healthy4u

Now Private Equity Jumps into the Health Care Fray: Will Cerberus Do Better with Caritas Christi than It Did with Chrysler?

And now for an early report on what may be the latest fashion in the ongoing commercialization of US health care in the US.  In the last few weeks we spotted three stories that appear to be closely related.  (And thanks to one of our ever vigilant scouts for finding the first of these.) Psychiatric Solutions and Bain Capital The first story was <a href="http://www.businessweek.com/news/2010-03-10/psychiatric-solutions-says-approach-made-by-purchaser-update1-.html">in BusinessWeek</a> in early March: <blockquote>Psychiatric Solutions Inc., the operator of psychiatric facilities in 32 states, said it has been approached by a potential buyer. A special board committee will consider possible responses and Goldman, Sachs & Co. has been hired as a financial adviser, the Franklin, Tennessee-based company said today in a statement. Earlier today, the Wall Street Journal reported the company was in buyout talks with Bain Capital LLC. Boston-based Bain manages about $65 billion in assets under management, according to the firm’s Web site. </blockquote> The significance of this story was not initially clear. The proposed deal had not been consummated. Although there may be something jarring about a private equity firm running psychiatric clinics, the clinics were already run by a for-profit corporation. Detroit Medical Center, Vanguard Health, and the Blackstone Group About a week later, the Detroit News published <a href="http://www.detnews.com/article/20100319/BIZ/3190378/Vanguard-Health-to-buy-Detroit-Medical-Center">a story </a>about another deal, <blockquote>The Detroit Medical Center is expected to announce today it will be acquired by a private Nashville-based health system that is to invest $850 million in improvements, The Detroit News has learned. The nonprofit DMC, with nine general and specialty hospitals in Metro Detroit, will be acquired by Vanguard Health Systems, which has 15 hospitals in four states, several sources said. No money is changing hands in the transaction, but Vanguard will assume $300 million in DMC pension obligations and $200 million in bond debt obligations, a source said.</blockquote> The article further noted, <blockquote>Vanguard is majority-owned by The Blackstone Group, one of the nation's largest private equity firms, which gives it access to capital for improvements.</blockquote> This did seem to be a done deal, and one that inspired all sorts of optimism. For example, Tom Walsh, a columnist <a href="http://www.freep.com/article/20100321/COL06/3210523/1014/BUSINESS01/DMC-deal-allows-it-to-thrive-grow">wrote</a> in the Detroit Free Press, <blockquote>Just as the bankruptcies of General Motors and Chrysler marked the end of an unsustainable business model for Detroit's auto industry, Friday's deal to sell the Detroit Medical Center to a big for-profit hospital system is a game-changer for the funding and delivery of health care in metro Detroit.</blockquote> Walsh felt, <blockquote>three DMC leaders made a bold move -- before it was too late -- to secure access to the money needed to invest in critical technology and top talent.</blockquote> because, <blockquote>'We were being choked to death by the nonprofit business model,' Duggan, the DMC CEO, said Friday. </blockquote> Walsh enthused, <blockquote>Vanguard's proposed purchase of DMC for $417 million and a promised investment of $850 million more gives DMC a legitimate shot at survival and growth without anywhere near the pain and suffering that the GM and Chrysler retrenchment brought to the region. It's hard to overstate what a godsend this deal could be for a wobbly city and state where the public sector is in no shape to help a major employer like DMC, if the banks and Wall Street are unwilling to provide capital.</blockquote> Similarly, Detroit News' editors <a href="http://www.detnews.com/article/20100325/OPINION01/3250342/1008/opinion01/Editorial--DMC-purchaser-bets-on-making-profit-through-quality-care">opined</a> that Vanguard Health <blockquote>owned by the investment group Blackstone ... promises to plow $850 million into the DMC facilities over 10 years. The cash will modernize all of the hospitals and provide for a major expansion of Children's Hospital. The upgrades should enable DMC to compete with the best-appointed hospitals in Metro Detroit, and set a new competitive bar for health care in the region. The most significant news for Detroit is that Vanguard will maintain the DMC's commitment to treat all patients, whether or not they have private insurance.</blockquote> Caritas Christi Health Care and Cerberus Capital Management But third time is the charm. Today, the Boston Globe <a href="http://www.boston.com/business/healthcare/articles/2010/03/25/equity_firm_set_to_buy_caritas/">reported</a>, <blockquote>Caritas Christi Health Care, the state’s second-largest hospital group, is set to disclose today that it has agreed to be acquired by New York private equity firm Cerberus Capital Management in an $830 million deal that hospital officials say will allow the chain to shed debt and make major improvements. Under the agreement, Cerberus’s first investment in hospitals, Caritas Christi’s management in Boston will continue running the Catholic community hospitals. In addition, Cerberus has pledged to keep the system’s 12,000 employees and won’t sell the hospitals or take them public for at least three years. The firm said it hopes to expand its hospital holdings nationally and in Massachusetts, potentially making Caritas a more formidable competitor with large Boston hospitals for many routine procedures. All six Caritas hospitals, including the flagship St. Elizabeth’s Medical Center in Brighton, will remain open and follow the Catholic Church’s ethical and religious directives, among them a ban on abortions. But they would convert from nonprofit to for-profit businesses and begin paying taxes to state and local governments.</blockquote> This deal is so new that it has not yet generated the sort of breathless enthuisiasm fostered by the Detroit Medical Center/ Vanguard Health/ Blackstone Group deal. But the Fall River (MA) Herald-News did <a href="http://www.heraldnews.com/lifestyle/health/x1336918685/St-Annes-parent-company-to-be-acquired-by-private-equity-firm">note</a>, <blockquote>Officials with the Caritas Christi Health Care system and St. Anne's Hospital say an agreement to sell the system to Cerberus Capital Management will have a significant impact on improving services locally. The agreement with Cerberus, announced Thursday, will not only ensure the system maintains religious and ethical directives, but also infuse the system with millions of dollars in capital to make infrastructure improvements in the system's facilities. At St. Anne's that will mean vastly expanding the facility's emergency room, and allow for construction of planned operating and recovery rooms. The change will also allow St. Anne's to convert the recently acquired former St. Anne's School into a medical office complex. 