There They Go Again - Merck Threatened Legal Action Against Italian Doctor who Criticized Zetia

It seems that when confronted with unfavorable facts or opinions, Merck executives like to threaten legal action, rather than just argue their side of the case.  Last month we <a href="http://hcrenewal.blogspot.com/2014/06/at-mercks-urging-federal-judge.html">discussed</a> how Merck officials used the US court system to try to prevent a physician from publicizing evidence uncovered in prior litigation that suggested Merck employees had concealed the risks of Vioxx from research subjects.<br /><br /><b>Legal Threats to Shut Up a Critic</b> <br /><br />Recently, a <a href="http://www.bmj.com/content/349/bmj.g4441">British Medical Journal news article</a> explained how Merck tried to shut up an Italian physician who dared criticize another of its drugs, Zetia (ezetimibe).<br /><br /><blockquote class="tr_bq"><div id="p-1">The Italian branch of the drug company Merck Sharp and Dohme (MSD) has stopped a leading public health doctor and administrator from circulating texts to GPs advising them about the use of one of the company’s drugs. </div><div id="p-1"><br /></div><div id="p-2">In the texts, Alberto Donzelli—the head of education, appropriateness, and evidence based medicine at the public health authority of Milan (Milan Healthcare)—had analysed the published evidence on the cholesterol lowering drug ezetimibe and discouraged its prescription in addition to statins.</div><br /><i>A letter telling Donzelli to 'cease and desist' was sent in February by MSD’s medical director, Patrizia Nardini,</i> and was cosigned by the company’s director of legal affairs. They accused Donzelli of serious misconduct and a breach of medical ethics and threatened to sue him and Milan Healthcare for as much as €1.3m (£1m; $1.78m).</blockquote><br />Dr Donzelli was defended by Dr Roberto Carlo Rossi, the Director of the Order of Physicians of Milan, the local regulatory body,<br /><br /><blockquote class="tr_bq"> Rossi replied in April, declaring that the medical commission had analysed and discussed the issue in depth and concluding that there was no reason to object on ethical grounds to Donzelli’s behaviour.</blockquote><br />But,<br /><br /><blockquote class="tr_bq">in late May the company sent <i>a second 'cease and desist' letter to Donzelli </i></blockquote><br />So,<br /><br /><blockquote class="tr_bq">In mid-June, Donzelli bowed to the request and removed the relevant material from his website....</blockquote><br /><br /><b>The Anechoic Effect Trumped </b><br /><br />Up to then, the story line was familiar.  We have often noted the <a href="http://hcrenewal.blogspot.com/search/label/anechoic%20effect">anechoic effect</a>, that facts or ideas that offend the rich and powerful in health care often get little circulation, have few echoes.  Health care professionals' may fear that speaking out may lead to great unpleasantness.  Self-censorship may be reinforced by knowledge that the pervasiveness of <a href="http://hcrenewal.blogspot.com/search/label/conflicts%20of%20interest">conflicts of interest</a> in health care means that one's friends, colleagues, family members, or more particularly supervisors are likely to have financial relationships with big health care corporations.  Similarly, those in the media and in the medical and health care scholarly literature may have similar fears, knowing that advertising revenue often comes from health care corporations, and their executives and boards may have their own conflicts of interest.<br /><br />But in this case, Dr Donzelli was not cowed at first.  Furthermore, neither was the BMJ, and then some people in the media.  Instead of quieting the issue, Merck's legal threats resulted in the BMJ news article.  Then, in short order, the story was picked up by Larry Husten <a href="http://www.forbes.com/sites/larryhusten/2014/07/06/merck-uses-legal-threats-to-stifle-negative-advice-about-zetia-and-vytorin-in-italy/">blogging for Forbes</a>, and by Ed Silverman's <a href="http://blogs.wsj.com/pharmalot/2014/07/07/merck-threatened-to-sue-doc-over-prescribing-advice/">PharmaLot blog</a> for the Wall Street Journal.  Amazingly, this time it only took Merck one day after this negative publicity to change its position.  Per Matthew Herper, again <a href="http://www.forbes.com/sites/matthewherper/2014/07/07/merck-says-it-regrets-strong-arming-italian-researcher/">in Forbes</a>,<br /><br /><blockquote class="tr_bq"><i>Merck says that it 'regrets' using legal threats</i> to push a leading Italian researcher to muffle his public critiques of one of the company’s cholesterol drugs.</blockquote><br />Herper was able to get confirmation from Merck spokesman Steve Cragle who said<br /><br /><blockquote class="tr_bq">the physician would be able to post his arguments about the drug, ezetimibe, on his web site again without fear of legal reprisal coming from Merck.</blockquote>So in this case, sunlight was an effective disinfectant.  Perhaps if some of  the health care professionals who have silently acquiesced to pressure to maintain the anechoic effect decided they would not take it any more, there could be a lot more disinfection.<br /><br />Note that Merck seems to have a chronic problem with honest discussion about Zetia (as well as Vioxx).  In 2007, we first <a href="http://hcrenewal.blogspot.com/2007/12/data-about-ezetimibe-adverse-effects.html">blogged</a> about reports that Merck had suppressed results of clinical research that showed the drug could cause adverse effects on the liver.  Eventually in 2013, a Reuters article that somehow got by us at the time, but was<a href="http://www.fiercepharma.com/story/merck-attacks-italian-critic-cholesterol-fighter-zetia-then-backs/2014-07-08"> summarized in FiercePharma</a>, announced that Merck would "<span id="articleText"><span class="focusParagraph"><span class="articleLocatio</span>n">pay $688 million to settle two U.S. class-action lawsuits by shareholders who said they lost money <i>because the company concealed the poor results of a clinical trial of the anti-cholesterol drug Vytorin</i> [a combination drug that included ezetimibe]."  Although, "</span></span></span><span id="articleText">the settlements include no admission of liability or wrongdoing.  '</span><span id="articleText"><span id="articleText">There's probably some merit (to the claims) or they wouldn't have settled for such a large amount,' Judson Clark, a health care analyst with Edward Jones,</span>..."  </span><br /><br /><span id="articleText">Merck managers, like many other health care leaders, got away with making facts and opinions they did not like taboo as topics of conversation for a long time.  Maybe if the health care leaders who are used to producing the anechoic effect for their own benefit saw that doing so will not be so easy in the future, the fog that obscures honest discussion of health care dysfunction might start to lift.  True health care reform would enable such honest discussion, no matter who among the powerful it might offend.  </span><br /><br /><span id="articleText">ADDENDUM (8 July, 2014) - See also comments <a href="http://shearlingsplowed.blogspot.com/2014/07/is-sanity-making-comeback-matt-herper.html">in the Shearlings Got Plowed blog</a>.   </span><br /><span id="articleText"><br /></span>

There They Go Again - Merck Threatened Legal Action Against Italian Doctor who Criticized Zetia

It seems that when confronted with unfavorable facts or opinions, Merck executives like to threaten legal action, rather than just argue the...

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What Does the Blumsohn - Procter and Gamble -Sheffield University Affair Say About the Fitness of the Latest VA Secretary Candidate?

