healthy4u

BLOGSCAN: The Place Where the Compass Spins

The 1 Boring Old Man blog is on a roll.  Read <a href="http://1boringoldman.com/index.php/2011/03/28/compasses/">this summary post</a>, see its amazing introduction below, then peruse the <a href="http://1boringoldman.com/">main page</a> and the archives: <blockquote>At the North Pole, the magnetic compass apparently spins at random, not knowing where to point. Is it because there’s no North? or is North everywhere? That’s the way I feel about this Atypical Antipsychotic story I’ve been preoccupied with for a couple of months. It’s like everyone’s walking around with a compass that doesn’t work any more. The Pharmaceutical Companies involved have forgotten what their products are used for. Many doctors seem to have forgotten why they became doctors. Whole industries have sprung up [Clinical Research Organizations, Clinical Research Centers, Medical Writing companies, etc] without being clear about what they’re even involved in. One has to move away from it all to avoid getting caught up in the confusion and becoming as blind as the other players. Once you get far enough away, it’s tempting to forget that it’s even there, that place where the compasses don’t work anymore.</blockquote>

BLOGSCAN: The Place Where the Compass Spins

The 1 Boring Old Man blog is on a roll. Read this summary post , see its amazing introduction below, then peruse the main page and the arc...

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"Government-Run Health Insurance" Run by Corporations? - Two Medicaid Examples

