Are We Really in Good Hands?
Alan Levine remembers the morning in 2004 when Jeb Bush got serious about turning around the North Broward Hospital District.
At the time, Levine was Bush's deputy chief of staff in the governor's office. He was at his desk about 7 a.m. when the governor came into his office with a faxed article in hand.
What the heck is going on in Broward? Levine remembers Bush asking him.
The governor tossed the fax to him: It was a New Times story about waste and mismanagement in the public hospital system. And Bush, he says, was steamed. "I'd never really seen Jeb Bush mad."
Levine's life changed dramatically from that morning on. Bush made it Levine's job to turn the district around, working from Tallahassee. Then, at the end of 2006, Levine took control directly, becoming NBHD's CEO.
The ambitious Levine, whose own political aspirations were slowed when he lost a bid for the state House 11 years ago, was never expected to make a career at the district. But when he announced last week that he was leaving Broward to become Louisiana's secretary of health and hospitals, it was still a jolt — and not a good one.
The 40-year-old executive led the transformation of the tax-assisted district from what was little more than an incestuous mix of corrupt insiders, led by former NBHD General Counsel William Scherer, into what now seems a respectable organization.
Of course, Levine had Bush behind him. The governor replaced all but one member of the district board. Several top executives were fired, including Scherer.
Levine oversaw the restructuring of wasteful contracts, saving taxpayers tens of millions of dollars. Those cuts were cited by Moody's and by Standard and Poor's when they recently raised the district's bond rating, which has allowed for more tax cuts at the district. It received $160 million from homeowners this year, a steep decline from recent years.
Levine was exactly what the district needed, a well-meaning outsider with a no-nonsense mandate from on high. The question now is whether he leaves the district in a position to build on its gains.
Frank Nask, the district's chief financial officer, will become interim CEO. Levine chose Nask for the post. He thinks the world of the older Nask, who mentored him when he started work out of college at Bayonet Point Hospital in St. Petersburg. Levine quickly rose to vice president of Bayonet Point.
"His work at the district has been very good," Levine says of Nask. "When it's not good news, he tells me, and when it's good news, he tells me. I have every confidence in him."
Those who live in Palm Beach County may not remember Nask as fondly. From 1996 to 2001, he was CFO of a private hospital company that ran the county's tax-assisted Good Samaritan and St. Mary's medical centers. During his reign, those hospitals were deeply plagued by mismanagement and financial problems. The state Attorney General's Office had to clean up the mess.
Nask hired a Nashville company to oversee billing for the two hospitals. He thought that move would save money, but it wound up wasting millions of dollars. Then Nask and other company officials blamed their budget problems on the costs of treating the poor and asked the public health district to bail out the hospitals. The Palm Beach Post, which covered these problems, concluded that Nask and the other officials were secretive and inept.
Levine stands by his hire. "That was a situation where two independent hospitals merged and both wanted the other to be closed down," he explains. "Frank has told me it was absolutely one of the most impossible situations imaginable. It couldn't work."
Perhaps, but one of the criticisms of Nask's ill-fated deal with the Nashville company was that due diligence wasn't done to try to make sure it would work. And now sources close to the district tell me that may be the case with a large recent development at NBHD.
The district spends about $100 million a year on medical supplies. About two months ago, at the urging of purchasing director Brian Bravo, Levine and Nask took much of their medical supply business from Premiere Medical Supply, which had been the district's primary supplier, and gave it to the smaller, less-established MedAssets, which had been a secondary supplier.
They did not get competing bids or board approval for the change.
That's not good public business. It's even worse when you consider that MedAssets is primarily a technology company and that it was $125 million in debt when Levine and Nask made the change. (MedAssets went public in December, in part to raise money to pay off the debt.)
Levine and Nask didn't foresee that the decision — and the seemingly hasty way it was made — would prompt Premiere to sever ties with the district last month.
Bad news. Not only was the district counting on Premiere to be its backup supplier but the district actually owns shares in the company.
Premiere spokeswoman Stacey Brown said the district's surprise decision gave Premiere no choice but to leave the district. "We don't take positions of being a secondary [supplier]," Brown said. "We were not given an opportunity to maintain the relationship." Brown says she is confident that had the district bid out the business, Premiere could have brought more value than MedAssets.
Levine says that things have run smoothly with MedAssets and that he wouldn't change a thing. The decision was based on MedAssets' guarantee that it would save NBHD $6 million, he says.
My sources say, anecdotally, that there have been glitches with the MedAssets deal, including higher prices and difficulties getting some supplies, a problem that can be critical at a hospital.
Levine says he doesn't know of any problems arising from the change. "If there were any problems with the MedAssets switch, none of it has bubbled up to my level. It was a no-brainer decision because it saves us money — and the state right now is facing a $2 billion budgetary shortfall."
Levine also says that since there already was a contract with MedAssets as the district's secondary supplier, it wasn't necessary to take bids or get the district board's approval for the change.
I don't agree. A decision regarding $100 million, some of it taxpayers' money, should never be made behind closed doors. I'm hearing that specific problems have arisen in pharmaceuticals and food supply and that some department heads are furious they were not told of the decision before it was made.
Maybe it will turn out well; maybe it won't. But one thing is certain: That contract needs watching, along with the entire district. No matter who's running it.
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