More than Just a Conflict of Interest? - Should Rutgers University's Own Contract Research Organizations Report to the Board of Covance?

Transparency International's 2013 global survey showed that over 40% of Americans think the country's health care is corrupt (see <a href="http://hcrenewal.blogspot.com/2013/07/43-believe-that-us-health-care-corrupt.html">this post</a>).  <a href="http://www.transparency.org/">Transparency International</a> defines corruption as abuse of entrusted power for private gain.  It is likely that one reason many US citizens feel this way is that they have become aware of the web of conflicts of interest that now permeates health care.<br /><br />The Institute of Medicine <a href="http://www.iom.edu/Reports/2009/Conflict-of-Interest-in-Medical-Research-Education-and-Practice.aspx">defined</a> conflicts of interest in medicine as occurring "when an individual or institution has a secondary interest that creates a risk of undue influence on decisions or actions affecting a primary interest."  Since the primary interest of physicians is to provide good care that puts patients' interests first, and the primary interests of academic medicine are to provide education and research of quality and integrity, conflicts of interest affecting physicians or academic medical institutions increase the risk of abuse of the entrusted power defined by these primary interests.<br /><br />The most striking conflicts may occur when one person simultaneously runs two different health care organizations whose missions and interests are at odds.  For example, we have been documenting <a href="http://hcrenewal.blogspot.com/2006/03/new-species-of-conflict-of-interest-in.html">since 2006</a> how some top leaders of academic medicine simultaneously sit on boards of directors of health care corporations.  Thus, <a href="http://hcrenewal.blogspot.com/2011/09/director-of-bristol-myers-squibb-to-run.html">for example</a>, the dean of a prestigious medical school may sit on the board of a large pharmaceutical company.  That person is supposedly responsible both for the honest education of students, including unbiased education about the use of drugs, and for a company whose revenue depends on selling more drugs at higher prices.<br /><br /><b>Rutgers University President, Director of VWR International and Covance </b><br /><br />Such conflicts attracted little public notice when we first blogged about them, but now occasionally attract more attention.  For example, the NorthJersey.com just <a href="http://www.northjersey.com/news/education/Barchi_draws_pay_from_two_companies_that_do_business_with_Rutgers.html">reported</a> on the conflicts affecting the President of Rutgers University, which includes two medical schools and many other academic health care components,<br /><br /><blockquote class="tr_bq">As he leads the transformation of the state’s flagship university into a medical research hub with national aspirations, Rutgers University President Robert Barchi is <i>also collecting hundreds of thousands of dollars for privately advising two firms that do millions of dollars of business with Rutgers related to scientific research.</i></blockquote><br />In particular,<br /><br /><blockquote class="tr_bq">both firms have a business relationship with Rutgers. Those relationships predate Barchi’s appointment. They could expand, however, with Rutgers’ recent merger with most of the University of Medicine and Dentistry of New Jersey. <br /><br /><i>Rutgers has paid VWR International, a publicly traded lab supply company, and its subsidiaries a total of $15 million since 2008</i>, records show. It is on pace to pay the company $2 million this calendar year, even though a contract with the firm expired in 2012. A university spokesman said the deal was extended, but an official who handles public records requests said a copy of the extension was not on file. <i>Covance Inc., a pharmaceutical research firm, has been paid about $100,000 by Rutgers since 2008. It supplies products and services used in biological research.</i><br /><br />Those two companies paid Barchi a combined $317,000 in fees and stock awards last year to sit on each company’s board, part-time advisory positions he has held more than seven years. Barchi has also accumulated stock in both companies — in the case of Covance, worth the equivalent of $2.5 million as of Friday, according to corporate filings. The annual fees supplement Barchi’s annual pay at Rutgers, which is worth up to $747,000 after bonuses. </blockquote><br />Dr Barchi argued that since he had disclosed these relationships to the university board of governors, it is all good,<br /><br /><br /><blockquote class="tr_bq">'I disclosed my membership on the board fully during the search process, both on my résumé and in discussions with Rutgers board of governors members,' Barchi wrote in a statement issued in response to questions and an interview request submitted through a spokesman. 