The Rise and Fall of Dr. Paul Levy: A Case Study in Non-Profit Crisis Management

The Rise and Fall of Dr. Paul Levy: A Case Study in Non-Profit Crisis Management

by

Joerg Ladny

AD 75101 Public Affairs: New Challenges for the Non-Profit Sector

Spring, 2014 Professor Richard Doherty

Dr. Paul Levy was a pioneering member of the non-profit community, and was

recruited to lead the Beth Israel Deaconess Medical Center (BIDMC) to transform it

amidst its organizational and financial troubles. He accomplished much during his

time as CEO, but was dethroned due to a scandal that erupted regarding his

relationship with a subordinate.

This case study will provide of history of the BIDMC and its importance in the

Boston community, the narrative of Dr. Levy’s ascent, leadership at BIDMC, and his

decline amidst scandal. The case study will examine the responses by BIDMC and the

lessons that can be learned for all involved parties by this management challenge. By

using a hospital as an example, this case study will expose students to the competing

interests within an organization that public affairs professionals must manage.

1. History of BIDMC

The Beth Israel Deaconess Medical Center (BIDMC) is one of Boston’s most

historic hospitals, a level 1 trauma center, and consistently ranked among the top in the

nation, and is currently one of the major teaching and training sites for Harvard

Medical School.1 It is also the official hospital of the Boston Red Sox.2 The hospital is

also affiliated with the Dana-Farber Cancer Center and the Joslin Diabetes Center, also

in Boston in the Longwood Medical Area. The present BIDMC hospital is the result of a

merger in 1996 between Beth Israel Hospital and New England Deaconess Hospital,

both founded near the turn of the 20th century.3

The hospital was most recently in the news because it was the site where the

Boston Marathon bombers were brought after their shoot-out with police, and is the

hospital where one bomber recovered from his injuries, and another died. The hospital

was universally applauded for its professionalism.4

2. Dr. Paul Levy and His Ascent at BIDMC

Dr. Paul Levy, the former CEO of Beth Israel Deaconess Medical Center

(BIDMC), grew up in New York City and attended MIT, graduating in 1972. Levy next

worked for the Massachusetts Department of Utilities and the Massachusetts Water

Resources Authority. He became famous for leading a cleanup of the Boston Harbor.

Levy returned to MIT as an Adjunct Professor teaching infrastructure planning and

development, and later became the executive dean for administration at Harvard

Medical School.

BIDMC had run into major financial troubles due to poor management in the

1990’s. In 2002, Levy was named CEO of BIDMC . He maintained an active blog and

wrote openly about controversial issues in healthcare. He motivated his staff to use

social media to improve healthcare. For example, when the financial crisis of 2008 hit,

he asked employees to crowdsource ideas for how to cut costs so that to prevent layoffs

among staff.5 Here is how a Boston Globe reporter described the meeting when Levy

initiated his plan to prevent the most vulnerable from being fired.

“[Paul Levy] looked out into a sea of people and recognized faces: technicians, secretaries, administrators, therapists, nurses, the people who are the heart and soul of any hospital. People who knew that Beth Israel had hired about a quarter of its 8,000 staff over the last six years and that the chances that they could all keep their jobs and benefits in an economy in freefall ranged between slim and none. “I want to run an idea by you that I think is important, and I’d like to get your reaction to it,” Levy began. “I’d like to do what we can to protect the lower-wage earners – the transporters, the housekeepers, the food service people. A lot of these people work really hard, and I don’t want to put an additional burden on them. “Now, if we protect these workers, it means the rest of us will have to make a bigger sacrifice,” he continued. “It means that others will have to give up

more of their salary or benefits.” He had barely gotten the words out of his mouth when Sherman Auditorium erupted in applause. Thunderous, heartfelt, sustained applause. Paul Levy stood there and felt the sheer power of it all rush over him, like a wave. His eyes welled and his throat tightened so much that he didn’t think he could go on.”6

Levy overall was widely praised for stabilizing the finances of BIDMC and energizing

its leadership during his tenure. His turning around of the struggling finances at

BIDMC was the subject of a case study by two Harvard Business School professors in

2002.7 His creative leadership and use of social media was the basis of a case study

created by The Health Foundation in 2010.8

3. An Unfolding Crisis: Narrative of Levy’s Decline

Despite Levy’s success as his job, many colleagues complained about his

judgment relating to his relationship with one of his subordinates, Ms. Farzana

Mohamed.

