healthy4u: representativeness

On Health Care Renewal, we have often shown how the governance of health care organizations may be unaccountable, unrepresentative of relevant constituencies, opaque, and not subject to ethical standards. Conversely, we have repeated the need to make the governance of health care organizations accountable, representative, transparent, and ethical. Meanwhile, our US debate about health care reform seems to be driven by leaders of powerful health care organizations, while common citizens need to scream to be heard. Maybe we could benefit from a lesson from another country. As reported in the <a href="http://www.who.int/bulletin/volumes/87/2/09-030209/en/index.html">Bulletin of the WHO</a>, Thailand seems to have found a way to get ordinary citizens and members of civil society involved in a civil, organized health care discussion. <blockquote> For Dr Suwit Wibulpolprasert, chairman of the committee organizing Thailand’s first National Health Assembly (NHA), which took place from 11 to13 December 2008 in Bangkok, opening up the debate on public health is an essential part of developing effective national policy. 'In the past, health policy has tended to be drawn up by politicians and officials,' Wibulpolprasert says. 'But the National Health Assembly is a forum for the public to pool views and initiate health agendas that truly address people’s needs.' More than 1500 people attended the conference, the first of its kind to take place since the passing into law of the National Health Act of 2007, which also brought the NHA into existence. A broad cross-section of Thai society was represented, including 178 delegations from government agencies and provincial authorities, the private sector and civil society. In addition, groups including stateless people living near the Myanmar border gave presentations at technical briefings for participants. Dr Kumanan Rasanathan, from WHO’s Department of Ethics, Equity, Trade and Human Rights, described the meeting as 'a very interesting exercise in participatory governance'. The 12 topics that were up for discussion were distilled from more than 68, including such familiar ones as universal access to medicines and equal access to basic public health services. Also addressed were matters as diverse as agriculture and food prices in the current economic crisis and safe media access for youth and family – an agenda that included a proposal for addressing problems of children addicted to online games and television. 'The broad slate of topics reflects the intention to encourage input from everyone,' says Rasanathan, 'and improve public participation as well as intersectoral collaboration.' In other words, the assembly’s organizers actively encouraged the participation of stakeholders from outside the field of public health – from education, agriculture and industry, to name but a few. 'The Thais have adapted much of the machinery of the World Health Assembly [WHO’s supreme decision-making body] for their own context,' says Rasanathan, who noted that each of the 178 constituent groups had equal speaking rights. Briefing papers were produced and resolutions were passed on each of the agendas. As with WHA resolutions, these resolutions are not binding. According to Dr Amphon Jindawatthana, secretary-general of the National Health Commission Office, once the resolutions have been adopted they are considered by the National Health Commission, which reworks them for ministerial review and possible inclusion in national policy. Given the hurdles that still need to be cleared once a resolution is passed at the Assembly, one might be forgiven for dismissing the body as something of a talking shop. This is a charge that Wibulpolprasert firmly denies. He is convinced that NHA-formulated resolutions will certainly lead to policy, and policy that is closer to the needs of Thailand’s 63 million people. </blockquote> The 2009 Assembly will be held in December. Details can be found <a href="http://www.nhcthailand.com/aboutus_detail.php?id=00000000025">here</a>. I wonder if we would be having a more productive health care debate in the US if the way had been prepared by a US National Health Assembly? Maybe if the multi-million dollar a year leaders of health care organizations had to listen to the concerns of ordinary people, and some practicing health care professionals, a little common sense might penetrate into the bubble created by their <a href="http://hcrenewal.blogspot.com/search/label/superclass">superclass</a> membership.

