The writer, a Los Angeles freelancer and former Detroit News business reporter, blogs at Starkman Approved.
By Eric Starkman
Grand Rapids-based BHSH, the corporate entity for the combined hospital operations of Beaumont Health and Spectrum Health, announced that Tracie Morris, former HR chief at BMO Financial Group, has been named “Chief People Officer” – a position formerly known as head of human resources.
Morris, who the trade publication American Banker last year named among the most influential women in U.S. banking, doesn’t appear to have healthcare experience. According to her LinkedIn profile, prior to joining Chicago-based BMO Financial, she worked in HR at various utility companies and DeVry Education Group, a for-profit company.
Morris faces an HR challenge of unimaginable proportions, decidedly among the biggest in the healthcare industry.
BHSH is far and away the biggest hospital system in Michigan, with 22 hospitals, more than 300 outpatient facilities, and 64,000 employees. HR is the most critical job in the industry, particularly for Spectrum, which closed on its acquisition of troubled Beaumont Health in February.
Beaumont has been experiencing a rash exodus of nurses that’s expected to lead to a stampede in January. That’s because Beaumont nurses were offered retention bonuses more than a year ago if they stayed with the hospital until December 31st of this year. Once the retention bonus payments are made, nurses will have little incentive to remain.
A source told me Beaumont pays nurses less than any hospital system in southeastern Michigan. In years past, the hospital system could get away paying lower wages because there was a certain prestige working at Beaumont, a once renowned regional hospital until former CEO John Fox ran it into the ground. Beaumont’s healthcare benefits are said to be better than Henry Ford Health’s, but that could change if Spectrum chooses to replace or reduce the package.
Even with the retention bonuses, Beaumont nurses have been bailing at alarming rates. BHSH recently reported that Beaumont racked up nearly $100 million in losses since February, which CFO Matthew Cox blamed on a “significant spend” on higher staffing costs, including escalating fees to nurse staffing agencies. Underscoring Spectrum’s misjudgment as to how badly ailing Beaumont was when it acquired the system, the company had only budgeted $57 million in losses.
Henry Ford’s stellar HR
The U.S. hospital industry is notoriously bad at HR management, so hiring an executive from another industry could prove to be a plus. Henry Ford Health is known for quality HR management and as best I can tell Nina Ramsey, senior vice president and chief resource officer, oversees the function. Prior to joining Henry Ford in 2017, Ramsey spent nearly 30 years at Troy-based Kelly Services, where she was chief human resources officer for more than half her tenure.
Ramsey’s bio suggests she’s pure Michigan, as she has an undergraduate degree from Oakland University and a graduate degree from Wayne State, so when she joined Henry Ford she knew the region when she switched careers. As well, there wasn’t a nurse staffing shortage when Ramsey joined Henry Ford.
There is nothing in Morris’ bio to suggest she has any Michigan ties or work experience, which is notable given BHSH’s tagline: “For Michigan, By Michigan.” Dr. Benjamin Schwartz, who Spectrum recently appointed to run Beaumont’s troubled hospital network, is from suburban New York City.
Spectrum’s news release didn’t say whether Morris will relocate to Grand Rapids or Southfield or possibly continue living in Chicago. Former Beaumont COO Carolyn Wilson maintained her primary residence in Grand Rapids, although she also kept a condo in Franklin to live in during the week.
Beth Cranson and Mark Geary, spokespersons for Spectrum and Beaumont, ignored an email asking for comment.
Cranson and Geary reflect Spectrum’s notorious lack of transparency. Spectrum requires departing employees to sign vigorous nondisclosure agreements as a condition for any severance package, thereby allowing the company to keep embarrassing issues or wrongdoings under wraps. Geary is a legacy of former Beaumont CEO John Fox, who as I’ve previously written, lacked credibility.
