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A Severance Package to an Un-Severed CEO - A Manifestation of "CEO Disease?"

The latest jaw-dropping story about executive compensation in health care has been unfolding in California, but at least now I have a diagnosis for this syndrome.  A Generous Retirement Package, Paid Before Retirement In April, the Los Angeles Times <a href="http://articles.latimes.com/2011/apr/28/local/la-me-pensions-20110428">reported</a> about the generous retirement package given to an outgoing public hospital district CEO in California: <blockquote>When he turned 65 two years ago, Samuel Downing received a $3-million retirement payment from a public hospital district in Salinas, Calif., where he serves as president and chief executive. But Downing continued working at his $668,000-a-year job for another two years, and after he retires this week, he will receive another payment of nearly $900,000. That comes on top of his regular pension of $150,000 a year.</blockquote> Note that not only was this pension package large in an absolute sense, but it was provided before the CEO actually retired. This compensation was clearly out of the ordinary: <blockquote>The payments amount to one of the more generous pension packages granted to a public official in California and come amid growing debate about 'supplemental' pensions that some officials receive on top of their basic retirement benefits. Though Downing's case is extreme, it follows the disclosure of extra pension benefits received by employees in municipalities including Bell and San Diego. Earlier this year, a state watchdog group called for stricter pension rules, saying California's retirement plans are 'dangerously underfunded, the result of overly generous benefit promises, wishful thinking and an unwillingness to plan prudently.' Seventy percent of Californians support a cap on pensions for current and future government workers, according to a recent Los Angeles Times/USC Poll.</blockquote> Furthermore, there was a disconnect between the size of the pension payments and the hospital district's financial situation: <blockquote>But the $3.9 million in supplemental retirement payments to Downing has come during a period of cutbacks at the hospital, including the reduction of 600 positions through layoffs and attrition. Hospital representatives said the cuts were mainly a response to recent economic conditions. The hospital has faced declining revenues and patient admissions and has been burdened by construction costs of a state-mandated retrofit project, they said.</blockquote> Hospital district apologists had the usual excuses: the pensions reflected the market, and the CEO is brilliant: <blockquote>Officials at the Salinas Valley Memorial Healthcare System defended the payouts, saying they need to pay private-sector-level benefits to retain top talent. They described Downing as a gifted and experienced administrator. 'I think I've earned it,' Downing said in an interview. 'I've stayed here out of my commitment to try to build a great hospital.... I worked for this institution and gave them my heart and soul.'</blockquote> As usual, left unsaid were how the CEO's "brilliance" was justified, other than by his own assertion, and why the CEO deserved so much credit for the performance of a hospital system that employed many other people. A Generous Severance Package, Paid to Someone Still Employed  Yesterday, it turned out that there was even more to Mr Downing's compensation. As again <a href="http://www.latimes.com/news/local/la-me-05-18-pension-20110519,0,4260805.story">reported</a> by the Los Angeles Times, <blockquote>A Salinas public hospital district, already under fire for granting its outgoing chief executive $3.9 million in retirement payments, also gave him nearly $1 million as part of an unusual severance agreement, according to records obtained by The Times. The payment fattened what was already considered one of the more generous public pensions ever given in California. Its disclosure prompted the state Assembly earlier this month to order an audit of the hospital district's finances. The Salinas Valley Memorial Healthcare System board gave Samuel Downing a cash payment of $947,594 in 2008, according to a hospital report on his compensation. The money came from a special severance fund set aside for when Downing ended his employment with the agency. But the board decided to award him the money while he was still CEO. By the time Downing retired last month, he had received a series of supplemental retirement benefits totaling $3.9 million, in addition to the severance payment. He will also be paid a regular pension of $150,000 a year. He earned about $670,000 in base salary during his final years of employment, along with other benefits such as a car allowance and paid time off.</blockquote> The details of how the CEO became entitled to this severance agreement, and how a severance payment was made to someone whose employment was not severed was sketchy: <blockquote>Salinas Valley officials said the severance payment stemmed from a handshake agreement in the 1980s between Downing and a previous president of the board of directors. In 2000, the hospital's board agreed to a contract in which Downing would be paid 18 months' salary upon the end of his employment. In 2008, the board voted to give Downing that money, which totaled nearly $948,000. It's unclear exactly why the board of directors decided to grant Downing the cash-out. The five board members, who are elected at-large by residents of the hospital district, didn't return calls seeking comment.</blockquote> Mr Downing, of course, once again asserted he deserved the money: <blockquote>Downing said he felt he deserved the pay after a long and successful career at the hospital, where he started in 1972. 'It sounds like a lot of money to everybody … but I know what the industry is and I know the board did an independent study,' he said. 'The board did an excellent job. They made sure we had competitive salaries.'</blockquote> Once again, a hospital district public relations person went to bat for him, by blaming previous board members: <blockquote>A hospital district spokeswoman released a statement Wednesday saying the current hospital directors were 'obligated by a previous board' to pay out Downing's severance.