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The CEO Who Made a Fortune While His Hospital Chain Collapsed

19 points by ViktorRay 2y ago

siva7 2y ago
> Dr. de la Torre made more money as a heart surgeon than in his first years as a corporate CEO Something is going wrong if you're making as a heart surgeon more than a corporate CEO because who pays for this? Is this making healthcare inaccessible to those who need it so someone can buy a yacht or two?
- christophilus 2y ago
  I’m willing to bet you can find a capable CEO more easily than you can find a capable heart surgeon. There is no rigorous CEO school. MBAs aren’t a prerequisite. There is a fairly rigorous medical degree requirement if you want to be a highly specialized surgeon...
  - eesmith 2y ago
    Which leads back to the supply of doctors, which depends on the limited number of med schools available and residency slots, and scope-of-care restrictions. (Eg, see https://skeptics.stackexchange.com/questions/4561/does-the-ama-limit-the-number-of-doctors-to-increase-current-doctors-salaries https://skeptics.stackexchange.com/questions/4561/does-the-a... and https://blog.petrieflom.law.harvard.edu/2022/03/15/ama-scope-of-practice-lobbying/ https://blog.petrieflom.law.harvard.edu/2022/03/15/ama-scope... )
- borbulon 2y ago
  Something is wrong with the whole system of how people are compensated for their work; a Starbucks employee shouldn’t have to rely upon the good graces of their customers (tips) to earn a living wage, either. That being said, a heart surgeon has a very specific and wide-ranging set of knowledge and skills which not many people could have, not to mention the incredible amount of stress they’re under.
- legacynl 2y ago
  Honestly in a 'Just' system I think the heart surgeon is supposed to make more than a CEO
  - Ekaros 2y ago
    I don't really know. Both should be doing reasonable well, but what is the impact of single surgeon? How many people can they heal a day? Where as well managed hospital run by CEO could impact lot more people effectively each and every day. Not that that pay should be insane either...
    - legacynl 2y ago
      Yes, but a manager could leave for an extended period of time without any real impact. If a doctor leaves the surgeries and treatments actually stop. There are worker-coops that function perfectly well without a management layer leeching of actual productive people. I mean practically I agree that some management is a good idea long term, and it's most efficient to have specific people for that, but to say that they are as important as the actual workers is ridiculous.
  - tivert 2y ago
    > Honestly in a 'Just' system I think the heart surgeon is supposed to make more than a CEO Yes, but in a just system they'd both also make less than they do now. Maybe ~$200k/year total compensation, say? IIRC, surgeons had the prestige and power when the fundamentals of the modern American medical billing system were established, so "procedures" pay better than office visits, and surgeons get compensated waaay more than other doctors because they do lots of procedures.
deleted 2y ago
[deleted]
legacynl 2y ago
> While it was losing hundreds of millions of dollars a year, Steward paid at least $250 million to its chief executive officer Can somebody explain to me the reasoning behind these payouts? Isn't this an incredible incentive for ceo's to make unsustainable changes, that look good by the time the bonus is payed out, but then destroys the company in the long run? But at that point this CEO is ofc already long gone with his 250mil ?
- Eddy_Viscosity2 2y ago
  Theoretically, the board of directors would intervene to prevent this. But in practice, boards are 'captured' entities filled with relatives and cronies of the CEO. So, the answer is that yes, the incentive exists for CEOs to rape a company for personal benefit. And it happens frequently.
  - josefritzishere 2y ago
    Is there a legal mechanism which might prevent, or penalize the capture of boards of directors? It's an obvious conflcit of interest, but I'm not sure if it's illegal.
    - Eddy_Viscosity2 2y ago
      Sometimes. A recent example of this is Elon's giant pay package from Telsa. A shareholder sued saying it was unjust enrichment and the board was full of cronies. The shareholder won, initially. But then Musk moved the incorporation of Tesla from Delaware to Texas where he knew he'd get less resistance from the law. So he got what he wanted eventually. https://www.cbsnews.com/news/elon-musk-pay-package-vote-cbs-news-explains/#:~:text=That%20package%2C%20approved%20in%202018,the%20massive%20payout%20was%20fair https://www.cbsnews.com/news/elon-musk-pay-package-vote-cbs-.... edit: Looks like I was incorrect about some of the details on Elon's pay suit as commenters have identified below. However the gist is that there exist legal avenues to reign in CEOs, but I can't think of any example where they have been ultimately successful.
morgango 2y ago
https://archive.is/3ofL4 https://archive.is/3ofL4
toomuchtodo 2y ago
Related: https://news.ycombinator.com/item?id=41292003 https://news.ycombinator.com/item?id=41292003

