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Who Guards the Guardians? - the Case of Boston Scientific

The fallout from the case of the faulty implantable cardiac defibrillators continues.  To summarize the story thus far, We started posting about Boston Scientific's travails in 2005, starting with allegations that Guidant, which is now a Boston Scientific subsidiary, hid information about defects in the implantable cardiac defibrillators (ICDs) the company manufactured. As we noted in early 2005 <a href="http://hcrenewal.blogspot.com/2005/05/guideants-short-circuit.html">here</a>, Guidant executives allegedly knew that ICDs made from 2000-2002 were at risk for short-circuiting and failing, thus making them unable to deliver potentially life saving electrical shocks meant to prevent cardiac arrests, but the company only revealed the problem in 2005. By failing to notify physicians and the public, Guidant executives let expensive and profitable, but potentially useless devices to continue to be implanted, potentially increasing the risk of sudden death for the patients who received them. Then here we <a href="http://hcrenewal.blogspot.com/2005/06/guidants-short-circuit-reloaded.html">noted</a> reports that Guidant continued to ship failure-prone devices even after it had designed and started to manufacture new ICDs that were supposed to be less likely to fail. By June, 2005 we <a href="http://hcrenewal.blogspot.com/2005/06/more-short-circuits-for-guidant.html">posted</a> that Guidant had recalled thousands of ICDs, including models that were previously not identified as likely to fail. Later that year, the case <a href="http://hcrenewal.blogspot.com/2005/07/new-england-journal-of-medicine-on.html">rated</a> an article by Robert Steinbrook in the New England Journal of Medicine. Towards the end of 2005, we <a href="http://hcrenewal.blogspot.com/2005/11/eliot-spitzer-sues-guidant-for-fraud.html">noted</a> that Eliot Spitzer had sued Guidant for fraud.  At the end of the year, more information <a href="http://hcrenewal.blogspot.com/2005/12/for-guidant-these-people-are-just.html">appeared</a>, suggesting that Guidant knew the ICDs were flawed, but continued to sell them. <a href="http://hcrenewal.blogspot.com/2006/03/more-about-guidant-it-is-possible-that.html">Still more</a> appeared early in 2006. Then the business media became interested in the bidding war between Johnson and Johnson and Boston Scientific for Guidant, provoking a bit <a href="http://hcrenewal.blogspot.com/2006/01/new-problems-for-guidant-and-boston.html">more interest</a> in the tale of the suppression of data about the flawed ICDs. Then all was quiet until 2009, when Guidant, now a Boston Scientific subsidiary, pleaded guilty to two criminal misdemeanor charges that it failed to properly notify the FDA about problems with its ICDs (see post <a href="http://hcrenewal.blogspot.com/2009/11/boston-scientific-to-plead-guilty-of.html">here</a>). Later, the Guidant subsidiary of Boston Scientific settled charges that it gave doctors kickbacks as part of a "seeding study" to use its devices. At that time, it came to light that Boston Scientific had made another settlement, in 2007, of civil lawsuits alleging that the company hid problems with its products (see post <a href="http://hcrenewal.blogspot.com/2009/12/boston-scientific-again-settles-this.html">here</a>). More details about this guilty plea have just been reported.  As <a href="http://www.startribune.com/business/89963612.html">noted</a> by the Minneapolis Star-Tribune, <blockquote>A federal judge on Monday delayed a decision on whether to accept a $296 million plea agreement between the U.S. Justice Department and Boston Scientific Corp.'s Guidant subsidiary, which was charged with concealing critical safety information involving some of its top-selling heart devices. If approved, the criminal penalty would rank as the largest ever in medical technology for a company that violated the federal Food, Drug and Cosmetic Act. But lawyers representing victims implanted with the potentially faulty devices threw a wrench into what was expected to be a routine hearing by demanding a piece of the settlement.</blockquote> It appears that this settlement would not do any specific good for patients who claim to have been harmed by being implanted with a device that the manufacturer knew at the time to be faulty. Also, the Star-Tribune noted: <blockquote>Boston Scientific bought Guidant Corp., whose cardiac rhythm division is based in Arden Hills, for $27 billion in 2006. Though troubled, the division that makes pacemakers and defibrillators reported $2.6 billion in sales last year and still employs 2,000 people locally.