'There will be more construction and expansion of the facility than any time in the history of the hospital,' Caritas Christi Chief Operating Officer Robert Guyon said.</blockquote> It certainly does look like a trend now. In fact, today a Wall Street Journal blogger <a href="http://blogs.wsj.com/deals/2010/03/25/obamacare-are-charity-hospitals-now-a-hot-commodity/">suggested</a> that this trend may be an immediate, although perhaps unintended result of the health care (insurance) reform legislation that just passed in the US Congress: <blockquote>Cerberus is planning to turn the Caritas Christi Health Care chain into a for-profit corporation in what it is likely the first sizable M&A bet on the newly minted Obama health-care overhaul law. [seemingly ignoring the Detroit Medical Center/ Vanguard Health/ Blackstone deal - ed] Hospitals that serve the poor and previously uninsured are expected to benefit from Obama’s plan, which is expected to extend insurance to 32 million previously uninsured Americans. That means such hospitals are likely to have more patients who can actually pay their bills. It is hard not to see how that new cash-flow stream wouldn’t have private equity licking its chops. </blockquote> That's funny, I did not think that a major reason to pass the bill was to benefit private equity.  Also, somehow the image of private equity honchos licking their chops over cash flow does not seem to fit with the breathless pronouncements above about improving quality, serving poor patients, etc. Will Private Equity and Health Care be Good for Each Other? In fact, it is not clear that these sorts of deals in the long run will be good for private equity, hospitals and health care providers, or patients. Barely mentioned in the coverage of the Caritas Christi / Cerberus deal was that at least one major past Cerberus deal, ironically located mainly in Detroit, home of the Detroit Medical Center/ Vanguard Health/ Blackstone deal, started with similar enthusiasm, but ended in disaster. As the New York Times <a href="http://www.nytimes.com/2009/08/09/business/09cerb.html">reported</a> in 2009, Cerberus' buy-out of Chrysler was once also heralded with breathless enthusiasm. <blockquote>'I thought, wow, this really signals a real change in the landscape here,' recalls a person who attended a Cerberus session who asked to remain anonymous because of agreements he signed. 'I guess it gave me hope. The auto companies needed an enormous amount of capital, and where else was it going to come from? John W. Snow, a former Treasury secretary in the Bush administration and Cerberus’s chairman, also heralded Cerberus as Chrysler’s savior, likening the firm’s investment to the government rescue of Chrysler in 1979. 'Over 25 years ago, when Chrysler faced bankruptcy, it turned to the United States government for assistance,' Mr. Snow said at a National Press Club meeting in 2007. 'Today, Chrysler again faces new financial challenges. But it is private investment stepping in to inject much-needed support.'</blockquote> However, the end results never did live up to the hype: <blockquote>For [Cerberus Capital Management CEO] Steve Feinberg, the onetime owner of Chrysler, the past year has been a crawl toward defeat. He lost billions of dollars. He lost prestige. He lost his privacy. And he ended up a ward and supplicant of the federal government. Mr. Feinberg took over Chrysler almost exactly two years ago, promising to revive the company. Chrysler filed for bankruptcy protection at the end of April. </blockquote> One problem in retrospect seems to be the hubris of the private equity leaders: <blockquote>Mr. Feinberg’s education at the hands of Chrysler, the government and economic reality is emblematic of the limits private equity players have encountered as they’ve sought to reap outsize returns while also contending that they had the smarts and managerial prowess to repair companies of any size.</blockquote> Even after the beautiful plan turned to ashes, it is still not clear that these leaders realized their limits: <blockquote>But, even now, Mr. Feinberg, a man who can play a decent game of chess while blindfolded, is hard-pressed to pinpoint many mistakes. Sitting in his office on Park Avenue, far away from the detritus that surrounds Detroit, he grows pensive when asked what he has learned from his audacious — and failed — effort to privatize and resurrect the legendary and deeply troubled auto giant. 'I don’t know what we could have done differently,' he says, crossing his arms on his chest. 'From the day we bought it, we worked hard to improve it.' </blockquote> One wonders if Mr Feinberg has learned more about his previous failure as he now grasps Massachusetts' second biggest hospital system. Summary The Chrysler debacle, however, suggests there should be concerns about private equity firms buying out hospitals and other health care providers, for example: - Will making a not-for-profit health care organization into a for-profit corporation really lead to more efficiency and lower costs? For-profit leaders tend to expect even larger compensation that not for-profit CEOs. Their decisions tend to driven by their short-term compensation, rather than the good of the organization.  For-profit corporations are supposed to generate profits for investors which may reduce re-investment in the corporation.  The thirst for more executive compensation may be a driving factor in the deal, as hinted in the Boston Globe coverage of the Caritas Christi/ Cerberus deal: <blockquote>While [current Caritas Christi CEO Ralph] de la Torre and other senior executives will retain their current salaries and benefits, they would be eligible for additional compensation from Cerberus based on the financial performance of the hospitals, Caritas officials said. They said the details of those financial incentives have yet to be worked out.</blockquote> - Can private equity cost-cutting techniques and other turn-around techniques really work in the health care environment? The Chrysler/ Cerberus case reveals how private equity leaders may get out of their depth in complex business contexts. Health care is even more complex than the automobile industry. - Finally, and more important, are for-profit hospitals and health care providers run by private equity really likely to be better at fulfilling their health care missions than they were when they were not-for-profit? I doubt there is any evidence that previous conversions of not-for-profit health care organizations to for-profit status improved health care, much less while simultaneously lowering costs and improving access. (Remember that many big health care insurance companies were once not-for-profit Blue Cross plans. Does Angela Braly's <a href="http://hcrenewal.blogspot.com/search/label/WellPoint">WellPoint</a> provide better care to more people at lower cost? But then again, when a Catholic charity teams up with an organization named for the <a href="http://en.wikipedia.org/wiki/Cerberus">three-headed dog</a> that guards the entrance to Hades, maybe they will need to put ski lifts in there too.

