UC’s culture of executive entitlement must change

In his state of the union address, President Obama lamented “big bonuses” to Wall Street bankers. For their part, Californians have good cause to cry foul over a bonus problem of their own involving the University of California medical centers, where performance does not always keep pace with pay.

The University of California regents recently approved $3.1 million in bonuses to 38 executives in the five University of California medical centers. For example, UCLA Medical Center chief executive David Feinberg, whose base salary is $739,695, received a bonus of $218,728.

The official line is that the bonuses come from hospital revenue, not student fees, and are linked to improvements in the health of patients, such as reducing infection. At the UC Irvine Medical Center, however, improvements seem little in evidence.

As the bonus story broke, federal investigators released an 85-page report on the problems they found at the UCI center last fall. These problems, which put the center’s Medicare funding in jeopardy, include an overdose on an 82-year-old patient, prompted by a narcotic patch given without approval. Nurses were injecting patients without proper oversight, and an on-call resident failed to respond to emergency pages.

The Centers for Medicare and Medicaid Services documented similar lapses a year ago and threatened to cut Medicare funding. The centers lifted funding last July after five UCI patients received overdoses because nurses had been improperly trained on medication pumps.

In 2004 and 2005, the Los Angeles Times reported, 32 people died at UCI Medical Center awaiting liver transplants while doctors rejected organs they subsequently found suitable. The liver transplant program was then shut down.

UC Irvine officials have also taken heat for performing unauthorized autopsies and selling off body parts. In 1995 the center was embroiled in a fertility scandal, in which doctors stole patients’ eggs and implanted them in other patients.

All that, plus the recent problems, did not prevent a bonus of $83,250 last year for UCI Medical Center’s chief executive. UCI officials maintain that high compensation for a hospital manager is necessary to attract talented candidates. This has long been the standard UC line, on the medical and academic side. According to the federal reviews, many of those UCI hired turned out to be not very talented, at least in preventing abuse and passing inspections.

Roy M. Poses, MD, writing in “Health Care Renewal,” argues that “compensation madness,” as it did in the financial field, “is likely to keep the health care bubble inflating until it bursts, with the expected adverse consequences.” He concludes that “if health care reformers really care about improving access and controlling costs, they will have to have the courage to confront the powerful and self-interested leaders who benefit so well from their previously mission-driven organizations.”

Such courage seems little in evidence, but this episode can teach valuable lessons. High salaries and bonuses do not, after all, guarantee that the best people get hired. Neither do big bucks guarantee exemplary performance. UCI medical center chief executive Terry Belmont has hinted at linking the bonuses to actual passage of federal inspections. That would be a responsible choice, but UC bosses have other alternatives.

The University of California system ultimately exists for the benefit of students, whose fees have been going up, not down. Put the $3.1 million into a scholarship fund for high-achieving students who are having difficulty coming up with tuition. That would be a better use of the money than handing it out to high-salaried administrators as a matter of executive entitlement.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

Scroll to Top