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"Living High Life on Money to Treat the Poor"

Here is another story that has developed over the last week about questionable goings on at a not-for-profit health care organization.  The organization in question this time was the not-for-profit, but state government supported Medicaid managed care organization/ health insurer for the Louisville, Kentucky region.  The details came from a Louisville (Kentucky) Courier-Journal <a href="http://www.courier-journal.com/article/20101109/NEWS01/311090031/1008/">article</a> about a state auditor's report on the Passport Health Plan: <blockquote>The organization providing Medicaid services in Jefferson and surrounding counties has spent lavishly on such things as travel, meals, salaries, bonuses and lobbying in recent years, the state auditor’s office said in a report released Tuesday. The scathing report, which Gov. Steve Beshear described as 'disheartening,' said two Passport Health Plan officials — Executive Vice President Shannon Turner and Associate Vice President Nici Gaines — were paid well, ate well and traveled extensively. 'Lodgings were often luxury spas and resorts,' the report said. 'The executives used limousine services and dined at expensive restaurants. While these types of expenditures may be routine for many private, for-profit companies, they should not be typical in nonprofit, health care organizations.' The report also said Passport made extraordinary efforts to burnish its public image and gain political support by spending $1 million since 2007 on lobbying and public relations, as well as $423,000 in donations and sponsorships. Many of the donations had no connection with health care, the report said — including $600 to sponsor a reception for the Senate Republican majority in 2009, $10,000 to sponsor an 'inflatable character' for the Kentucky Derby Festival's Pegasus Parade, and contributions to the Boy Scouts, Kentucky Opera, Volunteers of America and others.</blockquote> Here are some more specifics about amounts spent: <blockquote>Travel: Passport spent $106,722 on more than 36 trips including trips to conferences at resorts in New Orleans, Key West, Las Vegas, Seattle, Philadelphia, Tucson, Washington and Coeur d'Alene, Idaho. Meals: Spent $72,994 on 753 meals for groups large and small. These were mostly at Louisville restaurants but included tabs at some famous restaurants outside Kentucky, such as Emeril's and Commander's Palace in New Orleans. Limo services: Five uses of limos totaling $3,996. Lobbying and public relations: Spent $1 million. Donations and sponsorships: Spent $423,000, some with no connection to health care, including $10,000 to be an “Inflatable Character Sponsor” for the Kentucky Derby Festival. Gifts: Spent $9,311 for 95 gifts, which included flowers and Christmas gifts. Salaries: Paid salary and bonuses of $303,750 to Executive Vice President Shannon Turner and $156, 000 to Associate Vice President Nici Gaines in most recent year. </blockquote> Here are more specifics about conflicts of interest: <blockquote>Conflicts of interest: Both Turner and Gaines received additional compensation in contracts with subcontractor they were overseeing, AmeriHealth Mercy. Also, Larry Cook, Passport's chairman and CEO, had divided loyalties because he serves as an executive vice president of U of L. He also was reimbursed $1,717 by AmeriHealth for expenses for a trip to Ireland in 2007. Grants: Many grants were made by Passport to groups with ties to staff and/or board members </blockquote> The organization also was charged with distributing additional funds to area health providers based on their initial investment in the not-for-profit managed care organization, but not on the amount of care they were providing to Medicaid patients: <blockquote>[State Senator Tim] Shaughnessy was particularly concerned about distributions of $10 million in excess funds in late 2008 and again in and 2009 to the large Jefferson County health-care providers that formed Passport. These distributions were reported to the Kentucky Department of Insurance as grants to cover indigent care costs incurred by Passport's provider partners — University Medical Center, University Physician Associates, Norton Healthcare, Jewish Hospital and St. Mary's Healthcare, and the Louisville/Jefferson County Primary Care Association. But the auditor’s report said the money was distributed based on the percentage of the providers' initial investments to create Passport — not the amount of indigent care they provided. And the report said this money was placed in the general funds of these providers 'rather than specifically set aside for uncompensated indigent care.'</blockquote> Finally, it appears that Passport tried to block disclosure of important information, including the compensation of its executives, even though it is a not-for-profit organization entirely funded by the government: <blockquote>Early this year The Courier-Journal filed a request under the state open records law seeking Passport records on compensation of its executives and minutes of its board meetings. But Passport refused to release them, claiming that the law did not apply. The attorney general's office disagreed, saying that Passport is 100 percent publicly funded and must release the records. But Passport again refused and took the matter to Jefferson Circuit Court, where it is pending.</blockquote> So again we have the same tiresome features of leaders who apparently regard their organization as their own personal sandbox: lavish compensation, given the context, luxuries supplied the leadership out of organizational funds, conflicts of interest that apparently increased further the leaders' personal gains, and attempts to keep the whole thing secret. As a Lexington (Kentucky) Herald-Leader <a href="http://www.kentucky.com/2010/11/14/1524618/living-high-life-on-money-to-treat.html">editorial </a>("Living High Life on Money to Treat the Poor") noted, given the mission of the organization, this sort of sleaze is particularly unfortunate: <blockquote>In one way, though, Passport's profligacy deserves special condemnation. Every dollar Passport executives spent on their own pleasurable pursuits, on lobbying to insure tax money kept flowing their way, on buying goodwill in the Louisville area or on any other unnecessary expense was a dollar taken away from providing Medicaid services to the most vulnerable, needy members of society.</blockquote>This case resembles one we <a href="http://hcrenewal.blogspot.com/2010/08/making-community-health-agency-into.html">discussed </a>previously, that of the non-profit community health agency in Florida whose leaders again seemed to regard their job as an opportunity for personal enrichment.  It seems that even leaders of non-profit organizations whose mission is to help the needy may seem to put their own needs before those of their disadvantaged constituents.  Of course, given they may have seen leaders of not-for-profit universities and hospital systems making millions, and leaders of for-profit pharmaceutical, device, and especially managed care organizations/ health insurers making tens of millions, and conclude that their six-figure salaries and occasional luxuries were barely adequate compensation. As we have noted before, the "executives take all" mentality of an era economically dominated by financiers as aristocrats seems to have infected health care.  Somehow we have to restore the idea that executives and managers  like doctors and nurses, should regard their work as calling meant to put the needs of patients and public health first, rather than a quick way to get rich.