</blockquote> Thus, the financial penalty to be paid by Boston Scientific only would amount to little over ten percent of the yearly sales generated by the division which failed to disclose the faulty devices. Adding to the sense that Boston Scientific and its leadership will feel little pain from the "largest criminal penalty ever assessed against a medical device company" (see <a href="http://www.google.com/hostednews/ap/article/ALeqM5i6EeKMw1uQyqOJxROb_E5H2vMIeQD9ET7VCO0">this AP report</a>) was <a href="http://www.boston.com/business/articles/2010/04/06/success_or_no_ceos_score/">this op-ed </a>in the Boston Globe. It summarized just how richly the former CEO of Boston Scientific, Jim Tobin, who presided over the acquisition of Guidant and thus became responsible for its ethical lapses, and the current CEO, Ray Elliott have been compensated, in contrast to this supposedly large penalty. Re Tobin: <blockquote>Tobin came to Boston Scientific in 1999 with similar instructions to clean up somebody else’s mess. He had to close facilities, ward off competitors, and, yes, settle patent lawsuits even back then. His carrot: A million stock options, a big deal in those days. Tobin did fix some problems, and he brought the company’s new drug-eluting stent to market. Boston Scientific shares climbed, and he made about $39 million on options over the years. But Tobin also collected problems, the ones now in Elliott’s lap, and Boston Scientific shares fell again. So here’s what the board did in February last year: It awarded Tobin 2 million more stock options, just a few months before announcing his retirement. Adjusting for a stock split, the second option grant is the same size as what he got upon arrival.</blockquote> And re Elliott: <blockquote>Elliott, the man named as CEO of Boston Scientific Corp. last summer, became one of the best-paid chief executives in America in 2009. Separate national surveys published in the past week by The Wall Street Journal and The New York Times, although incomplete, come up with just one or two large-company CEOs with compensation packages that could outdo Elliott’s $33.5 million payday.</blockquote> And see also <a href="http://hcrenewal.blogspot.com/2010/03/new-investigations-of-boston-scientific.html">this Health Care Renewal post</a>.  TheBoston Globe editorialist asked "so what exactly was the point of the second award [to Tobin]?"  Perhaps this question should be directed to the <a href="http://www.bostonscientific.com/AboutUs/Leadership.bsci/,,/navRelId/1004.1012/seo.serve">Boston Scientific board</a> who approved it, and also approved Elliott's outsize pay package.  The current board includes two co-founders of the company and the current CEO, two retired politicians, a few others with whom I am not familiar, but also two academics who may be quite familiar to Health Care Renewal readers.  Recalling that Boston Scientific tried to plead guilty to charges of "making false statements ... to the FDA," and "failing to promptly notify regulators," it is striking that both these academics have had issues with transparency and free speech.  We just <a href="http://hcrenewal.blogspot.com/2010/04/mainstream-media-discovers-conflicts-of.html">posted</a> about the repeated failure of Prof Uwe Reinhardt to acknowledge the conflict of interests generated by his numerous memberships in the boards of health care companies, including Boston Scientific, when writing about health policy issues.  We have previously <a href="http://hcrenewal.blogspot.com/2006/03/new-species-of-conflict-of-interest-in.html">posted</a> about the the conflicts of Marye Anne Fox, the Chancellor of the University of California - San Diego and hence leader of its medical school and academic medical center.  Chancellor Fox has just been <a href="http://www.thefire.org/article/11612.html">criticized</a> by FIRE (the Foundation for Individual Rights in Education) for allowing the silencing of a student publication and television station which had published or broadcast opinions that apparently offended university leaders. So who in this sorry tale will stand up for quality care of patients?  The US Department of Justice is to be commended for pursuing deception by a large medical device company, but apparently could not bring itself to request a punishment for unethical practices likely to even inconvenience those responsible for the bad behavior.  The previous and current company CEOs have become quite rich without having to stand up for honesty, or patient safety.  The board of directors who are supposed to take responsibility for the overall direction of the company seem to have been happy just to go along. As I have <a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements">said</a> before, endlessly, we will not deter unethical behavior by health care organizations until the people who authorize, direct or implement bad behavior fear some meaningfully negative consequences.  Relatively small fines imposed on large corporations pain workers on the line and stockholders while sparing the richly paid top hired management and the boards that will not reign them in.  Real health care reform needs to make health care leaders accountable, and especially accountable for the bad behavior that helped make them rich.