In the US, there seems to have been a constant argument between right- and left-wingers over "government-run" health insurance.  The right tends to disparage all aspects of "government-run" health care, and in the case of insurance, uses the alleged faults of the two big US government health insurance programs as examples.  (Medicare is a federal government health insurance program for the elderly and disabled. Medicaid is federal-state program for the poor.)  For example, per the Associated Press <a href="http://www.businessweek.com/ap/financialnews/D9LTA0UO2.htm">via BusinessWeek</a>, from a currently prominent Republican hopeful for President, former Minnesota Governor Tim Pawlenty, <blockquote>The former Minnesota governor was the latest politician to participate in the Health Policy Grand Rounds program that Dartmouth-Hitchcock Medical Center has organized for its staff during the past two presidential campaign cycles. Using Medicare and Medicaid as examples, he criticized the notion that government-run health care will produce efficiency and said the answer lies in empowering consumers.</blockquote> Republican Congressman Darrell Issa (California) <a href="http://issa.house.gov/index.php?option=com_content&view=article&id=271:rep-darrell-issa-the-lackluster-record-of-government-run-health-care&catid=23:opinion-editorials">wrote</a> in 2010: <blockquote>an expansion of the federal bureaucracy at that rate will greatly increase the incidence of waste, fraud and abuse in health care. Already Medicare, which accounts for 14% of all federal spending, is rife with waste, fraud and abuse. Even Attorney General Eric Holder has said, 'By all accounts, every year we lose tens of billions of dollars in Medicare and Medicaid funds to fraud.' A recent analysis by the Government Accountability Office (GAO) estimated that federal subsidy programs cost taxpayers about $100 billion every year in improper payments, with Medicare and Medicaid accounting for more than half of that.</blockquote> The left may advocate for government-run, "single-payer" insurance programs, perhaps using the alleged benefits of Medicare and Medicaid as examples. Scholarly articles about health care policy may refer to Medicaid as a government "single-payer" system.  (For example, see: Robinson JC. The commercial health insurance industry in an era of eroding employer coverage. Health Aff 2006; 25:1475-1486. Link <a href="http://content.healthaffairs.org/content/25/6/1475.short">here</a>.) In any case, I suspect most of us think of Medicaid as an example of "government-run" health care insurance, regardless of whether we believe that is a good or a bad thing. Yet the reality may be more complex. Two recent stories, one a follow-up on an old Health Care Renewal post, provide some dots to connect. Connecticut HUSKY Medicaid Program In 2007, we <a href="http://hcrenewal.blogspot.com/2007/11/health-plans-programs-cancelled-for.html">posted</a> about how the state of Connecticut was going to end participation in the HUSKY state Medicaid program for poor children by four insurance companies/ managed care organizations.  They apparently refused to provide information about payments to physicians and denial of payments for prescription drugs to the state.  The two largest organizations involved were Anthem Health Plans (a subsidiary of WellPoint), and Health Net.  At the time, we noted that this case provided an example of the lack of transparency exhibited by major health organizations. Late last year, the Connecticut Mirror <a href="http://www.ctmirror.org/story/8085/husky-managed-care-company-profits">documented </a>more criticism of the HUSKY program based on a report that showed that participating companies were making big profits from it (but perhaps not from other state Medicaid programs):  <blockquote>The three managed care companies in the state's HUSKY insurance program for low-income children and families recorded profits of $18.8 million last year, according to figures released by the state Department of Social Services. In one part of HUSKY, the insurers made margins of at least 20 percent and spent less than 72 percent of their revenues on medical care. The figures released this month drew criticism from members of the Medicaid Care Management Oversight Council, who are in the midst of considering moving HUSKY out of managed care.</blockquote> In more detail, the relevant numbers were: <blockquote>AmeriChoice, part of UnitedHealthcare, spent 62 percent of its revenue on medical care and posted a 22.9 percent profit margin in the HUSKY B program. By contrast, the federal health reform law sets minimum medical care ratios for insurers of 80 percent or 85 percent, depending on the type of plan. The provision does not apply to Medicaid plans, but was cited as a benchmark in the council's discussion. None of the insurers met those benchmarks in HUSKY B, which covers children whose family income does not qualify for Medicaid. Last year, it covered between 13,000 and 16,000 children, many whose families earned below 300 percent of the federal poverty level. Aetna spent 70.5 percent on medical care and made a 20 percent margin, while Community Health Network of Connecticut, a non-profit with far more enrollees than the other insurers, spent 71.8 percent of its revenues on medical care and made a 20.6 percent margin. Margins were lower, and medical care ratios higher, in HUSKY A, a Medicaid program that enrolled as many as 358,088 children and adults in 2009. Community Health Network reported a 95.1 percent medical care ratio and a -0.3 percent margin. AmeriChoice spent 86.3 percent of its revenue on medical care and achieved a 3.5 percent margin, while Aetna had an 83.9 percent medical care ratio and 6.5 percent margin. Overall, the medical care ratio was 90.7 percent for both HUSKY programs and all three insurers. The overall margin was 2.3 percent.</blockquote> The insurers involved defended themselves by noting to participate in HUSKY they also had to participate in another program, Charter Oak Health Plan, "on which they lose money." Last month, it looked to be the end of managed care in these Medicaid programs, again as <a href="http://www.ctmirror.org/story/11427/malloy-administration-moving-husky-out-managed-care">reported</a> by the Connecticut Mirror: <blockquote>The Malloy administration announced plans Tuesday to move the HUSKY and Charter Oak health programs out of managed care and increase care coordination in the state's other Medicaid programs, an effort officials said would save money while giving the state more control over health programs that serve more than 500,000 people. </blockquote> This article also noted: <blockquote>In the current system, the state pays three managed care companies set fees for each HUSKY and Charter Oak member every month, and the companies use the money to pay medical claims. Critics say it gives the managed care companies an incentive to deny care since they get to keep the money not spent on medical costs.</blockquote> So let us deal directly with the cognitive dissonance generated by these articles. In the ongoing US health reform debate, Medicaid is usually discussed as a "government-run" health care (insurance) program. Yet these news articles from Connecticut suggest at least in that state, part of Medicaid was out-sourced to mostly large, national, for-profit health insurance companies/ managed care organizations. Furthermore, as noted just above, these corporations seemed to be mainly calling the shots in how their part of Medicaid was run. So is this "government-run" health care (insurance)? But wait, there is more.... Minnesota Medicaid Controversy Last month, the Politics in Minnesota web-site ran a <a href="http://politicsinminnesota.com/blog/2011/02/picking-the-lock-on-hmos-%E2%80%98black-box/">report</a> on an unlikely reformer: <blockquote>Dave Feinwachs is no stranger to the Capitol. For three decades he was the general counsel to the Minnesota Hospital Association. In that capacity, he negotiated with state agencies and testified regularly before legislative committees on health care issues. But early last year, Feinwachs said, he was ordered by his superiors at the hospital association not to provide any further testimony at the Capitol. The reason for the muzzle: his vocal insistence that health maintenance organizations (HMOs) should contribute money to help salvage the state’s General Assistance Medical Care program for indigent adults. Feinwachs says he abided by the prohibition on testimony before legislative committees, but apparently it was not enough to keep him in the good graces of his employer. In November he was fired as the group’s principal attorney. Feinwachs will not discuss the reason for his termination, citing potential litigation. But it almost certainly had something to do with his ongoing zealous campaign to force greater transparency and accountability on the state’s HMOs - primarily Blue Cross & Blue Shield, HealthPartners, Medica and UCare - which receive roughly $3 billion annually to run health plans for many of the state’s poorest residents.