Intro From If I Betray These Words
Intro From If I Betray These Words
Intro From If I Betray These Words
THESE WORDS
s t e e r f o rt h p r e s s
lebanon, new hampshire
Copyright © 2023 by Wendy Dean
ISBN 978-1-58642-355-1
Dr. Mike Hilden answered the knock on his front door in the fall of
2012 to find two Federal Bureau of Investigation (FBI) agents waiting
to speak with him. The FBI hadn’t come to Carlisle, a quiet college
town of twenty thousand people in central Pennsylvania, for drug
dealers or old-school racketeers. They were talking to doctors, nurses,
and administrators at the local hospital, tipped off by whistleblow-
ers who leveled fraud allegations at Health Management Associates
(HMA), the fourth-largest hospital corporation in the United States,
and the owner of Carlisle Regional Medical Center.
Dr. Hilden had been a hospitalist at Carlisle Regional for more
than a decade, since before the board of the nonprofit community
hospital sold out to HMA. Now it was one of seventy-one hospitals
in a nationwide for-profit enterprise that was being accused of coerc-
ing physicians to forsake their medical judgment — to hospitalize
patients who didn’t meet insurance criteria, to order more tests than
their conditions required, and to keep them in the hospital longer
than necessary — to increase profits.
Carlisle, established by Scots Irish in the mid-eighteenth century,
had an early history fraught with conflict. The Carlisle Barracks, now
home to the United States Army War College, served as supply head-
quarters in the Revolutionary War. George Washington reviewed
troops there before sending them west to put down the Whiskey
Rebellion, and downtown buildings still bear the scars of a three-day
occupation by Robert E. Lee during the Civil War. But since stopping
the northward advance of the Confederate army, the town had been a
2 Introduction
and that of his senior team, was hardly out of line with their success,
or with their peers in the industry.
At the meeting, HMA’s vice president of financial relations at the
time, John Merriwether, denied the critics’ contentions: “To imply
that we don’t take quality as seriously as we should, that’s not fair. If
you don’t provide good quality care, you won’t have good financial
performance.”3 But HMA specifically targeted markets where it knew
there was little or no competition, so patients at HMA hospitals could
not vote with their feet or their healthcare dollars. The Center for
American Progress found that rural emergency rooms in hospitals like
those HMA acquired were, on average, twenty-two miles from the
next nearest emergency room,4 a distance that could mean the differ-
ence between life and death.
Ultimately, the shareholders weren’t swayed by the critics. Schoen,
the board, and the compensation structure all remained unchanged.
But the Health Care Fraud Prevention and Enforcement Action Team,
a joint effort by the US Department of Justice and the US secretary
of health and human services, was just getting started with HMA.
Between 2009 and 2011, whistleblowers filed eight lawsuits against the
corporation, alleging fraud. Agents from the FBI and Department of
Justice spent two years talking with hundreds of employees across at
least eight states, and by the time the investigation was over, HMA
agreed to pay a $260 million settlement for forcing doctors, under
threat of losing their jobs, to provide unnecessary care against their
best judgment and training. Dr. Hilden was vindicated, but he and
his partners, like so many other physicians in the grip of increasingly
corporatized healthcare, were looking for new jobs — ones where
they could practice medicine as they had been trained to do, not as
corporate growth plans told them they must.
dropping out of high school to start a scrap metal business. During the
Korean War, he enlisted in the marines. Unhappy serving on the front
lines, he vowed to finish his education when he got home. He even-
tually earned a master’s degree in business administration, studying
lean management principles and how economies of scale benefit the
bottom line, and upon graduation went straight into the turbulent,
low-margin world of glassmaking as a marketing manager for Anchor
Hocking.5 In less than a decade, he became president and CEO of
Pierce Glass, where his ambition caught the eye of Robert Lear, CEO
of the holding company that owned Pierce.6 When family-run brewer
F&M Schaefer Corporation recruited Lear to turn around their falter-
ing beer business in 1972, Lear jumped at the chance but knew he
couldn’t do it alone. He started planning how to bring Schoen on at
Schaefer.
Businesses usually succeed in one of three ways: through better qual-
ity, lower cost, or less competition. Until the mid-twentieth century,
most beer was locally brewed, and companies balanced quality and
cost to appeal to local tastes. By the 1960s, however, companies like
Anheuser-Busch, Schlitz, Pabst, and Miller had built industrial brew-
eries, churning out beer at one-quarter the cost of local breweries, in
strategic locations along the new interstate highway system, which
enabled them to ship their cheap, bland brew around the country.7
Brothers Frederick and Maximilian Schaefer, immigrants from
Germany, founded F&M Schaefer Brewing in New York City in 1846.
The company survived the Civil War, Prohibition, and the privations
of two world wars, but by the late 1960s, it was struggling. An attempt
to expand Schaefer’s regional market into Ohio had failed. Brewing
was consolidating, with companies leveraging economies of scale
to compete on cost. Schaefer’s breweries in Albany, Brooklyn, and
Baltimore were aging and inefficient. To compete with the big brands,
then CEO Rudolph Schaefer II, grandson of Maximilian, decided
to build a new brewery. To fund the project, he needed cash,8 so in
1968 he took the company public, raising $106 million in capital. In
What Beer and Modern Healthcare Have in Common 5
taking the company public, F&M Schaefer Brewing was split into
two business entities: F&M Schaefer Corporation, the parent holding
company, and Schaefer Brewing Company, the production subsidi-
ary. Schaefer immediately spent $60 million building a modern brew-
ery near major transportation hubs in Fogelsville, Pennsylvania, just
outside the former steel powerhouse of Allentown, where land was
cheap and labor was plentiful, with so many steel workers recently
laid off.
