Mutiny at Continuum: Hyman Out of Board Chair?

On Tuesday evening, hours before the annual board meeting of Continuum Health Partners, the sprawling New York hospital network, the

On Tuesday evening, hours before the annual board meeting of Continuum Health Partners, the sprawling New York hospital network, the reign of longtime chairman Morton Hyman looked like it was tapering to an end.

According to several sources, Mr. Hyman was faced with a quiet but serious mutiny among some of the members of Continuum’s board of directors—the high-powered group that oversees a network of five New York hospitals, including Beth Israel Medical Center. Anxious for a change in leadership, a small but influential core of these members had been pushing for Mr. Hyman to step down from his post for several weeks. Instead, they negotiated a carefully brokered, face-saving plan that would have Mr. Hyman departing in as little as one year’s time.

Sources familiar with the negotiations said the plan was expected to be raised—and voted on—at the Wednesday board meeting, unless the deal fell apart at the last minute.

“I suspect he will suggest that it’s time to start looking for a replacement for him and set some kind of time limit for that procedure to take place,” said one Continuum board member who asked not to be identified. “A [while] ago, he made it quite clear that he did not intend to stay there for the rest of his life …. I think what’s happening now is that it’s being strongly suggested to him that he speed up the process.”

A spokesman for Continuum declined to comment on any board tensions or backroom maneuverings, saying only that she expected Mr. Hyman to be re-elected as chairman of the board on Wednesday. She said he would be elected to a one-year term.

SHOULD MR. HYMAN FOLLOW THROUGH WITH his “retirement,” it is bound to reverberate throughout the cozy hospital-board world.

For more than three decades, Mr. Hyman, 70, a retired shipping-industry titan, has been synonymous with the rising and falling fates of Beth Israel and, eventually, all five of the hospitals in the Continuum fleet. As the notoriously hands-on chairman of the Continuum board—as well as the Beth Israel and St. Luke’s–Roosevelt Hospital mirror boards—Mr. Hyman has guided the hospitals through mergers, acquisitions, renovations and real-estate swaps, as well as the occasional unfortunate scandal. Even some of his fiercest critics acknowledge that he “brought a lot of money to that board.” (As recently as the May 10 board meeting, he pledged $50,000 to help the hospital network.)

But the rainmaker’s reign has become increasingly fraught in recent months, rocked by board-member discontent over everything from shaky hospital finances to what some members describe as Mr. Hyman’s “dictatorial” management style. In May, rumors began to spread of a push to oust him from his powerful board perch. And on Monday afternoon, a core group of roughly half a dozen dissidents—many of them on the executive board—met for lunch to finalize the details of the exit plan.

“No one wants to hurt Mort,” said the board member, whose position might be described as opposed but sympathetic. “People want a change in attitude from the chairmanship, something that seems to deal more openly with the problems of the system, and deals with them in a way that isn’t quite as heavy-handed.”

Mr. Hyman’s “retirement,” should it come, is both a cautionary tale of one man’s fall from hospital-world grace and a larger allegory of today’s treacherous medical landscape. (Call it A Pilgrim’s Progress for the high-flying board chair.) In this landscape, New York’s hospitals face a rash of financial challenges, from shriveling H.M.O. reimbursement rates to cutbacks in public funding to shrinking in-patient volume. Almost every hospital is struggling. And while Mr. Hyman may have made mistakes along the way, as his critics argue, it is also true that a chairman who takes a forceful approach is equally at risk of being lionized as a savior and pilloried as a demon.

“He is clearly an easy target,” the first board member said.

To listen to Mr. Hyman’s critics, discontent has been burbling beneath the genteel surface of board relations for several years. For some members, it began with serious differences of opinion over financial decisions such as the sale of Beth Israel’s Singer Division, also known as Beth Israel North, in 2004, as part of an effort to sell off assets and plug budget gaps. For others, it began with the sense that new and trying times demanded a new leadership. And still others took issue with the board chair’s, er, bedside manner.

“There is a certain arrogance with the way he deals with disagreements that is troublesome,” the board member said.

And yet, out of a sense of deference, respect or timidity, most board members didn’t challenge Mr. Hyman’s reign.

“I know people who left the board because they said he is dictatorial. And I think we’d be better off with a more open environment,” said a second veteran board member. “But you know what? He certainly puts his life and heart into it.”

Such thinking kept board members quiet for many years. But things began to change during the last few months, as Continuum was rocked by the one-two punch of a scandal and a funding threat. In November, Beth Israel agreed to pay $73 million to settle a very public, and very embarrassing, Medicare fraud case in which it was accused of “knowingly” doctoring Medicare cost reports from 1992 to 2001. Then, in April, New York’s hospitals were hit by Governor George Pataki’s Medicare and Medicaid vetoes—budget cuts that fell particularly hard on the Continuum network, sources said.

Mr. Hyman didn’t create either of these catastrophes, of course. But in their wake, board members began to wonder whether his rosy board briefings told the whole story, and whether a “change in faces would lead to a better result,” several sources said. As a third board member observed, “The natives became restless.”

