healthy4u: oligarchy

Planned Obsolescence Disguised as Innovation, Oligopoly Disguised as a Free Market, and the Enrichment of Oligarchs

The New York Times published another<a href="http://www.nytimes.com/2014/04/06/health/even-small-medical-advances-can-mean-big-jumps-in-bills.html"> article</a> in its series on the high cost of US health care.  This one, focused on the care of type 1 diabetes mellitus and other chronic diseases, shines some light on the business management practices that now determine how our health care system functions, or not, and implies who benefits the most from them. Planned Obsolescence Disguised as Innovation The article first discussed the brave new world of type 1 diabetes treatment.  The introductory theme was: <blockquote class="tr_bq">Today, the routine care costs of many chronic illnesses eclipse that of acute care because new treatments that keep patients well have become a multibillion-dollar business opportunity for device and drug makers and medical providers.</blockquote> Much of modern diabetes treatment seems to depend on medical devices and disposable medical supplies: <blockquote class="tr_bq">That captive audience of Type 1 diabetics has spawned lines of high-priced gadgets and disposable accouterments, borrowing business models from technology companies like Apple: Each pump and monitor requires the separate purchase of an array of items that are often brand and model specific. A steady stream of new models and updates often offer dubious improvement: colored pumps; talking, bilingual meters; sensors reporting minute-by-minute sugar readouts. [Diabetes patient] Ms. Hayley’s new pump will cost $7,350 (she will pay $2,500 under the terms of her insurance). But she will also need to pay her part for supplies, including $100 monitor probes that must be replaced every week, disposable tubing that she must change every three days and 10 or so test strips every day.</blockquote> Of course, the device and supply manufacturers claim that the high prices reflect the value of the wondrous new innovations: <blockquote class="tr_bq">Companies that produce the treatments say the higher costs reflect medical advances and the need to recoup money spent on research.</blockquote> Yet now the Times reporter was able to find physicians who claim the "innovations" are really just the latest version of planned obsolescence: <blockquote class="tr_bq">Diabetes experts say a good part of what companies label as innovation amounts to planned obsolescence. Just as Apple customers can no longer buy an iPhone 3 even if they were content with it, diabetics are nudged to keep up with the latest model.</blockquote>For example, <blockquote class="tr_bq"><div class="story-body-text story-content" data-para-count="410" data-total-count="4006" id="story-continues-3" itemprop="articleBody">Those companies spend millions of dollars recruiting patients at health fairs, through physicians’ offices and with aggressive advertising — often urging them to get devices and treatments that are not necessary, doctors say. 'They may be better in some abstract sense, but the clinical relevance is minor,' said Dr. Joel Zonszein, director of the Clinical Diabetes Center at Montefiore Medical Center.</div><div class="story-body-text story-content" data-para-count="410" data-total-count="4006" id="story-continues-3" itemprop="articleBody"> </div><div class="story-body-text story-content" data-para-count="109" data-total-count="4115" itemprop="articleBody">'People don’t need a meter that talks to them,' he added. 'There’s an incredible waste of money.'</div></blockquote> Pharmaceutical companies have also discovered this model. <blockquote class="tr_bq">insulin ... has been produced with genetic engineering and protected by patents, so that a medicine that cost a few dollars when Ms. Hayley was a child now often sells for more than $200 a vial, meaning some patients must pay more than $4,000 a year.</blockquote> In particular, <blockquote class="tr_bq">Synthetic human insulin is safer for patients, who sometimes developed reactions to animal insulin. But it is made by only three companies: Eli Lilly, Sanofi and Novo Nordisk. Manufactured in microbes, each one’s product has minor dissimilarities that reflect the type of cell in which it was made. Since the companies owned the cell lines, it is nearly impossible for other companies to make exact copies or even similar versions that would be cheaper, even once the patents expire. And the pharmaceutical companies defend the patents ferociously. <div class="story-body-text story-content" data-para-count="270" data-total-count="12681" itemprop="articleBody">What’s more, the three companies continued to refine their product, adding chemical groups that made the insulin absorb somewhat more quickly or evenly, for example. They are called insulin analogues, and their benefits are promoted tirelessly to doctors and patients.</div></blockquote> Of course, the pharmaceutical companies also claim that it's all about innnovation, <blockquote class="tr_bq">Dr. Todd Hobbs, chief medical officer of Novo Nordisk, defended the rising prices of insulin, linking them to medical benefits. 'The cost to develop these new insulin products has been enormous, and the cost of the insulin to the consumer in developed countries has risen to enable these and future advancements to occur,' he wrote in an email.</blockquote> Not everyone is convinced, <blockquote class="tr_bq">'The insulins are tweaked for minor benefits that may help a small number of patients with difficult-to-control diabetes, and result in major price increases for all,' [Kings College, London, UK Professor] Dr. Pickup said. Because of analogues, he added, Britain’s National Health Service has had to spend 130 percent more on insulin in the past five years. In the United States, said Dr. Zonszein at Montefiore, the price of Humalog, Lilly’s analogue insulin, was typically two to four times that of its older human insulin line, called Humulin. 'There is not a lot of difference between Humulin and analogues,' he said, but he noted that Humulin was getting 'hard to find.' Sanofi Aventis has stopped selling its older product in the United States, and Mr. Kliff, the financial analyst, said other companies were likely to follow suit, effectively forcing patients to use the costlier versions.</blockquote> The arguments about valuable innovation also do not explain why the prognosis of diabetes in the US does not seem to reflect all the money we spend on the disease, <blockquote class="tr_bq"><div class="story-body-text story-content" data-para-count="306" data-total-count="4993" itemprop="articleBody">Complication rates from diabetes in the United States are generally higher than in other developed countries. That is true even though the United States <a href="http://www.cdc.gov/diabetes/statistics/complications_national.htm">spends more</a> per patient and per capita treating diabetes than elsewhere, said Ping Zhang, an economist at the Centers for Disease Control and Prevention.</div><div class="story-body-text story-content" data-para-count="306" data-total-count="4993" itemprop="articleBody"> </div><div class="story-body-text story-content" data-para-count="280" data-total-count="5273" itemprop="articleBody">The high costs are taking their toll on public coffers, since 62 percent of that treatment money comes from government insurers. The cumulative outlays for treating Type 1 and Type 2 diabetes <a href="http://www.diabetes.org/advocacy/news-events/cost-of-diabetes.html">reached nearly $200 billion</a> in 2012, or about 7 percent of America’s health care bill.</div></blockquote> So to summarize, there is considerable evidence that companies that make drugs and devices to manage type 1 diabetes constantly provide "innovations," yet most are minor changes that encourage obsolescence of previous products, but do not provide important increases in benefits or reductions in harm for patients.  Oligopoly Disguised as a Free Market Many in the US sing the praises of our supposed free-market health care system.  As noted above however, the insulin market is an oligopoly, dominated by three companies.  The diabetes device market is also dominated by a few companies, and in particular, the insulin pump market is dominated by a single company, <blockquote class="tr_bq"><a href="http://www.medtronic.com/">Medtronic</a> is the dominant insulin pump manufacturer, serving 65 percent of American patients and the majority of those worldwide. Though smaller companies sell cheaper pumps, it is hard to make inroads: Once familiar with the Medtronic system and its extensive support network for troubleshooting problems, patients are reluctant to switch. Doctors are leery of prescribing equipment from a new company that may be out of business in a year; their office computer may not sync with the new software anyway.</blockquote> Of course, Medtronic public relations will justify it all again based on innovation, <blockquote class="tr_bq">Medtronic declined to talk about specific prices, but said a core tenet was to make only 'a fair profit.' Amanda Sheldon, a spokeswoman, added: 'We are committed to reinvesting in research and development of new technologies to improve the lives of people with diabetes, and our current pricing structure ensures that we can bring new products to market.' </blockquote> The article also discussed the prices of treating chronic diseases other than diabetes.  