Making Health Care More Representative and Accountable - the Example of the Thai National Health Assembly

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As we get closer to graduation season for most institutions of higher education, another story about the leadership and governance of higher education, involving an institution housing a prominent medical school, has come into view, albeit indirectly. Let me try to explain this complex story, which on its surface has something to do with the ongoing financial crisis, but nothing to to with academia, by quoting, as usual, from media coverage. We start with <a href="http://www.nytimes.com/2009/04/17/nyregion/17pension.html">an article </a>from the New York Times last week: <blockquote> The man leading the Obama administration’s efforts to restructure the auto industry has been described in Securities and Exchange Commission documents as having arranged for his investment firm to pay more than $1 million to obtain New York State pension business. Although he is not named in the documents, a person with knowledge of the inquiry said the investment executive is Steven Rattner, co-founder of the Quadrangle Group, the prominent private equity firm. The S.E.C. complaint, filed as part of an expansive state and federal investigation into corruption at the state pension fund, details the efforts of Quadrangle to gain business from the pension fund beginning in 2004. The person who received most of the $1 million-plus payment has been indicted, accused of selling access to the fund. </blockquote> Here are the details of allegations of how Mr Rattner interacted with intermediaries to get NY state pension fund investments into his company. <blockquote> Investigators are scrutinizing the fees paid by investment firms to intermediaries who arranged deals with the $122 billion pension fund. While such payments are legal, they often raise questions about conflicts of interest and would be illegal if used to bribe public officials. In a 123-count indictment issued last month, two aides to Mr. Hevesi were accused of selling access to the fund. The aides, Hank Morris, who was Mr. Hevesi’s top political consultant, and David Loglisci, the fund’s chief investment officer, have denied any wrongdoing. The S.E.C. complaint, which was released Wednesday, describes steps undertaken by the Quadrangle executive to win $100 million worth of business from the pension fund in 2005. That amount accounted for nearly 5 percent of a Quadrangle private equity fund and helped the company raise money from other investment funds. In October 2004, the executive met with Mr. Loglisci to seek the pension fund investment and Mr. Loglisci 'reacted favorably' and 'began taking the necessary steps to secure approval' for the investment, the complaint said. Two months later, in December, the same executive met with Mr. Morris, who, according to prosecutors, was working in tandem with Mr. Loglisci to generate millions of dollars in fees from the investment firms, and within weeks had agreed to a deal to pay an obscure securities firm that employed Mr. Morris 1.1 percent of any money that the retirement fund invested with Quadrangle, as a placement agent fee. That worked out to $1.1 million, of which Mr. Morris received 95 percent. The timing of the meeting with Mr. Morris was significant, the complaint indicated, because the Quadrangle executive had already met with Mr. Loglisci and would presumably not need a placement agent. In addition, Quadrangle had previously retained a separate placement agent. The executive also met with Mr. Loglisci about a low-budget movie Mr. Loglisci was producing, 'Chooch.' Soon afterward, GT Brands Holdings, a company owned by one of Quadrangle’s private equity funds, made a deal to acquire the DVD distribution rights to 'Chooch,' an agreement that made the film’s producers nearly $90,000. The Quadrangle executive called Mr. Morris after the distribution deal was closed, and told him of the deal’s 'connection to Loglisci.' Three weeks later, Mr. Loglisci 'personally informed the Quadrangle executive that the retirement fund would be making a $100 million investment' in Quadrangle, the complaint said. </blockquote> Later, the Washington Post published <a href="http://www.washingtonpost.com/wp-dyn/content/article/2009/04/17/AR2009041701908.html">an article </a>which alleges possible conflicts of interest affecting Mr Rattner in his current position as "automobile czar," <blockquote> The questions around Quadrangle and Rattner follow others that came to light soon after he emerged as a candidate to lead the Obama administration's efforts to prop up Chrysler and General Motors. Quadrangle was, at least indirectly, previously involved in a deal involving Chrysler's majority owner, Cerberus Capital Management, a private equity firm. That connection has led some Chrysler investors to doubt whether Rattner can decide without bias how the government should aid Chrysler. In the summer of 2007, Quadrangle purchased Dennis Publishing, the owner of magazines including Maxim and Blender. The estimated price was $250 million. Quadrangle's new magazine