"Living High Life on Money to Treat the Poor"

Here is another story that has developed over the last week about questionable goings on at a not-for-profit health care organization. The ...

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About to be Bought-Out Non-Profit Hospital System Tries to Hide Executives' Golden Parachutes

A <a href="http://www.floridatoday.com/article/20101112/BUSINESS/11120317/1006/NEWS01/Ruling+sought+on+Wuesthoff+exec+separation-pay+secrecy">report</a> from FloridaToday (in Brevard County) about the sale of a not-for-profit Florida hospital system to a for-profit corporation raises some interesting questions. The background is that the non-profit Wuesthoff Health System was bought by for-profit Health Management Associates (HMA): <blockquote>HMA, a for-profit hospital management company in Naples, bought the not-for-profit Wuesthoff Oct. 1 for $145 million. Wuesthoff lawyer William Kopit has said it was forced to sell because the hospital system lacked the capital to compete.</blockquote> The question is about the conditions of the sale: <blockquote>A foundation formed to manage the proceeds of the sale and continue providing indigent health care has refused to disclose the executive packages to the state, claiming it constitutes a trade-secret exemption under Florida law.</blockquote> This was despite the state Attorney General's authority to oversee sales of charitable non-profit organizations to for-profit entities: <blockquote>Under its statutory obligation to oversee charities registered in the state, the Attorney General's Office requested the executive pay information from Wuesthoff, Wiggins said. Wuesthoff's lawyers submitted 40 pages of heavily redacted material. Negotiations led to Wuesthoff agreeing to redact only the names and compensation details of the executives.</blockquote> The materials submitted suggested a lot of executives getting golden parachutes, but not the amounts or conditions involved: <blockquote>The unredacted portions show as many as eight former executives receiving three years of salary paid out over 12 months, a pay-to-stay retention bonus for continuing to work for the company during sale discussions, a senior executive retirement package and regular retirement pay and extended health benefits. Based on Wuesthoff's tax returns, those payouts will be in the millions.</blockquote> So, legal action will ensue: <blockquote>'Therefore we will look to the court for guidance and abide by any judicial ruling on the public record and trade secret issues,' said Ryan Wiggins, communications director for the attorney general.</blockquote> The notion that how much a for-profit corporation will pay in golden parachutes to former executives of a not-for-profit hospital system is a "trade secret" just boggles the mind.  What could a competitor possibly gain from this information that could lead to specific action that would disadvantage Wuesthoff? On the other hand, it might be that the size of these golden parachutes, if revealed, would lead to some raised eyebrows, or worse.  Consider first the contrast between payments made and to be made to fortunate executives and the performance of the health care system.  Note that what is available on the public record (via the hospital system's latest available, that is,<a href="http://www.guidestar.org/FinDocuments/2008/592/432/2008-592432318-054db727-9.pdf"> 2008 form 990 disclosures</a> to the US Internal Revenue Service) suggests that in the past, Wuesthoff executives were already quite well-paid. On that form we found the following total compensation reported: Emil Miller, President: $927,543 ($523,069. compensation; $342,130, benefits; $62,344, benefits) Brian Bodi, Controller: $184,789 George Fayer, CFO: $439,580 Johnette Gindling, Senior Vice President: $236,975 Marchita Marino, Senior Vice President: $264,529 Nearly a million dollars was a lot of compensation for the CEO of a small, non-profit hospital system in 2007.  Although there is no easily publicly available information about executive compensation since 2007 (the year covered by the 2008 report noted above), these high rates of compensation were paid by a hospital system that now apparently has so little capital that it no longer can "compete" without being bought by a for-profit corporation.   Now the executives who could not amass a competitive amount of capital will amass quite a sizable amount of personal riches. Consider second the contrast between the extraordinary assertion that these golden parachutes should remain secret, and the hospital system's <a href="http://www.wuesthoff.org/eob/eob.aspx">stated interest</a> in "transparency," or its <a href="http://www.wuesthoff.org/">stated devotion</a> to "five core values that drive our hospital and its mission: integrity, courtesy, compassion, competence and stewardship." It seems that preventing embarrassment about executive enrichment may trump transparency and integrity. Health care, probably infected by the finance industry that brought us the global financial collapse, aka "great recession," seems to have been overcome by "compensation madness."  A central value of many health care organizations seems to be enriching their top leaders/ managers/ executives, no matter what the financial condition of the organization, or the performance of the leaders in terms of fulfilling the organization's mission.  From these perverse incentives, the perverse incentives favoring short-term financial performance over patient care seem to have sprung.  As <a href="http://hcrenewal.blogspot.com/2009/12/compensation-madness-insiders-hijacking.html">Prof Mintzberg wrote</a>, "All this compensation madness is not about markets or talents or incentives, but rather about insiders hijacking established institutions for their personal benefit." If we truly want health reform that addresses spiraling costs, declining access, and threatened quality of care, we need to give health care practitioners and leaders positive incentives for being caring, competent, well-informed, and honest, not for clever financial manipulation and short-term profits, or just for managing to show up for work. ADDENDUM (2 December, 2010) - 4 days after the above post, Florida Today <a href="http://www.floridatoday.com/article/20101119/BUSINESS/11190321/1003/rss03">reported</a> that details about the golden parachutes were released: <blockquote>[Emil] Miller, who ran Wuesthoff for more than a decade, received $6.25 million total. Of that, $2.2 million was severance pay and $3.2 million was retirement pay. The balance was the cost of his employee benefits. Former CFO George Fayer has the next highest exit pay at $973,000, which includes a $171,000 for staying through the sale and transition. Fayer is a consultant to the foundation, Gindling said. Chantal LeConte, who ran the Rockledge hospital, received the third highest payout, $553,000. LeConte's package included about $138,000 for staying through the transition.</blockquote> Given that the health system was merged out of existence because it supposedly no longer had enough capital to "compete," now we see why system leaders were so reluctant to reveal the amounts.

