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Health Care Leaders: the Best and the Brightest?

We have recently discussed how even executives of relatively small, not-for-profit health care organizations are <a href="http://hcrenewal.blogspot.com/search/label/executive%20compensation">paid enough</a> to make them rich.  The compensation and privileges given to leaders of health care organizations are often justified by the notion that they are the "best and brightest," such arguments sometimes accompanied by a few choice logical fallacies (e.g., <a href="http://hcrenewal.blogspot.com/2010/09/logical-fallacies-in-defense-of-million.html">here</a>).  So here are a few news stories about the activities of some choice health care executives. Canopy Financial This company provided financing for health care services.  As<a href="http://www.google.com/hostednews/ap/article/ALeqM5gVyFvPO6tDLsg228D_xK6c123SvAD9I3U2881"> reported</a> by the Associated Press, <blockquote>A former executive of the bankrupt health care company Canopy Financial Inc. has agreed to plead guilty in an alleged multimillion-dollar fraud. Court documents released Wednesday say former chief technology officer Anthony Banas will plead guilty to wire fraud. Chicago-based Canopy was known as one of the nation's fastest growing businesses before its 2009 bankruptcy. Many clients relied on it to pay medical bills.</blockquote> Danbury Hospital This is a community hospital in Connecticut. As <a href="http://www.newstimes.com/news/article/Former-Danbury-Hospital-CFO-pleads-not-guilty-in-651364.php">reported</a> by the Danbury News Times, <blockquote>Danbury Hospital's former Chief Financial Officer William Roe pleaded not guilty Thursday morning to defrauding the hospital and a previous employer out of nearly $200,000. Roe was freed on bond after he agreed to a stringent set of conditions imposed by a federal judge.</blockquote> Here are more details of the charges: <blockquote>The 54-year-old Roe is accused of wire fraud and two counts of interstate transportation of stolen money, stemming from fraudulent invoices he allegedly submitted to Danbury Hospital and his previous employer, St. Rita's Medical Center of Lima, Ohio, a member of Catholic Healthcare Partners. The invoices were from a software company Roe set up in Pennsylvania in 2008, and, according to investigators, no services were ever provided to either institution. The wire fraud charge carries a maximum penalty of up to 20 years in prison, and the other two charges carry potential maximum penalties of up to 10 years each behind bars, Assistant U.S. Attorney Rahul Kale said. Kale initially expressed reservations about releasing Roe on bond because the court determined that hours after his arrest by FBI agents on Aug. 17, Roe violated a previous no-contact order by barraging Danbury Hospital president Dr. John Murphy with e-mails and cell phone calls and begging him to make the charges 'go away.' A day later, on Aug. 18, Roe also sent an e-mail to the hospital's vice president for human resources, asking her to arrange a meeting with Murphy, Kale said. Those actions resulted in the judge revoking the $100,000 bond Roe had posted and filing additional charges against him, including witness tampering and harassment. In the Aug. 18 e-mail, Roe acknowledged that he wasn't supposed to contact any hospital officials, but sought a 'brief conversation' with Murphy 'before any court proceedings begin,' Kale said. The prosecutor said the order had been entered because 'Danbury Hospital had expressed a concern about the employee's return' and referenced a shooting at the hospital earlier this year and another incident of workplace violence in Manchester. Not only did Roe violate the no-contact rule, but he also traveled to Pennsylvania on Aug. 18 without notifying court officials, Kale said, even though he was supposed to seek permission before leaving the state.</blockquote> H. C. Healthcare This company operated a community hospital in Florida. As <a href="http://www.gainesville.com/article/20100910/ARTICLES/9101003/1002">reported</a> by the Gainesville (Florida) Sun: <blockquote>The former chief financial officer of a Gainesville company that ran medical facilities in several small North Florida counties has been arrested in Illinois on racketeering charges for allegedly misusing grant money, reported the Florida Department of Law Enforcement. Arrested was Natalie Ann Krasnow, 35, of Huntley, Ill., on various felony charges including racketeering, aggravated white-collar crime and operating a scheme to defraud. Krasnow is now being held on a $250,000 bond pending an initial appearance before a judge in McHenry County, Ill. Krasnow was the former CFO of H.C. Healthcare Inc. of Gainesville. It operated and owned Trinity Community Hospital in Jasper. Krasnow's arrest is a continuation of the joint investigation by the Attorney General's Medicaid Fraud Control Unit, FDLE and the State Attorney's Office for the 3rd Judicial Circuit into activities at the now closed Trinity Community Hospital and its affiliated clinics in Hamilton, Suwannee and Columbia counties. Krasnow is the eighth person employed by or associated with H.C. Healthcare who has been arrested during the investigation. In July, investigators with the Attorney General's Medicaid Fraud Control Unit, FDLE and the McHenry County Sheriff's Office arrested owner Robert A. Krasnow, 36, of Gainesville; Dr. Yong Am Park, 66, of Lake City; Robert T. Krasnow, 58, of Gainesville, the father of Robert A. Krasnow; hospital administrator Christina L. Ortega, 42, of Lake City; and licensed practical nurse Ashley Lane Butler, 37, of Live Oak. The former medical director at Trinity Hospital, Dr. Wayne A. Rahming, and former Trinity staff physician, Jorge Prieto, were arrested by Medicaid fraud investigators in a separate scheme involving the unlicensed practice of medicine at a clinic in High Springs. Additional arrests may follow. The investigation of Trinity Community Hospital established that more than $660,000 in state grant funds dedicated to hospital improvements were received by the corporation, but little if any of the money was used to make such improvements, FDLE reported. Natalie A. Krasnow was the corporation's grants liaison officer with the Florida Department of Health and was instrumental in applying for and accounting for the proper disposition of these funds. Most of the money was used either to support the activities of the criminal enterprise or diverted to the personal use of Krasnow or her brother, hospital owner Robert A. Krasnow, FDLE said.</blockquote> North Memorial Health Care This is a health care system in Minnesota. <a href="http://www.startribune.com/lifestyle/health/102111219.html?">Per</a> the Minneaopolis - St Paul Star Tribune: <blockquote>David Cress, the hospital executive arrested and charged with engaging in prostitution this week, has been suspended indefinitely without pay as president and chief executive of North Memorial Health Care, officials said late Thursday. Cress, 60, was one of about a dozen men arrested at a Richfield hotel during a daylong vice operation. He was released from jail Wednesday and is scheduled to appear in court Sept. 15 on a misdemeanor charge. He has been at North Memorial since 1982, and took over as the top executive in 2005.</blockquote> Summary So the box score is one guilty plea to fraud charges, arrests for wire fraud. interstate transport of stolen money, witness tampering and harassment; for racketeering, white collar crime, and operating a scheme to defraud; and for engaging in prostitution; and violation of a no-contact order.  The people involved were all "C-level" executives, including a CTO, two CFOs, and a CEO. Of course, all people who are arrested are not guilty.  There are only four organizations, all relatively small, involved in this series of cases. Again, however, should not the standard of conduct for health care leaders be somewhat higher than that of, for example, garbage haulers?  (I am sorry if that appears to insult garbage haulers.  Such was not my intention.)  For people generally paid so well because they were thought to be the best and the brightest, should not our expectations be higher.

