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Hospital Board Members with "the Juice" in New Jersey

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

Hospital Board Members with "the Juice" in New Jersey

We recently commented on the conviction of a state legislator charged with selling his influence to a powerful local medical center. NorthJ...

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Listening to Google Health users

At Google, we believe that consumers should have convenient and secure access to all their health data so that they can be better informed and be more involved in their care. Recently, a data-savvy patient known as e-Patient Dave <a title="blogged" href="http://patientdave.blogspot.com/2009/04/imagine-someone-had-been-managing-your.html" id="lc:c">blogged</a> about data that was imported into his Google Health Account from his hospital in Boston, <a id="o5rs" href="https://www.google.com/health/directory?url=www.patientsite.org" title="Beth Israel Deaconess Medical Center">Beth Israel Deaconess Medical Center</a>. Once he saw his data in Google Health, he saw diagnoses that were both alarming and wrong. Where did they come from? It turns out that they came from the billing codes and associated descriptions used by the hospital to bill the patient's insurance company. These descriptions, from the <a id="w_s." href="http://www.cdc.gov/nchs/icd9.htm" title="International Classification of Diseases (ICD9)">International Classification of Diseases (ICD-9)</a>, often do not accurately describe a patient because the right ICD-9 code may not exist. So the doctor or hospital administrator chooses something that is "close enough" for billing purposes. In other cases, the assigned code is precisely what the doctor is trying to rule out, and if the patient turns out not to have that often scary diagnosis, it is still associated with their record. Google Health faithfully displayed the data we received on Dave's behalf. We and Beth Israel knew that this type of administrative data has its limitations but felt that patients would find it a good starting point. Too often, this is wrong. At Google, we are constantly learning important lessons from our users. Two days after we learned about this issue, I met with Beth Israel <a id="fds_" href="http://geekdoctor.blogspot.com/" title="CIO John Halamka">CIO John Halamka</a>, the patient's physician <a href="http://services.bidmc.org/Find_a_doc/doc_detail.asp?sid=41414547464148">Dr. Danny Sands</a>, and e-Patient Dave himself. We agreed on a reasonable plan: Beth Israel will stop sending ICD-9 billing codes and will instead only send to Google Health the free text descriptions entered by doctors. Beth Israel is also working with the <a id="rg-q" href="http://www.nlm.nih.gov/" title="National Library of Medicine (NLM)">National Library of Medicine (NLM)</a> to associate those free text descriptions with a more clinically useful coding system called <a id="iwwf" href="http://www.nlm.nih.gov/research/umls/Snomed/snomed_main.html" title="SNOMED-CT">SNOMED-CT</a>, so that we can offer patients useful services like automatic drug interaction checking. The result will be more accurate and useful information in patients' Google Health profiles. This week, all four of us were also at a conference called <a title="Health 2.0" href="http://health2con.com/" id="vbuo">Health 2.0</a> in Boston. Dave's story, and the lessons we all learned, were the focus of much discussion. We are grateful to Dave for his openness and passion for making things right. We're also glad this happened because we and many others now better understand the limitations of certain types of health data and we are working with partners to improve the quality of the data before it gets to Google Health and our users. We look forward to sharing what we learn with the broader community. We also learned that the patient community is surprisingly interested in understanding these data issues. Dave and his doctor Danny Sands collaborated on an <a title="informative post" href="http://e-patients.net/archives/2009/04/part-of-it-is-encoding-information.html" id="jj7s">informative post</a> about different data vocabularies used in different aspects of healthcare. The patient-controlled "data liquidity" that Google Health supports is clearly an important part of the future of health care. We are more committed than ever to putting consumers in charge of their own health information. Posted by Roni Zeiger, M.D., Product Manager, Google Health

Listening to Google Health users

At Google, we believe that consumers should have convenient and secure access to all their health data so that they can be better informed a...

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Coming soon to YouTube: Besson's and Bertrand's environmental film project