Despite lacking healthcare experience, Spectrum CEO Tina Freese Decker is confident that Morris can hit the ground running. “Tracie has the vision and experience to make an immediate and positive impact for our teams, organization and communities,” Spectrum CEO Tina Freese Decker crowed in a news release.
That had better be the case, as an acute nationwide shortage of staff nurses appears to be worsening. It’s become far more lucrative for staff nurses to quit their jobs and work for staffing agencies offering considerably better pay.
Even Henry Ford, despite its quality HR management during the pandemic, has been impacted. The hospital system was forced to step up its recruitment efforts in Windsor, where a significant percentage of its nursing staff lives. Beaumont also was trying to recruit in Windsor, as well as overseas.
According to a nursing source, Detroit-area staff nurses earn about $42 an hour or less, on average. Staffing agencies are offering wages as high as $110 an hour, and in some instances, rent and relocation assistance.
The nurse staffing situation has become so acute at Beaumont that even managers must work shifts on the floor.
In my mind, having such a high degree of temporary nurses and other healthcare professionals is a safety risk. A year ago last January, a patient at Beaumont Royal Oak died from anesthesia complications while undergoing a routine colonoscopy. The nurse anesthetist who administered the anesthesia was visiting from Beaumont Dearborn. The anesthesiologist overseeing her was from Detroit Medical Center.
Notably, Beaumont Royal Oak’s endoscopy suite, where the colonoscopy death occurred, has experienced severe nursing turnover and forced to heavily rely on travel nurses.
Heading into the colder months could entice nurses to relocate to Florida to escape the rigors of a Michigan winter, at least on a temporary basis. Ford CEO Jim Farley has let it be known that he plans to fire 8,000 employees, most of them likely in the Detroit area. No doubt the spouses of some of the fired Ford workers are employed as nurses, so that could spark an additional impetus for relocations.
In yet another example of Spectrum’s lack of transparency, the terms of the hospital system’s takeover of Beaumont weren’t publicly disclosed. It’s likely that Freese Decker didn’t pay anything to acquire Beaumont and its more than $3 billion reserve other than give former CEO Fox a handsome golden parachute to disappear as soon as the deal closed.
Freese Decker no doubt was counting on Beaumont’s reserve to cover expected losses, but her miscalculation as to the extent of those losses could ultimately jeopardize Spectrum’s independence. If Beaumont continues to bleed massive losses for an extended period, the BHSH enterprise might need to be rescued by a bigger and out-of-state hospital system with the management talent and resources to turn around a troubled healthcare system.
Michael Freed, Spectrum’s former CFO who publicly warned that acquiring Beaumont could result in a “massive financial loss,” noted on his LinkedIn page a few months ago that Spectrum could be at risk of being acquired and run by an out of state company, much like the Chicago-based Advocate and Wisconsin-based Aurora hospital systems will be if regulators approve a proposed acquisition by Charlotte-based Atrium Health. Freed made the takeover comment before it was publicly known how much of a drain Beaumont was proving to be on Spectrum.
In hiring Morris, who is Black, Freese Decker is making good on her desire to ensure diversity, which she says is her biggest priority.
In June, Spectrum announced the hiring of Carlos Cubia as chief inclusion, equity, diversity and sustainability officer, and offered this rambling description of his mission: To inspire and define "the systemwide transformational and innovative inclusion, equity (inclusive of health equity), diversity and sustainability strategies to drive the organization toward its goals of transforming health for the communities it serves, improving health and health equity, and fostering a culture of belonging.”
Cubia previously worked at Walgreens Boots Alliance, which is also based in Chicago. Spectrum didn’t disclose where Cubia will be based or who he will report to.
A year ago, a group of Black Spectrum employees met with an attorney to explore the possibility of a class action lawsuit alleging systemic racism. Ovell Barbee, Spectrum’s former head of diversity who in April 2021 was named one of the top diversity executives in the country, resigned last October to join Indiana University Health as head of HR. Barbee was a lifelong Michigander and highly regarded by Spectrum’s Black employees.
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