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BLOGSCAN - On Device Company's Obfuscation of the Reasons for Payments to Surgeons

On the Hooked: Ethics, Medicine and Pharma blog, Dr Howard Brody <a href="http://brodyhooked.blogspot.com/2010/12/in-defense-of-paranoia-suspecting.html">analyzed</a> further the case of the huge royalties paid to spine surgeons by Medtronic (see our most recent post <a href="http://hcrenewal.blogspot.com/2010/12/spine-surgeons-reticent-about.html">here</a>).  He wondered why surgeons would get such sizable payments for "intellectual property" related to devices that they neither seemed to use or to research?  I would note that the lack of clarity about the reason for Medtronic's payments to these surgeons is just part of a larger lack of clarity about most of the payments made to physicians and medical and health care academics for "consulting" or serving on advisory boards.  If such professional-industrial collaboration is so important for "innovation," one wonders why the people engaged in it are almost never willing to disclose the topics of these wonderful interchanges?

BLOGSCAN - On Device Company's Obfuscation of the Reasons for Payments to Surgeons

On the Hooked: Ethics, Medicine and Pharma blog, Dr Howard Brody analyzed further the case of the huge royalties paid to spine surgeons by ...

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BLOGSCAN - Wandering in the Wilderness

BLOGSCAN - Wandering in the Wilderness

On the 1 Boring Old Man blog, "Mickey," the anonymous blogger, a retired academic psychiatrist, posted about how he figured out t...

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Former NIH Director Spins Through Revolving Door, Ends Up at Sanofi-Aventis

