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The Perils of Physicians Practicing as Corporate Employees: the Contract Trap

A seriously chilling cautionary tale corroborated some of my <a href="http://hcrenewal.blogspot.com/search/label/corporate%20physician">previously expressed fears</a> about the perils of physicians practicing as corporate employees.  It unlikely venue was the April 25, 2011 issue of Medical Economics.  The article, not yet on the web, was "Selling to a Corporation Poses Challenges," by Todd R C Neely. Here is how the case started: <blockquote>A start-up company with a new medical treatment became a publicly traded corporation. The company's top managers were not physicians; they were finance and business experts familiar with the ways of Wall Street. To meet the corporation's goals and Wall Street expectations, the company used stock sale proceeds to aggressively market itself to doctors and buy established physician practices around the country. It quickly captured market share, exponentially raised the number of patients by the practices it owned, and developed substantial revenue streams. The physicians who sold their practices thought that selling would be a win-win situation for them and for the corporation. As marketed to them, the company would handle the business aspects of owning a medical practice - the ubiquitous paperwork, employee issues, and all the rest of the nonclinical task so distasteful to doctors. The physicians would spend all their work time practicing medicine using the latest technology. Benefiting from the company's promotion to the public, they would see an increase in their patient base. They would receive a base salary and, most significantly, a percentage of the profits of their practice.</blockquote> But here is how things turned out: <blockquote>Everything was great until the end of the first year. The physicians expected large payments from their practices' increased profits, but the large bonuses never came. </blockquote> What went wrong? The physicians were so blinded by the marketing pitch that they apparently never read the fine print: <blockquote>In negotiating the sale of the practices and the employee contracts, the doctors had not required the company to specify in writing what expenses the corporation would charge an individual practice and what accounting rules would be followed. So the corporation charged the practices for marketing, accounting, human resources, financing, and other services, wiping out the profits of each practice.</blockquote> The contracts were apparently designed by the corporation to favor all its interests (which should not have been surprising), but was accepted as is by the physicians: <blockquote>The contracts specified in precise terms the physicians' responsibilities, noncompete provisions, confidentiality, dispute resolution and the like. But although the contracts stated the corporation's initial responsibilities - mainly making payment on the negotiated purchase price - it phrased the company's other obligations in remarkably vague terms, or, astonishingly, did not specify them at all. The company was to make its 'best efforts' to accomplish certain goals, but the contract left the phrase 'best efforts' undefined. The phrase turned out to be quite malleable. The company's other responsibilities were to be determined at a later, unspecified time. The company's best efforts always turned out to be whatever efforts it chose to make.</blockquote> It was a trap,baited by marketing, into which the physicians neatly fell: <blockquote>Many sought legal advice and were told they had no legal resource. The noncompete clauses - fair provisions under the contract terms to which the physicians thought they were agreeing but that were disastrous under the terms (or lack thereof) of the actual contract - were broad, tight, specific, and ironclad. Many of the physicians even were barred from practicing medicine within the geographic area in which they lived. And under the equally ironclad confidentiality clause, the doctors could not publicly discuss their situations or, for that matter, anything else of significance about the corporation; if they did, they would be subject to high fines and penalties. What had appeared to the doctors as a mutually beneficial situation turned into a nightmare for them. They lost their practices and money and took years to recover. They had no legal recourse. They could not even warn others. The corporation could, and did, continue with impunity.</blockquote> Note that it is now obvious why the article was so vague about the identity of the corporation and the physicians it ensnared, and why it took so long for even such a vague version of this story to surface. The confidentiality (and probably anti-disparagement) clauses made it hazardous for anyone who signed these contracts to be forthright witnesses.  Obviously, the willingness of corporations to employ such clauses means that there may be many more cases like this out there, hidden behind the veil of contractual restrictions on free speech. We previously discussed how physicians often seem willing to blithely sign contracts without fully understanding them, thereby sacrificing their economic well-being and core values.  Here is another striking case of this phenomenon.  We previously attributed this tendency to <a href="http://hcrenewal.blogspot.com/2007/10/physicians-learned-helplessness.html">learned helplessness</a>.  The author of this article, however, suggested  that physicians were victims of carefully targeted marketing based on psychological manipulation.  It was meant to capitalize on three major factors: physicians' naive belief that everyone involved with medicine is interested in helping people by behaving rationally and logically; physicians' over-confidence in their ability to avoid failure (presumably including failure due to ignorance or misinterpretation of legal contracts); and physicians' feelings of entitlement.  In addition, the physicians seemed (probably foolishly) unaware that corporate executives are not interested in physicians' core values: <blockquote>Unlike physicians, the corporation and its top executives, non-doctors all, were involved in the practice of medicine solely to make money; the medical practices, and the very practice of medicine, were just commodities [to them].</blockquote> This observation corresponds with numerous observations about how leaders of health care organizations may ignore, or be expressly<a href="http://hcrenewal.blogspot.com/search/label/mission-hostile%20management"> hostile</a> towards physicians' core values. Thus, while the article went on to give some straight-forward advice about negotiating combined practice buy-out and corporate employment agreements, it becomes obvious that the main lesson is: physicians should not practice medicine as corporate employees. They should not sell their practices to and become employees of for-profit corporations as a way to practice medicine.  Otherwise, rather than being practitioners, they will end up as medical assembly line workers for bosses who only care about the revenue they generate. Physicians who have already inadvertently, foolishly, or under duress signed contracts that could threaten their professionalism and their patients' welfare need to do the right thing and challenge these contracts.  , or else there will soon be nothing left of the medical profession, and no one left to ethically care for patients.  With each new anecdote, it becomes clearer that the corporate practice of medicine will end up exploiting physicians and patients alike. So there is also a main lesson for patients: you should not go to doctors who are corporate employees, or practices or clinics that are run by corporations. If you do, you will end up being used only as a means for the bosses to make money. At a policy level, if we do not stop the corporate practice of medicine, we will all end up as increasingly unhealthy cogs in the corporate health care machine.

