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Anatomy of a Bankruptcy

Part 2: Think globally, look locally

Tuesday, January 19, 1999
By Steve Massey, Post-Gazette Staff Writer

William Penn Snyder III felt good.

  day2.jpg (17896 bytes)

His and the Allegheny General board’s experiment with going outside the organization for a chief executive had failed. Miserably.

John Westerman, lured from the University of Minnesota Hospitals in 1982 on the strength of his reputation as a thinker and national leader in the new era of hospital administrators, was abruptly shown the door three years later, having lost the confidence of Allegheny General’s doctors, directors and managers.

Oh, everyone liked John OK. He was movie-star handsome, an engaging speaker with a creative mind, a penny-loafered and button-downed man of ideals and ideas, a wunderkind in the field of medicine. Named at 33 to the Minnesota post, he was one of the nation’s youngest directors of a university hospital. He could toss around the new buzzwords — regional integrated system, fully integrated delivery — with the best of them.

The only problem was that Westerman wasn’t much of a manager. He had a lot of intriguing suggestions — such as forming a regional coalition of non-academic research hospitals, but when it came to actually getting things done, Westerman was paralyzed by analysis.

He was a "democratic’’ manager; he’d solicit input from as many sources as possible and encourage open discussions and debate among his managers, doctors and directors. But making a decision and acting on it didn’t seem part of his make-up.

"He’d have one idea in the morning, and then three more in the afternoon,’’ says Claude Joyner, former chairman of medicine at Allegheny General and a longtime board member. "He was a free spirit," recalls another director.

Snyder, and the AGH board, weren’t going to make the same mistake again.

Instead of looking nationally for a big name to bring the respect and clout their institution deserved and needed if it hoped to be considered among the nation’s top-tier hospitals, they found someone local. Oh, Allegheny went through a national search process, and even included several outsiders on a pared-down list. But Abdelhak was their guy.

And for good reason. Snyder liked Sherif Abdelhak, and Abdelhak was a known quantity. He had been at Allegheny General before, working his way up from a food service purchasing manager to chief operating officer in less than a decade. He had a reputation for getting things done, an image reinforced by his overseeing the almost seamless move from the hospital’s landmark 22-story tower to its modern new Snyder Pavilion in 1981, toward the end of his first stretch at the hospital.

Abdelhak had left Allegheny General in 1982 when the board opted to go with Westerman as CEO. The decision tore Abdelhak up, but the board was concerned he might be a little too green to take over the reins. Besides, he was linked to a scandal involving Westerman’s predecessor, Lad Grapski, the longtime chief executive.

Grapski had been forced to resign a year before his mandatory retirement, after it was revealed he and two other administrators were part-owners in an in-house pharmacy that catered to the hospital’s doctors and staff. Abdelhak wasn’t involved, but he was accused of acting on Grapski’s behalf after the affair became public.


Snapshot of AHERF
June 30, 1986

Employees: 3,610
Revenue: $195.38 million
Assets: $329.15 million
Debt: $67.2 million
Inpatient admissions: 25,354

* Based on Allegheny Health Education and Research Foundation and tax documents


Still, that was ancient history now. The simple fact was the medical staff, particularly many of the big names on the board — Joyner, director of surgery George Magovern and director of the trauma unit Daniel Diamond — liked Abdelhak. Not only did he run things well, he seemed to share their goal of making Allegheny General a premier institution, one with a significant reach beyond Western Pennsylvania.

The desire to be more than just a well-run regional hospital weighed on Snyder’s mind, too.

Westerman had been brought in to fan the fires of change lit during the Grapski years. During his 13-year tenure, Grapski worked to make Allegheny General more than just a good community hospital.

Under Grapski, it drew patients from all over the region, and was noted nationally for its expertise in high-profile medical specialties, including cancer research, transplants, trauma and cardiology. It wooed Joyner from the University of Pennsylvania, and Magovern from Johns Hopkins. It launched the region’s first helicopter service and opened its first sports medicine center.

