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Debt Ceiling deal could endanger health care law - and it would be beneficial if health IT/HITECH were part of the trimmings

A story about the recent political deal to raise the Debt Ceiling entitled "Deal could endanger health care law" appeared in the Politico (hat tip Drudge Report): <blockquote style="font-family: arial;"><a href="http://www.politico.com/news/stories/0811/60634.html">Deal could endanger health care law</a>By <a href="http://www.politico.com/reporters/JenniferHaberkorn.html" rel="nofollow">JENNIFER HABERKORN</a> | 8/3/11 11:28 PM EDT Politico.com The <a href="http://www.politico.com/news/stories/0811/60549.html" target="_blank">debt ceiling agreement</a> could jeopardize millions of dollars, and perhaps billions, in initiatives from President Barack Obama’s health care reform law if the super committee can’t come up with required spending cuts.Many of the pots of money in the law — one of the Democrats’ most prized pieces of legislation — could get trimmed by the debt deal’s sequestration, or triggered cuts. The funds for prevention programs and community health centers, grants to help states set up insurance exchanges and co-ops, and money to help states review insurance rates could be slashed across the board if the panel can’t find enough cuts this fall. </blockquote><div style="overflow: hidden; color: rgb(0, 0, 0); background-color: transparent; text-align: left; text-decoration: none; border: medium none; font-family: arial;">My suggestion: </div> <div> <div style="font-size: 13px; color: rgb(0, 0, 0); direction: ltr; font-family: Arial;"> <div style="font-family: arial;" dir="ltr"> </div> <div dir="ltr" style="font-family:arial;">Put health IT and the HITECH Act (the health IT component that 'somehow' found its way into the fantastically-successful American Recovery and Reinvestment Act of 2009) on the table. Health IT devices are medical devices that are dangerous, unregulated and unproven (e.g., see 'Reading List' <a href="http://www.ischool.drexel.edu/faculty/ssilverstein/cases/?loc=cases&sloc=readinglist">here</a>) in their current state of development and lawless environment. Cutting HIT funding probably would be beneficial in avoiding waste as well. Note what just occurred in the UK: </div> <div style="font-family: arial;" face="arial" dir="ltr"> </div> <div dir="ltr"><a href="http://hcrenewal.blogspot.com/2011/08/you-saw-it-here-first-uk-nhs-pulls-plug.html">UK NHS pulls the plug on its £11bn IT system</a> -- SS </div></div></div>

Debt Ceiling deal could endanger health care law - and it would be beneficial if health IT/HITECH were part of the trimmings

A story about the recent political deal to raise the Debt Ceiling entitled " Deal could endanger health care law " appeared in the...

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Time For A Summer Vacation at ONC - And Ethical Education of Health IT Zealots