Who Guards the Guardians? - the Case of Boston Scientific

The fallout from the case of the faulty implantable cardiac defibrillators continues. To summarize the story thus far, We started posting a...

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Mainstream Media "Discovers" Conflicts of Interest of Prominent Health Policy Pundit

The main-stream media, in this case <a href="http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2010/04/06/businessinsider-new-york-times-health-care-blogger-secretly-holds-5-million-in-health-care-stocks-2010-4.DTL">the San Francisco Chronicle</a>, just "discovered" an important case of a conflicted health policy pundit, <blockquote>Uwe Reinhardt, a Princeton economic professor who often writes about health care for the New York Times' Economix blog, earns more than $500,000 a year working for a number of health care companies. He also holds more than $5 million worth of related stock. Reinhardt's <a href="http://www.nytimes.com/ref/business/economy/reinhardt.ready.html">NYT bio</a> does not mention these financial relationships. As the <a href="http://www.nytpick.com/2010/04/ethics-breach-princeton-prof-who-writes.html">NYTPicker points out</a>, Reinhardt's various incomes break the New York Times rules, which ban anyone who writes for the paper from having any financial interest 'in a company, enterprise or industry that figures or is likely to figure in coverage that he or she provides, edits, packages or supervises regularly.' We asked the New York Times for comment. They sent us this email: 'Professor Reinhardt is a leading expert on the economics of health care, and has provided valuable and independent insights in his blog posts. He has mentioned his service on corporate boards in the blog, but we are reviewing how to more fully describe his activities for readers of Economix.' We also asked Reinhardt for comment. He is working on one for us and we will post it here as soon as possible. Here's the breakdown of what he owns, according to NYTPicker: * Reinhardt either earns an income or stock options from the five different private health care companies for which he sits on the board of directors/serves as a trustee. * He has sat on the board of health care company, Amerigroup, since 2003. This tenure has resulted in Reinhardt's accumulation of 144,558 shares in the company and $226,531 in cash-and-stock compensation. These shares are currently valued around $4.8 million. * Reinhardt also holds 75,625 shares of Boston Scientific (worth more than $500,000 in value) and earned $213,132 from the company in 2009. He has sat on the board of this medical device manufacturing company since 2005. * Reinhardt serves as a trustee for H&Q Healthcare Investors and H&Q Life Science Investors. His 2008 income from the companies included $43,000 in income and between $1 and $10,000 worth of securities. * He also made $2.3 million from the 2007, $5.1 billion sale of Triad Hospitals to Community Health Systems.</blockquote>It only took four years for this to get into the main-stream media. The reason "discovered" is in quotes is that we have been writing about Reinhardt's conflicts of interests vis a vis his prominent opinions on health policy since 2006 on <a href="http://hcrenewal.blogspot.com/">Health Care Renewal</a>. As I wrote in a comment on the original NYTPicker post, in 2006, we first <a href="http://hcrenewal.blogspot.com/2006/03/economist-puts-down-physicians-cri-du.html">wrote</a> about a letter to the editor of the NY Times by Reinhardt dismissing a physician op-ed writer's concerns about what has gone wrong with health care.  Reinhardt's letter failed to disclose the board memberships he held at that time. In 2009, we <a href="http://hcrenewal.blogspot.com/2009/01/what-ruc-prominent-health-care-policy.html">wrote</a> about how Reinhardt left out some crucial facts in his discussion in the Economix blog of how physicians are paid. That year we also <a href="http://hcrenewal.blogspot.com/2009/05/what-influenced-paean-to-karen-ignagne.html">wrote</a> about how Reinhardt defended Ms Karen Ignagni, CEO of America's Health Insurance Plans (AHIP) in an interview quoted in a Washington Post article. In neither case above did Reinhardt or the newspaper reveal his conflicts. Note that Reinhardt is not the only case of a prominent health policy expert with undisclosed conflicts of interest. See <a href="http://hcrenewal.blogspot.com/2006/03/new-species-of-conflict-of-interest-in.html">this post </a>for some examples we had found in 2006. In fact, in my humble opinion, the public discourse about health care policy in general, and health care reform in particular has been seriously distorted by various commentators, pundits, and experts who have major conflicts of interest, usually in the form of important financial relationships with large health care organizations.  In many cases, these conflicts are not disclosed.  A related problem is the influence of various non-profit organizations that are heavily funded by those with vested interests, usually in selling particular health care products or services.  