For example, see how a nominally non-profit hospital priced treatments for chronic diseases, <blockquote class="tr_bq">Dr. Kivi was on high doses of steroids for debilitating joint pain that left him unable to walk at times. But when his last three-hour infusion at NYU Langone Medical Center’s outpatient clinic generated a bill of $133,000 — and his insurer paid $99,593 — Dr. Kivi was so outraged that he decided to risk switching to another drug that he could inject by himself at home. </blockquote> However,  this pricing appears to have been facilitated by the hospital's increasing market domination generated by its purchase of physician practices, <blockquote class="tr_bq">He had moved his care to NYU Langone to follow his longtime doctor, who had moved her practice from a nearby hospital where the same infusion had been billed at $19,000. The average price that hospitals paid for Dr. Kivi’s dose of Remicade late last year was about $1,200, according to Medicare data.</blockquote> So in summary, a few companies now dominate the production of drugs and devices for the management of diabetes, and a few large hospitals may increasingly dominate the treatment of particular chronic diseases.  Such oligopolists are able to increase prices without improving treatment to or outcomes of patients. Enrichment of the Oligarchs This example shows how the current US health care system is dominated by huge organizations, mostly for-profit corporations but including some nominally non-profit corporations that act similarly.  They loudly proclaim innovation, but much of that innovation seems to provide few benefits to patients, and actually appears to be planned obsolescence.  The result is high and ever-rising prices. So if patients do not benefit from this, who does? It does not appear to be the health care professionals, <blockquote class="tr_bq">Meanwhile, as the price of supplies rises, endocrinologists remain among the lowest-paid specialists in American medicine, meaning severe physician shortages in many areas and long waits to see a doctor.</blockquote> We  have seen other examples of how leaders of the big health care organizations have become as<a href="http://hcrenewal.blogspot.com/search/label/executive%20compensation"> rich as royalty</a>.  Therefore, let us consider the pay of the leaders of the organizations mentioned above.  I will focus on the two US based corporations, Eli Lilly and Medtronic, and the New York hospital, NYU Langone Medical Center. Eli Lilly According to the company's <a href="http://investor.lilly.com/secfiling.cfm?filingID=59478-14-90&CIK=59478">2014 proxy statement</a>, the 2013 total compensation of its five highest paid hired executives was - John C Lechleiter PhD, CEO                                      $11,217,000 - Derica W Rice, CFO                                                   $5,176,822 - Jan M Lundberg, PhD, EVP, Science and Technology   $4,774,535 - Michael J Harrington, General Counsel                          $3,174,222 - Erico A Conterno, President Lilly Diabetes                    $3,009,041 Note that all of these executives save Mr Harrington have also amassed more than 100,000 shares of company stock, and Dr Lechleiter has amassed more than 1,000,000. It should be no surprise, given our recent discussion (e.g., <a href="http://hcrenewal.blogspot.com/2014/04/finally-article-in-large-circulation.html">here</a>) of the currently symbiotic relationship among top health care corporations and academic medicine, that several of the members of the Lilly board of directors that has exercised stewardship over the company, and is thus responsible for these gargantuan compensation packages and the business practices discussed above are top academic leaders.  These include, - Alfred G Gilman, MD, PhD, Regental Professor Emeritus, recent (until 2009) executive vice presdient, provost, and dean of medicine, University of Texas Southwestern  - William G Kaelin Jr, MD, Professor of Medicine, Associate Director of Basic Science, Dana-Farber Cancer Center, Harvard University - Marschall S Runge MD, Executive Dean and Chair of the Department of Medicine, University of North Carolina Medical School - Katherine Baicker PhD, Professor of Health Economics, Harvard University School of Public Health  (I must note that Prof Baicker is also - amazingly - on the Medicare Payment Advisory Committee, MEDPAC). - Ellen R Marram, Trustee, New York-Presbyterian Hospital - Ralph Alvarez, President's Council, University of Miami - R David Hooper, Trustee, Children's Hospital of Colorado - Franklyn G Pendergast MD PhD, Professor, Mayo Medical School All but the newest directors were paid at least $250,000 a year by the company (and thus by the executives the directors are supposed to supervise), and all but the newest directors had accumulated tens of thousands of shares of stock or the equivalent as pay for their services. Medtronic Similarly, according to the company's<a href="http://phx.corporate-ir.net/phoenix.zhtml?c=76126&p=irol-SECText&TEXT=aHR0cDovL2FwaS50ZW5rd2l6YXJkLmNvbS9maWxpbmcueG1sP2lwYWdlPTkwMjY0MzAmRFNFUT0wJlNFUT0wJlNRREVTQz1TRUNUSU9OX0VOVElSRSZzdWJzaWQ9NTc%3d"> 2013 proxy</a> (the latest now available), CEO Omar Ishrak made $8,975,866 in 2013, and the next four highest paid executives all made over $2,500,000 each.   Mr Ishrak owned or could acquire the equivalent of more than 500,000 shares of stock, and the other top paid executives owned of could acquire from over 100,000 to over 1,000,000 shares of stock. Again, the executives were nominally supervised by a board of directors that included an academic and non-profit leader, Dr Victor J Dzau, MD former chancellor for health affairs at Duke University, and president-elect of the Institute of Medicine (note that we discussed Dr Dzau's conflicts of interest most recently <a href="http://hcrenewal.blogspot.com/2014/02/incoming-president-of-iom-outed-as.html">here</a>).  It also included a former government leader, Michael O Leavitt, former US Secretary of Health and Human Services; and a hospital leader, Preetha Reddy, Managing Director of Apollo Hospitals Enterprise Limited (India).  NYU Langone Medical Center The Medical Center's<a href="http://www.guidestar.org/FinDocuments/2012/133/971/2012-133971298-09798bbc-9.pdf"> 2011 US form 990</a> is old, but the latest available, and is remarkably obscure, omitting, for example, mentioning the titles of any of the people listed as highest paid officers and employees.  The current CEO, was listed as receiving total compensation of just over $2.000,000.  Four individuals then received over $1,000,000.  The 990 form also mentioned that the Medical Center provided some individuals with first class travel, tax gross-up payments, housing allowances, and reimbursement for personal services.  Neither the 990, nor the center's <a href="http://www.med.nyu.edu/about-us/who-we-are/medical-center-leadership/trustees">web-site</a> makes all the possible conflicts of interest of its trustees obvious.    So in summary, the large organizations, for-profit and non-profit, that are able to greatly increase their prices through planned obsolescence disguised as innovation, and oligopoly disguised as free markets, are able to make their top executives very rich, and also enrich those who are supposed to exercise stewardship over them.  Summary An extensive journalistic investigation revealed how certain aspects of chronic care in the US health care system are dominated by a few large organizations.  These organizations are able to charge very high prices, mainly through market domination, and with the aid of marketing and public relations that tout planned obsolescence as valuable innovation.  The leaders of these organizations have become wealthy, often fabulously so.  This state of affairs has not been challenged by those who are supposed to provide stewardship, including many prominent academics. The US health care system is the most expensive, on a per capita basis, in the world, and far more expensive than that in any other developed country.  Yet there is no evidence that its results are superior to those of other countries.  What evidence there is suggests in fact that our results are mediocre at best. The current example suggests how the US system differs from those of other countries.  It has an ostensible free market focus.  Yet the system appears more to be an oligopoly, with most of its market components dominated by a few large organizations, run as an oligarchy, by a small, overlapping in-group of managers, executives and their cronies, with elements of corporatism, that is with the cooperation of, rather than regulation by government entities and leaders A real free market health care system would include a level playing field.  This could only be achieved by the government acting as a fair umpire, not a crony.  Anti-competitive practices would have to end.  Oligopolies would have to be broken.  Deceptive marketing and public relations would have to be exposed.  Leaders would have to be made accountable, especially for putting patients' and the public's health ahead of their own enrichment.  All this would be horribly difficult, as the oligarchs have amassed much money and control, and would oppose, possibly violently, any effort to challenge them.  If we do not challenge them in the US, however, not only will our health care continue to become ever more expensive, less accessible, and less beneficial to patients, but we will all cease to be citizens of one of the first real democracies, and end up serfs instead.