A Microsoft Developer's Network (MSDN) blogger "Family Health Guy" a.k.a. Sean Nolan writes in a July 31, 2011 post entitled "<a href="http://blogs.msdn.com/b/familyhealthguy/archive/2011/07/31/time-for-a-summer-vacation-at-onc.aspx">Time for a summer vacation at ONC</a>" that: <blockquote style="font-family: georgia;font-family:arial;" >I’ve spoken at some length about my enthusiasm for the current leadership at HHS and ONC. President Obama has both directly and indirectly engaged some really gifted individuals to help us address healthcare challenges through the use of information technology --- which is awesome ... I’ve had the good fortune to participate in a few of these, and it’s been some of the most rewarding work of my career. Truth is, I’m not used to seeing such great work out of government. So I’m a bit reluctant to throw out what could be perceived as a negative message --- but after my own two-week vacation thinking about it I’m convinced the time is right to ask ONC: PLEASE, TAKE A BREAK! JUST STOP TALKING FOR AWHILE AND LET US IMPLEMENT STUFF. Why stop now? I think the answer is increasingly clear. Between <a href="http://www.cms.gov/EHRIncentivePrograms/30_Meaningful_Use.asp">Meaningful Use Stage 1</a>, the <a href="http://wiki.directproject.org/">Direct Project</a> and the <a href="http://www.data.gov/health">Health Data Initiative</a>, government has kicked industry out of a funk it’s been in for the previous decade, and we’re seeing a ton of really exciting and positive innovation. But nobody, and certainly not ONC, knows at a detailed level how to turn that innovation into ubiquitous market reality. What we need now is a period of implementation, competition and iteration to figure out how to deliver on the promise. </blockquote> I find this attitude to be somewhat - well, let's just say, in a somewhat negative message, psychopathic. We're talking about real, live human patients as the subject of our "figuring." For, during the period of implementation, competition and iteration during which "we" will be figuring out how to deliver on "the promise" of <a href="http://hcrenewal.blogspot.com/2011/04/fda-decides-regulating-implantable.html">experimental health IT medical devices</a>, we shall be putting at risk and injuring non-consenting patients with our IT lessons-learned, and burying our more serious mistakes. A far better way to figure out "how to deliver on the promise" would be to follow the protocols and procedures used to figure out how to deliver on the promise of other medical devices. These protocols and procedures, and ethical guidelines as well (<a href="http://grants.nih.gov/grants/policy/hs/ethical_guidelines.htm">link</a>), were developed over decades in response to abuses of the past. (The Tuskegee experiments come to mind.) That calls for controlled clinical trials under informed consent for safety and efficacy, careful study of the results, weeding out of unproven or dangerous technologies via regulation, and all this even before wide-scale rollouts of these health IT medical devices. Even after rollout, there needs to be a robust post-marketing surveillance process. That's how it works with other medical devices and with pharmaceuticals. HIT medical devices deserve no special accommodation for any logical or ethical reason I can think of. A lesson here: computer people, and health IT zealots of any background, need to be kept at arm's length from clinical settings, and on very short leashes in those settings. -- SS Aug. 3 addendum: the "period of implementation, competition and iteration to figure out how to deliver on the promise" in the UK <a href="http://hcrenewal.blogspot.com/2011/08/you-saw-it-here-first-uk-nhs-pulls-plug.html">did not turn out very well</a>.

Time For A Summer Vacation at ONC - And Ethical Education of Health IT Zealots

A Microsoft Developer's Network (MSDN) blogger "Family Health Guy" a.k.a. Sean Nolan writes in a July 31, 2011 post entitled ...

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UK NHS pulls the plug on its £11bn IT system