company was renamed Alpha Media and it took a loan of $125 million, much of it coming from Cerberus. A year after Quadrangle's purchase, the publishing company's profits began to plummet. The company announced last month that it would cease publication of its Blender magazine. Quadrangle has written the Alpha Media investment down to zero on its books, and Cerberus, the company's major creditor, is now effectively in control of Alpha, a person familiar with the matter said. </blockquote> This week, a NY Times <a href="http://www.nytimes.com/2009/04/22/business/22quadrangle.html">article</a> revealed that Mr Rattner and Quadrangle are facing a wider investigation, and may be a target of investor lawsuits: <blockquote> Two months after Steven Rattner left Wall Street for Washington, his private investment company is facing a widening investigation into corruption in public pension funds — and fighting for its future. As state and federal authorities examine Mr. Rattner’s dealings with the New York State retirement fund, questions are emerging about his efforts to gain business from several other public funds, including ones in New Mexico and New York City. His private investment firm, the Quadrangle Group, is moving to calm anxious pension managers, who have entrusted the firm with hundreds of millions of dollars. Mr. Rattner, who is leading the Obama administration’s efforts to revamp the auto industry, has left his small but prominent firm in a bind. Because he was integral to Quadrangle, investors can try to withhold additional money that they have pledged to the firm now that he has left. No charges have been filed against Mr. Rattner, who did not respond to e-mail messages on Tuesday, or against Quadrangle, whose executives declined to comment. While Quadrangle’s funds have not suffered as much as some other private equity funds, its investors have suffered losses in other parts of their portfolios. Some of them might try to capitalize on the inquiry to avoid making good on their pledges. Another crucial question, however, is whether money from one Quadrangle fund was used to lure investors to a second fund. That possibility that might expose Quadrangle to investor lawsuits. </blockquote> Furthermore, a Washington Post <a href="http://www.washingtonpost.com/wp-dyn/content/article/2009/04/22/AR2009042203942.html">article</a> raised the question of a failure of honest disclosure: <blockquote> Government officials are expanding their investigation of Quadrangle, the private-equity firm founded by the Obama administration's lead auto negotiator, as new details emerge about an alleged kickback scheme involving the New York state pension fund. On Wednesday, the New York City Comptroller William C. Thompson Jr. said he is working with the state's attorney general, Andrew M. Cuomo, to determine whether the city's pension funds were 'intentionally misled or deceived' by Quadrangle's failure to disclose the use of a middleman who has since been indicted, Hank Morris. New York City's comptroller on Wednesday said Quadrangle never disclosed that it had paid Morris fees in connection with the city pension funds' investment in Quadrangle. The city invested $85 million in 2005 and $40 million in 2006. The city has a rule that use of placement agents must be disclosed, but that rule was implemented in 2008 and does not apply to the Quadrangle investments. But as part of the due diligence for receiving the investment, Quadrangle said in writing at the time that it used only two placement agents, Monument Group and London-based Helix Associates, the comptroller's office said. 'We take any ethical lapses by our managers seriously and will consider any remedies available to investors,' Thompson, the city's comptroller, said in a statement. </blockquote> In response to all this, New York state government officials decided to ban middle-men from influence over pension fund investment decisions, <a href="http://online.wsj.com/article/SB124040821903043595.html">according to the Wall Street Journal</a>: <blockquote> New York state said its public pension fund, one of the nation's largest, would ban the use of middlemen to help private-equity funds and other investors secure its business. The move marked a pivotal development in a burgeoning controversy that has grown from a local corruption probe to a broader examination of the tactics that investment firms used to win lucrative business from vast public pension pools. In most states, charging placement fees is legal if they are disclosed as required. But potential conflicts of interest are rife, especially for officials with a legal obligation to make informed, well-intended decisions about how pension-fund money is spent. Lawyers say a gray area emerges when finder's fees are paid to individuals or firms that do little more than trade on their access to public-pension-fund executives. Such alleged behavior is at the heart of the scandal unfolding in New York. The state attorney general and the SEC have accused a former top fund official and a political adviser of giving investment funds access to billions of dollars of state pension money, in exchange