The Perils of Physicians Practicing as Corporate Employees: the Contract Trap

A seriously chilling cautionary tale corroborated some of my previously expressed fears about the perils of physicians practicing as corpor...

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The Continuing Parade of Legal Settlements by Health Care Organizations: Cardinal, Cerberus, Dartmouth-Hitchcock, Masonicare

Here is our latest round-up of the more colorful legal settlements made by some US health care organizations. Cardinal Health Cardinal Health is a pharmaceutical services company. <a href="http://www.kansascity.com/2011/04/21/2817951/former-chiefs-player-reaps-reward.html">Per</a> the Kansas City Star: <blockquote>A pharmaceutical distributor has settled a federal anti-kickback lawsuit by agreeing, in part, to pay $760,000 to former Kansas City Chiefs player Dan Saleaumua and a consultant. That money is part of an $8 million settlement that Cardinal Health Inc. of Ohio agreed to pay the U.S. government to settle the lawsuit. The lawsuit alleged that Cardinal offered Saleaumua and consultant Kevin Rinne an illegal $440,000 kickback so it could supply prescription drugs to seven Kansas City area Medicine Shoppe pharmacies that Saleaumua owned at the time.</blockquote> Cerberus Capital Management/ Dyncorp/ Steward Health Care This will require some explanation. Cerberus Capital Management now owns Steward Health Care, mostly composed of what was formerly known as Caritas Christi hospital system of Massachusetts, and a large group of physician practices now known as Caritas Christi Network Services (see posts <a href="http://hcrenewal.blogspot.com/2011/02/new-steward-health-care-will-superbowl.html">here</a> and <a href="http://hcrenewal.blogspot.com/2011/02/send-mercenaries-guns-and-money.html">here</a>). Cerberus Capital Management now also owns DynCorp (see <a href="http://www.dyn-intl.com/history.aspx">their web-site</a>), which has been called one of the "leading mercenary firms," by <a href="http://www.thenation.com/blog/mercenary-owners-they-are-changin-sort">an article </a>in the Nation. As <a href="http://www.bloomberg.com/news/2011-04-22/dyncorp-to-pay-7-7-million-for-inflated-claims-on-iraq-work-u-s-says.html">reported</a> by Bloomberg about DynCorp, and hence indirectly about Cerberus, and Steward Health Care: <blockquote>DynCorp International Inc., the largest U.S. contractor in Afghanistan, agreed to pay $7.7 million to resolve allegations it submitted inflated claims for construction work in Iraq, the U.S. said. The Justice Department said yesterday that DynCorp and its subcontractor, The Sandi Group, will settle a whistleblower case filed in federal court in Washington. The Sandi Group, accused of submitting false claims on a police-training contract in Iraq, will pay more than $1 million. 'The hard work of stabilizing Iraq is challenging enough without contractors and subcontractors inflating the cost of rebuilding by making false claims at taxpayers’ expense' Assistant Attorney General Tony West, who oversees the department’s civil division, said in an e-mailed statement. DynCorp inflated the costs of building camps at various locations in Iraq, the U.S. said. </blockquote> Dartmouth-Hitchcock Medical Center Dartmouth-Hitchcock Medical Center is a prestigious medical center. <a href="http://www.unionleader.com/article.aspx?headline=Dartmouth-Hitchcock+pays+%242.2m+in+whistle-blower+suit&articleId=9574df3c-da6c-41a0-9a1f-55ba55002aee">Per</a> the New Hampshire Union-Leader: <blockquote>Dartmouth-Hitchcock Medical Center has settled a case of alleged billing fraud to various federal health programs, such as Medicare, Medicaid and Veterans Affairs. DHMC, which denied any liability in the matter, agreed to pay $2,227,075. The federal government recovers $1.5 million, Vermont $80,396, and New Hampshire $61,541, the U.S. Attorney for the District of Vermont announced Tuesday. The investigation began in 2007 following a complaint filed by Dr. Thomas J. Prendergast, who was a physician in the DHMC pulmonary department in Lebanon. The complaint alleged the hospital improperly billed federal health care programs for services performed by resident staff without sufficient supervision by physicians. Regulations allow physicians to bill for certain services by resident staff, but only if the services are performed in the presence of a physician. The investigation, conducted with the hospital's cooperation, found alleged improper billing in the anesthesiology department, pain clinic and radiology, according to the government. The billings at issue were from 2001 to 2007.</blockquote> Masonicare <a href="http://www.masonicare.org/">Masonicare</a> is a not-for-profit "senior services provider." <a href="http://http//www.myrecordjournal.com/wallingford/article_2fce0e70-7036-11e0-8479-001cc4c002e0.html">Per</a> the Meriden (CT) Record-Journal: <blockquote>A settlement agreement was reached today where Masonicare Health Center will pay the government almost $450,000 to resolve allegations the facility violated the False Claims Act, according to an announcement from U.S. States Attorney David B. Fein. Fein explained the allegations against the senior-focused inpatient and outpatient health care facility involved improper billing to Medicare and Medicaid for injections of leuprolide acetate, or Lupron. The medication is used to treat prostate cancer in men and endometriosis and fibroids in women. The billing code for the female-related dosage has a higher reimbursement rate than the code for male-related doses, according to the statement. The government alleges that Masonicare regularly billed for the female-related code for male patients who were being treated for prostate cancer, so they received a substantially higher reimbursement than it should have received, according to the statement. Further, the government alleges that in 2009, the company realized it had improperly coded the Lupron injections services but never self-disclosed its improper bulling to the government or made any attempt to pay the money back to the Medicare and Medicaid programs, Fein said.</blockquote> Summary So in the last 10 days or so, we have seen legal settlements of charges of kickbacks by a pharmaceutical services provider, submitting inflated claims to the federal government made by a subsidiary of a private equity group which also owns a large hospital system and group of physicians' practices, billing fraud by an academic medical center, and false claims by a senior health care services provider.  I begin to think that if we keep this blog going long enough, the <a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements">parade of legal settlements</a> will include the majority of US health care organizations.  Again, such legal settlements serve as markers of the scope of bad behavior by a wide variety of health care organizations, including some of the largest and/or most prestigious, but also including many organizations that work regionally or at the community level.  Bad behavior indicated by<a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements"> these settlements</a> seems so prevalent that it must be an important reason for the chronic problems that afflict US health care, rising costs, diminishing access, and stagnant quality.  However, it still seems to be politically incorrect to discuss such mismanagement, malfeasance and/or corruption as important causes of US health care problems.  Although sometime in the past there may have been a general societal understanding that health care organizations ought to be held to the highest standards, and ought to be lead by people with the best character and of the best reputation, now one seldom hears an expression of shame when such organizations settle claims alleging fraud, over-billing, etc, etc, etc. Like nearly all such cases we have previously reported, none of these cases seemed to involve any negative consequences for any persons who authorized, directed, or implemented the questionable acts.  While the fines involved may seem large to ordinary folk, they are not big enough to markedly affect the organizations involved.  So the <a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements">parade of legal settlements</a> has had little deterrent effect.  Once again, I say: we will not deter unethical behavior by health care organizations until the people who authorize, direct or implement bad behavior fear some meaningfully negative consequences. Real health care reform needs to make health care leaders accountable.

