THE OZ PRINCIPLE

Marshall Allen and Tony Cook

Friday, Feb. 16, 2007 | 7:12 a.m.

It might seem that a cowardly lion, heartless tin woodman and brainless scarecrow have nothing to do with hospital management.

But with a lot of enthusiasm, some imagination and a $263,860 motivational program, former University Medical Center boss Lacy Thomas tried to turn a metaphorical philosophy based on "The Wizard of Oz" into a yellow brick road to success.

The curtain was pulled back last month, however, and UMC's management team imploded when the public hospital's dire financial situation became known.

At the same time that Thomas was using public funds to pay a California-based firm to implement "The Oz Principle" at UMC, the hospital was losing tens of millions of dollars - $34 million in fiscal 2006 and $29 million more in the first half of fiscal 2007.

Thomas was fired Jan. 16, the same day it was announced that he and two of his lieutenants were being investigated for allegedly giving no-work contracts to Thomas' friends in Chicago.

At UMC, posters highlighting "The Oz Principle" still line walls. They're part of a two-year indoctrination campaign emphasizing personal and corporate accountability with a four-part problem-solving mantra: See it. Own it. Solve it. Do it.

Consultants from the company Partners in Leadership came up with the program and conducted the seminars.

Like the Cowardly Lion, UMC managers and employees were told to muster the courage to acknowledge reality. In keeping with the Tin Woodman's story line, they were trained to have the heart to "own" their circumstances. Following the Scarecrow's example, they were taught to obtain the wisdom to solve problems. And like Dorothy, they were urged to "make things happen."

A UMC nurse said managers spent two years converting employees to the MBA-imbued philosophy. Everyone attended mandatory eight-hour seminars on "The Oz Principle," complete with role-playing exercises and Oz-themed parties.

Managers reinforced the messages with visual aids like ruby red slippers, Dorothy memorabilia, stuffed Toto dogs and a mannequin of the Tin Man. UMC's emergency room was decorated with black and white photos from "The Wizard of Oz" movie. A new training area was named "The Emerald Room." And one supervisor had a sign on her door saying: "Don't make me call the flying monkeys."

It was like Soviet-style propaganda, the nurse said, and it amounted to nothing more than a fairy tale.

"It was their way or no way at all," the nurse said of the managers. "It was very condescending. They talked to us like we're a bunch of idiots."

In light of UMC's recent scandals and Thomas' rousing sermons on ethics and integrity at the Oz seminars, employees now make jokes about the subject, noting that philosophical tenets that once seemed merely insipid now appear hollow and hypocritical.

Some problems at the hospital, though, might have been averted or better handled if UMC managers and county overseers had applied the Oz philosophy.

One of the Oz posters is rich with irony if Thomas, as accused, illegally steered contracts to his Chicago friends.

"A simple solution," the poster says. "Sometimes, staying above the line seems so unbelievably simple. Like night and day, hot and cold, fast and slow, start and stop. Right and wrong."

But while Thomas has been singled out as the one most responsible for the mess at UMC, he is not the only one at fault. Although he recommended controversial contracts - some that are part of the criminal probe, others that seemed overpriced - Clark County commissioners approved them.

Making Thomas the scapegoat of all that's wrong at UMC violates "The Oz Principle," which says people must not play the "blame game." The blame game includes finger-pointing, ignoring or denying problems, covering your tail, saying "it's not my job" or taking a wait-and-see attitude.

Thomas pointed fingers in November when he blamed new computer software for months of delays in providing commissioners with monthly financial statements. After his ouster, officials said that explanation was simply a ploy to conceal the scope of UMC's dire financial situation. In January an annual audit revealed the extent of Thomas' deceit.

County Commission Chairman Rory Reid said commissioners did not take action sooner because they had no choice but to trust their staff. That, too, sounds like finger-pointing.

"I am not an accountant," Reid said at the time. "I've never run a hospital ... The reason this broke down is because people didn't tell the truth."

Commissioners instead took a wait-and-see attitude - another Oz Principle no-no - rather than "owning" the problems and taking corrective action.

Thomas' immediate supervisor, County Manager Virginia Valentine, said last month she had no direct access to UMC's financial information during his tenure. Although Thomas blamed that on the software, it became clear near the end of fiscal 2006 that it was difficult, but not impossible, for UMC to provide monthly financial reports. Valentine, though, chose to wait for audited financial statements due in October but which were delayed until January.

While Valentine took the wait-and-see approach, UMC continued to lose millions of dollars under Thomas.

Another violation of "The Oz Principle" precepts came early this month, when Commissioner Yvonne Atkinson Gates covered her tail.

In December, Atkinson Gates failed to disclose her bid to build the home of a prominent heart specialist when she voted to give his physician group a controversial UMC cardiology contract. After the Sun inquired about her conflict of interest, she asked to have the item reconsidered at the Feb. 6 commission meeting, where she abstained from the vote.

Commissioner Chris Giunchigliani, who joined the board last month, said the county - not just Thomas - is culpable for allowing problems at UMC to persist.

"If our own auditor suspected problems for 14 months, why wasn't that dealt with earlier?" she said. "Why were there no financial reports since May? For people to say, 'They wouldn't give it to us,' is not acceptable. Withhold his paycheck."