</blockquote> At least no one so far is claiming that this part of Mr Downing's compensation was determined by the almighty "market." In fact, <blockquote>But several outside experts said it is unusual for an entity to award severance to someone who remains an employee. Typically, they said, severance is promised to employees only in the event that they are pushed out of their jobs. Downing's severance was also atypical because he was entitled to it even if he retired of his own accord rather than being forced to leave. 'It's absolutely outside of the industry standard to pay a severance upon retirement,' said Jeff Christenson, a compensation consultant at the firm Integrated Healthcare Strategies. 'The theory of severance pay is to protect an executive or an employee from an unforeseen termination.'</blockquote> And of course the severance was not even paid on retirement, but paid while Mr Downing was still working. Summary - A Manifestation of "CEO Disease?" Once again we see how top health care leaders are different from you and me.  Despite the fact that executives are paid employees, they seem to be entitled to special treatment far beyond that afforded other employees.  While the modern treatment of health care executives as minor deities seemed to start in the private health care sector, it seems to be extending even into government. It turns out, over 20 years ago, the BusinessWeek cover story was entitled "<a href="http://www.businessweek.com/archives/1991/b320639.arc.htm">CEO Disease</a>."  It summarized the pathology that now seems to be the major cause of health care system dysfunction.  Yet the warning still goes largely unheeded: <blockquote>Pampered, protected, and perked, the American CEO can know every indulgence. The executive who finally reaches the top of a major corporation enters an exclusive fraternity. The CEO's judgment and presence are eagerly sought by other captains of industry and policymakers. CEOs zip around the world in private jets and cash the heftiest personal paychecks in industry. They take home 85 times what the average blue-collar worker makes, unlike their counterparts in Japan, where the ratio is closer to 10 to 1 (page 60). [That was in 1991.  For larger US companies, the ratio was 343 in 2010.  See <a href="http://money.cnn.com/2011/04/19/news/economy/ceo_pay/index.htm">this link</a>. -Editor] It is a job that can easily go to one's head--and often does. 'Too many people treat CEOs as some kind of exalted, omnipotent leader,' says John Sculley, CEO of Apple Computer Inc. 'The real danger is that you start believing that stuff.' Sculley took a sabbatical in 1988 as a way of "reacquainting myself with the fact that I'm a mere mortal." Many chief executives come to believe that they are much more than that. The perquisites and deferences create a protective cocoon--if not a full-fledged fantasy world--for the chieftains of some of the nation's largest companies. 'Many CEOs take on a level of self-importance that goes way beyond reality,' says Douglas D. Danforth, former CEO of Westinghouse Electric Corp. and now a director at several large corporations. 'They view the company as their own . . . . Some people's personalities change completely. If you're not careful, you can be seduced.' Call it CEO Disease. The symptoms are all too familiar: The boss doesn't seem to understand the business anymore. Decisions come slowly, only to be abruptly changed. He (there are only two women CEOs in the BUSINESS WEEK 1000) feels he can do no wrong and refuses to concede any mistake. He begins to surround himself with sycophants in senior management and on the board. TELLTALE SIGNS. Increasingly, the boss may seem out of touch--spending too much time away from the job, playing the role of statesman for the sake of personal recognition. He may even compete with industry counterparts over how much money he makes, how big the headquarters building is, or how many corporate jets are parked on the landing strip. And when it's time to leave the job, the boss just hangs on, often by undermining potential successors.</blockquote> In 1991, the BusinessWeek article suggested some ways to prevent CEO disease. In 20 years, these suggestions have been largely ignored in health care corporations, and in the larger health care system and the surrounding economy: <blockquote>A few fairly simple reforms would go a long way toward preventing many cases of CEO Disease, at least in its most virulent form. One obvious answer is to disperse decision-making. An advantage of this approach is that it focuses attention on a group of executives, not just the CEO. The prevalence of the problem also makes an overwhelming case for more involvement at the board level. To be effective, boards must be composed of a sizable percentage of outside directors who have the time to learn enough about a company and its management to make informed decisions about its leadership. If the boss isn't receptive and problems mount, a responsible director has no choice but to press for change. On four separate occasions since he started serving on boards, Jewel's Perkins says, 'I've sat down with the CEO and said: `In my judgment, you've made the contribution you can to this organization.' Three CEOs took early retirement. Ultimately, the power to prevent, and if necessary, cure CEO Disease rests with the shareholders. They have the right, and the duty, to insist on a board of competent and aggressive outsiders. At least, they do in theory. In reality, shareholders are often either passive, indifferent, or only invested in the stock on a short-term basis.</blockquote> CEO disease would seem to be an explanation for why a public hospital district gave an outlandish retirement package and a severance payment to a CEO who was still in office. CEO disease would describe much of the bad management we have described on this blog. So, as I have said before,.... 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. On the other hand, those who authorize, direct and implement bad behavior ought to suffer negative consequences sufficient to deter future bad behavior. 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. We need to launch a crash program to prevent CEO disease and cure existing cases, before it kills off our health care system.