Such funding is also rarely disclosed.  I further submit that this distortion has overwhelmingly been in favor of various aspects of the status quo that have been so profitable for the discussants, and their commercial sponsors.  This distortion has meant that certain important problems, especially those that we discuss on Health Care Renewal, are rarely even mentioned in the mainstream media, in journals on health care and services research and health policy, and in political discussion.  Try, for example, to find any discussion of the impact of ill-informed, self-interested, conflicted or corrupt leadership of prominent health care organizations on costs, access and quality, or on patient outcomes.  It is simply not done to discuss the shortcomings of leadership, maybe because it is this leadership who subsidizes many of the pundits, commentators and experts.  At a minimum, participants in the health policy discussion, starting with the most prominent, should fully disclose all financial relationships that could constitute conflicts of interest.  Meanwhile, those listening to the discussion should be extremely skeptical about the opinions expressed.

Mainstream Media "Discovers" Conflicts of Interest of Prominent Health Policy Pundit

The main-stream media, in this case the San Francisco Chronicle , just "discovered" an important case of a conflicted health polic...

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Quis Custodiet Ipsos Custodes?

HAPPY TIMES AT NIMH Two weeks ago I <a href="http://hcrenewal.blogspot.com/2010/03/dr-pangloss-as-nih-institute-director.html">discussed</a> a Commentary in JAMA by Dr. Thomas Insel, Director of the National Institute of Mental Health. Over on <a href="http://carlatpsychiatry.blogspot.com/2010/03/dr-tom-insel-nimh-chief-scolds.html">Danny Carlat’s blog</a>, Dr. Insel took exception to my linking him with Charles Nemeroff, and appeared to be putting distance between himself and Dr. Nemeroff. So, I did some checking, and a correction to one of my statements is in order. I had said, “ … that Insel appointed Nemeroff as an advisor soon after he (Insel) moved to NIMH.” That was my recollection. It turns out what I recalled was instead Insel showcasing Nemeroff in the NIMH Director’s 7th Annual Research Roundtable June 10, 2003, a few months after Insel moved from Emory University to NIMH. Let the record stand corrected. At that gala meeting, held at the National Press Club in Washington, DC, Dr. Insel characterized Nemeroff as one of the “real stars of NIMH’s research community…” Nemeroff used the occasion to pimp GlaxoSmithKline’s drug paroxetine (Paxil), showing data on change in platelet stickiness after Paxil in patients with heart disease and depression. This highlighting of Paxil by Nemeroff focused on the surrogate outcome of platelet function, and contained no evidence that Paxil modified any important clinical endpoints. Nevertheless, Nemeroff speculated liberally about the place of antidepressant drugs in managing heart disease. This is the sort of stuff Insel described at the Roundtable as “ … an excellent sampling of the Institute’s exciting research endeavors.” My general point two weeks ago was that Dr. Insel, the Director of an NIH Institute, downplayed the seriousness of the ethics issues surrounding the seven academic psychiatrists he mentioned in his Commentary in JAMA. Though he spoke in platitudes about the need for transparency, the spirit of transparency did not move him to disclose his own close ties with Dr. Nemeroff, who is one of the seven. Lest there be any remaining doubt about those ties, here is Dr. Nemeroff lauding Dr. Insel at the 201st meeting of the National Advisory Mental Health Council September 13, 2002 in the presence of the NIH Director, Elias Zerhouni, MD. From the Minutes: Dr. Charles Nemeroff, Reunette W. Harris Professor and Chair, Department of Psychiatry and Behavioral Sciences, Emory University School of Medicine, commended Dr. Zerhouni’s selection of Dr. Insel as the next NIMH Director and added that Dr. Insel is the epitome of courage defined as grace under pressure. Dr. Nemeroff added that Dr. Insel will leave his current position as a most beloved professor, a respected scientist, and a great person. In the comments on Danny Carlat’s blog I called Dr. Insel’s objections to my linking him with Nemeroff disingenuous. I still think that. Dr. Insel and Dr. Nemeroff are closer than Insel now seems comfortable acknowledging. Their record of talking up each other is hard to ignore. The irregularities identified by Senator Grassley involving Nemeroff’s reporting to NIH, his conflict of interest, and his conflict of commitment occurred on Insel’s watch. Considering the appearance of cronyism in their relationship, is it even possible for Dr. Insel to investigate Dr. Nemeroff’s performance in areas like the Emory-GlaxoSmithKline-NIMH Collaborative Mood Disorders Initiative? Bernard Carroll