Now Private Equity Jumps into the Health Care Fray: Will Cerberus Do Better with Caritas Christi than It Did with Chrysler?

And now for an early report on what may be the latest fashion in the ongoing commercialization of US health care in the US. In the last few...

Đọc thêm »

The Health Care Reform Bill and Health Care Renewal

I have not written much about the seemingly endless health care reform debate in the US, because much of it has not been relevant to the issues we discuss on <a href="http://hcrenewal.blogspot.com/">Health Care Renewal</a>.  Now that the current phase of the debate is done, and legislation has been passed, let me offer my opinions on the few aspects that do seem relevant to this blog. The Sunshine Act For Health Care Renewal readers, the most important part of the legislation is that containing the provisions of the Sunshine Act, championed by Senators Grassley and Kohl.  (See <a href="http://postscript.communitycatalyst.org/?p=1209">this summary</a> on Postscript, the Prescription Project blog.)  The act requires that all drug, device, biologic, and medical supply manufacturers report essentially all payments to physicians or teaching hospitals to the goverment, and on the internet.  It does not appear that the rules apply to other health care related non-profit organizations, e.g., medical schools, disease advocacy groups, health care related charities, medical societies, etc, or to payments made by for-profit health insurers, clinical research organizations, and some other corporations.  Unfortunately, the provisions only take effect in 2013.  However, despite these quibbles, this still may be one of the most important advances promoting disclosure of health care related conflicts of interest made in the 21st century. Comparative Effectiveness Research As best as I can tell at this point, the current legislation used the wording from the bill previously passed in the US Senate, which we discussed <a href="http://hcrenewal.blogspot.com/2009/10/who-should-sponsor-comparative.html">here</a> and <a href="http://hcrenewal.blogspot.com/2009/11/no-free-speech-for-comparative.html">here</a>, regarding comparative effectiveness research.  Although its goal of setting up a not-for-profit comparative effectiveness organization seems laudable, the devil will be in the details.  The Senate version gave considerable oversight of this organization to those with vested interests in selling particular products or services, threatening the impartiality of the organization and the research it would sponsor, and perhaps thus wholly defeating its ostensible purpose.  Furthermore, the Senate bill included curious wording that seems to threaten the ability of those getting funding from the organization to express views that might disturb the organization's leadership, again threatening the integrity of their dissemination of its work, and perhaps violating the First Amendment of the US Constitution.  Whether these provisions provide benefits that outweigh their harms is highly questionable. Payments to Physicians We have criticized how the process of setting payments to physicians by the US Medicare system has been captured by a secretive committee of the American Medical Association that is dominated by physicians who do procedures, the RBRVS Update Committee, or RUC.  The results have been payments for primary care and other cognitive services that have failed to keep up with inflation, a major cause of the continuing decline of generalist/ primary care medicine in the US.  (See most recent post <a href="http://hcrenewal.blogspot.com/2009/06/letter-from-ruc-and-my-reply.html">here</a> about this.)  According to the summary provided by the American College of Physicians (<a href="http://www.acponline.org/advocacy/where_we_stand/access/health_reform_comparisons.pdf">here</a>), the new legislation would enable review of  payments made for specific services, and would reconsideration of the process used to set physician payments by an independent advisory group.  However, the bill would not mandate any changes in payments, or in the processes used to set them, including the pivotal role of the RUC.   So there is some chance that the legislation would lead to a more transparent, accountable, honest, and rational process for setting physician payments and hence eliminating perverse incentives, but no guarantee of such favorable changes. Summary The legislation seemingly will result in one major advance fostering disclosure of some conflicts of interest, and perhaps some progress in terms of reducing perverse incentives generated by Medicare's payments to physicians, and possibly reducing regulatory capture of this process.  It likely will result in more comparative effectiveness research, but how badly it will be biased in favor of vested interests is unclear.  As far as I can tell, the legislation will leave most of the other problems we discuss on Health Care Renewal untouched.  We thus have one or two small steps for mankind, but no reason for complacency. the news is not bad, but we are still a long way from meaningfully addressing concentration and abuse of power in health care.  There will be no rest for the weary bloggers of Health Care Renewal. Also, see comments <a href="http://brodyhooked.blogspot.com/2010/03/now-its-time-to-start-clearing-land.html">here</a> and <a href="http://brodyhooked.blogspot.com/2010/03/along-for-reform-ride-sunshine.html">here</a> by Dr Howard Brody on the Hooked: Ethics, Medicine and Pharma blog. ADDENDUM (25 March, 2010) - Also see <a href="http://alison-bass.blogspot.com/2010/03/shining-light-on-drug-company-shell.html">comments</a> on the Sunshine Act by Alison Bass on the Alison Bass Blog.

