Other Inconsistencies

According to a USA Today story, other inconsistencies included hospital statements about the date Mr Duncan's diagnosis was confirmed, and whether or not the hospital was diverting ambulances.

Were Health Professionals Silenced?

Of course, given the suddenness of the arrival of Ebola in the US, the acuity of the first patient, and the general atmosphere of panic, initial confusion in public statements however critical the information they were meant to contain may be, is understandable.

However, there are now allegations that hospital management was not merely confused, but trying to keep critical information secret, and the allegations do not seem incredible.

In a Washington Post story on October 12, about how many US hospitals seem not well prepared for Ebola infected patients, appeared this from Bonnie Castillo, director of Registered Nurse Response Network, part of the union, National Nurses United,

Castillo said the union has been trying to contact nurses at Texas Health Presbyterian Hospital, where Thomas Eric Duncan, the Liberian man diagnosed with Ebola, died Wednesday.

'That hospital has issued a directive to all hospital staff not to speak to press,' Castillo said. 'That is a grave concern because we need to hear from those front-line workers. We need to hear what happened there. … They have them on real lockdown. There is great fear. This hospital is not represented by a union. Our sense is they are afraid to speak out.'

The Los Angeles Times story included,

The Dallas nurses asked the union to read their statement so they could air complaints anonymously and without fear of losing their jobs, National Nurses United Executive Director RoseAnn DeMoro said from Oakland.

The October 14 Washington Post story noted

the labor organization National Nurses United read a statement that it said came from nurses at the hospital who 'strongly feel unsupported, unprepared, lied to and deserted to handle their own situation.'

The AP story of October 15 stated,

The Presbyterian nurses are not represented by Nurses United or any other union. DeMoro and Burger said the nurses claimed they had been warned by the hospital not to speak to reporters or they would be fired.

The AP has attempted since last week to contact dozens of individuals involved in Duncan's care. Those who responded to reporters' inquiries have so far been unwilling to speak.

 Covering up information vitally needed by health care professionals, other institutions, the government, etc to better manage a potentially fatal disease that is already epidemic in other countries appears completely unethical.  Doing so to preserve the reputation of managers seems reprehensible.  But the implication of the recent stories is that is what happened. 

Why Hospital Managers May Not Deserve Our Trust

The US has had no recent experience with any disease like Ebola.  So that mistakes, sometimes very serious ones, were made in the management of the first Ebola patients is not a big surprise.
 
What may be a big surprise to many Americans is how untrustworthy health care leaders, and in particular the managers of Health Texas Presbyterian hospital and its parent system, Health Texas Resources now appear.  After all, USA Today published on October 14, "Texas Health Presbyterian was a respected, renowned hospital."  While even people at respected, renowned institutions make mistakes when confronted with sudden, unfamiliar problems, should not the institution's leaders at least be trusted to in their public pronouncements?

Instead, it appears that the leaders appeared tremendously overconfident, and worse, may have silenced employees from raising concerns that could have reflected badly on leadership.  This occurred in a context in which transparency was imperative so that other people who might have to deal with Ebola patients might be better prepared.


On the other hand, based on what we have been posting on Health Care Renewal for nearly 10 years, the conduct of the Texas Health Resources leaders should have come as no surprise.  On Health Care Renewal we have been connecting the dots among severe problems with cost, quality and access on one hand, and huge problems with concentration and abuse of power, enabled by leadership of health care organizations that is ill-informed, incompetent, unsympathetic or hostile to health care professionals' values, self-interested, conflicted, dishonest, or even corrupt and governance that fails to foster transparency, accountability, ethics and honesty. 

We have seen many examples of hospital executives who seemed vastly impressed by their own brilliance, egged on by board members who were themselves executives of other organizations, and by marketing and public relations functionaries dependent on these executives for their own career advancement.  In particular, we have posted examples of hospital CEOs and other top executives making millions of dollars a year based on their supposed "brilliance," or "visionary" capacity, at least according to the board members who supposed to be exercising stewardship over their institutions, and the public relations people they hired.  Such brilliance has often been asserted, but rarely been explained or justified  (The latest example was here, and much more discussion is here.)

Most such ostensibly "brilliant" hospital executives had no direct experience in clinical care, public health, or biomedical science.