The Continuing Parade of Legal Settlements by Health Care Organizations: Cardinal, Cerberus, Dartmouth-Hitchcock, Masonicare

Here is our latest round-up of the more colorful legal settlements made by some US health care organizations. Cardinal Health Cardinal Healt...

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CPOE Cesspool

An accomplished physician who <a href="http://hcrenewal.blogspot.com/2011/04/when-will-first-class-action-lawsuit-on.html">read my post on CPOE</a> at Memorial Sloan Kettering causing medical errors and near misses, and lack of FD&C Act regulation of health IT medical devices, relates the following: <blockquote>So I want to stop medications on a patient. The device only allows me to stop one at a time, and for each one, it requires me to type in a reason. Then, I get another pop up screen to enter my password. Six clicks and two manual entries to stop an aspirin, not counting the click to get to the med list. [What a valuable use of physician time! - ed.] Also, I have found that when I want an order for something that is labor intensive to enter, and I ask house staff [trainees - ed.] to do it, I get balking as to why I want that treatment or infusion. The arguments, I have found, are not really about the treatment. They are about their avoiding the pain in the ass of having to deal with the user unfriendly screens for that order. The doctors all put up with this.</blockquote> Yet for some reason this waste of valuable clinician time due to antediluvian HIT design, and even wild goose chases for critical medications such as in my Apr. 5, 2011 post "<a href="http://hcrenewal.blogspot.com/2011/04/special-k-red-berries-mission-hostile.html">Mission Hostile Health IT Obstructs Physicians From Ordering Life Saving Drugs In Critical Emergency</a>", are considered "progress" in medicine. World class medical centers such as Sloan Kettering consider CPOE a "<a href="http://hcrenewal.blogspot.com/2011/04/when-will-first-class-action-lawsuit-on.html">critical vulnerability</a>" towards near misses and outright medical errors. Still, this IT toxicity is considered "progress" right up to our Department of HHS and POTUS. Why? -- SS

CPOE Cesspool

An accomplished physician who read my post on CPOE at Memorial Sloan Kettering causing medical errors and near misses, and lack of FD&C...