for kickbacks and other payments for personal and political gain. One such middleman already has pleaded guilty to securities-fraud charges. Some officials across the country have expressed concern about so-called pay-to-play practices -- that is, paying to influence people who direct the investments of public-employee retirement funds. Pay-to-play can range from illegal kickbacks, which in some instances have led to jail time, to legal activities such as campaign contributions to elected officials on the boards of pension funds. Pension funds are especially vulnerable to such accusations because their boards are often populated by elected officials or people with limited financial experience who need to rely heavily on outside advisers. New York state's comptroller, Thomas DiNapoli, said that in light of the allegations contained in the case brought by the state's attorney general and the SEC, 'the best way to restore the pension fund's reputation is to say we won't be involved with any transactions that involved placement agents.' </blockquote> Meanwhile, several commentators raised questions about Mr Rattner's suitability to be "automobile czar." David Rothkopf, the author of Superclass, <a href="http://rothkopf.foreignpolicy.com/posts/2009/04/17/and_now_introducing_the_kickback_czar">dubbed Mr Rattner </a>the "kickback czar" on the Foreign Policy blog, <blockquote> Are you joking? The Obama Administration somehow thought that it was okay to give a pass to Steve Rattner? They thought it was okay to appoint a guy to a key job after he apparently acknowledged to them that he was under investigation for providing a million dollar payment to pension consultant in exchange for receiving an assignment to manage a big chunk of pension fund money for New York State? They thought it was okay in the middle of a justified surge of global disgust with Wall Street to embrace a big time Wall Street player who is smart enough to be arguing the legal technicalities of the transaction but not smart enough to recognize that it might just seem to be sleazy, dubious and a gross disservice to the people who were depending on the State to use appropriate methods and metrics to find stewards for their retirement money? They even thought it was okay when part of the deal involved payments to support a movie called 'Chooch.' (What’s worse than bad ethics and bad taste all wrapped up into one sordid exchange? The New York Post called 'Chooch' which scored an amazing 00 rating from Rotten Tomatoes “the kind of vanity project that gives amateurs a bad name.”) What's more they did all this while giving Rattner the job of auto czar for which he had no material auto industry experience? I thought the way high ethical standards worked was that you didn't just bar people convicted of crimes, you tried to weed out people who had done things that were wrong or contrary to the public interest. </blockquote> On BlackStarNews, Edward Manfredonia <a href="http://blackstarnews.com/?c=121&a=5582">wrote</a>: <blockquote>I believed Rattner’s efforts to take the Times private should have disqualified him from an appointment with the Obama Administration; especially the key post of trying to stabilize the collapsing auto industry. The White House still insists that the Administration fully supports Rattner; that reminds me of Bush proclaiming backing for Don Rumsfeld when it was clear he should have been shown the door as defense secretary. Here's why Rattner deserves the boot. An even more egregious form of activity that what I previously covered has become public. Rattner, who has extensive ties to Bill and Hillary Clinton, has been identified in several published news reports as the Quadrangle Fund executive who paid $1.1 million to receive more than $100 million from New York State’s multi-billion dollar pension fund to manage. The manner in which the payments were made leaves no doubt that they were meant for 'pay to play', which is illegal in my opinion. </blockquote> Not surprisingly, a NY Times <a href="http://www.nytimes.com/2009/04/22/opinion/22wed1.html">editorial</a> was milder, but did allow, <blockquote>Mr. Rattner showed some bad judgment in the 'Chooch' deal, and the public has a right to expect more of him in his new, highly sensitive position. </blockquote> It's an interesting story, with implications in many areas, and it has hardly played out. Anyone reading this far is probably wondering, however, what this has to do with leadership, governance, and ethics in health care. None of the articles quoted above mentioned anything related to health care, or academics for that matter. Here is where I pull the rabbit out of the hat. Steven Rattner, in fact, has an important leadership position relevant to academics, and to academic health care. He is a <a href="http://www.brown.edu/Administration/News_Bureau/Info/Corporation.html">member of Brown University's Board of Fellows</a>, the "upper house" in the university's bicameral board of trustees, called the Brown Corporation. Brown University includes the <a href="http://med.brown.edu/">Alpert Medical School</a>, and the Division of Biology and Medicine. (Full