Making hospital leaders feel entitled to make more and more money regardless of their or their institutions' performance seems to be a recipe for "CEO Disease," leading to disconnected, unaccountable, self-interested leaders.  Hospital leaders suffering from the CEO disease may be particularly willing to countenance suppression of any facts or ideas that might raise doubts about their brilliance.  

So the leadership of Texas Health Resources may in fact be very typical of that of large non-profit hospital systems.  THR is such a system.  A Dallas Morning News article about Mr Doug Hawthorne, the Texas Health Resources CEO who just retired in September, 2014, stated

In 1997, Doug Hawthorne helped reshape the health care industry in North Texas by leading the creation of Texas Health Resources, an alliance of Presbyterian Healthcare Resources, Harris Methodist Health System and Arlington Memorial Hospital.

By 2014,

 With more than 22,000 employees in fully owned and joint venture operations, Texas Health is one of the largest care providers in North Texas. For its 2012 fiscal year, it had $3.7 billion in total operating revenue and $5.3 billion in total assets.

For leading this system, Mr Hawthorne made a lot of money, although apparently no recent data is available on his compensation,

He was among the most highly compensated not-for-profit CEOs in the region. For 2012, the most recent information available, his base salary was about $1 million and his bonus was about $1.1 million.

It should be no surprise that to justify this compensation, Mr Hawthorne was proclaimed a visionary.  According to the Dallas/ Fort Worth Healthcare Daily, Mr Hawthorne was inducted in 2014 into the Texas Business Hall of Fame.  At that time, 

'A healthcare visionary, Mr. Hawthorne is at the helm of one of the largest faith-based, nonprofit health care delivery systems in the United States, Texas Health Resources,' the Hall said in a release announcing the induction.

Yet Mr Hawthorne had no direct patient care experience, public health experience, or biomedical or clinical science experience.  Mr Hawthorne is on the board of directors of the LHP Hospital Group Inc, a for-profit that provides capital and services to non-profit hospitals.  The official bio, posted by LHP stated his educational background only included

B.S. and M.S. degrees in healthcare administration from Trinity University in San Antonio.

Furthermore, as we mentioned earlier, the current CEO of Texas Health Resources, Mr Barclay E Berden, who has only been on the job since September 1, 2014, also was hailed by system board of trustees for his "unique leadership strengths."  His current compensation is unknown, but I would guess is likely over $1 million/year.  He highest degree is a MBA, and like his predecessor, had much experience in hospital management, but apparently none in clinical care, public health, or biomedical science. 

Summary

Texas Health Resources' recent CEOs have been paid millions, and hailed for their brilliance, despite a lack of any direct experience in health care, public health, or biomedical science.  Leaders convinced of their own brilliance may live in bubbles that prevent penetration of any ideas or facts that may challenge that brilliance, making them thus susceptible to hubris.

So should we have been surprised that the leadership of the first US hospital system to directly confront Ebola de novo seemed more concerned with polishing their supposed brilliance than with transparently providing the information that other people who have to confront Ebola in the future so greatly need?

No, but one tiny silver lining to the time of Ebola is that it may make it glaringly obvious that we need true health care reform that focuses on reforming the leadership of big health care organizations. In particular, we need leadership that is well-informed about health care and public health; that upholds the values of health care professionals, specifically by putting patients' and the public's health ahead of their own remuneration; is willing to be held accountable; and is honest and unconflicted.

Allowing the current dysfunction to continue, while it will be very profitable to the insiders who run the system, will continue to enable tragic outcomes for patients and the public.  

1:02 PM

More "Visionary" Leadership That Turned Out to be "More Interested in Flash than Substance" - Continuing Troubles at the University of Miami

Over the last 20 years or so, health care organizational leaders somehow ceased to be mere mortals, and became visionaries.  The latest example of how their visions turned out to be cloudy appeared in the Miami Herald.

Background: Donna Shalala as "Visionary" President of the University of Miami

Donna Shalala, formerly the US Secretary for Health and Human Services, became President of the University of Miami in 2001 (see her official biography).  She has since been hailed literally for her "visionary leadership" (as recipient of the Health Leadership Award from the National Hispanic Medical Association in 2005).  In 2008, then US President George W Bush awarded her the US Medal of Freedom, the highest US civilian award, as "one of our nation’s most distinguished educators and public officials. She has worked tirelessly to ensure that all Americans can enjoy lives of hope, promise and dignity.")

