Who is Larry Hood?

The new CEO of General Hospital has an unpopular job. Can he do it?

BY TRACY IDELL HAMILTON

He's an unpopular guy with an unpopular job–Larry Hood is the latest CEO charged with bringing General Hospital's county subsidy down and its patient census up.

While he attempts to do that, Hood has been criticized from almost every corner. Former and current employees say he's abrasive, dictatorial, and retaliatory. Several long-time employees have chosen to leave since Hood came on board.

Others speak out only anonymously, afraid of reprisals. In addition to criticizing his management style, some say the man is intentionally running the hospital into the ground. Others say he's only stretching out the hospital's days, just so that he can keep his job.

Hood has also been criticized for the way he has attempted to stay within the annual county subsidy of $7.5 million–a necessity if the hospital is to remain open, according to supervisors. His decision to fire two pediatric doctors and replace them with family practitioners has galvanized parents and health care workers around the county, who accuse Hood of putting the county's children in jeopardy.

His decision to open up the emergency room contract to new bids led to the removal of the existing team of emergency room docs, the head of whom had practiced in General's emergency room for more than 20 years.

That decision has now turned into a legal dispute, as former emergency room chief Dr. Geoffrey Phillips and his lawyer, Neil Tardiff, seek to prove that not only was Phillips' bid lower than the team who was chosen to replace him, but that the entire proposal and bid process did not follow county procedures, or California law. The two sides meet in court on Sept. 28.

And as the embattled CEO defends his decisions, his style, and the continued need for a public hospital in the county, even long-time supporters of the hospital, including a couple of supervisors, wonder if it isn't time to close the beleaguered hospital and contract out the services the county must legally provide to indigent patients.

***

The plight of the county's only public hospital has received plenty of ink over the years. Numerous blue ribbon panels, experts and supervisors have all recommended closing it at one time or another.

And in no way are General Hospital’s woes unique. Operating a public hospital, which provides legally mandated care to the county's indigent population, has become increasingly expensive for counties, as the various state and federal revenue streams that keep them running have decreased.

Private doctors now see more Medi-Cal patients, once the staple of the state's public hospitals, as the reimbursement rates for those patients now often exceed those of private insurance. That shift is just one example of what has become an intensely competitive health care marketplace, where hospitals rely on specialized centers for such areas as cardiology, neurology, or pain management to bring in patients. With dwindling resources, public hospitals have struggled to keep up.

Managed care dealt the state's public hospitals another blow, as did a report that many of California's hospitals, including General, would need to complete expensive earthquake retrofitting by 2008.

Many counties in the state no longer own their own hospitals. The number of county-owned hospitals has decreased from 66 in 1974 to 22 today. Those closures have reduced access to patient care, and in many cases raised the amount of a county's public subsidy, argue proponents of pubic hospitals. Meanwhile, the number of uninsured in Californians–those who rely most on public hospital services–continues to skyrocket, increasing at the rate of 50,000 people per month, according to the California Association of Public Hospitals and Health Systems.

There is an assumption that contracting out for indigent care will be cheaper, says Karen Butler spokeswoman for the association. But many counties find that this is not the case, she said. The county subsidy is only part of a public hospital's overall budget, something many people forget when they talk about costs.

"Contra Costa County went through something similar," she said, with different factions fighting bitterly over whether or not to close down and rebuild the aging public hospital, whether their was not already an excess of beds in the private sector, and whether the county just ought to contract out for services.

"It was a contentious but thorough debate," Butler says, "and in the end, they decided to rebuild. When it got down to brass tacks, [the county and the county's private hospitals] were never in agreement about how to handle indigent care."

***

General Hospital's death knell sounded once again at the end of 1998, when the supervisors voted to close the hospital once and for all.

Before any actual closure plans could be put into place, however, a new board was elected that revisited the decision. While Harry Ovitt and Mike Ryan stuck to their guns, Shirley Bianchi, Peg Pinard and Katcho Achadjian voted to try it one more time. As the swing vote, Achadjian helped create a three-year, $28.5 million turn-around plan.