The Health Care Reform Bill and Health Care Renewal

I have not written much about the seemingly endless health care reform debate in the US, because much of it has not been relevant to the iss...

Đọc thêm »

Healthcare Legislation to "Control the People?"

At "<a href="http://hcrenewal.blogspot.com/2010/03/ama-and-nearly-100-other-physician.html">AMA And Almost 100 Physician Societies Sound Off To CMS On Health IT</a>" I referred to concern held by AMA and ~94 other medical specialty societies about comments overheard from senior government officials that: <blockquote>complex measures and high reporting thresholds are needed to discourage EP's - Eligible Professionals (i.e., eligible for government EHR subsidies) from switching back to the use of paper during this transition to EHRs.</blockquote> Such reporting requirements could not only 'discourage' a switch back to paper even if these 'government-approved' EHR's turned out to be a <a href="http://www.ischool.drexel.edu/faculty/ssilverstein/failurecases/?loc=cases&sloc=2009">clinical and/or operational nightmare</a> (which I feel is likely if not unavoidable based on numerous writings at this blog and <a href="http://www.tinyurl.com/healthITfailure">here</a>), but also could force event those planning to stay with paper and endure the "penalty" for doing so to move to computer systems. The human resources required to satisfy truly ominous reporting requirements via paper records might simply be too burdensome. This could be perceived as an ingenious and devious plan to establish control of healthcare providers via IT and data. (He who controls the data, controls the playing field.) Privacy activist Dr. Deborah Peel shares related concerns as expressed in a Wall Street Journal article yesterday "<a href="http://online.wsj.com/article/SB10001424052748703580904575132111888664060.html">Your Medical Records Aren't Secure</a>." Along the lines of control, now there's this, recently posted on <a href="http://www.drudgereport.com/">the Drudge Report</a>: <blockquote>Shocking Audio: Rep. Dingell Says ObamaCare Will Eventually ‘Control the People’ (<a href="http://www.breitbart.tv/shocking-audio-rep-dingell-says-obamacare-will-eventually-control-the-people">link</a>)</blockquote> I don't care which "people" Dingell's referring to - 300 [sic] Americans (he left out "million"), physicians, insurers, etc. Our government has no business discussing "controlling" anyone. Ideology aside, the control mentality of government over medicine, facilitated by healthcare IT, is starting to rear an ugly head. I'm afraid this phenomenon might get really out of hand in the very near future. -- SS Addendum: there appears to be a <a href="http://hcrenewal.blogspot.com/2010/01/more-on-perversity-in-hit-world.html">healthcare IT industry sockpuppet</a> writing in the comments thread at the <a href="http://online.wsj.com/article/SB10001424052748703580904575132111888664060.html">aforementioned WSJ article</a> by Dr. Peel, under the especially inappropriate nom de blog "Hank Dagny." The usual dismissal of physician concerns about HIT, unqualified statements, ad hominem attacks, and other games typical of an industry shill occur throughout that comment thread. See my reply <a href="http://online.wsj.com/article/SB10001424052748703580904575132111888664060.html#articleTabs_comments%3D%26articleTabs%3Dcomments%26commentId%3D1031862">at this link</a>. (It takes a moment to load the WSJ comment thread.) Also see this summary of a <a href="http://www.schneier.com/blog/archives/2010/03/electronic_heal.html">Canadian analysis of electronic health record security</a> at the blog of security technologist <a href="http://www.schneier.com/about.html">Bruce Schneier</a>. Hat tip to Joseph Arpaia, MD.

Healthcare Legislation to "Control the People?"

At " AMA And Almost 100 Physician Societies Sound Off To CMS On Health IT " I referred to concern held by AMA and ~94 other medic...