Quis Custodiet Ipsos Custodes?

HAPPY TIMES AT NIMH Two weeks ago I discussed a Commentary in JAMA by Dr. Thomas Insel, Director of the National Institute of Mental Health...

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My WSJ Letter to the Editor: "Concern About Medical Records Is Not Misplaced"

A Wall Street Journal letter to the editor I authored entitled "<a style="font-weight: bold;" href="http://online.wsj.com/article/SB10001424052702304252704575156092885171262.html">Concern About Medical Records Is Not Misplaced</a>" was published today, April 3, 2010. On Mar. 23, 2010 the WSJ had carried an Op-Ed entitled "Your Medical Records Aren't Secure" by patient privacy rights advocate Deborah Peel, MD, a <a href="http://patientprivacyrights.org/board-of-directors/">psychiatrist and founder-leader of the organization Patient Privacy Rights</a>. Dr. Peel's Op Ed can be read <a href="http://online.wsj.com/article/SB10001424052748703580904575132111888664060.html">here</a>. My letter to the editor is in response to criticism of Dr. Peel's concerns. The criticism occured in a WSJ letter "Industry Rep Calls Patient Privacy 'Overblown' Worry" on Mar. 30, 2010 by Mary R. Grealy, president of the Healthcare Leadership Council, a "coalition" of chief executives from major healthcare companies and organizations. Ms. Grealy's letter can be read <a href="http://online.wsj.com/article/SB10001424052748704094104575144110418562490.html">here</a>. In her letter, Ms. Grealy criticized Dr. Peel's concerns about medical record privacy. She opined that "Dr. Peel seeks to frighten people into believing electronic health records are more vulnerable than paper ones, which is not the case" and that "stymieing the necessary transfer of data contained in one diagnosis, one prescription or one lab test could mean the difference between life and death. That is a very high price to pay in order to address overblown privacy concerns." My letter in response published today speaks for itself: <a href="http://online.wsj.com/article/SB10001424052702304252704575156092885171262.html"></a><blockquote><a href="http://online.wsj.com/article/SB10001424052702304252704575156092885171262.html">Concern About Medical Records Is Not Misplaced </a> Wall Street Journal Letter to the Editor April 3, 2010 In her letter of March 30, Mary Grealy, president of the Healthcare Leadership Council, implies that Dr. Deborah Peel is being alarmist and hysterical about fears of electronic medical records (EMR) privacy ("<a class="" href="http://online.wsj.com/article/SB10001424052748703580904575132111888664060.html">Your Medical Records Aren't Secure</a>," op-ed. March 24). Ms. Grealy makes the fantastic assertion that EMRs are less vulnerable than paper ones. Nonsense. I do not recall many news stories of trucks hauling away 10,000 or 100,000 paper charts for diffusion to identity thieves, but massive IT security breaches and computer thefts involving tens of thousands of records or more are increasingly common. As one example, your Feb. 18 article "<a href="http://online.wsj.com/article/SB20001424052748704398804575071103834150536.html">Global Attack Snags Corporate, Personal Data</a>," tells about how hackers in Europe and China broke into computers at more than 2,400 companies and government agencies over the last 18 months, as well as at 10 U.S. government agencies. [I'd written about this story at HC Renewal <a href="http://hcrenewal.blogspot.com/2010/02/networked-emrs-and-healthcare.html">here</a> - ed.] It is quite realistic to be concerned about how hospitals, generally an IT backwater, will fare. Further, who's being hysterical? Ms. Grealy asserts that without the unrestricted flow of medical data for research, "one prescription or one lab test could mean the difference between life and death." This is classic fear-mongering. EMRs remain an experimental technology of uncertain risks and benefits. EMR data, itself uncontrolled as entered into multiple vendors' disparate EMR systems by multiple personnel of varied medical backgrounds and research experience, under widely varied circumstances, make statistically meaningful EMR-based research quite difficult if not impossible. The gold standard of medical research is the randomized controlled clinical trial (RCT), and the irrational exuberance over EMRs as somehow able to bypass or surpass the RCT is dollar sign-studded nonsense. Perhaps one day EMRs will be used to rigorously gather RCT-quality data, but not today. EMRs are not magic bullets. </blockquote> I note from a <a href="http://www.cahc.net/about_mary.html">bio</a> that Ms. Grealy is neither a medical professional nor an IT/informatics professional: <blockquote>Ms. Grealy has a bachelor degree from Michigan State University and a law degree from Duquesne University. </blockquote> Somewhat concerning is the following: <blockquote>Ms. Grealy has an extensive background in health care policy. She has led important initiatives on the uninsured, improving patient safety and quality, protecting the privacy of patient medical information and reforming the medical liability laws. She testifies frequently before Congress and federal regulatory agencies.</blockquote> Along with other non-medical medical experts such as at the EPIC company who proffer authoritative statements at HHS meetings that <a href="http://hcrenewal.blogspot.com/2010/04/does-award-for-stupidest-statement-made.html">physicians will be uncomfortable reporting EMR defects and EMR-related injuries to the FDA</a>, someone needs to remind me why we need non-medical, non-IT, non-informatics "experts" as healthcare leaders and promoters of healthcare IT universal beneficence at all. It is in my opinion injurious to have healthcare leaders who cannot count on their own personal expertise to partition fact from fiction in medical affairs, and who through lack of that expertise suffer impairment in judging the concerns, expertise and competence of others who are domain experts. (I should also note that conflicts of interest can also cause people to make statements they know are false or misleading.) -- SS