You saw it here first. Or, at least well before the pundits admitted this. I've been predicting this event for quite awhile at this blog (e.g., see posts about the UK NPfIT at <a href="http://hcrenewal.blogspot.com/search/label/NPfIT">this blog query link</a>). From the Independent: <blockquote>The Independent (UK) <a href="http://www.independent.co.uk/life-style/health-and-families/health-news/nhs-pulls-the-plug-on-its-11bn-it-system-2330906.html">NHS pulls the plug on its £11bn IT system</a> After nine years and with billions already spent, doomed computer system is abandoned By Oliver Wright, Whitehall Editor Wednesday, 3 August 2011 A plan to create the world's largest single civilian computer system linking all parts of the National Health Service is to be abandoned by the Government after running up billions of pounds in bills. Ministers are expected to announce next month that they are scrapping a central part of the much-delayed and hugely controversial 10-year National Programme for IT. Instead, local health trusts and hospitals will be allowed to develop or buy individual computer systems to suit their needs – with a much smaller central server capable of "interrogating" them to provide centralised information on patient care. News of the Government's plans comes as a damning report from a cross-party committee of MPs concludes that the £11.4bn programme had proved "beyond the capacity of the Department of Health to deliver". [That's a theme in my writings on this blog with respect to the IT community in general. The situation is similar here in the United States. The health IT sector and the hospitals and physician practices who would need to implement this technology do not have the expertise, wisdom and plain common sense to make good on what would be the most massive and complex IT project in the world - ed.] The Commons Public Accounts Committee (PAC) said that, while the intention of creating a centralised database of electronic patient records was a "worthwhile aim", a huge amount of money had been wasted. [It could have been used on patient care - ed.] </blockquote> Note that some of the major players are American: <blockquote>"The department has been unable to demonstrate what benefits have been delivered from the £2.7bn spent on the project so far," Margaret Hodge, chair of the PAC, said. [See my <a href="http://hcrenewal.blogspot.com/2011/02/updated-reading-list-on-health-it.html">'reading list'</a> post for more on this issue - ed.] "It should now urgently review whether it is worth continuing with the remaining elements of the care-records system. The £4.3bn which the department expects to spend might be better used to buy systems that are proven to work, that are good value for money and which deliver demonstrable benefits to the NHS." A further £4.4bn was expected to be spent on other areas of the vast IT project. The nine-year-old NHS computer project – the biggest civilian IT scheme ever attempted – has been in disarray since it missed its first deadlines in 2007. The project has been beset by changing specifications, technical challenges and clashes with suppliers, which has left it years behind schedule and way over cost. Accenture, the largest contractor involved, walked out on contracts worth £2bn in 2006, writing off hundreds of millions of pounds in the process. Months earlier, the US supplier IDX, contracted to provide software in and around London, had also withdrawn from the project, making a $450m (£275m) provision against future losses from the two contracts. The PAC said part of the problem had been weak leadership in the department. "The department could have avoided some of the pitfalls and waste if they had consulted at the start of the process with health professionals," it said. "We are concerned that, given his significant other responsibilities, [NHS chief executive] David Nicholson has not fully discharged his responsibilities as the senior responsible owner for this project. This has resulted in poor accountability for project performance." The report also criticises the contracts between the department and suppliers – so far, £1.8bn has been paid. "One supplier, Computer Sciences Corporation (CSC), has yet to deliver the bulk of the systems it is contracted to supply and has instead implemented a large number of interim systems as a stopgap," it said. </blockquote> It should also be mentioned that US HIT supplier Cerner Corp. <a href="http://www.ischool.drexel.edu/faculty/ssilverstein/cases/?loc=cases&sloc=granger_speaks_out">was a prime supplier of HIT medical device software</a> for this failed project. Professors at Harvard and Nottingham Medical School have warned that the US is going down the same path as the UK (<a href="http://www.ischool.drexel.edu/faculty/ssilverstein/cases/?loc=cases&sloc=nottingham">link</a>). I predict we'll waste hundreds of billions of dollars before we learn the same lesson. National HIT is a <a href="http://en.wikipedia.org/wiki/Wicked_problem">wicked problem</a>, not a tractable one. It is unsolvable by run-of-the-mill bureaucrats, pundits and IT ignorazzi, especially those without clinical experience. A list of other IT disasters is at the end of the Independent article cited above. It would appear this industry and its pundits/experts are incapable of learning from mistakes, or unwilling to learn. In the case of HIT, however, people end up being maimed and killed rather directly. -- SS Aug.9, 2011 addendum: An anonymous HC Renewal commenter on August 4, 2011 9:46:00 PM EDT had written: "There are some successes being reported with Cerner: <a href="http://www.guardian.co.uk/healthcare-network/2011/aug/03/newcastle-clinical-implementation-medical-software">http://www.guardian.co.uk/healthcare-network/2011/aug/03/newcastle-clinical-implementation-medical-software</a>." In checking that Guardian.uk article "Newcastle's clinical implementation of medical software" authored by <a href="http://www.guardian.co.uk/profile/sadelaja">Sade Laja</a> on Aug. 3, I find this fascinating comment from a Guardian reader (apparently an even more confrontational earlier comment from