Health Care Leaders: the Best and the Brightest?

We have recently discussed how even executives of relatively small, not-for-profit health care organizations are paid enough to make them r...

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Small Hospital System Loses $61 Million Betting on Financial Derivatives, But Pays CEO Nearly a Million Dollars

As we have quoted many times, sunlight is the best disinfectant.  New US Internal Revenue Service requirements for reporting by not-for-profit organizations has resulted in more transparency about the finances of many health care organizations, and this transparency has shown that the culture of perverse incentives and management privilege has spread far and wide. How far and wide?  Consider this <a href="http://www.exploreharford.com/news/5882/ceo-makes-900000/">story</a> in the (Harford County, Maryland) Aegis: <blockquote>Harford County’s Upper Chesapeake Health lost $70 million because of bad bets in the derivatives markets two years ago, but still paid its chief executive more than $900,000 in annual salary and bonuses. According to figures from their latest tax returns and from the state agency that regulates hospital rates, Upper Chesapeake Medical Center in Bel Air and Harford Memorial Hospital in Havre de Grace, hospitals owned and operated by nonprofit Upper Chesapeake Health Inc., posted huge losses in their fiscal year ending December 2008. The losses were the result of an increase in non-operating expenses, according to the Maryland Health Services Cost Review Commission. The hospitals had combined revenue of $254 million for the year, but posted a combined net loss of $61 million. The two hospitals also paid out some of the highest salaries in Harford County, led by their CEO, Lyle Sheldon, who made more than $900,000 in 2009, a figure which was first reported by The Baltimore Sun on Aug. 29. Including Sheldon, the hospitals’ top administrators and top medical staff, who are hospital employees, received a combined $5 million in salary, bonuses and other compensation in 2009.</blockquote> So how did the hospital's management explain the huge loss? <blockquote>'That was the year the stock market fell, in fiscal year 2008,' Dean Kaster, Upper Chesapeake’s senior vice president of corporate strategy and business development, said Tuesday in explaining the 2008 loss. 'We saw a significant change in terms of how some of the instruments we used in managing our debt service were valued and during that time period what these dollar changes reflected was an accounting loss directly related to the decline in the overall market in 2008,' he said. Kaster said Upper Chesapeake, like many hospitals, has investment instruments it uses, called derivatives and hedges, to manage its long-term debt. He said the value of those instruments changed in fiscal year 2008. In simpler terms, like many corporate, institutional and individual investors, Upper Chesapeake got burned by taking risks that backfired when the economy tanked. Since those markets have come back, Kaster said, Upper Chesapeake has recovered two-thirds, or about $46.7 million, of the $70 million it lost from investments.</blockquote> Of course, 2008 was the year of the great recession/ global financial collapse, or whatever we may end up calling it, happened. The value of many investments, and many peoples' homes, imploded. The best current  explanation of the collapse had to do with the bets financial institutions made on risky derivatives which their managers often did not understand. In hindsight, these bets seem somewhere between unnecessarily risky and stupid. Many smaller businesses and organizations were fortunate to be financially conservative enough not to have bet on derivatives. But little Upper Chesapeake Health apparently bet a large chunk of its money on them, and lost badly. Although VP Kaster belabored the obvious in noting that 2008 was the year of the collapse, he did not explain what the stewards of a not-for-profit health care institution were doing when they were betting on risky derivatives. One thing they were doing was making a lot of money themselves. <blockquote>At UCH, the highest compensated employee is President and CEO Lyle Sheldon. Sheldon’s annual compensation for the hospital’s fiscal year 2009, the most recent information available, was $918,957, according to the Form 990 submitted to the IRS. Sheldon’s base salary for the year was $535,000 and his bonus and incentive compensation was $224,007. Sheldon’s compensation is nearly $500,000 more than the next highest paid employee for UCH.</blockquote> Other executives did well too: <blockquote>Second to Sheldon, the next highest paid employee in UCH’s upper management is Joseph Hoffman III, the senior vice president and CFO, who was paid $420,355 in the hospital’s fiscal year 2009. His base salary was $272,210 and his bonus and incentive compensation was $91,439. Senior Vice President and COO Kenneth Kozel was paid $352,538, according to Upper Chesapeake’s Form 990. Kozel received additional nontaxable benefits and deferred compensation on Harford Memorial’s form, bringing his total compensation to $396,039. Kaster, the senior VP for strategy and business development, was paid $281,142, according to Upper Chesapeake’s form. He also has additional nontaxable benefits and deferred compensation on Harford Memorial’s form, bringing his total to $330,598. Vice President of Human Resources Toni Shivery’s Upper Chesapeake compensation was $204,531, with an additional $33,895 from Harford Memorial, bringing the total to $238,426.</blockquote> Note that the CFO of this small hospital system, the person who ought to be most directly responsible for the decision to "invest" in derivatives, made over $420,000, and the vice president for strategy and business development, responsible for the simplistic discussion of derivatives above, made over $330,000. Providing such perverse incentives seems to contradict the hospital system's high-minded <a href="http://www.uchs.org/?section=about&page=mission">statements of values</a>, which includes: <blockquote>Responsibility: We take responsibility for our actions and hold ourselves accountable for the results and outcomes. </blockquote> A CEO who truly accepted responsibility for a $61 million loss from risky bets on opaque derivatives would not accept total compensation of over $900,000. A CFO who truly accepted responsibility for these bets would not accept over $400,000. So in summary, we see that now CEOs of even the smallest community hospital systems seem entitled to make nearly a million dollars a year. We see that even CEOs whose institutions lose millions due to risky investments still receive such compensation. We see that the executives who seem directly responsible for making such money losing investments still earn hundreds of thousands of dollars. This is an extreme illustration of how perverse incentives permeate health care, how CEOs command pay beyond the dreams of ordinary people, even when their leadership is financially calamitous, and how little health care leaders support their organizations' idealistic values. Are leaders who are not held accountable for easily measured financial performance likely to be good stewards of clinical performance, which is much harder to measure? If we do not hold health care leaders accountable, if we do not provide them with incentives that are proportional to their actual performance, why should we expect health care organizations to do any more than satisfy their leaders' self-interest? ADDENDUM - If you got to this page from a blog with "royposes" in its URL, and with "roy poses" ostensibly listed as its author - neither has anything to do with me, Roy M Poses MD.  I have no knowledge of who wrote posts on that blog, and no responsibility for them.  The only blog to which I presently regularly post is this one, Health Care Renewal.