My WSJ Letter to the Editor: "Concern About Medical Records Is Not Misplaced"

A Wall Street Journal letter to the editor I authored entitled " Concern About Medical Records Is Not Misplaced " was published t...

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Does the Award for the Most Risible Statement Made by a Health IT Vendor Belong to EPIC?

It may, because I am hard pressed to find any statement that approaches this one in vacuousness. Regarding reporting of healthcare IT problems and defects that might cause, or have caused, patient harm, the executive VP at EPIC stated at a<a href="http://www.informationweek.com/story/showArticle.jhtml?articleID=224201003"> HHS Health IT Policy Committee certification workgroup</a>: <blockquote>... The FDA might not be the best organization to help the ONC create an environment where people feel comfortable coming forward with incident reports, said Carl Dvorak, executive VP at EHR system provider Epic Systems and a workgroup member Dvorak said he's also concerned that the FDA's QSR process wouldn't address problems people spoke about in recent workgroup testimony. "If the mission is to build a safer system, I don't know that the FDA can contribute toward that mission," he said.</blockquote> To this I ask these questions: 1. Where, exactly, does Mr. Dvorak think clinicians and healthcare organizations report defects and problems with devices and drugs now? Consumer Reports? Good Housekeeping? 2. What is Mr. Dvorak's first hand experience with the FDA in terms of reporting on medical devices and medical device IT, and pharmaceuticals? Could that be the reason he "doesn't know" how the FDA can contribute to "the mission" of HIT medical device safety? Perhaps Mr. Dvorak himself is uncomfortable reporting defects and problems with health IT medical devices to FDA as opposed to some new, amateur medical device safety organization [see note 1] friendly to the HIT industry or in their pockets, but clinicians won't be. Either that, or this is one of the lamest attempt at FUD in computing history [see note 2]. <div style="text-align: center;"><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhx1-jfHKDjEB4JcowvZtmUZnOnn7_5pGkpstR5N75dAJqw9wi6VbwiL_pjXrpq7Y4ujmFymBH2IfbTePiEQXKnPJJE_OmlwoY4cXF9DwP9LDTdj_uNBO58Fyh9OtmGk5jCSSKsevXBxhkS/s1600/medwatch.png"><img alt="" border="0" id="BLOGGER_PHOTO_ID_5455377518586343586" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhx1-jfHKDjEB4JcowvZtmUZnOnn7_5pGkpstR5N75dAJqw9wi6VbwiL_pjXrpq7Y4ujmFymBH2IfbTePiEQXKnPJJE_OmlwoY4cXF9DwP9LDTdj_uNBO58Fyh9OtmGk5jCSSKsevXBxhkS/s320/medwatch.png" style="display: block; margin: 0px auto 10px; text-align: center; cursor: pointer; width: 287px; height: 167px;" /></a>A possibly real billboard from parts unknown about where to report shoddy HIT: FDA's <a style="font-weight: bold;" href="http://www.fda.gov/Safety/MedWatch/HowToReport/ucm167733.htm">MedWatch Hotline</a>. (Hat tip to <a href="http://histalk2.com/2010/03/18/news-31910/">HisTALK blog</a>.) </div> -- SS Notes: [1] See my post "<a style="font-weight: bold;" href="http://hcrenewal.blogspot.com/2010/03/third-party-reviews-of-devices-come.html">Third-Party Reviews of Medical Devices Come Under Scrutiny at the FDA - Except Healthcare IT Medical Devices, Which Get Special Accommodation</a>" for more on the issue of third-parties and amateurs performing device review. [2] HIT personnel in my experience often seem to resort to a psyops strategy of trying to instill Fear, Uncertainty and Doubt in others to kill ideas they don't like (usually, ideas that would cause them to have to work harder), although it's usually done in a far more credible manner than in this example.