'Rutgers University recognizes the value of having its chief executives serve on corporate boards. ... Recognizing the potential for a conflict, however, since becoming president at Rutgers I have not been involved in any decisions at Rutgers involving' the companies. </blockquote><br />Members of the university governing board did not seem too troubled either. <br /><br /><blockquote class="tr_bq">'It was fully disclosed,' said Gordon MacInnes, a member of the governing board. 'I don’t see any inherent conflict.' </blockquote><br />However, NorthJersey.com found some people who thought there could be a real issue since the university has direct financial relationships with both companies on whose board Dr Barchi sits. <br /><br /><blockquote class="tr_bq">Cary Nelson, a past president of the American Association of University Professors who has written a dozen books on higher education policy and conflicts of interest, said Barchi’s arrangement 'is not an ambiguous case, unfortunately,' calling it <i>a clear conflict</i>.<br /><br />There’s a danger of impropriety, Nelson said, even if Barchi never actively exerts influence on behalf of the companies he advises. For example, officials who make large buying decisions for the university may choose contracts with the companies to curry favor with the president or because they 'don’t want to make waves,' he said.<br /><br />Nelson is the co-author of an extensive report for the professors’ association due out at the end of this year that will suggest university policies to avoid such problems.<br /><br />'What we say is that <i>no administrator should serve on a corporate board or have any kind of financial relationship with a company that does business with the university</i>,' he said. 'That’s a fundamental principle that has to be honored.'</blockquote><br /><b>Public Notice</b><br /><br />Unlike some cases we have previously discussed (for example, <a href="http://hcrenewal.blogspot.com/2006/01/california-nightmares-more-troubles-at.html">here</a> and <a href="http://hcrenewal.blogspot.com/2011/09/director-of-bristol-myers-squibb-to-run.html">here</a>), this one produced an immediate kerfuffle, if not an uproar.  The New York Times reported on it.  Already editorialists (e.g., <a href="http://news.google.com/news/url?sr=1&sa=t&ct2=us%2F0_0_s_7_0_t&usg=AFQjCNHWcgGT8g4KHN66hDJCq4_ZGE-0aQ&did=c47cdb7d453db56d&cid=52778199768898&ei=vpPlUaCzI4jcggfD9wE&rt=STORY&vm=STANDARD&url=http%3A%2F%2Fwww.northjersey.com%2Fnews%2Fopinions%2F215623061_The_Record__Barchi_and_boards.html">here</a>) and a few politicians (look <a href="http://www.nj.com/news/index.ssf/2013/07/rutgers_president_barchi_faces_calls_to_resign_from_paid_posts_on_corporate_boards.html">here</a>) have called for Dr Barchi to step down from his corporate board positions. For example, <a href="http://www.northjersey.com/news/Rutgers_president_Barchis_side_pay_draws_criticism_from_lawmakers_experts.html">per</a> again NorthJersey.com,<br /><br /><br /><blockquote class="tr_bq">'This is a two-way financial arrangement that creates <i>a textbook example of a conflict of interest,</i>' said Senate Majority Leader Loretta Weinberg, a Teaneck Democrat, who called on him to resign from his advisory posts for the companies, VWR International and Covance Inc. 'The president of the university is on the payroll of companies that are paid millions of dollars by the school. Even if Mr. Barchi avoids direct involvement in business decisions between Rutgers and these firms, <i>the appearance of a conflict could undermine his credibility at a key time in the evolution of the university.</i>' </blockquote><br /><b>Some Additional Perspective </b><br /><br />Dr Barchi's conflicts of interest have drawn considerable more coverage than similar conflicts of other academic health care leaders whom we have discussed in the past. Unlike these previous cases, they have also provoked upset, if not some outrage.<br /><br />Yet there could be more outrage, because this case is actually worse than it has been so far publicly described.<br /><br />First, the public discussion seems not to have taken into account the nature of Dr Barchi's responsibilities to VWR International and Covance.  He is not on advisory boards to these two companies, as implied by the initial NorthJersey.com report.  He is a member of both these companies' boards of directors.<br /><br />As we <a href="http://hcrenewal.blogspot.com/2008/05/worse-variant-of-new-species-of.html">noted in 2008</a>,  the issue goes beyond just the often generous payments board service entails. The important consideration is that directors of public for-profit corporations have a duty to "demonstrate unyielding loyalty to the company's shareholders" [Per Monks RAG, Minow N. <a href="http://www.amazon.com/Corporate-Governance-Robert-G-Monks/dp/1405116986">Corporate Governance</a>, 3rd edition. Malden, MA: Blackwell Publishing, 2004. P.200.]   (Many people would now argue that many current corporate directors function more like cronies of top management than representatives of the shareholders).