<b>Introduction - New Leadership for the US Department of Veterans Affairs </b><br /><br />After reports of problems with access, manipulation of data about waiting times, and most recently "a corrosive culture," the US Department of Veterans Affairs, the country's large government run health system, has had a massive leadership overhaul.  President Obama's nominee to head the agency is now Robert A McDonald, former CEO of Procter and Gamble.<br /><br />The choice of a former CEO or a large corporation was called "unorthodox" <a href="http://www.bostonglobe.com/news/nation/2014/06/29/bob-mcdonald-former-chief-obama-nominee-lead-veterans-affairs/zVA9EH7PlMNWaTU7Yyp8NP/story.html">by the Boston Globe</a>, but many saw merit in a business leader running the VA.  As reported by the Globe, House Speaker John Boehner said that as a "private sector" leader,  Mr McDonald is the "kind of person who is capable of implementing the kind of dramatic systemic change that is badly needed and long overdue at the VA."  The Chairman of Boeing, also a member of the P&G board, hailed Mr McDonald as the person who "navigated Procter & Gamble through the difficult post-financial-crisis years, where he expanded business in developing markets and made substantial progress improving the efficiency of the company’s internal operations...."<br /><br />On the other hand, a <a href="http://www.washingtonpost.com/politics/federal_government/obamas-choice-for-va-will-find-fixing-it-is-harder-than-selling-soap/2014/07/01/84cf28d6-0139-11e4-b8ff-89afd3fad6bd_story.html">column in the Washington Post</a> suggested that expertise in "selling Tide and Pantene" might not be relevant to fixing the VA. Yet aside from a <a href="http://ringoffireradio.com/2014/07/obama-nominates-former-corporate-exec-as-veteran-affairs-secretary-2/">single article</a> on the Ring of Fire web site, all news coverage and discussion so far has ignored Mr McDonald previous experience in health care leadership, but also that his relevant track record ought to raise questions about his fitness for the VA position.<br /><br /><b>Procter and Gamble and Health Care</b><br /><br />According to Mr McDonald's <a href="http://www.pg.com/en_US/downloads/company/executive_team/bios/pg_executive_bio_bob_mcdonald.pdf">official P&G biograpy</a>, after various roles in various countries, before becoming CEO,  <br /><br /><blockquote class="tr_bq">Bob returned to the U.S. as the <i>Vice Chairman of Global Operations</i> (2004 to 2007) and later P&G’s <i>Chief Operating Officer</i> (2007 to 2009).</blockquote><br /><br />Although not widely known as a pharmaceutical company, P&G actually had a subsidiary that made prescription drugs, which Mr McDonald sold off in 2009 (see this <a href="http://online.wsj.com/news/articles/SB125111032092353427">Wall Street Journal report</a>.)  As we noted <a href="http://hcrenewal.blogspot.com/2014/05/abort-retry-fail-lancet-avoided-much.html">here</a>, its products still include over the counter pharmaceuticals (e.g., Pepto-Bismal, Metamucil, Prilosec OTC).  Also, while Procter & Gamble does not make it very obvious, it has owned MDVIP, a company that employs physicians to provide concierge medical services, since 2010, although as Cincinnati.com just <a href="http://www.cincinnati.com/story/money/business/2014/05/02/pg-sells-concierge-medicine-unit/8622903/">reported</a>, it will soon sell this unit to private equity.  So during Mr McDonald's tenure, his company was to some extent a pharmaceutical company, and a health care provider.<br /><br /><b>The Blumsohn - Procter and Gamble - Sheffield University Case</b><br /><br />Furthermore, on Mr McDonald's watch as Vice Chairman of Global operations and Chief Operating Officer, there was a case involving Procter and Gamble that raised multiple concerns about the ethics of its pharmaceuticals operations.  We first posted about the case in 2005 (<a href="http://hcrenewal.blogspot.com/2005/12/another-challenge-to-integrity-of.html">here</a>).  For all relevant posts, look <a href="http://hcrenewal.blogspot.com/search/label/Actonel">here</a>. In 2009 we <a href="http://hcrenewal.blogspot.com/2009/12/british-medical-journal-interviews-dr.html">described the case</a> thus,<br /><br /><blockquote class="tr_bq">The case involved <i>suppression and manipulation of research</i>, <i>ghost-writing</i>, <i>institutional conflicts of interest, and attempts to silence a whistle blower. </i>It provides lessons about the downsides of letting commercial firms sponsor and hence control human research designed to evaluate the products or services they sell; and of academic medicine becoming dependent on research money from such firms for such research.</blockquote><br />We previously <a href="http://hcrenewal.blogspot.com/2009/09/reappearance-of-ghost-of-seasons-past.html">summarized</a> the case's events<br /><br /><blockquote><ul><li>Dr Aubrey Blumsohn, a senior lecturer at Sheffield University, and Professor Richard Eastell performed a research project on the effects of the drug risedronate (<a href="http://www.actonel.com/index.jsp">Actonel</a>, made by Procter & Gamble Pharmaceuticals [P&G]) under a <a href="http://www.fraudinscience.org/PG/contract.pdf">contract</a> between P&G and the University.</li><li>Although the research contract designated Blumsohn and Eastell as "Investigators" under whose direction the project would be carried out, Blumsohn was not given access to the original data collected by the project.</li><li>Despite numerous requests, (like <a href="http://www.fraudinscience.org/PG/20050525mckay.pdf">this one</a>), P&G <a href="http://www.fraudinscience.org/PG/20030619email.htm">refused access </a>to this data <a href="http://www.fraudinscience.org/PG/attorneyreq.pdf">repeatedly</a>.<br />Blumsohn was concerned that he and Eastell could be accused of scientific fraud if they continued to make presentations and write articles and abstracts without access to the data which they were supposedly writing about.</li><li>Blumsohn became suspicious that some of the analyses done by P&G could be misleading, especially <a href="http://www.fraudinscience.org/PG/20030909audio.htm">related to a graph shown to him that omitted 40% of patient data</a>.</li><li>Blumsohn objected to <a href="http://www.fraudinscience.org/PG/20030424email.htm">P&G arranging for papers and abstracts to be written by a professional writer</a>, but with Blumsohn listed as first author. Blumsohn was concerned that such ghost-written documents were mainly meant to convey "key messages" in support of P&G's commercial interests.</li><li><a href="http://www.fraudinscience.org/PG/20030910audio.htm">Eastell warned Blumsohn </a>not to aggravate P&G, because the company was providing a grant to the University which "is a good source of income."</li><li>After repeated failed attempt to get the data, Blumsohn complained to numerous officials at Sheffield University, including <a href="http://www.fraudinscience.org/PG/20040526eastell.pdf">Eastell</a>, medical school Dean <a href="http://www.fraudinscience.org/PG/20050708weetman.pdf">Tony Weetman</a>, University Vice-Chancellor <a href="http://www.fraudinscience.org/PG/20050814bouche.pdf">Robert Boucher</a>, and the Head of the University's Department of Human Resources, <a href="http://www.fraudinscience.org/PG/20050627boucha.pdf">Ms R Valerio</a>.</li><li>Still unable to get the data, he spoke with news reporters about his case. At this point, Sheffield suspended him, but then <a href="http://www.fraudinscience.org/PG/gag.doc">offered him a severance agreement </a>if he signed a contract binding him not to make any detrimental or derogatory statements about the University and its leaders.</li></ul></blockquote><blockquote>So the case involved suppression and manipulation of research, ghost-writing, institutional conflicts of interest, and attempts to silence a whistle blower. It provides lessons about the downsides of letting commercial firms sponsor and hence control human research designed to evaluate the products or services they sell; and of academic medicine becoming dependent on research money from such firms for such research.</blockquote><br />Although this case occurred in the UK, it involved actions by the US based Procter and Gamble.  While many of the events in the case occurred before 2004, from 2004 to 2009 it became clear that Procter and Gamble was not going to go easy on Dr Blumsohn.  For example, <a href="http://scientific-misconduct.blogspot.com/2007/03/advice-to-p-pharmaceuticals-how-not-to.html">according to Dr Blumsohn</a>, in 2006, P&G released some scientific data relevant to the case, but not complete enough data to be meaningful.  In 2007, there was still shady business going on involving scientific abstract submissions apparently made in Dr Blumsohn's name by P&G operatives.<br /><br />Since Procter and Gamble never made any known attempt to apologize, explain its conduct, or ameliorate Dr Blumsohn's plight during 2004 - 2009, as one of the most senior leaders of Procter and Gamble, seemingly with direct authority over its pharmaceutical operations in the UK during that time period, Mr McDonald ought to be held accountable for the company's misbehavior described above.  To my knowledge, though, no one at P&G, including Mr McDonald, has ever admitted responsibility or been made accountable in any way.   <br /><br /><b>Summary</b><br /><br />Since Mr McDonald recently was an executive of a company that sold prescription and non-prescription pharmaceuticals, and provided direct health care, confirmation as Veterans Affairs secretary could be regarded as a transit through the revolving door, and hence open to question.  Since Mr McDonald got <b><i>$15,928,015</i></b> in total compensation during his last year as CEO (2012-13) (see the company's 2013 proxy statement), and had accumulated 2,247,593 shares of stock or equivalent by 2013, worth approximately <b><i>$179 million</i></b> at today's price of $79.67, his ability to understand the needs of the often poor veterans whom the VA serves is also open to question.  <br /><br />More importantly, while Mr McDonald held high executive positions at Procter and Gamble, the company was involved in a dodgy affair involving conflicts of interest, manipulation of research, and attempted silencing of whistle blowers.  In my humble opinion, given that these events occurred directly on his watch, his fitness to run a huge health care system ought to be in question unless his responsibility for these events is disproved.<br /><br />The widespread huzzahs for Mr McDonald as potential VA leader based mainly on his exalted status as CEO of a big corporation show that many in the US still see corporate CEOs as aristocracy.  True health care reform would hold health care leaders accountable, particularly for upholding the health care mission and putting patients' and the public's health ahead of revenue generation and especially personal profit.<br /><br />ADDENDUM (7 July, 2014) - Link to McDonald's official P&G biography fixed. <br /><br />ADDENDUM (8 July, 2014) - This post has been re-posted <a href="http://www.nakedcapitalism.com/2014/07/obama-va-robert-macdonald-procter-gamble-scandal.html">on Naked Capitalism</a>, and <a href="http://www.openhealthnews.com/story/2014-07-07/robert-mcdonald-fit-be-va-secretary">on Open Health News</a>. 

What Does the Blumsohn - Procter and Gamble -Sheffield University Affair Say About the Fitness of the Latest VA Secretary Candidate?

Introduction - New Leadership for the US Department of Veterans Affairs After reports of problems with access, manipulation of data about wa...

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Health Care Corruption, "No Dirty Little Secret," but "An Open Sore" - Lessons from India for the US