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The Quack Remedy of Commercialization

Paul Krugman has a recent column, <a href="http://www.nytimes.com/2011/04/22/opinion/22krugman.html?_r=2&hp">"Patients Are Not Consumers."</a> He concludes the column by saying:<blockquote>The idea that all this can be reduced to money — that doctors are just “providers” selling services to health care “consumers” — is, well, sickening. And the prevalence of this kind of language is a sign that something has gone very wrong not just with this discussion, but with our society’s values.</blockquote>I like Krugman’s having the good common sense to realize that medical care is NOT all or only about money – and that we are in trouble if we think it is. The reduction of EVERYTHING to money is a key driver, I think, in making corruption invisible to people. As Krugman observes: <blockquote>Now politicians and supposed reformers talk about the act of receiving care as if it were no different from a commercial transaction, like buying a car — and their only complaint is that it isn’t commercial enough. What has gone wrong with us? </blockquote>James Kwak at the Baseline Scenario <a href="http://baselinescenario.com/2011/02/18/is-economics-the-problem/#more-8696">details research</a> which shows that the more people think about money, the less admirably they act. As well, taking economics classes may have a negative effect on behavior: <blockquote>Robert Frank, Thomas Gilovich, and Dennis Regan wrote two papers on this back in the 1990s that most of the professional economists out there already know. In one of their experiments, they asked undergraduates at the beginning and end of the semester several questions such as whether or not they would return $100 lost by a stranger at the end of the semester. They found that the proportion of students who gave more dishonest answers at the end of the semester than at the beginning was highest for students who took introductory micro from the mainstream economist, lower for students who took introductory micro from the developmental economist, and lowest for students who took introductory astronomy. If there’s an effect here, I don’t think the mechanism is that economics makes you a bad person. Instead, it changes your expectations about what the rest of the world is like. If you are an altruistic person and someone teaches you that (a) most people are self-interested and (b) the world would be better if everyone behaved in a self-interested way, that is likely to make you behave in a less altruistic way.</blockquote>I was really struck by Krugman’s words that: “and their only complaint is that [medicine] isn’t commercial enough.” Somehow, more commercialization has become the always-prescribed panacea to everything. The same universal nostrum is also prescribed for education. Recently in Texas, there has been a lot of emphasis in education in whether professors and research are on balance money-making or money-losing for their universities. Commercialization is not only no panacea – it is often not a remedy at all, like other quack prescriptions. Fortunately, many good people within organizations that pay lip service to money as the only value do NOT act that way and do subvert their corrupt leadership. But we also need to challenge the frameworks that people use when they talk – very unrealistically – as though human beings were, above all, “consumers.” In reality, life is NOT all about money – and we get in trouble when we act or think as though it is.

The Quack Remedy of Commercialization

Paul Krugman has a recent column, "Patients Are Not Consumers." He concludes the column by saying: The idea that all this can be ...

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RUCing About - Conflicts of Interest Affecting the Members of the RBRVS Update Committee