At the University of Miami, as described in a detailed investigative report by Paul Basken in the Chronicle of Higher Education in 2011, Ms Shalala pursued a grand strategic vision to " bring the University of Miami into the ranks of the nation's elite research universities."  In an interview at that time, she claimed to have had "a very disciplined strategic plan to make this place much, much better, to move into the top ranks of American universities."

Cracks in the Wall Appear in 2011

However, Mr Basken reported that by 2011, that strategy was showing signs of failure.  He noted problems including rising deficits and a worsening credit rating; allegations that the university was failing to meet the needs of the poor patients for whom its doctors had traditionally cared for at Jachson Memorial Hospital while favoring paying patients at its newly acquired medical center; and concerns about conflicts of interest affecting top leadership of the university, including Ms Shalala (see our post here).  At the time, university leadership scoffed at the importance of these problems.  For example, Ms Shalala ridiculed doctors "who gripe" that the university had become over-extended by pushing research over patient care as "these people complaining they want to live their little lives without being researchers." 

After the 2011 report came out, Ms Shalala ridiculed  it in print as "a shocking example of irresponsible and lazy reporting."

Note that on Health Care Renewal, we had previously raised questions about Ms Shalala's conflicts of interests, particularly her role on the board of UnitedHealth at the time its CEO was receiving hundreds of millions in back-dated stock options (in 2006, look here); and about her priorities, including the contrast between her lavish compensation, which encompassed her residence in a fully-staffed mansion, and how the university treated its low level workers, particularly its janitors who did not receive health insurance (also in 2006, look here). 

The Cracks Widen in 2012

In retrospect, Mr Basken's article appears quite responsible and accurate.  Last week the Miami Herald reported that Ms Shalala's "ambitious moves vaulted UM’s medical school to the national stage — but they may also have seriously damaged it."  Soon after Ms Shalala ridiculed the Chronicle of Higher Education article, already internal reports showing even more trouble were appearing. 

As far back as October, billionaire car dealer Norman Braman wrote in a memo to fellow UM trustees that he and colleagues had been receiving anonymous letters for months 'outlining a host of wrongdoings, mostly at the medical school. Braman and others closely tied to the school warned UM officials the medical school was spending too much, too fast in the push to build a world-class medical center.

There were problems beyond those described by the CHE article:

The medical school also had major problems of its own. According to internal documents, the school suffered from bloated staffing, a faulty billing system and prices that sometimes ran much higher than at other South Florida hospitals. Internal controls apparently were weak at best: A whopping $14 million in expensive cancer drugs disappeared from a UM pharmacy over three years before an employee was charged with theft in June 2011.

The medical school’s difficulties even began to impede its relationship with the ailing, taxpayer-financed Jackson Health System, endangering a decades-long partnership with the public hospital system.

The Herald article includes substantially more detail to support these assertions.

Trustee Braman summarized it thus:

Poorly conceived decisions by the medical school administration have put the university at significant risk and, at the same time, injured Jackson Memorial Hospital.

As we noted, earlier this year the university's financial problems lead to layoffs, but at the same time, the university was building an even fancier mansion for President Shalala. After the lay-offs, Braman said they were:

a real tragedy that never should have happened. ... The people at the top were very much more interested in flash than substance.

Summary

Since the early 1990s we have suffered the rise of extremely confident, extremely well-paid, "visionary" health care leaders. Anyone within the organization who doubted their visions risked being labeled a malcontent or worse. Any skeptic outside the organization might be met by a barrage of propaganda from the organization's well financed public relations operation. Yet the visions these leaders produced often appeared to be clouded at best.

One of the most striking early examples remained anechoic for a long time. The then CEO of the Allegheny Health Education and Research Foundation, Sharif Abdelhak, was publicly labeled a "visionary" and "genius" for assembling a large, vertically oriented health care system, which eventually went bankrupt. Abedlhak went to jail. (Look here for summary). In the greater business world, whose culture now seems to rule health care, there are other examples of such failed visionaries (look here).  Yet this case, and other since, have largely been ignored.