<a href="http://hcrenewal.blogspot.com/search/label/health%20care%20corruption">Health care corruption</a> is widely prevalent around the globe, but remains the great unmentionable.<br /><br /><b>Introduction: Global Health Care Corruption </b><br /><br />We have discussed health care corruption whenever we have an opportunity, but rarely does the topic appear in the English language media or in English language medical and health care journals, particularly in the US.  Some might think that this is because health care corruption is not so prevalent in the US and other "developed" countries.  However, our <a href="http://hcrenewal.blogspot.com/2013/07/43-believe-that-us-health-care-corrupt.html">most read post of all time</a> was about a Transparency International global survey that found that fully <b><i>43% of Americans believe our health care is corrupt.  </i></b><br /><br />A recent editorial in the BMJ(1) opened thus,<br /><br /><blockquote class="tr_bq"><i>Healthcare is a high risk sector for corruption</i>. Best estimates are that between <i>10% and 25% of global spend on public procurement of health is lost through corruption</i>. This is big bucks. Total global spend on healthcare is more than $7 trillion each year. Corruption takes many forms, depending on the country’s level of development and health financing system. The United States, for example, lost between $82bn and $272bn in 2011 to medical embezzlement, mostly related to its health insurance system. <i>No country is exempt from corruption.</i> Patients everywhere are harmed when money is diverted to doctors’ pockets and away from priority services. Yet this complex challenge is one that <i>medical professionals have failed to deal with, either by choosing to enrich themselves, turning a blind eye, or considering it too difficult</i>. Transparency International, a watchdog on these matters, defines corruption as the<i> abuse of entrusted power for private gain, which in healthcare encompasses bribery of regulators and medical professionals, manipulation of information on drug trials, diversion of medicines and supplies, corruption in procurement, and overbilling of insurance companies</i>. This is no dirty little secret. It is one of the biggest open sores in medicine.</blockquote><br />When health care corruption is actually discussed in polite circles, including the scholarly literature about medicine and health care, the discussion usually refers to corruption elsewhere.  In particular, in developed countries, discussion of health care corruption usually focuses on less developed countries. <br />Thus, maybe it should not be a surprise that the editorial by Jain et al accompanied another BMJ article about health care corruption in India. Yet by reading between their lines, both articles have global application, and are just as relevant to those nations in which the powers that be seem to have smugly concluded that health care corruption is only a problem in benighted third world countries.<br /><br /><b>A Personal View on Health Care Corruption in India</b> <br /><br />David Berger a UK trained general practitioner (GP), discussed the corruption he found while volunteering in India.(2)  His introduction was,<br /><br /><blockquote class="tr_bq">'<i>The corruption strangles everything, Sir. It’s like a cancer</i>.' Accompanied by apologetic shrugs and half smiles, statements like this are commonly heard in India. I knew this was the case before I went to work as a volunteer physician in a small charitable hospital in the Himalayas, but what I didn’t realise was <i>how far the corruption permeates the world of medicine and the corrosive effect it has on the doctor-patient relationship.</i></blockquote><br />Berger raised several issues: <br /><br /><u>Neoliberalism and Privitization</u><br /><br /><br /><blockquote class="tr_bq">The healthcare system itself is <i>a model of inequity; it is one of the most privatised in the world</i>, with out of pocket expenditure on healthcare at more than 70%, far higher even than in the United States. This phenomenon is at least partly the result of the <i>neoliberal World Bank policies of the 1990s, which mandated a reduction in public financing of healthcare</i>, fuelling growth of the private sector. The latest in technological medicine is available to people who can pay, albeit at a high price,...</blockquote><br /><u>Kickbacks to Physicians for Referrals</u><br /><br />This is a common form of corruption in India.<br /><br /><blockquote class="tr_bq"><i>all investigations attract a 10-15% kickback to the referring doctor</i>. One day, the marketing executive for this clinic had turned up at the hospital with an envelope full of cash—the commission for investigations ordered in the past few months. The senior doctor refused it and stipulated that in future the commission was to be paid back to patients, which is why the resident had to sign the form. The country’s <i>doctors and medical institutions live in an 'unvirtuous circle' of referral and kickback</i> that poisons their integrity and destroys any chance of a trusting relationship with their patients.</blockquote><br /><u>Kickbacks from Pharmaceutical Firms</u><br /><br /><blockquote class="tr_bq">There is also widespread corruption in the pharmaceutical industry, with <i>doctors bribed to prescribe particular drugs.</i> Tales are common of hospital directors being given top of the range cars and other inducements when their hospitals sign contracts to prescribe particular antibiotics preferentially.<br /><br />I met a former pharmaceutical sales executive who left the industry, sickened by the corrupt practices he was supposed to employ. Working for one of the largest drug companies in the country, <i>he was expected to bribe doctors with money and luxury goods. </i>The crunch came when a doctor demanded that the company fly him to Thailand for a holiday and then provide him with prostitutes at his home. When the company representative queried this, his manager told him to comply, and he felt he had no choice but to resign, protesting that he was 'not a pimp.'</blockquote><br /><u>Huge Fees Charged to Medical Students</u><br /><br /><blockquote class="tr_bq">Endemic corruption extends to medical studies themselves.<i> In another 'unvirtuous circle,' students can have to pay very large “donations” (perhaps $200 000 or more, some 20 times the average doctor’s annual salary) to get into the rapidly increasing number of private medical colleges and to get on to sought after postgraduate training schemes. </i>This means that doctors can have <i>high levels of debt or family obligation when qualifying, which is a strong incentive against working as generalists in rural areas and favours them practising technological medicine for maximum profit</i> in urban areas to try to recoup their investment.</blockquote><br /><br /><b>The US Parallels</b><br /><br />All the issues above have clear parallels in the US.  But in the US, hardly anyone talks about health care corruption as a local or national problem.   <br /><br /><u> Neoliberalism and Privitization</u><br /><br />The US is known for its increasingly private health care system, pushed by the ideology of "neoliberalism" or "<a href="http://hcrenewal.blogspot.com/search/label/economism">economism</a>."  US health insurance is mostly provided by private, for-profit corporations, not non-profits, or government agencies.  US hospitals and hospital systems are increasingly private, as are other organizations that provide direct health care, e.g., <a href="http://hcrenewal.blogspot.com/search/label/hospices">hospices</a>.  US physicians are increasingly <a href="http://hcrenewal.blogspot.com/search/label/corporate%20physician">corporate employees</a>.  India may be more privatized, but the US is close behind. <br /><br /><u> Kickbacks to Physicians for Referrals</u><br /><br />We have frequently posted about cases in which there was good evidence that physicians in the US got <a href="http://hcrenewal.blogspot.com/search/label/kickbacks">kickbacks</a>, or bribes.  Most involved legal settlements of cases in which there were allegations of widespread kickbacks.  Some of them involved kickbacks for referrals (e.g., the settlement involving Omnicare in 2013, look <a href="http://hcrenewal.blogspot.com/2013/10/there-they-go-again-omnicare-to-settle.html">here</a>).  On the other hand, resolution of cases involving kickbacks to small groups of physicians for referrals are so common in the US that we rarely discuss individual examples. For example, I found the following headlines from the last few weeks:<br /><br /><blockquote class="tr_bq"><a href="http://6abc.com/news/nj-arrests-more-than-12-in-alleged-kickback-scheme/134025/">NJ Arrests More than 12 in Alleged Kickback Scheme</a><br /><a href="http://www.nj.com/morris/index.ssf/2014/06/randolph_doctor_jailed_for_20_months_for_role_in_massive_kickbacks_scheme.html">Randolph Doctor Jailed for 20 Months for Role in Massive Kickback Scheme</a><br /><a href="http://www.ocregister.com/articles/ahmed-626942-indictment-million.html">O.C. Grand Jury Indicts 15 Doctors  </a>  </blockquote><br />We have also written extensively about how <a href="http://hcrenewal.blogspot.com/search/label/corporate%20physician">corporate physicians</a> are pushed to avoid "leakage," that is referral of patients to health care facilities not owned by their corporate employees (e.g., look <a href="http://hcrenewal.blogspot.com/2011/02/new-steward-health-care-will-superbowl.html">here</a>).  <br /><br /><br /><u>Kickbacks from Pharmaceutical Firms</u><br /><br />We have posted about numerous examples of widespread <a href="http://hcrenewal.blogspot.com/search/label/kickbacks">kickbacks</a> given by health care corporations, particularly pharmaceutical, biotechnology, and medical device companies, to physicians to enhance their prescriptions for or use of their products.  Most recent examples include legal settlements by Pfizer about kickbacks to promote use of Neurontin (one of many by that company, look <a href="http://hcrenewal.blogspot.com/2014/06/justice-delayed-is-justice-denied.html">here</a>); by Medtronic to promote use of its pacemakers and defibrillators (look <a href="http://hcrenewal.blogspot.com/2014/06/fool-me-twice-boehringer-ingelheim.html">here</a>); and by Johnson and Johnson to promote use of Risperdal (look <a href="http://hcrenewal.blogspot.com/2013/11/another-and-huge-22-billion-settlement.html">here</a>).  Moreover, we have discussed many examples of physicians paid as "consultants" or given "honoraria" for talks by companies whose goal was to use these physicians as "<a href="http://hcrenewal.blogspot.com/search/label/key%20opinion%20leaders">key opinion leaders</a>," actually covert marketers for their drugs or devices.  Many of the <a href="http://hcrenewal.blogspot.com/search/label/conflicts%20of%20interest">conflicts of interest </a>we have discussed actually seemed to involve kickbacks or bribes, even though some physicians and policy-makers like to refer to them as "collaborations" with industry to increase "innovation."  <br /><br /><u>Huge Fees Charged to Medical Students</u><br /><br />The huge tuition charged US medical students, their huge resulting debt, and their resulting tendency to pursue procedural specialties rather than cognitive specialties, particularly primary care, have become cliches.<br /><br />So it seems that the US has some of the same possible risk factors for corruption as does India, that there are many cases in the US of activities that are called corruption in India, and that a near majority of US citizens feel their health care is corrupt.  But health care corruption remains a largely taboo topic in the US.  <br /><br /><b>Summary: Some General Approaches </b><br /><br />The editorial by Jain et al that to its authors' credit emphasized that health care corruption is a global problem suggested some general approaches to corruption(2)<br /><br /><blockquote class="tr_bq"><i>Good governance, transparency, and zero tolerance</i> must form the basis of any anti-corruption strategy. Changes must be implemented in society at large for reform to be sustained. <i>Better governance requires rigorous legislation and functioning administrative mechanisms to provide fiscal oversight. Ethical standards of conduct must be explicitly established and staff held accountable for their performance.</i> <i>Punitive measures should be available to serve as a deterrent.</i> <i>Honest behaviour must be rewarded</i>. These policies may be ineffective, however, unless healthcare professionals are assured of a decent salary and <i>fair opportunities for professional growth</i></blockquote><br />Also<br /><br /><blockquote class="tr_bq">Simple and effective <i>channels for complaints must be established, and appropriate legal support and protection provided to whistleblowers</i>. Looking deeper, <i> underlying issues such as education and social justice must not be forgotten</i> if the battle against corruption is to be sustained and eventually won. Answers may also lie outside the world of medicine. </blockquote><br />Note that we have discussed all these approaches: <a href="http://hcrenewal.blogspot.com/search/label/accountability">accountability</a>, <a href="http://hcrenewal.blogspot.com/search/label/transparency">transparency</a>, <a href="http://hcrenewal.blogspot.com/search/label/governance">governance</a>, <a href="http://hcrenewal.blogspot.com/search/label/boards%20of%20trustees">boards of trustees</a>, <a href="http://hcrenewal.blogspot.com/search/label/boards%20of%20directors">boards of directors</a>, <a href="http://hcrenewal.blogspot.com/search/label/ethics%2F%20integrity%20policies">ethics and integrity policies</a> , <a href="http://hcrenewal.blogspot.com/search/label/impunity">impunity</a>, <a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements">legal settlements</a>, and education about corruption (look <a href="http://hcrenewal.blogspot.com/2010/12/lancet-emphasizes-threats-to-academic.html">here</a>).  <br /><br /><br />Not that any of them have been widely adopted.<br /><br />So to repeat an ending to <a href="http://hcrenewal.blogspot.com/2013/07/43-believe-that-us-health-care-corrupt.html">one of my previous posts</a> on health care corruption....  if we really want to reform health care, in the little time we may have before our health care bubble bursts, we will need to take strong action against health care corruption.  Such action will really disturb the insiders within large health care organizations who have gotten rich from their organizations' misbehavior, and thus taking such action will require some courage.<br /><br /><b>References</b><br /><br />1.  Jain A, Nundy S, Abbasi K. Corruption: medicine's dirty open secret.  Brit Med J 2014.  Link <a href="http://www.bmj.com/content/348/bmj.g4184">here</a>.  <br /><br />2.  Berger D. Corruption ruins the doctor-patient relationship in India.  Brit Med J 2014.  Link <a href="http://www.bmj.com/content/348/bmj.g3169">here</a>.

