healthy4u: University of Chicago

WINDY CITY BLUES

<div class="MsoNormal">WINDY CITY BLUES<o:p></o:p></div><div class="MsoNormal"> </div><div class="MsoNormal">There is an academic ethics mess brewing in the windy city… at The University of Chicago. It involves a start-up Chicago corporation, a star statistician in the medical school, seed money in the form of NIH research grants, the American Psychiatric Association, and the chairman of the APA’s DSM-5 Task Force. It involves the appearance of self-interested bias in the DSM-5 process. It involves a recidivist pattern of failure to disclose material conflict of interest. And it involves academic journal editors (JAMA and JAMA Psychiatry) who did not do the right thing when the perps were outed.<o:p></o:p></div><div class="MsoNormal"> </div><div class="MsoNormal">I broke the story <a href="http://hcrenewal.blogspot.com/2013/11/when-is-disclosure-not-disclosure.html">on this site</a> back in November, right after a <a href="http://archpsyc.jamanetwork.com/article.aspx?articleID=1780020">confession</a> appeared on-line in JAMA Psychiatry by the gang of five perps (Robert Gibbons, Ellen Frank, David Kupfer, Paul Pilkonis, and David Weiss) . Indeed, it was I who had alerted the journal. Others have since weighed in <a href="http://1boringoldman.com/index.php/2013/12/29/insider-trading/">here</a> and <a href="http://www.behaviorismandmentalhealth.com/2013/12/23/dsm-5-dimensional-diagnoses-more-conflicts-of-interest/">here</a> and <a href="http://www.psychologytoday.com/blog/saving-normal/201401/holding-psychiatry-much-higher-ethical-standard">here</a>, for instance. The definitive summary and Timeline were the work of Dr. John M. (Mickey) Nardo <a href="http://1boringoldman.com/index.php/2014/01/21/open-letter-to-the-apa/">here</a>. Of course, readers of JAMA Psychiatry would never know that the authors were outed. The editors (Howard Bauchner for JAMA and Joseph Coyle for JAMA Psychiatry) allowed the authors to make it seem like they were making a spontaneous admission of nondisclosure, and they acquiesced in the withholding of key information that I had given to the journal.<o:p></o:p></div><div class="MsoNormal"> </div><div class="MsoNormal">It gets worse. We now know that the chair of the DSM-5 Task Force (Dr. David Kupfer) failed to disclose his financial conflict of interest on at least 4 occasions (#s 13, 15, 16, 19 in the Nardo <a href="http://1boringoldman.com/index.php/2014/01/21/open-letter-to-the-apa/">Timeline</a>). On two of those occasions he was representing the DSM-5 team and the APA! These lapses undermine his repeated assurances that COI issues were under control in DSM-5. If the chairman of the DSM-5 Task Force does not have his own act together concerning COI disclosures, then what are his assurances worth? Nevertheless, the APA released a <a href="http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=3&ved=0CDgQFjAC&url=http%3A%2F%2Fwww.psych.org%2FFile%2520Library%2FAdvocacy%2520and%2520Newsroom%2FLetter-to-Assembly-20140114.pdf&ei=8ZTaUoLaGfSrsQSJ14GgDQ&usg=AFQjCNE--psrRvauH2Ow3Xu9VKYfv9AItQ&sig2=WFYXTx1QYMMKjrS0DfMANQ&bvm=bv.59568121,d.cWc">statement</a> that tried to whitewash Dr. Kupfer’s nondisclosures. They need to recalibrate their ethical compass.<o:p></o:p></div><div class="MsoNormal"> </div><div class="MsoNormal">The methods adopted in this affair are classic: Peddle unproven psychiatric screening scales backed up by black box statistics (a distressing specialty of Dr. Gibbons); publish a glowing report in JAMA Psychiatry, which you have infiltrated (Ellen Frank and Robert Gibbons are on the editorial board); get your corporate people inside the DSM-5 process (David Kupfer, Robert Gibbons, Paul Pilkonis); slant the DSM-5 process to endorse, however weakly, the kind of products you intend to market; start a corporation without telling anybody and establish a <a href="http://www.adaptivetestingtechnologies.com/">website </a> with advance marketing that