Đọc thêm »

DR. PANGLOSS AS NIH INSTITUTE DIRECTOR

DR. PANGLOSS AS NIH INSTITUTE DIRECTOR JAMA is out today with a <a href="http://jama.ama-assn.org/cgi/content/extract/303/12/1192">Commentary</a> by Dr. Thomas Insel, Director of the National Institute of Mental Health. Using indirection, Dr. Insel has risen to the defense of seven academic psychiatrists on whom an ethical searchlight has been trained for the past several years by Senator Grassley and others. With ludicrous optimism and a series of straw man discussions, Dr. Insel makes the case that things are not really as bad as they seemed to be or, if they were, then other specialty physicians were doing much the same things. Dr. Insel needs to recalibrate his ethical compass. Why is an NIH Institute Director issuing this apologia for the corruption of academic psychiatry? Does he not have better things to do, such as ensuring that longstanding NIH regulations on conflict of interest are enforced? Why does an NIH Institute Director presume to speak for academic psychiatry? Where are the leaders of the major professional and scientific organizations like the American Psychiatric Association, the American College of Psychiatrists, the American College of Neuropsychopharmacology, and the Society of Biological Psychiatry? Why are they not stepping up publicly to the plate? Perhaps they are confounded by the awkward fact that some of the seven individuals are current and past presidents of these very organizations. Even the Institute of Medicine of the National Academy of Sciences has not sanctioned those of the seven who are Institute members. Why is an NIH Institute Director downplaying the gravity of the ethical controversies surrounding these compromised individuals like Charles Nemeroff at Emory (now at Miami), and Alan Schatzberg at Stanford? To hear Dr. Insel tell it, all they did was fail to disclose income from pharmaceutical companies. That is not the half of it. Readers can look <a href="http://hcrenewal.blogspot.com/search?q=Nemeroff">here</a> and <a href="http://hcrenewal.blogspot.com/search?q=Schatzberg">here</a> for much more detail on the activities of Nemeroff and Schatzberg. If Dr. Insel chose to remain ignorant of or to overlook the history of false claims on behalf of pharmaceutical corporations or the concealment of consulting relationships or the complaisance with ghostwriting or the patently misleading “educational” presentations or the cashing in through stock sales or the editorial self dealing, then Dr. Insel’s fitness to serve as an NIH Institute Director needs to be reviewed. Surely Dr. Insel knows that Nemeroff and the others worked mainly with the marketing personnel within pharmaceutical companies. Nemeroff’s staggering schedule of promotional talks for GlaxoSmithKline, released by Senator Grassley, is testament to that. So is Nemeroff’s record of priming the pump for himself with GSK by giving the corporation unpublished research data from NIMH-funded projects at Emory. In turn, GSK and its medical education communications company, Scientific Therapeutics Information, Inc., incorporated Nemeroff’s privileged material in the training manual for PsychNet – a speaker program designed to build advocacy for GSK’s antidepressant drug Paxil. These issues go well beyond just failing to report income. They signify the corruption of academic psychiatry. Doesn’t Dr. Insel understand that? In his Commentary, Dr. Insel reported no financial disclosures. This is a good example of the problem that Dr. Insel doesn’t see. Many readers will interpret this Commentary from the Director of NIMH as the opening move in the attempted rehabilitation of Charles Nemeroff by his friends and cronies. Though Dr. Insel spoke in platitudes about the need for transparency as a solution, the spirit of transparency did not move him to disclose that Nemeroff is his former boss at Emory; that Nemeroff found a position for him when Insel was departing the intramural research program at NIMH; that Nemeroff lobbied for Insel’s appointment as NIMH Director; and that Insel appointed Nemeroff as an advisor soon after he moved to NIMH. These are pertinent conflicts of interest that readers of JAMA deserve to know about. Quis custodiet ipsos custodes? Maybe Dr. Insel should stick to his knitting and resist the impulse to speak for academic psychiatry as a whole. A good place for him to start looking hard would be at the productivity and accounting of the once vaunted Emory-GSK-NIMH Collaborative Mood Disorders Initiative (Principal Investigator Charles B. Nemeroff; 5U19MH069056). One never knows what one will find when the rocks are turned over.

DR. PANGLOSS AS NIH INSTITUTE DIRECTOR

DR. PANGLOSS AS NIH INSTITUTE DIRECTOR JAMA is out today with a Commentary by Dr. Thomas Insel, Director of the National Institute of Menta...

Đọc thêm »

Members of the Board of Now Bankrupt Lehman Brothers as Leaders of Health Care?