Health Care Corruption, "No Dirty Little Secret," but "An Open Sore" - Lessons from India for the US

Health care corruption is widely prevalent around the globe, but remains the great unmentionable. Introduction: Global Health Care Corrupti...

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Through a Glass Darkly - How Can So Many Health Care Executives Be Visionaries?

<span style="background-color: #eeeeee;"><i><span style="font-size: x-small;">Visionary (noun)</span></i></span><br /><span style="background-color: #eeeeee;"><i><span style="font-size: x-small;"></span></i></span> <br /><div class="sblk"><div class="scnt"><span style="background-color: #eeeeee;"><i><span style="font-size: x-small;">1<span class="ssens"><b>:</b>  one whose ideas or projects are impractical <b>:</b>  <a href="http://www.merriam-webster.com/dictionary/dreamer">dreamer</a> </span></span></i></span></div></div><div class="sblk"><div class="scnt"><span style="background-color: #eeeeee;"><i><span style="font-size: x-small;">2<span class="ssens"><b>:</b>  one who sees <a class="formulaic" href="http://www.merriam-webster.com/dictionary/visions">visions</a> <b>:</b>  <a href="http://www.merriam-webster.com/dictionary/seer">seer</a> </span></span></i></span></div></div><div class="sblk"><div class="scnt"><span style="background-color: #eeeeee;"><i><span style="font-size: x-small;">3<span class="ssens"><b>:</b>  one having unusual foresight and imagination</span></span></i></span></div></div><div class="scnt"><span style="background-color: #eeeeee;"><i><span style="font-size: x-small;"><span class="ssens"><span class="vi"> </span><a href="http://www.merriam-webster.com/dictionary/visionary"><span class="vi">Merriam-Webster Dictionary online </span></a></span></span></i></span></div><div class="scnt"></div><div class="scnt"><br /><span class="ssens"><span class="vi"><b>The Visionary, or Messianic Health Care Executive </b></span></span></div><div class="scnt"></div><div class="scnt"><br /><span class="ssens"><span class="vi">In 1997, Sherif Abdelhak, the CEO of the then unusually large vertically integrated health care system based in Pennsylvania, the Allegheny Health Education and Research Foundation (AHERF) </span></span>was described in an American College of Physicians publication as a "visionary." (See the summary beginning on p 5 <a href="http://www.acponline.org/about_acp/chapters/ri/nl-fall04.pdf">here</a>.) Abdelhak had previously been called a "visionary" or a "genius" in the media. [Gaul GM. Creator of a cross-state health system despite personal and financial questions, Sherif Abdelhak has boldly expanded from Pittsburgh to Philadelphia. Philadelphia Inquirer, March 4, 1991. P. D1. Gaul GM. The new prescription for health care: Hahnemann’s merger dwarfs - and frightens - many local rivals. Philadelphia Inquirer, November 21, 1993. P. E1.]   In 1998, AHERF was bankrupt, and Abdelhak eventually pleaded guilty to misusing charitable funds and went to jail.  </div><div class="scnt"><span class="ssens"><span class="vi"><br /></span></span></div><div class="scnt"><span class="ssens"><span class="vi">Mr Abdelak was one of the earlier examples I found of the hospital leader regarded as fearless leader, visionary, even messianic, and the possible bad effects of putting so much money, power, and faith in one person.  </span></span>For more recent examples of how health care leaders may be described in messianic terms, look <a href="http://hcrenewal.blogspot.com/2011/09/more-repeats-of-talking-points.html">here</a>, <a href="http://hcrenewal.blogspot.com/2011/09/talking-points-sans-original-thought-to.html">here</a>, and <a href="http://hcrenewal.blogspot.com/2011/12/more-tales-of-hospital-ceo-compensation.html">here</a>.  For  related, and also religiously allusional theories of the "divine rights of CEOs," look <a href="http://hcrenewal.blogspot.com/2012/03/golden-calf-explains-how-economism-lead.html">here</a> and <a href="http://hcrenewal.blogspot.com/2012/03/why-health-care-leaders-remain.html">here.</a></div><div class="scnt"></div><div class="scnt"><br /><span class="ssens"><span class="vi">Modern health care, the US economy, and many developed countries have seen<a href="http://hcrenewal.blogspot.com/search/label/managers%27%20coup%20d%27etat"> increasing domination by administrators, managers and executives</a>.  In particular, US hospitals were once small non-profit institutions based in communities or universities, often threadbare, and run by dedicated if harried health care professionals.  They now have morphed into huge organizations run by professional managers who may <a href="http://hcrenewal.blogspot.com/search/label/executive%20compensation">become multimillionaires</a> in the process.  Meanwhile, US health care has become increasingly expensive, but without any obvious advantages to patients' or the public's health.  </span></span></div><div class="scnt"></div><div class="scnt"><br /><span class="ssens"><span class="vi">As we have noted, justification for the domination by professional managers and their lavish remuneration often includes paeans to their brilliance.  Most recently we<a href="http://hcrenewal.blogspot.com/2014/06/a-real-example-of-public-relations.html"> discussed</a> how the rise of the professional manager has been explained by a not very clear analogy between such managers and the "great men" of history.  </span></span></div><div class="scnt"></div><div class="scnt"><br /><span class="ssens"><span class="vi"><b>Can They All be Visionaries? </b></span></span></div><div class="scnt"></div><div class="scnt"><span class="ssens"><span class="vi"><br />The notion of every hospital CEO as a Napoleonic figure seems ridiculous, but there seems to be little public skepticism of the notion of executives, including hospital leaders as fearless leaders.  </span></span></div><div class="scnt"></div><div class="scnt"><br /><span class="ssens"><span class="vi">One reason may be that the exposure most people have to these notions is limited.  One may see the local hospital CEO extravagantly praised, but it is always possible the local CEO is brilliant.  Most people probably do not see the praises sung for the CEO of the hospital 100 miles away.</span></span></div><div class="scnt"></div><div class="scnt"><br /><span class="ssens"><span class="vi">So inspired by our most recent discussion of the public relations talking points used to justify health care CEOs often million dollar plus compensation, I set out to see if brilliant hospital leaders are really a dime a dozen.  My methods were simple.  I used Google News to search back about one month, and looked simply for hospital CEOs or other top leaders described as "visionaries." </span></span></div><div class="scnt"></div><div class="scnt"><br /><span class="ssens"><span class="vi">Here are the results, in chronological order.</span></span></div><div class="scnt"></div><div class="scnt"><span class="ssens"><span class="vi"></span></span></div><div class="scnt"><br /><span class="ssens"><span class="vi"><u>CEOs of Frederick Regional Health System, Meritus Health, and Western Maryland Health System </u></span></span></div><div class="scnt"></div><div class="scnt"><br /><span class="ssens"><span class="vi">[Maryland, June 9, 2014]</span></span></div><div class="scnt"></div><div class="scnt"><br /><span class="ssens"><span class="vi">The context was,</span></span></div><div class="scnt"></div><blockquote class="tr_bq"><div class="scnt"><span class="ssens"><span class="vi"> </span></span><span class="ssens"><span class="vi">Frederick Regional Health System, Meritus Health and Western Maryland Health System announced Trivergent Health Alliance as the name of their regional health care alliance.<br /><br /> After a national executive search, Raymond Grahe, senior vice president and chief financial officer of Meritus Health based in Hagerstown, has been named chief executive officer of Trivergent Health Alliance MSO, the management services organization that is a subsidiary of the alliance.</span></span></div></blockquote><div class="scnt"></div><div class="scnt"><br /><span class="ssens"><span class="vi">This is what Grahe said about the CEOs of the three hospitals,</span></span></div><div class="scnt"></div><blockquote class="tr_bq"><div class="scnt">It is thanks to the dedication of these <i>three <b>visionary</b> CEOs</i> that Trivergent Health Alliance exists today. </div></blockquote><div class="scnt"></div><div class="scnt"><a href="http://www.times-news.com/local/x1396882112/Meritus-official-named-CEO-for-Trivergent-Health-Alliance">From the Cumberland Times-News</a>.