</blockquote> So here we go again. This article suggested that Minnesota had out-sourced a very large part of its Medicaid program. Furthermore, it also appears that the state government knows little about what happens to the money it hands over: <blockquote>In the next two years, Minnesota is slated to funnel about $6 billion to the state’s HMOs to provide health care for 550,000 of the state’s poorest residents. To put that figure in perspective, it is nearly 20 percent of the state’s expected 2012-13 general fund revenues - and nearly identical to the state’s projected $6.2 billion deficit. In coming up with a solution to Minnesota’s financial crisis, Feinwachs and others believe, legislators must at least have a clear accounting of this massive pot of health care dollars. HMOs, meanwhile, are not exactly yearning for scrutiny, especially as they launch a pitch to administer even more of the state’s health care spending.</blockquote> In addition, there is reason to believe that Minnesota may be paying a significant amount for administration: <blockquote>Feinwachs believes that the administrative overhead collected by HMOs could be in the neighborhood of 16 percent. He concedes, however, that this is no more than a 'guesstimate' pieced together from the limited information that is publicly available.</blockquote> Then, there is reason to suspect that the private (and nominally not-for-profit) HMOs that Minnesota pays to run Medicaid have resisted accounting for how the money they got was spent: <blockquote>Past attempts to bolster accountability and transparency for HMOs have largely run into a brick wall. For instance, when legislators considered requiring the health plans to chip in on a plan to restore the General Assistance Medical Care program last year, they were told by officials from the Department of Human Services that such a move would be illegal. Efforts to provide more financial disclosure have been rebuffed by the argument that such information is proprietary and not subject to the state’s data practices rules. The complexity of Minnesota’s patchwork of publicly funded health care plans, which very few individuals clearly understand, has also helped forestall changes. 'We can’t let the complexity of data and information beat us down, and I think that’s what happened in the years past,' Hosch said. 'The systems almost seem like they’re deliberately complex in order to confuse us.'</blockquote> Apparently in these parlous financial times, Mr Feinwachs got some attention. Last week, the state Governor announced his willingness to dig into the results of the state's out-sourcing of Medicaid, per the Minneapolis Star-Tribune: <blockquote>It's high time that Minnesota started treating its nonprofit health plans for what they are -- some of state government's largest vendors. Reforms announced this week by Gov. Mark Dayton's office are a promising first step toward scrutinizing health plan contracts for savings and finding new ways to rein in Minnesota's soaring medical costs. Managing care for more than 500,000 low-income, disabled and elderly Minnesotans enrolled in state public health programs is a $3.1 billion-a-year business for health plans in Minnesota, with the state and federal government jointly footing the bill. Over the past decade, the state's portion of this outsourced care has increased from 5 percent to 11 percent of the state budget, according to Dayton's office. The state also has more than 249,000 people -- typically the sickest of the sick -- in a fee-for-service public program. That spending is also ripe for a cost-savings review. On Wednesday, Dayton announced plans to do what good business leaders do in difficult financial circumstances. His administration is going to start driving harder bargains with health plans. Key parts of the plan include making the contracting system more competitive, making financial information more transparent, and doing deeper auditing of plans' books to analyze administrative and medical expenses.</blockquote> So again in Minnesota, it appeared that the state had out-sourced a large proportion of its Medicaid program, covering apparently two-thirds of the state's Medicaid patients. It appears that knowledge of the out-sourcing of most of Medicaid was relatively anechoic, and that even the state's former Governor Pawlenty was unaware of it (see his comments in introduction to this post). Despite the amounts of money and the numbers of people involved, up to now the state government had apparently very little information about how billions of dollars were being spent by private, albeit nominally non-profit health insurance companies/ managed care organizations. Summary Two cases from two states suggest that some proportion of Medicaid, perhaps a very large proportion, has been out-sourced to private corporations, both nominally non-profit and for-profit. In fact, a Washington Post <a href="http://www.washingtonpost.com/wp-dyn/content/article/2010/07/07/AR2010070703560.html">article</a> last year suggested that 70% of Medicaid patients are in managed care plans, most of which are likely out-sourced, not run by state Medicaid agencies. Our two cases above further suggest that government officials may know little about how the money given to these corporations was spent, and how the corporations managed the supposedly "government-run" health insurance. So much for the notion that the US Medicaid program is "government-run" health insurance.  Whether one believes that government bureaucrats are good or bad at running health care, it seems that most Medicaid patients' care is managed by corporate, not government bureaucrats. The likelihood that a substantial proportion of Medicaid patients actually get their health care coverage from corporations, be that non-profit or for-profit, raises some important questions. - What proportion of the government funds provided these corporations goes to health care versus administration, overhead, etc? -  What then is the proportion of all Medicaid money spent on health care versus administration, overhead, etc at the federal, state, and corporate levels? -  What proportion of the revenue of major health insurers/ managed care organizations actually comes from tax-payers via Medicaid? -  To what extent do health insurers/ managed care organizations influence clinical care through their role implementing Medicaid? -  How transparent are their finances and their implementation of Medicaid? -  How well are they supervised and regulated by national and state government? Meanwhile, it appears that there is far more overlap between government and corporate health insurance and managed care than most of us realized.  That suggests the usual debate between the foes and proponents of "government-run" health care (insurance) was vastly too simplistic.  Maybe some of those involved in the debate should have known that.    Meanwhile, the concerns I <a href="http://www.ejinme.com/article/S0953-6205%2803%2900029-3/abstract">discussed</a> in 2002 that "health care has become dominated by large, bureaucratic organizations" appear increasingly well-founded.  This domination seems to be increasingly facilitated by collaboration - or should that be collusion? - among government and private bureaucracies.  The danger, as we have repeatedly discussed, is that the leaders of these bureaucracies may feel increasing loyalty to the managers' and executives' guild, and decreasing pressure not to fulfill their own and their cronies' self-interest.  We need at least to have some frank discussions about the increasing corporatism of health care and all of society, and what to do about it.

"Government-Run Health Insurance" Run by Corporations? - Two Medicaid Examples

In the US, there seems to have been a constant argument between right- and left-wingers over "government-run" health insurance. T...

