Prescription for Resignation

Upset over a new pay policy, docs are checking out of St. Louis University Hospital

Being a physician in America usually means you're well paid, drive a nice car, enjoy the respect of others and sometimes have power over life and death. At St. Louis University Hospital, it also means you could get a yearly 20 percent pay cut, every year, for as long as you don't meet your quota.

Of course, they don't call it a quota; rather, they refer to it as meeting the requirements of your "performance supplement." It works like this: A medical-faculty member's minimum "base" salary next fiscal year will be 80 percent of what his or her salary was last year. To recover that missing 20 percent, the faculty member must meet certain goals. Those goals usually involve seeing more patients, performing more procedures or both, thereby producing more revenue. The chairman of each department sets the goals; the medical-school dean approves them. If those goals are not met at the end of fiscal year 2001, the faculty member takes a 20 percent income hit. The same is repeated the next year.

Predictably, more than a few physicians are pissed.

"If I don't get any of the supplement, the 20 percent, for this coming year, then next year I'm going to have another salary cut of 20 percent of the previous 80 percent," says one unhappy camper. "This means if I don't get approval by my chairman for the performance supplement, in five years my salary will be zero." OK, the math's a little off, but you get the point. And there are other concerns.

"This plan makes no reference to tenure. This is completely independent of tenure. Now it doesn't matter if we are tenured or not," the doc moans. "That destroys the principle of tenure. The idea behind tenure is to give professors freedom of expression, academic freedom, without fear of retaliation. That's lost now."

Short Cuts found that out in a hurry -- virtually no one wanted his or her name attached to comments about the new pay plan and the accompanying discontent at the medical campus on South Grand. Even sawbones who saw some good in the new pay plan didn't want to talk on the record because they were worried they'd get in trouble. So much for academic freedom.

It's no wonder there is reluctance to speak up. The chairman of internal medicine no longer heads that department, the health-science center's largest, because of his opposition to the pay plan. The director of the physicians' University Medical Group stepped down as a result of the flap. Several other chairmen are leaving, and, for a variety of reasons, some top doctors -- including two renowned cancer specialists -- have left. That the new compensation plan includes incentive bonuses for faculty physicians who really crank out the patients and procedures seems to be overshadowed by the threat of a pay cut.

Though times are tough all over for teaching hospitals -- for example, the University of Missouri-Columbia Health Sciences Center lost $17.8 million last year -- St. Louis University Health Sciences Center is in a peculiar situation because of the 1998 sale of its teaching hospital to for-profit Tenet Healthcare. For decades, SLU and its med school used the hospital's surplus to cover deficits on the North Grand main campus and in the rest of the medical campus. The sale to Tenet capped that well, however.

Thanks to St. Louis University president Lawrence Biondi, S.J., the university took in $309 million from Tenet by selling the hospital. The move was criticized by Archbishop Justin Rigali, who opposed the idea of selling the not-for-profit hospital to a for-profit chain. But Biondi and others were convinced that the hospital would eventually become a money pit. The cash from the sale was put in an endowment; critics of Biondi say he should tap that endowment to stabilize finances at the medical campus now that profits no longer flow from the hospital. The university says that's not possible, because the use of the endowment is restricted.

On the business side, critics say Tenet paid too much for the hospital. They point to the hospital's balance sheet, which shows an operating surplus before debt service from the purchase is included. Those numbers suggest that if SLU had kept the hospital, there still would have been a surplus and the need to squeeze physicians' salaries would not have arisen.

Tenet's operations in St. Louis have proved a mixed bag. At SLU Hospital, aside from having to pay off its steep purchase price, Tenet is doing well. But Tenet closed Compton Heights Hospital (the former Incarnate Word Hospital) in April and is still running deficits at Forest Park Hospital (the former Deaconess Hospital). Nationally, Tenet has had trouble with some of the hospitals the corporation has purchased, particularly eight in the Philadelphia area. Though the stock price and profits are up, a Tenet spokesman in April estimated that the company lost $100 million nationwide on physician practices. Perhaps Biondi, who serves on the Tenet board of directors, has picked up a few lessons on how to put a cap on physician costs.

Biondi, who is nicknamed "Father Capone" for his Italian and Chicago roots and for his, well, assertiveness, appears to think the medical faculty needs to pull its own weight. Not all of the faculty disagree, but the way this has been done has caused grief and some unintended defections. "The good thing is that we lost some people who weren't very productive," one professor says about some who have quit already. "The bad thing is, we're also losing good, influential people because morale is bad. People are worrying about their paychecks."

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