touts your new academic publication in JAMA Psychiatry while <a href="http://www.adaptivetestingtechnologies.com/our-people.html">highlighting</a>Dr. Kupfer’s key role in DSM-5; loudly <a href="http://www.cmeinstitute.com/psychs-talk/#top">proclaim</a> (see page 4) the advent of population-wide screening but before doing any serious field trials or acknowledging that most positive screens will be false positives. This is the usual dodgy hand waving of wannabe entrepreneurs, whose vision is obscured by dollar signs. Oh, and did I mention regulatory capture of NIMH for <a href="http://1boringoldman.com/index.php/2014/01/19/what-2/">over $11 million</a> in funding while not producing a product worth a tinker’s damn? <o:p></o:p></div><div class="MsoNormal"> </div><div class="MsoNormal">In response to all this adverse commentary, the authors and the journal editors have gone to radio silence. They must be hoping it will blow over.  If anything, their silence has provoked even more searchlight questions that focus on what is happening at The University of Chicago. <o:p></o:p></div><div class="MsoNormal"> </div><div class="MsoNormal">For instance, who is bankrolling this start-up corporation? Last summer they brought on board an executive named Yehuda Cohen who is a mover and shaker in Chicago business circles. I am sure he doesn’t work for peanuts. He set up a <a href="http://www.adaptivetestingtechnologies.com/">website</a> that must be staffed to respond to queries from consumers and professionals. Plus, the corporate office appears to be located in prime commercial space at 217 N Jefferson #600, Chicago IL 60661; phone 312-878-6490. E-mail: <a href="mailto:info@adaptivetestingtechnologies.com">info@adaptivetestingtechnologies.com</a>(from the website: you can find a picture of the neighborhood on Google). So, they are racking up significant operating expenses already. Heaven forfend that these expenses might be covered directly or indirectly by their NIMH funding! Are the responsible administrators at NIMH and at The University of Chicago looking and auditing?<o:p></o:p></div><div class="MsoNormal"> </div><div class="MsoNormal">It is also unclear whether they have a sound or even a legal business plan. Where will the high powered computing needed for their expansive applications be conducted? Do they have a computing facility at the corporate office? Or do they intend to perform the commercial computing through the NIH-supported Center for Health Statistics at The University of Chicago, which Dr. Gibbons personally directs? If so, did the University sign off on that plan? Is NIH aware of the plan?<o:p></o:p></div><div class="MsoNormal"> </div><div class="MsoNormal">In late November I asked NIH about the ownership of the data bases and algorithms on which the corporation relies for the business plan. I received a reply from NIH outlining the applicable federal policy and stating “We understand that the data are deposited and made available to the community per request through the Center for Health Statistics.” That had to be what Dr. Gibbons told them. Notice that no mention was made of the algorithms. I have replied to NIH, asking them to clarify the status of the algorithms, without which the data bases alone are of little use. I also pointed out to NIH that there is no mention of this public access option in any of the publications from these authors or on the corporate website. This situation is typical of the dissembling style we have seen before from Dr. Gibbons and Dr. Kupfer – lacking in candor and transparency.</div> <div class="MsoNormal">The more one looks, the more questions arise. Is The University of Chicago being taken for a ride? Is NIMH being taken for a ride? Are we all being taken for a ride? Can we please have some transparency here? Can we please have some psychometric standards here? Will the APA step up to the plate? Will NIH step up to the plate? Will The University of Chicago step up to the plate?<o:p></o:p></div>