In our own Providence Journal, Michael Hiltzik <a href="http://www.projo.com/opinion/contributors/content/CT_hiltz20_03-20-10_7EHQ7MI_v20.405673a.html">commented</a> about the Valukas report on the fall of the once proud Lehman Brothers.  He asserted that one of the lessons learned from the case is the "folly of relying on self-discipline and self-regulation in the financial markets," particularly given the irresponsibility of the top leaders of financial corporations. In particular, <blockquote>I’d love to hear an argument for allowing any of Lehman’s independent directors, who seem seldom to have asked a penetrating question, ever to serve on a corporate board again. As I write, those 10 directors, who pulled down better than $100,000 cash a year to sit jointly in the driver’s seat for Lehman’s race to disaster, still boast at least 15 company directorships among them. Does this make you confident that corporate America is in good hands? Me neither.</blockquote> It also should not make us confident that health care, and academic medicine, in the US and elsewhere, are in good hands. Hiltzik declined to name the members of the Lehman board, or identify the other organizations that they lead.  One can find a list of the directors who presided over the demise of Lehman in the company's <a href="http://www.sec.gov/Archives/edgar/data/806085/000104746908002261/a2183244zdef14a.htm">2008 proxy statement</a>. It turns out that while they were presiding over Lehman's collapse, they also were presiding over the direction of some major health care organizations, to wit: <blockquote>MICHAEL L. AINSLIE Director since 1996 Trustee of Vanderbilt University [including the School of Medicine] JOHN F. AKERS Director since 1996 ROGER S. BERLIND Director since 1985 MARSHA JOHNSON EVANS Director since 2004 Ms. Evans served as President and Chief Executive Officer of the American Red Cross from August 2002 to December 2005. RICHARD S. FULD, JR. Director since 1990 serves on the Board of Trustees of ... New York-Presbyterian Hospital SIR CHRISTOPHER GENT Director since 2003 Non-Executive Chairman of GlaxoSmithKline plc. JERRY A. GRUNDHOFER Mr. Grundhofer is a director of <a href="http://www.ecolab.com/MarketsServed/Healthcare.asp">Ecolab, Inc </a>["As a leader in infection prevention, Ecolab provides products, tools, training and service to healthcare facilities to help prevent the spread of healthcare acquired infections.] ROLAND A. HERNANDEZ Director since 2005 HENRY KAUFMAN Director since 1995 a Member of the Board of Trustees of New York University [including the School of Medicine] a Member of the Board of Governors of Tel-Aviv University [including the Sackler Faculty of Medicine] JOHN D. MACOMBER Director since 1994 [Also, a member of the board of directors of <a href="http://www.warrenpharma.com/pages/bios/Macomber.html">Warren Pharmaceuticals</a>, "a privately held biotech company, incorporated in 2001 for the purpose of developing proprietary tissue-protective technologies." </blockquote> So, collectively, the confidence uninspiring members of the board of the now defunct Lehman Brothers also were on the boards of two major US and one major Israeli university that include well-known medical schools, one major health care related charity, one major British multi-national pharmaceutical company, a prestigious academic medical center, a large public for-profit US company with major health care interests, and a small, privately held biotechnology company.  We have another vivid illustration in the aftermath of the global economic collapse, and in an ongoing health care crisis, how some of the problems of health care, and academic medicine in particular, may have been at least enabled by leadership more used to working in an increasingly amoral marketplace than to upholding the academic mission. All health care organizations, for-profit and not-for-profit, those in the US and those in other countries, need leaders who value their health care and academic missions more than simply the money they may bring in.

Members of the Board of Now Bankrupt Lehman Brothers as Leaders of Health Care?

In our own Providence Journal, Michael Hiltzik commented about the Valukas report on the fall of the once proud Lehman Brothers. He asser...

Đọc thêm »