A bit of news that got little attention this month was a new job for the former head of the US National Institutes of Health (NIH).  Dr Elias Zerhouni had <a href="http://www.nature.com/news/2008/081001/full/455570a.html">left the NIH</a> in October, 2008.  Here is the <a href="http://www.reuters.com/article/idUSLDE6BD08Q20101214">Reuters version</a> of the story of his hew career: <blockquote>French drugmaker <a href="http://hcrenewal.blogspot.com/search/label/Sanofi-Aventis">Sanofi-Aventis</a> (SASY.PA) replaced its head of research and development with a leading academic and former top U.S. health official on Tuesday to raise its game in medical innovations. The company said Elias Zerhouni would lead R&D of drugs and bring R&D for vaccines under his control too as Sanofi reshapes its portfolio and looks to vaccines as one area for growth to offset sales losses from mounting generic competition. The appointment of Zerhouni, a professor of radiology and biomedical engineering, comes as Sanofi battles to buy U.S. rare disease specialist Genzyme. Chief executive Chris Viehbacher brought in Zerhouni in February 2009 as his scientific adviser, shortly after taking charge of the group which he has been transforming to include the development of drugs based on biotechnology.</blockquote> Zerhouni's Embrace of Corporate Health Care Although Zerhouni ostensibly left the NIH to return to academia at Johns Hopkins University, note that by February, 2009, four months after his resignation was announced, Zerhouni was already advising the Sanofi CEO.  Soon after he joined the corporate health care world in earnest.  In April, 2009, he was <a href="http://www1.actelion.com/en/our-company/news-and-events/index.page?newsId=1301120">proposed </a>for membership on the board of directors of Actelion Ltd, a <a href="http://www1.actelion.com/en/our-company/index.page?">Swiss biotechnology company</a>.  On December 8, 2009, he was <a href="http://www.implu.com/releases/2009/20091211/33777/implu_viewer">elected</a> to the board of Danaher Corp, a diversified technology corporation which makes <a href="http://www.danaher.com/business/strategic_detail.asp?key=17">medical devices</a>.  At some time he had become <a href="http://www.zerhounigroup.com/about/index.php">President</a> of the Zerhouni Group, which <a href="http://www.zerhounigroup.com/expertise/index.php">advertised itself</a> as a resource to "pharmaceutical and biotechnology companies, trade organizations, sovereign wealth funds, government agencies, and research entities around the globe." Zerhouni at the NIH: His Response to the Conflict of Interest Scandal There is more than a little irony inspired by Zerhouni's quick circuit through the revolving door. Zerhouni became director of the NIH in 2002, and announced his departure <a href="http://www.nature.com/news/2008/081001/full/455570a.html">in October, 2008</a>. In December, 2003, David Willman published his <a href="http://articles.latimes.com/2003/dec/07/nation/na-nih7">landmark article</a> in the Los Angeles Times on severe conflicts of interest affecting NIH scientists and leaders.  It revealed that formerly stringent conflict of interest policies at the Institutes were rescinded by then director Dr Harold Varmus in 1995, during the Clinton administration, and increasingly since 1998, disclosure of NIH personnel's conflicts of interest had been reduced.  Thus, in 2002, Zerhouni had taken charge of an agency already deeply affected by conflicts of interest affecting many of its leaders, even though that was not yet public.  He initially did nothing about the situation.  Willman published another <a href="http://www.latimes.com/news/nationworld/nation/la-na-nih22dec22,0,7519657.story?coll=la-home-headlines">series of articles</a> revealing even more breathtaking conflicts of interest in December, 2004.  (See our post <a href="http://hcrenewal.blogspot.com/2004/12/anechoic-effect-and-conflicts-of.html">here</a>.)   By then, a Los Angeles Times editorial said there was the "appearance of corruption" at the NIH, and called for Dr Zerhouni's resignation.  