this Guardian reader had been deleted): <blockquote> <a href="http://www.guardian.co.uk/discussion/comment-permalink/11900000" style="font-weight: bold;">ExiledEurophile</a> 9 August 2011 2:10AM I am very concerned that you saw fit to delete my last post. Here it is again edited for any judgements and now contains only facts and questions, my opinion derived from carefully reading your article and from my own experience as a clinician who has tried to work with UK Health IT initiatives. Could you have asked some more penetrating questions? Why did you not interview 'ordinary' staff about what they think of the system? Were you unable to? Where is the verified and peer reviewed evidence of benefit of implementation of the system? Neither the head of IT and the Director of Pharmacy (unless Mr. (?Dr.) Watson is a medically qualified clinical pharmacist) are strictly speaking clinicians. Why were you not introduced to the masses of excited and supportive senior clinicians backing Cerner at the RVI? Have you understood the nature of a Cerner contract and the clauses relating to any responsibility the company has for medical accidents that occur when the software is used? Does the contract allow staff to communicate publicly about the performance of the system? Reading your article carefully it is clear that RVI have implemented Cerner's Patient Administration System (PAS) and the electronic ordering of tests and drugs, but it seems fairly clear there is no electronic patient record, nor the chance of one arriving soon. If all other methods of ordering drugs and tests have been scrapped then the RVI can easily claim ALL medical staff are using the programme, but strictly that is because they have no alternative. A 'Big Bang' start up would imply implementing all aspects of Cerner together, but it seems all that all the RVI did initially was start the PAS followed by a 'slow down'. Let me tell you about my own experience of the 'slow down'; The Cerner Millenium interface, in my opinion, is so user unfriendly and so difficult to interrogate that when it was switched on in a District Hospital in the South West of England they has to immediately employ 24 extra clerks to manage the appointments in out patients - which brings into question whether the system automatically leads to increased efficiency and cost savings. As far as I know no Cerner based electronic patient record was ever switched on in that hospital because none available was seen to be fit for purpose. Every Department or specialty had to make its own arrangements for e-health, and there was difficulty in talking to the Cerner PAS both technically and because the UK Dept of Health forbade peripheral systems from being able to talk back to the PAS electronically. So much for avoiding 'siloing' of medical information around the hospital. If you want to know how Cerner clinical systems perform please read this; <a href="http://sydney.edu.au/engineering/it/%7Ehitru/essays/Pt%201%20-%20The%20Story%20of%20the%20Deployment%20of%20an%20ED%20Clinical%20Information%20System6.0.pdf">A Critical Essay on the Deployment of an ED Clinical Information System ‐ Systemic Failure or Bad Luck?</a> Not only does it state how poorly the 'First Net' emergency system from Cerner performs in New South Wales but also that majority of staff loathe it , Prof Patrick also has discovered key flaws in the underlying IT architecture of the core code of Cerner's software. Furthermore it reports on the nature of Cerner contracts and the way the company seeks to avoid responsibility for incidents and restricts staff from talking about the product. Two further points - look on the BBC and e-Health Insider web-sites about Cerner costs. Why does a Cerner system in Bath cost nearly three times a System C implementation in Bristol? And as for Patient safety of e-Health intiatives; there is the ultimate irony of the following report of a failure at UPMC, Cerner's 'home' hospital; <a href="http://m.post-gazette.com/local/region/entire-upmc-transplant-team-missed-hepatitis-alert-1159219">http://m.post-gazette.com/local/region/entire-upmc-transplant-team-missed-hepatitis-alert-1159219</a> To be fair the problem here was one of staff failing to acknowledge a result, but it may have been exacerbated by the level of usability of the system and certainly having a full e-Health IT record did NOT stop the problem occurring. [In that article: "But some UPMC doctors have complained that the hospital system's acclaimed electronic records system, designed in coordination with Cerner, an electronic records company, is, at best, cumbersome to use and difficult to adjust for any one doctor's particular needs." What we need to see are the actual screens and context in which these alerts appeared, as I find it hard to believe an entire transplant team could be be negligent or fools. See my <a href="http://www.tinyurl.com/hostileuserexper">9-part series on mission hostile user interfaces</a> for more on this issue - ed.] By the way the tide of opinion may be turning about how much health and economic benefit e-Health initiatives are delivering around the world; <a href="http://www.post-gazette.com/pg/11219/1165767-114-0.stm?cmpid...xml">http://www.post-gazette.com/pg/11219/1165767-114-0.stm?cmpid...xml</a> "Electronic Records no Panacea for Health Care Industry" The recent Public Accounts Committee report has amply demonstrated the folly of the NPfIT programme, but unless proper OBJECTIVE evidence of the direct implementation of Cerner systems is provided together with unfettered support from ordinary (ie non-Trust management) NHS staff, I hope you will adopt an approach of scepticism, rather than acceptance of the opinions & oral reports of top-end NHS Trust mangers of the RVI or NHS other hospitals, who have their CEO's, executives and their IT providers to impress. ps I believe that most NHS Trust Boards are having the wool pulled over their eyes on this issue.</blockquote> Let's hope this comment stays. I have seen grossly exaggerated PR regarding health IT "success" myself and the themes in this comment resonate with that experience. -- SS