Small Hospital System Loses $61 Million Betting on Financial Derivatives, But Pays CEO Nearly a Million Dollars

As we have quoted many times, sunlight is the best disinfectant. New US Internal Revenue Service requirements for reporting by not-for-prof...

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A Golden Parachute for Captain Outrageous

A year ago, I <a href="http://hcrenewal.blogspot.com/2009/09/captains-outrageous-for-cape-annes.html">posted</a> about leadership and governance problems at Northeast Health Systems, a small hospital system located in neighboring Massachusetts.  The colorful story included leaders who solicited money from the community but concealed what they were doing from the same community, an adolescent pregnancy pact after the hospital system refused to provide confidential birth control information at the high school clinic it ran, a hospital vice-president accused of art theft, various cuts, some concealed, of medical services, accusations of conflicts of interest affecting the board of trustees, and no-confidence votes by nurses and physicians. Finally, Stephen Laverty, the CEO held responsible for much of the mess, resigned and things quieted down a bit.  However, he left a system in deficit, leading to further lay-offs, (e.g., see <a href="http://www.boston.com/yourtown/salem/articles/2010/08/18/beverly_hospital_group_to_cut_jobs/">this story</a> in the Boston Globe).  And the vice-president accused of art theft was also "arraigned on bribery and larceny charges" (also <a href="http://www.boston.com/business/healthcare/articles/2010/07/23/former_hospital_official_accused_of_kickback_scheme">per the Boston Globe</a>.) Yet, Mr Laverty collected a tidy sum just to leave, as the Salem News just <a href="http://www.salemnews.com/local/x605762202/Laverty-got-1M-after-he-resigned">reported</a>: <blockquote>Former Northeast Health System President and CEO Stephen Laverty collected more than $1 million from the nonprofit hospital chain after he resigned under fire in the fall of 2008, newly released financial records show. The earnings, $1.08 million in total, include a settlement package of more than a year's salary plus pay for the one month the controversial Laverty was at the helm of Northeast, which owns Beverly Hospital, as well as Gloucester's Addison Gilbert Hospital. The documents provide the first details of how much Northeast, now laying off workers and cutting costs, was willing to pay to part ways with its CEO who had just endured no-confidence votes from nurses and doctors, plus the arrest of one of his top managers.</blockquote> Neither the hospital system nor its former CEO was exactly forthcoming about the rationale for this payment: <blockquote>As part of Laverty's resignation, both sides agreed not to discuss the settlement or any of the details that led them to part ways. 'I have no understanding of what you are talking about,' Laverty said yesterday afternoon from his home in Concord, when asked about his settlement package. He then hung up the phone. A spokeswoman for Northeast Health System said she could not comment on Laverty or the terms of any agreements between the company and past employees.</blockquote> So even the hired manager of a small community hospital system is entitled to a million dollar plus golden parachute when resigning in disgrace. This is another great example of the current perversity of the incentives given to hired health care managers. Even small community hospitals, the backbone of real community health care throughout the country, seem to feel obligated to make millionaires out of their managers, no matter how bad their performance. As we said before, the problem is not just the money wasted paying for bad performance. These perverse incentives are likely to encourage worse performance.  They send the message to even the worst executives that they are wonderful people, they can do no wrong, and should stand for no criticism, all further diverting them from what they really are supposed to be doing: upholding the mission. As an <a href="http://www.gloucestertimes.com/opinion/x627001820/Northeast-board-bears-blame-for-shameful-1M-Laverty-buyout">editorial</a> in the Gloucester Times noted, although the nexus is perverse incentives given to paid managers, it is not only the paid managers who are to blame for this situation. <blockquote>The other party to his contract was the Northeast Board of Trustees. </blockquote>So, <blockquote>Those who want to serve as trustees of Northeast need to get the notion out of their heads that their board seats are not just resume builders — with high-profile community roles and a few corporate dinners thrown in. These are positions of community leadership and responsibility that comes with a measure of accountability. New Northeast CEO Ken Hanover has indeed seemingly ushered in a new era of relative openness in dealing with the community. But the same cannot be said for the Board of Trustees. If Laverty's shameful buyout deal and these types of contracts are examples of their 'leadership' and responsibility, each and every one of them should step down now.</blockquote> As we have said many times before, true health care reform would encourage leaders of health care who understand health care and care about its mission, rather than those who just see a quick road to riches or social respectability.