Since 2007, we have been <a href="http://hcrenewal.blogspot.com/search/label/RUC">writing</a> about the secretive RUC (RBRVS Update Committee), the private AMA committee that somehow has managed to get effective control over how Medicare pays physicians. The RUC has been accused of setting up incentives that strongly favor invasive, high technology procedures while disfavoring primary care and other "cognitive medicine." Despite the central role of (perverse) incentives in raising health care costs while limiting access and degrading quality, there was surprisingly little discussion about the pivotal role played by the RUC until the formation of the "<a href="http://replacetheruc.org/">Replace the RUC</a>" movement (see post <a href="http://hcrenewal.blogspot.com/2011/03/getting-out-of-our-ruc-open-letter-to.html">here</a>).  Recently, the leaders of Replace the RUC scored a journalistic coup by putting the current list of RUC members publicly on-line.  As we have <a href="http://hcrenewal.blogspot.com/2011/02/replace-ruc.html">discussed</a>, previously the membership of this committee was kept very obscure, although the committee argued it was not exactly secret.  Some Google searching suggests one possible reason that the RUC was in no hurry to disclose its own membership.  It appears that many of the RUC members have significant conflicts of interest with respect to their roles as de facto setters of the rates at which physicians are paid by the government. The RUC Members and Their Financial Relationships Below is the list of the current RUC membership (from<a href="http://careandcost.files.wordpress.com/2011/04/ruc-composition.xlsx"> this link</a>), and relevant conflicts of interest obtained by Google searching.  Note that for each member, I first give the name, affiliation relevant to the RUC, location, and first year of membership as provided by the link above.  Then I list relevant financial relationships that appear to present conflicts of interest. - Barbara Levy, MD Chair, RVS Update Committee Federal Way, WA 2000 Consultant/Advisory Boards: Conceptus; AMS; Covidien; Halt Medical; Gynesonics; Idoman Medical (hysteroscopic surgery and sterilization, endometrial ablation, electrosurgery, vaginal hysterectomy) per <a href="http://www.uptodate.com/contents/obstetrics-gynecology-and-womens-health/peer-reviewers?topicId=226">UptoDate</a> - Bibb Allen, Jr., MD American College of Radiology (ACR) Birmingham, AL 2006 - Michael D. Bishop, MD American College of Emergency Physicians (ACEP) Bloomington, IN 2003 - James Blankenship, MD American College of Cardiology (ACC) Danville, PA 2000 Lecture fees from Sanofi-Aventis per <a href="http://www.nejm.org/doi/full/10.1056/nejmoa0802944#t=article">New England Journal of Medicine</a> - Robert Dale Blasier, MD American Academy of Orthopaedic Surgeons (AAOS) Little Rock, AK 2008 - Joel Bradley, MD American Academy of Pediatrics (AAP) Brentwood, TN 2008 Medical Director, Americhoice by UnitedHealthcare, per <a href="http://www.acopeds.org/meetings/2009fop/2009FoP.pdf">AAP conference brochure</a> - Ronald Burd, MD American Psychiatric Association (APA) Fargo, ND 2006 - William F. Gee, MD American Urological Association (AUA) Lexington, KY 2010 Member, Physician Advisory Board, Aetna <a href="http://www.aetna.com/about-aetna-insurance/initiatives/physician-advisory-board/physician-advisory-current-board-members.html">per Aetna</a> - John O. Gage, MD American College of Surgeons (ACS) Pensacola, FL 1991 - David F. Hitzeman, DO American Osteopathic Association (AOA) Tulsa, OK 1996 - Peter A. Hollmann, MD CPT Editorial Panel (AMA/CPT) Providence, RI 2003 Medical Director, Blue Cross and Blue Shield of Rhode Island, per <a href="http://www.rimed.org/bio-hollmann.asp">RI Medical Society</a> - Charles F. Koopmann, Jr., MD American Academy of Otolaryngology-Head and Neck Surgery (AAO-HNS) Ann Arbor, MI 1996 - Robert Kossmann, MD Renal Physicians Association (RPA) Santa Fe, NM 2009 Member of Advanced Renal Technologies Advisory Board, Network 15 Medical Advisory Board, Baxter Home Dialysis Advisory Board, Fresenius Medical Advisory Board per <a href="http://www.renalmd.org/page.aspx?id=1408">Renal Physicians Association</a> - Walter Larimore, MD American Academy of Family Physicians (AAFP) Colorado Springs, CO 2009 - Brenda Lewis, DO American Society of Anesthesiologists (ASA) Cleveland, OH 2009 - J. Leonard Lichtenfeld, MD American College of Physicians (ACP) Atlanta, GA 1994 Member, Physician Advisory Board, Aetna per <a href="http://www.aetna.com/about-aetna-insurance/initiatives/physician-advisory-board/physician-advisory-current-board-members.html">Aetna </a> - Scott Manaker, MD, PhD American College of Chest Physicians (ACCP) Philadelphia, PA 2010 Consultant to Pfizer and Johnson and Johnson. Owns stock in Neose Technologies, Pfizer, Johnson & Johnson, and Rohm and Haas per <a href="http://chestjournal.chestpubs.org/content/134/4/680.full.pdf">Chest</a> - Bill Moran, MD Practice Expense Review Committee Oklahoma City, OK 2000 - Guy Orangio, MD American Society of Colon & Rectal Surgeons (ASCRS) Atlanta, GA 2009 - Gregory Przybylski, MD American Association of Neurological Surgeons (AANS) Edison, NJ 2001 Stock Ownership: United Healthcare (300 shares);  ...  