UK NHS pulls the plug on its £11bn IT system

You saw it here first. Or, at least well before the pundits admitted this. I've been predicting this event for quite awhile at this blo...

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What the Pfizer (II)? - Lack of Transparency About Dysfunctional Leadership

The recent in-depth <a href="http://features.blogs.fortune.cnn.com/2011/07/28/pfizer-jeff-kindler-shakeup/">investigation</a> by Fortune reporters of 10 years of dysfunctional leadership at <a href="http://www.pfizer.com/">Pfizer</a>, the "world's largest research-based pharmaceutical company," raises many issues about leadership and governance in health care (see our post <a href="http://hcrenewal.blogspot.com/2011/08/10-years-of-pfizer-leadership-saga-of.html">here</a>).  To continue what is likely to become a lengthy series, let us discuss the most obvious one, is the discrepancy between what appeared in Fortune and what Pfizer chose to make public about its leadership. This discrepancy is most apparent when one compares official descriptions of executive performance with what the Fortune reporters found.  To illustrate, consider the official descriptions of the performance of former Pfizer CEOs Hank McKinnell and Jeffrey Kindler in the respective years in which they were forced out. "Hank" McKinnell -2006 Mr McKinell was forced to retire in 2006.  The Fortune article described Mr McKinnell as a "desperate CEO" by 2002 because he could find no way to replenish the company's fading drug pipeline; who then became an absent CEO who "left a power vacuum" and then triggered internal political warfare by setting up a "bitter contest" over succession planning. The <a href="http://services.corporate-ir.net/SEC/Document.Service?id=P3VybD1odHRwOi8vaXIuaW50Lndlc3RsYXdidXNpbmVzcy5jb20vZG9jdW1lbnQvdjEvMDAwMDkzMDQxMy0wNi0wMDIwOTEvZG9jLzAwMDA5MzA0MTMwNjAwMjA5MS5wZGYmdHlwZT0yJmZuPTAwMDA5MzA0MTMwNjAwMjA5MS5wZGY=">2006 Pfizer proxy statement</a>  explained how the Board of Directors' Compensation Committee assessed Mr McKinnell's performance, <blockquote>The Committee does not rely solely on predetermined formulas or a limited set of criteria when it evaluates the performance of the Chairman and CEO and the Company's other elected officers. In 2005, the Committee considered management's continuing achievement of its short and long-term goals versus its strategic imperatives, including Dr. McKinnell's objectives which are shown below: • Achieve specific revenue, EPS, operating cash flow per share, and merger-related synergy goals • Effectively communicate strategy and financial results to increase shareholder value • Deliver more new medicines more quickly to patients, through industry- leading R&D productivity and significant in-licensing activity • Adapting to Scale • Promote new directions in health and wellness • Shape a positive environment for better healthcare • Developing People, Talent, and the Organization</blockquote> The Compensation Committee then assessed McKinnell's performance thus: Financial and merger synergy goals <blockquote>Overall, the financial targets, which reflected a significant stretch for the organization given the dynamic business environment and the loss of exclusivity for certain key products, were exceeded.</blockquote> Communicate effectively <blockquote>However, given the performance of the Company's stock price in 2005 when compared to prior years, the Committee felt that the goal of effectively communicating strategy and financial results to increase shareholder value was not met.</blockquote> More medicines more quickly <blockquote>All R&D productivity and licensing goals were met or exceeded, with, notably, five products under priority review at the FDA — an industry first. As the R&D organization continues to establish the industry standard in productivity, the Committee determined that performance against this objective significantly surpassed expectations.</blockquote> Adapting to scale <blockquote>In 2005, initiatives related to Adapting to Scale resulted in twice the cost reduction that had been estimated for the year, giving a very strong start to the Company's efforts to reduce the cost base and streamline the organization. </blockquote>So, <blockquote>the Committee believes that overall performance significantly surpassed the expected outcomes for this objective.</blockquote> Promote new directions <blockquote>In promoting new directions in health and wellness, Pfizer's newly launched Healthy Directions program for U.S. based colleagues far exceeded expectations.... the Committee determined that these goals were significantly exceeded.</blockquote> Shape a positive environment <blockquote>The Company is also leading efforts to rebuild trust in the industry and large companies in general.</blockquote>So, <blockquote>Overall, the Committee believes that the Company surpassed expectations of performance against this particularly challenging objective.</blockquote> Developing people, talent, and the organization <blockquote>With respect to the final objective for 2005 — Developing People, Talent, and the Organization — the Committee recognized that senior leadership of the Company has been instrumental in developing and implementing new People & Talent strategies related to long-term development planning for key talent, enhancing leadership skills for all 'people managers', and enabling Pfizer to become a global leader in attracting, developing, and engaging a diverse workforce that delivers superior business results. As a result, the Committee determined that the goals of this objective were surpassed.