Planned Obsolescence Disguised as Innovation, Oligopoly Disguised as a Free Market, and the Enrichment of Oligarchs

The New York Times published another article in its series on the high cost of US health care. This one, focused on the care of type 1 di...

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Finally, An Article in a Large Circulation Medical Journal with Systematic Data about Leaders of Academic Medicine Conflicted by their Service on Health Care Corporate Boards

Background - a New Species of Conflict of Interest Since <a href="http://hcrenewal.blogspot.com/2006/03/new-species-of-conflict-of-interest-in.html">2006</a>, we have posted repeatedly about  what was then a new species of severe <a href="http://hcrenewal.blogspot.com/search/label/conflicts%20of%20interest">conflicts of interest</a>.  This occurs when leaders of academic medical institutions or other health care non-profit organizations or non-governmental organizations (NGOs) also serve as members of <a href="http://hcrenewal.blogspot.com/search/label/boards%20of%20directors">boards of directors</a> of for-profit corporations  whose products and actions have major effects on health care. Most recently, we <a href="http://hcrenewal.blogspot.com/2014/03/american-board-of-internal-medicine.html">discussed </a>the cases of the current CEO of the National Quality Forum and past CEO of the American Board of Internal Medicine who was found to be on the board of for-profit hospital group purchasing organization Premier Inc, and had been on the board of its privately held but for-profit predecessors.  We then <a href="http://hcrenewal.blogspot.com/2014/02/incoming-president-of-iom-outed-as.html">discussed</a> the case of the incoming president of the US Institute of Medicine and former Chancellor of Health Affairs at Duke University who was on the boards of Alnylam Pharmaceuticals, Medtronic and Pepsico.  We next <a href="http://hcrenewal.blogspot.com/2014/03/turnabout-is-fair-play-why-university.html">discussed</a> the case of the current Dean of medicine at the University of Illinois who is on the board of Novartis.  We also recently <a href="http://hcrenewal.blogspot.com/2014/03/better-late-than-never-jama-article.html">posted</a> about the first time these sorts of severe conflicts of interest issue have been addressed in a large circulation medical journal.  A commentary in JAMA called for many such conflicts to be banned. A Small Study of the Prevalence of a New Species of Conflict of Interest Now JAMA has just published a research letter which examined the prevalence of board members of large, for-profit, publicly held pharmaceutical companies who also were among the leadership of academic medical centers. [Anderson TS, Dave S, Good CB et al. Academic medical center leadership on pharmaceutical company boards of directors.  JAMA 2014; 311: 1353-5.  Link <a href="http://jama.jamanetwork.com/article.aspx?articleid=1853147">here</a>.] The authors looked at public data about 2012 board membership of the 47 biggest publicly held companies based on global prescription drug sales. They tabulated those who were also leaders at (apparently only US) academic medical centers.  The most important findings were: - 19/47 companies (40%) had at least one board member who was a leader of an academic medical center (AMC) - 16/17 US based companies had at least one board member who was also a leader of a US AMC -  pharmaceutical company board members included 2 university presidents, 6 deans of medicine, 6 hospital or health system executives, 7 clinical department chairs or center directors -  28 board members were also members of boards of trustees or directors of US hospitals, medical schools, or their parent universities. Comments We have been trying to raise awareness of this issue since 2006.  Now we have some idea of the size of the problem. Keep in mind that this study did not attempt to determine the prevalence of academic medical center leaders on boards of smaller pharmaceutical companies, privately held companies, biotechnology or device companies, or other health care and health care related companies (e.g., for-profit hospital systems, health insurance companies, for-profit contract research organizations, for-profit medical education and communication companies, large companies with major health care components, etc, etc, etc)  It also did not attempt to determine the prevalence of leaders of other important health care non-profit organizations (e.g., hospitals and hospital systems, insurance companies, professional societies, patient advocacy groups, accrediting boards, etc, etc, etc) on health care or related corporate boards.  It also did not address leaders of health care organizations outside of the US.  So this study likely greatly underestimates the overall prevalence of and the number of people involved in what we first called a "new species of conflict of interest." But it is a start.  And publishing it in JAMA will begin to make more health care professionals, policy makers, and researchers, and more of the public at large aware of the problem. As I said before, it is very nice to see that the issue of what we once called a new species of conflict of interest finally has made the big time.  Whether it now gets any more traction remains to be seen.  Unfortunately, since conflicts of interest can be so profitable for the directly affected parties, I fully expect they will continue to oppose any restrictions.  The money they have made will likely be used to deploy marketing and public relations personnel and legal counsel to counter any attempts to try to make this aspect of health care more honest. As we have said again and again, the web of conflicts of interest that is pervasive in medicine and health care is now threatening to strangle medicine and health care.  Furthermore, this web is now strong enough to have effectively transformed US health care into an oligarchy or plutocracy.  Health care is effectively run by a relatively small group of people, mainly professional managers plus a few (lapsed?) health care professionals, who simultaneously run or influence multiple corporations and organizations. For patients and the public to trust health care professionals and health care organizations, they need to know that these individuals and organizations are putting patients' and the public's health ahead of private gain. Health care professionals who care for patients, those who teach about medicine and health care, clinical researchers, and those who make medical and health care policy should do so free from conflicts of interest that might inhibit their abilities to put patients and the public's health first. Health care professionals ought to make it their highest priority to ensure that the organizations for which they work, or with which they interact also put patients' and the public's health ahead of private gain, especially the private gain of the organizations' leaders and their cronies. ADDENDUM (3 April, 2014) - see also comments by Paul Levy <a href="http://runningahospital.blogspot.com/2014/04/how-not-to-set-example.html">on the Not Running a Hospital blog</a>, <a href="http://1boringoldman.com/index.php/2014/04/01/at-first-glance/">on the 1BoringOldMan blog</a>, and by Ed Silverman (welcome back!) on <a href="http://blogs.wsj.com/corporate-intelligence/2014/04/01/why-people-who-influence-reseach-are-popular-in-pharma-boardrooms/">the WSJ Corporate Intelligence blog</a>.

Finally, An Article in a Large Circulation Medical Journal with Systematic Data about Leaders of Academic Medicine Conflicted by their Service on Health Care Corporate Boards

Background - a New Species of Conflict of Interest Since 2006 , we have posted repeatedly about what was then a new species of severe conf...

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No Fooling - When a Retired Conservative Politician Warns About Oligarchy...

then things must be getting really bad. Of course, we have been warning about <a href="http://hcrenewal.blogspot.com/search/label/oligarchy">oligarchy</a>, and related issues such as <a href="http://hcrenewal.blogspot.com/search/label/concentration%20of%20power">concentration of power</a>, <a href="http://hcrenewal.blogspot.com/search/label/oligopoly">oligopoly</a>  in health care for a long time.  Basically, we have been warning that health care is increasingly run by a small group of insiders, mostly professional managers/ executives, and their cronies, who often have multiple overlapping leadership positions (e.g., as we <a href="http://hcrenewal.blogspot.com/2014/03/better-late-than-never-jama-article.html">discussed</a> recently, leadership of one health care organization while being member of the board of another), or may interchange positions through the <a href="http://hcrenewal.blogspot.com/search/label/revolving%20doors">revolving door</a>.  It appears that this pattern is merely part of a larger one involving US and even global society. While warnings about the growing threat of oligarchy or plutocracy have mainly come from people (including your loyal Health Care Renewal bloggers) who might be regarded as out of the mainstream, that is changing. We have a striking local example. David Carlin is a former Majority Leader of the Rhode Island Senate.  While he is a Democrat, he could hardly be called a flaming leftist.  He just published an <a href="http://www.providencejournal.com/opinion/commentary/20140401-david-carlin-is-it-oligarchy-in-democracy-out.ece">op-ed</a> in the Providence Journal which opened, <blockquote class="tr_bq">I am not a leftist. Far from it. Not only have I become a conservative in my old age, but I find myself growing more conservative every month.</blockquote> He then went on, <blockquote class="tr_bq"> Nonetheless, I think those on the left are correct about one thing, at least. They are right when they warn us that the United States, where the top 1 percent of people own about 40 percent of the nation’s wealth, has a dangerous imbalance of wealth. Please don’t misunderstand. I am far from agreeing with the leftist notion that the ideal society would be one in which wealth is equally distributed. This is absurd. Nonetheless, this great inequality of wealth is dangerous for America. For it is making the United States less and less a democracy (a form of government in which the people rule) and more and more an oligarchy (a form of government in which a small number of very rich people rule).</blockquote> He did propose a specific remedy for the problem.  However, he did warn of the consequences in dire terms. <blockquote class="tr_bq">in the United States we have a special problem. For we are and always have been philosophically democratic. We believe that government is legitimate to the degree — and only to the degree — that it is chosen by the people. When we conclude that in reality our government is controlled by the rich and super-rich, not the people, we will experience a great legitimacy crisis; our government will no longer feel legitimate to us, and thus it will not receive the deference that legitimate authority is entitled to. Lawlessness and disorder will follow.</blockquote> That is pretty strong, and when people like Mr Carlin start making such strong warnings, things must be really bad. In my humble opinion, there are already plenty of reasons to have doubts about whether the ostensible authorities in health care are legitimate.  Just to mention some recent examples: we have discussed how the leaders of two major prestigious non-profit health care organizations (look <a href="http://hcrenewal.blogspot.com/2014/02/incoming-president-of-iom-outed-as.html">here</a> and <a href="http://hcrenewal.blogspot.com/2014/03/american-board-of-internal-medicine.html">here</a>) and one major medical school (look <a href="http://hcrenewal.blogspot.com/2014/03/turnabout-is-fair-play-why-university.html">here</a>) were revealed to simultaneously be responsible for the governance of for-profit health care organizations, some of which had clear track records of ethical misadventures which cast doubt on the abilities of these leaders to uphold their organizations' missions.  Two of the three leaders subsequently dropped their outside board memberships, but not their leadership positions, and their previous actions in those positions have not been revisited. In health care, if we do not re-establish leadership which is accountable for putting the health of patients and the public ahead of self-interest, the deluge will not be far behind.

No Fooling - When a Retired Conservative Politician Warns About Oligarchy...

then things must be getting really bad. Of course, we have been warning about oligarchy , and related issues such as concentration of power ...

