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MIHS board members bring health system to brink of financial disaster

Bil Bruno

Bil Bruno

Just over 2 years ago, three newly elected board-members took control of the Maricopa County Special Healthcare District.  Once Mary Harden, Mark Dewane and Terence McMahon were seated, we saw what was in store for the citizens of Maricopa County as this new majority pushed through an unrequested $125,000 raise for the outgoing CEO. The following month they approved a special executive retirement plan.

Those new board members have led Maricopa Integrated Health System (MIHS) from fiscal stability to the precipice of financial disaster.  In the two years since my term ended, they have burned through more than a third of its operating cash.  The district’s last fiscal year ended 6/30/14 with expenses $24,779,078 higher than its income. As recognition for his work that year, the board voted a “performance bonus” for its CEO.

I served 8 years on the district board and we never finished any year with a loss- much less almost $25 million in the red.  Now, in only the first 7 months of this fiscal year, they topped the FY2014 record and have lost a staggering $35,172,241! It is almost inconceivable that such a vital public institution could get itself in such serious trouble. We haven’t even mentioned that this board somehow fumbled away the strategic affiliation agreement with the UA College of Medicine.

There are challenges, sure, but you cannot justify losing $60,000,000 in 19 months. I think it is time that directors Harden, Dewane and McMahon admit that they not up to the job the taxpayers elected them to do and get out.

MIHS is a wonderful organization with hard working employees and great doctors. It does amazing work healing people every day. Unfortunately at the rate MIHS is losing money, its days are numbered. It may never build a new hospital or anything else.  With the current loss rate of $5 million a month, MIHS will be flat broke in about a year. There are hard decisions to be made, strategic alliances to be formed and creative solutions to be initiated. We need insightful, intelligent and intrepid leadership now.

— Bil Bruno of Chandler is a former chairman of the Maricopa County Special Healthcare District Board of Directors.

8 comments

  1. The goal of a leader is to lead an organization and set it’s sails for the future. It’s unfortunate Mr. Bruno accepts no responsibility for his short shortsightedness as a leader. As well as all of the previous administration.

    The organization had clear income loss projections identified in the upcoming years due to the DISH funds drying up from the state (money to help the organization stay afloat due to payer mix) and the potential income loss incurred by the Affordable Health Care Act. Placing the blame for financial issues squarely on the shoulders of the new board members is laughable at best.

    Mr. Bruno would have faced the exact same challenges if he were in office and the legislation changes had taken place during his tenure. As a tax payer it makes me mad the new leadership had to walk into a mess like this.

    Thanks Bill for your service and kind words.

  2. John, all hospitals have had to adjust for changes brought about by the ACA. And no one is saying that there weren’t some situations that of themselves caused loss, what is being said here is that leaders are supposed to exemplify the ideals of a non-profit healthcare provider, not line their own personal bank accounts at the expense of the hospital, dedicated staff, and ultimately the community. Consistent actions that amount to immediate self-gratification in any terms in leadership also translate downstream through management and causes disruption in communications, distrust and demoralization. There is plenty of valid research to prove what I’m stating, all you have to do is look. One of the hard choices perhaps to be called for is Servant Leadership style among the administration. I think part of the real problem here is that even though such procedures are legal, there is an obvious conflict of interest in the ability of the administration members to arbitrarily vote for themselves or each other any kind of monetary award, bonus, raise etc. without intense oversight from the larger interests of the healthcare system. Everyone should have to earn a raise or award. Actually, everyone else in this case has to. Another problem to ponder is this, if leadership is so self-focused that they reward themselves immediately upon taking their position how ethical, moral, just, and competent are they in handling strategic alliances, contracts, and other agreements within the larger scope of the health and education community of which we are increasingly dependent upon and are depending on us for a community solution that works well in providing health care to everyone. Is it any wonder that such valued and respected relationships have fallen? What of the rising loss of dedicated staff and lack of holding new hires? These are signs of a serious problem that needs to be addressed, as the author says “we need insightful and intelligent leadership now”. I hope that we can all work together to correct this and prevent this type of problem from occurring again.

  3. I am acutely aware of the issues at MIHS and while the pay raise is certainly tone deaf it, in no way, represents to underlying problems that MIHS faces. I predict no one will make the hard choices necessary to reverse the cash burn and that within two years you will see a bankruptcy plan enacted and perhaps, ultimately, a cessation of operations. To interject a brief aside…the U of A never intended to partner with MIHS anyway…Banner owned those aspirations from the outset. In my humble opinion MIHS needs to cut the service lines that do not produce profit immediately and focus on those that remain. In addition MIHS could bring on a couple of elective services that produce cash. The exposure to “non-paying” patients and unprofitable services will bury the hospital. Instead they now focus on cutting jobs and cutting hours. In any business, even the hospital business, one MUST focus on the bottom line.

  4. What I don’t get is why would they increase the salary of a CEO when they know they are leaving? Losing their partnership with UofA was a huge loss and voting for a new executive retirement plan a month after taking office sounds very shady. I look at the facts…the old board turned things around and brought MIHS back in to the red, The new board is blowing through money like crazy and the voters just said yes to giving them more. Wonder how fast they will burn through that? The new board can make excuses, but that wouldn’t fly in corporate America, why should that fly here. Numbers are numbers, where is the oversight? I think if Mr. Bruno was just crying sour grapes, he could have done that almost 2 years ago when he lost the election. By expressing his frustration now, he has almost 2 years of data to support his statements. Something has to be done to stop the bleeding or it is going to cost us much more over the next few years.

  5. Hey John, you should read the minutes of the MIHS board in early 2012. You will see many times that I proposed reducing costs or postponing major capital expenditures. You will also note time after time Management fought my motions and the board voted against me. On 1/25/12 I proposed the MIHS leadership create a Strategic Survival Plan which included 7 mandates. One of those was to implement significant expense reductions or other actions to improve financial performance month-by-month until they were on track to meet our key financial indicators by 6/30/12. Management protested and the vote was 4 to 1 against my motion.

    In May 2012 I asked to postpone an $11.1 million purchase. The minutes capture my comment “He (Bruno) finds it difficult to support this commitment until staff can show him how MIHS can stay in business in 2014”. At the same meeting, “Director Bruno stressed his concern about possible changes in 2014 and ongoing debt…”
    You are correct we had clear income loss projections but neither the rest of my board, the new board nor management during or after my term in office had or have shown any interest in actually creating a plan to reshape MIHS to survive. Bil Bruno

  6. Wow really after all that being said in upper comments. The staff here at MIHS still seem commited to give their patients the quality of care they are used to even though they can’t or unable to pay their bill. People that have no insurance homeless and others wont be seen at other valley hospitals because of there care.

  7. I beg to differ regarding the level of quality personnel at MIHS. A few years back we did have great people working. There has been a mass exodus of personnel due to new administration hires. MIHS is full of unqualified staff. Staff without proper credentials and not even high school diplomas ( Cardiology,radiology).

  8. Im an employee of MIHS and I can attest to the professionalism of the staff nurses and doctors and the level of care they provide. It is apparent that we have been affected by this loss and continue to suffer from the effects of it. We the low level workers suffer and is hoping that a change will come soon or God knows where we get our next paycheck

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