<br /><br />But the important message is the boards of directors are responsible for the governance and overall direction of the company.  For example, the 2<a href="http://services.corporate-ir.net/SEC/Document.Service?id=P3VybD1hSFIwY0RvdkwyRndhUzUwWlc1cmQybDZZWEprTG1OdmJTOWtiM2R1Ykc5aFpDNXdhSEEvWVdOMGFXOXVQVkJFUmlacGNHRm5aVDA0T0RFNU16YzVKbk4xWW5OcFpEMDFOdz09JnR5cGU9MiZmbj04ODE5Mzc5LnBkZg==">013 Covance proxy statement </a>includes, "The Board of Directors provides oversight of senior management in its operation of the Company."   The members of the board have a fiduciary duty to align with the companies' interests which goes beyond whatever loyalty their compensation from the company ought to inspire.  Thus, the extreme conflict between, for example, one person's roles as a university president responsible for education, including unbiased education of physicians about drugs,  and a director of a drug company ought to be obvious.<br /><br />Dr Barchi, is not a director of a drug company, but the director of a contract research organization.  The description of Covance in the NorthJersey.com article above was incomplete.  In fact, the Covance web-site describes the company as "one of the world’s largest and most comprehensive drug development services companies."  In particular, Covance functions as a contract research organization (CRO).  Its work includes running clinical research for pharmaceutical and biotechnology companies, including "Early Patient Studies,Clinical Development (Phase II-III)."<br /><br />As university president, Dr Barchi is simultaneously responsible for educating students about clinical research, and for the integrity of clinical research performed within the university.  More acutely, however, he actually is responsible for several contract research organizations that appear to be competing with Covance.<br /><br />As more clinical research has been taken over by CROs, some academic institutions have decided to compete directly with CROs.  In particular, Rutgers University, in particular, seems to have its own CROs.  First, as <a href="http://shrp.rutgers.edu/dept/biopharma/">proclaimed </a>by its Biopharma Educational Initiative, "Rutgers Biomedical and Health Sciences is one of the largest health care research institutions in the US with our own (emerging) contract research organization."  The Rutgers Clinical Research Organization <a href="http://cro.rbhs.rutgers.edu/aboutUs.html">asserts</a> "Rutgers CRO connects industry, patients and academic collaborators with the University's state-wide academic resources."  Meanwhile the Rutgers New Jersey Medical School Institute of Genomic Medicine <a href="http://njms.rutgers.edu/genesweb2/services.cfm">states</a> "the IGM functions as an academic contract research organization (CRO) dedicated to biomarker discovery and the clinical evaluation of biomarkers.".<br /><br />Thus, not only does Dr Barchi's role in the governance of Covance seem to present a conflict with his role in upholding the integrity of research at Rutgers, but it could conceivably be anti-competitive.  While one may question whether university's should directly compete with CROs, as long as they do, it seems they ought not to be run by those responsible for the governance of the CROs with which they are ostensibly competing.<br /><br /><b>Summary</b><br /><br />As the web of conflicts of interest that entangles health care becomes more visible, the risks of corruption that it generates become more obvious.  I hope as disclosure improves, public outrage about health care corruption will increase.   Ultimately, true health care reform requires more than disclosing conflicts of interest.<br /><br />The IOM  <a href="http://www.iom.edu/Reports/2009/Conflict-of-Interest-in-Medical-Research-Education-and-Practice.aspx">report </a> on conflicts of interest suggested full disclosure of all payments that could be considered conflicts of interest, banning clinical research by conflicted individuals, prohibiting academic physicians from giving "drug talks" whose content was provided by industry, and developing methods to fund continuing medical education independent from industry.  This report, and its recommendations have gotten scant attention, maybe because they would threaten a status quo that enriches conflicted health professionals and the companies that create these conflicts.  However, in my humble opinion, implementing all the report's recommendations would only be a beginning down the road of restoring the integrity of clinical care, teaching, and research. <br /><br />Hat tip to Prof Margaret Soltan <a href="http://www.margaretsoltan.com/?p=40518">on the University Diaries blog.</a><br /><br />See also the <a href="http://loathingbioethics.blogspot.com/2013/07/what-does-rutgers-president-have-in.html">comments </a>by Dr Carl Elliott on the Fear and Loathing in Bioethics blog.  <br /><br />ADDENDUM (24 July, 2013) - see additional comments <a href="http://www.margaretsoltan.com/?p=40606">here</a> and <a href="http://www.margaretsoltan.com/?p=40613">here</a> by Prof Margaret Soltan on the University Diaries blog. 