</blockquote> So, according to the Committee, Mr McKinnell's performance was excellent in all areas but one. Accordingly, based apparently on this stated "General Compensation Philosophy," <blockquote>The Committee believes that compensation paid to executive officers should be closely aligned with the performance of the Company on both a short-term and long-term basis....</blockquote> So the present value of Mr McKinnell's total compensation was estimated to be $15,880,989. Jeffrey Kindler - 2010 Kindler was forced to resign in 2010. The Fortune article also described Mr Kindler as "suddenly desperate" after two failures of drugs in development; someone who "just couldn't make up his mind," about acquisitions and spin-offs; "anguished" about research, leading to a "messy" overhaul; and putting "destructive" trust in a subordinate with previously described problems with "character, integrity and divisiveness" leading to loss of the loyalty of the executive team. However, in the company's <a href="http://services.corporate-ir.net/SEC/Document.Service?id=P3VybD1odHRwOi8vaXIuaW50Lndlc3RsYXdidXNpbmVzcy5jb20vZG9jdW1lbnQvdjEvMDAwMTE5MzEyNS0xMC0wNTc5NDkvZG9jLzAwMDExOTMxMjUxMDA1Nzk0OS5wZGYmdHlwZT0yJmZuPTAwMDExOTMxMjUxMDA1Nzk0OS5wZGY=">2010 proxy statement</a>, the Compensation Committee made this general assertion: <blockquote>The Committee believes that Mr. Kindler's leadership was a significant factor in the continued progress made by Pfizer in 2009 in strengthening the foundation for future growth and long-term success.</blockquote> Then, Mr Kindler, like Mr McKinnell, was assessed against specific performance standards thus: Financial Results <blockquote>Despite the unprecedented challenges in the global macroeconomic environment and other challenges, the Company exceeded the target goals for 2009 set by the Committee for annual incentive purposes</blockquote> Enhancing the Product Portfolio <blockquote>Under Mr. Kindler's leadership and oversight, during 2009 we improved the product portfolio (early stage through late stage),...</blockquote> People Management <blockquote>In 2009, we met or exceeded each of our people management goals,...</blockquote> Business Model Implementation <blockquote>the Company remains on track to meet the various research and development goals announced in March 2009. Mr. Kindler also further strengthened the Company's leadership team through strategic hiring and the redeployment of key senior leaders across the Company.</blockquote> Wyeth Transaction <blockquote>During 2009, we devoted significant attention to the acquisition of Wyeth. Under Mr. Kindler's leadership, we finalized negotiations, gained regulatory approval and closed the $68 billion acquisition of Wyeth, all in an expeditious manner. During the year, Mr. Kindler oversaw a detailed review of Wyeth and its businesses and the development of an integration plan,...</blockquote>So, <blockquote>With the completion of the acquisition under Mr. Kindler's leadership, Pfizer is one of the largest biopharmaceutical companies in the world, as well as a more diversified company in the health care industry.</blockquote> Industry Leadership <blockquote>During 2009, Mr. Kindler was actively involved, through both Pfizer and external organizations, in developing and advancing U.S. and global public policies that serve the overall interests of our Company and our shareholders</blockquote> In summary, <blockquote>In view of Mr. Kindler's accomplishments noted above and the fact that he achieved all of his objectives and exceeded most of them, the Committee believes that Mr. Kindler successfully led the Company toward the achievement of its strategic goals during 2009....</blockquote> Based on the same general compensation philosophy noted above, Mr Kindler's total compensation in 2009 was $14,898,038. Summary Anyone who depended on these proxy statements to assess the performance of the Pfizer CEOs in 2006 and in 2010 would have likely concluded that both CEOs exhibited exemplary performance. These impressions would have apparently been sharply discrepant with the realities inside the company at those times. Like the children of Lake Woebegone, we have frequently noted how almost all CEOs seem to appear "above average" or better to their boards of directors or trustees. The case of Pfizer in 2006 and in 2010 shows a board of directors which painted a grossly optimistic view of CEO performance to the public. In both years, these views would almost immediately clash with the fates of the particular CEOs. Now, based on the Fortune investigative report, these views seem even more overblown if not absurd. This case, which again concerns the "world's biggest research driven pharmaceutical company," suggests one should be very skeptical about evaluations of executive performance in proxy reports. Proxy reports now appear to be a very cloudy window through which to view how corporations are really run. However, in the US, proxy reports have legal standing and are supposed to be sources of definitive information for stockholders and anyone else interested in the corporations that produce them. Thus, the large organizations that dominate US health care may be even less transparent than they appear. True health care reform requires true transparency, and meaningful deterrence of propaganda disguised as fact.