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Those Who Dismiss Healthcare (and Healthcare IT) Adverse Events Reports as Mere "Anecdotes" Have Lost - Supreme Court-Style

At my Sept. 2010 post "<a href="http://hcrenewal.blogspot.com/2010/09/dangers-of-critical-thinking-in.html" style="font-family: arial;">The Dangers of Critical Thinking in A Politicized, Irrational Culture</a>" I wrote: <blockquote style="font-family:arial;">... It's the EMR "anecdotalists" (as opposed to the "<a href="http://www.blogger.com/redir.aspx?C=dc7b9da405614c5dbab920a23075d904&URL=http%3a%2f%2fonline.wsj.com%2farticle%2fSB122910977401502369.html%3fmod%3dloomia%26loomia_si%3dt0%3aa16%3ag2%3ar3%3ac0.0175368%3ab0" target="_blank">Markopolists</a>") who say that "anecdotes" of HIT-related injury are meaningless. They deem reports of safety issues and HIT-related misadventures and risk as simply "anecdotal", and that "anecdotes don't make evidence" (or "anecdotes don't make data").</blockquote> For "anecdotes" of patient harm due to medical devices even from the most reliable of sources to be counted as "evidence" of device risk, apparently, the stories need to be blessed with Statistical Holy Water. The Holy Water must also be of a brand approved by the academic pundits. For me, this is no longer merely a professional debate. My elderly relative became one of those "anecdotes" in May last year. I address the casual, Dogbert-style, waving-of-the-hand "Bah!" dismissal of health IT harm "anecdotes" at numerous other posts as well, such as "<a href="http://hcrenewal.blogspot.com/2011/01/ehr-problems-no-theyre-merely.html" style="font-family: arial;">EHR Problems? No, They're Merely Anecdotal</a>" and "<a href="http://hcrenewal.blogspot.com/2010/09/health-it-on-anecdotalism-and.html" style="font-family: arial;">Health IT: On Anecdotalism and Totalitarianism</a>". <div style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjC3R-neGSEVG6YHlF2_aqr3l_TIiwnLOVuprTMHik2msljNENb9cbk8yfkczzdbnzm3vXf5s1MSAybYAwwEdk4qPThRR8mDgKozEtleyGagJOM7rQY7xomFQXq1-z5nKatfhw-Fhc5m5MN/s1600/dilbert_bah.jpg"><img alt="" border="0" id="BLOGGER_PHOTO_ID_5588746392800329890" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjC3R-neGSEVG6YHlF2_aqr3l_TIiwnLOVuprTMHik2msljNENb9cbk8yfkczzdbnzm3vXf5s1MSAybYAwwEdk4qPThRR8mDgKozEtleyGagJOM7rQY7xomFQXq1-z5nKatfhw-Fhc5m5MN/s320/dilbert_bah.jpg" style="display: block; margin: 0px auto 10px; text-align: center; cursor: pointer; width: 122px; height: 102px;" /></a>Bah! Your Health IT adverse events reports are anecdotes, and anecdotes don't make data! </div> In those posts I also mention how Australian informatics professor Dr. Jon Patrick had essentially hit the flaws of this argument out of the Southern hemisphere with a short editorial in the journal "Applied Clinical Informatics" entitled "<a href="http://aci.schattauer.de/en/contents/archive/issue/1124/manuscript/15463/show.html" style="font-family: arial;">The Validity of Personal Experiences in Evaluating HIT</a>." That essay is free at the link and is worth reading. Interestingly and thankfully, the "anecdotes are meaningless" crowd have now lost, and lost big - Supreme Court style. In fact, the U.S. Supreme Court has shown far more common sense than many esteemed academics and industry pundits. As noted in <a href="http://pipeline.corante.com/archives/2011/03/25/the_supreme_court_slams_big_pharma_not_exactly.php" style="font-family: arial;">this post</a> at Derek Lowe's pharmaceutical industry "In the Pipeline" blog, the company that made "Zicam", a zinc-based over-the-counter cold remedy, tried to defend shareholder suits that the company withheld case reports of Zicam causing permanent loss of smell via arguing that such reports "did not reach a level of statistical significance", i.e., were "anecdotal." The case went to the U.S. Supreme Court. The Supreme Court would have none of that argument: <blockquote>"Matrixx’s [Zicam's manufacturer - ed.] premise that statistical significance is the only reliable indication of causation is flawed. Both medical experts and the Food and Drug Administration rely on evidence other than statistically significant data to establish an inference of causation. It thus stands to reason that reasonable investors would act on such evidence. </blockquote> The full court decision is at this link: <a href="http://www.supremecourt.gov/opinions/10pdf/09-1156.pdf" style="font-family: arial;">http://www.supremecourt.gov/opinions/10pdf/09-1156.pdf</a> (PDF file), but a passage I consider key to this issue is as follows: <blockquote style="font-style: italic;">... We conclude that the materiality of adverse event reports cannot be reduced to a bright-line rule ... Because adverse reports can take many forms, assessing their materiality is a fact-specific inquiry, requiring consideration of their source, content, and context. </blockquote> This is common sense incarnate. It applies not just to drugs, but to medical devices, to health IT, and to other domains as well. In essence, it is saying that adverse events reports, especially repeated ones, from trustworthy sources are not to be lightly dismissed, but should serve at the very least as red flags that there may be a systemic problem requiring further investigation. One wonders how and if public healthcare IT vendors will begin disclosing "anecdotal" reports of their products causing patient harm to their own stockholders. One also wonders if the academic anecdotalists (up to the level of the chair of the <a href="http://healthit.hhs.gov/portal/server.pt/community/healthit_hhs_gov__onc/1200" style="font-family: arial;">Office of the National Coordinator for Health Information Technology</a> at HHS) will cease their unfettered dismissal of health IT AE reports as mere "anecdotes" and therefore let's roll out this 100% beneficent technology nationwide ASAP: <blockquote style="font-family:arial;">"Nothing [ONC has] found would give them any pause that a policy of introducing EMR's could impede patient safety." - David Blumenthal </blockquote> That sounds a bit like the refrain of the makers of Zicam. One might also wonder if the anecdotalists merely lack common sense, or are using this form of epistemological dementia to obscure conflict of interest. On a final note, my favorite comment at the aforementioned "In the Pipeline" blog story is this by anonymous commenter "<a href="http://pipeline.corante.com/archives/2011/03/25/the_supreme_court_slams_big_pharma_not_exactly.php#486785">Still Scared of Dinosaurs</a>": <blockquote>One of the most important ideas real statisticians must get into their heads is "Thou shalt not worship the 0.05 threshold". The whole concept of "statistical significance" for AEs is idiotic and the fact that Matrixx based any part of their defense on it indicates that their stupidity did not end when they named the company.</blockquote> Perhaps this Dilbert cartoon is apropos to the Supreme Court decision: <a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjpWvtHM2V4woNCenRHGJBsn5bL2lnegSGbsn6NLY-al4u1RXF9vsMrbkECBhDJvRAGg2DNSe298h2dNiNetm9f54jUTxDwmFFYPchyphenhyphenaKz8y8mP16rRDeGIIMIHPsg-utiJIN9ZGOjkrfS6/s1600/dogbert.gif"><img alt="" border="0" id="BLOGGER_PHOTO_ID_5588746949773253554" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjpWvtHM2V4woNCenRHGJBsn5bL2lnegSGbsn6NLY-al4u1RXF9vsMrbkECBhDJvRAGg2DNSe298h2dNiNetm9f54jUTxDwmFFYPchyphenhyphenaKz8y8mP16rRDeGIIMIHPsg-utiJIN9ZGOjkrfS6/s320/dogbert.gif" style="display: block; margin: 0px auto 10px; text-align: center; cursor: pointer; width: 138px; height: 135px;" /></a> -SS Addendum: I thought it appropriate to share these thoughts with the leadership of the <a href="http://www.jointcommission.org/">Joint Commission</a>, the organization that accredits healthcare organizations in the United States: <div style="direction: ltr;" id="divRpF355968"></div><blockquote><div style="direction: ltr;font-family:arial;" id="divRpF355968">From: Scot Silverstein Sent: Sunday, March 27, 2011 10:41 AM To: MGiuntoli, Anita; Chassin, Mark; Schyve, Paul; Legaspi, Shirley Cc: Ross Koppel; 'David Kreda' Subject: Re: MATRIXX INITIATIVES, INC., ET AL. v. SIRACUSANO ET AL. </div> <div> <div face="Arial" size="13px" style="direction: ltr; color: rgb(0, 0, 0);"> <div dir="ltr" style="font-family:arial;"> </div> <div dir="ltr" style="font-family:arial;"> </div> <div dir="ltr" style="font-family:arial;">Not a complaint this time [about health IT failure - ed.], but an observation. The JC has noted health IT risks in the Sentinel Events Alert "<a href="http://www.jointcommission.org/assets/1/18/SEA_42.PDF">Safely implementing health information and converging technologies</a>" of 2008. The company that made "Zicam", a zinc-based over-the-counter cold remedy, tried to defend shareholder suits that the company withheld case reports of Zicam causing permanent loss of smell via arguing that such reports "did not reach a level of statistical significance", i.e., were "anecdotal." The case went to the U.S. Supreme Court. The Supreme Court would have none of that argument: <blockquote style="font-family:arial;"> "Matrixx’s [Zicam's manufacturer] premise that statistical significance is the only reliable indication of causation is flawed. Both medical experts and the Food and Drug Administration rely on evidence other than statistically significant data to establish an inference of causation. It thus stands to reason that reasonable investors would act on such evidence. </blockquote> The full court decision is at this link: <a href="http://www.supremecourt.gov/opinions/10pdf/09-1156.pdf" target="_blank">http://www.supremecourt.gov/opinions/10pdf/09-1156.pdf</a> (PDF file), but a passage I consider key to this issue is as follows: <blockquote style="font-family:arial;">... Because adverse reports can take many forms, assessing their materiality is a fact-specific inquiry, requiring consideration of their source, content, and context.</blockquote> This is common sense incarnate. It applies not just to drugs, but to medical devices, to health IT, and to other domains as well. </div> <div dir="ltr" style="font-family: arial;"> </div> <div dir="ltr" face="arial">I believe JC should start to pay serious attention to "anecdotal reports" of health IT-caused patient injury, and consider reliable reporting of these events as an Accreditation standard. </div> <div dir="ltr" face="arial"> </div> <div dir="ltr" style="font-family: arial;">As I noted in my July 2009 JAMA letter to the editor "<a href="http://jama.ama-assn.org/content/302/4/382.1.extract" target="_blank">Health Care Information Technology, Hospital Responsibilities, and Joint Commission Standards</a>" in response to Koppel and Kreda's <a href="http://jama.ama-assn.org/content/301/12/1276.extract" target="_blank">JAMA article</a> on HIT industry practices, "hold harmless" and "gag" clauses must go, and be replaced with proactive reporting of healthcare IT-related "events." </div> <div style="font-family: arial;" dir="ltr"> </div> <div dir="ltr" style="font-family: arial;">Scot Silverstein</div> <div dir="ltr"> </div></div></div></blockquote>-- SS