A Golden Parachute for Captain Outrageous

A year ago, I posted about leadership and governance problems at Northeast Health Systems, a small hospital system located in neighboring M...

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National Programme for Health IT Declared Dead Due to 'Luddite Doctors' and Lousy IT, But Mostly Lousy IT

And poor leadership. From the NHS Department of Health (also see "<a href="http://www.e-health-insider.com/news/6227/end_of_npfit_to_be_announced_today">End of NPfIT to be announced today</a>" at eHealth Insider.com): <blockquote>9 Sept. 2010 <a href="http://www.dh.gov.uk/en/MediaCentre/Pressreleases/DH_119293">The future of the National Programme for IT</a> A Department of Health review of the National Programme for IT has concluded that a centralised, national approach is no longer required, and that a more locally-led plural system of procurement should operate, whilst continuing with national applications already procured. A new approach to implementation will take a modular approach, allowing NHS organisations to introduce smaller, more manageable change, in line with their business requirements and capacity. NHS services will be the customers of a more plural system of IT embodying the core assumption of ‘connect all’, rather than ‘replace all’ systems. This reflects the coalition government’s commitment to ending top-down government and enabling localised decision-making. The review of the National Programme for IT has also concluded that retaining a national infrastructure will deliver best value for taxpayers. Applications such as Choose and Book, Electronic Prescription Service and PACS have been delivered and are now integrated with the running of current health services. Now there is a level of maturity in these applications they no longer need to be managed as projects but as IT services under the control of the NHS. Consequently, in line with the broader NHS reforms, the National Programme for IT will no longer be run as a centralised national programme and decision making and responsibility will be localised. Health Minister, Simon Burns, said: “Improving IT is essential to delivering a patient-centred NHS. But the nationally imposed system is neither necessary nor appropriate to deliver this. We will allow hospitals to use and develop the IT they already have and add to their environment either by integrating systems purchased through the existing national contracts or elsewhere. “This makes practical sense. It also makes financial sense. Moving IT systems closer to the frontline will release £700 million extra in savings. Every penny saved through productivity gains will be reinvested to improve patient care.” Director General for [Medical] Informatics Christine Connelly [former CIO of Cadbury Schweppes, the candy-and-soft drink company, and before that Chief of Staff for Gas, Power and Renewables, and Head of IT at British Petroleum - ed.] said: “It is clear that the National Programme for IT has delivered important changes for the NHS including an infrastructure which the NHS today depends on for providing safe and responsive health care. Now the NHS is changing [ostensibly away from central bureaucratic control and towards more physician autonomy - ed.], we need to change the way IT supports those changes, bringing decisions closer to the front line and ensuring that change is manageable and holds less risk for NHS organisations.” </blockquote> The U.S. will painfully learn these lessons in years to come, it being clear that to date we've learned nothing from the UK's experiences. Worse, our own government is ignoring the downside risks of the technology, bypassing science (and patient safety) for political expedience. At the same time, the EU is heading in the reverse direction, with the Swedish Medical Products Agency leading the way for consideration of HIT in the EU as a medical device to be regulated (see "<a href="http://hcrenewal.blogspot.com/2009/06/improving-patient-safety-in-eu-hit.html">Improving Patient Safety In The EU: HIT Should Be Classified As Medical Devices</a>"). On ignoring science, see my July 2010 post <a href="http://hcrenewal.blogspot.com/2010/07/new-england-journal-on-meaningful-use.html">"Science or Politics? The New England Journal and "The 'Meaningful Use' Regulation for Electronic Health Records"</a>. Also see my prior calls for US restraint such as at "<a href="http://hcrenewal.blogspot.com/2008/11/should-us-call-moratorium-on-ambitious.html">Should The U.S. Call A Moratorium On Ambitious National Electronic Health Records Plans</a>?" and "<a href="http://hcrenewal.blogspot.com/2008/12/open-letter-to-president-barack-obama.html">Open Letter to President Barack Obama on Healthcare Information Technology</a>". In fact, a major American health IT vendor (e.g., <a href="http://www.publications.parliament.uk/pa/cm200809/cmselect/cmpubacc/153/15304.htm">at this link</a>, items 5 and 6, Cerner Millenium) was explicitly blamed by the UK's government for many of the National Programme's travails. The key experience of the NHS is reflected in this passage: <blockquote>A new approach to implementation will take a modular approach, allowing NHS organisations to introduce smaller, more manageable change, in line with their business requirements and capacity. </blockquote> The "meaningful use" requirements in the U.S. alone ignore local "business requierments and capacity" over the centralized diktats of bureaucrats. -- SS Sept. 10 addendum, from <a href="http://histalk2.com/2010/09/09/news-91010/">here</a>: <blockquote>... Said the co-director of the Royal College of Physicians Health Informatics Unit, “One of the dirty secrets of the NHS is the regrettable state of medical record keeping. Earlier reports have shown that this compromises patient safety and clinical care. If IT in the health service is going to regain the confidence of the medical profession, then more emphasis has to be placed by the Department of Health on making sure that the new systems accurately capture the dialogue between doctor and patient. Everything else flows from getting that right.” </blockquote> Earlier reports ["earlier" with respect to...what? - ed.] "have shown that [poor electronic medical record keeping] compromises patient safety and clinical care? You don't say? -- SS

National Programme for Health IT Declared Dead Due to 'Luddite Doctors' and Lousy IT, But Mostly Lousy IT

And poor leadership. From the NHS Department of Health (also see " End of NPfIT to be announced today " at eHealth Insider.com): 9...

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Projecting Competence ...

