Nudelman Smarts Over Focus On His Degrees -- But Group Health Chief Has Allies' Support, Praise

For the past 20 years, Phil Nudelman has worked 16-hours days, often without a weekend break, to achieve a stature in the health-care profession shared by few others.

The former Group Health president heads a new, $2 billion corporation called Kaiser/Group Health, a health-maintenance organization with more than 1 million patients in the Northwest.

Nudelman, 62, was recently named to a national health-reform task force, and he is on a first-name basis with President Clinton. Last month, he dined with Microsoft Chairman Bill Gates during a Seattle technology summit for top business leaders.

Many civic organizations, including the Woodland Park Zoo, the Pacific Science Center and the Greater Seattle Chamber of Commerce list Nudelman as a friend and financial supporter.

But instead of savoring his accomplishments, Nudelman suddenly finds himself on the defensive.

The Ph.D. and master's degrees listed on his resume come from an unaccredited California college characterized by some as a diploma mill.

For years, Group Health press releases have said Nudelman earned three bachelor-of-science degrees from the University of Washington, but last week university officials said he received only two.

To his supporters, the focus on Nudelman's educational background is a painful distraction from his years of good service.

Others say Nudelman is not who he appears to be, and neither is Group Health.

The 50-year-old cooperative has strayed from its ideological roots under Nudelman's term, his critics say, and the Kaiser deal further dampened its democratic spirit.

Nudelman maintains that he is ashamed of nothing and is more prepared than ever to shape Group Health's future.

"I believe in what I have done, and what I'm doing," he said in an interview Friday. "It was not my intention to be in the spotlight. It is my intention to change the health-care system in this country."

Class president for two years

Nudelman was born and raised in Portland, the second son of a housewares salesman. He earned a pilot's license and flew solo when he was 16 before leaving home to attend the UW.

At the university, he quickly became involved in numerous campus activities, and contemporaries remember him as an affable, hard-working student who sought leadership positions and held them effectively. He was a member of a fraternity, and he was elected junior class president in 1956 and senior class president the following year.

"Friendly Phil Nudelman, president of the junior class, managed the activities of the class very efficiently," reads the caption underneath a photograph of a grinning Nudelman in the UW's 1956 yearbook.

"Phil had a nice sense of humor and didn't take himself too seriously," said Charles Mertel, a classmate who is now a King County Superior Court judge. "I didn't sense that he was inappropriately ambitious. He brought a lot to the table that made him a good leader."

But the 1957 class president left the UW without a diploma. Nudelman joined the Air Force reserves several credits short of a degree, a move he blames on his out-of-school distractions.

"I was overzealous in my extracurricular activities, so I had to finish a credit or two," toward a bachelor's degree.

However, a spokesman for the UW said Nudelman was not close to finishing the degree. Last week, Nudelman revised his resume. Instead of saying he earned a B.S. in microbiology in 1957, it now reads: "Major work completed - degree not awarded."

After a stint in the Air Force and a job as a commercial airline pilot, Nudelman joined a national drug company as a salesman. He worked as a pharmacist in Bellevue and went back to the UW to earn a bachelor-of-science degree in zoology in 1963 and another bachelor-of-science degree in pharmacy three years later.

In 1973, he was asked to serve as a consultant to Group Health's pharmacy division. After two months, he was hired full time.

No Ph.D., no promotions

Nudelman rose swiftly through the ranks at Group Health and conceived several innovations that are still in place today. In 1975, he introduced a computerized prescription system. Later that year, he was put in charge of Eastside expansion. That project absorbed so much of Nudelman's energy that it became a family project. His two sons helped put together the park benches and weeded the flowers at the Eastside hospital, which opened in 1977.

But his career at Group Health nearly ended in 1979, when Nudelman clashed with his boss, Dr. Robert Shaver, vice president for operations. Almost every day, Nudelman said, Shaver reminded his underling that he would get nowhere without an advanced degree. And he was not speaking as a concerned mentor.

"They were not friendly conversations," Nudelman said. "But it stuck with me."

Nudelman resigned from Group Health, but returned a few months later after Shaver had left. In 1982 he was named senior vice president and chief operating officer.

By that time, he had received a master's degree and a Ph.D. from Pacific Western University, a California-based school that has no classrooms or examinations and awards degrees based partially on what the student has already learned.

Given the nature of the health-care industry, it's no surprise Nudelman heeded Shaver's advice. Many members of Group Health's leadership are doctors with the "M.D." behind their names, and the health-care profession places enormous prestige on academic performance.