About to be Bought-Out Non-Profit Hospital System Tries to Hide Executives' Golden Parachutes

A report from FloridaToday (in Brevard County) about the sale of a not-for-profit Florida hospital system to a for-profit corporation raise...

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Report of an AMIA special task force on challenges in ethics, safety, best practices, and oversight regarding HIT

I am both surprised and pleased to read the new report of an American Medical Informatics Association (<a href="http://www.amia.org/">AMIA</a>) task force, in the form of an AMIA Board Position Paper released today entitled: "Challenges in ethics, safety, best practices, and oversight regarding HIT vendors, their customers, and patients: a report of an AMIA special task force." Goodman, Berner, Dente, Kaplan, Koppel et al. for the AMIA Board of Directors. J Am Med Inform Assoc (2010). doi:10.1136/jamia.2010.008946. A free PDF is available <a href="http://jamia.bmj.com/site/icons/amiajnl8946.pdf" style="font-weight: bold;">at this link</a>. This report may be part of a trend. As I wrote recently <a href="http://hcrenewal.blogspot.com/2010/11/on-amias-jan-2009-letter-to-office-of.html">at this link</a>: <blockquote>I was somewhat taken aback by the appearance of the article by Karsh et al. entitled "Health information technology: fallacies and sober realities" (covered at Healthcare Renewal <a href="http://hcrenewal.blogspot.com/2010/10/jamia-health-information-technology.html">here</a>) in the Oct. 2010 Journal of the American Medical Informatics Association (<a href="http://jamia.bmj.com/">JAMIA</a>). I was taken aback since the article rains heavily on the academic memes of healthcare IT as a benign and deterministic solution to healthcare's ills, and of health IT-related adverse outcomes being mere "anecdotes."</blockquote> It appears that the views on healthcare IT safety, ethics, management practices, etc. appearing on the Healthcare Renewal blog and on my once-controversial academic health IT website "<a href="http://www.ischool.drexel.edu/faculty/ssilverstein/cases/">Contemporary Issues in Medical Informatics: Common Examples of Healthcare Information Technology Difficulties</a>" (started in 1999) are now becoming mainstream. Most of the issues in this new AMIA Position Paper have been written about at this blog since 2004, and at my aforementioned academic HIT website since 1999. I will reproduce the abstract of the paper below, but download and read the entire paper (emphases mine): <blockquote>ABSTRACT The current commercial health information technology (HIT) arena encompasses a number of competing firms that provide electronic health applications to hospitals, clinical practices, and other healthcare-related entities. Such applications collect, store, and analyze patient information. Some vendors incorporate contract language whereby purchasers of HIT systems, such as hospitals and clinics, must indemnify vendors for malpractice or personal injury claims, even if those events are not caused or fostered by the purchasers. Some vendors require contract clauses that force HIT system purchasers to adopt vendor-defined policies that prevent the disclosure of errors, bugs, design flaws, and other HIT-software-related hazards. [The "gag clauses." These are exceptionally unethical, in my view, regarding the use of an experimental technology, healthcare IT, on unsuspecting, unconsented patients unaware of health IT risks - ed.] To address this issue, the AMIA Board of Directors appointed a Task Force to provide an analysis and insights. Task Force findings and recommendations include: patient safety should trump all other values [I've been writing and saying this for many years now - ed.]; corporate concerns about liability and intellectual property ownership may be valid but should not over-ride all other considerations; transparency and a commitment to patient safety should govern vendor contracts; institutions are duty-bound to provide ethics education to purchasers and users, and should commit publicly to standards of corporate conduct; and vendors, system purchasers, and users should encourage and assist in each others’ efforts to adopt best practices. Finally, the HIT community should re-examine whether and how regulation of electronic health applications could foster improved care, public health, and patient safety. [Regulation has been another issue I have focused upon, especially after holding a management role in Big Pharma - ed.]</blockquote> Also notable was this proclamation: <blockquote> ... “Hold harmless” clauses in contracts between Electronic Health Application vendors and purchasers or clinical users, if and when they absolve the vendors of responsibility for errors or defects in their software, are unethical. [I note that, somewhat remarkably, this is not the more typical hedged academic "may be unethical" statement- ed.] Some of these clauses have stated in the past that HIT vendors are not responsible for errors or defects, even after vendors have been informed of problems.</blockquote> Unethical, indeed, as per my JAMA letter of July 22, 2009 on that issue entitled "Health Care Information Technology, Hospital Responsibilities, and Joint Commission Standards" (<a href="http://hcrenewal.blogspot.com/2009/07/health-care-information-technology.html">link</a>) and per my more detailed essay at my Drexel HIT website (<a href="http://www.ischool.drexel.edu/faculty/ssilverstein/cases/?loc=cases&sloc=koppel_kreda">link)</a>. Also remarkable were these statements: <blockquote>... For-profit manufacturers of healthcare products are bound by values which may at times conflict. For instance, as entities in a marketplace, they are duty-bound to provide a financial return to those investors who have contributed resources in anticipation of their success. Yet, as developers and manufacturers of products that affect the health of people, they are no less obligated to ensure, to the extent possible, that their products are safe and effective, and beneficially support patients [that goes without saying - ed.] and those who treat and care for them. [That is, clinicians, who through their unpaid hard work using oft ill-designed HIT systems are currently used as beta testers and, through 'hold harmless' clauses, as an insurance company and, quite frankly, as cannon fodder - ed.] ... Contracts should require that system defects, software deficiencies, and implementation practices that threaten patient safety should be reported, and information about them be made available to others, as appropriate. Vendors and their customers, including users, should report and make available salient information about threats to patient safety [I've also been writing this for years; it's common sense - ed.] resulting from software deficiencies, implementation errors, and other causes. This should be done in a way easily accessible to customers and to potential customers. This information, when provided to customers, should be coupled with applicable suggested fixes, and should not be used to penalize those making the information available. [There should be as little fear of reporting HIT problems as in reporting medication problems - ed.] ... If appropriate for their size and mission, vendors and client institutions contribute to the growth of biomedical knowledge by conducting HIT research [including research on how to remediate the HIT itself and the IT industry creeds, customs and traditions that cause suboptimal design and implementation in the first place - ed.] … authors of scientific reports should not be prevented from identifying devices, tools, and systems by name in publications. … There are situations in which HIT vendors pursue joint marketing agreements with institutions that adopt vendors’ products and by which these institutions become a part of the vendors’ marketing program [I believe that hospitals should never allow themselves to become IT marketing and promotion operations - ed.], often in exchange for discounts, payments, stock options, or favorable treatment by the vendor. In at least some cases, these agreements include provisions whereby healthcare institutions that serve as demonstration sites for particular products receive compensation when other institutions adopt products from the same vendor. The Task Force notes that such agreements might place the “referring” institutions in a conflict of interest [a common topic on this blog -ed.], and therefore recommends that: <ul><li>Any such conflicts should be eliminated or managed, including disclosure, according to current standards.</li></ul><ul><li>Where such agreements are made, they should include a provision whereby any payment or other compensation contingent on the sale of a system to another party must be disclosed to that other party.</li></ul><ul><li>Payments or gifts to individuals and institutions, including institutional officials, clinicians, etc, should be disclosed. Alternatively, they should be addressed by entities’ internal mechanisms for managing conflicts of interest and commitment, perhaps along the lines of the “rebuttable presumption” standard endorsed by the Association of American Medical Colleges. The goal of the standard is “to ensure that institutions systematically review any financial interest that might give rise to the perception of a conflict of interest, and further, that they limit the conduct of human subjects research by financially interested individuals to those situations in which the circumstances are compelling.</li></ul></blockquote> The new AMIA Position Paper and the aforementioned paper on HIT fallacies and realities seem to reflect a welcome transformation or even about-face for AMIA. I am likely considered "radioactive" by some in that organization for espousing similar views dating back to the late 1990's, when expression of such views was uncommon and even frowned upon. Academia has not been highly tolerant of heterodoxy in many domains for quite some time. One wonders if that stigma will "stick" in view of the increasing realization that such views were not heretical, but forward-thinking along the lines of my early medical mentor, the late Victor P. Satinsky, MD of Hahnemann Medical College and Hospital:<a name="VPS"></a> <blockquote style="font-family:arial;">From <a href="http://www.upenn.edu/gazette/0298/0298obits.html">http://www.upenn.edu/gazette/0298/0298obits.html</a>: Dr. Victor P. Satinsky, C'34, Philadelphia, a cardiovascular surgeon at the old Hahnemann Hospital who helped develop coronary-bypass surgery; September 7 [1997]. He is also credited with 30 major medical innovations and the invention of the Satinsky clamp, now a standard instrument in cardiovascular surgery. He joined Hahnemann (now part of the Allegheny health system [as of 2010 now Drexel College of Medicine - ed.]) in 1946 to do thoracic-surgical research, and from 1961 till his retirement in 1977 he was the research director of its cardiovascular institute. Dr. Satinsky liked to refer to himself on promotional materials as 'the Renaissance Doctor', as he was also a poet, a playwright (some of his plays were produced in London), a painter, a clarinetist, and a fencer; he was known at Hahnemann for practicing his swordsmanship in the halls and classrooms of the hospital. And at the age of 80, he earned a black belt in aikido, and subsequently taught it. Although he had no religious training, during the Second World War he once filled in as a rabbi on a troopship going to Europe when he learned it had chaplains, but no rabbi. He also had taught himself psychiatry and while at Hahnemann developed educational programs for young people; the first, for gifted high-school students, began in 1961. He later added programs for disadvantaged youth, for young people with emotional problems, and one for college dropouts. On retiring, he set up the Satinsky Institute for Human Resource Development to continue this work, which he ran until his death at 84 years.</blockquote> Dr. Satinsky's short, simple and unyielding credo was: "Critical thinking always, or your patient's dead." -- SS