</div><div class="scnt"></div><div class="scnt"><br /><u>Baystate Health CEO</u></div><div class="scnt"><br /></div><div class="scnt">[Massachusetts, June 18, 2014]</div><div class="scnt"><br /></div><div class="scnt">In the course of a tribute to retiring CEO Mark R Tolosky, an attorney by training, Mary Jo Stafford, a nurse, said,</div><div class="scnt"><br /></div><blockquote class="tr_bq"><div class="scnt">He has been incredibly accessible and is a <b><i>visionary</i></b></div></blockquote><div class="scnt"></div><div class="scnt"><br /><a href="http://www.masslive.com/news/index.ssf/2014/06/baystate_health_names_building.html">From Masslive.com</a>. </div><div class="scnt"><br /></div><div class="scnt"><u>Anna Jacques Hospital CEO</u></div><div class="scnt"></div><div class="scnt"><br />[Massachusetts, June 18, 2014] </div><div class="scnt"></div><div class="scnt"><br /></div><div class="scnt">On the announcement of the retirement of Delia O'Connor, David LaFlamme, chairman of the hospital board, said,</div><div class="scnt"><br /></div><blockquote class="tr_bq"><div class="scnt">Her legacy is that of <i>a <b>visionary</b>, decisive leader</i> whose extraordinary contributions to the hospital and local area have earned her the trust and respect of the entire community.</div></blockquote><div class="scnt"></div><div class="scnt"><br /><a href="http://www.newburyportnews.com/local/x1927809729/AJH-CEO-to-retire">From the Newburyport News</a></div><div class="scnt"></div><div class="scnt"><br /><u>CoxHealth Vice President for Marketing and Public Affairs</u></div><div class="scnt"></div><div class="scnt"><br />[Missouri, June 23, 2014]</div><div class="scnt"></div><div class="scnt"><br />On the announcement of the appointment of Jim Anderson as the new Vice President for Marketing and Public Affairs, CoxHealth CEO Steve Edwards said,</div><div class="scnt"></div><blockquote class="tr_bq"><div class="scnt"> We welcome Jim Anderson, <i>a great <b>visionary</b></i> with a passion for our community</div></blockquote><div class="scnt"></div><div class="scnt"><br /><a href="http://www.ky3.com/news/local/coxhealth-hires-retired-chamber-president-for-pr-veep/21048998_26619350">From KY3</a>. </div><div class="scnt"><br /></div><div class="scnt"><u>Good Shepherd Medical Center Chief Medical Officer</u></div><div class="scnt"><br /></div><div class="scnt">[Texas, June 25, 2014]</div><div class="scnt"><br /></div><div class="scnt">Per a news report on the announcement of the appointment of Dr Lawrence T Verfurth as new Chief Medical Officer</div><div class="scnt"><br /></div><blockquote class="tr_bq"><div class="scnt">Dr. Verfurth, who joined the Good Shepherd staff earlier this month, is <i>a <b>visionary</b> physician executive</i> with a broad base of operation and clinical leadership spanning the spectrum of healthcare</div></blockquote><div class="scnt"><br /></div><div class="scnt"><a href="http://www.cbs19.tv/story/25868616/good-shepherd-medical-center-names-new-chief-medical-officer">From KYTX</a>. </div><div class="scnt"></div><div class="scnt"><br /><u>Bassett Healthcare Newtork President and CEO</u></div><div class="scnt"></div><div class="scnt"><br />[New York, June 25, 2014]</div><div class="scnt"></div><div class="scnt"><br />On the occasion of awarding the Distinguished Service Award by the Healthcare Association of New York State (HANYS) to Dr William F Struck as Bassett Healthcare Network President and CEO, HANYS President Dennis Whalen said,</div><div class="scnt"></div><blockquote class="tr_bq"><div class="scnt"> Under Dr. Streck’s <i><b>visionary</b> leadership</i>, a single hospital in Cooperstown, with 70 physicians, has grown into a network of six affiliated hospitals, with 45 community- and school-based health centers, and more than 400 providers serving eight counties</div></blockquote><div class="scnt"></div><div class="scnt"><br /><a href="http://www.hanys.org/news/index.cfm?storyid=3546">From a AHNYS press release</a>. </div><div class="scnt"><br /></div><div class="scnt"><u>Milford Hospital CEO</u></div><div class="scnt"><br /></div><div class="scnt">[Connecticut, June 26, 2014]</div><div class="scnt"><br /></div><div class="scnt">On the occasion of an article published by Milford Hospital researchers, Dr Sin Hang Lee, one of the authors and director of Milford Medical Laboratory, a Milford Hospital affiliated laboratory said,</div><div class="scnt"><br /></div><blockquote class="tr_bq"><div class="scnt">the four employees of Milford Hospital's Department of Pathology are carrying out the commitment of <i>the hospital's <b>visionary</b> president and CEO</i> Joseph Palaccia</div></blockquote><div class="scnt"><br /></div><div class="scnt"><a href="http://www.businesswire.com/news/home/20140626005650/en/Milford-Hospital-Pathology-Staff-Independent-Physicians-Discover#.U6xutEDNCic">From a Milford Medical Laboratory news release via BusinessWire</a>.</div><div class="scnt"><br /></div><div class="scnt"><u>St Jude Children's Research Hospital</u></div><div class="scnt"><br /></div><div class="scnt">[Tennessee, June 26, 2014]</div><div class="scnt"><br /></div><div class="scnt">On the announcement of the appointment of Dr James R Downing as the new CEO of St Judge Children's Research Hospital, Terry Burman, chairman of the St Jude Board of Governors, said,</div><div class="scnt"></div><blockquote class="tr_bq"><div class="scnt">Dr Downing is an exceptional scientist whose <i><b>visionary</b> approach</i> to the next era of growth and discovery at St. Jude will mirror the legacy established by Danny Thomas more than 50 years ago. </div></blockquote><div class="scnt"></div><div class="scnt"><br /><a href="http://www.memphisdailynews.com/news/2014/jun/26/st-jude-names-downing-new-ceo/">From the Menphis Daily News</a>. </div><div class="scnt"><br /></div><div class="scnt"><b>Summary</b></div><div class="scnt"><br /></div><div class="scnt">So with a very cursory search covering less than one month I was able to find eight CEOs, one vice president for marketing, and one CMO, from 10 hospitals in seven states who were called visionary or visionaries.  It is hard to believe that all these people were truly visionaries using the definition above.  </div><div class="scnt"></div><div class="scnt"><br />None of the news articles or press releases that used the v word provided any detailed justification.  In most cases, the visionary designation was made either by someone who worked directly for the leader in question, or was a member of the organization's board of trustees and hence responsible for that individual holding a leadership position. This is more evidence that there are cults of leadership surrounding most health care leaders these days.  </div><div class="scnt"><br /></div><div class="scnt">Actually, labeling a health care manager a visionary should evoke more suspicion than admiration.  As in the unfortunate case of Mr Abdelhak and AHERF, we have seen many health care leaders praised for their brilliance and paid royally despite leadership resulting in financial distress, <a href="http://hcrenewal.blogspot.com/search/label/mission-hostile%20management">threats to the organizations' health care missions</a>, poor patient care, unethical behavior, or even <a href="http://hcrenewal.blogspot.com/search/label/crime">crime</a>.</div><div class="scnt"></div><div class="scnt"><br />Yet health care CEOs are just people, sometimes smart, but almost never brilliant.  Promoting them as messianic or "great men" (or more rarely women) to bewitch key constituencies, justify the remuneration of other top managers, and the hiring of more public relations flacks is likely to lead to the sort of organizational disasters and system-wide dysfunction we discuss on Health Care Renewal.  The rise of the falsely messianic leader may allow the entry of the most dangerous false messiahs, the psychopathic ones.  (We discussed the likelihood that some health care leaders are actually psychopaths <a href="http://hcrenewal.blogspot.com/search/label/psychopaths">here</a>.)</div><div class="scnt"></div><div class="scnt"><br /><br />In the secular occupation of health care, we ought not to yearn for messiahs, or even "great men" or women, but instead hope for reasonable leadership that draws on the collective knowledge and values of health care professionals rather than dubious "visions."  True health care reform would promote leaders who show accountability, integrity, transparency, honesty, and ethics. </div><div class="scnt"></div><div class="scnt"></div>