The National Program for Healthcare IT in the United States, 2015

Here is what I predict the the National Program for Healthcare IT in the United States will likely resemble in 2015 - namely, the National Programme for IT in the NHS in 2010: <a href="http://www.guardian.co.uk/business/2010/mar/21/nhs-software-system-close-to-imploding"></a><blockquote><a href="http://www.guardian.co.uk/business/2010/mar/21/nhs-software-system-close-to-imploding">Delays with £12.7bn NHS software program bring it close to collapse</a> Sunday 21 March 2010 18.47 GMT Simon Bowers guardian.co.uk The government's ailing £12.7bn IT programme to overhaul paper-based <a href="http://www.guardian.co.uk/society/nhs" title="More from guardian.co.uk on NHS">NHS</a> patient records in England is close to imploding, potentially triggering a deluge of legal claims against the taxpayer running into billions of pounds, which could start to emerge weeks before a general election. The Guardian has discovered that mounting chaos and delays in installing core care records systems across the country is reaching a tipping point, with intense political pressure from Whitehall now falling on Morecambe Bay NHS Trust and a software "go-live" deadline set for the end of this month. Morecambe Bay is intended to be the first acute trust to take a new patient administration software package called Lorenzo, which has been delayed for four years. After a string of missed deadlines, the Department of Health set a deadline of March 2010 for Lorenzo last April. "If we don't see significant progress... then we will move to a new plan for delivering infomatics in healthcare," Christine Connelly, the Department of Health's director general of IT, said at the time. </blockquote>Problem #1:A problem of leadership. As I mentioned <a href="http://hcrenewal.blogspot.com/2009/12/uk-mp.html">here</a>, Christine Connelly knows as much about "informatics" as I know about candy making. She was previously Chief Information Officer at Cadbury Schweppes with direct control of all IT operations and projects. She also spent over 20 years at BP where her roles included Chief of Staff for Gas, Power and Renewables, and Head of IT for both the upstream and downstream business.Candy experience? More than <a href="http://en.wikipedia.org/wiki/Willy_Wonka">Willy Wonka</a>. Experience producing gas? Plentiful. Medical informatics expertise? Not so much. Predecessors also lacked genuine medical informatics expertise. This lack of appropriate expertise is all too common in healthcare leadership, and no exception is made for healthcare IT. <blockquote>Preparatory testing at Morecambe Bay is believed to have failed some weeks ago, though <a href="http://www.guardian.co.uk/business/isoft" title="More from guardian.co.uk on iSoft">iSoft</a>, the firm behind Lorenzo, last week insisted testing was "on track" and dismissed as "media speculation" suggestions that the deadline was in jeopardy. </blockquote>Problem #2:Claiming everything is going just fine. This initiative has been a debacle from the start, partly due to it being rushed for purposes of governmental grandstanding. Don't take my word for it. Take the word of these people: <ul><li>The UK Public Accounts Committee report on problems in the £12.7 billion national EMR program is <a href="http://www.publications.parliament.uk/pa/cm200809/cmselect/cmpubacc/153/15304.htm">here</a>. </li></ul><ul><li> Gateway reviews of the UK National Programme for IT from the Office of Government Commerce (OGC) are <a href="http://www.connectingforhealth.nhs.uk/about/foi">here</a> (released under the UK’s Freedom of Information Act), and a summary of 16 key points is <a href="http://www.computerweekly.com/blogs/tony_collins/2009/06/16-key-points-in-gateway-revie.html">here</a>. </li></ul><ul><li>ComputerWeekly.com - <a href="http://www.computerweekly.com/Articles/2008/02/18/229447/secret-downing-street-papers-reveal-tony-blair-rushed-nhs.htm">Blair Rushed NHS IT</a></li></ul><ul><li>Telegraph.co.UK - more on rushing - <a href="http://www.telegraph.co.uk/health/healthnews/7408379/Patients-medical-records-go-online-without-consent.html">Patients' medical records go online without consent</a></li></ul> Back to the article:<blockquote>The BMA (British Medical Association) echoed calls for greater public scrutiny of contracts. "Changes to NHS IT should be driven not by financial or political expedience, but by a commitment to improving clinical care. If any new system is rushed through too quickly, there can be a negative impact on patient care."</blockquote> Problem #3: The obvious as stated by clinicians is ignored by project leaders and politicians. <blockquote>Failure at Morecambe Bay could see the largest regional contractor on the 10-year programme, US outsourcing firm Computer Sciences Corporation (CSC), come under renewed pressure to book heavy provisions against the value of three £1bn NHS contracts – a move likely to send the group's share price tumbling.It would also be bad news for iSoft, the Australian firm formerly called IBA Health, which in 2007 acquired crisis-stricken iSoft plc, the British firm behind Lorenzo, and took its name. It has told investors: "iSoft expects the milestone at Morecambe Bay to be met according to the timetable agreed between its partner CSC and the NHS, and expects this achievement to trigger a cash payment to the company."A Morecambe Bay delay could also push mounting tensions between the Department of Health and CSC into the hands of lawyers, as a squabble breaks out over who should foot the bill for seven years of underperformance since the National Programme contracts were signed in 2003. The government is already facing a reported £700m legal dispute with CSC's fellow regional contractor Fujitsu after the Japanese consultancy firm walked away from a £1bn contract to supply and install IT systems at NHS trusts across the South of England and the West Country three years ago. If CSC, an $11bn (£7.3bn) Virginia-based group listed on the New York stock exchange, were to enter into a parallel legal battle, it would leave 80% of care records IT contracts – the heart of the National Programme – in the hands of lawyers. After the departure of Fujitsu, and Accenture a year earlier, the only remaining regional contractor aside from CSC is BT, responsible for the London area. It was forced last year to wipe between half and 70% from the value of its £1bn contract with NHS London because of delays and software failings. </blockquote> Problem #4 (if you can follow all that nonproductive but expensive mayhem that does little beyond consuming precious healthcare resources better spent elsewhere): Too much outsourcing to a musical-chairs confederacy of management consultant firms rather than use of local expertise. <blockquote>... Disappointing results from the National Programme – once a flagship NHS modernising push for then prime minister Tony Blair – have become an embarrassment for Labour, and the project has lost the confidence of many NHS staff. Up to now, however, ministers have sought to stress that the taxpayer has not lost out. Earlier this month, health minister Mike O'Brien told BBC Radio 4's File on 4: "Yes, there have been delays. These delays have not cost the tax payer. They have cost the companies – they have taken the risk... Some of these companies have been more ambitious than they should have been." [In other words, they promised far more than they could deliver with the talent on hand - ed.] </blockquote> Problem #5: Incompetence, talent mismangement and not knowing what they do not know about healthcare IT. Read the rest of the article at the link above.Also note the UK's healthcare system is far smaller, far more monolithic, and far more easily controlled by government than that in the U.S. My belief is that the US program for health IT will likely resemble the UK's in just a few years' time, for the very same reasons. Unless, that is, major changes in the approaches to design and implementation occur, and soon, and the purpose of HIT reigned in to clinician support, not support of massive bureaucracies. I consider the necessary changes unlikely due to the intransigence of the IT culture and of the leadership behind the effort. Again, don't take it from me, take it from the <a href="http://www8.nationalacademies.org/onpinews/newsitem.aspx?RecordID=12572">U.S. National Research Council</a> and other writers at <a href="http://www.ischool.drexel.edu/faculty/ssilverstein/failurecases/?loc=cases&sloc=2009">this link</a>. -- SS

The National Program for Healthcare IT in the United States, 2015

Here is what I predict the the National Program for Healthcare IT in the United States will likely resemble in 2015 - namely, the National P...