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Three Facets of One Hospital: Coddling the Rich, Hounding the Poor, and Crooked Executives

Juxtaposing three news stories from the past few months raises disturbing questions about the priorities of the leaders of one of the US' more prestigious hospitals. "Chefs, Butlers, Marble Baths: Hospitals Vie for the Affluent"  This 21 January, 2012 <a href="http://www.nytimes.com/2012/01/22/nyregion/chefs-butlers-and-marble-baths-not-your-average-hospital-room.html">article </a>from the New York Times focused on the ritzy comforts now provided for wealthy (but perhaps not very sick) patients at the renowned New York Presbyterian/ Weill Cornell Hospital.  It opened, <blockquote>The feverish patient had spent hours in a crowded emergency room. When she opened her eyes in her Manhattan hospital room last winter, she recalled later, she wondered if she could be hallucinating: 'This is like the Four Seasons — where am I?' The bed linens were by Frette, Italian purveyors of high-thread-count sheets to popes and princes. The bathroom gleamed with polished marble. Huge windows displayed panoramic East River views. And in the hush of her $2,400 suite, a man in a black vest and tie proffered an elaborate menu and told her, 'I’ll be your butler.' It was Greenberg 14 South, the elite wing on the new penthouse floor of NewYork-Presbyterian/Weill Cornell hospital. Pampering and décor to rival a grand hotel, if not a Downton Abbey, have long been the hallmark of such 'amenities units,' often hidden behind closed doors at New York’s premier hospitals. But the phenomenon is escalating here and around the country, health care design specialists say, part of an international competition for wealthy patients willing to pay extra, even as the federal government cuts back hospital reimbursement in pursuit of a more universal and affordable American medical system. </blockquote> Additional amenities include: <blockquote>A waterfall, a grand piano and the image of a giant orchid grace the soaring ninth floor atrium....</blockquote> Also, <blockquote>the visitors’ lounge seems to hang over the East River in a glass prow and Ciao Bella gelato is available on demand....</blockquote> An architect who specializes in designing such luxury facilities for hospitals noted: <blockquote>'These kinds of patients, they’re paying cash — they’re the best kind of patient to have,' she added. 'Theoretically, it trickles down.' </blockquote> Note that the article also mentioned other hospitals which offered similar luxuries, including Johns Hopkins Hospital in Baltimore, Cedars-Sinai Medical Center in Los Angeles, and Mount Sinai Medical Center in New York. On the other hand,.... Hounding the Poor for Payment While Getting Government Money for Indigent Care On 12 February, the New York Times published an <a href="http://www.nytimes.com/2012/02/13/nyregion/study-finds-new-york-hospitals-flout-charity-rules.html">article</a> about how New York Presbyterian/ Weill Cornell deals with patients with fewer resources than those discussed above: <blockquote>For most of her life, Hope Rubel was a healthy woman with good medical insurance, an unblemished credit history and a solid career in graphic design. But on the day an ambulance rushed her to a Manhattan hospital emergency room shortly after her 48th birthday, she was jobless, uninsured and having a stroke. Ms. Rubel’s medical problem was rare, a result of a benign tumor on her adrenal gland, but the financial consequences were not unusual. She depleted her savings to pay $17,000 for surgery to remove the tumor, and then watched, 'emotionally paralyzed,' she said, as $88,000 in additional hospital bills poured in. Eventually the hospital sued her for the money. Yet that year the hospital, NewYork-Presbyterian/Weill Cornell, had already collected $50.2 million from the state’s so-called Indigent Care Pool to help care for people like Ms. Rubel who have no insurance and cannot pay their bills. </blockquote> Note that the article also included other New York hospitals that allegedly used aggressive collection tactics on poor patients even though they too collected government money for indigent care. These included NYU Langone Medical Center and State University of New York Downstate Medical Center. And one more... Kickbacks for Hospital Executives For some reason, the only media coverage of this story was not in New York, but <a href="http://articles.philly.com/2012-02-13/news/31054958_1_kickbacks-philadelphia-developer-hospital-employees">by the Philadelphia Inquirer </a>on 13 February, 2012. <blockquote>The FBI said that ... [Michael Yaron] he received asbestos-removal and construction contracts at New York Presbyterian Hospital for two of his companies, Cambridge Environmental & Construction Corp. and Oxford Construction & Development Corp., because he paid about $2.3 million in kickbacks starting in 2000. Neither Yaron, a resident of Meadowbrook, Montgomery County, nor his attorneys could be reached for comment yesterday. No one answered at Yaron Properties, his offices on Arch Street in Old City. Bucks County native Moshe Buchnik, a president of two asbestos-abatement companies, was also convicted after the four-week trial. Santo Saglimbeni, a former vice president of facilities operations at the hospital, and Emilio 'Tony' Figueroa, a former director of facilities operations at the hospital, were also convicted. The FBI said the two former hospital employees steered contracts to Yaron and Buchnik in exchange for the kickbacks.</blockquote> The Inquirer apparently covered the story because Yaron lives in Philadelphia. Thus it treated the convictions of a former vice president and former director of facilities operations at New York Presbyterian/ Weill Cornell Hospital as afterthoughts. Summary Thus, in the last six weeks, we have been treated to stories that showed how New York Presbyterian/ Weill Cornell Hospital has devoted substantial resources to create luxury suites for rich patients, presumably because they may pay cash; while simultaneously hounding poor patients who could not pay their large medical bills, even though the hospital was receiving government funds for indigent care; and until recently was employing some executives now shown to have abused their authority. The themes of the three individual stories should be familiar. The first story was a reminder that the very rich are different from you and me in how they interact with the health care system. In many ways, the rich and powerful - some might call them the one percent - are personally protected from various aspects of health care dysfunction. For example, <a href="http://hcrenewal.blogspot.com/search/label/executive%20health%20plans">here</a> we have discussed how wealthy executives seem to be able to obtain health insurance with benefits unheard of by the more common folk, and <a href="http://hcrenewal.blogspot.com/2011/10/how-rich-and-influential-get-health.html">here</a> we discussed how the wealthy and influential may get preferential hospital treatment. Thus, even one percenters who are not otherwise involved in health care may not be inclined to lend their support to any efforts to really reform the system. Aggressive bill collection practices by hospitals which are supposed to serve the poor are also old news. We first <a href="http://hcrenewal.blogspot.com/2004/12/money-trumps-mission.html">discussed</a> such practices occurring in New York City in 2004 - yes, this blog is that old. We also <a href="http://hcrenewal.blogspot.com/2008/12/suing-poor-patients-in-maryland.html">discussed</a> such practices in Baltimore in 2008. Such practices are an example of <a href="http://hcrenewal.blogspot.com/search/label/mission-hostile%20management">mission-hostile management</a>. Finally, we have commented many times about misbehavior by health care executives, and discussed examples of <a href="http://hcrenewal.blogspot.com/search/label/fraud">fraud</a>, <a href="http://hcrenewal.blogspot.com/search/label/kickbacks">kickbacks</a>, and <a href="http://hcrenewal.blogspot.com/search/label/health%20care%20corruption">health care corruption</a>. It has been unusual, however, for individual executives to actually suffer negative consequences when they induce systemic misbehavior in their organizations. Instead, the results are often <a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements">legal settlements</a> that only lead to financial penalties on the organizations that are no more than costs of doing business. However, the juxtaposition of stories that a hospital has been coddling the rich, and simultaneously hounding the poor while it was lead by at least a few criminal executives is unusual. One would think that they should lead to an in-depth look at the leadership and governance of the institution in question, perhaps even to some reform of same. (By the way, one area of interest to such an investigation should be the presence of several former and current leaders of some of the failed financial firms that lead us into the global financial crisis or great recession on the board of that hospital, as we discussed <a href="http://hcrenewal.blogspot.com/2012/01/new-york-presbyterian-hospital-trustee.html">here</a> and <a href="http://hcrenewal.blogspot.com/2009/12/with-leaders-like-these.html">here</a>.) However, so far I seem to be only one to note the inter-relationships of these stories, and their implications, while obvious, therefore remain anechoic. So I get to repeat.... Health care organizations need leadership that understands, and knowledgeably upholds the organizations' missions and patients and the public's health. The leaders should be subject to incentives that align with these responsibilities, and should not be given opportunities to personally profit from activities hostile to the mission.

Three Facets of One Hospital: Coddling the Rich, Hounding the Poor, and Crooked Executives

Juxtaposing three news stories from the past few months raises disturbing questions about the priorities of the leaders of one of the US...

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Unequal Justice Under Law - Comparing Cases of Alleged Misbehavior by Large Health Care Organizations and Individuals