On Oct. 8, 1990, after serving five different presidents, Nudelman was named to Group Health's top post. The press release announcing his promotion said Nudelman was a graduate of the UW in pharmacy, zoology and microbiology.

"One of the reasons Phil stood out in our decision to hire him was his values were consistent with our higher expectation of ourselves," said Aubrey Davis, longtime board member and past president of Group Health. "He has understood the problems of balancing our culture and the marketplace."

`Circling the wagons'

Last month, Group Health members voted by a wide margin to form an alliance with Kaiser health plan of Oakland, Calif., the nation's largest health-maintenance organization.

The marriage creates a new company, Kaiser/Group Health, which will oversee strategic planning and budgeting for Group Health and Kaiser operations in the Northwest. Nudelman was named president. His annual salary remains at $466,501.

The vote was largely seen as a victory for Nudelman and other Group Health executives who touted the deal as a way for Group Health to acquire the needed capital to survive increasing competition.

For many of Group Health's board of trustees, the Kaiser affiliation was the latest in a string of savvy moves by Nudelman that enabled the cooperative to compete.

With the same friendly, approachable style that he developed as UW class president, Nudelman has created tremendous personal loyalty between himself and the board that employs him.

"I would put my coat down in the mud for Phil," said Dorothy Mann, who has spent nine years on Group Health's board and was on the search committee that hired him in 1990. "There's no doubt we got the best person for the job. It breaks my heart to know that this has come up for some reason. The guy knows what he's doing."

But others say the cooperative's voting process has created a governing structure at Group Health that does not challenge Nudelman's background or leadership.

In March of last year, the chair of the nominating committee for board positions resigned in protest over how the members are selected. In her resignation letter, Martha Steinborn wrote that, for the second time in two years, the "trustees have requested . . . advice on filling a board vacancy, then ignored that advice, when given, in favor of someone who had neither been interviewed nor had stood for election."

Group Health has since changed the bylaws concerning nominating trustees, but some still charge that the board has lost its oversight of Nudelman.

Group Health has about 642,000 enrollees, but only about 10 percent have paid a $25 membership fee to gain voting rights.

The membership votes on changes to the bylaws, and elects members to the board of trustees.

Nudelman and others characterize the Kaiser deal as an affiliation between two like-minded partners. But critics, such as Ken Seeds, who recently resigned from Group Health's Factoria Medical Center Council in protest over the Kaiser move, say Nudelman led the board and the membership into a merger with the nation's largest health-maintenance organization at the expense of the cooperative's independence.

The fact that so many board members have rushed to Nudelman's defense, his critics contend, says more about the lack of diverse opinions on the board than his effectiveness as a leader.

"It's a circling of the stupid wagons. How can you defend the indefensible?" said Lyle Mercer, who served on Group Health's board periodically for 21 years. "The bigger picture has been the overall decline of the co-op which Phil Nudelman and the board are a part of."

Nudelman rejects that charge.

"To say Group Health is not a democracy is like saying America is not a democracy," he said. "And one would have to stretch to say Group Health is not in control of its own budget. If cuts are made, they will be made at Group Health."

`I was very let down'

Nudelman is used to taking heat from his critics. But until the past two weeks, he has never had to answer questions about his personal background. That changed on May 21, when he looked in the television guide and saw that the subject for that evening's tabloid television show "American Journal" was "Dubious Credentials."

Although he knew that his degrees from Pacific Western University would be mentioned in the program, he didn't watch it. Instead, Nudelman popped a tape into the VCR and went to a dinner at the Woodland Park Zoo. He watched the tape twice when he returned and then threw it away.

"I was very let down. They inferred I was part of a charade," he said. "Not knowing what my friends and colleagues think bothers me."

But the 200 e-mails, cards and letters he has received have been overwhelmingly supportive, he added. The last time he received such an outpouring was after he suffered a heart attack while giving a speech to the Downtown Rotary Club in February.

Nudelman no doubt has many allies in the local community.

The director of the Woodland Park Zoo, Robert Towne, calls Nudelman a "gentle giant," a powerful executive who chairs the Zoo Commission with good humor and a soft hand.

Nudelman's love of animals is legendary, and his Bellevue home has rooms filled with thousands of seashells and penguin images collected by his wife, Sandra.

But Nudelman has a special affinity for the giraffe. He was instrumental in helping the zoo acquire one of the animals several years ago, and since then, people have brought dozens of carved, painted or woven giraffes to his office.

"They managed to survive for so long," he says. "I like to think of myself as a survivor, too."