We've Got Hollywood Covered

The MPTF’s Long Road to Failure

Extravagant spending, closing the ICU and pharmacy, freezing doctors’ pay all led to disaster, say insiders.

For almost three months, the Motion Picture and Television Fund has argued that its hotly-contested decision to close both its hospital and long-term care facility was the result of a “perfect storm” — a collapse in the stock market, cutbacks in medical benefits and the worst economic downturn since the Great Depression.

But past and present medical staff, nursing-home experts and others with connections to the MPTF or its board of trustees say the closures are also the culmination of a series of management decisions stretching back several years.

They accuse the fund’s chief executive, Dr. David Tillman, of a failure to plan ahead, of an over-reliance on outside consultants and a lack of respect for the opinions of his own most experienced medical and administrative staff. They also accuse him of lavish spending in some quarters and self-defeating cutbacks in others.

One fatal decision may have been the move three years ago to close the intensive care unit of the MPTF hospital, against the advice of Tillman’s staff. They argued that closing the unit would make the hospital less attractive to patients, even if it saved money in the short-term.

These were the kinds of decisions, say Tillman’s detractors, that led inexorably to the January decision to close the hospital and long-term care facility.

“The time to act would have been seven to 10 years ago, because it was very clear then that there was a problem,” an employee privy to management decisions said. “Unfortunately, the board and Tillman had very little vision or foresight about problems of this magnitude. They had their own limited way of dealing with things.”

The problem, these people say, was that the MPTF slowly turned from an organization with an operating loss somewhere in the order of $1 million a year — a figure easy to recoup from charitable donations, or from the stock performances of a large endowment — to an organization with an operating loss of $10 or $20 million a year.

The problems were far from trivial. California’s nursing-home reimbursement rates ranked in the bottom 10 of U.S. states, even as medical costs skyrocketed. The MPTF’s unionized workforce enjoyed salaries and benefits on the upper end of the elderly care spectrum — an environment in which labor accounts for 65-75 per cent of all costs. Both the hospital and the nursing home were aging facilities, which created added costs in and of themselves.

Such problems, though, were not insurmountable. The Los Angeles Jewish Home for the Aging in Reseda, which has a similar profile to the Motion Picture home and very similar financial pressures but a much smaller endowment managed to build a brand-new medical center and is due to break ground next year on a new nursing home building.

This was possible largely thanks to long-term planning by its chief executive, Molly Forrest, and targeted fundraising making up a shortfall of about $10 million a year.

Tillman and his team, by contrast, made no such long-term plans  and used the MPTF’s charitable money simply to break even year to year — as attested by the Fund’s audited accounts and tax returns. When the financial crisis hit, they — unlike the Jewish Home — had nothing to fall back on.

“We’ve been planning since 1997. We have had to work very, very hard to secure donor dollars to build these new buildings,” the Jewish Home’s chief executive said in an interview with TheWrap. “With each building we’ve had to prove to the board that it can function, that it is better for the home overall than what we have torn down, that we can pay for it.”

Asked if the MPTF should have had similar foresight while the economy and the stock market were up, Forrest was careful to make no overt criticisms. “I’m not walking in anyone’s shoes, and I’m not making their decisions,” she said. “But if I were running the MPTF and looking at the environment today, I would not choose to build a new nursing home.”

The MPTF has spent extravagantly in some areas – lavishing millions on outside management consultants, for example, and paying its own top executives significantly more than, say, Molly Forrest.

The $20 million Saban Center, opened in 2007, used largely charitable funds to build a state-of-the-art gym and swimming pool complex that one MPTF insider said was more suitable for 20-year-olds than retired industry stalwarts.

At the same time, it has taken the advice of those consultants to make short-sighted decisions that have not always worked out well.

Among them:

* Freezing doctors’ pay for many years (until a recent, unexpected raise in the wake of the closure announcement), obliging them to cut back on patient visit times, cajoling them into referring patients to specialists who use the MPTF hospital, and switching from eight-hour to 10-hour shifts, even at the cost of losing talented doctors trying to raise young families.