Projecting competence ... used to be important. No longer. Today I received a mailing about a surgical educational conference at a local hospital, Jefferson. The envelope, pre-printed stationery used by the department, had the following logo: <div style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhvllq0zIUlTXeu_2HP0HkqQ178gNReMcf3LQi5fGdIRkGm0pB1jLdLqcfbdY7cmqVrgeLjwKvaXv_Qo1nfxcCtx31Lhg4R-c_ibXzmf80viFfKcklQMf6MJrrzPuJ-MbXtsla39d7P8eiZ/s1600/sugery1.jpg" onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}"><img alt="" border="0" id="BLOGGER_PHOTO_ID_5514679740966751026" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhvllq0zIUlTXeu_2HP0HkqQ178gNReMcf3LQi5fGdIRkGm0pB1jLdLqcfbdY7cmqVrgeLjwKvaXv_Qo1nfxcCtx31Lhg4R-c_ibXzmf80viFfKcklQMf6MJrrzPuJ-MbXtsla39d7P8eiZ/s320/sugery1.jpg" style="display: block; margin: 0px auto 10px; text-align: center; cursor: pointer; width: 395px; height: 167px;" /></a>(click to enlarge) </div> This envelope certainly does not inspire my confidence. We are in a bad time in medicine when hospitals cannot spell. I cannot imagine how this was missed, other than via the hiring of the cheapest help possible. -- SS

Projecting Competence ...

Projecting competence ... used to be important. No longer. Today I received a mailing about a surgical educational conference at a local hos...

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Logical Fallacies in Defense of Million Dollar Babies

We recently posted about the latest example of generously paid health care leaders, million dollar plus hospital CEOs in the Baltimore area (<a href="http://hcrenewal.blogspot.com/2010/08/more-hospital-ceos-join-millionaires.html">here</a>).  Such stories are appearing more often in the media, and increasingly generating skeptical, anguished, or angry responses.  Defending Millionaire Hospital CEOs So it should be no surprise that the defenders of rich hospital CEOs are starting to rally.  The Baltimore Sun published two letters defending the million dollar plus compensation received by many local hospital CEOs.  But what arguments they made. First, let us examine in detail  <a href="http://articles.baltimoresun.com/2010-09-02/news/bs-ed-hospital-assn-letter-20100902_1_hospital-ceo-hospital-leaders-maryland-hospital-association">the arguments made</a> by Carmela Coyle, "president and CEO of the Maryland Hospital Association."  She opened with this description of hospitals as organizations: <blockquote>Famed management expert Peter Drucker said that health care is the most difficult, chaotic, and complex industry to manage today, and that the hospital is "altogether the most complex human organization ever devised." Indeed, hospitals are not your typical business. Hospitals are places where lives are saved. They ease pain and suffering. Hospitals are open every minute of every day, driven by a mission of caring and rooted in their communities. Hospitals do not close up and move on when economic times get tough. This requires extraordinary dedication, commitment, talent, and leadership. And hospitals are governed by trustees--independent leaders from the communities hospitals serve. </blockquote> She then briefly described her version of how hospital CEO compensation is set: <blockquote>The compensation for hospital executives is determined by those boards and compensation committees who follow nationally recommended practices for setting contract terms, evaluating CEO performance, reviewing salary comparability data, setting and approving compensation, and ensuring the process is free from conflict of interest.</blockquote> Then she provided this extraordinary description of what hospital CEOs do: <blockquote>Perhaps the more important look is at what these hospital leaders do day in and day out for Marylanders: •Provide more than 88,000 Maryland jobs; most hospitals are the largest employers in their communities and they employ your friends and neighbors; •Make health care available 24 hours a day, every day of the year, regardless of a recession, blizzards, physician and nurse shortages, or other obstacles; •Bring you the latest technology and facilities so you, your family, and your neighbors can get the care they need, when they need it; •Manage the uncertainties and vast change that health care reform will bring; •Preserve your local hospital as the cornerstone of care in your community. Hospitals are unique places, and it takes unique people to run them. Maryland is fortunate to have such leaders.</blockquote>. "Famed management expert Peter Drucker said...." - Appeal to Authority Mr Drucker may be a management expert, but what expertise does he have in health care, medicine, or the health care environment?  I actually agree that the hospital environment is "difficult, chaotic, and complex" in many senses, but would assert that it is the health care professionals in hospitals (doctors, nurses, other clinicians, therapists, technicians, etc) who are most expert at and primarily tasked with responding to these complexities (see below).  I submit that the opening citation of Drucker is an example of an <a href="http://www.nizkor.org/features/fallacies/appeal-to-authority.html">appeal to authority</a> (chosen not because of his specific expertise in the relevant context.) "Hospitals are places where lives are saved...." - Appeal to Emotion Of course they are, and the general description of the hospital is true.  However, who is it who (rarely) save lives, (hopefully often) relieve pain and suffering, and provide continuous service "every minute of every day?"  It is, glaringly obviously, the health care professionals listed above, admittedly assisted by a variety of staff who keep the lights on, make the food, clean the operating rooms, etc, etc.  The most removed from the actual clinical care are the managers.  The higher the managers are in the food chain, the less likely they are to have any contact with actual clinical care.  I submit that most CEOs deal mainly with C-level officers and vice presidents, and interact mainly with them, spread sheets, PowerPoints, and emails.  