Through a Glass Darkly - How Can So Many Health Care Executives Be Visionaries?

Visionary (noun) 1 :   one whose ideas or projects are impractical :   dreamer 2 :   one who sees visions :   seer 3 :   one having unus...

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A Real Example of Public Relations Talking Points to Justify Outsize Executive Compensation - and Why We Should No Longer be Fooled

We frequently discuss outsize <a href="http://hcrenewal.blogspot.com/search/label/executive%20compensation">executive compensation</a> in health care organizations as both a symptom and a cause of these organizations' poor leadership and governance, and hence of widespread health care dysfunction.<br /><br /><b>The Latest Stories of Huge CEO Pay </b><br /><br />Stories of gargantuan compensation appear almost daily.  For example, some headlines about pay at hospitals and hospital systems in the last few months included,<br /><br /><blockquote class="tr_bq"><a href="http://www.gjsentinel.com/news/articles/millionaire-health-care">Millionaire health care?</a><br />With high costs and insurance premiums in Garfield County, focus falls on pay of a hospital’s chief executive<br /><a href="http://www.masslive.com/politics/index.ssf/2014/05/audit_faults_umass_medical_sch.html">Audit faults UMass Medical School for improper documentation of $2 million in bonus compensation</a><br /><a href="http://www.tennessean.com/story/news/health/2014/05/25/saint-thomas-ceos-salary-benefits-soar/9556721/">St Thomas CEO's salary, benefits soar</a><br /><a href="http://bangordailynews.com/2014/06/07/news/state/mainehealth-defends-executive-pay-despite-major-cuts/">MaineHealth defends top executives' pay despite major cuts</a></blockquote><br />Then there were stories about the amazing pay given to CEOs of top for-profit health insurance companies, e.g., <a href="http://ifawebnews.com/2014/05/30/single-payer-advocate-reports-pay-increases-for-many-health-carrier-ceos-in-2013/">via IFAwebnews,</a><br /><br /><br /><blockquote class="tr_bq">According to research published by a single-payer advocacy group, <i>average compensation for nine CEOs at large health insurance companies rose by more than 19% in 201</i>3, with some chief executives seeing steep increases in pay, while others received less remuneration.<br /><br /> Healthcare-NOW!, a non-profit that says its goal of single-payer health coverage is also known as 'improved Medicare for all,' analyzed recent financial reports of the Fortune 500 health insurance carriers.<br /><br /> According to Healthcare-NOW!,<i> the highest compensation increase went to Aetna CEO Mark Bertolini, who received a <b>$30.7 million</b> compensation package in 2013. The Bertolini pay package, which included a large “special one-time performance-based retention award,” represented a 131% increase</i> over his $13.3 million compensation in 2012.<br /><br />Molina Healthcare and Centene, insurers that specialize in privately managed Medicaid plans, <i>roughly doubled CEO compensation in 2013. J. Mario Molina received <b>$11.9 million</b>, up from $5 million in 2012, while Centene’s CEO Michael Neidorff made <b>$14.5 million</b>, up from $8.5 million.</i><br /> <br />Overall, <i>average CEO pay across Fortune 500 health insurers rose from $11.6 million in 2012 to $13.9 million in 2013.</i></blockquote><br />Here we go again.  In May, 2014, I <a href="http://hcrenewal.blogspot.com/2014/05/more-stories-of-million-dollar-plus.html">summarized</a> how discussion of executive compensation, particularly in non-profit hospitals and hospital systems, seemed to follow a clear pattern. <br /><br /><blockquote class="tr_bq"><b>The Pattern </b><br /><br />Nearly all non-profit hospitals must release minimal data on the total compensation of a few of the highest paid executives.  When these reports come out, sometimes the local media take a look, either at an individual hospital or hospital system, or at a number of local hospitals.  They almost inevitably find that some, usually most executives make what appears to be lots of money.  This could be hundreds of thousands of dollars at small community hospitals, or millions of dollars at larger hospitals and hospital systems.  Sometimes the reports end there.  Sometimes the reporters ask hospital representatives or local experts to explain the apparently exalted compensation figures.  <br /><br /><b>The Talking Points </b><br /><br /> The explanations are usually very similar, and so we have called this part of The Pattern The Talking Points. <br /><br />It seems nearly every attempt made to defend the outsize compensation given hospital and health system executives involves the same arguments, thus suggesting they are talking points, possibly crafted as a public relations ploy.   We first listed the talking points <a href="http://hcrenewal.blogspot.com/2011/09/talking-points-sans-original-thought-to.html">here</a>, and then provided additional examples of their use <a href="http://hcrenewal.blogspot.com/2011/09/more-repeats-of-talking-points.html">here</a>, <a href="http://hcrenewal.blogspot.com/2012/03/example-of-how-complex-takes-control.html">here</a> <a href="http://hcrenewal.blogspot.com/2012/12/health-care-hired-managers-not-playing.html">here,</a> <a href="http://hcrenewal.blogspot.com/2013/05/executive-compensation-as-legal.html">here</a>, <a href="http://hcrenewal.blogspot.com/2013/06/no-blues-but-lots-of-green-for-st-louis.html">here,</a> and <a href="http://hcrenewal.blogspot.com/2013/08/should-we-cry-for-non-profit-hospital.html">here</a>, and <a href="http://hcrenewal.blogspot.com/2013/08/the-long-con-charitable-hospitals-make.html">here</a>.  <br /><br />They are:<br />- We have to pay competitive rates<br />- We have to pay enough to retain at least competent executives, given how hard it is to be an executive<br />- Our executives are not merely competitive, but brilliant (and have to be to do such a difficult job).<br /><br />The talking points are usually supplied by hospital public relations personnel, sometimes by hospital trustees or executives, sometime by various health care consultants.  The talking points are rarely questioned.</blockquote><br /><b>There Really Were Talking Points, at Least at Cigna</b><br /><br /><br />I hypothesized that perhaps public relations managers at various hospitals might actually have organized these talking points, since so many news stories of executive compensation in health care seemed to faithfully follow the pattern.  That was, however, speculation.  However, now there is anecdotal evidence that public relations executives really did use these talking points to defend their bosses' compensation.<br /><br /><br />Wendell Potter is the former head of public relations for for-profit health insurance company Cigna who defected, and now advocates for honest, fair health care.  On June 9, 2014, he <a href="http://wendellpotter.com/2014/06/skyrocketing-salaries-for-health-insurance-ceos/">wrote</a> in <a href="http://wendellpotter.com/blog/">his blog</a> about the latest revelations about outrageous executive compensation given to health insurance CEOs (as summarized above).  <br /><br /><br /><blockquote class="tr_bq">When I handled financial communications for Cigna, the day I dreaded most every year was the day we filed the company’s proxy. That’s because I knew I would get calls from reporters wanting to know <i>how we could justify paying the CEO so much when most other employees were lucky to get 3 percent raises.</i><br /><br /><i><b>I always had talking points</b> drafted with plenty of help from the company’s lawyers and HR executives.</i> They didn’t vary much from year to year. Basically, all I said was, hey, <b><i>this is a very big company, the CEO has a very big job and his pay is in line with what other firms of similar size pay their top guys.</i></b></blockquote><br />So there you are.  First, at least at this company, it appears that an important responsibility of the company public relations department was to defend the CEOs pay.  In my humble opinion, this confirms my suspicion that corporate public relations and marketing often put the personal interests of the top company executives ahead of everything else, including the interests of shareholders of for-profit companies in fair executive compensation, and the interests of patients in reasonable health care costs.<br /><br />Second, there really were talking points used at least in this company's public relations that were pretty similar to those I hypothesized:<br /><br /> - We have to pay competitive rates = <i>"his pay is in line with what other firms of similar size pay their top guys."</i><br /><br />- We have to pay enough to retain at least competent executives, given how hard it is to be an executive = <i>" this is a very big company, the CEO has a very big job"</i><br /><br />- Our executives are not merely competitive, but brilliant (and have to be to do such a difficult job) = by implication.<br /><br />You heard it here first.<br /><br /><br />So maybe we should all be a lot more skeptical about executive compensation.  Unfortunately, Mr Potter suggests we may be getting less so.<br /><br /><blockquote class="tr_bq">I made frequent use of those talking points the first couple years. But toward the end of my 15 years at the company, I would rarely get more than one or two calls. By 2008, the year I left, the phone didn’t ring at all, at least not from the media. Fewer and fewer reporters even bothered to look at the proxy statements.</blockquote><br />Of course, that may have something to do with the general decline of journalism, perhaps partially due to the transformation of journalism into a pursuit of a few big corporations, lead by overly compensated executives. <br /><br />Furthermore, instead of the talking points, consider some recent ideas about causes and effects of excess executive compensation.  We have discussed some of these frequently, but here are some recent versions.<br /><br /><b>Causes of Excess Executive Compensation</b><br /><br /><u>Cronies on the Board</u><br /><br />- from an Associated Press story <a href="http://www.usnews.com/news/business/articles/2014/05/27/the-ceo-got-a-huge-raise-you-didnt-heres-why">via US News and World Report</a>,<br /><br /><blockquote class="tr_bq">Some board members defer to a CEO's judgment on what his or her own compensation should be. There's a good reason: <i>Many boards are composed of current and former CEOs at other companies.</i> And in some cases, <i>board members are essentially hand-picked or at least vetted by the CEO</i>. Not surprisingly, the boards' compensation committees offer generous bonuses.