Those Who Dismiss Healthcare (and Healthcare IT) Adverse Events Reports as Mere "Anecdotes" Have Lost - Supreme Court-Style

At my Sept. 2010 post " T he Dangers of Critical Thinking in A Politicized, Irrational Culture " I wrote: ... It's the EMR ...

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The Institute of Medicine Releases Reports on Practice Guidelines and Systematic Reviews Which Generate Few Echoes

Two days ago, the prestigious US Institute of Medicine <a href="http://www8.nationalacademies.org/onpinews/newsitem.aspx?RecordID=13058">released </a>two reports on important health care issues, clinical practice guidelines and systematic reviews.  <a href="http://iom.edu/Reports/2011/Finding-What-Works-in-Health-Care-Standards-for-Systematic-Reviews.aspx">Systematic reviews</a> of the relevant clinical research have been advocated by evidence-based medicine proponents as the appropriate basis for clinical and policy decisions.  <a href="http://iom.edu/Reports/2011/Clinical-Practice-Guidelines-We-Can-Trust.aspx">Clinical practice guidelines</a> have been advocated by many health researchers, policy makers, and clinicians as the best way to encapsulate the evidence to inform clinical and policy decision making.  Both reports suggested series of standards for how systematic reviews and clinical practice guidelines should be developed.  These topics are of general importance to clinicians, health services researchers, and health policy makers.  The <a href="http://www.iom.edu/">Institute of Medicine</a>, part of the US National Academy of Sciences, is one of the most authoritative sources of opinion on medicine and health care.  Therefore, one would think that these reports would have gotten wide notice, and would hardly required Health Care Renewal to create some echoes. However, a Google News search today produced only six "hits" relevant to these reports, including the original press release.  All are in specialized medical/ health care news outlets.  None are in the national media, and none are from major medical/ professional journals or societies.  Let me suggest a theory about why these two major reports have generated so few echoes so far.  Let me quote from the <a href="http://iom.edu/~/media/Files/Report%20Files/2011/Clinical-Practice-Guidelines-We-Can-Trust/Clinical%20Practice%20Guidelines%202011%20Report%20Brief.pdf">summary</a> of the report on clinical practice guidelines: <blockquote>Most guidelines used today suffer from shortcomings in development. Dubious trust in guidelines is the result of many factors, including failure to represent a variety of disciplines in guideline development groups, lack of transparency in how recommendations are derived and rated, and omission of a thorough external review process. To be trustworthy, clinical practice guidelines should: • Be based on a systematic review of the existing evidence; • Be developed by a knowledgeable, multidisciplinary panel of experts and representatives from key affected groups; • Consider important patient subgroups and patient preferences, as appropriate; • Be based on an explicit and transparent process that minimizes distortions, biases, and conflicts of interest; • Provide a clear explanation of the logical relationships between alternative care options and health outcomes, and provide ratings of both the quality of evidence and the strength of recommendations; and • Be reconsidered and revised as appropriate when important new evidence warrants modifications of recommendations. Additionally, as reflected in the committee’s standards for developing trustworthy clinical practice guidelines, guideline development groups optimally comprise members without conflict of interest. The committee recognizes that in some circumstances, a guideline development group may not be able to perform its work without members who have conflicts of interest—for example, relevant clinical specialists who receive a substantial portion of their incomes from services pertinent to the guideline. Therefore, the committee specifies that members of the guideline development group who have a conflict of interest should not represent more than a minority of the group.</blockquote> So it seems that the report on clinical practice guidelines emphasized two issues highly relevant to Health Care Renewal, the need for <a href="http://hcrenewal.blogspot.com/search/label/transparency">transparency</a> in guideline development, and the need to avoid <a href="http://hcrenewal.blogspot.com/search/label/conflicts%20of%20interest">conflicts of interest</a> affecting the development process. The two first <a href="http://iom.edu/~/media/Files/Report%20Files/2011/Clinical-Practice-Guidelines-We-Can-Trust/Clinical%20Practice%20Guidelines%202011%20Insert.pdf">standards</a> for guidelines are about transparency and minimization of conflicts of interest.  Similarly, the report on systematic reviews also included fairly tough <a href="http://www.iom.edu/~/media/Files/Report%20Files/2011/Finding-What-Works-in-Health-Care-Standards-for-Systematic-Reviews/Standards%20for%20Systematic%20Review%202010%20Insert.pdf">standards</a> to minimize conflicts of interest. We on Health Care Renewal go on and on about the need to maximize transparency in health care, and particularly in health care leadership and governance, and about the need to disassemble the now pervasive web of conflicts of interest that has entangled health care.  However, as we know, these are not popular topics among the leadership of health care, which includes many individuals who have greatly benefited from lack of transparency and pervasive conflicts of interest.  We know these topics make these leaders, and many of those who report to, or work or associate with them very uncomfortable. So unfortunately, I am not surprised that the two new and likely authoritative reports from the Institute of Medicine, despite that organization's prestige, have started off relatively <a href="http://hcrenewal.blogspot.com/search/label/anechoic%20effect">anechoic</a>.  It also unfortunately likely that they will remain relatively anechoic.  In 2009, the IOM issued an authoritative <a href="http://www.iom.edu/Reports/2009/Conflict-of-Interest-in-Medical-Research-Education-and-Practice.aspx">report on conflicts of interest</a> in medicine and health care which suggested fairly tough standards to decrease such conflicts and their influence (also see post <a href="http://hcrenewal.blogspot.com/2010/12/health-professionals-for-new-century.html">here</a>).  Since 2009, I just found 53 citations to that report in the medical literature using the ISI Web of Science, for a rate of 27/year.  In 1999, the IOM issued a report on medical errors, "To Err is Human."  Since then, it has received 1374 citations, a rate of 115/year.  As we noted above, the topic of conflicts of interest seems to make the powers that be in health care very uncomfortable.  In contrast, "To Err is Human" was widely interpreted to mean that physicians make a lot of dangerous errors, and the best way to decrease them is to impose more controls by bureaucrats, managers, and executives (even if that was not its intent).  Thus, that report could be twisted to fit the talking points of the powers that be, and hence has been anything but anechoic. So while Health Care Renewal is hardly a powerful tool for creating publicity, I thought we should try to get the word out about the new IOM reports on clinical practice guidelines and systematic reviews.  Every little bit helps. Meanwhile, the deathly quiet reception these reports have gotten so far emphasizes the need to combat the anechoic effect.  As long as the powers that be can command billions of dollars to influence the health care conversation through their marketing, public relations, and lobbying departments, expect the discussion not to question what they do, and how they benefit from the status quo to the financial and health detriment of patients and the population. We will not be able to truly reform health care until we can speak openly about what threatens health care values and what needs to be done about these threats.