Given that hospitals do al these wonderful things, should not the support, credit, and frankly, pay go to those who actually do wonderful things, not sit in meetings and play with spread sheets? I believe that this wonderful description of the hospital mission is mainly an <a href="http://www.nizkor.org/features/fallacies/appeal-to-emotion.html">appeal to emotion</a>, designed to generate warm and fuzzy opinions about hospitals that make paying their detached top managers much more than the people who actually provide patient care more emotionally, but not logically palatable. "And hospitals are governed by trustees...." "The compensation for hospital executives is determined by those boards...." - Begging the Questions and an Appeal to Common Practice The description of how CEO pay is set merely describes a process, but does not explain why this process is likely to come up with the right result.  It <a href="http://www.nizkor.org/features/fallacies/begging-the-question.html">begs questions</a> about hospital leadership and governance that we have discussed often, including whether <a href="http://hcrenewal.blogspot.com/search/label/boards%20of%20trustees">boards</a> populated by people with little understanding of health care, sometimes including leaders of <a href="http://hcrenewal.blogspot.com/search/label/finance">financial firms</a> who helped usher in the great recession, and sometimes including individuals with obvious <a href="http://hcrenewal.blogspot.com/search/label/conflicts%20of%20interest">conflicts of interest</a> are likely to make decisions about executive compensation that ultimately support the hospitals' missions.  It begs questions about the standards to which <a href="http://hcrenewal.blogspot.com/search/label/executive%20compensation">executive pay</a> is compared, especially the phenomenon that all executives are above average (see this <a href="http://hcrenewal.blogspot.com/2010/07/where-no-hospital-ceos-are-below.html">post</a>).  The implication that because a process is in place that follows the usual practice, the outcome must be good amounts to an <a href="http://www.nizkor.org/features/fallacies/appeal-to-common-practice.html">appeal to common practice</a>.  "what these hospital leaders do day in and day out...." -Appeal to Emotion and the Questionable Cause Fallacy In one sense, this is just a more extreme version of the <a href="http://www.nizkor.org/features/fallacies/appeal-to-emotion.html">appeal to emotion</a> used above.  Furthermore, the bullet points are really about what hospitals and their health care professionals and support staff, not what their leaders do.  It is the hospitals as organizations that provide jobs.  It is the professionals and support staff who make the health care available every hour of every day.  (Have you ever seen the CEO of a hospital caring for an acute patient at 2 AM?  LOL.)  It is the hospital that provides the technology and facilities.  It is largely the health care professionals who manage uncertainties.  Suggesting that the few CEOs, sitting in their meetings and reading their spread-sheets, rarely directly interacting with health professionals, and virtually never actually involved in patient care, should get most of the credit for these good works insults the thousands of health care professionals who actually do the health care.  It also amounts to an example of the <a href="http://www.nizkor.org/features/fallacies/questionable-cause.html">questionable cause fallacy</a>: the fallacy is that because the managers are somehow associated with actual health care, they cause the health care to happen.  (Think how long a hospital could provide services if the health care professionals and support staff were to vanish.  Think how long a hospital could provide services if the managers vanished.) The <a href="http://articles.baltimoresun.com/2010-09-03/news/bs-ed-hancock-ceo-pay-letter-20100903_1_hospital-ceo-hospital-boards-board-compensation-committee">second letter</a> to the Baltimore Sun was by the chairman and CEO of Yaffe & Company, Inc, apparently a firm that consults on executive pay.  This letter was even less to the point than that above.  I invite our readers to discover its logical fallacies. Summary For a while we have been writing an informal series of posts about how logical fallacies may be deployed to advocate questionable health policy arguments, usually in a highly self-serving manner.  Our most recent example was <a href="http://hcrenewal.blogspot.com/2010/04/everybodys-doing-it-health-care-leaders.html">here</a>.  Most of the <a href="http://hcrenewal.blogspot.com/search/label/logical%20fallacies">examples</a> seemed to involve defenses of financial relationships among doctors and medical academics and drug and device companies, often written by people who themselves have financial relationships with such companies.  The question of huge compensation given to leaders of health care organizations, and related questions about the effects of their <a href="http://hcrenewal.blogspot.com/search/label/perverse%20incentives">perverse incentives</a>, <a href="http://hcrenewal.blogspot.com/search/label/impunity">impunity</a> from negative consequences of their actions, status as a new aristocracy, etc on health care dysfunction are getting more attention in the media.  So it should be no surprise that the defenders of the pay and power of these leaders are appearing.  It probably, but regrettably should also be no surprise that the defenses are mostly illogical, and made by people with financial interests in continuing excess compensation for health care leaders. Physicians, other health care professionals, those interested in health policy, and the public at large need to be continuously skeptical about health policy advocacy appearing in the media, especially by those who stand to personally gain from the results of the advocacy. My just slightly tongue-in-cheek suggestion for a policy position that could address this issue would be mandatory training in logical and evidence-based thinking, specifically to include recognition of logical fallacies, beginning at least at the middle-school level for all Americans (and around the globe), reinforced for those in health care.  (See the <a href="http://www.nizkor.org/features/fallacies/">Nizkor Project site</a> for a useful catalog of logical fallacies.)