WINDY CITY BLUES

WINDY CITY BLUES There is an academic ethics mess brewing in the windy city… at The University of Chicago. It involves a start-up Chicago co...

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From the University of Chicago EHR Helpdesk Call Line

I was alerted this morning (Aug. 23rd) to this message currently in the telephone message of the CBIS [Chicago Biomedicine Information Services] Service Desk at University of Chicago Medical Center: <blockquote class="tr_bq">"Thanks for calling the CBIS Service Desk.  Your call is very important to us. We are currently experiencing troubles with our Citrix logon.  It may log you on under a different profile.  Please check before you go any further when you're logging in to Citrix."</blockquote> <a href="http://www.citrix.com/English/ps2/products/product.asp?contentID=1857200&ntref=hp_cat_prod" target="_blank">Citrix</a> is a computer program that allows remote access to information systems. I imagine the meaning of "log you on under a different profile" means "logging you on as a different user." The chances of a security breach (ability of unauthorized user to peer into patient's charts they have no business seeing), unauthorized history/order manipulation, or even misidentification error (e.g., a clinician inadvertently acting upon a patient of some other clinician who has a similar name to their own patient) and other distracting work disruptions due to the inconveniences this "trouble" creates are worrisome. One wonders how every user is being informed of this problem, as not everyone makes it a habit to call the service desk before logging in to clinical systems... But, alas, this is just a "glitch" (the <a href="http://hcrenewal.blogspot.com/2012/08/health-it-difficulties-and.html" target="_blank">euphemism used by technophiles</a> for malignant software defects), and, of course, patient safety is never compromised by "glitches." <table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh6NqMEfshKCF7TC4bPKm1jza8y7xQnOiw1MNd58j6pVp85x_OBGy8hPo25yjwa79LCXObcyGT8EQOKFiThEwk3kb5ehX-JoX8QGQR8vHa2cWB2tsaUF5Eitp0DNoM8ykUgb8g87q2DrPEk/s1600/crystal+ball.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="132" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh6NqMEfshKCF7TC4bPKm1jza8y7xQnOiw1MNd58j6pVp85x_OBGy8hPo25yjwa79LCXObcyGT8EQOKFiThEwk3kb5ehX-JoX8QGQR8vHa2cWB2tsaUF5Eitp0DNoM8ykUgb8g87q2DrPEk/s200/crystal+ball.jpg" width="200" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">Patient Safety Will Not Be Compromised, We Predict ... So Say Us All.</td></tr></tbody></table> -- SS 8/29/12 Addendum: Apparently the problem was finally solved between 5:30 PM and 9 PM CST on August 27.   I first became aware of it at around 8 AM EST August 23.  Brings to life the line "either you are in control of your information systems, or they are in control of you." Also, see the comment thread to this post <a href="http://www.blogger.com/comment.g?blogID=9551150&postID=3141136033860089060&isPopup=true" target="_blank">here</a>, specifically the comments starting at August 28, 2012 12:16:00 PM EDT, to see yet another demonstration of the illogic, unserious attitudes and feelings of entitlement towards patient risk and transparency characteristic of the health IT industry.  The anonymous commenter also alleges to have firsthand knowledge of the problem, suggesting they are from U. Chicago, but this cannot be confirmed. -- SS

From the University of Chicago EHR Helpdesk Call Line

I was alerted this morning (Aug. 23rd) to this message currently in the telephone message of the CBIS [Chicago Biomedicine Information Servi...

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Three Golden Parachutes and Some Unexpected Sequels