Report of an AMIA special task force on challenges in ethics, safety, best practices, and oversight regarding HIT

I am both surprised and pleased to read the new report of an American Medical Informatics Association ( AMIA ) task force, in the form of an...

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BLOGSCAN: The Age of Deception

BLOGSCAN: The Age of Deception

Per the Corrente blog , the CEO of the Girl Scouts of America described the biggest obstacle to inspiring girls to become leaders: The major...

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"This is Really Going to Set People's Hair on Fire" - the Justice Department Indicts a Pharmaceutical Company Vice President and Associate General Counsel

We have been posting nearly every week about the parade of <a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements">legal settlements</a>, sometimes including guilty pleas to criminal charges, made by health care organizations.  The settlements have involved charges of kickbacks, fraud, conspiracy, and other colorful offenses. Most of these settlements entailed fines or other payments by the organizations that may seem huge, but were fractions of the amounts made by the practices that lead to the charges that were settled.  Almost never have the cases involved penalties for any individuals who authorized, directed, or implemented the misbehavior.  We have also been saying (seemingly <a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements">endlessly</a>, but most recently <a href="http://hcrenewal.blogspot.com/2010/11/ela-medical-now-sorin-group-settles.html">here</a>) that such settlements may be viewed by organizations as merely the costs of doing business, and so until the actual people who were involved in the bad behavior suffer some negative incentive or penalty, expect the behavior to continue.  Maybe things are changing.  In the New York Times, Duff Wilson <a href="http://www.nytimes.com/2010/11/10/health/10glaxo.html">wrote</a>: <blockquote>In a rare move, the Justice Department on Tuesday announced that it had charged a former vice president and top lawyer for the British drug giant GlaxoSmithKline with making false statements and obstructing a federal investigation into illegal marketing of the antidepressant Wellbutrin for weight loss. </blockquote> Specifically, <blockquote>The indictment accuses the Glaxo official, Lauren C. Stevens of Durham, N.C., of lying to the Food and Drug Administration in 2003, by writing letters, as associate general counsel, denying that doctors speaking at company events had promoted Wellbutrin for uses not approved by the agency. Ms. Stevens 'made false statements and withheld documents she recognized as incriminating,' including slides the F.D.A. had sought during its investigation, the indictment stated. </blockquote> An Associated Press <a href="http://www.google.com/hostednews/ap/article/ALeqM5j811xbptN9aTOdN53moz5SDRm7cA?docId=71bc37f9be2d4afe8c7ec7f4e0639242">story</a> provided more detail about the allegedly false statements: <blockquote>The Department of Justice alleges that in 2002, Lauren Stevens of Durham, N.C., signed several letters to the Food and Drug Administration denying that her company had promoted an antidepressant drug for unapproved uses. But Stevens knew that the company had paid numerous physicians to give talks touting unapproved uses of the drug, including weight loss,.... </blockquote> Also, <blockquote>In one instance, prosecutors say Stevens withheld slides used by physicians promoting the company's drug, even though the FDA had asked specifically for the materials. Stevens claimed that the company's response to the FDA was 'final' and 'complete,' according to the indictment. Stevens also falsely denied that Glaxo had paid doctors to attend special sessions where medical experts discussed unapproved uses of Wellbutrin, according to the Department of Justice. 'Attendees were not paid, reimbursed or otherwise compensated to attend these events,' Stevens wrote in a 2003 letter to the FDA. But prosecutors say attendees received gifts, entertainment and other compensation in return for attending the events. During 2001 and 2002, Glaxo paid two expert physicians to speak about 500 times each about Wellbutrin, including how to use the drug to treat obesity.