Even before Grapski, Allegheny General was a noted research and teaching hospital. It benefited from a rich tradition of support from industrialists and financiers, and established a separate research arm, the William H. Singer Memorial Laboratory, in 1915. It also had a history of collaboration with the University of Pittsburgh, providing graduate medical education programs in a variety of fields.

It was even noted for its architecture. Its $104 million Snyder Pavilion received raves when it opened in 1981 for having the latest in electronic and medical gadgetry, including one of the country’s first around-the-clock computerized monitoring systems for critical-care patients.

And its 22-floor South tower, one of the nation’s first skyscraper hospitals when it opened in 1936, brought a new, luxury feel to medicine, evoking a northern Italian elegance with arches, columns, a courtyard and a lot of natural light.

But the hospital’s love for the grand came at a price: Both building projects were plagued with cost overruns, so much so that the cream-brick skyscraper stood vacant and uncompleted for four years, until the government bailed it out in 1934 with a $2 million loan.

It would mark the last time Allegheny General confronted a severe fiscal threat — until a decade into Abdelhak’s tenure.

For now, however, Snyder had his man.

A few directors would raise suspicions about the direction Allegheny General’s parent would take under Abdelhak, but Snyder would hear none of it. He’d forget to show up for Duquesne Club lunches arranged by board members who wanted to talk about Abdelhak. Instead, he would turn to Abdelhak for most of his information about the corporation’s affairs.

And board meetings were scripted and dull affairs. It was the "Bill and Sherif Show.’’ There weren’t a lot of probing questions, and those who did speak up persistently were discouraged from doing so again — not openly, but in ways in which the don’t-rock-the-boat message was clear.

Vincent Sarni, the former PPG Industries Chairman who chaired Allegheny General’s board when it wooed Philadelphia’s Medical College of Pennsylvania in late 1987, frequently raised concerns about the financial toll of expanding east.

Then one day, during the second half of 1990, Sarni got a call from Snyder informing him that his three years as chairman were up.

"I said, ‘What three years?’ " recalls Sarni, who was then told it was hospital policy to rotate its chairman every three years. "It was the first I’d heard of it.’’

Others who tried to approach Snyder to talk about the affairs of the organization were put off. There could be no meetings, formal or otherwise, without Abdelhak.

It was as if the pair had a relationship of mutual dependence.

Abdelhak was Snyder’s right-hand man, the person who’d carry out his dream for his adopted institution, one in which his family had devoted so much time and money over the years. And Snyder was Abdelhak’s lifeline, the man who’d keep him in power and deflect naysayers.

It was a strange synergy between the Egyptian-born manager with the razor-sharp mind and driving ambition, and the tall, gangly WASP from an old Sewickley family.

"Sherif knew he was nothing without Snyder, that he could be gone in a minute if Snyder lost confidence in him," says one high-ranking doctor. In fact, when Snyder underwent a risky operation for a gastrointestinal ailment in the early 1990s, the doctor says, Abdelhak was openly shaken.

"Sherif practically spent the night in Snyder’s room. He was wringing his hands, frantic that nothing should happen to Snyder," the doctor says. "It went beyond mere affection. It seemed like he was terrified about what would happen to him if Snyder didn’t make it."

Just how tightly the two were intertwined was clear during a convocation address in 1992 at the dedication of a new medical office and research facility at the Medical College of Pennsylvania, the Philadelphia medical school Allegheny had taken over only four years earlier.

Snyder was the man of the hour. An endowed chair was being awarded in his honor, a recognition of his and his family’s devotion and financial support for Allegheny.

When he rose to speak of his — and Allegheny’s — beloved benefactor, Abdelhak made clear how much Snyder meant to him.

In a sonorous, measured voice, Abdelhak scanned the audience with his dark, piercing eyes and said: "I came to Allegheny because of William P. Snyder. And I stay at Allegheny because of William P. Snyder.’’

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