Golden parachutes are an always fascinating aspect of executive compensation in health care.  I have collected three relatively recently revealed stories about golden parachutes given to government and non-profit hospital system CEOs, at least two of which involve unexpected, and also fascinating sequels.  They will appear in order of the apparent size of the parachutes. Santa Clara Valley Health and Hospital System Santa Clara Health and Hospital System is a county (government) system of moderate size in California.  Last week, the compensation given its outgoing CEO in 2010 was <a href="http://www.bizjournals.com/sanjose/blog/2012/01/ex-santa-clara-county-health-chief-kim.html">revealed</a> by the San Jose Business Journal: <blockquote>Former Santa Clara Valley Health and Hospital System CEO Kim Roberts walked away with an impressive chunk of change when she abruptly left the job in February 2010. According to a city and county salary report released from the State Controllers Office, the position earned a little over $1 million that year. A county spokeswoman confirmed that the total included accrued vacation, sick leave and other payments Roberts was entitled to. The salary was the highest in the Bay Area for public employees in 2010. </blockquote> Note that <blockquote>Roberts was hired as CEO in March 2007 with a five-year contract. The agreement included a starting salary of $285,744 with annual salary adjustments, severance and other benefits.</blockquote> The issue here is that Ms Roberts was the CEO of a local government run health system. Traditionally, the pay given to people in such positions is closely scrutinized by politicians and tax payers, and hence is usually less than that given out by private, non-profit hospital systems, much less for-profit ones. Nonetheless, while it appears that Ms Roberts got something more than $700,000 worth of compensation beyond her usual salary in her last year, the nature of this compensation, and the justification for it is unclear. Erlanger Health System The <a href="http://timesfreepress.com/news/2012/jan/10/brexler-erlanger-trustees-ok-728000-severance-deal">story</a> that got my attention appeared two days ago in the Chattanooga Times-Free Press: <blockquote>After more than a month of negotiations, Erlanger trustees reversed a previous vote and approved a controversial $728,000 severance package for outgoing CEO Jim Brexler. Trustees voted 4-4 against the same severance package in December but voted 5-4 to approve it during a 30-minute meeting Monday morning.</blockquote> More detail about the package: <blockquote>The approved agreement provides 15 months of severance for Brexler, worth about $713,000. He also keeps his Erlanger health coverage for 18 months, paying his employee portion, a benefit worth about $15,000.</blockquote> This story is actually a complex sequel. We <a href="http://hcrenewal.blogspot.com/2011/01/making-their-numbers-examples-of.html">discussed</a> CEO compensation at Erlanger Health System, an academic medical center affiliated with the University of Tennesse, a year ago. At that time, we noted that a substantial bonus given to then CEO Jim Brexler was based on favorable financial results in the previous year, but did not apparently take into account the more recent decline in the system's finances. That bonus was justified by the typical paean to the leadership's "real expertise in health care" by one member of its board. By last month, however, Erlanger's finances had deteriorated dramatically. A Free Press <a href="http://timesfreepress.com/news/2011/dec/22/1222-a1-erlanger-considers-layoffs">article</a> then stated, <blockquote>Erlanger hospital employees have been asked to take 12 days off in the next two months, consider voluntary buyouts and face possible layoffs as Chattanooga's only public hospital bleeds money. The hospital has lost more $6 million in the last five months, half of that in November.</blockquote> The reason for this accelerating misfortune deterioration remain unexplained. Apparently, CEO Brexler had decided to depart, for also unclear reasons, two months earlier: <blockquote>In October, the hospital announced CEO Jim Brexler would retire at the end of the year.</blockquote> At that time, the board had voted to give him the severance package described above, but then suddenly began to reconsider after how bad things were became clear: <blockquote>The board voted earlier this month not to give Brexler a more than $700,000 severance package, but the issue may be brought back up, board members have said.</blockquote> It was unclear whether the decline in Erlanger's finances had to do with its relationship with another troubled hospital, Hutcheson Medical Center, as described in another Free Press <a href="http://timesfreepress.com/news/2012/jan/02/hutcheson-continues-to-bleed-money">article</a>: <blockquote>Despite a new board, new management and the infusion of a $20 million line of credit, a struggling North Georgia public hospital continues to lose money. Erlanger at Hutcheson, formerly known as Hutcheson Medical Center, lost more than $9 million in the first five months of the 2012 fiscal year, which began in July. It lost the most -- $2.7 million -- in September. Hutcheson board Chairman Corky Jewell could not be reached for comment last week. The hospital's administrator, Debbie Reeves, and other management personnel were not in the office the week between Christmas and New Year's, according to spokeswoman Haley Johnson. The publicly funded hospital in Fort Oglethorpe had been losing about $1 million a month, defaulted on a $35 million bond and laid off 75 employees in fiscal year 2011. In May, Erlanger Health System took over management of the hospital and extended up to $20 million in credit to it.