How the wealthy and powerful have become able to play by a different set of rules than those affecting ordinary people may be the defining issue of our time.  Yesterday, President Obama's State of the Union message asked for an economy in which "everyone plays by the same set of rule."  We posted about how this issue, which got national attention due to the Occupy movement, affects health care <a href="http://hcrenewal.blogspot.com/2011/11/health-care-also-needs-to-challenge.html">here</a>. We have previously posted again and again about how the penalties for misbehavior by large US health care organizations seem to be so minimal as to be incapable of deterring future bad behavior (e.g., see <a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements">posts</a> about legal settlements).  At most, corporations often pay fines that are no more than a cost of doing business.  They rarely have to admit guilt, and when they do, it is usually to a relatively trivial charge.  The people who authorized, directed, or implemented the bad behavior almost never suffer any negative consequences.  Thus, the leaders of large US health care organizations seem to have <a href="http://hcrenewal.blogspot.com/search/label/impunity">impunity</a>. Similar complaints have been made about the lack of accountability of the leaders of the finance firms that lead us into the global financial crisis, or great recession.  However, while I have reviewed now hundreds of stories about such minimal organizational punishments, I have also seen hundreds of stories discovered by my automatic news searches of much more severe penalties paid by individuals who have been accused of similar misbehavior.  I have never previously made an explicit comparison of how health care corporate and individual misbehavior are handled. A recent set of examples of organizational misbehavior invites such a comparison.  Here they are, in chronological order. KV Pharmaceutical On December 6, 2011, the St Louis Post Dispatch <a href="http://www.stltoday.com/business/local/kv-pharmaceutical-agrees-to-million-settlement-with-doj/article_3c947aee-2054-11e1-8c50-001a4bcf6878.html">reported</a>: <blockquote>KV Pharmaceutical Co. has agreed to pay $17 million to federal and state authorities to settle Justice Department allegations that it defrauded federal health care programs. The settlement resolves allegations that KV, as the Bridgeton-based parent company of now-defunct Ethex Corp., misrepresented the regulatory status of two of its drugs that did not qualify for coverage under federal health care programs, the Justice Department said today. The Justice Department alleges that Ethex submitted false quarterly reports to the federal Centers for Medicare and Medicaid Services related to the two drugs: nitroglycerin extended release capsules and hyoscyamine sulfate extended release capsules.</blockquote> Company leadership made the usual sort of comment. CEO Greg Divis said: <blockquote>The closure of this matter is another step forward as KV moves ahead as a women's healthcare focused branded specialty pharmaceutical company.</blockquote>Corporate leaders seem to love putting such unpleasantness in the past and moving on, especially when they personally are not held accountable for the previous misbehvior. Note that this is just the latest settlement for KV Pharmaceutical: <blockquote>KV shut down Ethex after the subsidiary pleaded guilty in March 2010 to two felony counts of criminal fraud for failing to report to the Food and Drug Administration that it was making oversize drugs - and drew $27.6 million in fines and restitution.</blockquote> Catholic Healthcare West, Sutter Health On December 8, the Sacramento Bee <a href="http://www.sacbee.com/2011/12/08/4107855/chw-sutter-pay-23-million-to-settle.html">reported</a>: <blockquote>Two of Sacramento's biggest health care players paid a combined $2.3 million to the federal government to settle allegations that 61 of their hospitals double-billed Medicare for therapies and services, U.S. Department of Justice officials announced Wednesday. Catholic Healthcare West paid more than $875,000 and Sutter Health nearly twice that – more than $1.43 million – for alleged duplicate charges for infusion therapies and treatments to break up kidney and bladder stones, in what Lauren Horwood, a spokeswoman in the Sacramento U.S. attorney's office, called 'a significant settlement.'</blockquote> As usual, <blockquote>Officials at the two health networks admitted no wrongdoing in agreeing to the settlement, Horwood said. No charges will be filed.</blockquote> Again, however, this was not the first such issue to affect these large non-profit organizations: <blockquote>In 2006, Sutter Health agreed to grant discounts and refunds to uninsured patients the network was accused of overcharging, stemming from a 2004 class-action lawsuit.</blockquote> Blue Shield (California) On December 29, 2011, the Los Angeles Times <a href="http://articles.latimes.com/2011/dec/29/local/la-me-blue-shield-20111229">reported</a>: <blockquote>More than a year after the healthcare reform law sought to prevent sick patients from losing medical coverage, insurers are still paying for their alleged abuses. Blue Shield has agreed to pay $2 million to resolve accusations that the company improperly dropped policyholders after they got sick and needed expensive treatment. The settlement, announced Wednesday by Los Angeles City Atty. Carmen Trutanich, ends an investigation into more than 1,000 so-called rescissions by Blue Shield, a San Francisco-based not-for-profit company.</blockquote> As usual, there was no admission of guilt, and a company spokesperson claimed that while the company decided to pay out the money in response to the allegations, it, of course, was blameless: <blockquote>Blue Shield spokesman Steve Shivinsky said the firm settled to avoid litigation. 'Our process meets or exceeds all legal and regulatory requirements,' Shivinsky said in a statement. 'In every instance, we provide immediate notice, ensure multiple layers of review, involve a medical director in the decision, give members an opportunity to provide additional information before we take any action, and follow the guidance of an independent third party review.'</blockquote> Note that rescission is now against US federal law: <blockquote>President Obama made rescission a central theme in his push for a healthcare overhaul. In September 2010, a ban on rescissions for unintentional application errors became one of the first pieces of the healthcare law to take effect.</blockquote> GE Healthcare On December 29, 2011, the Detroit Free Press reported (<a href="http://www.usatoday.com/money/industries/health/story/2011-12-29/ge-healthcare-settlement-30-million-dollars/52268818/1">via</a> USA Today): <blockquote>Pharmaceutical giant GE Healthcare will pay $30 million to the U.S. Department of Justice to settle claims in a case filed by a Michigan salesman, alleging one of its companies marketed a diagnostic drug used in cardiology tests as one that could be diluted and stretched to more patients than intended.</blockquote> Not surprisingly, <blockquote>GE admitted no wrongdoing in the settlement. </blockquote> This was despite the fact that the actions alleged may have harmed patients as well as defrauding the government: <blockquote>For patients, the diluted product resulted in more false positives during cardiology tests and exposed them to additional and unnecessary testing....</blockquote>We have <a href="http://hcrenewal.blogspot.com/search/label/General%20Electric">posted previously</a> about some previous questionable behavior by GE in the health care sphere. Actavis On January 3, 2012, Bloomberg <a href="http://www.businessweek.com/news/2012-01-03/actavis-to-pay-84-million-to-end-medicaid-drug-pricing-suit.html">reported</a>: <blockquote>Two units of Actavis Group Hf will pay $84 million to settle a lawsuit over drug pricing, Texas officials said, less than half the amount an Austin jury said the company should pay. The state accused Actavis Mid-Atlantic LLC and Actavis Elizabeth LLC, subsidiaries of the Iceland-based company’s U.S. division, of inflating billings to the Texas Medicaid program by falsely reporting drug prices. The state court jury in February ordered the units to pay the state $170 million. The settlement resolves that litigation, Texas Attorney General Greg Abbott said today in a statement.</blockquote> Note that Medicaid is a joint federal-state insurance program for the poor. The company's statement had a familiar ring to it: <blockquote>'Actavis denies any and all wrongdoing, and denies that it has any liability relating to the Texas judgment,' the company and the state said in the settlement agreement. The parties reached a settlement 'to avoid the delay, uncertainty, inconvenience and expense of continuing the litigation.'</blockquote> Nothing to see here, just move along. Denver Health Medical Center On January 5, 2012, the Denver Post <a href="http://www.denverpost.com/breakingnews/ci_19680861">reported</a>: <blockquote>Denver Health Medical Center will pay $6.3 million to federal and state officials for overbilling Medicare and Medicaid, state and U.S. attorneys said. After investigating a whistleblower's lawsuit, government officials said Denver Health was classifying patients with an "inpatient" status when it should have been listing them as 'outpatient' or under 'observation' status, which paid less under government rules.</blockquote> Oops, missing from this story was the pro forma denial of blame, wrongdoing, misconduct by organizational leadership. However, the Denver Business Journal was <a href="http://www.bizjournals.com/denver/news/2012/01/05/denver-health-settles-medicare.html">able to add that</a>: <blockquote>Denver Health, in a statement, said it and the government agreed to the settlement to avoid 'protracted litigation' over the allegations. It did not admit guilt in agreeing to the settlement.</blockquote> Of course, again despite having to pay millions, the organization asserted that it is fine and upstanding: <blockquote>'Denver Health has, and will continue to, strive to ensure that its billing systems are accurate,' the hospital said in a statement, adding that the hospital has implemented a system to correct and improve billing accuracy.