A Severance Package to an Un-Severed CEO - A Manifestation of "CEO Disease?"

The latest jaw-dropping story about executive compensation in health care has been unfolding in California, but at least now I have a diagno...

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NPfIT: National Programme of Failed IT in the NHS

I have a suggestion for the Queen: Perhaps the NPfIT (National Programme for IT in the NHS) should be renamed the "National Programme of Failed IT in the NHS." No new acronym will be needed. For this pleasure, the UK has spent upwards of £13 billion. Of course, we as the progeny of the UK are going down the same path, surely soon to have a "National Program for Failed IT in the US." Ours will be a bit more expensive, unfortunately. Excerpts from the US and UK press (read the entire pieces at the links): <a href="http://online.wsj.com/article/SB10001424052748703421204576330691233267966.html"> </a> <blockquote style="font-family:arial;"><a href="http://online.wsj.com/article/SB10001424052748703421204576330691233267966.html" style="font-weight: bold;">http://online.wsj.com/article/SB10001424052748703421204576330691233267966.html</a> Wall Street Journal Auditor Blasts UK HIT BY STEN STOVALL LONDON The billions of pounds spent so far on England's much-delayed electronic patient record system within the National Health Service have been poorly used and the project urgently needs to be reassessed to ensure taxpayers get value for their money, the U.K.'s National Audit Office said Wednesday. A report released by the independent body concludes that the £2.7 billion spent on the records systems so far "does not represent value for money." <a href="http://www.computerworlduk.com/news/public-sector/3280340/official-failed-nhs-national-it-programme-has-no-chance-of-delivering-value-for-money/"> </a><a href="http://www.dailymail.co.uk/health/article-1388224/NHS-IT-project-cost-billions-delivering-ANY-benefits.html" style="font-weight: bold;">http://www.dailymail.co.uk/health/article-1388224/NHS-IT-project-cost-billions-delivering-ANY-benefits.html</a> Dailymail.co.uk NHS IT system 'has cost billions without delivering ANY benefits' By Sophie Borland 18th May 2011 Health Minister damns project as 'expensive farce' The NHS’ controversial project to computerise all patient records has cost billions of pounds without delivering any benefits, according to a damning report. It warns the project is running years behind schedule and will probably never happen. The £11 billion scheme, launched under Labour in 2002, was meant to create a central computer database of all patient records which could be easily be accessed by GPs and hospitals. But from the outset it has been hit with technical glitches and arguments between the companies installing the systems. The scheme has also been heavily criticised by leading doctors and privacy campaigners who warned patients’ personal details would be vulnerable if stored on a database that could be easily accessed by thousands of NHS staff. ... The project was meant to be completed last year but the report warned that it was unlikely to be finished even by 2016, when the contract with one of the main firms installing the system expires. So far only a few hospitals across the country have installed the new system – and there have been widespread problems. Doctors have said it is too slow to use during busy clinics and other staff have reported the system suddenly crashing. Ministers last night described the project as an “expensive farce” and demanded it was scrapped immediately. <a href="http://www.computerworlduk.com/news/public-sector/3280340/official-failed-nhs-national-it-programme-has-no-chance-of-delivering-value-for-money/">http://www.computerworlduk.com/news/public-sector/3280340/official-failed-nhs-national-it-programme-has-no-chance-of-delivering-value-for-money/</a> Computerworld UK Official: Failed NHS National IT programme has no chance of delivering value for money Time to turn off the life support machine? By Leo King Published 00:02, 18 May 11 The NHS National Programme for IT, which is now budgeted at £11.4 billion, has no chance of delivering value for money and has failed on all of its crucial elements. That is the verdict of a sharp report, compiled by the National Audit Office, that the prime minister has publicly insisted on assessing before any more deals are signed with suppliers. The report will be followed by Public Accounts Committee hearings and a Treasury report, which will also precede any signature. National audit of the £11.4bn, 10-year UK program to automate all NHS patient records concludes "the project has not been value for money for the Dept of Health." <a href="http://www.bbc.co.uk/news/health-13430375" style="font-weight: bold;">http://www.bbc.co.uk/news/health-13430375</a> BBC News £7bn NHS electronic records 'achieving little' for patients By Nick Triggle Health correspondent Patients are getting "precious little" from the NHS electronic care records system in England, a watchdog says. The £7bn system to replace paper files is falling further behind schedule and in places where it has been introduced it is not working as it should. The National Audit Office also said some patients would not even get one as large chunks of the NHS had pulled out. In conclusion, the NAO said the system was not providing value for money - something the government rejected. Electronic care records are the key part of the overall £11.4bn NHS IT project. The scheme was launched in 2002 with the aim of revolutionising the way the health service uses technology and also includes developments such as digital x-rays and fast internet connections. It is the third time the NAO has looked at electronic records - and each time the findings have been more damning. <a href="http://www.guardian.co.uk/society/2011/may/18/government-urged-to-abandon-nhs-it-programme" style="font-weight: bold;">http://www.guardian.co.uk/society/2011/may/18/government-urged-to-abandon-nh</a><a href="http://www.guardian.co.uk/society/2011/may/18/government-urged-to-abandon-nhs-it-programme">s-it-programme</a> The Guardian Government urged to abandon NHS IT programme Polly Curtis, Whitehall correspondent guardian.co.uk, Wednesday 18 May 2011 12.03 BST The government is coming under increasing pressure to abandon plans for a new NHS patient record system after the official spending watchdog said the scheme was very likely to waste another £4.3bn in the next four years. The original aim of the £11.4bn NHS IT programme – to install a patient record database accessible from any point in the NHS in England by 2015 – will fail, the National Audit Office (NAO) warned. The £2.7bn spent so far on the system has not been value for money, the watchdog said, adding it had no confidence that the remaining £4.3bn would be any better spent. The nine-year-old project – the biggest civilian IT scheme attempted – has been in disarray since it missed its first deadlines in 2007. While its ambitions have been downgraded in recent years, the bill from the suppliers has remained largely unchanged, the report said. MPs appealed for the remaining contracts to be abandoned to prevent the £4.3bn from going to waste. It amounts to more than one-fifth of the £20bn efficiencies the NHS is attempting to achieve. </blockquote> I think it fair to say the UK has been massively fleeced and abused by its suppliers, consultants and health IT pundits. The people of the UK have paid for this boondoggle. They should think of it as a form of taxation without representation, an abuse of their rights. Perhaps they can learn a valuable lesson from this document: <blockquote style="font-family:arial;"><a href="http://www.ushistory.org/declaration/document/">The Declaration of Independence of the United States</a></blockquote> Truth brings freedom. -- SS

NPfIT: National Programme of Failed IT in the NHS

I have a suggestion for the Queen: Perhaps the NPfIT (National Programme for IT in the NHS) should be renamed the " National Programme...

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More Medical Societies Supported by Industry