Does the Award for the Most Risible Statement Made by a Health IT Vendor Belong to EPIC?

It may, because I am hard pressed to find any statement that approaches this one in vacuousness. Regarding reporting of healthcare IT proble...

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More Doubts About Private Equity Taking Over Not-for-Profit Hospital Systems

Last week, we <a href="http://hcrenewal.blogspot.com/2010/03/now-private-equity-jumps-into-health.html">posted</a> about how buy-outs of not-for-profit hospital systems by private equity firms seemed to be a new fashion in health care.  Since then, new doubts have been raised about whether this is a good idea. Detroit Medical Center, Vanguard Health, and the Blackstone Group <a href="http://www.freep.com/article/20100330/OPINION04/3300321/1322/Med-Center-mistake">Letters</a> to the Detroit Free Press raised concerns, <blockquote>As a nonprofit corporation, DMC's mission is to provide quality health care to the community. Management is accountable to Detroit area citizens and health care consumers, not to profit-motivated investors. As a private, for-profit corporation, its mission will be to provide profit for its shareholders. Management will be accountable to shareholders and will be rewarded in relation to the rate of return on their investments.</blockquote> Also, the Free Press <a href="http://www.freep.com/article/20100330/FEATURES08/100330060/1319/Groups-DMC-sale-violates-law">reported</a> that a coalition of local not-for-profit organizations challenged the legality of the proposed sale, <blockquote>The sale of the Detroit Medical Center to a for-profit Nashville company violates state law and raises issues about whether poor patients who depend on the DMC will be assured of care for years to come, three nonprofit Michigan organizations said today. Marjorie Mitchell, executive director of Michigan Universal Health Care Network, said the organizations e-mailed today a three-page list of concerns about the sale to Michigan Attorney General Mike Cox. Mitchell testified briefly today at the Detroit City Council about the issue and distributed the letter. The two other nonprofit organizations signing the letter were Metropolitan Organizing Strategy Enabling Strength, or Moses, an organization of community and religious leaders active on health issues, and Michigan Legal Services, a Detroit legal aid organization. The three groups called themselves the Coalition to Protect Detroit Health Care. Citing a provision in state law, the letter said Michigan law is clear that nonprofit companies should not 'permit assets … to be used, conveyed or distributed for non-charitable purposes.' 'The mission of a for-profit is to serve the stockholders,' the letter to Cox said. The letter said it is the opinion of the three groups that the purchase by Vanguard of the DMC 'violates Michigan’s nonprofit corporation statute.' The three organizations asked Cox to hold public meetings to answer questions about the impact of the proposed sale on the health of Detroiters, particularly uninsured people. The groups also have questions about how the DMC’s $140-million charitable assets will be used as well as concerns that use of state Renaissance Zone money would benefit a for-profit company. </blockquote> Caritas Christi Health Care and Cerberus Capital Management Boston Globe news articles <a href="http://www.boston.com/business/healthcare/articles/2010/03/25/cerberuss_success_hurt_by_a_pair_of_gambles/">noted</a> that Cerberus failed recently not only in its management of Chrysler, but of GMAC (now also bailed out by the US government), its management is secretive even for the opaque world of private equity, and it has <a href="http://www.boston.com/business/healthcare/articles/2010/03/26/equity_firm_in_caritas_buyout_lacks_medical_field_experience/">no experience</a> running "large medical systems."    A letter by Dr Arnold Relman, distinguished former editor of the New England Journal of Medicine, <a href="http://www.boston.com/bostonglobe/editorial_opinion/letters/articles/2010/03/30/beware_of_for_profit_suitor/">warned</a>, <blockquote>Cerberus promises to keep the present hospital management, add much money beyond the purchase price toward the operation and improvement of the hospitals, maintain charity support, and not sell the system — for three years. After that, who knows? Cerberus follows its own interests, and it will take money out of the community, not contribute to it. As a close observer of the for-profit hospital industry ever since its beginnings, I predict that Cerberus will sell to another business sooner or later, and the initial promises will be forgotten. That’s what happened at Framingham’s MetroWest Hospital. Control over the kinds of medical services provided by the hospital would be lost. Unprofitable services such as pediatrics, obstetrics, and outpatient psychiatry would disappear. Business-owned hospitals will resist major reforms to control medical costs or reorganize a community’s medical services in the public interest.</blockquote> Caritas Christi ran an advertisement in local papers that referred to Cerberus as its new "financial sponsor," suggesting that the company was going to give a still not-for-profit health care system a grant, quite different from what was really proposed, which was that Cerberus would become the owner of a formerly not for-profit health care system, thus rendering it into a privately held, for-profit system.  One wonders why the public relations people thought they needed to spin the deal thus. Finally, the Boston Globe <a href="http://www.boston.com/business/healthcare/articles/2010/03/28/at_caritas_helm_a_doctor_turned_dealmaker/">profiled</a> current Caritas Christi CEO Dr Ralph de la Torre, who apparently negotiated a deal that would leave him "as chief executive of Caritas, while also putting him in charge of acquiring other hospitals for Cerberus." But the article raised questions about what sort of leader he would be. It characterized him as transformed "from doctor to dealmaker," who now "stands to win a much bigger payout." Worse, it suggested that winning, as evidenced by making more money than anyone else, rather than access to quality patient care, is his prime motivation. <blockquote>He used to say, ‘It’s not about the money, but that’s one way people keep score.’ </blockquote> In addition, Dr De la Torre has now so transformed into a CEO that "he let his medical license lapse." Summary Let me note some people think that the notion that how much money one makes should be considered a "score," and that he who dies with the most money wins, was one of the central reasons for the global financial collapse. For example, Nancy Rapoport <a href="http://jurist.law.pitt.edu/forumy/2007/01/et-tu-steve-new-years-resolutions-for.php">suggested</a> some New Year's resolutions for corporate boards (in 2008!), including: <blockquote>I will remind myself and my colleagues that the level of CEO compensation is not an indicator of the company’s performance and that the arms race towards excessively high executive compensation is not a winnable race. At the point when money becomes just a way of keeping score, compensation is probably too high.</blockquote> Earlier in 2007, Michael Kinsley <a href="http://www.time.com/time/magazine/article/0,9171,1612697,00.html">wrote</a> presciently in Time about, <blockquote>a development in the larger economy. For most people, the point of money is that you can buy things with it. But at the top, where people already can buy whatever they want, the purpose of money is keeping score: making sure that you don't slip down in the Forbes 400 list.</blockquote>So, putting someone who believes that he must always make more money in order to keep "winning" in charge of a large health care system does not seem to be a recipe for better patient care or more access, but rather for ever-increasing executive compensation while making money becomes the overwhelming priority for the organization, completely eclipsing such quaint concepts as quality of care, reasonable costs, or adequate access. Recent history has not shown that for-profit hospitals deliver cheaper, better, or more accessible care than not-for-profit institutions. While their presence has influenced not-for-profit hospitals to behave more like for-profit institutions, costs have risen inexorably while quality and access decline.   Moreover, for-profit hospitals run by private equity (as opposed to publicly traded corporations) would likely to be even more opaque than they were when they were not-for-profit. Increasing opacity of health care would likely worsen, not improve our current problems. Deals that turn not-for-profit hospital systems into privately held for-profit systems ought to be scrutinized ith extreme skepticism. The questions raised above about the currently proposed deals ought to be addressed, In addition, I would suggest that all such deals should be conditioned on a requirement that the taken-over hospitals, and their parent private equity companies have to disclose at least as much as both public for-profit health care corporations and not-for-profit health care organizations are required to disclose, e.g., their ownership, the make-up of their boards of directors, the compensation, in detail, of their most highly paid officers, employees, and board members, all conflicts of interest affecting their leaders, etc. By the way, maybe such disclosure should be required of all health care organizations above some reasonable minimum size. If private equity companies are unwilling to make such disclosures, maybe they should not be allowed to run health care organizations.