Đọc thêm »

Effort to Make Health Insurance Reimbursement Fairer Lead by Director of Insurance Company Accused of Unfair Practices

We previously <a href="http://hcrenewal.blogspot.com/2009/01/unitedhealth-and-ingenix-settles.html">discussed</a> a legal settlement of charges that UnitedHealth's Ingenix subsidiary manipulated its database of payments to physicians so as to reduce its and other insurers' payments to "out-of-network" physicians.  One aspect of the settlement was a new initiative to better determine such payments.  Now that effort has been caught up in the web of conflicts of interests that has ensnared health care.  As <a href="http://www.syracuse.com/news/index.ssf/2010/03/su_professor_hired_to_rid_heal.html">reported</a> by the Syracuse (NY) Post-Standard, <blockquote>[New York state Attorney General Andrew] Cuomo obtained $100 million in settlements from 13 insurers, including Excellus, that used the defective reimbursement data supplied by Ingenix, a subsidiary of United Health, the nation’s second biggest insurer. Cuomo’s investigation showed insurers such as Excellus used that data to shortchange New York consumers by as much as 28 percent.</blockquote> Also, the settlement included <blockquote>money ... to create FAIR Health Inc., a New York City-based nonprofit that is supposed to come up with a new, fair reimbursement system that will be used by insurers nationwide. FAIR Health has contracted with SU [Syracuse University] to help create that database.</blockquote> The effort was lead by SU Professor Deborah Freund, "a distinguished professor of public administration and economics. She also is an adjunct professor of orthopedics and pediatrics at Upstate Medical University." However, <blockquote>Freund also happens to be listed on the health insurance company’s payroll. Excellus paid Freund $61,378 last year for serving on its board of directors, according to a financial report Excellus filed with the state last week. After The Post-Standard spent several days investigating her ties to the insurance company, Freund quit the Excellus board Friday afternoon.</blockquote> The Post-Standard noted, <blockquote>But some consumer advocates said it was odd that a paid director of Excellus, one of the companies targeted in Cuomo’s investigation, was playing such an important role. [Art] Levin, of the Center for Medical Consumers, said it was ironic that one of the people helping to fix a payment system riddled with industry conflicts of interest may have had a conflict of her own. 'This makes no sense whatsoever given that Excellus is part of the settlement,' Levin said. Chuck Bell, programs director of Consumers Union, publisher of Consumer Reports and an outspoken supporter of the payment reform project, was unaware of Freund’s ties to Excellus. 'I think it’s a concern because consumers do want this to be an entity that is independent of the insurance industry,' Bell said.</blockquote> Among Freund's defenders was <blockquote>Dr. Nancy Nielsen, immediate past president of the American Medical Association and a board member of FAIR Health, [who] said the AMA looked closely at Freund’s qualifications and her Excellus affiliation. She said the doctors’ group concluded her expertise is important to the project and was comfortable that there were enough safeguards in place to avoid any conflicts. Nielsen said FAIR Health would have independent experts not tied to the insurance industry review any recommendations from Freund’s research team.</blockquote> But to add another level of irony, and perhaps conflict of interest, the Minneapolis - St Paul Business Journal just <a href="http://twincities.bizjournals.com/twincities/stories/2010/03/01/daily1.html?surround=lfn">announced</a> <blockquote>The American Medical Association will use an electronic health records system from Ingenix, the company said Monday. The Eden Prairie health care information technology said its Web-based CareTracker software will run on an AMA platform currently in beta testing with the Michigan State Medical Society and will launch nationwide later this year. The platform is touted as a way to improve patient care, clinical efficiency and make administration simpler. CareTracker is the first such system that the AMA will provide to physicians online. 'Ingenix and the AMA will help doctors adopt health IT systems that reduce time spent on administrative tasks and enable them to devote more of their time to patient care,' said Bill Miller, Ingenix executive vice president of health care delivery systems, in a news release. 'Ingenix CareTracker integrates patient medical records and e-prescribing tools into the physician’s workflow. By selecting CareTracker for its platform, the AMA is helping physicians make smarter, more practical decisions about technologies to support their practice.'</blockquote> Although we often discuss conflicts of interests involving physicians or health care academics who moonlight for drug and device companies, and the effects of these relationships on clinical research and medical education, it seems like the pervasive web of conflicts of interest in health care has entangled just about every kind of health care organization, health care decision-maker, and health care opinion leader. Thus, we need to be extremely skeptical of just about everyone and every organization claiming to provide health care related goods and services, or whose goal is to improve any aspect of health care. The danger is that such skepticism will lead to cynicism and distrust. At the least, comprehensive, detailed disclosure of all even indirectly relevant financial and other relationships by all health care decision-makers and opinion leaders at any level, whether they be individuals or organizations, would make it somewhat easier to assess their decisions and opinions.

Effort to Make Health Insurance Reimbursement Fairer Lead by Director of Insurance Company Accused of Unfair Practices

We previously discussed a legal settlement of charges that UnitedHealth's Ingenix subsidiary manipulated its database of payments to ph...

Đọc thêm »