The Institute of Medicine Releases Reports on Practice Guidelines and Systematic Reviews Which Generate Few Echoes

Two days ago, the prestigious US Institute of Medicine released two reports on important health care issues, clinical practice guidelines an...

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A Jury Finds Johnson and Johnson's Risperdal Marketing "Willfully Deceptive," but What Will It Take to Change Company Leadership?

For Johnson and Johnson, it's deja vu all over again, as <a href="http://www.goupstate.com/article/20110324/ARTICLES/103241022/1083/ARTICLES?Title=Spartanburg-jury-says-maker-of-drug-Risperdal-deceptive">reported </a>by the Spartansburg (SC) Herald Journal: <blockquote>A Spartanburg jury decided that Johnson & Johnson and a subsidiary violated South Carolina's Unfair Trade Practices Act, but the company will wait until damages are determined next month before it decides whether to appeal the jury's decision.</blockquote> Also, <blockquote>The jury decided Tuesday the company willfully violated the act by sending a 2003 letter to doctors that attorneys for the state said sought to minimize the risk of hyperglycemia — or high blood sugar — and diabetes reported by patients using Risperdal. The letter was sent to about 700,000 doctors nationwide — 7,200 of those in South Carolina. The jury decided that warning labeling included with the drug was also willfully deceptive.</blockquote> This is not the first such lawsuit involving Risperdal, <blockquote>South Carolina's lawsuit was the fourth state lawsuit to go to trial. In West Virginia, claims involving Risperdal were dismissed with prejudice last December following the company's appeal. In October, a jury in Louisiana awarded almost $258 million in civil penalties to the state. Janssen will appeal that decision. In a jury trial in Pennsylvania in June, a judge dismissed the state's case against Janssen.</blockquote> Note that we posted about the Louisiana verdict <a href="http://hcrenewal.blogspot.com/2010/10/last-weeks-scandals.html">here</a>. The hits, they just keep on coming for Johnson and Johnson, which has been recalling a dizzying array of products due to manufacturing problems.  A new recall was just <a href="http://blogs.wsj.com/health/2011/03/24/jj-recall-watch-360000-surgical-wound-drainers/">announced today</a>, and there have been 20 separate recalls since mid-2009. Just eight days ago we <a href="http://hcrenewal.blogspot.com/2011/03/despite-recalls-legal-settlements.html">contrasted</a> the opulent compensation given the Johnson and Johnson CEO in 2010 (about $29 million) with the company's poor financial performance, seeming inability to make pure, unadulterated, safe products as manifested by multiple recalls, and ethical problems as indicated by legal settlements and guilty pleas. Today we have added another recall, and a jury verdict against the company finding its marketing was deceptive.  So the cognitive dissonance evoked by comparison of executive pay and corporate dysfunction continues.  Is there any degree of organizational dysfunction that could possibly induce a health care corporate CEO to feel shame for continuing to extract millions from the flailing beast?  Is there any degree of disconnection between executive compensation and corporate performance that could possibly induce complacent corporate boards to feel shame for enriching the hired executives who presided over the mess? Probably not.  The events surrounding the global financial collapse suggested that somehow expecting corporations to regulate themselves was at best foolishly naive (e.g., see <a href="http://economistsview.typepad.com/economistsview/2011/03/wall-streets-performance-enhancement-scandals.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+EconomistsView+%28Economist%27s+View+%28EconomistsView%29%29">here</a>).  Presumably former US Federal Reserve Chair Allan Greenspan <a href="http://www.huffingtonpost.com/2010/04/09/financial-crisis-panel-gr_n_531647.html">really thought</a> that markets could regulate themselves, and that fraud could not exist because markets in his idealized view would punish it themselves, <blockquote>he didn't believe that fraud was something that needed to be enforced or was something that regulators should worry about....</blockquote> But then he later admitted:  <blockquote>Those of us who have looked to the self-interest of lending institutions to protect shareholder's equity – myself especially – are in a state of shocked disbelief</blockquote>We do not yet seem to be at the point that will we generate enough "shocked disbelief" about the misbehavior of current health care organizations to realize that they will not police themselves, and a true health care reform movement will have to figure out how to reasonably regulate them.  (I submit that perusing the archives of Health Care Renewal will suggest that we should have been at that point years ago.) If we do not fix the severe problems affecting the leadership and governance of health care, and do not increase accountability, integrity and transparency of health care leadership and governance, we will be as much to blame as the leaders when the system collapses.

A Jury Finds Johnson and Johnson's Risperdal Marketing "Willfully Deceptive," but What Will It Take to Change Company Leadership?

For Johnson and Johnson, it's deja vu all over again, as reported by the Spartansburg (SC) Herald Journal: A Spartanburg jury decided th...