There were several new reports about the extent that medical societies are supported by industry.  Last week we <a href="http://hcrenewal.blogspot.com/2011/05/has-heart-rhythm-society-become-more.html">asked</a> whether the extent of the industrial support provided the Heart Rhythm Society made that organization appear to be more of a marketing firm than a professional society.  Society for Cardiac Angiography and Interventions (SCAI) ProPublica <a href="http://www.propublica.org/article/cardiac-society-draws-bulk-of-funding-from-stent-makers">reported</a> last week: <blockquote>The Society for Cardiac Angiography and Interventions (SCAI) received 57 percent of its revenues in 2009 from medical device and pharmaceutical makers, according to financial information on the group's website. Industry contributions to the society's budget covered $4.7 million of the $8.2 million it received that year. The group's biggest funders are the companies with the biggest share of the stent market: Cordis Corp. (a subsidiary of Johnson & Johnson), Boston Scientific, Abbott Laboratories and Medtronic. </blockquote>So here is another medical society that gets more money from pharmaceutical, biotechnology and device companies than it does from its members. The SCAI does not make obvious any relationships among its board members and officers and industry and does make publicly accessible its CEO's compensation or its recent 990 forms (see its web-site <a href="http://www.scai.org/default.aspx">here</a>). National Lipid Association (NLA) The CardioBrief blog discussed the somewhat more convoluted case of the sources of support of the National Lipid Association. First blogger Larry Husten examined the role of industry support for the association's "clinical guidance papers" on familial hypercholesterolemia  (FH). These papers recommended extremely aggressive screening for high cholesterol, that is, starting for 9 year old children, and 2 year olds whose families' had histories of elevated cholesterol and coronary disease. The conference that came up with these ideas was supported by drug companies, per the <a href="http://cardiobrief.org/2011/05/17/part-1-the-national-lipid-association-and-the-fh-guidelines/">first blog post </a>in a three-part series: <blockquote>The January 2011 NLA familial hypercholesterolemia recommendations conference was supported by unrestricted grant funding from the following companies: Abbott Laboratories, Aegerion Pharmaceuticals, Daiichi Sankyo, Genzyme, Kaneka Pharma America LLC, and Merck & Co.</blockquote> Also, <blockquote>Each of these companies would benefit from increased screening and treatment of FH and some, such as Keneka, Aegerion, and Genzyme have a huge portion of their future invested in FH.</blockquote> Furthermore, <blockquote>The executive summary of the papers includes disclosures from all of the authors, and all the authors list industry ties, and all but two of the authors disclose multiple relationships with industry (see below). Nearly all had ties with the companies that sponsored the conference. In an interview, [chair of the expert panel Dr Anne] Goldberg, told me that 'we believe in transparency' but that, unlike organizations like the ACC and the AHA, 'we have not taken people off of committees because of any ties with industry.' </blockquote> A <a href="http://cardiobrief.org/2011/05/17/part-2-the-national-lipid-association-and-industry/">second blog post </a>noted that a brochure on FH published by the NLA was supported by a drug company (Genzyme) and that: <blockquote>The NLA offers a multitude of CME programs, nearly all of which are  commercially supported by the pharmaceutical industry. Often the content of the programs are closely tied to the interests of the sponsor. For instance, the program on 'Lipid-Altering Drug Pharmacology and Safety' is supported by Abbott, Merck/Schering-Plough, and Reliant, all of whom manufacture popular lipid drugs.</blockquote> However, in pursuit of the "transparency" promised above, Mr Husten was not able to get a clear idea of the total amount of industry support supplied to the NLA: <blockquote>the NLA does not provide a detailed account of its revenue from industry, so it is impossible to say with certainty precisely how reliant it is upon industry support.</blockquote> Note that the association's <a href="http://www.lipid.org/pages/2010Tax.pdf">2010 990 form </a>listed revenues totaling $3,657,060, of which $1,106,091 came from meeting registration, and $216,356 from dues.  So this society received about 36% of its revenue from these traditional sources, while it received 37% from contributions and grants ($1,246,242) plus $116,750 in exhibitor fees.  (Other sources of revenue were less easy to classify.)  This suggests that the NLA does receive substantial revenue from industry. The NLA did not list amongst its disclosures whether its board members and officers had their own financial relationships with industry. Furthermore, the NLA seems particularly opaque about its hired executives and how much they are paid. Its 2010 990 form did not name its highest-compensated employees, nor list their compensation. Although it noted that its management was "delegated" to Compass Management & Consulting, it did not state the amount paid to Compass,  or the compensation given to any Compass employees who are effectively the NLA's highest-paid employees, nor did it list Compass as one of its most highly-paid independent contractors. Mr Husten discovered an addendum to a 2010 financial report also posted on the web that did state Compass' compensation was $662,640 in "management fees," and $326,378 for "commissions" for "fund-raising, a total of $989,018, equal to 25% of the organization's total expenses of $3,945,688. Summary Here are two more examples of medical societies that receive substantial revenues from companies that make products about which the societies' members may decide to prescribe or implant. In both cases, the societies' seemed to receive at least as much revenue from industry as they did  from members for dues, registration fees, and the like. Although both societies claimed to value transparency, neither disclosed the extent that society leaders and paid managers benefited from the societies' or their own relationships with industry.  So there is reason to be concerned about the extent their volunteer leaders and paid executives may benefit from the soceities' and their own personal relationships with industry. He who pays the piper calls the tune.  So it does not appear unreasonable to ask whether these societies should be regarded as at least as beholden to their industrial funders as to their members and meeting attendees?  So should they be regarded as commercial marketing firms at least as much as professional societies? As we said before, if medical societies have come to resemble marketing firms, is it any wonder that they have not spoken up against the commercialization of health care, even when the result has not been good for physicians' core values? But in that case, why would physicians who care about their patients and their core values want to belong and pay dues to marketing firms? Inquiring minds want to know.... Maybe physicians should only join medical societies that really act like medical societies.

More Medical Societies Supported by Industry

There were several new reports about the extent that medical societies are supported by industry. Last week we asked whether the extent of...

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Another Blow to the Health IT Idealists: Sony CEO Howard Stringer, and HHS OIG, on Information Security