</blockquote> Whoever wrote the statement seemed to overlook the implication that flowed from the need to "correct" the system. CVS Caremark On January 12, 2012, the Baltimore Sun <a href="http://articles.baltimoresun.com/2012-01-12/business/bal-consuming-interests-cvs-caremark-settles-deceptive-pricing-charge-for-5-million-20120112_1_cvs-caremark-drug-pricing-information-drug-plan">reported</a>: <blockquote>The Federal Trade Commission announced that CVS Caremark Corp. agreed to pay $5 million to settle a complaint that it misinformed seniors about the price of certain Medicare Part D prescription drugs sold through CVS and Walgreens pharmacies. The action by the company, according to the FTC, caused seniors and consumers with disabilities to pay significantly more for drugs. It also pushed them more quickly into the so-called 'doughnut hole,' in which drug costs aren’t covered by the federal program.</blockquote> Despite its multimillion dollar payment, the company admitted no guilt, of course, and asserted its exemplary corporate citizenship: <blockquote>CVS Caremark released a statement: 'During the course of this two year investigation, our company cooperated fully with the FTC and provided to the government millions of documents as well as access to numerous members of our management team who participated in voluntary interviews and depositions,' said Douglas A. Sgarro, Executive Vice President and Chief Legal Officer of CVS Caremark.</blockquote> He also took comfort from the fact that there were not even more charges: <blockquote>It is important to note that, at the conclusion of this comprehensive investigation, the FTC made no allegations of antitrust law violations or anti-competitive behavior associated with any of our business practices, products or service offerings.</blockquote> Stryker Corp On January 18, 2012, Bloomberg <a href="http://www.bloomberg.com/news/2012-01-18/stryker-biotech-pleads-guilty-to-misbranding-charge-pays-15-million-fine.html">reported</a>: <blockquote>A Stryker Corp. (SYK) unit agreed to plead guilty and pay a $15 million fine while the medical-device maker was on trial on charges it marketed an unapproved mixture of products for strengthening human bone growth. The unit, Stryker Biotech, and three Stryker sales representatives were on trial in federal court in Boston on a 13-count criminal indictment claiming conspiracy and wire fraud. The trial began Jan. 9 with jury selection. Stryker Biotech agreed to plead to one misdemeanor count of misbranding a medical device, according to a letter dated yesterday from the U.S. Attorney’s Office in Boston and filed with the federal court. </blockquote> This did involve an admission of guilt, but to what amounts to a financial violation when there were allegations that patients may have been harmed: <blockquote>The U.S. had charged Stryker Biotech with misbranding and its sales force with conspiring to defraud surgeons into combining the company’s OP-1 and OP-1 Putty with the bone filler Calstrux. Some patients suffered adverse side effects and required more surgery, the U.S. said. 'That mixture was never studied clinically,' Assistant U.S. Attorney Susan Winkler told the jury in her opening statement on Jan. 12. 'They did not know if it worked. They did not know if it was safe, and they marketed it to doctors anyway.' </blockquote> Interval Summary We have presented eight cases in which  major US health care organizations settled cases involving allegations of financial gain under false pretenses. Nearly all involved US federal charges, and the others included alleged misbehavior that affected a federal program or that now would be illegal under federal law. All the cases were resolved with fines over $1 million. However, while these fines may seem big to most people, they were trivial compared to the revenues of the organizations. None of the settlements involved any penalties to actual people who authorized, directed, or implemented the misbehavior. No individuals at any of the involved organizations admitted any mistakes, much less wrong doing. While the volume of such settlements indicates the prevalence of misbehavior by large health care organizations, it is not clear that their results, which amount to slaps on corporate wrists, have any deterrent effect. In comparison, see what happens when little people obtain money from the government under false pretenses. I found a convenience sample of such cases reported in the last month through a Google search. Vasquez On January 9, the San Francisco Chronicle <a href="http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2012/01/09/state/n193158S68.DTL">reported</a>: <blockquote>A Los Angeles woman who pleaded guilty to committing $6.2 million in Medicare fraud has been sentenced to 5 years in prison. Federal Health and Human Services officials say 47-year-old Carolyn Ann Vasquez has also been ordered to pay $6.2 million in restitution. Vasquez admitted to conspiring with others to use a series of fraudulent Los Angeles-area medical clinics to defraud the federal health care insurance program for people over age 65 and the disabled. Between 2007 and 2008, Vasquez obtained a physician's personal information and Medicare provider number and used it to print prescription pads. She then had a physician's assistant, David Garrison, write fraudulent prescriptions for pricey medical equipment.</blockquote> Curtis On January 7, 2012, the [Jacksonville] Florida Times-Union <a href="http://jacksonville.com/news/georgia/2012-01-07/story/leader-medicare-fraud-scheme-gets-3-years-6-months-prison">reported</a>: <blockquote>A federal judge sentenced the would-be owner of a Brunswick prosthetic business to three years and six months in prison for his organization and leadership of a scheme that defrauded Medicare of more than $250,000.</blockquote> Also, <blockquote>In addition to prison, Wood sentenced Curtis to repay $254,750.94 to Health and Human Services and serve three years’ probation. She dismissed eight other counts as part of his plea agreement.</blockquote> In stark contrast to the stories above about cases of fraud involving large health care organizations: <blockquote>Samuel Curtis III, who had submitted false claims from Preferred Prosthetics and Orthotics in Brunswick and Team Orthotics and Prosthetics of Houston, had pleaded guilty in July to conspiring to commit health care fraud. Curtis, 38, apologized and asked U.S. District Judge Lisa Godbey Wood for leniency during his sentencing hearing Friday.</blockquote> Popov On January 12, 2012, the Sacramento Bee <a href="http://blogs.sacbee.com/crime/archives/2012/01/doctor-posing-as-sacramento-clinic-owner-sentenced-in-scam.html">reported</a>: <blockquote>A Los Angeles physician who assumed the role as co-owner of a Sacramento medical clinic has been sentenced to federal prison for his participation in a Medicare fraud scam. Alexander Popov, 47, was sentenced today by U.S. District Judge Morrison C.England Jr. to eight years and one month in prison for committing health care fraud and conspiring to commit health care fraud, according to a federal Department of Justice news release. He was found guilty by a jury in July. In sentencing, Judge England found that Popov was responsible for more than a million dollars in fraudulent billings submitted to Medicare and more than $600,000 in payments made on false claims. Evidence at trial showed that Popov gave false testimony and manufactured evidence at trial, amounting to an obstruction of justice, officials said.</blockquote> Also, <blockquote>Vardges Egiazarian previously pleaded guilty in the case and is serving 78 months in prison. </blockquote> Applebaum On January 20, 2012, Medscape <a href="http://www.medscape.com/viewarticle/757251">reported</a>: <blockquote>A former Idaho psychiatrist was ordered to pay nearly $95,000 in a legal judgment this week, adding to a prison sentence of up to 5 years, which he received in November for obstruction and falsifying records relating to Medicaid fraud. The judgment, obtained by the US Attorney's Office against Michael Applebaum, MD, of Nampa, Idaho, involved a civil lawsuit in which he was accused of submitting false Medicare and Medicaid claims for undocumented and ineligible services from 2004 through 2009. Prosecutors claimed Dr. Applebaum failed to properly document services for approximately 502 claims, including falsifying service dates on 49 claims to make them appear eligible for reimbursement under Medicaid's rule of submitting claims within 12 months of the date of service.</blockquote> Summary As we noted above, if a large organization, such as a hospital system, pharmaceutical company, or health insurance company is accused of fraud against the government, the outcome is likely to be a large fine that is nonetheless small compared with the organization's revenue, no admission of guilt or responsibility, and no penalties for any individuals who authorized, directed or implemented the misbehavior. However, if an individual or small business is accused of such fraud, the results are likely to include fines sufficient to bankrupt either, admissions of guilt, and years of jail time. Yet such actions by large organizations are likely to be more harmful to individuals and society than those of individuals or small businesses. This seems like a glaring, stark example of unequal justice in health care. If an individual does something bad in a health care context, the punishment is likely to be severe and life altering. If an individual who is a leader of a large health care organization does something equally bad, he or she is likely to receive no punishment at all. This is an example that ought to unite the left and the right, liberals and libertarians in outrage. Liberals are supposed to believe in the rights of the individual and economic justice. Libertarians are supposed to believe in economic freedom and the economic rights of the individual. In this example, the government and large corporations seem to have gotten together to let corporate leaders play by different rules than individuals. Corporate leaders seem to be above the law, the same law that can ruin individuals who violate it. If we really want to reform health care, we need to make sure that its rules apply equally to all individuals, whether humble or rich, whether they are individual professionals of corporate CEOs. As long as the rich and powerful can play by different rules, we only fuel cynicism and anger. Down that road lies disaster.