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Despite Poor Financial Results, Diminishing Pipeline, Multiple Settlements of Legal Cases, Outgoing Pfizer CEO Got Over $24 Million

It is the season for share-holders' meetings of big US publicly held corporations, and as the proxy statements prepared for these meetings, prepare for more eye-popping, jaw-dropping examples of executive compensation.  Pfizer's 2010 CEO Compensation The AP (<a href="http://online.wsj.com/article/AP710553746b304ba0b503426028084ebd.html">via the Wall Street Journal</a>) just noted the compensation given to Jeffrey Kindler, the outgoing (in 2010) CEO of Pfizer, Inc, the world's largest pharmaceutical company: <blockquote>Former Pfizer Inc. Chairman and CEO Jeffrey B. Kindler may have left the world's largest drugmaker abruptly last December, but he didn't leave empty-handed thanks to a compensation package valued almost $22 million. Kindler received a 60 percent increase last year over his 2009 compensation, according to an Associated Press analysis of a Pfizer regulatory filing Tuesday. The New York-based drugmaker gave Kindler a salary and performance-related bonus totaling $4.9 million, a $4.5 million severance payment and more than $12 million in stock and option awards. The company also will continue his health coverage for 12 months 'at active employee rates,' the filing said.</blockquote> In fact, perusal of the new <a href="http://www.pfizer.com/files/annualreport/2010/proxy/proxyfinancial2010.pdf">2011 Pfizer proxy statement</a> shows that Kindler, who stepped down on 5 December, 2010, made even more based on Pfizer's own calculations, $24,688, 849. Curiously, Ian Read, the CEO after 5 December, and previously Group President, Worldwide Pharmaceutical Business, received $17,396,112, despite only being CEO for 26 days. Pay for What Kind of Performance? These opulent pay packages stand in contrast to Pfizer's performance under Kindler and its financial results in 2010: <blockquote>Kindler was ousted by Pfizer's board unexpectedly Dec. 6 after four years of languishing share prices and several failures of promising drugs in late testing, including a successor to cholesterol fighter Lipitor, the world's top-selling drug. Pfizer will lose U.S. patent protection in November for Lipitor.</blockquote> Also, <blockquote>Pfizer's 2010 net income fell 4 percent to $8.26 billion, or $1.02 per share. Revenue totaled $67.81 billion, up 36 percent, thanks to $18.1 billion from sales of Wyeth products. Its stock price slipped 4 percent to close 2010 at $17.31, while the Standard & Poor's 500 index climbed 12.8 percent.</blockquote> Furthermore, the compensation given the former and current CEO also stood in sharp contrast to Pfizer's amazing track record of recent unethical behavior.   Pfizer paid a $2.3 billion settlement in 2009 of civil and criminal allegations and a Pfizer subsidiary entered a guilty plea to charges it violated federal law regarding its marketing of Bextra (see post <a href="http://hcrenewal.blogspot.com/2009/09/pfour-legal-settlements-for-pfizer-why.html">here</a>).  Pfizer was involved in three other major cases from then to early 2010, including two involving settlements of fraud charges, and one in which a jury found the company guilty of violating the RICO (racketeer-influenced corrupt organization) statute (see post <a href="http://hcrenewal.blogspot.com/2010/03/settlement-and-conviction-round-up.html">here</a>).  The company was listed as one of the pharmaceutical "big four" companies in terms of defrauding the government (see post <a href="http://hcrenewal.blogspot.com/2010/12/drug-companies-are-now-no-1-when-it.html">here</a>).  Pfizer's Pharmacia subsidiary settled allegations that it inflated drugs costs paid by New York in early 2011 (see post <a href="http://hcrenewal.blogspot.com/2011/02/pharmacia-or-maybe-pfizer-settles-only.html">here</a>).   Just yesterday a settlement was announced in a long-running class action case which involved allegations that another Pfizer subsidiary had exposed many people to asbestos (see <a href="http://www.bloomberg.com/news/2011-03-22/pfizer-reaches-asbestos-settlement-that-may-end-quigley-unit-s-bankruptcy.html">this story</a> in Bloomberg). Despite Pfizer's recent dismal financial performance, clotted drug pipeline, and unfortunate ethical/ legal track record, the company's board compensation committee reported thus: <blockquote>The Committee believes that Pfizer’s executive compensation program implements and achieves the goals of our executive compensation philosophy. Pfizer’s executive compensation philosophy, which is set by the Committee, is to align each executive’s compensation with Pfizer’s short-term and long-term performance and to provide the compensation and incentives needed to attract, motivate and retain key executives who are crucial to Pfizer’s long-term success.</blockquote>Who Provided "Stewardship" of Pfizer? So I had to ask: who were these people who thought that compensation of over $24 million was somehow "aligned" with declining profits, declining revenues, little output of new drugs, and multiple legal settlements of charges like fraud and violating the RICO act? Here is a list of Pfizer's board of directors in 2010, and some relevant affiliations, taken from <a href="http://www.pfizer.com/about/leadership_and_structure/meet_board.jsp">Pfizer's web-site</a>, and where indicated, elsewhere (color coding to be explained below) - Dennis A. Ausiello, M.D. - Jackson Professor of Clinical Medicine at Harvard Medical School and Chief of Medicine at Massachusetts General Hospital since 1996. Member of the Institute of Medicine.... Director of TARIS BioMedical, Inc. (<a href="http://www.researchamerica.org/ausiello_dennis">per Research!America bio</a>) advisor to drug delivery and biosensing start-up companies Entra, BIND Biosciences, and Seventh Sense Biosystems, Inc., to drug-discovery startup companies Promedior and Pulmatrix, to Proventys, an evidence-based medicine delivery system, and to Ore Pharmaceuticals and Polaris, investment and venture capital companies working in the biotech and device area. - Michael S. Brown, M.D. - Distinguished Chair in Biomedical Sciences since 1989 and Regental Professor since 1985 at the University of Texas Southwestern Medical Center at Dallas. Member of ... the Institute of Medicine,.... Director of Regeneron Pharmaceuticals, Inc. - M. Anthony Burns - Chairman Emeritus since 2002, Chairman of the Board from 1985 to 2002, Chief Executive Officer from 1983 to 2000, and President from 1979 to 1999 of Ryder System, Inc., a provider of transportation and logistics services. Life Trustee of the University of Miami. - Robert N. Burt - Retired Chairman and Chief Executive Officer of FMC Corporation, a chemicals manufacturer, and FMC Technologies Inc., a machinery manufacturer.... Life Trustee of the Rehabilitation Institute of Chicago - W. Don Cornwell - Chairman of the Board and Chief Executive Officer of Granite Broadcasting Corporation from 1988 until his retirement in August 2009 and Vice Chairman until December 2009. (per <a href="http://www.wallacefoundation.org/AboutUs/directors_and_staff/Pages/BioWDonCornwell.aspx">Wallace Foundation web-site</a>) He previously served as vice president, investment banking division, of Goldman Sachs. - Frances D. Fergusson, Ph.D. - President Emeritus of Vassar College since 2006 and President from 1986 to 2006. Served on the Mayo Clinic Board for 14 years, the last four years as its Chairman, and as President of the Board of Overseers of Harvard University from 2007 through 2008. - William H. Gray III - Co-Chairman of GrayLoeffler, LLC (formerly the Amani Group), a business advisory and consulting firm. Chairman of the Amani Group from 2004 through September 2009. Currently Director of ... J. P. Morgan Chase & Co. - Constance J. Horner - Guest Scholar from 1993 until 2005 at The Brookings Institution.... - James M. Kilts - Founding Partner, Centerview Partners Management, LLC, a private equity firm, since 2006. (Per <a href="http://www.centerviewpartners.com/overview.aspx?xitm=2&yitm=1">Centerview Partners web-site</a>) Centerview Partners' investment banking advisory business serves some of the largest companies globally in a broad range of industries, with particular expertise in Food & Consumer Products, Financial Institutions, General Industrials, Healthcare, Media & Entertainment .... The firm has executed many significant transactions in recent years, including: Altria's $113 billion spin-off of Philip Morris International, its $62 billion spin-off of Kraft and its $11.7 billion acquisition of UST... Facet Biotech's $722 million sale to Abbott Labs; OSI Pharmaceuticals' $4.0 billion sale to Astellas Pharma; - George A. Lorch - Chairman Emeritus of Armstrong Holdings, Inc., a global manufacturer of flooring and ceiling materials,.... - John P. Mascotte - Retired President and Chief Executive Officer of Blue Cross and Blue Shield of Kansas City, Inc.,... - Suzanne Nora Johnson - Retired Vice Chairman, Goldman Sachs Group, Inc.,... Director of American International Group, Inc., .... Board member of the American Red Cross, The Brookings Institution, ... and the University of Southern California. (per <a href="http://www.milkeninstitute.org/events/gcprogram.taf?EventID=GC08&SPID=3058&function=bio">Milken Institute web-site</a>) on the board of numerous not-for-profit organizations, including ... RAND Health .... She is on the Advisory Board of Councilors of Harvard Medical School - Ian C. Read - President and Chief Executive Officer since December 2010. - Stephen W. Sanger - Chairman of General Mills, Inc. Currently Director of ... Wells Fargo & Company. - William C. Steere, Jr. - Chairman Emeritus of Pfizer Inc. since 2001. Currently Director of Health Management Associates, Inc. Director of the New York University Medical Center ...; and Member of the Board of Overseers of Memorial Sloan-Kettering Cancer Center. Of Pfizer's 14 directors (excluding its CEO), seven have or had leadership positions at teaching hospitals, academic medical centers, medical schools or their parent universities. Three have or had leadership positions at other influential non-profit health care organizations.  Two had leadership positions at potentially competing pharmaceutical or biotechnology companies. Two had leadership positions at companies that finance pharmaceutical, biotechnology and other health related companies. One had a leadership position at a health insurance company. One had a leadership position at a for-profit hospital operating company. Four had leadership positions in financial services corporations, including some that were implicated in the global financial collapse, and/or required massive federal bail-outs to avoid collapse. It seems that every time we look at the boards of directors or trustees who are supposed to provide stewardship to a troubled health care organization, we see a similar pattern.  Just as we <a href="http://hcrenewal.blogspot.com/2011/03/despite-recalls-legal-settlements.html">recently said</a> about the Johnson and Johnson board, ....   Summary   So here we have the latest striking case that indicates the confluence of forces that can lead to health care dysfunction. Not only has the compensation given to health care leaders got so large that it is per se a cause of increased health spending, but also, and more importantly, such compensation often provides perverse incentives that perpetuate mismanagement, raising costs and lowering quality. This situation appears to be enabled by governance (or "stewardship") by individuals who are often fellow members of the CEOs' club, and hence who may feel more sympathy with the executives they are supposed to supervise than the stockholders whose financial interests they are supposed to protect, or the public whom the companies' products and services are supposed to benefit. Moreover, these individuals often have conflicts of interest which may mitigate against objective scrutiny of the executives they are supposed to oversee. Finally, these individuals often may come from corporate cultures which do not espouse the values that we in health care are supposed to uphold. (See this post and its links for other examples of the sorts of people who are supposed to provide stewardship to health care organizations.) So to repeat once more- I strongly believe that there needs to be much more investigation, academic, journalistic, and perhaps legal, of the identity, nature, and culture of the leaders of health care, and their relationships. A few bloggers cannot do it all. Obviously, the <a href="http://hcrenewal.blogspot.com/search/label/anechoic%20effect">anechoic effect</a> mitigates against medical and health care academics looking into their own leaders. However, failing to understand who is leading our march to the brink of health care failure ought not to be something such academics would want on their conscience. Finally, and obviously, health care organizations need leaders that uphold the core values of health care, and focus on and are accountable for the mission, not on secondary responsibilities that conflict with these values and their mission, and not on self-enrichment. Leaders ought to be rewarded reasonably, but not lavishly, for doing what ultimately improves patient care, or when applicable, good education and good research. If we do not fix the severe problems affecting the leadership and governance of health care, and do not increase accountability, integrity and transparency of health care leadership and governance, we will be as much to blame as the leaders when the system collapses. ADDENDUM (23 March, 2011) - See also <a href="http://gooznews.com/?p=2622">comments</a> by Merrill Goozner on the GoozNews blog.