What the Pfizer (II)? - Lack of Transparency About Dysfunctional Leadership

The recent in-depth investigation by Fortune reporters of 10 years of dysfunctional leadership at Pfizer , the "world's largest re...

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10 Years of Pfizer Leadership - "A Saga of Ambition, Intrigue, Backstabbing, and Betrayal"

A remarkable story about mismanagement of health care has appeared in the mainstream media, and most remarkable is that this <a href="http://features.blogs.fortune.cnn.com/2011/07/28/pfizer-jeff-kindler-shakeup/">article</a> in Fortune chronicled 10 years of poor leadership by three CEOs at Pfizer Inc, the world's biggest drug company The CEO Who Would Not Leave In 2001, William C Steere Jr retired as CEO, but did not really leave, muddying the chain of command: <blockquote>In January 2001, Steere, by then 64 and a company legend, retired as CEO. He handed the job to his handpicked No. 2, Hank McKinnell. Steere stepped aside -- but not out. He received a consulting contract, with an office and secretary at Pfizer headquarters. Most important, Steere was granted the title of chairman emeritus and retained his seat on the Pfizer board. Governance experts widely regard such lingering as a recipe for trouble. Steere would remain a potent influence for another decade, outlasting his two successors.</blockquote> Waffling About How to Support the Pipeline The next CEO was Henry "Hank" McKinnell Jr, who was faced with a declining pipeline of new drugs. His response was to go from one extreme to another: <blockquote>Pfizer's pipeline simply couldn't support the growth the company had promised investors. Three of its blockbusters were about to lose patent protection and face generic competition, meaning their profits would plummet. The biggest issue, of course, was Lipitor -- by 2005, it was bringing in a staggering $12 billion a year, more than a quarter of Pfizer's revenues. The company wouldn't lose its exclusive rights to Lipitor until late 2011, but already Wall Street was wondering how Pfizer could possibly replace it. McKinnell kept boosting R&D budgets, maintaining Pfizer's 'shots on goal' approach -- the more compounds you explored, in theory, the more drugs you'd generate. But drugs can take a full decade to be developed and approved, and nothing big would be ready for years. So McKinnell fell back on the refuge of the desperate pharma CEO: In July 2002 he announced the acquisition of Pharmacia, the industry's seventh-largest company, for $60 billion in stock. </blockquote> A Power Vacuum and the Infighting Begins When that did not work, McKinnell made himself scarce, leading to infighting among the next level of executives: <blockquote>But even as Pfizer struggled to digest this latest meal, McKinnell seemed to spend less and less time at headquarters, becoming head of industry trade groups, funding an institute in Africa to combat AIDS, even writing a book about reforming health care. That left a power vacuum, and Bill Steere, the former CEO, seemed more than willing to fill it. He was a familiar figure at Pfizer's New York headquarters, where he worked out in the basement fitness center and ate lunch in the cafeteria. Steere was always happy to lend an ear and share his views. His retired status and public reserve concealed tremendous influence. 'He says almost nothing,' says a person familiar with Pfizer's board. 'But people look to him to see how he nods and how he moves, because he knows the company better than anyone.' With Pfizer no longer soaring, internal squabbling intensified. Vexed by what he viewed as Steere's meddling, McKinnell even tried to terminate his consulting contract. Steere fended off that move. </blockquote> Furthermore, McKinnell's ideas about succession planning led to further infighting: <blockquote>By 2005, McKinnell was already making plans for his succession. He promoted three executives to vice chairman, setting off what would become a long and increasingly bitter contest to choose the next CEO.