During the four years of construction, from 1968 to 1972, the
company continued to lose market share to the national brands.9
When the new brewery finally started sending out beer, customers
complained they could taste a difference. Sales flagged and debts
mounted. Something had to change.
Enter Robert Lear. Just a year after he was brought in, Lear lured
Schoen away from Pierce Glass to oversee the production subsidiary,
Schaefer Brewing, displacing Rudie Schaefer III. Rudie had been with
the company for sixteen years, working his way up the ranks as an
expert in production, and was being groomed to take over from his
father.10 But Lear and Schoen dismissed Rudie’s expertise. Their goal
wasn’t quality, it was survival as a profitable company. Lear was confi-
dent that Schoen’s “record of making his own way, overcoming prob-
lems, and meeting formidable challenges” would make up for his lack
of experience in the beer industry.11 But Rudie couldn’t bear to watch
his family name associated with a shoddy product. In 1976, after three
years of working with men who didn’t value his expertise, Rudie told
his father the work was “untenable” and left. The younger Schaefer
never returned to brewing.12
When the Fogelsville brewery opened in 1972, Rudie Schaefer had
closed the Albany facility, and three hundred people lost their jobs.
Still plagued by falling market share in 1976, Schoen needed to cut
expenses further. He again increased production in Fogelsville, then
shuttered the Brooklyn plant, putting another 850 employees on the
street.
6 Introduction
Schaefer had tried competing first with better quality, then with
lower cost, both unsuccessfully. So Schoen looked to the third strat-
egy: less competition. With the bigger brands dominating most of
the mainland US market, he set his sights on the island of Puerto
Rico, where beer consumption per capita had doubled in the 1960s,
but competition from local breweries was limited. By 1977, Schaefer
held 70 percent of the beer market in Puerto Rico, and its Baltimore
brewery was shipping 1.3 million barrels of beer to the island every
year, amounting to a third of Schaefer’s entire business.13
Then in 1978, after years of rumors it would happen, legislators
in Puerto Rico imposed a five-cent-per-can excise tax on imports
from large breweries, which undercut Schaefer’s price advantage in
that market. A third of Schaefer’s business evaporated overnight, and
Schoen needed to cut overhead sharply, so he closed the Baltimore
brewery and put three hundred more workers on the street.14 Spooked,
and out of ideas for how to recover, Schoen started eyeing the exits.
On Thursday, May 14, 1981, after barely eight years at the company,
Schoen completed the sale of Schaefer to Stroh Brewing, which
wanted the Fogelsville brewery to expand production of its own
beer. He walked away with, as the Tampa Bay Times put it, “a pile of
money” from his time as CEO, but the deal he struck was less a wind-
fall for shareholders than a way to save face and avoid bankruptcy. In
less than a decade, William Schoen, who knew nothing about the beer
industry, took a family business that had been around for a century
and a half and sold it for parts. Schaefer beer was no more.
many uninsured) and were dragging HMA’s balance sheet into the
red. They had to go.
Then he started rebuilding, buying up ailing community hospitals
in rural areas where population growth guaranteed strong demand
and a lack of competition meant HMA would own the market. These
small hospitals typically operated at low margins, if they made any
profit; after all, they existed to serve their communities. But Schoen
was confident that he could turn them into moneymakers for HMA.
The Tampa Bay Times described the HMA formula as “simple, but
capital-intensive.”
and consolidated over the past forty years, most executives have come
to see themselves as responsible not to physicians or to patients but
rather to shareholders, who have one goal: maximizing profit.
Today, MBAs like Schoen control most of our healthcare systems.
But there is one consistent face of medicine for patients: their physi-
cian. Bearing the weight of responsibility and liability for these profit-
generating systems is breaking them.
For months after hearing about moral injury, I thought of little else.
Giving up clinical medicine had been a personal loss, but now I under-
stood the problem was not with me but with our healthcare system. I
wanted other doctors in distress to know they were not alone, and for
them to stop blaming themselves for their frustrations with clinical
medicine.
In the fall of 2016, I shared my thoughts about this with my
friend Dr. Simon Talbot, an academic plastic surgeon whom I’d
gotten to know through his work in hand transplants and with
whom I’d done other disruptive work. Over the next year and a
half, we researched, revised, and refined the idea. Eventually we
drafted an article about why moral injury, not burnout, was the
source of widespread distress among physicians, which we submit-
ted to journals like the New England Journal of Medicine and the
Journal of the American Medical Association. For six months, we
received only rejections, until finally Pat Skerrett, the editor at a
new medical spinoff of the Boston Globe, STAT News, accepted the
article. Since the day it was published, the response has been over-
whelmingly positive. The article has been downloaded more than
300,000 times, and scores of clinicians — doctors, nurses, physical
therapists, social workers — have reached out directly, telling us
what a relief it was to have language to accurately characterize their
experience, and telling their stories of peril. It became clear that
patients and the public needed to hear those stories, and there was
a growing appetite for change.
What Beer and Modern Healthcare Have in Common 19