Levy met Mohamed when she was an undergraduate at MIT in the late 1990’s,

and he was her academic advisor, and Levy was at that time married and had two

daughters. Levy became Mohamed’s mentor and thesis advisor for work in city

planning and engineering.

When Levy later became CEO at BIDMC, he hired Mohamed in 2002 to perform

various capacities, including information technology, strategic planning, operations,

and administration, and she directly reported to Levy. Later, Mohamed was asked by

the head of the BIDMC Needham campus if she wanted to be its chief of staff and head

director of strategic planning, as the hospital was building a 30 million dollar addition.

Mohamed’s salary rose to over $100,000 per year and she worked for BIDMC for nearly

8 years. Levy often ate lunch with Mohamed, drove places with her, and traveled

together. Levy continued to describe the relationship as one of close personal

friendship.

All of this was noticed by other employees, and board members, and senior staff

and other hospital board members encouraged Levy to cut off his ambiguous

relationship with Mohamed and to not keep her on staff. Levy claimed that she was

paid to fill needed jobs, and that she did good work and was highly qualified even

though she had no hospital experience.

In 2009, Mohamed left her job at BIDMC amidst increasing criticism about her

relationship with Levy, and was given a severance package of $30,000 cash, which Levy

claimed was in line with what other employees get when they are laid off. He stated

that “I realized for her good, my good, and the hospital’s good that she should no

longer work here.’’9

In 2010, BIDMC’s board of directors held 4 emergency meetings to discuss two

anonymous letters received accusing levy of improper relationships with his

employees, and to fine Levy $50,000 for his relationship with Mohamed. The hospital’s

board of directors publicly rebuked Levy asking him to stop his relationship with

Mohamed and to terminate her employment, but continued to give him a vote of

confidence. The board said the situation was a “serious lapse in judgment,” and

“created an improper appearance and became a distraction within the hospital.”10

In addition, a review was begun by Attorney General Martha Coakley’s office to

see whether charitable funds were misspent. Coakley’s report concluded that Levy’s

actions endangered the hospital’s reputation and management, and that the Board

should do “some soul-searching” about whether to keep Levy in his job.11 At this time

the topic of resigning was raised to Levy, and he replied, “I really love this place…I’ve

mainly thought about how much I’d like to stay here. We’re doing really good things

for patients and families.’’12

In 2010, amidst increasing criticism about his relationship with Mohamed and his

employment of her in his hospital, Levy called these past decisions his “worst mistake”

that he would hire a “close personal friend”.13 He stated that he hoped to win back the

trust of the hospital and its patients.

He stated that, “I’ve been in public service about 40 years, and although I’ve

made mistakes along the way, this is probably the worst one I’ve ever made,’’ he said,

“because of the effect it’s had on people here at the hospital who have come to rely on

me. . . . I know the hurt and disappointment is going to remain. Although what I did

didn’t cause harm to a particular person, it cased harm to the institution. . . . This will

take quite a while for people to get over. . . . I am hoping people can look past this

personal infraction.’’14

In January 2011 , Levy stepped down as CEO of BIDMC, which Levy called a

“negotiated departure”, amidst questions about his relationship with and hiring of

Mohamed.15 In a blog posting, Levy noted that he had used time during vacation in

Africa to think about his career and that it was time for him to resign. He stated, "Last

night, I informed the Chair of our Board that I will be stepping down as CEO. We will

work out an appropriate transition period, and things will continue to run smoothly

here. I leave confident that the Board will find many able candidates to succeed me."16

He noted, “While I remain strongly committed to the fight for patient quality and

safety, worker-led process improvement, and transparency, our organization needs a

fresh perspective to reach new heights in these arenas.”…“Likewise, for me personally,

while it has been nine great years working with outstanding people, that is longer than

I have spent in any one job, and I need some new challenges.”17

The BIDMC board and Levy both denied that the resignation had anything to do

with Levy’s relationship with Mohamed, but women’s rights groups applauded the

decision.18

In December, 2012, Levy and Mohamed married each other.19

5. Competing Interests, Ethical Issues, and Lessons Learned

In terms of competing interests, the most obvious is Levy’s interest in his

possibly romantic relationship with Mohamed and his relationship with his wife and

children.