</blockquote> Apparently inflated compensation to Hutcheson's CEO was also a subject of <a href="http://hcrenewal.blogspot.com/2011/01/more-on-hospital-executives.html">one of our posts </a>from about a year ago. At that time, we wrote, "despite a major financial loss, lay-offs and service discontinuations, and a bond default," the CEO got "bonus and incentive compensation" in 2009. So, to summarize, despite major financial problems, Hutcheson Medical Center's CEO got a bonus and incentive compensation in 2009. As its situation got worse, it was taken over in some sense by Erlanger Health System, whose CEO also got a bonus despite increasing financial problems in 2010. Thereafter, the finances of Erlanger really declined, its CEO announced his retirement, and still will collect a golden parachute. Thus Erlanger Health System's golden parachute for its outgoing CEO symbolizes the anti-gravitational powers of executive compensation. While lavish executive pay is often justified by short-term financial results, health care executives seem to be able to just keep collecting more and more until they have to flee. Health care seems to more and more be run for the benefit of self-interested insiders. Also, this case demonstrates how skeptical we ought to be of the breathless praise for health care executives and managers and the uncritical touting of their latest advances and initiatives.  (By the way, we posted <a href="http://hcrenewal.blogspot.com/2011/09/another-hospital-putting-on-ritz.html">here</a>, just before it became apparent how badly Erlanger's finances were collapsing, about its breathless advertisement of a "new service excellence program" for Erlanger employees run by the Ritz-Carlton hotel chain.  One wonders whether the attention to the peripheral ahead of core responsibilities this denoted could have been one reason for the system's decline.)  And we are just working our way up to our big case.... University of Chicago Medical Center This story actually dates back to 2009, but was first revealed briefly in late 2011, <a href="http://www.beckershospitalreview.com/compensation-issues/northwestern-memorial-ceo-dean-harrison-made-97m-in-2010.html">in Becker's Hospital Review</a>, <blockquote>The other three highest-paid hospital CEOs in Chicago in 2010 include the following: • James Madara, MD, and Ken Sharigian, University of Chicago Medical Center: $7.9 million Note: This includes severance for Dr. Madara, who resigned in Oct. 2009. Mr. Sharigian served as the interim in 2010.</blockquote> A little more detail came out in a side-bar to a <a href="http://chronicle.com/article/On-Campuses-the-Income-Gap/129980">story</a> on executive compensation in higher education by the Chronicle of Higher Education: <blockquote>James L. Madara, dean of the school of medicine and chief executive of the medical center, U. of Chicago Total compensation: $7,038,944 Mr. Madara’s base salary was $1.3-million, and he received $2.5-million in severance pay.</blockquote> There was also a hint of why this was so interesting: <blockquote>Mr. [sic] Madara stepped down after seven years as dean and three as chief executive to return to the faculty. He resigned amid controversy over his management decisions, such as a plan to redirect medical-center patients to neighboring hospitals, according to local news reports. </blockquote> A little digging shows there was more to it than that. Recall our recent <a href="http://hcrenewal.blogspot.com/2012/01/us-presidential-candidates-financial.html">post</a> that discussed the "Urban Health Initiative," a program ostensibly meant to direct some patients, allegedly mainly poor patients, to more appropriate health care venues, allegedly away from the Emergency Department of the university medical center, and again allegedly to make room for patients who need and whose insurance can pay for more lucrative services. By February, 2009, the Wall Street Journal <a href="http://online.wsj.com/article/SB123577975486997825.html">reported</a> that <blockquote>In February, two high-ranking doctors quit their administrative posts to protest the plan, saying it could lengthen already long waiting times for patients who visit the ER.</blockquote> In particular, <blockquote>The two doctors who gave up their administrative posts in Chicago were Dr. Vanden Hoek, who stepped down as interim chief of emergency medicine, and pulmonology researcher Joe G.N. Garcia, who had been chairman of medicine. The doctors still can practice medicine at the hospital. About a dozen other doctors from the emergency room and other departments had signed a letter of protest over the hospital administration's plan to reduce the number of beds available to emergency patients in the ER and other units.</blockquote> Three months later, as <a href="http://www.chicagobusiness.com/article/20090502/ISSUE01/100031705/u-of-c-docs-attack-ceos-finance-focus">reported</a> by Chicago Business, <blockquote>Some University of Chicago Medical Center faculty members are accusing CEO James Madara of putting hospital finances ahead of research and teaching. A letter delivered to Dr. Madaar last month and signed by 76 faculty members asserts that, since adding the hospital CEO title in 2006, Dr. Madara has lost focus on his role as a dean of the Hyde Park medical center's vaunted research and academic enterprise. A preocccupation with hospital profits and an 'insular management style' have 'disenfranchised' the faculty, the letter says. </blockquote> By that month, <a href="http://online.wsj.com/article/SB123681502175301913.html">according to the Wall Street Journal</a>, <blockquote>More than 190 doctors at the University of Chicago Medical Center signed a letter to trustees protesting plans to reduce the number of beds available to emergency patients as 'unnecessarily risky' and a threat to patient safety.