However, as the case of the leadership of the University of Miami now seems to show in retrospect, many people seem to fall again and again for the now tired hucksterism of the "visionary," or "genius" leader selling grandiose and often self-serving pipe dreams.

Maybe it would be enough in health care to simply aspire to good patient care, responsible education, and honest research.

Meanwhile, health care professionals, health policy leaders, and the public at large should start showing appropriately pointed skepticism of our current self-proclaimed "visionary" leadership.

9:14 AM

The CEO as False Messiah

Why is the leadership of health care organizations so bad?  An important explanation of one part of the puzzle appears on InformationWeek's Brainyard blog written by Venkatesh Rao. 

The Visionary, Charismatic, or Messianic Leader

In "The Fall of the Messiah Leader," Rao described the rise of the concept of "visionary" leadership:

we'll look at the rise in the 1980s and impending fall of the idea of 'Leadership' as a pop business construct. The role of visionary leader emerged to make up for the apparent failure of the manager mind, but it evolved into something very different, illustrated in the picture below: a role dedicated mainly to creating and maintaining an illusion of control in the markets interspersed with occasional Big Bold crisis management moves that generally fail.

Rao suggested that the first example of the messianic organizational leader was former General Electric CEO Jack Welch:

Welch was the first modern example of 'charismatic leadership,' and his was the first widely recognized business name since the robber barons. I challenge you to name, off the top of your head, one "celebrity" business name between Rockefeller and Welch that the average man on the street would have recognized.

Rao described the charismatic, or visionary leader in truly messianic terms:

one savant-like figure can intuitively read market conditions, spot brilliant strategic opportunities, create clarity of purpose in pursuit of that opportunity, and steer by an innate sense of True North, without a compass.

Oh yeah, and while performing this miracle routinely, the leader also models virtues and values that would put saints to shame. This idealized leader sparks a pursuit of corporate greatness with a brilliant strategic insight every few years, and he ensures that the pursuit is conducted in accordance with values so noble you feel like writing epic poems in his honor.

These charismatic figures are supposed to be capable of intuitively cutting through complexity and producing visionary decisions that make the managers' jobs tractable again.

In case this description of supposedly messianic leaders of recent years sounds far-fetched, recall the example of the failed, then eventually jailed CEO of what was once the Allegheny Health Education and Research Foundation (AHERF), one of the largest vertically integrated health care systems of the 1990s. (Currently, we call such organizations accountable care organizations, or ACOs.) Abdelhak was described in an American College of Physicians publication as a "visionary." (See the summary beginning on p 5 here.) Abdelhak had previously been called a "visionary" or a "genius" in the media. [Gaul GM. Creator of a cross-state health system despite personal and financial questions, Sherif Abdelhak has boldly expanded from Pittsburgh to Philadelphia. Philadelphia Inquirer, March 4, 1991. P. D1. Gaul GM. The new prescription for health care: Hahnemann’s merger dwarfs - and frightens - many local rivals. Philadelphia Inquirer, November 21, 1993. P. E1.]  For more recent examples of how health care leaders may be described in messianic terms, look here, here, and here.

The False Messiahs

Just as Abdelhak proved to be not a messiah, but a criminal, most messianic leaders are anything but. As Rao put it,

Do these Messiahs actually do the job required of them--relieve beleaguered mere-mortal managers and steer the company toward greatness? Nine out of 10 times, they do nothing of the sort. What they do is convince people that they're in control.

His main point is that the "messiahs" are just people playing at that role, supported by public relations, if not propaganda and disinformation:

Heroic, charismatic leadership in the context of large public companies is mostly a myth. What makes it a myth isn't that such figures don't exist (there have been a handful, such as Welch himself, Jobs, and Bezos), but the idea that the phenomenon can be studied in general terms, codified, and turned into a teachable skill.

True leaders are born, not manufactured. And they're quite rare. What the leadership cottage industry can manufacture are false leaders: People who can act like leaders. That theater has two audiences: the media and Wall Street.