Scientific Advisory Board: United Health Group (B, Spine Advisory Board) per <a href="http://www.nassannualmeeting.org/Documents/AM11_Prelim.pdf">NASS meeting</a> - Marc Raphaelson, MD American Academy of Neurology (AAN) Leesburg, VA 2009 personal compensation for activities with Jazz Pharmaceuticals and Medtronics as a speakers bureau member or consultant per <a href="http://www.marathonmultimedia.com/store/products_pdfs/disclosures/aan10/1FC.001.pdf">AAN</a> - Sandra Reed, MD American College of Obstetricians and Gynecologists (ACOG) Thomasville, GA 2009 GlaxoSmithKline Consulting, $1750 in 2009, $1500 in 2010 per ProPublica Dollars for Docs search through <a href="http://projects.propublica.org/docdollars/">here</a> - Daniel Mark Siegel, MD American Academy of Dermatology (AAD) Brooklyn, NY 2003 Vivacare Dermatology Advisory Board, 2006 – present. Photomedex Scientific Advisory Board, 2006-present, Ad Hoc consultant to ClickDiagnostics, per<a href="http://www.encite.us/pdf/dansiegel_cv.pdf"> Encite CV</a> DermFirst-Shareholder, Logical Image – Consultant, Vivacare - Consultant per <a href="http://www.mohssurgery.org/files/conf/papers/2009%20ACS%20Physician%20Session/SIEGEL-EHR%202014%20is%20Closer%20Than%20You%20Think.pdf">MOHS Surgery</a> - Lloyd S. Smith, DPM Health Care Professionals Advisory Committee Bethesda, MD 2007 - Peter Smith, MD Society of Thoracic Surgeons (STS) Durham, NC 2006 Eli Lilly, Consulting, $1500 in 2009, $1990 in 2010 per Pro Publica Dollars for Docs search through <a href="http://projects.propublica.org/docdollars/">here</a> Advisor or consultant to Bayer per <a href="http://www.medscape.org/viewprogram/7877">Medscape</a> - Susan Spires, MD College of American Pathologists (CAP) Lexington, KY 2007 - Arthur Traugott, MD American Medical Association (AMA) Champaign, IL 2006 - James Waldorf, MD American Society of Plastic Surgeons (ASPS) Jacksonville, FL 2008 - George Williams, MD American Academy of Ophthalmology (AAO) Royal Oak, MI 2009 Advisory Team, <a href="http://www.retro-sense.com/advisors.html">RetroSense Therapeutics</a> Shareholder and consultant for ThromboGenics Ltd. and holds intellectual property on the use of plasmin per <a href="http://www.revophth.com/content/d/retinal_insider/c/26258/">Review of Opthamology</a> Alcon Laboratories, consultant, lecturer; Allergan, consultant, lecturer; Macusight, consultant, equity owner; Neurotech, consultant; Nu-Vue Technologies, equity owner, patent/ royalties; OMIC- Ophthalmic Mutual Insurance Company, employee; Optimedica, consultant, equity owner; Thrombogenics, consultant, equity owner per <a href="http://www.aao.org/meetings/annual_meeting/subspecialty/upload/09-Financial-Disclosures-Subspecialty-Day.pdf">AAO meeting</a> Pfizer, “Professional Advising,” $5534 in 2009 per Pro Publica Dollars for Docs search through <a href="http://projects.propublica.org/docdollars/">here</a> Summary There you have it.  A substantial proportion, almost half, 14 of 29 members of the RUC have financial relationships with pharmaceutical companies, biotechnology companies, device companies, companies that directly provide health care, and health care insurance companies.  As we have noted in our <a href="http://hcrenewal.blogspot.com/search/label/RUC">previous discussions</a> of the RUC, that committee has been accused of being the de facto controller of how the US government pays physicians.  In that role, it has been accused of favoring procedural care rather than cognitive or primary care by increasing the relative financial incentives for the former over the latter.  This may be one of the most important reasons for the expensive, high-technology, procedural-heavy style of care in the US, which has likely been a major driver for increasing costs, declining access and stagnant quality. It seemed obvious that a committee dominated by a majority of physicians who perform procedures would tend to favor bigger financial incentives for procedures.  But now it appears the committee also includes a substantial number of people who work part-time or have ownership interests in companies that also stand to benefit from increasing use of procedures.  Procedures drive increased consumption of drugs, supplies and devices, and lead to larger revenue for hospitals and clinics.  Thus these financial relationships could reasonably be suspected of even further distorting the committee's decision-making in favor of procedures. I was surprised how many RUC members have financial ties to health care insurance companies.  Such companies are not usually thought of as beneficiaries of high-technology, procedural care.  However, if one conceives of their revenue as a percentage of health care costs, perhaps they are.  Furthermore, one can only wonder if the links between the RUC and health care insurance companies have anything to do with how such companies have apparently unquestioningly adapted the RBRVS system controlled by the RUC? The prevalence of conflicts of interest among RUC members highlight the need for a more accountable, transparent and honest system to manage how the government pays physicians, and a need for more transparency and accountability in the relationship among the government, health care insurance, and physicians.  As we have previously <a href="http://hcrenewal.blogspot.com/2011/02/replace-ruc.html">noted</a>,  there are still many unanswered questions about the RUC: - How did the government come to fix the payments physicians receive? Government price-fixing has not been popular in the US, yet this has caused no outcry. - Why is the process by which they are fixed allowed to be so opaque and unaccountable? Why are there no public hearings on the updates, and why is there no input from practicing physicians or organizations other than those related to the RUC? - How did the RUC become de facto in charge of this process? - Why does the AMA [keep the membership of the RUC so opaque, and] give no input into the RUC process to its general membership? - Why is the RUC membership so dominated by procedural specialists? Why were primary care physicians, who made up at least a sizable minority of physicians when the update process was started, not represented according to their numbers? - Why has there been so little discussion of the RUC and its responsibility for an extremely expensive health care system dominated by high-technology, expensive, risky and invasive procedures? Stay tuned, maybe these will be answered in our life-times....