In a series of Healthcare Renewal posts such as those linked below, I pointed out that healthcare IT information security was largely a pipe dream, and that plans to create a national network of health information, while a seductive idea dating to the beginnings of computer networking, is not a good idea now. <ul><li>"<a href="http://hcrenewal.blogspot.com/2010/02/networked-emrs-and-healthcare.html">Networked EMR's and Healthcare Information Security: Practical When Massive IT Security Breaches Continue</a>?",</li></ul><ul><li>"<a href="http://hcrenewal.blogspot.com/2010/02/networked-interoperable-secure-national.html">Networked, Interoperable, Secure National Medical Records a Castle in the Sky?</a>",</li></ul><ul><li>"<a href="http://hcrenewal.blogspot.com/2010/01/it-flaws-and-coverups-of-same-why-i.html">Operation Aurora And a Widespread Reluctance to Discuss IT Flaws: Is Universal Healthcare IT Really a Good Idea in 2010?</a>",</li></ul><ul><li>"<a href="http://hcrenewal.blogspot.com/2010/10/medical-data-breach-of-week-but-your.html">Medical data breach of the week - but your EMR data is secure, trust us, we're IT experts</a>", </li></ul><ul><li>"<a href="http://hcrenewal.blogspot.com/2010/11/insurers-test-data-profiles-to-identify.html">Insurers Test Data Profiles to Identify Risky Clients</a>",</li></ul><ul><li>and <a href="http://hcrenewal.blogspot.com/search/label/medical%20record%20privacy">others</a></li></ul> Now you can hear it from another source: The CEO of one of the world's largest electronic companies, Sony. Emphases mine: <a href="http://online.wsj.com/article/SB10001424052748703421204576328982377107892.html"></a><blockquote><a href="http://online.wsj.com/article/SB10001424052748703421204576328982377107892.html" style="font-weight: bold;">Sony CEO Warns of 'Bad New World' </a> Wall Street Journal May 8, 2011 TOKYO—After spending weeks to resolve a massive Internet security breach, <a class="companyRollover link11unvisited" href="http://online.wsj.com/public/quotes/main.html?type=djn&symbol=SNE">Sony</a> Corp. Chief Executive <a class="topicLink" href="http://topics.wsj.com/person/s/howard-stringer/243">Howard Stringer</a> said he can't guarantee the security of the company's videogame network or any other Web system in the "bad new world" of cybercrime. Mr. Stringer's comments in a phone interview Tuesday, ahead of a New York roundtable discussion with reporters, come on the heels of a trying month for Sony. The company partially restored two of its online game systems and a streaming movie and music service over the weekend after shutting the services for several weeks when a breach compromised the personal information of more than 100 million account holders. While Sony has restored part of the PlayStation Network—an online game system for its PlayStation 3 videogame console—in the U.S. and Europe and bolstered security measures, Mr. Stringer, 69 years old, said maintaining the service's security is a "never-ending process" and he doesn't know if anyone is "100% secure." He said the security breach at PSN, Sony Online Entertainment, an online game service for personal-computer users, and its Qriocity streaming video and music network his company could lead the way to bigger problems well beyond Sony, or the gaming industry. He warned hackers may one day target the global financial system, the power grid or air-traffic control systems. [And healthcare, where identity theft, data alteration, and data destruction might occur - ed.] <div style="overflow: hidden; text-decoration: none; border: medium none;"> <div style="overflow: hidden; text-decoration: none; border: medium none;"></div></div></blockquote><div style="overflow: hidden; text-decoration: none; border: medium none;"><div style="overflow: hidden; text-decoration: none; border: medium none;"> I really don't think this is the time to be setting up a national health information network. Beyond that, I offer no additional comments, other than that regarding the impossibility of keeping healthcare information secure on a national or even regional network, you may have heard it first here at Healthcare Renewal. It would be prudent and consistent with the Hippocratic Oath to tone down our grandiose expectations and grandiose plans for these technologies in healthcare. If you feel insecure yet, just wait a moment. Going from very, very bad to very much worse: An independent audit of ONC's and CMS's security programs by the HHS OIG (Office of the Inspector General) produced concerning if not alarming results to say the least: <a href="http://www.healthleadersmedia.com/content/FIN-266313/HIT-Security-Problems-Found-at-CMS-ONC"></a><blockquote><a href="http://www.healthleadersmedia.com/content/FIN-266313/HIT-Security-Problems-Found-at-CMS-ONC" style="font-weight: bold;">Federal Audits Find HIT Security Problems at CMS, ONC </a> John Commins, for HealthLeaders Media May 18, 2011 Audits of the federal agencies charged with implementing and monitoring security measures for healthcare information technology identified this week lax oversight and insufficient standards for healthcare providers. The audits were conducted by the Department of Health and Human Services' Office of Inspector General, and targeted HIT security standards, privacy protection under HIPAA, and other security measures at the Centers for Medicare & Medicaid Services, and the Office of the National Coordinator. "These two reports are being issued simultaneously because OIG found weaknesses in the two HHS agencies entrusted with keeping sensitive patient records private and secure," OIG said in a media release. The CMS audit, Nationwide Rollup Review of the Centers for Medicare & Medicaid Services Health Insurance Portability and Accountability Act of 1996 Oversight, examined seven hospitals across the country and found 151 "vulnerabilities" in systems and controls that are designed to safeguard electronic protected health information. Those lapses included 124 "high impact vulnerabilities" such as unencrypted laptops and portable drives containing sensitive personal health information, outdated antivirus software and patches, unsecured networks, and the failure to detect rogue devices intruding on wireless networks, the OIG audit said. "These vulnerabilities placed the confidentiality, integrity, and availability of ePHI at risk. Outsiders or employees at some hospitals could have accessed, and at one hospital did access, systems and beneficiaries' personal data and performed unauthorized acts without the hospitals' knowledge," the OIG audit said. "As a result, CMS had limited assurance that controls were in place and operating as intended to protect electronic protected health information, thereby leaving ePHI vulnerable to attack and compromise. OIG's Audit of Information Technology Security Included in Health Information Technology Standards examined ONC's mandate under the HITECH Act to develop HIT security as part of a national HIT interoperability infrastructure. The audit found "no HIT standards that included general information IT security controls … which provide the structure, policies, and procedures that apply to a healthcare provider's overall computer operations, ensure the proper operation of information systems [which obviously also impacts patient safety - ed.], and create a secure environment for application systems and controls.</blockquote> That's not very reassuring. In fact, it is downright frightening. ONC has to learn such lessons from HHS OIG? Read the whole thing.I somewhat mordantly note that organizations such as ONC and CMS would probably never hire a person like me, who might actually kick-start true critical thinking on these issues. This is due to my non-bien pensant "bad attitudes", and lack of faith in cybernetic idols. <a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgmnwU_sH88Ham6kL2ikFt88_2qx899yg4zsSynC9_sggBBClRDUYMxnZnxfE06yrPqWhz7crbwSYQdkbQc8scVnH0kyg5Y9-g4MUsvHlEcswajJ_WzalDVaLBTGwwOB4RJ7rim6pJZRmDD/s1600/golden_calf.jpg"><img alt="" border="0" id="BLOGGER_PHOTO_ID_5608090912264648962" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgmnwU_sH88Ham6kL2ikFt88_2qx899yg4zsSynC9_sggBBClRDUYMxnZnxfE06yrPqWhz7crbwSYQdkbQc8scVnH0kyg5Y9-g4MUsvHlEcswajJ_WzalDVaLBTGwwOB4RJ7rim6pJZRmDD/s320/golden_calf.jpg" style="display: block; margin: 0px auto 10px; text-align: center; cursor: pointer; width: 305px; height: 217px;" /></a>Click to enlarge. A well-known idol of gold. Computer circuits use gold, no? -- SS </div></div>