</blockquote> The plan was put on hold by the university president a few days later. Dr Madara resigned in August. So, somewhat like the case above, this involved a hospital system CEO who got a very large golden parachute after leaving under fire, not for declining revenue, but for his role in overseeing a program of questionable ethics, one possibly bad for patients, and having lost the confidence of some important proportion of his medical faculty. He did not, however, go off quietly into the night. His next stop was Leavitt Partners (as noted in <a href="http://www.ama-assn.org/ama/pub/news/news/ama-names-new-evp-ceo.page">this AMA press release</a>), founded by former President George W Bush administration Secretary for Health and Human Services James Leavitt. As we noted <a href="http://hcrenewal.blogspot.com/2011/10/former-us-secretary-of-health-and-human.html">here</a>, <a href="http://leavittpartners.com/">Leavitt Partners</a> advertises that it "advises clients that invest in health care and food safety." It does not publicize its client list, but that list apparently includes Alliance Health Networks, whose press release noted that Leavitt Partners "will help it expand its presence in the US health industry and beyond "(look <a href="http://www.healthcareitnews.com/news/alliance-health-networks-gets-boost-leavitt-partners">here</a>); and Connextions, Inc, whose press release noted that it would work with Leavitt Partners to " refine existing health insurance exchange models for federal and state governments, as well as private sector organizations that are navigating health care reform law," (look <a href="http://www.businesswire.com/news/home/20110614005331/en/Connextions-Leavitt-Partners-Enter-Agreement-Bring-Health">here.</a>)  Mr Leavitt joined the board of Medtronic last year (look <a href="http://www.bizjournals.com/twincities/news/2011/10/17/medtronic-board-leavitt-fda.html">here</a>).  Then, however, he got back into the CEO business.  While still maintaining <a href="http://leavittpartners.com/team/dr-james-madara">a role at Leavitt</a>, in 2011, per the <a href="http://www.ama-assn.org/ama/pub/news/news/ama-names-new-evp-ceo.page">AMA release</a>, <blockquote>The American Medical Association (AMA) today named James L. Madara, M.D., as its new Executive Vice President and Chief Executive Officer. Dr. Madara will assume leadership of the nation’s oldest and largest physician group on July 1.</blockquote> That news release noted his past positions, <blockquote>the Thompson Distinguished Service Professorship and deanship at the University of Chicago Pritzker School of Medicine, where he was the longest serving Pritzker dean in the last 35 years. Subsequently, he added the responsibility of CEO of the University of Chicago Medical Center, bringing together the university’s biomedical research, teaching and clinical activities. </blockquote> Perhaps not surprisingly, it did not mention the controversies at the medical center that preceded his resignation, nor his sizable golden parachute, nor his ongoing role at Leavitt Partners. So, the American Medical Association claims to represent all US physicians and their values. It turns out that its current Executive Vice President and CEO is a former hospital system CEO who departed under fire with a golden parachute beyond any severance package a practicing or academic physician would dream about.  He also is a former and current consultant with a firm lead by one of our better recent examples of beneficiaries of the revolving door.  We have come a long, and the wrong way since the AMA asserted, "the practice of medicine should not be commercialized, nor treated as a commodity in trade." (See <a href="http://hcrenewal.blogspot.com/2007/12/relman-in-jama-on-threats-to-physicians.html">this post</a>.) This story is not just about the ridiculous compensation given to health care executives, and how this provides perverse incentives and suggests that many health care leaders have become insiders who put their self-interest ahead of the health care mission. This story is also about the connectedness of these insiders, and how they appear to control nearly every part of health care. The Moral of the Stories Maybe if I write this often enough, it will get some notice.... health care organizations need leaders that uphold the core values of health care, and focus on and are accountable for the mission, not on secondary responsibilities that conflict with these values and their mission, and not on self-enrichment. Leaders ought to be rewarded reasonably, but not lavishly, for doing what ultimately improves patient care, or when applicable, good education and good research. On the other hand, those who authorize, direct and implement bad behavior ought to suffer negative consequences sufficient to deter future bad behavior. If we do not fix the severe problems affecting the leadership and governance of health care, and do not increase accountability, integrity and transparency of health care leadership and governance, we will be as much to blame as the leaders when the system collapses.