</blockquote> In addition, a CBS News <a href="http://www.cbsnews.com/8301-31727_162-20022282-10391695.html">story</a> suggested that Ms Stevens was made aware of the nature of the information withheld: <blockquote>In March of 2003, the indictment alleges, Stevens received a memo from other lawyers at GlaxoSmithKline analyzing the pros and cons of turning over the slides to the FDA. One of the cons listed in that memo was that turning over the slides would provide 'incriminating evidence about potential off-label promotion of [the drug] that may be used against [the corporation] in this or in a future investigation.' </blockquote> An indictment of an individual, particularly a high-ranking corporate executive, seems to have gotten people's attention, e.g., as Duff Wilson wrote in the Times: <blockquote> The indictment grabbed the attention of pharmaceutical executives who have been bracing for a long-promised government crackdown on company officials — rather than the corporations themselves — in drug-fraud cases that have resulted in billions of dollars in fines and payments. 'This is absolutely precedent-setting — this is really going to set people’s hair on fire,' said Douglas B. Farquhar, a Washington lawyer who recently presided at a panel on law enforcement during a drug industry conference where federal officials warned they were focusing on individuals. 'This is indicative of the F.D.A. and Justice strategy to go after the very top-ranking managing officials at regulated companies.' </blockquote> My response is, of course, that the threat of this sort of action is absolutely what is needed to deter future bad behavior by health care organizations. As long as health care leaders could act with impunity, the fraud, kickbacks, conspiracy etc were continuing. Worse, given their impunity, why would anyone but an idealistic fool attempt to swim against the tide of rising sleaze in health care?  How could skeptics and critics of the status quo in health care gain any traction? Now maybe this sort of action may finally lead self-satisfied, unreflective health care executives to think about what they are doing and its ethical and moral aspects. The NY Times article included this statement in defense of Ms Stevens: <blockquote>Brien T. O’Connor, a lawyer with Ropes & Gray, said in a statement, 'Lauren Stevens is an utterly decent and honorable woman. She is not guilty of obstruction or of making false statements. Everything she did in this case was consistent with ethical lawyering and the advice provided her by a nationally prominent law firm retained by her employer specifically because of its experience in working with F.D.A.' </blockquote> I actually would guess that Ms Stevens believes she did nothing wrong. I would guess that most of the numerous health care leaders who have been caught up in bad behavior also thought they did nothing wrong. After all, they were all very well paid, lived in nice houses in nice neighborhoods, drove fancy cars (when they did not have a paid car and driver), were respected in their communities, did charitable works, etc. How can fine people who look so respectable do anything wrong? But, of course, the veneer of respectability does not prevent unethical or immoral behavior. Making one's numbers, getting one's bonuses, all from doing the big boss' wishes do not certify one's actions as ethical or moral. Perhaps making corporate health care leaders actually accountable for their actions will lead them to think about whether their actions are really as upstanding as their accoutrements of social status make them feel. My final comment is that it may be significant that this case involved a lawyer. On one hand, attorneys have been at the forefront of what little movement there is to improve the accountability, integrity, and transparency of health care organizations. On the other hand, the leadership of many health care organizations have lawyered up to defend their actions. Organizational lawyers have been known to sweet-talk, obfuscate or intimidate those who dare to criticize the organizational leaders' actions. Anyone who is a vocal skeptic of the powers that be in health care must know there is a constant risk of some corporate counsel or hired firm threatening a libel, slander, or tortious interference action. Any individual who dares to be skeptical must be worried that the leaders of large health care organizations can use a lot of other peoples' money to pay for lawyers to push such actions, while individual skeptics facing threats of suits for huge amounts of damages are not likely to have enough money of their own to keep fighting. So I hope that the current case will also push attorneys who make a lot of money protecting the status quo in health care to reflect on the ethics and morality of what they are doing. ADDENDUM (10 November) - Also see comments by Prof Margaret Soltan <a href="http://www.margaretsoltan.com/?p=27401">on the University Diaries blog.</a>

"This is Really Going to Set People's Hair on Fire" - the Justice Department Indicts a Pharmaceutical Company Vice President and Associate General Counsel

We have been posting nearly every week about the parade of legal settlements , sometimes including guilty pleas to criminal charges, made by...