More Doubts About Private Equity Taking Over Not-for-Profit Hospital Systems

Last week, we posted about how buy-outs of not-for-profit hospital systems by private equity firms seemed to be a new fashion in health car...

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New Investigations of Boston Scientific, but New CEO Made $33.5 Million for Half a Year's Work

It appears that device-maker Boston Scientific has a new set of troubles.  The Boston Globe just <a href="http://www.boston.com/business/healthcare/articles/2010/03/31/recalls_put_boston_scientific_in_regulators_sights/">reported</a>: <blockquote>Stepped-up government scrutiny of Boston Scientific Corp. stems from heightened concern over medical safety and disappointment that the company made new missteps after resolving previous problems with the Food and Drug Administration, analysts said yesterday. The Natick medical-device maker, which has been working to settle patent suits and federal investigations dating back years, recently was notified of fresh investigations begun by the Department of Justice and the Securities Exchange Commission into problems that forced it to recall implantable heart defibrillators this month. Boston Scientific said March 15 that it had halted shipments and recalled unsold units of seven brands of cardioverter and cardiac resynchronization therapy defibrillators. The products represented roughly 15 percent of the company’s $8.2 billion in 2009 sales. On March 15, the company belatedly filed a notice informing the FDA of the production changes. Larry Biegelsen, a senior analyst for Wells Fargo Securities, estimated Boston Scientific could lose $5 million in revenue every business day until defibrillator sales resume. </blockquote> The Boston Globe article noted that: <blockquote>Boston Scientific’s latest woes are reminiscent of an earlier round of friction with the FDA when defibrillator problems came to light after the company bought Guidant. The agency issued a 'warning letter' in 2006, citing multiple manufacturing violations and limiting Boston Scientific’s ability to get new devices approved until it fixed the problems. The restrictions were gradually loosened over the next two years, as the company strengthened its compliance, and the letter was lifted in 2008.</blockquote> That summary actually soft-pedaled Boston Scientific's previous woes. We started posting about the company's travails in 2005, starting with allegations that Guidant, which is now a Boston Scientific subsidiary, hid information about defects in the implantable cardiac defibrillators (ICDs) the company manufactured. As we noted in early 2005 <a href="http://hcrenewal.blogspot.com/2005/05/guideants-short-circuit.html">here</a>, Guidant executives allegedly knew that ICDs made from 2000-2002 were at risk for short-circuiting and failing, thus making them unable to deliver potentially life saving electrical shocks meant to prevent cardiac arrests, but the company only revealed the problem in 2005. By failing to notify physicians and the public, Guidant executives let expensive and profitable, but potentially useless devices to continue to be implanted, potentially increasing the risk of sudden death for the patients who received them. Then here we <a href="http://hcrenewal.blogspot.com/2005/06/guidants-short-circuit-reloaded.html">noted</a> reports that Guidant continued to ship failure-prone devices even after it had designed and started to manufacture new ICDs that were supposed to be less likely to fail. By June, 2005 we <a href="http://hcrenewal.blogspot.com/2005/06/more-short-circuits-for-guidant.html">posted</a> that Guidant had recalled thousands of ICDs, including models that were previously not identified as likely to fail. Later that year, the case <a href="http://hcrenewal.blogspot.com/2005/07/new-england-journal-of-medicine-on.html">rated</a> an article by Robert Steinbrook in the New England Journal of Medicine. Towards the end of 2005, we <a href="http://hcrenewal.blogspot.com/2005/11/eliot-spitzer-sues-guidant-for-fraud.html">noted</a> that Eliot Spitzer had sued Guidant for fraud.  At the end of the year, more information <a href="http://hcrenewal.blogspot.com/2005/12/for-guidant-these-people-are-just.html">appeared</a>, suggesting that Guidant knew the ICDs were flawed, but continued to sell them. <a href="http://hcrenewal.blogspot.com/2006/03/more-about-guidant-it-is-possible-that.html">Still more</a> appeared early in 2006. Then the business media became interested in the bidding war between Johnson and Johnson and Boston Scientific for Guidant, provoking a bit <a href="http://hcrenewal.blogspot.com/2006/01/new-problems-for-guidant-and-boston.html">more interest</a> in the tale of the suppression of data about the flawed ICDs. Then all was quiet until 2009, when Guidant, now a Boston Scientific subsidiary, plead guilty to two criminal misdemeanor charges that it failed to properly notify the FDA about problems with its ICDs (see post <a href="http://hcrenewal.blogspot.com/2009/11/boston-scientific-to-plead-guilty-of.html">here</a>). Later, the Guidant subsidiary of Boston Scientific settled charges that it gave doctors kickbacks as part of a "seeding study" to use its devices. At that time, it came to light that Boston Scientific had made another settlement, in 2007, of civil lawsuits alleging that the company hid problems with its products (see post <a href="http://hcrenewal.blogspot.com/2009/12/boston-scientific-again-settles-this.html">here</a>). However, just as the latest questions about Boston Scientific were revealed, the Boston Globe also <a href="http://www.boston.com/business/healthcare/articles/2010/03/30/new_boss_reaps_huge_reward/">reported</a> about how the company compensated its new CEO, who started in the middle of 2009: <blockquote>Boston Scientific Inc. gave its new top executive an unforgettable welcome gift. The Natick medical device maker said it paid chief executive J. Raymond Elliott, who replaced former CEO James Tobin last summer, $33.5 million in total compensation last year, making him one of region’s highest-paid corporate leaders. Elliott’s pay package includes a salary of more than $598,000 for six months, a $1.5 million signing bonus, nearly $608,000 in other incentive awards, and $29.4 million in stock awards and options that will vest over the next few years. He also received other benefits, including a $12,500 executive allowance, nearly $198,000 for personal use of the corporate jet, and more than $1 million in relocation expenses. Tobin, who retired last year after running the medical device company for about a decade, earned $13.7 million last year, roughly six times his pay level in 2007 and 2008.</blockquote> And by the way, the compensation paid both these men did not exactly correlate with the company's financial, as opposed to ethical performance: <blockquote>In February, the company agreed to pay $1.7 billion to settle patent infringement charges from rival Johnson & Johnson. And for years, the company has struggled with anemic sales growth. Last year, the company reported it lost $1 billion, its fourth straight year in the red. Sales rose 2 percent to $8.2 billion. The company’s stock rose 16 percent in 2009, reflecting the broader stock market recovery. But shares have slipped 20 percent this year.</blockquote> You just cannot make this stuff up. How could the company possible justify paying over $30 million for half a year's work by its CEO at a time when the company is facing multiple investigations, has had to settle civil cases and criminal charges, has had to stop production of one of its most important products due to its failure to meet regulatory requirments, and has lost money for four years?  This illustrates how leaders of big health care organizations are able to make themselves extremely rich at the expense of share-holders, employees, patients, and ultimately society, completely out of proportion to any claims they can make about their or their companies' performance.  This indicates the collective lack of accountability of many health care leaders, and the perverse incentives that now drive health care.  But is it any wonder that health care costs continue to rise uncontrollably? Once again, I submit that true health care reform needs to make health care leaders accountable, and subject to clear ethical standards, and to eliminate the sorts of perverse incentives that are transforming them (and other corporate CEOs) into a new aristocracy.  Without such measures, we in the US may have near universal health care insurance, but soon no one will be able to afford access to any sort of quality health care.

New Investigations of Boston Scientific, but New CEO Made $33.5 Million for Half a Year's Work

It appears that device-maker Boston Scientific has a new set of troubles. The Boston Globe just reported : Stepped-up government scrutiny o...

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