Another Blow to the Health IT Idealists: Sony CEO Howard Stringer, and HHS OIG, on Information Security

In a series of Healthcare Renewal posts such as those linked below, I pointed out that healthcare IT information security was largely a pip...

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Global Fund Will Not Suppress Discussion of Health Care Corruption

Some good news to discuss, for a change.... We previously discussed losses from corruption reported by the Global Fund to Fight AIDS, Tuberculosis, and Malaria, and by the Health Alliance International <a href="http://hcrenewal.blogspot.com/2011/02/after-publicity-about-losses-from.html">here</a>.  At the time, we noted that some experts in health care corruption praised the Global Fund for being transparent about the effects of corruption. However, last week there was concern that some elements within the Global Fund thought that the best response to losses due to corruption would be hiding them.  As reported by the AP (<a href="http://www.cbsnews.com/stories/2011/05/11/ap/health/main20061781.shtml">via CBS</a>):  <blockquote>A global health fund championed by celebrities and world leaders is considering scaling back its groundbreaking philosophy of full transparency about how it spends billions of dollars in health care in poor countries. Its decision could have broad consequences for the ways international aid groups operate. Revelations this year by The Associated Press about misspent funds and corruption among recipients of the money — and the donor backlash that has followed — have prompted leaders of the Global Fund to Fight AIDS, Tuberculosis and Malaria to propose scaling back on the investigations that uncovered the problems, and revealing less about them to donors and the public.</blockquote> But hardly everyone within Fund leadership wanted to abandon transparency: <blockquote>The Global Fund's internal watchdog fiercely opposes the proposed changes. In its latest progress report, obtained by the AP, Inspector General John Parsons warns the board that a move toward less transparency 'could be interpreted negatively and as a purposeful effort to suppress material information.'</blockquote> Also, <blockquote>The president of the board, Ethiopian Health Minister Tedros Adhanom Ghebreyesus, opposes any changes. 'Even the mere appearance of suppression of information is unacceptable. Scaling back, or the perception that we are retreating from, this commitment is something we simply cannot allow,' Tedros said. If anything, he added, 'we should increase our level of transparency.'</blockquote> Now, it looks like the transparency advocates won, at least in part. As again reported by the AP (<a href="http://www.cbsnews.com/stories/2011/05/13/ap/europe/main20062710.shtml">via CBS</a>): <blockquote>A multibillion-dollar fund that fights three killer diseases said Friday that it will make public more detailed information about money it has lost to corruption and mismanagement, but won't release other information critics have sought. The board of the $22 billion Global Fund to Fight AIDS, Tuberculosis and Malaria met this week to address a backlash among major donors over revelations by The Associated Press that the fund's internal watchdog was turning up losses of tens of millions of dollars of grant money. Board members decided to publish detailed accounting of losses and money recovered, the fund said, in an effort to distinguish between fraud and other problems such as poor accounting.</blockquote> However, <blockquote>The fund will not, however, provide other details from internal investigations and audits that might have made it possible to calculate how much of the money investigated is lost to corruption, or what percentage of the fund's overall disbursements are misspent.</blockquote> Also, <blockquote>The fund also is not making public an internal chart obtained by AP showing that in 12 nations where internal audits and investigations reviewed almost $576 million in spending, an average of 8 percent was lost to fraud, undocumented or unauthorized spending.</blockquote> Still, it is very good news that transparency won out in this case. Maybe the Global Fund leaders' decision will encourage more discussion of the severity of global health care corruption and its negative effects. On the other hand, it is bad news that even discussion of health care corruption remains controversial. In 2006, <a href="http://www.transparency.org/publications/gcr/gcr_2006">Transparency International's Global Corruption Report</a> asserted in its executive summary, " the scale of corruption is vast in both rich and poor countries."  As we summarized <a href="http://hcrenewal.blogspot.com/2011/02/after-publicity-about-losses-from.html">here</a>, the report discussed the scale and diversity of health care corruption, and the severity of its adverse effects.  Yet the very subject of global health care corruption remains as anechoic as many of the specific topics we discuss on Health Care Renewal. Also, as we have noted before, recently <a href="http://hcrenewal.blogspot.com/2011/02/after-publicity-about-losses-from.html">here</a>, there are very few if any meetings about global health care corruption, very few courses on it in medical or public health schools, no institutions specifically designed to address it, and no programs at the foundations and NGOs which are losing money to global health corruption to combat it.  Similarly, there are few efforts to promote accountability, integrity, transparency, honesty, and ethics in health care (aside from this blog and a few other similarly informal initiatives.)  What is wrong with that picture? We hope that the willingness of the Global Fund to discuss and admit it has a problem with health care corruption will make health care corruption a little less anechoic, and lead us closer to concrete steps to address it. PS - If anyone in our vast audience does know about any additional anti-corruption or conflict of interest, or pro-accountability, integrity, transparency, honesty and ethics initiatives, courses, meetings relevant to health care, please let me know and I will do my best to disseminate the information. [Posted on <a href="http://hcrenewal.blogspot.com/">Health Care Renewal</a> by Roy M. Poses MD]

Global Fund Will Not Suppress Discussion of Health Care Corruption

Some good news to discuss, for a change.... We previously discussed losses from corruption reported by the Global Fund to Fight AIDS, Tuberc...