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What a Conflicted Web We Weave: More About Leaders of Financial Firms Influencing Policy in the Guise of Independent Academics

The issue of <a href="http://hcrenewal.blogspot.com/2010/10/what-conflicted-web-we-weave-academic.html">conflicted academic economists providing public policy recommendations</a> just got bigger.  As discussed <a href="http://blogs.reuters.com/felix-salmon/2010/11/08/disclosing-economists-conflicts/">by Felix Salmon</a> in his blog for Reuters, and <a href="http://economix.blogs.nytimes.com/2010/11/08/ethics-for-economists">by Nancy Folbre</a> in the Economix blog for the New York Times,  a <a href="http://www.peri.umass.edu/fileadmin/pdf/working_papers/working_papers_201-250/WP239.pdf">new study</a> by Epstein and Carrick-Hagenbarth showed that some very prominent economists who frequently make pronouncements about financial policy often failed to disclose some major conflicts of interest.  In summary, they identified "two groups of economists that were prominent in the field of financial economics and which had taken a public stance on financial regulation."  Some of these economists also had prominent advisory roles for government economic agencies, including the US Federal Reserve, the US Council of Economic Advisers, the Indian Finance Ministry, the Bank of Finland, the World Bank, and the International Monetary Fund. The authors did an extensive search for the economists' financial ties to financial corporations, which probably detected most relationships such as membership on the boards of directors of public companies, but may have missed consulting arrangements.  They found that 12 of 19 had such relationships, mostly positions on boards of directors or ownership interests.  They found that all but one of the economists with such relationships failed to identify these relationships in the majority of their academic papers and writings in the media.  The one economist who always disclosed his relationships in the media only wrote articles for the private financial firm for which he worked. So major financial conflicts of interest were prevalent among "prominent economists who write op-eds for newspapers, they testify on public panels, they take positions as advisers for politicians and they are interviewed by the media. Academic economists often convey the impression that they occupy these positions as independent objective experts."  The authors concluded: <blockquote>Academic economists serve as experts in the media, molding public opinion. They are also important players in government policy. If those that are creating the culture around financial regulation as well as influencing policy at the government level for financial reform also have a significant, if hidden, conflict of interest, our public is not likely to be well-served.</blockquote> They also noted that economics as a profession does not even have a formal code of ethics, and in particular has never embraced any necessity for disclosing, managing, or restricting conflicts of interest. We had previously <a href="http://hcrenewal.blogspot.com/2010/10/what-conflicted-web-we-weave-academic.html">discussed</a> anecdotal but striking evidence that some of the most prominent economists who influenced public policy up to and after the great recession/ global financial crisis also had major but undisclosed financial ties to financial institutions. It now looks like conflicts of interest could be as prevalent among those who are influential in economics as they may be among those who are influential in medicine, health care, and health care policy. This further corroborates the hypothesis that academic medical institutions are so comfortable with their faculty and leaders' conflicts of interest because they exist in a larger academic culture in which such conflicts are standard operating procedure.  Academic institutions may be particularly happy with economists' conflicts of interest because they involve such large amounts of money. <a href="http://blogs.reuters.com/felix-salmon/2010/11/08/disclosing-economists-conflicts/">Felix Salmon</a> gave the example of  Paul Krugman who when he worked as an economist could command a $40-50,000 fee per speech, easily more than an order of magnitude more than the going rate for medical talks.  Furthermore, as we have noted before, (e.g., <a href="http://hcrenewal.blogspot.com/2010/05/stewards-of-elite-university-or.html">here</a>, <a href="http://hcrenewal.blogspot.com/2010/04/very-well-paid-boob-on-harvard.html">here</a>, and <a href="http://hcrenewal.blogspot.com/2010/02/university-president-but-no-longer.html">here</a>) many prominent academic institutions that incorporate medical schools and academic medical centers have boards of directors dominated by leaders of finance.  Now it appears that these leaders' economic interests may lead them to encourage conflicts of interest among their faculty and administration. So not only do conflicts of interest appear to be a fundamental problem for medicine and health care, they may pose a fundamental problem for society as a whole. Clearly, as Epstein and Carrick-Hagenbarth wrote, economists, like all professionals who can influence public policy, ought to have a code of ethics, and that code, at a minimum, ought to require full disclosure of all conflicts of interest.  Economists who write about policy in the media, write policy-relevant academic articles, and/or who advise non-profit organizations and government agencies should at a minimum reveal all such conflicts.  Similarly, of course, physicians and health policy/ care/ services researchers who write about or otherwise may influence health care policy should at a minimum reveal all such conflicts. Meanwhile, extreme skepticism about policy advice by apparently independent academics and experts is warranted.  We risk sliding into the cynical position that all major policy is now being made by imperial CEOs and their cronies and paid agents.