More than Just a Conflict of Interest? - Should Rutgers University's Own Contract Research Organizations Report to the Board of Covance?

Transparency International's 2013 global survey showed that over 40% of Americans think the country's health care is corrupt (see this post).  Transparency International defines corruption as abuse of…

Đọc thêm »

The Settlement and Conviction Round-Up: Friday Frequent Flier Edition

It's time for one of our periodic round-ups of legal settlements and convictions of health care organizations.  This time, we report on three frequent fliers, in chronologic order of the appearance of the relevant news stories.<br /><br /><strong>Robert Wood Johnson University Hospital Hamilton (UMDNJ)</strong><br /><br />We have written multiple times about the woes of the University of Medicine and Dentistry of New Jersey, which lead to a deferred prosecution agreement and operation under the watchful eye of a federal monitor for several years, and resulted in criminal convictions of a former Dean and the state legislative leader he hired.  Scroll through <a href="http://hcrenewal.blogspot.com/search/label/UMDNJ">this</a> for far too many details.  <br /><br />Now, the redoubtable Newark Star-Ledger <a href="http://www.nj.com/news/index.ssf/2010/03/hamilton_hospital_agrees_to_pa.html">reports</a>:<br /><blockquote>Robert Wood Johnson University Hospital in Hamilton has agreed to <em>pay $6.35 million to settle allegations that the facility defrauded Medicare</em>, Justice Department officials said today.<br /><br />The Mercer County hospital was accused of inflating charges to Medicare patients to obtain bigger reimbursements from the federal government.<br /><br />'Taxpayer dollars should go towards quality health care, not wasted on fraud and abuse,' said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice.<br /><br />The hospital denied wrongdoing in the settlement, said Skip Cimino, the facility's president and CEO. 'Robert Wood Johnson University Hospital Hamilton has resolved the outstanding Medicare Reimbursement issue with the government and looks forward to continuing its service to the community,' he said.</blockquote><br />Note that Robert Wood Johnson Medical School is one of the two medical schools contained within UMDNJ.<br /><br /><strong>Fresenius</strong> <br /><br />I admit that we last <a href="http://hcrenewal.blogspot.com/2007/09/dialysis-providers-and-restraint-of.html">discussed</a> Fresenius Medical Care Holdings Inc, a for-profit provider of kidney dialysis services, a while ago, back in 2007. At that time, the company settled charges made by the US Federal Trade Commission that it had tried to restrain competition. Last week, the Tennessean reported:<br /><blockquote>A long-running whistleblower complaint against the once-Nashville based Renal Care Group has led to a <em>$19.3 million federal court judgment against the acquired dialysis supplier and the German company that bought it four years ago</em>.<br /><br />The lawsuit, which focused on <em>improper claims submitted to Medicare for home dialysis supplies</em>, named Renal Care Group Supply Co. and Fresenius Medical Care Holdings Inc., as co-defendants. The federal government joined the whistleblower complaint more than two years ago.<br /><br /><em>Renal Care operated a shell billing company solely to submit claims on behalf of itself in violation of federal law that requires suppliers to be independent of the dialysis facilities where patients are treated</em>, the government said. Even after employees raised concerns, Renal Care continued to operate the billing company because of the 'illicit revenues it created,' the suit said.<br /><br />One employee wrote: 'I do not wish to go to jail' and felt the company's plan 'was not in the best interests of patients,' said federal Judge William J. Haynes Jr. of Nashville in his ruling.<br /><br />The billings reportedly occurred over a six-year period beginning in 1999. The Fresenius-Renal Care acquisition closed in 2006 at a sales price of $3.5 billion.</blockquote><br /><strong>Pfizer</strong><br /><br />Pfizer Inc, which proclaims itself to be the world's largest pharmaceutical company, has provided an amazing amount of material for Health Care Renewal. In September, 2009, we <a href="http://hcrenewal.blogspot.com/2009/09/pfour-legal-settlements-for-pfizer-why.html">discussed</a> the huge, that is, $2.3 billion dollar settlement Pfizer made of criminal and civil fraud charges. At that time, this was the fourth settlement of charges of unethical marketing made by Pfizer since 2002. <br /><br />Since then, we have discussed <a href="http://hcrenewal.blogspot.com/2009/10/pfizer-in-guise-of-pharmacia-pfound-to.html">another fraud settlement</a> in October, 2009, <strike>and </strike><a href="http://hcrenewal.blogspot.com/2010/01/physician-pleads-guilty-to-fraud-for.html"><strike>yet another</strike></a><strike> in January, 2010</strike>.<br /><br />Today, Bloomberg <a href="http://www.businessweek.com/news/2010-03-26/pfizer-told-to-pay-142-1-million-for-neurontin-marketing-fraud.html">reported</a>:<br /><blockquote>Pfizer Inc. <em>violated U.S. racketeering law in the marketing of its epilepsy drug Neurontin and should pay $142.1 million in damages,</em> a jury decided.<br /><br />Kaiser Foundation Health Plan Inc. and Kaiser Foundation Hospitals claimed in a monthlong trial in federal court in Boston that Pfizer illegally promoted Neurontin for unapproved uses. The insurer said it was misled into believing migraines and bipolar disorder were among the conditions that could be treated effectively with Neurontin, approved in 1993 by the U.S. Food and Drug Administration for epilepsy.<br /><br /><em>'The jury found Pfizer engaged in a racketeering conspiracy over a 10-year period</em>,' Tom Sobol, a lawyer for Kaiser, said after yesterday’s verdict. 'That bodes well for future cases.'</blockquote><br />Furthermore, this was a very special kind of verdict:<br /><blockquote>The jury, which deliberated for two days, found that New York-based <em><strong>Pfizer violated the federal Racketeer Influenced and Corrupt Organizations Act, or RICO,</strong></em> and California’s Unfair Competition Law. Under RICO, the amount of actual damages found by the jury, $47.36 million, will be tripled.</blockquote><br />The RICO statute was meant to be used against organized crime.  A jury seems to have found that Pfizer is a "Racketeer Influenced and Corrupt Organization," that is, the moral equivalent of a crime syndicate.<br /><br /><strong>Summary</strong><br /><br />So this week's settlement and conviction round-up shows the impunity that many health care organizations have exhibited thus far.  Some organizations have been charged again and again with unethical behavior.  Now one of the most frequent of the fliers has been convicted under the RICO law, certainly a new low.<br /><br />Yet none of the affected organizations in this post, and precious few we have discussed at other times, seem to have suffered any major consequences.  All have paid fines, some which seemed large at the time, but which have never been large enough to seriously threaten the organizations' financial well being.  None of the organizations seems to have lost business, or even much reputation.  Very few of the people within the organizations who approved, lead or implemented unethical behaviors have suffered any sort of negative consequences.<br /><br />There seems to be something very wrong here.  In the US, we have put much of our health care system in the hands of very large organizations, for-profit and not-for-profit, without holding these organizations and their leaders accountable for their actions.  The results have been increasingly rich leaders who often behave like a new aristocracy, and repeated bad behavior by the organizations they lead.  <br /><br />Our latest effort at health care "reform" has continued to rely on large private organizations, while so far not adding to their or their leaders' accountability.  In my humble opinion, if we really want to reform health care so as to improve quality, increase access, control costs, and support professionalism, we will have to make our new health care oligarchs accountable.