Logical Fallacies in Defense of Million Dollar Babies

We recently posted about the latest example of generously paid health care leaders, million dollar plus hospital CEOs in the Baltimore area ...

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Health IT: "Danger"

In an article simply entitled "Danger", Health Data Management author Elizabeth Gardner spells out some "inconvenient truths" about health IT. Many of the contributors have opined on the risks associated with health IT; several are newly contrite about this issue: <blockquote><a href="http://www.healthdatamanagement.com/issues/18_8/danger-ehr-safety-errors-40754-1.html">Danger</a> By Elizabeth Gardner Health Data Management Magazine, 08/01/2010 Even to Ross Koppel, electronic health records are better than paper ones, "or cuneiform tablets, smoke signals, or carrier pigeons," he adds. He prefers to use hospitals and doctors that have EHRs. But the University of Pennsylvania sociologist specializes in analyzing interactions between medical computer systems and the people who use them, and he's found enough problems to turn him into an industry gadfly on the potential dangers of EHRs. "A resident will get an alert at 50 [milligrams of a certain drug] at one hospital, 60 at a second hospital, and no alert at a third hospital because they turned it off," Koppel says. "So he thinks the 70 milligrams he's ordered there are safe. The residents don't know whether the alerts are on or off. They're not familiar with many medications and they start a new rotation every thirty days. They use these alerts as safety bumpers and that's not safe." ... Koppel has found plenty of other glitches, from outright programming errors to user interfaces that make life difficult for clinicians. Numerical values appear in an order that makes sense to the computer but looks random to a human; positive test results aren't always flagged for review; weights aren't consistently labeled as pounds or kilograms (which can lead to babies, for example, being given twice, or half, the medication they need). "Everyone focuses on why physicians are resistant to computers, but I would rather focus on how difficult the systems are to use," Koppel says. "Most physicians are the smartest guys in the room. Their resistance to technology as such is zero, but they resist software that has a clunky structure."</blockquote> Dr. Koppel, a sociologist, is a well recognized name in health IT critical thinking circles. He will not win any favors from the health IT vendors and CIO's for that comment about physicians and smartness, but he is quite correct. Physicians are not Luddites. They readily adapt new technology proven as good for patients. In fact, in my observations IT personnel are the true Luddites, clinging to inappropriate, rigid business-IT views on the healthcare IT development and implementation process (vs. more appropriate and modern <a href="http://en.wikipedia.org/wiki/Extreme_Programming">agile methodologies</a>), holding unshakable, stereotypical views about physicians, and remaining unreasonably obstinate on clinician complaints about "clunky" health IT user experiences. <blockquote>Every year the ECRI Institute, Plymouth Meeting, Pa., a not-for-profit organization that evaluates health technology, issues a top 10 list of technology hazards in medical care. "Problems with computerized equipment and systems" ranked seventh this year, right behind "needlesticks and other sharps injuries" and ahead of "surgical stapler hazards." Most of the incidents reported to ECRI by its 5,000 members (hospitals, health systems, payers, and other interested parties) were due to convergence of computers and medical devices in areas like medication management and the routing of device alarms to clinicians' cell phones and pagers. (ECRI Institute points out that such problems are "most certainly underreported.")</blockquote> Under-reporting of health IT hazards is a familiar theme to this author, as in a 2009 paper entitled "<a href="http://www.scribd.com/doc/28747771/Remediating-an-Unintended-Consequence-of-Healthcare-IT-A-Dearth-of-Data-on-Unintended-Consequences-of-Healthcare-IT" style="font-weight: bold;">Remediating an Unintended Consequence of Healthcare IT: A Dearth of Data on Unintended Consequences of Healthcare IT</a>" that was not published due to first-round reviews. Some of those reviews were legitimate and constructive regarding revision, but others appeared to suggest the topic was verboten (for example, "nothing is in this paper that could not be read in any big city newspaper", rather the oxymoron considering the paper's topic). I did not bother with a revision, simply making the paper public and bypassing the peer review censorship I saw coming. <blockquote>But EHRs can easily cause errors, too. Plenty of experts believe that too many systems are being installed too fast into environments too complex to be easily computerized. In the frenzy to be eligible for federal EHR meaningful use incentive payments, and avoid reimbursement penalties starting in 2015, institutions may be setting themselves up for disastrous computer-induced medical errors.</blockquote> The theme of "too fast" has been present in my writings for awhile now; see for example my 2008 posts "<a href="http://hcrenewal.blogspot.com/2008/11/should-us-call-moratorium-on-ambitious.html">Should The U.S. Call A Moratorium On Ambitious National Electronic Health Records Plans</a>?" and "<a href="http://hcrenewal.blogspot.com/2008/12/open-letter-to-president-barack-obama.html">Open Letter to President Barack Obama on Healthcare Information Technology</a>". <blockquote>"I'm one of the biggest believers [in EHRs], but there's tremendous pressure to implement these systems so fast," says medical informaticist Dean Sittig, associate professor at the University of Texas Health Science Center at Houston and a leading researcher on successes and failures of EHR implementations. "It worries me that people won't have adequate time to come to grips with what they're doing and test their systems properly."</blockquote> Dr. Sittig did write some excellent, pioneering articles on the <a href="http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2579195/pdf/procascamc00009-0785.pdf">indispensibility of the CMIO role ("information architect" - PDF)</a> back in the mid-1990's that I use in my teaching. However, a few years ago he told a former student of mine (he was unaware of that relationship) who listed me as a reference on her CV to not do so, as I was not a "real medical informaticist" or words to that effect. Seems at the time he may have taken issue with my realist views on the problems with health IT. <blockquote>The medical environment is more complex than other fields like aircraft navigation, which is already hard enough to computerize, notes Nancy Leveson, professor of aeronautics and astronautics at the Massachusetts Institute of Technology. She's a pioneer in software safety ... "We're talking about a professional environment of doctors, and changing the way they do business," Leveson says. "Most other kinds of automation aren't doing that. </blockquote> This issue is critical and at the root of health IT dysfunction. No other profession is being asked to use IT in the manner in which clinicians have been asked. No other profession may have an information model as complex that they're asked to record in painstaking, granular detail, either. <blockquote> Because software engineers aren't taught about usability and the impact of their systems on the world, they think they'll just automate it the way they want and make people do it their way. There's a lot of stuff out there [in health care] that's very difficult to use. The industry is naive about introducing software and the change it requires and the potential hazards it introduces, and they think it's going to be all right."