Today we're pleased to share an exciting new project that taps into the power of YouTube and Google Maps to spread the word about the state of our planet. <a href="http://en.wikipedia.org/wiki/Luc_Besson">Luc Besson</a>'s and <a href="http://www.yannarthusbertrand.org/index_new.htm">Yann-Arthus Betrand</a>'s 90 minute full-length film "Home" will exclusively be available online on YouTube for English, French, Spanish and German–speaking countries beginning June 5 — just in time for the 37th <a href="http://www.unep.org/wed/2009/english/">World Environment Day</a>. Through stunning displays of aerial camerawork, the film will give people from all corners of the world a glimpse of our planet like never before and visually demonstrate the urgency for preservation efforts. In addition to its Internet premiere, "Home" will be shown in movie theaters and outdoors on big screens at key locations around the globe. It will also air on TV stations around the world. Using this unique distribution model, one with a massive online and offline effort, the film creators are able to reach the widest audience possible. So whether you'd prefer to head to the theaters, watch it under the stars, or just stay put on the couch — the way you view "Home" is up to you. And starting today, YouTube channels in English, French, Spanish and German will feature behind-the-scenes looks from the making of the film, as well as interviews, and extras. To add even more dimension, Google Maps is featuring specially created layers that shed more light on some of the material covered in the movie. You can also use Maps to find a theater location near you. To get a preview of what you can expect on June 5, check out some of the spectacular footage in the <a href="http://www.youtube.com/homeproject">Home YouTube channel</a>, like the video below of the Arctic world and its wild terrain that's essential to preserve. Or <a href="http://www.youtube.com/watch?v=0rET3CvmyD4&feature=channel">this one</a> of Los Angeles exclusively seen from the sky, giving us a new perspective of the cityscape at night. And please respond and react to the film via video responses, comments, and ratings and share links via email with your friends. <object height="340" width="560"><param name="movie" value="http://www.youtube.com/v/sLbHicGdXvw&hl=en&fs=1"><param name="allowFullScreen" value="true"><param name="allowscriptaccess" value="always"><embed src="http://www.youtube.com/v/sLbHicGdXvw&hl=en&fs=1" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" height="340" width="560"></embed></object> Posted by Mats Carduner, Head of Google France and Southern Europe

Coming soon to YouTube: Besson's and Bertrand's environmental film project

Today we're pleased to share an exciting new project that taps into the power of YouTube and Google Maps to spread the word about the st...

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BusinessWeek on Health IT: "The Dubious Promise of Digital Medicine"

While I would have used the title "The Dubious Promise of Digital Medicine When Led By Amateurs in the Health IT Industry", the following Business Week article is one of the better and more realistic appraisals of the current state of Health IT. Business Week, April 23, 2009<a href="http://www.businessweek.com/magazine/content/09_18/b4129030606214.htm?campaign_id=rss_daily"> The Dubious Promise of Digital Medicine</a> Chad Terhune, Keith Epstein and Catherine Arnst Recommended reading for anyone interested in improving healthcare via information technology. (Full disclosure: MedInformaticsMD was a contributor to the article.) I will be commenting in upcoming posts on the article's points and HIT industry's customary, self serving and unscientific counterpoints. The article's thrust is that a HIT remains an experimental technology with a mixed history, which like any societal-level experiment (HIT representing a form of social engineering) carries individual and public risk. The risk is that when misled, any social experiment can and will lead to serious unintended consequences, which in this case ultimately means patient harm. The first counterpoint that struck me in the article was this one: <blockquote>Allscripts CEO Glen Tullman [a non-clinician businessman and an advisor to the Obama campaign on HIT] ... compares the skeptics of health info tech to doctors who questioned the introduction of the stethoscope in the 19th century: "There have been Luddites in every industry." </blockquote> This profoundly unscientific, ad hominem dismissal represents the poster example of what I call a cross-occupational invasion of medicine by the IT industry. The attitude represents the antithesis of medical and scientific culture. It simpy dismisses with a wave of the hand a growing body of authoritative literature going back decades. A small sample of that literature can be <a href="http://hcrenewal.blogspot.com/2009/04/health-it-vendor-blames-hit-problems-on.html">seen here</a>, and anyone in HIT is grossly negligent to dismiss, or worse, not to be aware of such findings. There's really not much more to say on this issue. This is an example of the attitudes of HIT industry leaders who believe they will "revolutionize" medicine via IT. Health IT with appropriate leadership can do quite well for healthcare. In the wrong hands, I'm sorry to say, the opposite is true. It is, in fact, Mr. Tullman and like minded others in the IT industry, who make similar statements about those with the ultimate responsibility and liability for patient care, physicians (as Koppel and Kreda point out, the vendors have none), who are the Luddites. They are Luddites through their dismissal of the best thinking in modern IT and in biomedical information science. On second thought, it might be more accurate to say they leverage their Luddism and willful ignorance in an opportunistic manner. <a href="http://www.ischool.drexel.edu/faculty/ssilverstein/DUCOM_EMR_Complaint.pdf">Caveat emptor</a>. -- SS

BusinessWeek on Health IT: "The Dubious Promise of Digital Medicine"

While I would have used the title "The Dubious Promise of Digital Medicine When Led By Amateurs in the Health IT Industry", the fo...