</blockquote><br />In more detail, from <a href="http://www.startribune.com/opinion/commentaries/258379541.html">an op-ed in the Minneapolis-St Paul Star Tribune</a>,<br /><br /><blockquote class="tr_bq"> <span class="Text_BoldOff_Body">Under current practice, a nominating committee made up of current board members selects nominees to be presented to the shareholders for approval. Since there are rarely any more nominees than open positions, <i>being nominated virtually assures election</i>. These elections are the same as what you would expect in a communist country where voters vote yes or no on a single candidate. </span><br /><br /><span class="Text_BoldOff_Body">The nominating committee is <i>usually selected by the board chairman and the CEO (in too many cases, the same person)</i>. <i>The CEO and the chairman are almost always on the nominating committee</i>. It is <i>in the CEO’s interest to select board members whose loyalty can be trusted</i>. In many cases, a nominee’s <i>primary qualification is loyalty to the CEO</i> and the board chairman, with </span><span class="Text_BoldOff_Body">little knowledge of or experience in the business. Often <i>there is a prior business or personal relationship to the nominee</i> and very often the CEO and/or the chairman serves on the board of a nominee, a cozy mutual back-scratching arrangement. </span><br /><br /><span class="Text_BoldOff_Body">Serving on the board is <i>prestigious and lucrative and abounds in perks</i>. Besides cash and/or stock options or grants, perks such as company-paid travel to foreign trade shows, board meetings in posh resorts (with spouses, of course) and other company benefits make continuing on the board the first priority of most board members, with shareholder interests a distant second priority. This is akin to a politician whose first priority is to get re-elected and whose constituents’ interests come next.  <i>To maintain continuation of this bonanza of benefits, the board member must be assured of being renominated by the nominating committee. Since the CEO and the chairman are on the nominating committee, which they selected, they have great influence over the ultimate choices for nominees.</i> Now, if you are a board member and want to be assured of being renominated, it pays (literally) to be looked upon favorably by the CEO and the chairman. </span></blockquote><br /><br /><span class="Text_BoldOff_Body">Note that both of these accounts referred to for-profit corporations, but could easily apply to boards of non-profit organizations as well.   Note further that crony boards violate the expectations of their charges, which are to defend the organizations' mission and the interests of all their stakeholders, not just a few top executive cronies.</span><br /><br />T<u>he Ratchet, or "Lake Wobegon" Effect</u><br /><br />-  from an Associated Press story <a href="http://www.usnews.com/news/business/articles/2014/05/27/the-ceo-got-a-huge-raise-you-didnt-heres-why">via US News and World Report</a>,<br /><br /><blockquote class="tr_bq">Robert Solow, a Nobel Prize-winning economist, recently observed that <i>CEOs live in 'Lake Wobegon,'</i> that fabled town created by radio show host Garrison Keillor where, it is said,<i> 'all the children are above average.' </i>Solow didn't mean it as a compliment.<br /><br /><i>Corporate boards often set CEO pay based on what the leaders of other companies make. No board wants an 'average' CEO</i>. <i>So boards tend to want to pay their own CEO more than rival CEOs</i> who are chosen for benchmarking compensation packages.<br /><br /><i>This will 'naturally create an upward bias' in pay,</i> Charles Elson and Craig Ferrere of the University of Delaware concluded in a 2012 paper. '(T)he compounded effect has been to create a significant disparity between the pay of executives and what is appropriate to the companies they run.'</blockquote><br />Note that the Lake Wobegon effect is based on a logical fallacy.  All CEOs cannot be above average.  <br /><br /><u>CEOs as "Great Men"</u><br /><br />- from an <a href="http://www.washingtonpost.com/opinions/great-men-great-pay-why-ceo-compensation-is-sky-high/2014/06/12/6e49d796-d227-11e3-9e25-188ebe1fa93b_story.html">op-ed in the Washington Post</a>,<br /><br /><blockquote class="tr_bq">It is a system that rests on<i> the Great Man theory of history: a school of thought that attributes virtually all important developments through time to heroic individuals.</i><br /><br />Think back to Jack Welch’s 20-year reign as chief executive of General Electric. He was lauded as a corporate leader and management guru who, seemingly single-handedly, grew the company’s revenue and market capitalization many times over. Before long, GE had become a synonym for Jack Welch (or was it the other way around?).</blockquote><br />The theory is from the 19th century,<br /><br /><blockquote class="tr_bq"> As a historian trying to parse America’s enthrallment with superstars, I keep coming back to the Great Man theory of history. Popularized in the mid-19th century by the Scottish essayist Thomas Carlyle, this concept holds that <i>history is largely attributable to the actions of great individuals, who because of their personal (and often mysterious) qualities — such as intelligence, wisdom, deftness, goodness and energy — use their agency to make a big impact</i>. 'In all epochs of the world’s history,' <a href="http://grammar.about.com/od/classicessays/a/On-Heroes-And-Hero-Worship-By-Thomas-Carlyle.htm" title="grammar.about.com">Caryle wrote</a> in his 1841 book, <a href="http://www.amazon.com/gp/product/1461064619?ie=UTF8&camp=1789&creativeASIN=1461064619&linkCode=xm2&tag=thewaspos09-20" title="www.amazon.com">'On Heroes, Hero-Worship and the Heroic in History,''</a> 'we shall find the Great Man to have been the indispensable saviour of his epoch.'</blockquote><br />But it makes no real sense,<br /><br /><blockquote class="tr_bq"> <i>Such lionization is misplaced</i>. Operating a sustainable enterprise, as any executive, manager or employee knows well, is <i>inherently a team spor</i>t. Across companies and industries, <i>this activity depends on many people working in concert in all kinds of groups, at all levels of the organization</i>. Such interdependence means that it is hard to precisely delineate, much less quantify, any one individual’s contribution, even that of the most senior manager, to a firm’s performance.</blockquote><br />This is particularly true in health care, and particularly in organizations that provide direct patient care.  In my humble opinion, it is ridiculous to lionize managers when health care professionals actually take care of patients, using tests and treatments developed by other professionals and scientists.  <br /><br /><br /><b>Effects of Excess Executive Compensation </b><br /><br /><u>Declining Morale of all Other Employees</u><br /><br />-  from an Associated Press story <a href="http://www.theguardian.com/business/2014/may/27/us-ceo-median-package-rise-10m">via the UK Guardian</a>,<br /><br /><blockquote class="tr_bq"> 'There's this unbalanced approach, where there's all this energy put into how to reward executives, but <i>little energy being put into ensuring the rest of the workforce is engaged, productive and paid appropriately,</i>' says Richard Clayton, research director at Change to Win Investment Group, which works with labor union-affiliated pension funds.</blockquote><br /><u>The CEO Disease</u><br /><br />- per Dan Quiggle, who invented the term, <a href="http://www.exchangemagazine.com/morningpost/2014/week24/Thursday/14061910.htm">in Exchange Magazine</a>, which leads to:<br /><br /><blockquote class="tr_bq">You either hear really good things from your people…or nothing at all.<br />You don’t trust the feedback you receive.<br />You take criticism too personally. <br />In general, your employees don’t seem engaged.<br />Your best employees are unhappy or leaving. <br />You don’t connect with people in a way that leads to loyalty.</blockquote><br />That is, bad management, and hence...<br /><br /><u>Poor Organizational Performance</u><br /><br />- from a <a href="http://www.forbes.com/sites/susanadams/2014/06/16/the-highest-paid-ceos-are-the-worst-performers-new-study-says/">Forbes column by Susan Adams</a>,<br /><br /> Across the board, <i>the more CEOs get paid, <b>the worse their companies do</b> over the next three years</i>, according to extensive <a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1572085">new research</a>. This is true whether they’re CEOs at the highest end of the pay spectrum or the lowest. 'The more CEOs are paid, the worse the firm does over the next three years, as far as stock performance and even accounting performance,' says one of the authors of the study, Michael Cooper of the University of Utah’s David Eccles School of Business.<br /><br />Since most health care CEOs seem to know more about finance and health care, I wonder if this effect is even more pronounced on health care quality and patient outcomes?<br /><br /><u>Income Inequality and a Declining Economy</u><br /><br />- from <a href="http://www.fiercehealthcare.com/story/ceo-compensation-time-reign-skyrocketing-salaries-incentives/2014-06-19">an editorial in FierceHealthcare</a>,<br /><br /><blockquote class="tr_bq">Indeed, <i>the continual <a href="http://www.fiercehealthfinance.com/story/healthcare-ceo-pay-skewing-economy/2014-06-12" target="_blank">rise of executive paychecks may contribute to inequities in the U.S. economy</a>,</i> according to a new Roosevelt Institute paper, 'Taking Stock: Why Executive Pay Results in an Unstable and Inequitable Economy.'<br /><br />'The toxic combination of stock-based executive pay and open-market stock repurchases has contributed to not only the g<i>rowing concentration of income at the top but also the failure of the U.S. economy to sustain existing middle-class jobs and create new ones</i>,' wrote author William Lazonick, professor and director of the Lowell Center for Industrial Competitiveness at the University of Massachusetts.</blockquote><br /><u>Civil Unrest</u><br /><br />- from a <a href="http://www.washingtonpost.com/opinions/robert-j-samuelson-the-ceo-aristocracy-may-not-be-worth-all-that-money-they-get/2014/06/22/d0bbd596-f888-11e3-8aa9-dad2ec039789_story.html">Washington Post op-ed by Robert J Samuelson</a>,<br /><br /><blockquote class="tr_bq">Americans dislike aristocracies. Unless companies can find a more restrained pay system, t<i>hey risk an anti-capitalist public backlash. This is the ultimate danger.</i></blockquote><br /><b>Summary</b><br /><br />So far, the rise of executive compensation in health care has been inexorable.  Much of the public and many health care professionals have been lulled into complacency, or paralyzed by learned helplessness.  Yet the talking points used to justify outrageous executive pay are nonsense.  Rising compensation seems to be really due to crony capitalism, logical fallacies, and false historical analogies.  Rising pay may lead to poor management, poor organizational performance, worsening social inequality, a failing economy, and ultimately civil unrest.  Although the transition of executives into a new aristocracy is a society wide, if not a global problem, we in health care cannot be complacent that someone else will solve it.  True health care reform would enable accountable leadership that puts the health care mission and patients' and the public's health ahead of personal gain.    <br /><br />