“In the last four months, there have been a lot more board members challenging [the administration], whether it be Hyman or [Continuum president and C.E.O. Stanley] Brezenoff,” said the president of the medical staff at one of the hospitals who was present at the board meeting. “You know, just challenging the reports, challenging the effectiveness of the current administration.”

The questioning became particularly acute at the May 10 board meeting, when one Beth Israel board member, Ira Rimerman, reportedly did a run-rate projection on Continuum’s numbers and found the hospital’s budget-balancing strategy wanting. “This guy did it right at the table,” said one board member who witnessed the exchange. “He said, ‘How about a realistic plan? Just don’t tell us you’re going to cut this and cut that.’” (Mr. Rimerman declined to comment.)

And yet this questioning was nowhere near as bruising as what might have happened at the meeting. The May gathering was supposed to have been the board’s “annual meeting,” the large gathering at which members vote in their leaders. Mr. Hyman’s tenure was up for renewal, and he was once again running for board chair. But the vote never ended up taking place.

“[The vote] was on the agenda for the last part of the meeting,” recalled the medical staff president. “But then [Mr. Hyman] threw off, ‘By the way, we’ve decided to delay the election because of issues that people need to discuss.’”

These “issues,” several sources suggested, were nothing less than Mr. Hyman’s tenure as chairman.

“I thought the meeting was postponed because there had not been agreement reached with Mr. Hyman on a timetable for his stepping down,” said the first board member. “And rather than have a knock-down, drag-out fight on that issue, it was thought that it was better to have more discussion of the matter.”

MR. HYMAN’S RETIREMENT, SHOULD IT HAPPEN, would be as rare as it is significant. In this high-altitude world, where board members tend to play largely passive, money-giving roles, people don’t get obstreperous. They don’t question their leaders. And they certainly don’t rebel against the likes of Mr. Hyman, who has dominated the medical landscape in ways that even his peers at more prestigious hospitals have not.

“He used to be the guy,” said Howard Berliner, a professor of health-services management and policy at the New School’s Milano Graduate School. “Everyone knew his name. And I don’t think you could say necessarily the same thing about the chairs of Mount Sinai, or [Presbyterian], or New York Hospital, or Sloan Kettering …. He devoted so much time to health care, and he was so involved in state politics, he was just a better-known person.”

Mr. Hyman began building his name as a health-care mover and shaker in 1971, when Governor Nelson Rockefeller tapped him to join New York State’s Public Health Council. As head of the council for 25 years—and as a regular on the blue-ribbon health-panel circuit—he commanded both influence and respect, weighing in on everything from Medicaid reimbursements to public smoking to a newly discovered illness called AIDS.

In 1973, he joined the board of Beth Israel, the 115-year-old East Side institution that was once as central to Jewish immigrant life as Katz’s, Yonah Schimmel and oversized pickle barrels. (Or almost.) Recruited by two hospital honchos, then-chairman Herbert Singer and philanthropist Richard Netter, Mr. Hyman arrived with power at his back and quickly carved out a niche as a boardroom player. In 1985, he became the hospital’s chairman.

Under Mr. Hyman’s watch, Beth Israel grew in scope, scale and ambition (as did his own influence). For perhaps the first time in its history, the hospital embarked on a splashy doctor-recruitment spree, luring star physicians like radiation oncologist Louis Harrison and breast surgeon Allison Estabrook from rival hospitals in a bid to boost Beth Israel into the medical big league. And then, in rat-a-tat-tat succession, came the deals that gave rise to the Continuum network: the merger with St. Luke’s–Roosevelt in 1997, the merger with Long Island College Hospital in 1998, and finally the merger with the New York Eye and Ear Infirmary in 1999.

The purpose of these deals was both survival and empire (or, perhaps more accurately, survival through empire). As managed care swept the medical industry, hospitals began merging and melding in the hope of maximizing their bargaining strength, buying power and market share. Along the way, Mr. Hyman also consolidated his own role, becoming chairman of the boards of Saint Luke’s–Roosevelt and Continuum, as well as Beth Israel. Critics began referring to Continuum as the Mort Hyman Show, one source said.

Had all gone well, Mr. Hyman might have been dubbed a hero, a saint, a savior of the system—albeit a ham-handed one. But in the last few years, the hospitals’ balance sheets have been swinging between red and black; cost-cutting and credit holds have become regular events; at LICH, partisans have begun questioning the fairness of the arrangement that brought them into Continuum, and some trustees have begun asking whether it really made sense to poach all those celebrity doctors.

“They thought: Hire the doctors and the patients will follow. [But] they didn’t follow,” said one disgruntled board member. “At the same time, they started neglecting their base, which were the bread-and-butter guys, the medical doctors who bring patients to the hospital.”

Whether Mr. Hyman is really to blame for any of these woes, or whether he is just an “easy target,” will fall to his board to decide when they walk into the annual meeting on Wednesday. Mr. Hyman could still change his mind about giving up power; the partisans could still try to force his hand. But at least one board member hopes that cooler heads prevail.

“I would like to see this particular issue resolved relatively quickly and peacefully,” said the first member. “I have a great deal of regard and respect for him …. So whether it’s time for him to step down or not, it’s something that everyone would like done with decorum.” Mutiny at Continuum:  Hyman Out of Board Chair?