Three Golden Parachutes and Some Unexpected Sequels

Golden parachutes are an always fascinating aspect of executive compensation in health care. I have collected three relatively recently rev...

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Hospital Executives - What Will They Think of Next?

Health care organizations are now most often run by people with management, not clinical backgrounds.  It seems like business schools have taught managers to sign on to whatever the latest management fashions are.  So what are the latest fashions in hospital management?  Here are a few hot items. Retreading Pharmaceutical Representatives My jaundiced reading of the business news suggests that most executives think that marketing is the most important part of their organizations, and that clever marketing can sell any product or service. For example, the pharmaceutical industry spends about twice as much on marketing as it does on research and development (despite pharma executives' protestations that they run research driven businesses) (see <a href="http://hcrenewal.blogspot.com/2008/01/blogscan-575-billion-spent-yearly-on.html">this post</a>). So it should be no surprise that now hospitals are using "hospital representatives" to market referrals to their institutions to doctors. From <a href="http://www.usatoday.com/money/industries/health/story/2011-12-13/hospitals-sales-reps/51887938/1">last week's USA Today</a>: <blockquote>n northwest Indiana, Carrie Sota visits five or six doctors' offices every workday as part of her new sales job. But Sota isn't selling the physicians on a prescription drug or a medical device. She's promoting her hospital — the University of Chicago Medical Center. Sota, 30, is one of four employees the academic medical center has hired in recent months to make 'sales calls' on physicians in the hope that they will send more patients to the hospital. 'We are trying to build meaningful relationships,' said Sota, who was previously a saleswoman for a small medical device company. The University of Chicago Medical Center is one of a growing number of hospitals nationwide hiring former drug and device sales reps to visit doctors' offices to persuade them to use their services over competing facilities. Rather than handing out samples of prescription drugs, the sales reps call on doctors armed with the latest information on how their facility is reducing hospital-acquired infections and improving patient-satisfaction scores. In visits that can last five to 20 minutes, reps try to win doctors' loyalty by helping them get better times on operating room schedules or easier patient referrals to hospital-based specialists. The sales reps can also carry messages back to the hospital, such as a doctor's request for a new medical device to be available in surgery.</blockquote> The article suggested a few problems with this approach. First, the point of the marketing is not to improve the match between patients' needs and the services the hospital provides. Rather, it is to generate referrals that have the potential to provide the maximum revenue: <blockquote>While hospitals have always tried to woo doctors to refer patients to them, the institutions are growing more direct in their efforts. The hospitals mine data to see which doctors have the most profitable, well-insured patients, and then they assign those doctors to a sales rep.</blockquote> So in particular, <blockquote>Many of the physician liaisons focus on specialists, who bring in patients for services with the highest profit margins, including orthopedics, cardiac care and cancer care, [Duke University Health System physician liaison manager Christine] Perry said.</blockquote> Second, the hospital reps have incentives based on revenue, not on value to the patient: <blockquote>About two-thirds of Tenet's liaisons are former drug and device sales reps, and they can make tens of thousands of dollars in bonuses if doctors increase their referrals to the hospitals. </blockquote> Third, across the system, the revenues generated may be much less than the costs incurred, since most of the marketing will only succeed in moving patients from one hospital to another: <blockquote>Paul Ginsburg, president of the non-partisan Center for Studying Health System Change, said, 'When you look at the health system, this is a waste of resources. It's a zero-sum game.' He added: 'The net results of changing physician-referral patterns is that one hospital gains at a cost of others, and all the hospitals burn resources to pay (sales)people who take up the doctor's time.'</blockquote> Of course, the reps could succeed in persuading doctors to refer patients to specific hospitals for services the doctors originally did not think the patients needed. That would be good were the patients to need those services, but bad if they were not. Fourth, we have discussed (for example, <a href="http://hcrenewal.blogspot.com/2007/05/fool-me-once-shame-on-you-fool-me-twice.html">here</a> and <a href="http://hcrenewal.blogspot.com/2008/04/more-about-cynical-world-of-drug-reps.html">here</a>) how pharmaceutical representatives use sophisticated psychological and emotional manipulation, despite claims that all they do is provide unbiased information and educational, to influence physicians to prescribe drugs. Again, this may result in patients getting drugs whose benefits do not outweigh their harms. It is possible that hospital representatives will do something similar: <blockquote>'These people are really good and really assertive and very sophisticated,' said Stephen Newman, Tenet's chief operating officer.