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Engineering a healthier diet

Back in 2007, the cafes at our Mountain View campus started color-coding menu items according to healthfulness. The healthiest items are colored green ("go ahead, pile it on!"), foods you should portion-control are yellow, and foods you should eat sparingly -- in the words of my favorite <a href="http://en.wikipedia.org/wiki/Cookie_Monster#Evolution">recently reformed</a> <a href="http://www.google.com/search?q=cookie+monster">blue monster</a>, "sometimes foods" -- are red. While the whole point of the color-coding was to encourage healthy eating, and Google certainly makes it very easy for one to do that, I quickly realized that all of my favorite food items were colored red on the menus. Since all of the cafe menus are posted to separate pages of our intranet, it took too long to look through them to find the one or two items that would hook me into eating at a particular cafe for the day. So I decided to write a script that scans all the pages and creates a single unified menu of just the "heart-stoppingly good" food in all of the Mountain View cafes. (The nutritionist at Google at the time called them "least healthy" rather than "heart-stoppingly good.") It took only a few minutes to write the script for the menus as they existed on the first day I ran it, but there were complications as each following day's menus started rolling in. Not all the chefs were using the same programs to create HTML menus, so the colors were all marked up differently in each. Every morning, I found I needed to add special cases to handle the various HTML variations to the original <a href="http://en.wikipedia.org/wiki/AWK">awk</a> script that I'd started with. Every chef had a different idea of which color should be used for red items, green items and yellow items (the favored color for "yellow" text on white background is actually orange), so I ended up having to write a formula to perceptually classify the colors (by hue angle). Plus, I started to learn how hard things must be for someone who is blind or colorblind when reading web pages. To solve that problem, I had the program generate well-structured HTML with CSS classes applied to each menu item to handle things in a consistent way that was easy to filter by <a href="http://en.wikipedia.org/wiki/XPath">XPath</a>. After I finished the script, I sent a link to the new web page to an internal food discussion mailing list, and soon enough I was receiving fan mail. What I'd intended to be a tool for my own personal use proved so popular that, early this year, the chefs at Google asked if I could expand the tool to include support for historical statistics. They wanted to keep track of which cafes had the greenest menus over time. The result is a tool that tracks the healthiness of all menu items at Google cafes around the world. You can see every color menu item in a single menu and toggle colors on and off as desired, depending on how you want to browse the menus. So I can look only at red items if I'm in the mood for pepperoni pizza or roasted garlic mashed potatoes. And if I want leafy greens, I can limit the menu to show only the healthiest dishes. It has other uses, too: a cafe in Switzerland, for example, could use the stats page (filled with graphs generated using the <a href="http://code.google.com/apis/chart/">Google Chart API</a>) to compete with a cafe in Mountain View for the title of "healthiest cafe." In fact, all the Google cafes worldwide are now in a heated competition now for this very title. If you suspect I've gone "green," and if my mom is reading this: I have. I'm eating healthier, I've had my cholesterol checked, and I walk at least three miles every day. For everyone else, don't worry -- after I produced the healthiest cafe statistics page, I also made another set of graphs that ranks by red items. If you see me eating red items at Google, please don't tell my mom. Posted by Nathan Laredo, Software Engineer

Engineering a healthier diet

Back in 2007, the cafes at our Mountain View campus started color-coding menu items according to healthfulness. The healthiest items are col...

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Project Spectrum: recognizing the talents of children with autism

A couple of years ago, the <a href="http://sketchup.google.com/">Google SketchUp</a> team began hearing from a new group of users -- people on the autism spectrum. After consulting with some experts, we learned the connection between autism and SketchUp isn't particularly surprising. Many people on the autism spectrum have visual and spatial strengths, and 3D design software plays to them. With this in mind, we started a program called <a href="http://sketchup.google.com/spectrum.html">Project Spectrum</a>. As part of <a href="http://www.autism-society.org/site/PageServer?pagename=research_awareness">Autism Awareness Month</a> in April, we've launched a new <a href="http://sketchup.google.com/spectrum.html">webpage</a> showcasing some great SketchUp artists (Rachel, Jeremy, JP and others). We've also created a <a href="http://www.youtube.com/watch?v=gsfH_cyXa1o">Getting Started with Google SketchUp video</a> for anyone who wants to learn the basic tools to start modeling. More of the Project Spectrum models can be seen in the Google 3D Warehouse <a href="http://sketchup.google.com/3dwarehouse/cldetails?mid=be3de3be31be4d088aee1e8fa383e7d3&prevstart=0">collection</a>. Watch the video below to hear the story behind Project Spectrum and meet some of the kids involved: <object height="344" width="425"><param name="movie" value="http://www.youtube.com/v/Jw_ZW1NCQgY&hl=en&fs=1"><param name="allowFullScreen" value="true"><param name="allowscriptaccess" value="always"><embed src="http://www.youtube.com/v/Jw_ZW1NCQgY&hl=en&fs=1" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" width="425" height="344"></embed></object> Googlers around the world are working with the autism community to introduce kids, teachers, parents and adults to SketchUp, and we've been inspired by the results. We hope you take the time to look at Project Spectrum and share it with others in your community. For more detail, check out the <a href="http://sketchupdate.blogspot.com/2009/04/strengths-of-autism-continue-to-shine.html">Google SketchUp blog</a>. Posted by Tom Wyman and Chris Cronin, Project Spectrum Team

Project Spectrum: recognizing the talents of children with autism

A couple of years ago, the Google SketchUp team began hearing from a new group of users -- people on the autism spectrum. After consulting ...

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

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

As we get closer to graduation season for most institutions of higher education, another story about the leadership and governance of higher...

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