Unequal Justice Under Law - Comparing Cases of Alleged Misbehavior by Large Health Care Organizations and Individuals

How the wealthy and powerful have become able to play by a different set of rules than those affecting ordinary people may be the defining i...

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Health Care Also Needs to Challenge "Crony Capitalism," the "New Gilded Age, and "the Idolatry of the Market"

The increasing size and scope of the "Occupy Wall Street" movement, and continuing instability in the finance system, most recently due to the threatened default of Greece, and resulting problems with the Euro, and now the bankruptcy of yet another prominent financial firm, MF Global, has lead to renewed discussion of what has gone wrong with the greater political economy. As I have perused some of it, I noted distinct parallels with the some of the discussion we have had about what has gone wrong with health care.  In fact, at the root of health care dysfunction appear to be the dysfunction of the greater political economy. Few in the One Percent Deserved the Money A dominant slogan of the "Occupy" movement is "we are the 99 percent," that is <blockquote>'We are the 99 percent,' is the continuing chant of the protesters, who are now in their seventh week of marching through the streets of Manhattan. And, surprisingly, they have hit upon the crux of America's problems with precisely this sentence. Indeed, they have given shape to a development in the country that has been growing more acute for decades, one that numerous academics and experts have tried to analyze elsewhere in lengthy books and essays. It's a development so profound and revolutionary that it has shaken the world's most powerful nation to its core. Inequality in America is greater than it has been in almost a century. Those fortunate enough to belong to the 1 percent, made up of the super-rich, stand on one side of the divide; the remaining 99 percent on the other. Even for a country that has always accepted opposite extremes as part of its identity, the chasm has simply grown too vast.</blockquote>[Schulz T] The One Percent are Mostly Salaried Corporate Executives Contrary to some propaganda, many in the one percent are not entrepreneurs, but corporate employees, albeit special ones. <blockquote>Also cited as factors contributing to the rapid growth of income at the top were the structure of executive compensation....</blockquote>[Pear R] In Health Care - We have frequently discussed the outsized compensation given to a few top executives. CEOs of for-profit health care corporations may make tens of millions of dollars a year (<a href="http://hcrenewal.blogspot.com/2011/10/peer-benchmarking-lake-wobegone-effect.html">here</a> is a recent example, and many similar stories can be found <a href="http://hcrenewal.blogspot.com/search/label/executive%20compensation">here</a>.) Even CEOs of non-profit hospital systems can make millions of dollars a year. (See <a href="http://hcrenewal.blogspot.com/2011/09/highly-paid-skilled-executives-and.html">this recent example</a>, then go <a href="http://hcrenewal.blogspot.com/search/label/executive%20compensation">here</a> for more.) Thus, a fair number of the one percent are likely to be from health care, and most of those at the top are likely to be current or former top hired executives. The One Percent's Wealth May be More Due to Luck than Skill, Intelligence, or Creativity According to a recent simulation study, <blockquote>by the 'inexorable effect of chance,' and chance alone, 'a small proportion of entrepreneurs come to possess essentially all of the wealth. ... The concentration of wealth occurs merely because some individuals are lucky by randomly receiving a series of high growth rates, and once they are ahead with exponentially growing capital, they tend to stay ahead.' According to Fargione, greater variation in rates of return hastened the concentration of wealth. Inequality grows with time. Wealth concentration continues despite periods of recession and depression.</blockquote>[Breining G] In Health Care-No similar study has been done in health care. However, we have documented many cases in which top health care executives' compensation seemed to have nothing to do with their skill, originality, or ability to uphold the health care mission. How "peer benchmarking," and the "Lake Woebegone Effect" account for immense compensation despite bad results was discussed <a href="http://hcrenewal.blogspot.com/2011/10/peer-benchmarking-lake-wobegone-effect.html">here</a>. A recent series of cases (with links to others) of hospital CEOs who prospered while their institutions' finances decayed was <a href="http://hcrenewal.blogspot.com/2011/08/more-executives-prospering-despite.html">here</a>. The One Percent Gamed the System, and Personally Profited from Perverse Incentives <blockquote>Most fundamentally, what protest groups on the left and the right share with less activist middle-class Americans -- the apolitical voters who often decide elections -- is an abiding sense that the bond between work and reward has been broken. Huge financial rewards are given to executives who fail miserably and get fired. Debt relief programs help not only those who have fallen behind through no fault of their own, but also the profligate who lived beyond their means. The list goes on: What’s inflaming voters isn’t so much inequality per se, though that’s certainly a symptom of the problem. It’s the fact that the rewards in our economic system seem increasingly divorced from American values of hard work, risk taking and innovation. Instead, these benefits are more and more likely to be awarded on the basis of connections and political power. </blockquote>[Klain R] In Health Care-We have seen not merely cases of top health care leaders paid a lot of money for mediocre financial results. We have seen cases in which leaders got outsize pay despite evidence of organizational misconduct, or even crime. For example, see posts <a href="http://hcrenewal.blogspot.com/2011/09/johnson-and-johnson-pleads-guilty.html">here</a>, <a href="http://hcrenewal.blogspot.com/2011/08/why-cultivate-weldons-confidence-ceo.html">here</a> and <a href="http://hcrenewal.blogspot.com/2011/03/despite-recalls-legal-settlements.html">here</a> that contrast one company's multiple legal settlements and guilty pleas and its CEO's eight-figure compensation. The One Percent Deny Accountablity While Blaming Others for the Problems They Produce Based on a as yet unpublished survey of top finance leaders in London, its leader, Rev Andrew Studdert-Kennedy, <blockquote>said he had been 'astonished' by the attitudes of some City workers displayed towards the financial crisis. He said, 'I did speak to many people about morality. I was amazed by how many banking crises there had been and how sanguine people were about them. A number of people said 'this is just what happens - it's the nature of banking, it's the nature of capitalism.' 'It's one thing having historical perspective, but I was astonished that people didn't try to learn a bit more. There is a recognition that there is something wrong, but a reluctance to admit they are part of the problem.'</blockquote>[Brady et al] In addition, <blockquote>Talk to most bank executives and they’ll still place the blame for the 2008 financial crisis on 'irresponsible consumers' who took out mortgages they couldn’t afford; dishonest mortgage brokers; and—at the top of the list—the government, which used Fannie Mae and Freddie Mac to finance mortgage lending to 'people who shouldn’t own homes,' as one senior New York bank executive put it to me recently. All of which is partly true but omits the enthusiasm with which Wall Street feasted on that market, and the fact, as Warren puts it, 'that Wall Street made tens of billions of dollars' from it. In short, there is no remorse, let alone a sense of obligation, because bank executives generally do not believe they were the cause of the financial collapse. As Neil Barofsky, Treasury’s former inspector general charged with oversight of TARP, the $700 billion government bailout of the banks, recalls from his interviews with bankers, the attitude instead was that 'shit happens.' The state of denial has been massive. On Wall Street today, says the vice-chairman of a private-equity firm, 'there is this enormous persecution complex in the banking industry about Dodd-Frank, that everyone is going after the banks.'</blockquote>[Andrews S] In Health Care-Health care leaders and their apologists sometimes cite their awesome responsibility as a rationale for their outrageous compensation. Yet while health care leaders often decry the state of the health care system, I have yet to hear one take any responsibility for what has gone wrong. Meanwhile, Wendell Potter has described how the leaders of one part of health care, health insurance and managed care, set up elaborate but stealthy public relations campaigns to blame the problems of health care mainly on patients and doctors, but certainly not the health insurance or managed care (see post <a href="http://hcrenewal.blogspot.com/2011/03/millions-to-health-insurance-ceos-but.html">here</a>). This echoes how top finance leaders blame their industry's problems on feckless consumers. The One Percent are Not Held Accountable, and Have De Facto Impunity <blockquote>So, yes, we face a threat to our capitalist system. But it’s not coming from half-naked anarchists manning the barricades at Occupy Wall Street protests. Rather, it comes from pinstriped apologists for a financial system that glides along without enough of the discipline of failure and that produces soaring inequality, socialist bank bailouts and unaccountable executives. </blockquote>[Kristof ND] <blockquote>In our article in the last issue,1 we showed that, contrary to the claims of some analysts, the federally regulated mortgage agencies, Fannie Mae and Freddie Mac, were not central causes of the crisis. Rather, private financial firms on Wall Street and around the country unambiguously and overwhelmingly created the conditions that led to catastrophe. The risk of losses from the loans and mortgages these firms routinely bought and sold, particularly the subprime mortgages sold to low-income borrowers with poor credit, was significantly greater than regulators realized and was often hidden from investors. Wall Street bankers made personal fortunes all the while, in substantial part based on profits from selling the same subprime mortgages in repackaged securities to investors throughout the world. Yet thus far, federal agencies have launched few serious lawsuits against the major financial firms that participated in the collapse, and not a single criminal charge has been filed against anyone at a major bank. The federal government has been far more active in rescuing bankers than prosecuting them.</blockquote>[Madrick J et al] In Health Care-We have gone on endlessly how despite numerous examples of unethical or even criminal behavior by health care organizations, almost never has any individual who authorized, directed or implemented the bad behavior suffered any negative consequences. (Look <a href="http://hcrenewal.blogspot.com/search/label/crime">here</a> and <a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements">here</a>.) The One Percent Have Captured Government The most important reason for the unaccountability of the one percent is regulatory capture, leading to corporatism: <blockquote>much as the economic giants of the Gilded Age developed such enormous influence that they could dictate basic political conditions, today's Wall Street bosses and CEOs have successfully arranged extensive deregulation for their industries. Indeed, he argues that this is the only thing that can explain how hedge fund managers suddenly started making billions of dollars a year. Former Citigroup CEO Sanford Weill, for example, kept a framed pen in his office as a symbol of his influence. It was the pen President Bill Clinton -- at Weill's instigation -- used in 1999 to sign into law legislation repealing the provisions in the Glass-Steagall Act of 1933 that separated the transactions of investment and commercial banks. At the same time, Bartels writes, the wealthy receive enormous tax breaks worth hundreds of billions of dollars. </blockquote>[Schulz T] In Health Care- We have discussed <a href="http://hcrenewal.blogspot.com/search/label/regulatory%20capture">regulatory capture</a>, <a href="http://hcrenewal.blogspot.com/search/label/embedded%20networks%20of%20influence">embedded networks of influence</a>, and <a href="http://hcrenewal.blogspot.com/search/label/corporatism">corporatism</a> in health care. Summary The articles I summarized above called for the need to "save capitalism from crony capitalists," [Kristof ND], and to seize "the high political ground" by "reform that lessens the influence of money in politics and government," and to strengthen "the bonds between work and reward," [Klain], and to end the impunity of the wealthy [Madrick et al]. A Vatican Council has <a href="http://www.zenit.org/article-33718?l=english">called</a> for the end of the "idolatry of the market," the "ethic of solidarity," and the "primacy of the spiritual and the ethical," and of "politics - which is responsible for the common good - over the economy and finance." This has also been supported by the Archbishop Of Canterbury. In parallel, as we have said again and again, true health care reform requires competent, ethical leadership that upholds health care's core values within a governance structure of accountability, integrity, transparency, and honesty. Tackling the deep problems in health care will require tackling the deeper problems in the global political economy which helped to generate them. References Andrews S. The woman who knew too much. Vanity Fair, November, 2011. Link <a href="http://www.vanityfair.com/politics/features/2011/11/elizabeth-warren-201111">here</a>. Brady B, Merrick J. Exclusive: cover-up at St Paul's. The Independent, Oct 30, 2011. Link <a href="http://www.independent.co.uk/news/uk/home-news/exclusive-coverup-at-st-pauls-2377923.html">here</a>. Breining G. The 1 percent: how lucy they are. Minneapolis Star-Tribune, Oct 29, 2011. Link <a href="http://www.startribune.com/opinion/132819963.html">here</a>. Klain R. Americans want a government that ties rewards to work. Bloomberg, Oct 31, 2011. Link <a href="http://www.bloomberg.com/news/2011-10-31/americans-want-a-government-that-ties-rewards-to-work-ron-klain.html">here</a>. Kristof ND. Crony capitalism comes home. NY Times, Oct 28, 2011. Link <a href="http://www.nytimes.com/2011/10/27/opinion/kristof-crony-capitalism-comes-homes.html">here</a>. Madrick J, Portnoy F. Should some bankers be prosecuted? NY Review of Books, November 10, 2011. Link <a href="http://www.nybooks.com/articles/archives/2011/nov/10/should-some-bankers-be-prosecuted/">here</a>. Pear R. Top earners doubled share of nation's income, study finds. NY Times, Oct 25, 2011. Link <a href="http://www.nytimes.com/2011/10/26/us/politics/top-earners-doubled-share-of-nations-income-cbo-says.html">here</a>. Schulz T. The second gilded age: has America become an oligarchy? Spiegel Online, Oct 28, 2011. Link <a href="http://www.spiegel.de/international/spiegel/0,1518,793896,00.html">here</a>.