What a Conflicted Web We Weave: More About Leaders of Financial Firms Influencing Policy in the Guise of Independent Academics

The issue of conflicted academic economists providing public policy recommendations just got bigger. As discussed by Felix Salmon in his ...

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Ela Medical (Now the Sorin Group) Settles

And we return to the parade of <a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements">legal settlements</a>, which is still marching along.  The next entrant to the parade was <a href="http://www.miamiherald.com/2010/11/01/1903266/ela-medical-settles-miami-whistle.html">described</a> by the Miami Herald: <blockquote>In a four-year-old case with nationwide implications, Ela Medical has agreed to pay $9.2 million to settle a whistle-blower case brought by a former Miami technician who charged the company used several schemes to pay kickbacks to South Florida doctors.</blockquote> The details of the allegations were: <blockquote>In the Miami case, brought by May and Ben Kuehne, Lee alleged that Ela gave money to doctors for questionable studies, had Ela techs do work on patients that doctors later billed Medicare for, gave doctors free trips and helped doctors get monitoring equipment that to led to more Medicare billing. The moves were made by the company to boost sales in the multibillion-dollar field of cardiac devices, where pacemakers can cost up to $7,000 and defibrillators up to $18,000. These devices have batteries that run down in about three years, the lawsuit said, and patients need to be monitored to see how much battery life their devices have left. An Ela tech performed the tests in doctors' office. 'Although Medicare required a physician to be present during the battery test, physicians never attended these battery check appointments,' the lawsuit alleged. Doctors then billed Medicare for the techs' work. Other times, doctors were paid $2,500 to $4,000 for each Ela patient enrolled in a study, even though patients were never informed and never gave the required permission, the lawsuit said. 'The physicians had no role and in fact did nothing in furtherance of the study,' the lawsuit stated. 'However, Medicare was billed each time the study was conducted, as if the physician had participated.'</blockquote> Of course, the company's statement had all the expected elements: <blockquote>Closure of this investigation places this legacy issue firmly behind us and clearly enhances our ability to execute on our plans for CRM [cardiac rhythm management] in the United States. Our commitment to provide patients and healthcare providers with life-saving and life-enhancing innovation, and to conduct our business in a highly ethical manner is stronger than ever.</blockquote> I leave it to my dear readers to decide on how ethically the company's previous business operations were, based on the above. I would note that not only did the company want to put this case behind it, it seemed to want to put its old name behind it too. Ela Medical is now apparently known only by the name of its Italian parent company, <a href="http://www.sorin.com/">the Sorin Group</a>. To add a final disturbing note, this case illustrates why people who see what appears to be unethical, or even illegal behavior are not rushing to report it: <blockquote>On Monday, May, the attorney, said Lee 'is not talking to anybody. This has been a difficult experience.' She quit Ela when, after complaining about the company's questionable practices, she was told to transfer to California. She took a job with a competitor, but was dropped when the industry learned she had filed the lawsuit. 'She was blackballed,' May said. 'She's basically gone from $100,000 a year to minimum wage.'</blockquote> One would hardly have expected Ms Lee to have kept her job at Ela once she reported what was going on there. However, it was worse than that. Being known as a whistle-blower may make one radioactive enough to preclude any employment in a segment of health care that is at all related to the one in which one blew the whistle. The Herald article did note that Ms Lee stands to get part of the settlement. Yet this will come at least four years after the case began, as her lawyer said: <blockquote>the 'money will allow her basically to start over.' If she had kept her mouth shut, 'she would have made far more money in her lifetime than she will get as a percentage of the settlement.'</blockquote> As we just <a href="http://hcrenewal.blogspot.com/2010/11/blogscan-corporate-characteristics-that.html">noted</a>, in health care, the incentives are strongly tilted to favor financial productivity , or "making the numbers," and to disfavor ethical conduct, especially when it requires dissenting with top managers. If we really want accessible, affordable, high-quality health care, we will have to get rid of these sorts of perverse incentives. So the march of <a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements">legal settlements</a> continues.  As in many previous cases, note that the monetary cost of the above settlement, while it seems large to normal humans, would be just slightly more than round-up error for a large multi-national company.  As I have said repeatedly,  penalties that only appear to be (relatively small) costs of doing business are unlikely to deter future bad behavior. Until the people who actually authorized, directed and implemented the bad behavior have to suffer some negative consequences, expect the bad behavior to continue.

Ela Medical (Now the Sorin Group) Settles

And we return to the parade of legal settlements , which is still marching along. The next entrant to the parade was described by the Miam...

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