Despite Poor Financial Results, Diminishing Pipeline, Multiple Settlements of Legal Cases, Outgoing Pfizer CEO Got Over $24 Million

It is the season for share-holders' meetings of big US publicly held corporations, and as the proxy statements prepared for these meetin...

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Millions to Health Insurance CEOs, But Blame Everyone Else for Rising Health Care Costs

The revelations about the huge golden parachute given the outgoing CEO of ostensibly non-profit Massachusetts Blue Cross Blue Shield induced some public discussion about the disconnect between executive compensation and the mission of health care organization (see most recent post <a href="http://hcrenewal.blogspot.com/2011/03/some-dare-call-it-corruption.html">here</a>).  Several other recent stories should generate more discussion on these issues.  First, new proxy statements revealed the compensation of executives of two large for-profit health care insurers/ managed care companies.  In alphabetical order, Cigna As reported by the AP, <a href="http://abcnews.go.com/Business/wireStory?id=13169800">via ABC news</a>, the CEO got a big raise: <blockquote>Cigna Corp. CEO David M. Cordani's total compensation more than doubled in 2010, his first year as leader of the nation's fourth-largest health insurer, and a period in which the company's earnings, revenue and enrollment all climb. Cordani, 45, received compensation valued at $15.1 million last year from the Philadelphia managed-care company, according to an Associated Press analysis of a regulatory filing Friday. That included a $1 million salary, a performance-related bonus totaling more than $7.3 million and stock and option awards adding up to $6.7 million.</blockquote> In 2009, Cordani's compensation was $6.5 million, but he did not serve for the entire year. Note that according to the <a href="http://www.sec.gov/Archives/edgar/data/701221/000089322009000604/w73121fdef14a.htm">2009 proxy</a>, the previous CEO, H Edward Hanway, received $12,236,740 in total compensation in 2008, his last year as CEO. What was the rationale for the huge rise in Cordani's compensation from 2009 to 2010? (And implicitly, the fairly large increase compared to Hanway's compensation in his last year?) <blockquote>The company said in its proxy statement filed with the Securities and Exchange Commission that Cigna 'effectively executed on its growth strategy under Cordani's leadership last year. 'Revenue rose significantly in 2010, reflecting strong premium growth in (Cigna's) ongoing business segments,' the proxy said. Cigna earned about $1.35 billion, or $4.89 per share, on $21.25 billion in revenue in 2010. That was up from $1.3 billion, or $4.73 per share, on $18.41 billion in revenue in 2009. The insurer's medical membership climbed 4 percent to 11.4 million people compared to the final quarter of 2009, when it fell more than 5 percent. That helped raise premiums and fees in health care, the insurer's largest segment.</blockquote> Also, <blockquote>Cigna shares climbed 4 percent to close 2010 at $36.66, while the Standard & Poor's 500 index rose 12.8 percent.</blockquote> So to recap, Cigna's current CEO's total compensation doubled in a year while earnings and the stock price rose about 4%. WellPoint Also reported by AP, <a href="http://www.washingtonpost.com/business/wellpoint-ceo-compensation-rose-to-134-million-last-year-despite-slide-in-profit/2011/03/18/ABaEq1r_story.html">via the Washington Post</a>, the CEO got a small raise (but ended up with compensation similar to Mr Cordani's above): <blockquote>The president and CEO of health insurer WellPoint Inc. received a 3 percent boost in total compensation in 2010 even as the company’s profit and enrollment numbers slipped during a transitional year for U.S. health care companies. The Indianapolis-based insurer awarded Angela Braly a total pay package worth $13.4 million up from $13.1 million in 2009. Wellpoint disclosed the compensation — which includes salary, bonus and other awards — in a filing with federal financial regulators late Friday.</blockquote> On the other hand, the company did not do so well financially: <blockquote>The insurer’s profit fell sharply last year compared with 2009, when the sale of its NextRx subsidiary contributed $2.2 billion in after-tax income. Medical enrollment also slid 1 percent last year to 33.3 million members.</blockquote> So what was the rationale for even a small raise (over an already huge compensation package)? <blockquote>In the company’s filing, Wellpoint’s board of directors highlighted accomplishments by management, including reducing general expenses by 3 percent. </blockquote> Also, <blockquote>A Wellpoint spokeswoman stressed Friday that the company’s pay formula rewards executives for improving enrollee health, boosting share prices and meeting other pre-set goals. 'For the CEO, almost 90 percent of total target compensation is based on company performance and is tied to meeting established goals,' Kristin Binns said in a statement.</blockquote>So while Cigna did slightly better financially than last year, its CEO's total compensation doubled to well over $10 million, and while WellPoint did slightly worse financially than last year, its CEO's total compensation increased, again remaining well over $10 million.  It seems that the leaders of top health care organizations will continue to get richer, no matter how well their organizations performed financially, let alone what effect they had on patients' and the public's health. So What Drives Up Health Care Costs? Just to distract from CEOs getting increases in their already huge compensation that seem disproportionate to any reasonable measure of their companies' financial performance, health care insurers continued to deny any responsibility for the rise in health care costs. For example, the San Francisco Chronicle published <a href="http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/03/19/MNCE1I3D1T.DTL">a story </a>entitled, "Insurer Wants Focus on What Drives Up Health Costs," which had a familiar ring: <blockquote>When health insurers notify members that rates are going up - often in the punishing double-digits - they typically blame rising medical costs. They say the problem really isn't theirs; it's all the other pieces of the health-care puzzle that drive up costs that must be passed on to customers.</blockquote>Don't blame you, don't blame me, blame that fella behind the tree. It went on to name all the usual suspects (color-coded for comparison below): <blockquote>Insurers say their costs grow in part because of new medical technologies and the rising price of pharmaceutical products and medical equipment. The consolidation of hospitals and doctors into large networks also makes it hard to keep prices low, as do waste, fraud and malpractice, they say. The system also lacks incentives for hospitals and doctors to curb costs. For example, they can charge twice by repeating tests and procedures, and by readmitting patients. Insurers also say they lose money with policies people buy on their own, as opposed to group coverage from employers. Because the individual policies are more expensive, healthier people tend to avoid them, leaving insurers with a sicker pool. Poor reimbursement from government programs such as Medi-Cal also forces insurers to raise private insurance prices to make up the slack, they say. Finally, as people get older and fatter, they gobble up more health care resources. 'When you're looking at growth in premiums, the largest engine of that growth are those medical costs,' said Charles Bacchi, executive vice president of the California Association of Health Plans, which represents health insurers. He said critics who claim that insurers raise prices to increase profits and pad executive salaries are wrong, and that insurers' average profit margin has remained at 3 to 5 percent for years.</blockquote> First, note that the executive compensation, the administrative costs, the marketing, public relations and lobbying costs all come off the top of revenues before any profits are generated, and before any possible dividends get paid to stock-holders.   I suspect that the insurance industry spokespeople immediately switch the topic to profits and investors' results to distract from those who really make money from health insurance companies, the top executives, and all those managers, bureaucrats, marketers, public relations people, and lobbyists who never touch patients and never deliver any care.  As Wendell Potter has written, many people like to blame government bureaucrats for health care's problems. They may deserve some blame, but not any more, and perhaps less than corporate bureaucrats and executives. Recall further what Wendell Potter described in <a href="http://wendellpotter.com/deadlyspin/">Deadly Spin</a>. All those health insurance corporate public relations people were earning good salaries in part based on their ability to distract the public and policy-makers from the insurance companies' roles in health care dysfunction. Potter wrote (p. 110): <blockquote>Rather than admit responsibility for the failures, insurance executives pointed the finger of blame at their customers, the 'consumers' of health care, and, of course, the providers of care. In introducing the concept of their new silver bullet - consumer driven health care - insurance executives claimed that the 'real drivers of health care costs' (one of my CEO's favorite expressions) were the people who sought care when they really didn't need it and the doctors and hospitals who were all too willing to provide this unnecessary care. Sure, the aging population and expensive new technology were also factors, but the main culprits were people who just didn't realize how expensive health care had become.</blockquote> Note the similarities among the "real drivers of health care costs" promulgated by the corporate PR people and the defense of the health insurers' role mounted above (some of the more obvious color-coded). Note that the defenses never explain why the insurance companies seem unable to negotiate prices down, and why they all use the physician payment schedule derived from the recommendations of the secretive <a href="http://hcrenewal.blogspot.com/search/label/RUC">RUC</a>. For some final irony, the Chronicle found an academic who was not too hard on the health insurance companies: <blockquote>Glenn Melnick, a health economist at the University of Southern California, sympathizes with many of the insurers' arguments. He blamed rising costs mainly on higher prices charged by hospitals and doctors, which account for the largest portion of health care spending.</blockquote> The reporter did not note Prof Melnick's full title, <a href="http://www.usc.edu/schools/sppd/faculty/detail.php?id=21">Professor and Blue Cross of California Chair in Health Care Finance</a>. Oops. So in summary, health care costs continue rising, access keeps declining, and there is no evidence of improvements in quality. Large health care organizations blame each other for the problems, but nearly all of them continue to make their top executives extremely rich. Although the amounts diverted to these executives cannot solely account for the rise in health care costs, the perverse incentives given those who lead health care are likely a major cause of the problems. A health care system run by leaders who are comfortable becoming extremely rich while the health care crisis worsens is a likely recipe for dysfunction. We now know commercial health insurers deploy well paid public relations departments to use stealthy if not downright deceptive means to distract those who want to address what really causes health care dysfunction (see <a href="http://hcrenewal.blogspot.com/2011/02/wendell-potters-deadly-spin.html">this post</a>.) It is likely that all large health care organizations use similar stealth advocacy strategies. These strategies have successfully distracted the conversation away from problems with health care leadership and governance, at least until now. 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. Furthermore, we need an open discussion of the real issues related to health care dysfunction, not one stifled by the anechoic effect, spun by corporate PR, and dominated by "third parties" whose conflicts of interest are hidden.

Millions to Health Insurance CEOs, But Blame Everyone Else for Rising Health Care Costs

The revelations about the huge golden parachute given the outgoing CEO of ostensibly non-profit Massachusetts Blue Cross Blue Shield induced...

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