A Real Example of Public Relations Talking Points to Justify Outsize Executive Compensation - and Why We Should No Longer be Fooled

We frequently discuss outsize executive compensation in health care organizations as both a symptom and a cause of these organizations'...

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GlaxoSmithKline's Marketing Firm Promised "Clinical Trials Could be Your Solution" to Poor Graduate Students

We have frequently raised concerns about the increasing domination of clinical research, particularly clinical trials, by those with vested in interests in the research producing particular results.  In particular, drug, biotechnology and device companies often sponsor trials meant to evaluate their own products.  Often it appears that commercial trial sponsors <a href="http://hcrenewal.blogspot.com/search/label/manipulating%20clinical%20research">manipulate</a> various aspects of research design, implementation, analysis, and dissemination to increase the likelihood of a result favorable to their interests.  Furthermore, when even such manipulation fails to produce the desired result, particular studies may simply be <a href="http://hcrenewal.blogspot.com/search/label/suppression%20of%20medical%20research">suppressed</a>, that is, hidden.<br /><br /><b>Clinical Trial Participation as "Your Solution" to Graduate Students' Money Woes </b><br /><br />A recent story, first told on the In-Pharma Technologist web site, gave an example of how trial recruitment could be gamed so as to produce more compliant study subjects. Since that web-site does not allow copy and pasting of even a few sentences of its content, I will quote, instead, from a subsequent <a href="http://www.theguardian.com/money/2014/jun/22/glaxosmithkline-gsk-interns-drug-trial-pitch">article in the Guardian</a>.<br /><br /><blockquote class="tr_bq">GlaxoSmithKline  the pharmaceuticals multinational, has apologised after being accused of playing on the hardship of unpaid interns to recruit them to take part in clinical trials.<br /><br /><i>A marketing firm working for the FTSE 100 company sought to place a blog on careers advice websites boasting that involvement in drug trials could help graduates to finance their way through unpaid work placements</i>.<br /><br />In a proposed 'guest blog' for the website <a href="http://graduatefog.co.uk/2014/3433/unpaid-interns-targeted-for-clinical-trials/" title="">Graduate Fog</a>, an employee at TouchPoint Digital, working on behalf of GSK, wrote: 'Clinical trials could be your solution.'</blockquote><br />The "guest blog" proposed that many graduate students "would prefer an immediate income to tide you over for the coming months."  So,<br /><br /><blockquote class="tr_bq"><i>Clinical trials could be your solution. Depending on the length of the study, you could earn up to £2,000 per trial for up to 4 trials a year</i>, plus reasonable travel expenses.</blockquote><br />This was not a one-off,<br /><br /><blockquote class="tr_bq"> Touchpoint provided examples of similar articles previously published on websites targeted at students. In an <a href="http://graduatefog.co.uk/2014/3433/unpaid-interns-targeted-for-clinical-trials/" title="">email to the founder of Graduate Fog, Tanya de Grunwald</a>, it added: 'Your readers would also benefit if there is a small link at the end of the article to the GSK website, which is the biggest pharmaceutical company in the UK, so that if they want to find out more or get answers to more specific questions they can do so.'</blockquote><br /><b>Excessive Inducement </b><br /><br />The story was <a href="http://blogs.wsj.com/pharmalot/2014/06/23/glaxo-dumps-firm-for-praying-on-college-grads-for-clinical-trials/">picked up by Ed Silverman at the PharmaLot blog</a> in the US, who pointed out how TouchPoint Digital appeared to be supplying an excessive inducement to vulnerable subjects,<br /><br /><blockquote class="tr_bq">Tanya de Grunwald, who runs the Graduate Fog website in the U.K., objected to the tone of the overture. 'Some of my readers are feeling very low, vulnerable and desperate for money,' she wrote us in an e-mail after openly questioning the recruiting tactic in <a data-ls-seen="1" href="http://graduatefog.co.uk/2014/3433/unpaid-interns-targeted-for-clinical-trials/">a note to readers</a> on her website last week. 'Many are unemployed. Others are in low-paid graduate jobs or doing unpaid internships.'<br /><br />'Suggesting that participating clinical trials is a great way to earn easy cash is not just crass – I think it’s irresponsible. Surely, <i>the more desperate someone is for money, the more likely they are to be dazzled by the financial benefits and less careful about weighing up the risks</i>.'</blockquote><br />A long time ago, that is, from 2006 - 2008, we published a series of posts about how <a href="http://hcrenewal.blogspot.com/search/label/contract%20research%20organizations">contract research organizations</a> running clinical research projects for commercial health care firms often preyed on financially and otherwise vulnerable research subjects by offering what would appear to such people to be dazzling remuneration.  For example, we discussed the trials by SFBC International (later PharmaNet Development Group, and now apparently <a href="http://www.inventivhealthclinical.com/">Inventiv Health Clinical</a>)  in Miami that enrolled immigrants, often undocumented, under questionable circumstances and in Montreal that resulted in the transmission of active tuberculosis (see post <a href="http://hcrenewal.blogspot.com/2006/03/consequences-of-sfbc-internationals.html">here</a> and links backward); and the trial by <a href="http://www.parexel.com/">Parexel International </a>in London that put most of its subjects in intensive care (see post <a href="http://hcrenewal.blogspot.com/2006/08/parexel-blues-again.html">here</a>, with links backward). In 2008, as we discussed <a href="http://hcrenewal.blogspot.com/2008/06/clinical-trials-torture-economy.html">here</a>, two articles questioning the ethics of research done under the auspices of CRO appeared in two major medical journals.  Excessively zealous recruiting designed to tempt vulnerable subjects with money appears unethical, and may be dangerous for these subjects.<br /><br /><b>How Excessive Inducement Could Lead to Invalid Trial Results</b><br /><br />Not only is such a practice apparently unethical and dangerous, it could endanger patients outside the research projects in question by producing invalid research.  Subjects who could be dazzled by such inducements might avoid disclosing conditions which would otherwise exclude them from particular research projects, or participate in multiple projects without sufficient or any wash out periods in between, meaning that one treatment's effects could confound another.  (Note that the blog post proposed by the marketer above suggested that subjects could participate in multiple trials during one year.)  Furthermore, subjects desperate to complete studies and earn their fees might avoid reporting adverse effects to avoid the risk of premature termination of their participation, or avoid protesting questionable actions by the researchers.    <br /><br />But now in the modern era of the Internet and social media, overzealous recruitment using monetary lures is still going on.  As per PharmaLot,<br /><br /><br /><blockquote class="tr_bq">One expert believes the flap is not surprising, because <i>drug makers are under pressure to maintain a steady stream of clinical trial recruits.</i><br /><br /> 'Middle class folks just sit back and wait until the drug reaches the market. <i>Poor folks are the guinea pigs in an economy that is more and more uneven, and uncertain by the day</i>,' says Roberto Abadie, a senior researcher at the Social Networks Research Group at John Jay College, City University of New York, and author of ‘The Professional Guinea Pig: Big Pharma and the Risky World of Human Subjects.' </blockquote><br /><b>A Belated Response from GSK </b><br /><br />Apparently only after the story broke did GSK notice there was a problem.  Again, per PharmaLot,<br /><br />A Glaxo spokeswoman <i>blamed the outside marketing firm</i> for the episode. In an e-mail, she wrote us that 'we would agree that the tone used in the ads… is wrong. It trivializes the role of clinical trials in developing new medicines and the part that volunteers play in that process. This isn’t acceptable and we’re looking into what happened.'<br /><br />Whether GSK was properly supervising the marketing firm, and whether GSK had provided incentives that might have lead to overzealous recruitment were not addressed. <br /><br /><b>Summary</b><br /><br />This story is yet another reminder that health care professionals, health policy makers, and the public at large should be extremely skeptical of clinical research sponsored (and controlled) by those with vested interests in the research results turning out a certain way, particularly clinical trials run by drug, biotechnology, or biotechnology companies meant to assess those companies' own products. However, note that very rarely do published clinical trial reports provide enough detail about subject recruitment to determine whether overzealous recruitment and undue inducements may have lead to enrollment of subjects who should have been excluded, under reporting of adverse effects, etc.<br /><br />In my humble opinion, we need to reassess current policies that allows organizations with such obvious conflicts of interest to run experiments on human beings (which is what clinical trials are.)<br /><br />By the way, this story is also a reminder that most big drug, device and biotechnology firms seem to be associated again and again with dodgy clinical research.   For example, see what we have previously written about GSK<a href="http://hcrenewal.blogspot.com/search/label/GlaxoSmithKline"> here</a>. <br /><br />

GlaxoSmithKline's Marketing Firm Promised "Clinical Trials Could be Your Solution" to Poor Graduate Students

We have frequently raised concerns about the increasing domination of clinical research, particularly clinical trials, by those with vested ...

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$100 million Epic install dampens Lifespan Rhode Island Healthcare's credit

Lifespan Rhode Island Healthcare System's Siemens EHR was apparently causing thousands of electronically-generated prescriptions to become scrambled, as I posted in Nov. 2011 here: <a href="http://hcrenewal.blogspot.com/2011/11/lifespan-rhode-island-yet-another.html">http://hcrenewal.blogspot.com/2011/11/lifespan-rhode-island-yet-another.html</a>.<br /><br />Due to this "glitch" - and other factors, I surmise - they switched to Epic.<br /><br />Here are the current results:<br /><br /><blockquote class="tr_bq"><b>$100 million Epic install dampens Lifespan's credit</b><br /><a href="http://www.modernhealthcare.com/article/20140606/NEWS/306069948">http://www.modernhealthcare.com/article/20140606/NEWS/306069948</a><br /><br /><span class="mh_tags"><span class="mh_tags">By <a href="mailto:bherman@modernhealthcare.com">Bob Herman</a></span></span><br /><br /><div class="mh_body_12px">Posted: June 6, 2014 - 5:45 pm ET</div><br />A multimillion-dollar <a href="http://www.modernhealthcare.com/section/articles?tagID=975">electronic health-record</a> system installation is eroding the cash flow, and bond rating, of Rhode Island's largest health system.<br /><br />Moody's Investors Service downgraded the rating of <a href="http://www.modernhealthcare.com/section/articles?tagID=2479">Lifespan</a>, Providence, R.I., to Baa2—<b>only two notches away from junk-level status</b>. The ratings agency also <a href="https://www.moodys.com/research/Moodys-downgrades-Lifespan-Rhode-Island-Obligated-Group-RI-to-Baa2--PR_300980">gave the system</a>, which operates four acute-care hospitals and one children's hospital, a negative outlook.<br /><br />... <b>At the heart of the downgrade is Lifespan's new health IT system. </b>In March 2013, Lifespan chose to implement an Epic platform, a system spokeswoman said. Lifespan expects to go live with Epic's EHR by the spring of 2015. <b>Moody's analysts noted the investment will cost $35 million this year and $100 million total over the next several years.</b><br /><br />This has slammed Lifespan's operating performance, Moody's analysts wrote. Lifespan is projecting a 2.8% operating cash flow margin for fiscal 2014, which is far below the Baa2 median of 8.8%. The operating margin is predicted to hover around -1.7%. And it's not likely to get better soon—executives told Moody's they don't expect to post improved results until 2016.<br /><br />“The thin performance provides little cushion during a period of increased capital spending and the installation of a new IT system with short-term implementation risks that could disrupt cash flow,” the report said</blockquote><br />They're a year from going "live" and they've already damaged their financials.  (This does not account for the losses from abandoning an older system.)<br /><br />$100 million is not an unusual cost for a commercial EHR, as I noted elsewhere, e.g., <a href="http://hcrenewal.blogspot.com/2006/10/70-million-for-electronic-medical.html">http://hcrenewal.blogspot.com/2006/10/70-million-for-electronic-medical.html</a>.  An entire hospital or large hospital wing can be built with that much money...not to mention the hiring of quite a lot of human health information management professionals.<br /><br />Hospital executives have bought the <i>"EHRs will save massive amounts of money, eliminate medical errors, and heal the sick"</i> marketing hype hook, line and sinker (as opposed to the more sober "improve healthcare somewhat when implemented expertly").  They are so eager to have this unregulated technology, NOW, that they will place their organizations - and patients - into jeopardy to get it. (As to patient risk, see <a href="http://hcrenewal.blogspot.com/2014/04/fda-on-health-it-risk-reckless-or.html">http://hcrenewal.blogspot.com/2014/04/fda-on-health-it-risk-reckless-or.html</a> and its hyperlinks).<br /><br />I find this phenomenon stunning, and even more so the cognitive dissonance and refusal to believe the actual evidence when the starry-eyed predictions of Cybernetic Medical Nirvana just don't come true.<br /><br />-- SS

$100 million Epic install dampens Lifespan Rhode Island Healthcare's credit

Lifespan Rhode Island Healthcare System's Siemens EHR was apparently causing thousands of electronically-generated prescriptions to beco...

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