Only after the second series of articles did Dr Zerhouni swing into action (see post <a href="http://hcrenewal.blogspot.com/2004/12/few-echoes-from-allegations-of-nih.html">here</a>).  In February, 2005, he announced that he would now hold the NIH to a "<a href="http://hcrenewal.blogspot.com/2005/02/nih-seeks-higher-standard-better-late.html">higher standard</a>."  Yet new conflict of interest stories kept surfacing and their handling kept provoking concern (e.g., see this <a href="http://hcrenewal.blogspot.com/2007/07/ongoing-nih-conflicts-of-interest-story.html">post</a> from 2007, and this <a href="http://hcrenewal.blogspot.com/2008/10/nih-management-reprimanded-scientific.html">post</a> from 2008), and concerns about how NIH deals with conflicts of interest affecting the extramural researchers it funds persist to this day (e.g., see this <a href="http://hcrenewal.blogspot.com/2010/07/ethics-turnaround-sort-of-by-nih.html">post</a>).  By the late 1990s, the NIH, like many other government agencies, seemed to have become extremely cozy with the world of big corporations.  Dr Zerhouni did nothing to obvious to reduce the local version of this coziness until it had become a public scandal.  His actions let questions about the relationships of the NIH, once a pristine example of a government run biomedical research agency, with big health care business persist to this day.  So it should perhaps be no surprise that he so quickly transitioned from the government that is supposed to be"of the people, by the people, for the people" to top leadership positions in corporate health care. Other US Government Health Care Agency Leaders Transit the Revolving Door Meanwhile, the previous commissioner of the US Food and Drug Administration, Dr Andrew von Eschenbach, is <a href="http://www.healthtransformation.net/cs/andrew_c_von_eschenbach_md">Senior Director for Strategic Initiatives</a> at the Center for Health Transformation, a group whose <a href="http://www.healthtransformation.net/cs/our_members">membership</a> includes some of the biggest health care organizations, many of which have had their own moments in the sun on Health Care Renewal.  For example, see Charter Members, <a href="http://hcrenewal.blogspot.com/search/label/AstraZeneca">AstraZeneca</a>, <a href="http://hcrenewal.blogspot.com/search/label/Sutter%20Health">Sutter Health</a>, and <a href="http://hcrenewal.blogspot.com/search/label/WellPoint">Wellpoint</a>; and Platinum Members, <a href="http://hcrenewal.blogspot.com/search/label/GlaxoSmithKline">GlaxoSmithKline</a> and <a href="http://hcrenewal.blogspot.com/search/label/Merck">Merck</a>.  Dr Eschenbach is also on the <a href="http://www.esplp.com/von-eschenbach-joins-histosonics-board.aspx">board of directors</a> of Histosonics Inc.  Also, the previous director of the Centers for Disease Control, Dr Julie Geberding, became <a href="http://www.merck.com/newsroom/news-release-archive/corporate/2009_1221.html">President</a> of Merck Vaccines in late 2009.  Conclusions So the revolving door just keeps spinning, its revolutions suggesting how closely tied together big government and big corporations have become in what is now the health care business.  Whatever the motivations of Doctors Zerhouni, von Eschenbach, and Geberding were, the message to every person in a leadership position in health care in the US government has to still be: you too can earn big corporate compensation soon after you leave here.  Who knows how much that siren song will lead current government leaders to avoid antagonizing the leaders of big health care corporations during their government "service."  That is, of course, not what we want them to be thinking about if government agencies ae to serve the people, not the CEOs of big corporations.  I am sure that the career transitions of Doctors Zerhouni, von Eschenbach, and Geberding were perfectly legal.  If we want government health care agencies to put the peoples' interests ahead of those of the CEOs of big health care corporations, should not, however, the law be changed to at least slow down the revolving door?

