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Wednesday, August 5, 2009

Dr. Agwunobi Then and Now

This story appeared in the Atlanta Journal Constitution.

In a “body blow” to efforts to save the cash-strapped Grady Health System, the facility must pay $20 million to the state due to Medicaid overpayments made to the center years ago, officials said.

Grady CEO Michael Young said the hospital is paying for desperate decisions made by his predecessors. He said Grady officials in 2004 and 2005 aggressively maximized the amount of Medicaid they received, leaving the current regime to pay back the extra millions.

“They were kind of robbing Peter to pay Paul,” Young said. “They took their money when they could ... and now it’s become someone else’s challenge.

This article is talking about Medicare billing and manipulation at Grady Hospital. Back in 2004-2005, the powers that be at the hospital maximized the billing on Medicare. This was all done within the confines of the law. In fact, all the hospital did was take too much up front with the agreement to pay later. Later is now.

This may seem harmless but it's actually a very effective way to pervert the current financial condition of a hospital and then leave before its true nature is realized. That's exactly what current Grady CEO Michael Young was complaining about. He was complaining that his predecessors had created this scheme leaving him with the bill. In fact, the CEO running Grady Hospital in 2004-2005 was perverting the financial health of the hospital. He was charging Medicare the maximum which created inflated earnings. The credit back from the hospital wouldn't happen for years. As such, the budget could look good during their term and they could high tail out of there before the bill came due. In a sense, that's what the CEO during this period did.

Who was that CEO? It was Dr. Andrew Agwunobi. I've recently tracked Dr. Agwunobi to Providence Health Care in Eastern Washington State. His first official act as CEO of that region was to send an organization wide email that warned staff that cuts were imminent.

We as a system have experienced significant investment losses; the state budget cuts to hospitals and health care will be drastic; and, in keeping with our Mission, it is inevitable that we will treat many more uninsured and under insured individuals in the months ahead. What you may not be aware of is that Providence Health Care is already experiencing significant financial challenges year-to-date in 2009. At this point, we are $9 million behind budget and this gap is increasing monthly. The economic recession is part of the cause, but we also have some productivity and expense overruns that have contributed to our poor financial performance.

As such, in addition to curtailing as many non-mission critical expenses as possible, we have made the difficult decision to implement some level of staff reductions in the Spokane hospitals during the months of April and May. As a faith-based organization, we consider any action that impacts our employees as an extremely serious step and, therefore, a great deal of work is being done to ensure that we minimize the number of people who will be directly affected. At this point we do not know how many staff will be impacted, but we will keep you informed as our internal analysis and that of the Wellspring consultants continues.

He's proclaiming the hospital is strapped for cash and unable to afford the current staff load despite the fact that the hospital system sits on nearly $2 billion worth of bonds. Dr. Agwunobi's tenure at Grady Hospital ended when an HHS report concluded that

Grady presents an immediate and serious threat to the health and safety of the patients

Now, we find out that on top of that he was also essentially cooking the books to make Grady appear more strong. About two and a half years after he left, Grady Hospital required a bailout of $200 million from the Woodruff Foundation. As such, one could say that Dr. Agwunobi was cooking the books to avoid the inevitable and make sure he was no longer there when it does happen.

Dr. Agwunobi has made it a career, you see, of finding high profile positions and then over staying his welcome very quickly, sometimes a year and less. In between, Grady Hospital and his current role at Providence, he spent a year as COO of St. Joseph's in California, six months on the board of Wellcare, about a year as Secretary of the Florida Agency for Health Care Administration. His first act as Secretary was to sign onto a raid on his former employer at Well Care. That raid just happened to be a couple months AFTER Agwunobi cashed out a million dollars worth of WellCare options that were part of his package when he left. Those same options were worthless after the raid.

Now, Agwunobi is attempting significant job cuts at a hospital that is financially healthy. Their latest financial statement showed that the system has nearly $2 billion in bonds. They made an operating profit of just more than $300 million last year. There's no logical reason for a hospital to say they need to impose job cuts when they sit on so much in bonds. Keep in mind that Providence is a non profit hospital and so they pay no taxes on any of this money. If a non profit hospital cut staff, even though they were financially viable, and these staff cuts lead to poor patient care, that would violate both the spirit and letter of their commitments in keeping their non profit status.

So, the same CEO that inflated his hospital's revenue in a shameless attempt to mislead the financial health of that hospital five years ago is now cutting staff on a financially viable hospital. Worse yet, the administration at his new hospital, Providence, knows all this, doesn't care, and supports Dr. Agwunobi 100% in his attempt to cut staff now.

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