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How to Fix EMRs: Shoreline Pools, Electronic Medical Records and Criminally Negligent Homicide

There are many parallels between the health IT sector (with known injuries and deaths [1]; deliberate lack of regulatory enforcement in part due to regulatory capture [2]; willfull blindness and special pleadings by vendors and purchasers regarding the dangers of the devices [3]; 'certification' standards that ignore safety [4], and other cavalier practices), and this tragic story below: <blockquote><a href="http://www.connecticutpersonalinjurylawblog.com/2011/04/swimming-pool-maker-pleads-guilty-to-criminally-negligent-homicide.shtml">Swimming pool maker pleads guilty to criminally negligent homicide</a> Source: Claims Journal "<a href="http://www.claimsjournal.com/news/east/2011/04/15/184540.htm" target="_blank">Pool Company Admits Guilt in Connecticut Boy's Drowning</a>" John Christoffersen, April 15, 2011 After the tragic drowning of a 6-year-old Connecticut boy in 2007, his parents have brought a lawsuit against the swimming pool company. The lawsuit against Shoreline Pools detailed statistics of pool entrapment deaths and injuries caused by unsafe drains. It presented nationwide evidence that more than 150 adults and children have been seriously hurt or killed in <a href="http://www.williamswalshandoconnor.com/Catastrophic-Injuries/Wrongful-Death.shtml" target="_blank">fatal accidents</a> from the lack of automatic pool pump shutdown devices since 1985. [FDA is well aware of deaths and injuries caused by health IT products, and they admit their data is likely just the 'tip of the iceberg.' See <a href="http://www.ischool.drexel.edu/faculty/ssilverstein/Internal-FDA-Report-on-Adverse-Events-Involving-Health-Information-IT.pdf">Internal FDA memorandum on HIT risks</a> to Jeffrey Shuren MD JD, Director, Center for Devices and Radiological Health - ed.] In a court case involving product liability, a designer or manufacturer is held accountable for product safety [except in the <a href="http://www.emrupdate.com/forums/t/27502.aspx" style="font-weight: bold; font-style: italic;">deliberately-unregulated</a> health IT sector, that may employ Joint Commission Safety Standard-violating '<a href="http://www.ischool.drexel.edu/faculty/ssilverstein/cases/?loc=cases&sloc=koppel_kreda">gag' and 'hold harmless</a>' contract clauses as well - ed.] and may be separately liable for civil damages when a product is linked to wrongful deaths. One industry expert speculated that some swimming pool companies may not have been installing the drain safety device on purpose, hoping that the requirements of the state code would be overturned by industry pressure. [That is, regulatory influence and capture - ed.] Criminal Consequences The swimming pool company and its president have pleaded guilty to charges relating to the wrongful death of a Connecticut boy who drowned when his arm became trapped in a pool drain. Shoreline Pools and its president admitted guilt for failing to install a required safety device that would have detected a blockage and shut down the drain pump, preventing the boy's death. Shoreline Pools will pay $150,000 to purchase swimming pool safety ads as part of its court agreement and guilty plea to second-degree manslaughter. A manslaughter charge against the company president was plea-bargained down to criminally negligent homicide [in effect, it probably was second degree manslaughter, but got reduced as a result of court process - ed.], a misdemeanor carrying less consequential weight. The pool company executive, escaping jail time, has been ordered to perform 500 hours of community service and bring 100 swimming pools up to legal safety standards. At trial, the swimming pool company president said he was not aware of a 2004 state law that mandated the drain safety device [he and the company knew, should have known, or should have made it their business to know, just as health IT companies know, should have known, or should make it their business to know about the toxic effects of their products - ed.] but prosecutors were able to show that the law and the device were both well promoted at trade shows and in safety awareness campaigns among pool manufacturers, even as soon as two full years before the boy's drowning. [Admonitions about heath IT safety risks have been available for far longer - ed.] </blockquote> Judgments of criminally negligent homicide or manslaughter against the designers and purchasers of clinical IT, and health IT and hospital executives, would go a long way to improving health IT safety. Such judgments would likely go far further than the typical "community building workshops" and other selective-attendance, "consensus" government committee meetings now underway. This seems an area wide open for tort actions. -- SS [1] <a href="http://www.ischool.drexel.edu/faculty/ssilverstein/Internal-FDA-Report-on-Adverse-Events-Involving-Health-Information-IT.pdf">Internal FDA memorandum on HIT risks</a> to Jeffrey Shuren MD JD (Director, Center for Devices and Radiological Health). "Not Intended for Public Use." Feb. 23, 2010. (My description/commentary on the memorandum is <a href="http://hcrenewal.blogspot.com/2010/08/smoking-gun-internal-fda-memorandum-of.html">at this link</a>). [2] Statements of Jeffrey Shuren, Director, CRDH, Feb. 25, 2010, HHS - Health Information Technology (HIT) Policy Committee Adoption/Certification Workgroup, <a href="http://www.emrupdate.com/forums/t/27502.aspx">http://www.emrupdate.com/forums/t/27502.aspx</a> [3] Statements of Barry Chaiken, MD, MPH, FHIMSS, former Chairman of the Board of health IT trade group <a href="http://www.himss.org/">HIMSS</a>, see <a href="http://hcrenewal.blogspot.com/2010/07/barry-chaiken-md-mph-lets-be-patient.html">http://hcrenewal.blogspot.com/2010/07/barry-chaiken-md-mph-lets-be-patient.htm</a>l [4] Hoffman, Sharona and Podgurski, Andy, Meaningful Use and Certification of Health Information Technology: What About Safety? (October 25, 2010). Journal of Law, Medicine and Ethics; Case Legal Studies Research Paper No. 2010-34. Available at SSRN: <a href="http://ssrn.com/abstract=1697587">http://ssrn.com/abstract=1697587</a> -- Originally posted at Healthcare Renewal http://hcrenewal.blogspot.com by S. Silverstein, MD

How to Fix EMRs: Shoreline Pools, Electronic Medical Records and Criminally Negligent Homicide

There are many parallels between the health IT sector ( with known injuries and deaths [1]; deliberate lack of regulatory enforcement in pa...