Former NIH Director Spins Through Revolving Door, Ends Up at Sanofi-Aventis

A bit of news that got little attention this month was a new job for the former head of the US National Institutes of Health (NIH). Dr Elia...

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Spine Surgeons Reticent About Disclosing Huge Medtronic Payments

Starting in 2007, we posted (<a href="http://hcrenewal.blogspot.com/2007/11/orthopedic-device-makers-reveal.html">here</a>, <a href="http://hcrenewal.blogspot.com/2007/11/few-answers-and-many-more-questions.html">here</a>, <a href="http://hcrenewal.blogspot.com/2007/11/one-more-payment-to-academic-health.html">here</a>, <a href="http://hcrenewal.blogspot.com/2008/03/stories-about-device-manufacturers.html">here</a> and <a href="http://hcrenewal.blogspot.com/2008/06/more-multi-million-dollar-orthopods.html">here</a>) about the payments, often huge, that five manufacturers of prosthetic joints (<a href="http://www.biomet.com/">Biomet</a>, DePuy Orthopaedics (a unit of <a href="http://www.jnj.com/">Johnson & Johnson</a>), Stryker Orthopedics,a unit of <a href="http://www.stryker.com/">Stryker Inc</a>, <a href="http://www.zimmer.com/">Zimmer Holdings</a>, and <a href="http://www.smith-nephew.com/">Smith & Nephew</a>) revealed they made to orthopedic surgeons and various academic and other organizations. We also <a href="http://hcrenewal.blogspot.com/2007/11/aaos-responds-to-disclosure-of-payments.html">noted</a> that some of the leadership of the major orthopedic societies have received substantial amounts from these companies, as <a href="http://hcrenewal.blogspot.com/2007/11/aaos-patient-discussion-guide-regarding.html">have the societies themselves</a>. In 2008, our <a href="http://hcrenewal.blogspot.com/2008/06/more-multi-million-dollar-orthopods.html">post </a>on this subject noted the minimal disclosure some of the surgeons receiving these huge payments made when writing scholarly articles on related topics.  In 2009, <a href="http://www.nejm.org/doi/full/10.1056/NEJMsa0807160">an article</a> in the New England Journal of Medicine showed that almost 30% of surgeons who got such payments in 2007 failed to disclose them when they presented at the 2008 American Academy of Orthopedic Surgeons meeting.(1) Medtronic's Payments to Spine Surgeons This month, the media reported that Medtronic also made payments, sometimes huge, to orthopedic and spine surgeons (see <a href="http://brodyhooked.blogspot.com/2010/12/highest-rolling-spine-surgeons-digging.html">this post</a> by Dr Howard Brody on the Hooked: Ethics, Medicine and Pharma blog, and our summary post <a href="http://hcrenewal.blogspot.com/2010/12/blogscan-medtronics-multi-million.html">here</a>.)  Now <a href="http://www.jsonline.com/watchdog/watchdogreports/112487909.html">further investigation</a> by John Fauber of the Milwaukee Journal-Sentinel suggests that surgeons receiving often huge payments from Medtronic may not have been good at disclosing them either. The article examined payments made to surgeons who authored two major studies about bone morphogenetic protein-2, a biologic drug manufactured by Medtronic used to promote bone growth at surgical sites: <blockquote>Over the last decade, a small group of prominent surgeons from around the country has been enlisted by medical device-maker Medtronic to do clinical research or write articles about the company's new spine surgery product. This year alone, many of those doctors received payments of hundreds of thousands to millions of dollars each in royalties for a variety of other Medtronic spinal devices, according to a Journal Sentinel analysis of newly released company payments. Medtronic began disclosing the payments this year, in advance of a federal requirement set to take effect in 2013. Since it won approval for narrow uses in 2002, the product - bone morphogenetic protein-2, known as BMP-2 - has been an increasingly dominant force in spinal fusion surgery, with sales of about $800 million a year, often for use in other procedures. Independent doctors say the product's success is due largely to positive findings made by the surgeons affiliated with the company. Doctors involved with two of the many research articles on BMP-2 published since it was approved - one in 2002, the other in 2004 - received a combined $6 million in royalties this year for other Medtronic spinal products, the newspaper found. The payments went directly to the doctors or business entities they are associated with.</blockquote> No Disclosure in a 2002 Article The Journal-Sentinel article referred to two scholarly articles written about BMP-2. Regarding the first, <blockquote>At the time BMP-2 was approved in 2002, little was known about the financial connections between Medtronic and doctors associated with the clinical trial. Likewise, little was known that year when the Journal of Spinal Disorders & Techniques published the article on the trial. The paper made no mention of doctors getting royalties or having any financial connection to the company.</blockquote>[Note: I am unable to find this article using standard search techniques, so I cannot give a citation for it.] Regarding the lack of disclosures made in the first article, <blockquote>The four co-authors of a 2002 paper about that trial received a total of $2.8 million this year from Medtronic in royalties for products not including BMP-2. The paper made no mention of any financial relationship between the authors and Medtronic. Burkus, who also was involved in the 2004 study, again declined to say if he was receiving royalties from Medtronic or if had some other financial connection with the company at the time the 2002 paper was published. He got $573,000 through September. Curtis Dickman, a Phoenix surgeon, did not respond to phone calls and e-mails. He and Vantage Investments LLC received $306,000 in royalties. Matthew Gornet, a St. Louis surgeon, and Gornet Enterprises got $591,000 in royalty payments. Gornet said he did not have a financial connection with the company at the time of the study, though he developed a relationship as a consultant right after the trial, an arrangement that ended after about a year. He said his patent rights with Medtronic did not begin until 2003 and none of his royalties involves BMP-2. The last author listed was Thomas Zdeblick, an orthopedic surgeon at the University of Wisconsin School of Medicine and Public Health. Through September, he and Taz Consulting received $1.4 million in royalties for a variety of products. Other records show Zdeblick has received more than $23 million in royalties from Medtronic since 2002. In an e-mail, Zdeblick said he had no financial interest in BMP-2. He does receive royalties for the invention of the LT-Cage, which was used in the BMP-2 clinical trial, but the two products are sold separately.