RUCing About - Conflicts of Interest Affecting the Members of the RBRVS Update Committee

Since 2007, we have been writing about the secretive RUC (RBRVS Update Committee), the private AMA committee that somehow has managed to ge...

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Will a Pharmaceutical CEO Finally Be Held Accountable for Misbehavior on His Watch?

It appears there may be a move afoot to have the leader of a large health organization suffer some negative consequences for the misbehavior of his organization.  As <a href="http://www.stltoday.com/business/local/article_7625e006-112f-57e2-a4ca-d8ee57474b2a.html">reported</a> by the St Louis Post-Dispatch, <blockquote>For the past 34 years, Howard Solomon has presided over Forest Laboratories Inc., a midsize pharmaceutical company that runs its national sales operations from Earth City. Solomon, 83, took home $8.3 million last year as the company's chairman, president and chief executive officer. But his company's marketing arm also fell into trouble, pleading guilty to federal charges that its sales force illegally marketed the antidepressants Celexa and Lexapro to children and adolescents, even though these drugs had not been approved for minors. Now, the federal Department of Health and Human Services is attempting to oust Solomon from his job. According to the company, the agency's Office of Inspector General advised Solomon, a Yale Law School alum, last week that it planned to exclude him from doing any business with federal Medicare and Medicaid programs. The move — similar to the government's exclusion of KV Pharmaceutical's former chairman, Marc Hermelin — is part of a new effort by regulators to use this enforcement tactic to root out 'untrustworthy individuals' who knew or should have known that health care fraud was being committed on their watch.</blockquote> This appears to be big news. As we have discussed ad infinitum, there has been a parade of <a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements">legal settlements</a> by large health care organizations of charges of various kinds of wrong-doing. Some of these settlements have involved apparently large monetary penalties. However, the settlements have almost never been accompanied by any negative consequences for the people who authorized, directed or implemented the bad behavior. The concern all along has been that monetary settlements may just be regarded as a cost of doing business, and as long as misbehavior is lucrative, such settlements have no deterrent effect. In fact, the current practice seemed to grant impunity to corporate leaders. Actually barring a corporate executive from Medicare, which could result in the collapse of his company were he or she not to resign, would be a significant step towards accountability. Note that the St Louis Post-Dispatch article documented the rarity of imposing any negative consequences on corporate health care executives: <blockquote>Prosecutors have long been criticized for seldom filing charges against individuals associated with drug companies that are convicted of criminal conduct. Huge fines in recent years against Pfizer Inc. and Eli Lilly & Co., for example, did not stop their chief executives from continuing in their jobs.</blockquote> Also, <blockquote>Solomon, who joined the company in 1977, would become the second drug company executive barred from doing business with federal health care programs under a specific provision of the law that authorizes the exclusion of individuals who have not been convicted of a crime. In October, the agency's Office of Inspector General posted 'guidance' saying that, when there is evidence that an owner/operator or company officer "knew or should have known" of his organization's criminal conduct, the agency 'will operate with a presumption in favor of exclusion.' Hermelin, an owner/operator of KV Pharmaceutical, was excluded in November from federal health care programs for 20 years — and stepped down from the company's board of directors. He pleaded guilty last month to two criminal misdemeanors connected with his firm's shipment of oversized morphine tablets, and was sentenced to 30 days in the County Jail. In addition, three executives of the Connecticut-based pharmaceutical company Pardue Frederick were excluded for 15 years from federal health programs under a different provision of the law, after their guilty pleas in 2007 in connection with the misbranding of the painkiller OxyContin.</blockquote>Meanwhile, it seems that health care corporate CEOs can find academics who will defend their actions no matter what.  It was instructive to see one such defense of Solomon described in the Post-Dispatch article: <blockquote>Jackson Nickerson, a professor of organization and strategy at Washington University's Olin Business School, said the agency's 'underlying model' for exclusion appeared to be an example of over-regulation. 'It's predicated on the assumption that if a company has done something wrong, it must mean the senior executives have done something wrong,' he said. 'You are branded as being unethical if a subordinate makes a decision that turns out to be a bad one.' Nickerson said that to encourage innovation, company executives needed to delegate certain responsibilities to employees lower down in the organization. 'The dilemma is, how do you engage in global competition and decentralize, while at the same time be held accountable as an individual leader?'</blockquote> It does seem that it would be hard for top corporate executives to keep their eyes on the actions of all subordinates. On the other hand, it also seems that top corporate executives have justified their out-sized compensation by taking personal credit for everything good that happens to their organizations. If they want such credit, why should they escape responsibility when some actions go wrong? Note that Prof Nickerson played the "innovation" card. A common justification for many corporate health care practices is that they enable innovation. This argument is thrown around so often I begin to suspect it comes from corporate public relations' talking points. (See <a href="http://hcrenewal.blogspot.com/2011/02/health-care-corporate-disinformation.html">this post</a> about the development of such talking points.) Of course, the more a corporation is truly decentralized to support innovation, the less it can argue that the top executives deserve huge salaries because of their close involvement in everything that goes on at that corporation. Furthermore, while Forest Laboratories' previous marketing practices might have been innovative, that did not make them ethical. As we noted in an <a href="http://hcrenewal.blogspot.com/2010/09/forest-pharmaceuticals-pleads-guilty-to.html">earlier post</a>, the company was accused of marketing anti-depressants to children when they had only previously been approved for adults. Their marketing tactics allegedly included suppressing negative studies, and paying physicians to prescribe the drugs. The company pleaded guilty to obstruction of justice for lying to the FDA during a plant inspection, and to misdemeanor charges of misbranding and distributing an unapproved drug contrary to an FDA directive. In addition, an <a href="http://hcrenewal.blogspot.com/2009/09/lexapro-marketing-plan-was-meant-to.html">earlier post </a>summarized memos made public by a congressional investigation about Forest Laboratories' marketing of Lexapro. These included coopting medical education, "key opinion leaders," and medical associations for marketing purposes: - The marketing plan from the marketing department paid for medical education as a "promotional objective," that is, to market, not to educate. - Thought leaders and consultants were again paid by marketing to market, and sometimes to provide opinions about "promotional strategies" and "commercial development." - Medical associations are funded by marketing "for commercial and policy activities." So the facts in the Forest Laboratories case make protests that holding corporate leaders accountable for misbehavior on their watches will stifle innovation seem disingenuous. Furthermore, it makes no sense to pay top corporate leaders outrageous amounts for everything good that happens on their watch without similarly holding them accountable for everything bad that happens then. If the US government is really going to hold one corporate leader responsible for misbehavior by his subordinates on his watch, that would be a step forward.  As we have said again and again, we will not deter unethical behavior by health care organizations until the people who authorize, direct or implement bad behavior fear some meaningfully negative consequences. Real health care reform needs to make health care leaders accountable, and especially accountable for the bad behavior that helped make them rich.