If, at the end of the three years, the county subsidy was down to $7.5 million from the average of $9 million it had been, and if census numbers were up (from the average of 10-12 patients per day), the hospital could remain open.

To jump start the turn-around plan, the county hired Intensive Resources Group, or IRG, for an initial four-month contract. That contract eventually spanned almost two years, and included a report that concluded that the hospital was not viable enough to remain open with only a $7.5 million county subsidy. The report included other possible options, including merging services with the county's other hospitals. The county's other hospitals already serve more poor people than General, the report concluded.

That report caused serious controversy at the time, even though doctors' groups supported, and the local daily paper editorialized, for the hospital's closure. Many hospital players still smart at the mention of IRG–now Cambio–which holds the more lucrative contract to run the not-for-profit hospital group that includes French Hospital and Arroyo Grande Community Hospital.

Before that report was issued, however, IRG recommended 31 General employees be laid off in a cost-cutting effort. Those lay-offs were completed in 1999, but IRG still came back to the county requesting an increase in General's operating budget. By the year 2000, two years into the supposed turn-around, the county subsidy had leapt up to almost $13 million.

"IRG was a disaster," said Kathy Borland, the former director of nursing at General who resigned recently over clashes with Hood. "After 20 months into the turn-around, in my opinion there was no progress. I trusted them about the lay-offs, and that was a disaster, too."

When IRG chose not to renew its contract, and with merger talks failing with French, the county, in an effort to keep the hospital open, decided to downgrade the emergency room, get rid of intensive care, and hired William Casey, Inc. to run the hospital. Casey in turn hired one Brian Bentley as the new CEO.

He was gone by January of 2001, apparently after clashes with Pat McCoy, then the head of the interim hospital authority board. That board, created by the supervisors, is supposed to take an active hand in managing the hospital in an effort to keep it open.

Larry Hood was hired by Casey in February, and confirmed by the board a month later. He began making waves his very first week.

***

"I've been through a lot of administrators," said Borland of her departure from General only five weeks after Hood arrived. "I was the only constant, so I was used to new people asking me questions."

Hood never asked questions, she says. "He's autocratic, he controls by intimidation. I was already concerned, but when he started talking lay-offs only weeks onto the job, I said no way. I was not going to go through that again."

Borland resigned after 18 years at the hospital this March. When she did, she also alerted the county to 11-year-old newspaper reports from Sonoma County alleging that Hood was fired for mismanagement of that county's public hospital. The stories included comments from disgruntled employees about Hood's management style.

Hood gets exasperated at the mention of Sonoma County. "It was a contract dispute with the county, and I was fired," he says. "Look, there's hardly a hospital administrator out there who hasn't been fired. It's an inherently loaded job."

County Administrative Officer David Edge said the supes were aware of Hood's background before they confirmed him. It was up to the Casey group to vet Hood, said Edge, and since he works for Casey, and not the county, "Casey is on the hook if he screws up." Edge said when the county did do its own investigation, however, it turned up no evidence of criminal wrongdoing.

Sonoma County was a turn-around job similar to General, Hood says. When he first came on board, the hospital was losing $2.6 million a year. His group not only stopped the hospital from bleeding red ink, but ended up making it profitable, he says.

Hood actually worked for Sonoma County twice, once for four years, then again after the interim CEO was fired. He stayed on board for another eight years.

In the last year, he said, the hospital saw an "ugly" nurses' strike, was going through accreditation (a difficult and stressful process, Hood says), and was in the middle of resizing the hospital after losing patients to Kaiser Permanente, which opened a hospital and took all the Kaiser patients previously seen by the county hospital.

"Those events don't make you a popular guy," Hood says. He doesn't seem to mind not being a popular guy here, either, because, he says, he's doing his job.

"I walked into a place that was rudderless. No one has been in charge here for a long, long, time. I walk in, and think I'm in charge. Everyone says, yes, we think the hospital needs to change, but not in my area," he says. "Now I'm trying to bring actual management here, and lots of people are unhappy about it."

He says he heard rumors that one staff member at General "was going to get me fired" in the first weeks of his tenure.