</blockquote> Little Disclosure in the 2004 Article Regarding the second article,(2) <blockquote>Three of the four authors of a 2004 article on the study of the productare listed as receiving nearly $4 million this year in royalties from Medtronic for a variety of spinal products, not BMP-2. That paper was important because it involved a clinical trial that had to be stopped because the product was causing troubling bone formation in the spinal canal of patients. In the paper, that finding was downplayed, with the authors describing the results as 'encouraging.' [Professor Dan] Spengler, the Vanderbilt orthopedic surgeon and former medical journal editor, said he doubted the paper would have been written in such positive terms by authors without financial ties to Medtronic. He described the article as egregious, saying it 'just blew off the complications. It's a horrible article.' Orthopedic surgeon [University of California - Irvine Clinical Professor Charles] Rosen said the paper was biased, calling it 'more of a marketing paper than an objective scientific study.'</blockquote> Regarding the disclosures made in the second article, <blockquote>The article described three of the authors as consultants to Medtronic, though it did not disclose that any of them were receiving royalties at the time. Regis Haid, lead author of the article and an Atlanta neurosurgeon, told the Journal Sentinel he was getting royalties for other Medtronic products. Haid noted disclosure rules for medical journals have become more stringent in recent years. He said BMP-2 provides excellent benefit to patients, adding he had it implanted in his own neck in an off-label procedure. ;I have BMP in me, and I would put it in you . . . ,' he told a reporter. Through September, Haid and Spinal Engineering LLC received about $2 million in royalties this year from Medtronic. Meanwhile, co-author Ken Burkus, a Columbus, Ga., surgeon, and RBCK Research & Consulting, received $573,000. 'Very importantly, you cannot assume that such royalty payments were made prior to 2010,' he said in an e-mail, declining to say whether he got royalties at the time the paper was written. 'I follow the rules to my fullest ability as put forward by the specific journal.' He took issue with criticism that the paper put a positive spin on a troubling clinical trial. 'I believe the words used were appropriate . . . ,' he said. 'I believe the words used were neither 'positive nor negative' but rather were representative of the data presented.' He said if other doctors have problems with the paper, they should take it up with the editor of the journal: 'They can write a letter to the editor.' Co-author Charles Branch Jr., chairman of neurosurgery at Wake Forest University, and the university itself have received $1.2 million in royalties this year. A spokeswoman for the university said it owns the intellectual property rights to Branch's patents and that royalties generally are split with 35% to the individual and 65% to the university. None of those royalties involved BMP-2, university media relations manager Bonnie Davis said in an e-mail. She said Branch and Wake Forest were getting royalties at the time the paper was published, but not when the trial was going on. In a separate e-mail, Branch said use of the term 'encouraging' in the paper 'was not a strong endorsement,' but, rather, recognition that patients getting BMP-2 had superior results to those receiving a traditional bone graft.</blockquote>Summary So here we go again.  Once again we see an example of a single medical device company paying heroic amounts, hundreds of thousands to over a million dollars a year, to surgeons ostensibly as royalties for their intellectual property.  The company and the surgeons were all rather cagey about the nature of the intellectual property for which the money was paid, and about the justification for the size of the payments. While it is likely that the payments have been going on for a while, previous influential articles written by some of the surgeons receiving the payments contained at best minimal disclosure of their financial relationships with Medtronic, and gave no hint about the magnitude of these relationships.  These previous influential articles seemed more enthusiastic about a Medtronic product than was justified by their results.  Of course, maybe getting hundreds of thousands or millions of dollars a year from a commercial health care firm could lead to some excess enthusiasm about its products. It seems that every drug, biotechnology, and device company has its stable of highly paid physicians and surgeons who can be counted on for their enthusiasm about the companies' products, and their reticence about their financial relationships with the companies.  We have often discussed the pervasiveness of the web of conflicts of interest that seems to link most commercial health care firms with most influential medical academics and practitioners.  The web seems even more pervasive than we once imagined, and the conflicts seem even more intense.  Those who laud ties between academic medicine and industry may perseverate about how collaboration leads to innovation, while denying that mere money can influence professional judgement.  However, it is difficult to imagine how even the most well-intentioned professional would not be influenced by hundreds of thousands or millions of dollars a year.  When professionals hide the magnitude of such relationships, it only raises more suspicions that they know they have something to hide because they realize they have been bought. The ever increasing revelations about conflicts of interest pervading academic medicine should inspire extreme skepticism about clinical research or clinical teaching supported in any way by commercial interests.  At the very least, these revelations justify the need for detailed and complete disclosure of all financial relationships among commercial health care firms and academic and practicing physicians, and others who make or influence health care decisions.  I suspect that if such full disclosure took place, physicians, other health care professionals and the public, at least those who had not been paid themselves, would be so aghast that such relationships would not remain legal for long.  References 1.  Okike K, Kocher MS, Wei EX, Mehlman CT, Bhandari M.  Accuracy of conflict-of-interest disclosures reported by physicians. N Engl J Med 2009; 361:1466-1474. 2. Haid RW, Branch CL, Alexander JT, Burkus JK. Posterior lumbar interbody fusion using recombinant human bone morphogenetic protein type 2 with cylindrical interbody cates. The Spine Journal 2004; 4: 527-539.