Will a Pharmaceutical CEO Finally Be Held Accountable for Misbehavior on His Watch?

It appears there may be a move afoot to have the leader of a large health organization suffer some negative consequences for the misbehavior...

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Henry Ford Health System Decides Meaningful Use Not That Meaningful

The CMIO for inpatient services for Henry Ford Health System discusses the Michigan system's decision to hold off on applying for meaningful use funding in 2011, and what that means for its long-term vision of connecting clinical goals with IT support. April 15, 2011. Podcast running time: 3:58 (<a href="http://www.hhnmag.com/hhnmag/HHNDaily/HHNDailyDisplay.dhtml?id=4620008509">link to podcast</a>).Excerpts: <blockquote>“The clinician experience of delivering care has never been more complicated. Implementation and adoption of these Electronic Health Records seems to be to many people an end in itself—and that’s unfortunate. The implementation and adoption of EHR is a means to an end and one of those ends is better patient care and another one is clinician efficiency or better and more effective care. And that part feels to me that it gets lower priority and gets overlooked for the sake of adoption and implementation especially now with the federal requirements coming on. Now we must adopt, adopt, adopt. And the clinician experience is left behind. The complexity of being a physician is almost overwhelming both in the hospital and clinic setting and that’s one of my great concerns.”</blockquote> - John Frownfelter, MD CMIO, Henry Ford Health System Health IT in its present <a href="http://www.tinyurl.com/hostileuserexper">poorly usable form</a> only makes being a clinician more overwhelming. As I wrote at "<a href="http://hcrenewal.blogspot.com/2010/07/meaningful-use-final-rule-have.html">Meaningful Use Final Rule</a>", meaningful use initiatives before "meaningful usability" has been achieved have put the cart before the horse. Henry Ford, inventor of the assembly line, would probably have approved. An assembly line is appropriate for building identical widgets, but inappropriate for the implementation of health IT in the <a href="http://www.ctlab.org/documents/Hiding%20in%20plain%20sight.pdf">extremely </a><a href="http://www.ctlab.org/documents/Hiding%20in%20plain%20sight.pdf"> complex, poorly bounded, conflicted, highly variable, uncertain, high-tempo work domain</a> of hospitals, especially if the implementation is just for implementation's sake. -- SS

Henry Ford Health System Decides Meaningful Use Not That Meaningful

The CMIO for inpatient services for Henry Ford Health System discusses the Michigan system's decision to hold off on applying for meani...

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