Levy also had a competing interest in that he had an obligation as CEO to create

a workplace environment in which women other than Mohamed do no feel that

romantic interests are influencing hiring and promoting decisions.

Levy also had a competing relationship between himself and Mohamed as his

employee and Levy and his relationship and obligations to other employees to be fair in

how he hired and promoted staff.

Levy also had a competing interest with the Board in that he has an obligation to

monitor and uphold the reputation of BIDMC and any of his actions that could be

construed as undermining that hospital’s reputation are troublesome.

Finally, Levy and Mohamed both have an obligation to patients and their

families (and to the caregivers at the hospital) to not let personal romantic problems

influence how the hospital uses its resources since that would detract from the mission

of the hospital to provide top quality care to all.

The Board of the hospital, and of other hospitals, could use this story as a chance

to learn a number of lessons on how to manage crises in non-profit organizations.

Spark’s Rules of Crisis Communication can easily be applied to this case.

Levy should have told the truth. He should have quickly and decisively

acknowledged his mistake when it first arose, and shown that he has taken steps to

ensure it will not happen again. He should not have waited for bits of the story to

dribble out month after month.

Levy should have known his stakeholders better. He should have known that all

of this didn’t have to erupt to the media and to Martha Coakley’s office. He should

have known that he could have kept it addressed at the level of the Board through

quick and decisive action.

Levy should have taken responsibility and not made any excuses about his

behavior, and should not have justified his hiring by saying that Mohamed was so very

qualified, educated, and so on.

Levy should have been more attuned to those who suffered due to his actions.

He should have mentioned the wasted money, the lost administrative resources, and

the misallocated jobs that have prevented others from advancing. He could have

showed his humanity and obviated any defensiveness.

Levy was an active blogger, but yet was not proactive enough to beat the media

and his Board to his own punishment. He could have been more proactive and this

would have shown more responsibility and humility about the situation.

He could have been more transparent. This is an irony considering Levy’s

platform as CEO was to increase transparency at BIDMC. Levy could have been much

more transparent about his relationship, what was justified and what was

unprofessional, what actions he has taken and what remains to be done to rectify

everything.

Finally, Levy could have asked for forgiveness. He could have approached the

media and the hospital and its patients as a human being who is hoping for redemption

and a better future, rather than as someone slow to admit mistakes, and quick to find

excuses and cover up information.

1 http://www.bidmc.org/AboutBIDMC/AwardsandHonors.aspx

2 http://www.bidmc.org/AboutBIDMC/RedSoxBIDMC.aspx

3 http://www.bidmc.org/AboutBIDMC/TheHistoryofBIDMC/HowitAllBegan.aspx

4 http://www.bostonglobe.com/lifestyle/health-wellness/2013/05/18/beth-israel-

deaconess-trauma-nurses-treated-bombing-suspect-like-any-other-patient-

almost/6m6i4CHj1ZFeieJuGQ884M/story.html

5 http://tedxmaastricht.nl/inspiration/program-detailed_draft/paul-levy/

6http://www.boston.com/news/local/massachusetts/articles/2009/03/12/a_head_with_a_

heart/?s_campaign=yahoo

7 http://hbr.org/product/paul-levy-taking-charge-of-the-beth-israel-

deacone/an/303058-MMC-ENG

8 http://www.health.org.uk/publications/beth-israel-deaconess-medical-center/

9http://www.boston.com/news/health/articles/2010/05/15/levy_ignored_warnings

_to_end_relationship/

10 http://www.thecrimson.com/article/2011/1/24/levy-board-medical-levys/




13 http://www.boston.com/names/2012/12/17/former-beth-israel-deaconess-

medical-center-ceo-paul-levy-marries/QHHmmJTfcmMK2XRMEBbrLO/story.html

http://www.boston.com/news/health/articles/2010/05/15/levy_ignored_warnings_t

o_end_relationship/



15 http://www.boston.com/news/health/blog/2011/01/beth_israel_chi.html

16 http://runningahospital.blogspot.com/2011/01/transitions.html



19 http://www.boston.com/names/2012/12/17/former-beth-israel-deaconess-

medical-center-ceo-paul-levy-marries/QHHmmJTfcmMK2XRMEBbrLO/story.html

The Rise and Fall of Dr. Paul Levy: A Case Study in Non-Profit Crisis Management

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