Spine Surgeons Reticent About Disclosing Huge Medtronic Payments

Starting in 2007, we posted ( here , here , here , here and here ) about the payments, often huge, that five manufacturers of prosthetic jo...

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How Marketing Mixes Into Medical School Curricula - an Example from Canada

Misery loves company, so here is an interesting case reported by the Canadian Press, <a href="http://www.ctv.ca/CTVNews/Health/20101223/university-of-toronto-pain-course-revised-101223/">via CTV News</a>, about how students in a pain management course at the University of Toronto complained that marketing seemed to have been mixed into their curriculum: <blockquote>The complaint centered around students being provided a book on managing chronic pain that was funded and copyrighted by the maker of the prescription pain killer OxyContin. The book had been brought in by a non-faculty lecturer with financial ties to the drug company. </blockquote> It turned out that: <blockquote>From 2002 to 2006, the pain course was funded by donations, included $117,000 in unrestricted educational grants from four drug companies -- Merck-Frosst, Purdue Pharma, Pharmacia Canada and Pfizer -- although they had no input into course content. Since 2007, the program has been funded solely from faculty budgets. [Dean of Dentistry Dr David] Mock said Purdue's copyrighted book on pain management had been brought in by Dr. Roman Jovey, an unpaid guest lecturer and co-author of the book who left copies 'for anyone to take.' Jovey, medical director for a chain of clinics called the Centres for Pain Management, is a member of Purdue's speakers' bureau, paid by the company to conduct workshops and lectures. </blockquote> Dr Jovey defended handing out the free book produced by his part-time employer: <blockquote>Jovey confirmed he had left copies of the 371-page book, entitled 'Managing Pain: The Canadian Health Care Professionals Reference,' for students. 'It was a gift from Purdue. I'm not at all embarrassed or ashamed. I think it's a darn good book. "If we all want to be politically correct and have the appearance of being politically correct, then I guess I get it, that nothing that has any kind of pharma logo or name or ownership should be given out to medical students,' he said Wednesday. 'But the losers are the medical students because I think it's a high-quality book, it's very readable and they're deprived of it this year because of this controversy. And I guess they will be in the future.' </blockquote> However, it appeared that the "darn good" book's content was biased in favor of Purdue's product, Oxycontin: <blockquote>Dr. Irfan Dhalla said he has concerns about the content of the book, which a medical student taking the course brought to his attention. 'There are definitely things that are not consistent with the evidence,' said Dhalla, a staff physician at St. Michael's Hospital and a lecturer at the university. 'For example, oxycodone ... is listed as a moderate-potency opioid, when I think everybody agrees it's a very strong opioid, up to twice as strong as morphine.' While it's appropriate to prescribe oxycodone for severe acute pain or cancer pain, Dhalla said the book suggests that physicians can prescribe the drug for chronic non-cancer pain with relative safety for the patient. 'And I think people with experience know that that is just not the case. When you prescribe to people with chronic non-cancer pain, it's very difficult to do that safely,' he said, noting that the book pays little attention to issues of addiction and deaths from overdose. 'The book in several places makes reference to a claim that the rates of addiction if opioids are used for chronic non-cancer pain are very low. And they're not nearly as low as is claimed in the book.' In fact, a study by Dhalla and colleagues published last year showed prescription rates for opioids -- including OxyContin, a long-acting form of oxycodone -- soared in Ontario over the last two decades, as did the number of deaths linked to the narcotic. </blockquote> A subsequent inquiry has recommended revising the curriculum and dispensing with the drug company funded book. This is another example of how marketing has infiltrated medical education. It suggests that market influenced education likely includes not only opinions in favor of the specific product being marketed, but distortions of fact to support the product that are hardly evidence-based. Furthermore, it shows how conflicts of interest facilitate marketing influenced medical education. Note that the bringer of the biased textbooks in this case was being paid honoraria to speak on behalf of the pharmaceutical company, but presumably not to teach the particular course in question. However, his enthusiasm readily carried over to his work in that course. We have <a href="http://hcrenewal.blogspot.com/search/label/key%20opinion%20leaders">discussed</a> how pharmaceutical marketers regard the "key opinion leaders" whom they pay to speak as salespeople. One would expect salespeople to be enthusiastic for their product even outside of their normal working hours. In my humble opinion, this is why no medical academic should be allowed to simultaneously be a commercially paid "key opinion leader." By the way, note that this case also suggests how the issues we discuss on Health Care Renewal are relevant globally, not just to the US. I tend to be wary of blogging about cases in other countries, since there may be subtle difference in context across countries that might make interpretation of cases more difficult when viewing them from abroad. However, I think that the facts and language here are straightforward enough for me to be fairly confident about what was going on. Nonetheless, if any Canadian think I have got this wrong, please let me know. Meanwhile, if anyone is blogging about similar issues from beyond the US shores, please let me know so I can add their work to our blog roll. Hat tip <a href="http://www.margaretsoltan.com/?p=28432">to Prof Margaret Soltan</a> on the University Diaries blog.

How Marketing Mixes Into Medical School Curricula - an Example from Canada

Misery loves company, so here is an interesting case reported by the Canadian Press, via CTV News , about how students in a pain management ...