The Settlement and Conviction Round-Up: Friday Frequent Flier Edition

It's time for one of our periodic round-ups of legal settlements and convictions of health care organizations.  This time, we report on three frequent fliers, in chronologic order of the appearance of…

Đọc thêm »

BLOGSCAN - At UMDNJ, Lose Your Job, Keep Your Cell Phone

<span style="color:#006600;">We have frequently discussed the plight of the University of Medicine and Dentistry of New Jersey (UMDNJ), the largest health care university in the US. Facing indictment for federal crimes, the university operated under a deferred prosecution agreement and the supervision of a federal monitor from 2005 to 2007. We most recently blogged about UMDNJ </span><a href="http://hcrenewal.blogspot.com/2008/11/politician-medical-school-dean.html"><span style="color:#006600;">here</span></a><span style="color:#006600;">, and see links backward to previous posts from </span><a href="http://hcrenewal.blogspot.com/2008/03/money-for-nothing-more-guilty-pleas-at.html"><span style="color:#006600;">here</span></a><span style="color:#006600;">. On the University Diaries blog, Prof Margaret Soltan </span><a href="http://www.margaretsoltan.com/?p=12392"><span style="color:#006600;">discussed</span></a><span style="color:#006600;"> the latest aspect of mismanagement at UMDNJ to be uncovered. </span>