* Purchasing a computer management system that was expected to handle the administration of both the hospital and the MPTF’s network of medical clinics. This appeared to be a cost-cutting measure — a more orthodox approach would have been to have one system for the hospital and another for the clinics. According to insiders, it took years to get the system to work even halfway reliably and consumed a large amount of the IT department’s time and energy. One doctor said the system “almost crushed our outpatient services.”

* Opening two large new medical clinics in the Valley, in the hope of getting more patients referred to the MPTF hospital, while leaving other areas of Los Angeles like the South Bay unserved. The Valley clinics are now forced to compete with each other for customers.

* The recent decision to close the pharmacy at the Westside medical clinic, even though staff there had volunteered to work longer hours so it could stay open. Patients and doctors there are argue that without the pharmacy, patients have one less reason to use the MPTF network as their medical provider in the first place. They also question whether it was really a loss-maker.

Tillman’s detractors also accuse of him of making seemingly cavalier personnel decisions that have had a grave impact on morale — for example firing the popular head of nursing at the hospital early in his tenure.

“He’s a big believer that an organization has parts, that every part is dispensible and nobody’s worth keeping. That’s his philosophy. That’s how he runs everything,” the employee privy to management decisions said. “The job of CEO is to be a visionary as to where the organization is going. What we’ve got is a guy who is essentially blind.”

Other detractors are more blunt in their assessment. “The sad part of the whole thing is, he doesn’t give a s—, and now they are using the economy as their way out of this,” said Susie Perkins, an MPTF patient whose father, former stuntman Gil Perkins, sat on the MPTF board before the Tillman era.

“My father gave 20 years of his life so what is happening now wouldn’t happen … I know he’s turning in his grave, he’s so pissed.”

And then there was perhaps the biggest blunder of them all.

In February 2006, Tillman was struggling to find ways to save money, so he asked a group of the Fund’s doctors what they thought of closing the Intensive Care Unit at the hospital.

They were not in favor, but Tillman told them the ICU was costing up to $1 million a year in medical staff, so the savings were potentially enormous.

When the doctors objected, saying no one would want to go to a hospital that doesn’t have an ICU, according to people present at the meeting Tillman responded: “There are lots of hospitals without ICUs.” And he went ahead and closed it.

As the doctors predicted, the flow of patients coming into the hospital slowed to a trickle – at last count, according to the MPTF’s own figures, it was treating an average of five to seven a day. That made the entire hospital unviable, leading to the much more recent decision to shutter it entirely.

And that, in turn, doomed the Fund’s long-term care nursing home, because a nursing hom without a hospital attached cannot claim anywhere near the same level of funding from the state Medi-cal system, and around 80 per cent of the nursing home’s residents are on Medi-cal.

Neither Dr. Tillman nor the MPTF would comment on this or any other aspect of this piece.

Despite the darker suspicions of some of the activists now campaigning to reverse the closures, nobody on the inside thinks there is any nefarious plot afoot.  Larry Mirisch, a Hollywood agent who sits on the MPTF board, echoed a widely held view when he said: “Everything is above board. No-one is hiding anything.”

Asked whether that meant the management had also been competent, Mirisch responded: “That’s all I have to say.”

Tillman clearly has a talent for impressing many on the board, since his tenure at MPTF has gone unchallenged in almost nine years in the top job. One insider described this as a knack for “managing up” despite apparent problems in “managing down.”

Questioned in February by TheWrap, Jeffrey Katzenberg — the MPTF’s chief fundraiser — said he had full confidence in Tillman and his executive staff.

Mirisch would not go that far, however. “It’s a very painful, unhappy thing that we’re all involved with,” he said. “I hope we get through this and get back to what we do, which is taking care of people.”

Related stories:

Part I: MPTF residents despondent; six have died since closure announced

Part II: As Elderly Are Displaced, MPTF CEO Makes $600,000 

Katzenberg Says He Gets “Failing Grade” on MPTF