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Hackensack University Medical Center CEO's $5 Million Golden Parachute: "the Public Will Perceive the Institution as a Kind of Insider's Group"

Last year was an embarassing one for Hackensack University Medical Center (HUMC), a large academic medical center affiliated with the University of Medicine and Dentistry of New Jersey.  In April, former state senator Joseph Coniglio was convicted of fraud (against the public) and extortion for a scheme that involved him being paid $5000 a month for undefined consulting work for HUMC while he promoted the hospital's interests in the state legislature (see post <a href="http://hcrenewal.blogspot.com/2009/04/new-jersey-legislator-found-guilty-of.html">here</a>).  A subsequent investigative report revealed widespread self-dealing on the part of the HUMC board (see post <a href="http://hcrenewal.blogspot.com/2009/04/hospital-board-members-with-juice-in.html">here</a>).  Soon after, the HUMC CEO, John Ferguson, announced his retirement, <a href="http://www.nj.com/news/index.ssf/2009/05/hackensack_university_medical.html">per the Newark Star-Ledger</a>. Scandal Leads to Apparent Reforms So when I read <a href="http://www.northjersey.com/news/112298739_Hospital_works_to_rebuild_reputation_hurt_by_trial.html">an article</a> from last week on NorthJersey.com entitled "Hackensack University Medical Center works to revamp reputation hurt by trial" I hoped that these travails lead to some real improvements in the leadership and governance of the institution.  Hope springs eternal, and the article did describe some apparent progress. The medical center's board of trustees was streamlined: <blockquote>the hospital's board of governors — once a 57-member behemoth run by a core group of powerful and politically connected members — was whittled to less than half its former size and is now overseen by what the hospital is calling a 'reinvigorated' parent company, Hillcrest Health Service System Inc.</blockquote> Conflicts of interest and self-dealing were apparently banned <blockquote>Members of the two boards may no longer do business directly with the hospital — a significant change because some of them own or work for companies that have been paid millions of dollars by Hackensack. In 2009 alone, these companies were paid $13.2 million by the hospital, according to its federal tax filings. They were paid $17.4 million in 2008.</blockquote>The Devil in the Details Although the board was reduced in size, it gained almost no new members, and the politically-connected members who previously were accused of self-dealing remained: <blockquote>Serving as chairman of the board of governors is Joseph M. Sanzari, a construction magnate, multimillion-dollar donor and longtime board member. His company, a joint venture with former board Chairman J. Fletcher Creamer Jr., has been one of the highest-paid independent contractors at the medical center.</blockquote> Also, <blockquote>There were no new board members until Tuesday, when two were appointed. Many who held influential positions on the board of governors — including Sanzari, Creamer and Joseph Simunovich — are still in key roles. </blockquote> Furthermore, there was a big loop-hole in the apparent ban on conflicts of interest and self-dealing: <blockquote>members of both the board of governors and Hillcrest can still do business with the hospital as long as they work as subcontractors or move to the foundation board or a newly created advisory panel that doesn't have voting or fiduciary powers.</blockquote> Also, <blockquote>Members of the board of governors and Hillcrest still can be hired as subcontractors. The ban on doing business with the hospital also doesn't cover members of the advisory panel or the board that oversees the foundation. About a dozen members of these two groups are affiliated with companies that have made money — millions, in some cases – in work with the hospital.</blockquote> As one outside expert noted, <blockquote>'They may have changed the structure, but if you don't change the people, you don't change the culture,' said Jamie Orlikoff, a governance expert who advises the National Hospital Association.</blockquote> Furthermore, <blockquote>'People who had influence and clout when they were members of a fiduciary board will still have influence and clout even if they are moved to an advisory board,' Orlikoff said.</blockquote> So, <blockquote>'The concern is that the public will perceive the institution as a kind of insider's group and things are being done to benefit them,' said Daniel Borochoff, president of the American Institute of Philanthropy.</blockquote>The CEO's Golden Parachute Hope spring eternal, but is too often crushed.  However, at least the former CEO is gone. But it turns out he got quite a going away present. As described in <a href="http://www.northjersey.com/news/112365189_Severance_raised_hospital_chief_s_pay_to__7_7M.html">a companion article</a>, <blockquote>John P. Ferguson received a severance package of more than $5 million when he was forced out as president of Hackensack University Medical Center last year, bringing his total compensation for 2009 to $7.7 million, according to recent federal tax filings.</blockquote> The other executives who presided over HUMC in 2009, the year that its former consultant was convicted, also did very well for themselves, <blockquote>His senior vice president for operations, Doreen Santora, received $2.6 million — including more than $1.5 million in severance — when she left in the executive reshuffling that followed, the documents show. In all, seven top executives at the non-profit hospital each received more than $1 million in total compensation in 2009, up from five the year before.</blockquote> This extremely generous compensation could not be related to the financial success of the hospital at the time: <blockquote>The compensation packages came in a year in which tax filings show the 775-bed medical center employed 317 fewer staff and Moody's Investors Service downgraded its credit rating to Baa1, leading to higher interest payments when new debt is issued.</blockquote> If this was pay for performance, by what measure these executives' performance was measured was not clear. Actually, who even decided to award them such sumptuous pay was unclear: <blockquote>only a handful of board members were aware of the millions of dollars in pay and perks that had been handed out to executives over the last few years. Several employees saw their overall compensation double or triple. Board members expressed 'sticker shock' when they first learned of the compensation numbers at a fall 2009 meeting, said J. Fletcher Creamer Jr., who completed his term as chairman of the board of governors in March. 'We went through every single executive' whose salaries must be disclosed on the IRS form for non-profit institutions, Creamer said in an interview earlier this year. 'It's the first time they actually saw it. … We always made the numbers available if they wanted to come see it, but not everyone looked.'</blockquote> Keep in mind that per the first NorthJersey.com article, Mr Creamer will still be in a "key role" at HUMC, his failure to think that top executives' compensation was something his fellow board members needed to consider notwithstanding. Summary Is this any way to run a hospital "which has a national reputation for quality care?" The hospital leadership did and still appears to be an "insider's group" which works to promote its own self-interest. As we have <a href="http://hcrenewal.blogspot.com/search/label/executive%20compensation">said before</a>, far too often the leaders of not-for-profit health care institutions seem more interested in padding their own bottom lines than upholding the institutions' missions. They often seem entirely unaware of their duty to put those missions ahead of their own self-interest. Like the financial services sector in the era of "greed is good," health care too often seems run by <a href="http://hcrenewal.blogspot.com/2009/12/compensation-madness-insiders-hijacking.html">"insiders hijacking established institutions for their personal benefit."</a> True health care reform would encourage leadership of health care who understand health care and care about its mission, rather than those who see a quick way to make a small fortune.