BLOGSCAN - At UMDNJ, Lose Your Job, Keep Your Cell Phone

We have frequently discussed the plight of the University of Medicine and Dentistry of New Jersey (UMDNJ), the largest health care university in the US. Facing indictment for federal crimes, the unive…

Đọc thêm »

Hospital Board Members with "the Juice" in New Jersey

We recently <a href="http://hcrenewal.blogspot.com/2009/04/new-jersey-legislator-found-guilty-of.html">commented</a> on the conviction of a state legislator charged with selling his influence to a powerful local medical center. NorthJersey.com has a <a href="http://www.northjersey.com/news/njpolitics/humc042609.html">follow-up </a>on this story which shows how health care leaders are often members of the power elite, if not quite of the superclass, and how their machinations put this group's interests ahead of the mission of their health care organizations.<br /><br /><br /><strong>The General Overview</strong><br /><br /><blockquote><br />The trial of former state Sen. Joseph Coniglio, convicted in a bribery scandal involving Hackensack University Medical Center [<a href="http://humed.com/index.php?page=about">affiliated with UDMNJ</a>, which has had its own issues, e.g., <a href="http://hcrenewal.blogspot.com/2008/11/yet-more-investigations-of-umdnj.html">here</a>], <em>exposed the hospital’s reach into the State House — and put a spotlight on the wealthy, influential men who serve as the hospital’s power brokers.<br /></em><br /><em>Hackensack’s board members have connections and political muscle that extend far beyond the hospital</em>. At black-tie fund-raisers and dinners at board member Joseph Sanzari’s Stony Hill Inn, business — hospital and otherwise — is on the agenda.<br /><br /><em>Various board members help to underwrite Bergen County’s Democratic machine and powerful lawmakers in Trenton. They’re awarded many of the region’s public construction contracts. They have the network — and the money — to smooth over zoning issues for the hospital</em>. Testimony at the trial this month showed they supported the hiring of Coniglio, who was convicted of steering millions in grants to Hackensack while on the hospital’s payroll.<br /><br />'A political machine' is how Assistant U.S. Attorney Thomas R. Calcagni described the hospital as he told jurors about Hackensack’s relationships with former acting governor and Senate President Richard Codey, state Sen. Paul Sarlo, Coniglio and others during the trial. </blockquote><br /><strong>Board Members' Self-Dealing</strong><br /><br />There are several results. One is that "some [board members] are also <em>making money off the hospital</em>." The article gave several examples of such conflicts of interest.<br /><br /><blockquote><br />A few examples from the hospital’s federal tax filings for 2007, the latest available:<br /><br />* Companies owned by Sanzari and Creamer are building a 975-car garage as part of the $135 million cancer center now under construction. Creamer was paid more than $475,000 by the hospital for construction services.<br /><br />* The hospital paid more than $2 million to Progenitor Cell Therapy, a private stem cell research company owned in part by Ferguson; Dr. Andrew Pecora, director of the cancer center; board members Peter C. Gerhard, George T. Croonquist and Samuel Toscano Jr.; and the hospital’s chief operating officer, Robert C. Garrett.<br /><br />* The hospital paid $2.5 million to lease space from Sanzari 2001, where board member David Sanzari — Joseph’s cousin — is a managing member with an ownership stake. It also spent $68,000 at the Marriott at Glenpointe hotel, which is owned by David Sanzari’s family.<br /><br />* The DeCotiis law firm, one of the most influential in the state, made more than $1 million from the hospital. It is representing the hospital in the Coniglio case and guiding its campaign to reopen Pascack Valley Hospital in Westwood. During that time, Frank Huttle III, a partner, served on the board. He said Friday that he resigned recently.<br /><br />* Universal Health, which operates a retail pharmacy at the hospital, received $200,000. At the time, Toscano was the company’s chief executive officer.<br /></blockquote><br /><br /><strong>Political Influence Disadvantages the Competition</strong><br /><br />The membership of the hospital's leaders in the power elite could be used to advance the hospital against less-connected competitors.<br /><br /><blockquote><br />The Coniglio trial served as a primer on the backroom politics of New Jersey, where certain grants, known as 'Christmas tree items,' were doled out based on who has 'the juice.' By all accounts, Hackensack mastered the game and loomed large in Trenton. From 2004 to 2006, the hospital received $17.4 million for its cancer center, an extra $9 million in charity care above the millions it was already getting and $250,000 for the Joseph M. Sanzari Children’s Hospital. A $900,000 research grant was awarded to the private stem cell firm at the hospital and $70,000 went for a seat belt study.