Health Care Also Needs to Challenge "Crony Capitalism," the "New Gilded Age, and "the Idolatry of the Market"

The increasing size and scope of the "Occupy Wall Street" movement, and continuing instability in the finance system, most recentl...

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How the Rich and Influential Get Health Care Different from You and Me: Data About How Very Influential Persons Get Expedited Care

An MSNBC <a href="http://www.msnbc.msn.com/id/44723391/ns/health-health_care/#.Ton_TnK5LDU">story</a> summarized some new data about how at least a particular subset of the rich can get different health care from you and me: Expedited Care for the Influential <blockquote>In a letter published in this week’s Annals of Emergency Medicine, Dr. A.J. Smally of Hartford Hospital and the University of Connecticut reports that more than half of the 33 emergency department medical directors in his state said they routinely provide so-called 'expedited' care to influential people.</blockquote> The influential people here include "corporate donors, hospital administrators, or, say, the brother-in-law of the president of the board of directors." This was corroborated by "a survey of 100 emergency doctors nationwide" which showed that "84 of them had given or would given extra attention to an influential person, such as a famous person or a hospital donor." Dr Smally asserted, "emergency triage protocols mandate treating the sickest patients first, no matter their social status." However, he also acknowledged that influential people will get treated more quickly, <blockquote>'Somebody calls and says so-and-so is coming in, can you make sure they get good care,' Smally said. 'We bump them up a notch. If everyone is waiting four hours, they might just wait one hour.'</blockquote>Better "Hotel Services" The article also noted that influential people are likely to get better "hotel services" from hospitals, presumably at no extra cost to them: <blockquote>to the head of the Association for Healthcare Philanthropy, a 5,000-memeber organization dedicated to boosting donations, tending to contributors when they’re sick or injured is just part of doing business. 'It is true, we pay attention to our donors,' said Bill McGinly, president and CEO of AHP, who says most development departments are alerted when VIPs enter their hospitals. 'They’ve gone above and beyond. We recognize that their contributions can make a difference to the community.' In some cases, that care can border on coddling. At Norwalk Hospital in Norwalk, Conn., donors who contribute $100,000 or more are known as 'Navigators' who receive not only a place at the front of the line, but top-tier attention as well. 'We help the family in any which way that we can,' said Carol Brennan-Smith, communications manager for the Norwalk Hospital Foundation. 'If their cell phone has no juice or they need a battery charger. It can be ‘I want lemonade, I want a Ben and Jerry’s Cherry Garcia ice cream.’ If we can do it, we will.' </blockquote> Grumbling and a Little Dissent The ER docs involved also seemed unwilling to question the practic, although they did not seem perfectly comfortable with it: <blockquote>grumbling is common, but to Smally and other ED docs, there’s little moral dilemma. Dr. Michael Carius, chair of the emergency department at Norwalk Hospital, home of the 'Navigators,' said he’s confident that no one is harmed by the practice — and that it actually may wind up doing greater good. 'This is a way of building good will so that when there is a need the hospital has, there’s this favor bank,' he said.</blockquote> The article only noted briefly that not all would agree with him: <blockquote>ethicists and patient advocates worry that improved access for VIPs undermines the public mission of community emergency rooms and raises sharp questions about health care equality. 'It’s not fair at the micro-level and I’m not sure it’s fair at the macro-level,' noted Laura Weil, former director of the Health Advocacy Program at Sarah Lawrence College in Bronxville, N.Y. </blockquote> In my humble opinion, the data and anecdotes summarized in the article raise a host of issues that deserve further thought. Can the Self-Interested Be Donors, and Should They Receive Favored Treatment from the Government? First, let us address the issue of donors receiving better "hotel services." I am not sure there are problems with offering better hotel services, as long as they have no direct effect on medical care, for a price to anyone who is willing to pay. However, the article suggests that the donors receive special services that might not be available to anyone else, even for a price. If so, that challenges their claim to be donors. Donation implies a lack of self interest, and is honored socially, and financially by the US Internal Revenue Service in the form of a tax deduction. If donors are receiving special consideration in return for their donation, their donations may actually be self-interested means to get services they could not buy on the open market, and do not deserve honor. Even if the donation was given expecting a partial quid pro quo in the form of a service that could otherwise be obtained by others for a price, to the extent that the donations included money paid for services, they may not deserve tax deductions. If the hospitals did not report the donation less the price of the services received in exchange for it, or if the donors did not subtract this amount from their donation before deducting it from their taxes, it might be worth an IRS investigation, perhaps both of the hospitals' non-profit status and the donors' personal tax returns. I hope the IRS is paying attention to this issue. Is It Ethical to Give Patients Who Are Not Donors Slower Care for Acute Illnesses? A much bigger problem is the data suggesting donors, hospital executives, and their relatives may get not only cushier hotel services, but more rapid emergency department care.  Since emergency departments are often operating near capacity, this rapid care for some may mean slower care for others.  In many cases, slower care means more pain, more suffering, more morbidity, and in certain cases, a higher likelihood of dying. Physicians have an ethical obligation to put each patient's interests ahead of other concerns (like attracting more donations to the hospital). It seems unethical to me to put a less sick patient ahead of a more sick patient because the former is an influential person. Knowing that sick patients sometimes get delayed care to make way for a VIP may open a whole new area of legal discovery for plaintiffs' lawyers seeking to litigate against hospitals when patients suffer from slow care in the Emergency Department. I hope plaintiffs' attorneys are paying attention to this issue. There may also be legal issues for hospitals if the law requires them to make emergency care available to all acutely ill patients. If some hospitals delay emergency care for some acutely ill patients to provide expedited care for some less acutely ill patients because they are influential, there may be legal ramifications. I hope the US Department of Justice, state attorneys general, and state departments of health are paying attention to this issue. Does Insulating the Rich and Powerful from the Dysfunctional Health Care System Make for Bad Health Care Policy? Finally, there is a larger health policy issue. At least a few of my fellow health care dissenters has been known to grimly opine that no real health care reform will take place until some big-wig, or his or her child, spouse, lover, sibling, or parent gets really bad care at the hands of our dysfunctional health care system. However, it appears that the rich and powerful have found ways to make this improbable. In a number of ways, the rich and powerful have found ways to engineer a deluxe health care system for themselves. We have <a href="http://hcrenewal.blogspot.com/search/label/executive%20health%20plans">posted</a> how big corporate executives have access to "executive health insurance" which provides benefits beyond what any normal person can obtain, even from seemingly the best employer paid policy. In 2007, we <a href="http://hcrenewal.blogspot.com/2007/11/academic-medical-center-with-a-list.html">posted</a> about how one academic medical center had an "A-list" of influential people who got special amenities and more rapid care. Now there is data to suggest this may be common practice. If the rick and powerful can insulate themselves from the dysfunction of the current health care system, do not expect their sympathy or support in reforming this system. It appears that to truly reform health care, we will have do something about the context, call it a new gilded age, new age of the robber barons, oligarchy, plutocracy, or age of crony capitalism, in which it exists.

How the Rich and Influential Get Health Care Different from You and Me: Data About How Very Influential Persons Get Expedited Care

An MSNBC story summarized some new data about how at least a particular subset of the rich can get different health care from you and me: E...

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