Hackensack University Medical Center CEO's $5 Million Golden Parachute: "the Public Will Perceive the Institution as a Kind of Insider's Group"

Last year was an embarassing one for Hackensack University Medical Center (HUMC), a large academic medical center affiliated with the Univer...

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BLOGSCAN - Are electronic medical records a health care cure or a disease?

This doctor writing at Cleveland.com <a href="http://www.cleveland.com/opinion/index.ssf/2010/12/are_electronic_medical_records.html">really doesn't like EMR</a>: <blockquote style="color: rgb(0, 153, 0); font-weight: bold;">... Our practice implemented EMR about three months ago, and it has not been a downhill sleigh ride thus far. Here's the scorecard. • It saves time. It doesn't. • It saves money. It hasn't. • It promotes office flow and efficiency. Hardly. • It improves staff morale. Are you joking? • Patients prefer it. None that I know. • It's been a bonanza for document-scanning companies. Bingo! What I find most troubling about EMR is that it is "point and click" medicine. It radically disrupts the doctor-patient relationship. Taking the patient's medical history -- the bedrock of doctoring -- is reduced to a sterile data-entry process. Taking the history, the conversation that physicians and patients have had since Hippocrates tended to the sick, is our opportunity to reach out and bond with our patients. During this time, we forge human-to-human connections with patients who are seeking our help. This is the scaffold upon which a sturdy doctor-patient relationship develops. EMR is taking a chainsaw to this structure. Those who champion the technology are usually not practicing physicians. They are the insurance industry, billing personnel, medical coding specialists, the government, various bean counters and, of course, EMR vendors. Because these folks are not physicians, they do not appreciate how EMR affects doctoring at ground zero in our exam rooms ... </blockquote> Read the whole thing. -- SS

BLOGSCAN - Are electronic medical records a health care cure or a disease?

This doctor writing at Cleveland.com really doesn't like EMR : ... Our practice implemented EMR about three months ago, and it has not...

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