disclosure: I am an alumnus of the College at Brown, and of the Medical School. I am a former full-time Brown faculty member, and currently a voluntary Clinical Associate Professor.) And thus the issue here is really about the <a href="http://hcrenewal.blogspot.com/2007/08/bling-bling-poltical-correctness-and.html">anechoic effect</a>. Even though this convoluted case raises issues about Mr Rattner's role at Brown analogous to the issues it raises about his role as "automobile czar," there has been to date not even any media mention of his role at Brown, much less discussion of its implications for the university, academic leadership and governance, etc. To survey the local coverage, the Providence Journal has not published any relevant news stories so far. It did print an <a href="http://www.projo.com/opinion/contributors/content/CT_rick15_04-15-09_DJDVGHK_v17.3e650b1.html">op-ed </a>questioning Mr Rattner's suitability for the "automobile czar" position, which had to do with the lack of sympathy an "investment banker" might have for the United Auto Workers. The Boston Globe ran <a href="http://www.boston.com/news/nation/washington/articles/2009/04/18/auto_task_force_chair_tied_to_investment_investigation/">a story </a>from the Washington Post about the case, but one that had nothing on the local, or the academic angle. The Brown Daily Herald published a two news stories (<a href="http://www.browndailyherald.com/2.12235/alum-may-become-obama-s-car-czar-1.1668270">here</a> and <a href="http://www.browndailyherald.com/2.12235/alum-to-advise-treasury-on-bailout-of-u-s-automakers-1.1667893">here</a>) about Mr Rattner's appointment as "automobile czar," which did note he is a "corporation member," but has not covered the current controversy. I am aware of no recent open discussion, or any discussion at all of Mr Rattner as a member of the Board of Fellows, in light of the recent unpleasantness. Thus, our local angle on the New York pension/ placement agents/ Quadrangle/ "Chooch" affair mainly demonstrates how at many academic institutions, it is simply not done to bring up issues that question leadership and governance, especially at the highest levels. Parenthetically, we have posted many times, most recently <a href="http://hcrenewal.blogspot.com/2009/04/investment-bankers-strike-back.html">here</a>, about the leadership and governance of Dartmouth College. Some might have interpreted these posts as hostile to that institution. They were anything but. In fact, it has only been possible to discuss leadership and governance at Dartmouth so thoroughly because that institution is much more open about its leadership and governance than is the typical US academic institution. Half of the he Dartmouth Board of Trustees, as we noted, used to be elected by vote of the alumni. The alumni could nominate their own candidates for the Board, through a petition process. The successful attempt to decrease the overall proportion of elected Trustees sparked a tremendous amount of open discussion and debate. Issues of leadership and governance at Dartmouth seem to be frequently discussed in local publications, on blogs, and sometimes even in the national media. I suspect that a governance system at Dartmouth marked by more than average representativeness and accountability has lead to much more vigorous debate and discussion of academic governance and leadership than occurs at more typical universities. (Note that even after the "board packing," Dartmouth still has a larger proportion of alumni-elected trustees than does the typical university, and it is still possible for alumni to put people on the ballot via petition.) Brown University, on the other hand, is lead by a Corporation most of whose members are appointed by the Corporation itself. While a minority (14 of 42) of the Board of Trustees (the lower house) of the Corporation are <a href="http://alumni.brown.edu/about/elections/trustee_bg.html">elected by alumni</a>, to my knowledge, all the election candidates are hand-picked by the Brown Alumni Association, and there is no provision for petition candidates. Although a few fiesty students occasionally call for more light to shine on the Brown Corporation, (e.g., see <a href="http://www.browndailyherald.com/2.12227/ben-bernstein-09-why-the-corporation-matters-and-how-they-get-paid-1.1667634">here</a>), for the most part, questioning the leadership and governance of the university is simply not done. Thus, Brown seems to be typical of most major US academic organizations. However, more transparent, accountable, governance, clearly guided by ethical principles and the organization's mission might allow US academia, and academic medicine to address some of the problems that we too often have opportunities to discuss on Health Care Renewal.

Pension Fund Scandals, Payment Agents, "Chooch" and the Anechoic Effect

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Making Health Care More Representative and Accountable - the Example of the Thai National Health Assembly

BLOGSCAN - Accountable Academic Governance Under Threat

Pension Fund Scandals, Payment Agents, "Chooch" and the Anechoic Effect