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Was the Wright Medical CEO Really "Pleased" to "Continue Our Commitment to the Highest Standards of Legal and Ethical Conduct?"

This story fits into the "if you believed that one, I have a bridge to sell you" category.  Let's go back seven months to 2010, when we <a href="http://hcrenewal.blogspot.com/2010/10/wright-medical-settles-but-wait-there.html">discussed</a> the legal settlement, which included submission to deferred prosecution and corporate integrity agreements by Wright Medical, a device manufacturer.  We noted that the company CEO, one Gary D Henley, said he was "pleased to announce these agreements and look[ing] forward to working with the independent monitor as we continue our commitment to the highest standards of ethical and legal conduct."  At the time, we wondered whether the only real reason he was pleased was that he got to keep his job (with total compensation of greater than $2 million a year) and hang onto his stock options (then consisting of 436,601 shares). Now it is 2011, and the Memphis Daily News <a href="http://www.memphisdailynews.com/editorial/Article.aspx?id=58418">reported</a> that last month, Mr Henley was out of a job: <blockquote>It was just last month that [Chairman David] Stevens was appointed interim president and CEO after Gary D. Henley resigned from the position, which he had held since 2006. Stevens at that time asked not to be considered for the permanent position. Henley tendered his resignation prior to a board of directors meeting called to discuss management’s oversight of the company’s ongoing compliance program. The board accepted Henley’s resignation, but deemed it to be without 'good reason' under the terms of his employment agreement, making him ineligible for severance.</blockquote> He was accompanied out the door by <blockquote>Frank S. Bono, the company’s senior vice president and chief technology officer, for failing to exhibit appropriate regard for Wright’s ongoing compliance program.</blockquote> It appeared that the previous company leadership may not have been all that "pleased" to work with external monitors to "continue our commitment to the highest standards of ethical and legal conduct." The Daily News also reported: <blockquote>Wright Medical Group Inc. on Thursday announced that it received a letter from the United States Attorney’s Office for the District of New Jersey pursuant to Paragraph 50 of the Deferred Prosecution Agreement stating that the USAO believes Wright Medical Group knowingly and willfully breached material provisions of the DPA.</blockquote> Also, Corporate Counsel <a href="http://www.law.com/jsp/cc/PubArticleCC.jsp?id=1202493182276&US_Attorney_Accuses_Wright_Medical_Group_of_Breaching_Deferred_Prosecution_Agreement">reported</a>: <blockquote>Two days after its general counsel departed abruptly, the Wright Medical Group, Inc., said Thursday that the U.S. attorney’s office believes the company 'has knowingly and willfully' breached its deferred prosecution agreement. As a result, the company said it could face 'significant liability' including potential criminal and civil litigation. It also faces possible exclusion from federal health care programs such as Medicare, 'which would have a material adverse effect on our financial condition.' The Tennessee-based company revealed the legal problems in 8-K filings on Wednesday and Thursday with the Securities and Exchange Commission. Wright has declined further comment.</blockquote> One explanation for the company's pessimism: <blockquote>The board recently received a tip about non-compliance and hired unnamed outside counsel to conduct an internal investigation. The probe found 'credible evidence of serious wrongdoing,' which the board communicated to the U.S. attorney’s office on Wednesday.</blockquote> The Memphis Daily News noted that another slew of managers just went out the door: <blockquote>Raymond Kolls, senior vice president, general counsel and secretary, Alicia Napoli, vice president of Clinical and Regulatory Affairs, and Cary Hagan, senior vice president of EMEA Commercial Operations, have all stepped down from their positions.</blockquote> So should we believe Wright Medical Chairman and now interim CEO Stevens when he said: <blockquote>The board is committed to maintaining the highest standards of ethical conduct and we remain diligent in ensuring that Wright Medical complies with all applicable laws and regulations...</blockquote>? Are you looking to buy a bridge? I know a nice one in Brooklyn. More seriously, day in and day out we hear righteous, if not pompous pronouncements from health care organizational leaders about their organizations' integrity, brilliant performance, quality of care, devotion to patients, etc, etc, etc. Meanwhile, we have seen an astonishing <a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements">parade of legal settlements</a>, sometimes including guilty pleas to <a href="http://hcrenewal.blogspot.com/search/label/bribery">bribery</a>, <a href="http://hcrenewal.blogspot.com/search/label/fraud">fraud</a>, <a href="http://hcrenewal.blogspot.com/search/label/kickbacks">kickbacks</a>, and other <a href="http://hcrenewal.blogspot.com/search/label/crime">crimes</a> by top health care organizations.  This parade raises serious questions about the performance and integrity of some of our biggest and best known health care organizations. In nearly all cases, these settlements did not include specific negative consequences for those who authorized, directed or implemented the bad behavior that caused the need for the settlements. In nearly every case, the top leaders of the organizations continued to get generous compensation, often more generous than Mr Henley's $2 million plus a year. Yet rarely does the media, much less health care scholarship check back later to see if the righteous pronouncements turned out to be true. Rarely do they check back to see if the settlements lead to better behavior. Here is one vivid anecdote that suggests that the pronouncements may be nothing more than vapid PR, and the settlements lead to no change in behavior as long as the people who were in charge when the bad behavior occurred remain in charge, and richly remunerated. So the next time you see a corporate health care CEO's boasts, think about that bridge in Brooklyn To reprise: 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. [Originally posted on <a href="http://hcrenewal.blogspot.com/">Health Care Renewal</a> by Roy Poses]

Was the Wright Medical CEO Really "Pleased" to "Continue Our Commitment to the Highest Standards of Legal and Ethical Conduct?"

This story fits into the "if you believed that one, I have a bridge to sell you" category. Let's go back seven months to 2010...

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