</blockquote> Unbundling Payments The airlines decided a while ago that they could make more money by charging passengers for each checked bag, and even for those little meals on plastic trays. It looks like hospital executives have discovered a new way to unbundle. As reported last month by <a href="http://www.stltoday.com/business/local/outpatient-sticker-shock-for-a--minute-treatment/article_a2915e64-1499-11e1-bf45-001a4bcf6878.html">the St Louis Post-Dispatch</a>, hospitals have begun charging often hefty "facility fees" for patients seen as outpatients in hospital clinics or hospital owned practices, even for very minor procedures or just office visits, and even for Medicare patients. (Private physicians who see patients in their own offices cannot charge such fees to Medicare patients, and most private insurance companies will not cover such fees.): <blockquote>A few weeks after Allison Zaromb took her 4-year-old son Meir to see a dermatologist in an outpatient office at the SSM Cardinal Glennon Children's Medical Center campus, she received separate bills from the doctor and the hospital. The cost for a 3-minute procedure to treat Meir's warts totaled $538, which included a $220 bill for physician services - and a separate bill for a $318 hospital 'facility fee.' Zaromb, a periodontist who lives in University City, is now suing SSM Health Care Corp. and Cardinal Glennon Children's Medical Center in a proposed class action lawsuit on behalf of other patients</blockquote> More generally, <blockquote>With the proliferation of hospital-owned outpatient centers and hospital-owned physician practices, hospital 'facility fees' have become increasingly common. Such hospital facility fees often involve greater dollar amounts than the fees charged by physicians.</blockquote> Technically, it all appears to be legal: <blockquote>Under federal regulations, health systems are permitted to charge a hospital facility fee for an outpatient service if it's done in a clinic that is 'hospital-based' - meaning that the clinic is owned and operated as part of a hospital or health system, regardless of whether the clinic is physically located on the hospital grounds.</blockquote> This technique does seem to be a way to increase revenue. But one person's revenue is another person's cost, so it also seems to be a great way to further increase the already high cost of US health care. It is not obvious, however, that these increased costs will lead to increased quality of care or value for the patient: <blockquote>'From a consumer's perspective, when you go see your doctor, you go see your doctor - whether it's in an office inside a larger hospital complex or right across the street,' [Zaromb's lawyer John] Phillips said. 'The doctor's practice remains the same. ... They're making the doctor's office a ‘hospital-based' clinic for one reason: to make money by charging a facility fee, not to improve consumer service.'</blockquote> Negotiating the Costs of Medical Devices One of the favorite topics on <a href="http://hcrenewal.blogspot.com/">Health Care Renewal</a>, at least before we found even more outrageous subjects, was the stratospheric cost of medical devices. For example, look at posts from 2005 <a href="http://hcrenewal.blogspot.com/2005/09/1600-screw-and-other-outrages.html">here</a>, <a href="http://hcrenewal.blogspot.com/2005/08/imaging-test-pre-certification-blues.html">here</a>, <a href="http://hcrenewal.blogspot.com/2005/08/wooden-headed-health-care.html">here</a>, and <a href="http://hcrenewal.blogspot.com/2005/08/new-york-times-examines-why.html">here</a>. So last month we found out that hospital executives have come up with a revolutionary idea to combat the high cost of devices. They will actually try to see what prices the device companies charge other hospitals, and then negotiate the prices down, as <a href="http://www.reuters.com/article/2011/11/30/us-hospitals-idUSTRE7AS2ZI20111130">Reuters</a> reported as big news in late November: <blockquote>Implantable devices make up a sizable chunk of typical hospital budgets, and administrators are devising new ways to limit that cost as they brace for cuts to government reimbursement and treat more patients who can't pay for care. That means methodically working through each category of device, from heart valve replacements and stents to spinal products, to see where they can negotiate lower prices. It also means creating databases of shared information on pricing between hospitals.</blockquote> Imagine that! Of course, the notion that buyers ought to bargain with sellers to get the best price goes back a few years. However, only in 2011 did it apparently occur to hospital executives that they ought to negotiate the prices of one their most expensive purchases. This suggests that there has been something profoundly wrong with the basic assumptions underlying the commonly accepted wisdom that making the health care system more of a market will lead to more financially efficient care.  Summary In 1988, Alain Enthoven advocated in <a href="http://www.amazon.com/gp/product/0444703594/102-6581115-0444916?n=283155">Theory and Practice of Managed Competition in Health Care Finance</a>, a book published in the Netherlands, that to decrease health care costs it would be necessary to break up the "physicians' guild" and replace leadership by clinicians with leadership by managers (see 2006 post <a href="http://hcrenewal.blogspot.com/2006/03/consequences-of-breaking-physicians.html">here</a>). Thus from 1983 to 2000, the number of managers working in the US health care system grew 726%, while the number of physicians grew 39%, so the manager/physician ratio went from roughly one to six to one to one (see 2005 post <a href="http://hcrenewal.blogspot.com/2005/04/growing-proliferation-of-managers.html">here</a>). Health care went from being controlled by clinicians to controlled by a growing volume of managers.  Most of these managers were generic, in that they had little if any knowledge of, experience in, or sympathy to the values of health care. These generic managers have used the same techniques advocated for the management of supermarkets or automobile manufacturers to manage health care organizations, despite all the obvious differences in context, goals, values, and people involved. So these generic managers have brought us such "innovations" as the "hospital (marketing) representative," and the "facility fee" for outpatient visits, but only thought to negotiate device prices in 2011. But that is why we pay them <a href="http://hcrenewal.blogspot.com/search/label/executive%20compensation">the big bucks</a>. How many more arguments do we need that health care organizations ought to be lead by people who understand the health care context, share its core values, and are accountable for how these organizations affect patients' and the public's health?

Hospital Executives - What Will They Think of Next?

Health care organizations are now most often run by people with management, not clinical backgrounds. It seems like business schools have t...

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