<br /><br />Those awards dwarf the grants given to Hackensack’s competitors.<br /><br /></blockquote><br /><strong>Connectedness of the Hospital's Board Members</strong><br /><br />The article gave further examples of how connected were the board members, and how they used their connections.<br /><br /><blockquote><br />At Hackensack, a few names — Simunovich, Ferguson, Sanzari, Creamer — keep showing up in influential roles on key boards. They serve as trustees of the Hackensack University Medical Center Foundation, the hospital’s fund-raising arm, as well as the hospital’s board of governors and Hillcrest Health Service System, the hospital’s parent corporation. Leading contractors and developers — Sanzari, Creamer and John C. Fowler — are on the building committee.<br /><br />Simunovich is the former chairman of the board of governors and current chairman of the board of trustees for the Hackensack University Medical Center Foundation, the hospital’s fund-raising arm.<br /><br />Governor Corzine did not reappoint Simunovich to the Turnpike Authority in 2007 after he was investigated by the State Ethics Commission; as chairman, he had voted on millions in public contracts that were awarded to Sanzari while he accepted free rides on the contractor’s private jet. Simunovich paid a $50,000 fine, which was not an admission of guilt.<br /><br />'Mr. Simunovich’s actions do not reflect the standards demanded by the governor for those who serve in his administration,' Corzine’s then-spokesman Anthony Coley said.<br /><br />Joseph Sanzari serves as first vice chairman, the No. 2 position on the hospital’s board of governors.<br /><br />Sanzari is part owner of both the Stony Hill Inn in Hackensack and the New Bridge Inn in New Milford, popular hangouts for Bergen County’s political elite. Sanzari, his companies and employees have contributed more than $100,000 to political campaigns and political action committees in the past three years, according to data the company provided to state elections regulators.<br /><br />Among his top employees is state Sen. Paul Sarlo, also the mayor of Wood-Ridge. Sarlo oversees billions in public spending as a lead member of the Senate Budget and Appropriations Committee. As chairman of the Senate Judiciary Committee, he also controls key appointments to state agencies that have awarded millions in contracts to Sanzari’s firms.<br /><br />Sarlo, chief operating officer for Sanzari’s construction company, testified at the trial that he was largely responsible for getting the $900,000 grant for the hospital’s cancer center. He said he also lobbied Codey for the $9 million cancer center grant and played a role in the $900,000 grant for stem cell research at the hospital. </blockquote><strong>Conclusions<br /></strong><br />Hospitals often have sterling reputations within their communities as selfless organizations devoted to improving the health of the people. As we have noted, hospitals and other health care organizations have come to be run more often by people with managerial background than those with health care experience. Not-for-profit hospitals have boards of trustees who are supposed to exercise stewardship, making sure the organization upholds its mission. But as we have noted before, e.g., <a href="http://hcrenewal.blogspot.com/2009/04/investment-bankers-strike-back.html">here</a>, boards of health care and related organizations may put their own agendas ahead of the mission. Furthermore, boards of big hospitals and other health care organizations seem to be increasingly composed of the well-connected, often to the point that they can be regarded as members of the power elite, if not the superclass. There may be some short term benefits to having such people on the boards. In the long run, however, is it any surprise that their missions may give way to other interests?<br /><br />Hat tip to <a href="http://www.margaretsoltan.com/?p=12174">University Diaries</a>.<br /><br />ADDENDUM (4 May, 2009) - Hackensack University Medical Center's <a href="http://www.politickernj.com/wallye/29412/humc-bans-record">response</a> to the news story discussed above was apparently first to stop advertising in the offending newspaper, and ban its sales in the hospital. Another example, almost laughable, of a health care organization's leadership trying to shoot the messenger, and of how the anechoic effect may be generated. Hat tip to the <a href="http://blog.lib.umn.edu/schwitz/healthnews/178972.html">Schwitzer Health News Blog</a>.

Hospital Board Members with "the Juice" in New Jersey

We recently commented on the conviction of a state legislator charged with selling his influence to a powerful local medical center. NorthJersey.com has a follow-up on this story which shows how healt…

Đọc thêm »