19 points by ViktorRay 2y ago

> Dr. de la Torre made more money as a heart surgeon than in his first years as a corporate CEO Something is going wrong if you're making as a heart surgeon more than a corporate CEO because who pays for this? Is this making healthcare inaccessible to those who need it so someone can buy a yacht or two?

christophilus 2y ago
I’m willing to bet you can find a capable CEO more easily than you can find a capable heart surgeon. There is no rigorous CEO school. MBAs aren’t a prerequisite. There is a fairly rigorous medical degree requirement if you want to be a highly specialized surgeon...
- eesmith 2y ago
  Which leads back to the supply of doctors, which depends on the limited number of med schools available and residency slots, and scope-of-care restrictions. (Eg, see https://skeptics.stackexchange.com/questions/4561/does-the-ama-limit-the-number-of-doctors-to-increase-current-doctors-salaries https://skeptics.stackexchange.com/questions/4561/does-the-a... and https://blog.petrieflom.law.harvard.edu/2022/03/15/ama-scope-of-practice-lobbying/ https://blog.petrieflom.law.harvard.edu/2022/03/15/ama-scope... )
borbulon 2y ago
Something is wrong with the whole system of how people are compensated for their work; a Starbucks employee shouldn’t have to rely upon the good graces of their customers (tips) to earn a living wage, either. That being said, a heart surgeon has a very specific and wide-ranging set of knowledge and skills which not many people could have, not to mention the incredible amount of stress they’re under.
legacynl 2y ago
Honestly in a 'Just' system I think the heart surgeon is supposed to make more than a CEO
- Ekaros 2y ago
  I don't really know. Both should be doing reasonable well, but what is the impact of single surgeon? How many people can they heal a day? Where as well managed hospital run by CEO could impact lot more people effectively each and every day. Not that that pay should be insane either...
  - legacynl 2y ago
    Yes, but a manager could leave for an extended period of time without any real impact. If a doctor leaves the surgeries and treatments actually stop. There are worker-coops that function perfectly well without a management layer leeching of actual productive people. I mean practically I agree that some management is a good idea long term, and it's most efficient to have specific people for that, but to say that they are as important as the actual workers is ridiculous.
- tivert 2y ago
  > Honestly in a 'Just' system I think the heart surgeon is supposed to make more than a CEO Yes, but in a just system they'd both also make less than they do now. Maybe ~$200k/year total compensation, say? IIRC, surgeons had the prestige and power when the fundamentals of the modern American medical billing system were established, so "procedures" pay better than office visits, and surgeons get compensated waaay more than other doctors because they do lots of procedures.

deleted 2y ago

[deleted]

legacynl 2y ago

> While it was losing hundreds of millions of dollars a year, Steward paid at least $250 million to its chief executive officer Can somebody explain to me the reasoning behind these payouts? Isn't this an incredible incentive for ceo's to make unsustainable changes, that look good by the time the bonus is payed out, but then destroys the company in the long run? But at that point this CEO is ofc already long gone with his 250mil ?

Eddy_Viscosity2 2y ago
Theoretically, the board of directors would intervene to prevent this. But in practice, boards are 'captured' entities filled with relatives and cronies of the CEO. So, the answer is that yes, the incentive exists for CEOs to rape a company for personal benefit. And it happens frequently.
- josefritzishere 2y ago
  Is there a legal mechanism which might prevent, or penalize the capture of boards of directors? It's an obvious conflcit of interest, but I'm not sure if it's illegal.
  - Eddy_Viscosity2 2y ago
    Sometimes. A recent example of this is Elon's giant pay package from Telsa. A shareholder sued saying it was unjust enrichment and the board was full of cronies. The shareholder won, initially. But then Musk moved the incorporation of Tesla from Delaware to Texas where he knew he'd get less resistance from the law. So he got what he wanted eventually. https://www.cbsnews.com/news/elon-musk-pay-package-vote-cbs-news-explains/#:~:text=That%20package%2C%20approved%20in%202018,the%20massive%20payout%20was%20fair https://www.cbsnews.com/news/elon-musk-pay-package-vote-cbs-.... edit: Looks like I was incorrect about some of the details on Elon's pay suit as commenters have identified below. However the gist is that there exist legal avenues to reign in CEOs, but I can't think of any example where they have been ultimately successful.

morgango 2y ago

https://archive.is/3ofL4 https://archive.is/3ofL4

toomuchtodo 2y ago

Related: https://news.ycombinator.com/item?id=41292003 https://news.ycombinator.com/item?id=41292003