The psychological allure of 'leadership' as a concept is almost entirely due to its profitability as a business-writing cottage industry, which in turn is based almost entirely on appealing to the vanities of wannabe-Messiahs. On the other side, there's an entire shadow world devoted to manufacturing perceptions of Messianic capabilities, by 'proving' claims to charismatic leadership using hagiographic narratives.

Rao claimed that the rise of such falsely messianic leadership was due to the ability of such leaders to bewitch investors:

The de facto job of a leader is to manage perceptions on Wall Street and thereby manage the stock price. Projecting an image of charismatic leadership is the easiest way to do that. Managers fight fires out of sight, creating a perception of corporate normalcy and control, and the Glorious Leader uses that blank canvas of apparent normalcy to spin tales that mesmerize Wall Street.

Who Else Benefits

Rao wrote mainly in the context of understanding the stresses and challenges of managers (who he sees as distinct from leaders in the context above). Thus he may not have written about other factors in the etiology of falsely messianic leaders.

I hypothesize that such leaders are not only good at bewitching investors, but bewitching other constituencies and stakeholders. Most health care organization now must deal with government agencies. Non-profit health organizations must deal with groups that are interested in their ostensibly charitable missions. Having a apparently messianic leader makes it possible to bewitch these groups.

Furthermore, I hypothesize that falsely messianic leaders greatly benefit two groups within their organizations. The first is obviously their apostles, often the top layers of organizational executives just below the CEO. Such positions are now almost as personally remunerative as are CEO positions. The second is obviously the spin-doctors, that is mainly the public relations and sometimes the marketing people who help produce the theatre that creates the perception of messianic qualities.

The Final Common Pathway

Rao suggests that falsely messianic leaders are likely to lead their organizations to a bad end, even if they themselves may escape the consequences:

Charismatic theater-leadership is about to die a messy death, like Qadaffi, because the sheer amount of chaos converging in a bottom-up torrent to the CEO's office will become unmanageable very soon. The theater will become increasingly hard to sustain.

Leaders fail when their managers fail to keep up with the fire-fighting. Once the fires become visible externally, the apparent normalcy necessary for the leader to manage perceptions is gone.

At this point, the leader is an impossible situation, but the theater must continue. And so we're treated to the grand finale of the tenure of a CEO: the Big Bold Move, the Bet The Company moment.

The Big Bold Move is usually a Big Dumb Move--deciding to go after large new markets, taking on bold new product initiatives costing hundreds of millions of dollars, making major acquisitions. It's a high-stakes game with a billion-dollar ante.

And usually these moves fail because charismatic leaders are forced to make them at terrible times, with bad data, when growth has stagnated or is plummeting, and there's a need for an 11th hour business model shift to replace hundreds of millions of dollars of collapsing revenue streams. A case of too much, too late.

The leaders who fail are sacked, land safely with golden parachutes, and proceed to loudly blame 'culture' (read: 'incompetent middle management') for the failure.

Rao is writing for a general business audience. The outcomes of such failures when the falsely messianic leader is in charge of a health care organization can obviously be even worse, leading to rising health care costs, declining access and quality, and threats to patients' and the public's health.

Summary

We have seen many health care leaders praised for their brilliance and paid royally despite leadership resulting in financial distress, threats to the organizations' health care missions, poor patient care, unethical behavior, or even crime. (The most recent example as of the time this was written was here. For other examples look here.)   Yet health care CEOs are just people, sometimes smart, but almost never brilliant.  Promoting them as messianic to bewitch key constituencies, justify the remuneration of other top managers, and the hiring of more public relations flacks is likely to lead to the sort of organizational disasters and system-wide dysfunction we discuss on Health Care Renewal.  The rise of the falsely messianic leader may allow the entry of the most dangerous false messiahs, the psychopathic ones.  (We discussed the likelihood that some health care leaders are actually psychopaths here.)

Rao's theory of falsely messianic leadership (and related, and also religiously allusional theories of the "divine rights of CEOs," look here and here), suggest that the better paid the CEO, and the more expansive the descriptions of the CEOs talents, the more skeptical we ought to be. 

In the secular occupation of health care, we ought not to yearn for messiahs, but hope for reasonable leadership that draws on the collective knowledge and values of health care professionals rather than dubious "visions," and that show accountability, integrity, transparency, honesty, and ethics.

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