</blockquote> I would replace the word "naive" with "willfully ignorant, complacent and negligent." There are simply no acceptable excuses for a field that has been in existence for decades to be as toddlers on the impact of their work. <blockquote>... Clinicians who already have extensive experience with EHRs are under no illusions that everything works smoothly. "It's inevitable that some new errors will be introduced [with EHRs]," says David Bates, M.D., chief of general medicine at Brigham and Women's Hospital, Boston, a patient safety expert, and a member of the information technology executive committee of Partners HealthCare, Brigham's parent. </blockquote> Considering the ice-cold reception by most of those clinician experts (e.g., in the medical informatics community) to my writings on HIT problems that began in 1999 and now reside at my Drexel site <a href="http://www.ischool.drexel.edu/faculty/ssilverstein/cases/">here</a>, and to the similar writings of others, I disagree with Bates' assessment. I think the experts have now painted themselves into a corner and have been forced by reality and their own willful blindness into admitting the truth about this experimental technology. (A <a href="http://www.ncbi.nlm.nih.gov/sites/entrez">PubMed</a> search on "Bates DW" is not generally revealing of papers on health IT risks until relatively recently.) <blockquote>"The key thing is to devote enough resources and attention to fixing them [errors] after they happen. Your EHR may prevent 10 errors for every new one it causes [not sure where these figures come from or if they're generalizable at all - ed.], but you have to have an approach for dealing with the new ones."</blockquote> Again, I would differ. The key thing is to prevent them from happening as much as possible. The pharma and medical device industries do this through RCT's, post market studies, and strong regulatory requirements for their products' manufacture and use. Bates is not an advocate of regulation of health IT. As in my post "<a href="http://hcrenewal.blogspot.com/2009/07/health-care-information-technology.html">JAMA letter: Health Care Information Technology, Hospital Responsibilities, and Joint Commission Standards"</a>, in 2009 Bates signed on to an unpublished letter to JAMA (archived <a href="http://www.evernote.com/pub/poikonen/PublicPharmacoinformatics#n=582cbf46-d342-46bc-a39e-3d57e3a31388">here</a>) in response to Koppel and Kreda's article on "hold harmless" clauses that stated "... the belief that the best approach to increase the safety and effectiveness of EHR systems is by legal regulation of system vendors is misplaced." (Incidentally, the letter that JAMA did publish was <a href="http://jama.ama-assn.org/cgi/content/extract/302/4/382">mine</a>.) <div></div> <blockquote>... Partners has been developing its own in-house EHR for several decades, and still encounters things that need fixing. For example, when physician order entry was introduced, the system made it possible to order fatally large doses of intravenous potassium, because the initial order choices hadn't been properly vetted by the internal team responsible. The nurses who executed the orders knew enough to catch the error before it harmed a patient, but Bates says it took a year and a half to get the screen corrected in the order entry system.</blockquote> I can add that taking a year and a half to correct a potential fatality-causing screen in a home-built clinical IT application is not just a technological issue, but also an organizational, political and leadership issue. <blockquote> ... "Emergency care is by definition nonlinear and unpredictable, and information technology tends to enforce a certain amount of linearity: you can't do step 5 until you've done steps 1 through 4," says Wears. Emergency room personnel often care for multiple patients simultaneously and have to do things "out of order" so they can be more efficient. If an EHR enforces a linear pattern, it will just get in their way, and they'll compensate by running a parallel system on paper and putting information into the EHR later. "That subverts one of the fundamental things you wanted the system to do-give you real-time feedback on good and bad ideas," Wears says.</blockquote> The realities of the ED cannot be neatly dealt with as if a calm, solitary office environment . <blockquote>There's plenty of blame to go around. Koppel and Leveson say software design, or lack of it, is a common culprit, and they take vendors to task for not focusing on usability.</blockquote> Again, there is no reasonable excuse for IT intractability in a mission critical sector. <blockquote> Leveson says part of the problem is a lack of regulatory standards. "The FDA doesn't want to oversee anything and that's a mistake," she says. "So it's become this free-for-all in the industry."</blockquote> I've used that same language. In my 2009 post <a href="http://hcrenewal.blogspot.com/2009/08/e-health-hazards-provider-liability-and.html">E-Health Hazards: Provider Liability and Electronic Health Record Systems</a> I wrote "the unregulated free-for-all that has been the health IT marketplace, with dangerous and even <a href="http://www.ischool.drexel.edu/faculty/ssilverstein/cases/?loc=cases&sloc=clinical%20computing%20problems%20in%20ICU">outrageous practices</a> I noted starting a decade ago, must come to an end as the market matures and as diffusion of this technology massively increases per the government mandates now in effect." <blockquote>Though experts say EHRs clearly fall under the category of medical devices, the FDA has steered clear of directly regulating them. Its ill-starred policy of requiring pre-market approval for blood-bank software, begun back in the 1990s, resulted in major vendors pulling out of the market altogether and stifling innovation ... "That kind of regulation provides a huge economic disincentive and there hasn't been any substantial improvement in blood bank software in 10 years," says Geisinger's Walker. "If the FDA required it for EHRs, it would harm patients more than help."</blockquote> I disagree with Walker and especially disagree with the latter statement, based on one anecdotal case of IT regulation (ironically, it's HIT proponents who most often claim that 'anecdotes' of patient harm don't make data). Further, the FDA was called in initially because of IT dangers in existing blood banking software. Also, the "innovation" referred to could more accurately be referred to as "lifecycle adaptation and enhancement", not true innovation. In other words, there was not enough profit to be made in maintaining mature software under regulation. The effect might be to push the quick-buck profiteers out of the industry, and thus improve quality and innovation. The Swedish Medical Products Agency is leading the way for consideration of HIT in the EU as a medical device to be regulated as in my post "<a href="http://hcrenewal.blogspot.com/2009/06/improving-patient-safety-in-eu-hit.html">Improving Patient Safety In The EU: HIT Should Be Classified As Medical Devices</a>". Yet, that didn't seem to impact Swedish innovation; in the UK, Wrightington, Wigan and Leigh NHS Foundation Trust has recently awarded its hospital information system contract to Swedish healthcare systems provider, Cambio (<a href="http://www.e-health-insider.com/news/6214/cambio_for_wrightington_wigan_and_leigh">link</a>). Albeit in another anecdote, FDA's regulation did not harm pharma IT as far as I could tell, while a Group Director in Merck Research Labs' Research Information Systems Division. Truth is, there is no good data one way or the other regarding regulation, but after thirty or more years of an unfettered HIT industry, I believe it reasonable to say that the presence of harmful HIT speaks more for regulation than for a continued industry "free-for-all." <blockquote>The Agency for Healthcare Research and Quality is currently working with the FDA, VA and other federal agencies to develop a common format for reporting I.T.-related patient safety events and unsafe conditions. </blockquote> "What took so long" is my question. Read the whole article. The myth of health IT beneficence continues to be eroded. One can only hope the tens of billions earmarked for the technology in the recent economic "recovery" legislation will become similarly eroded in years to come, to allow the technology to be safely improved - that is, in vitro, not in vivo. -- SS

Health IT: "Danger"

In an article simply entitled "Danger", Health Data Management author Elizabeth Gardner spells out some "inconvenient truths...

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