Edge says the supes recognize the inherent conflicts of Hood’s position, and took the information about the decade-old firing with a grain of salt. "There was some discussion about how political this was," Edge said. "That some people may be trying to submarine him merely because he's doing the job he was asked to do."

Hood says he is "moderately confident" about keeping General within the subsidy amount the supervisors have chosen, and says he would be interested in staying on board if the supes choose to keep the hospital open, regardless of his souring reputation with some in the community.

***

As Hood spoke to a reporter in his office on Sept. 15, Dr. Phillips, the former head of the emergency room team, walked into the room and asked if it was true that Hood has asked him to vacate the premises since his contract expired at 8 a.m. that morning.

Hood asked Phillips how much longer he intended to stay at the hospital.

"None of your business," replied Phillips. When Hood asked him why, and what position he was filling, Phillips replied that he was an "active member of the medical staff, and chair of the department."

Hoods face did not change. "Nice of you to come by. I'm very excited to see you again."

Phillips left the room, and eventually the trailer. But he insists that he is still part of the medical staff, and may still see patients at the hospital.

Hood says that if a hospital-based doctor's contract expires, he or she may still see their own private patients at the hospital, that they still have hospital privileges. But since an emergency room doctor such as Phillips would have no patients outside the hospital, he effectively loses his rights to practice within it.

Phillips disagrees, and sees the entire case as one of retribution against his refusal to hire what is known as a hospitalist, or a hospital-based physician who sees other doctors' patients once they are admitted into the hospital.

Hospitalists have become more common in the last several years as a way to control costs. But Phillips said hiring a hospitalist would have taken revenue away from his colleagues, something he just wasn't willing to do.

Hood says that the hospitalist issue was barely even discussed by he and Phillips, and that the contract went out to bid because he and Phillips could not agree on terms.

But he is frank that the hospitalist concept is something he asked the top three bidders about. One group opposed to it, he says, the other had little experience, so he chose the team he did because it had a great deal of experience with hospitalists–something he was told by the county was perfectly acceptable, although not part of the proposal process.

"Look at the county requirements for request for proposals," says Hood. "You could drive a truck through them."

Edge confirmed that for services, a successful bid is not necessarily only based only on cost, but on "best fit," which means other factors may be taken into account.

But Tardiff, Phillips attorney, says Hood did not only distort the bidding process, but that he misrepresented to the board of supervisors the actual amount this new physician group would save the county.

Also part of Phillips' complaint is that by dropping from board certified emergency room physicians to non-board certified, the county is dropping a level of care, something that would require a public hearing before going into effect.

Because of an interim order by the judge, all of the physicians hired by the new team are board certified.

***

The argument that a public hearing is necessary has been made about the firing of two full-time pediatricians, as well. Members of the community, children’s services agencies, the Health Commission and the fired physicians have all asked that a hearing be held on that decision, a request the supervisors have turned down.

Hood argues that no hearing is necessary, since pediatric care is still available.

He has offered the supervisors the numbers to prove that the county just didn't need the number of pediatricians it had, that it still has pediatricians on board, but that with the hiring of family practitioners, the clinics "will be able to cast a wider net" for patients–crucial to the continuation of the hospital–while those children that need to see a pediatrician will still be able to do so.

One nurse, who spoke on condition of anonymity, said that when it comes to health care, people speak out of both sides of their mouth. They know that a generalist will save money, she said, something crucial to keeping the public hospital open, but when they are sick, they personally want the best of everything–and that often means an expensive specialist.

But many community members remain unconvinced. Borland and others see it as a gutting of the clinic system, a system more crucial to most would-be patients than the hospital itself, they argue.

Keeping the clinics open has always been the county’s goal, even if it decides to close the hospital and contract care out to either for-profit Sierra Vista, or not-for-profit French and Arroyo Grande Hospitals.

But Hood argues that without the hospital itself, keeping the clinics open will cost more than the $7.5 million the county has landed on as appropriate to spend on the county’s indigent.

He has until June 2002 to make his case. Æ

Staff writer Tracy Hamilton may be reached at [email protected]