</blockquote> More Waffling Over Acquisitions Versus Spin-Offs As Pfizer's stock price continued to fall, the board pushed McKinnell into rretirement in 2006, and replaced him with Jeffrey Kindler. However, Kindler also could not make up his mind whether to grow or shrink the company: <blockquote>Suddenly desperate to shrink the company -- which had just completed two giant mergers -- Kindler announced plans for brutal layoffs that included axing 20% of the vaunted U.S. sales force. Yet even as he was making massive cuts, Kindler was also pondering acquisitions, toying with alternative strategies. The first was a 'string of pearls' approach -- a handful of smaller purchases, each aimed at filling a single strategic gap, such as biotech. The second strategy was yet another megadeal -- namely, buying Wyeth. That company had $23 billion in sales, strength in vaccines and biotech, a large over-the-counter products division, and several blockbusters of its own, including Prevnar, an antibacterial vaccine for children. But after more than a year of on-and-off debate, Kindler just couldn't make up his mind.</blockquote> Inconsistent Leadership for Research and Development <blockquote>the process of overhauling R&D was a messy one. Kindler shuffled through three research chiefs during his 4 1/2 years as CEO. He closed six R&D sites, then halted research in 10 disease areas even while setting a new goal of launching four new internally developed drugs a year by 2010. He split the research operation in two -- setting up a separate unit for biologic drugs (and launching an expensive new facility in San Francisco) -- only to reverse the decision 30 months later after taking on Wyeth's big biotech operation. Among the shuttered Pfizer sites was one at Ann Arbor, the birthplace of Lipitor. Says Bruce Roth, the scientist known as 'the father of Lipitor,' who lost his job when the Ann Arbor site closed and now works for Genentech: 'When every 18 months you throw the organization up in the air and are shifting therapeutic areas or closing sites, you have this period of turmoil when everybody in the organization is paralyzed. You need some continuity to do science.' Kindler was struggling for answers in a complex industry where his own experience was limited. In an effort to bring in fresh thinking, Kindler spun his leadership team like a top. Company veterans Shedlarz, chief medical officer Dr. Joseph Feczko, and CFO Alan Levin departed. Frank D'Amelio, Kindler's new CFO, arrived from Lucent. Sally Susman, his new communications chief, had worked at Estée Lauder (EL). His new general counsel, Allen Waxman, resigned abruptly for "personal reasons" after just one year; replacing him was Amy Schulman, a high-profile litigator at DLA Piper.</blockquote> In Thrall to a Questionable Subordinate The Fortune article devoted considerable space to document Mr Kindler's trust in a questionable subordinate. <blockquote>Perhaps the only thing as destructive to Kindler as his inability to trust his colleagues was the one Pfizer executive in whom he did place his trust: Mary McLeod. The head of human resources under Kindler, McLeod would leverage her relationship to the CEO to become both his emissary and a power in her own right. Kindler's loyalty to her would undercut him at a crucial moment. </blockquote> Kindler did not seem to realize why she had lost her former position: <blockquote>Her tenure at Schwab had ended disastrously, though there's no sign Kindler knew that when he brought McLeod in. As Schwab's head of HR and chief of staff to CEO David Pottruck in the early 2000s, McLeod had proved toxic, according to six members of Pottruck's executive team. They say she isolated him from other points of view and went to extraordinary lengths to remove rivals. Meanwhile she criticized him behind his back and bragged that she had the CEO under her thumb. After an internal investigation, Pottruck fired McLeod in 2004, he confirms. In an e-mail sent to McLeod the day of her termination, read aloud to Fortune, Pottruck wrote: 'The issues are about the perceptions others have of you around character, integrity and divisiveness … There is a perception that you do not tell the truth.'</blockquote> Ms McLeod's ascendancy seemed to create toxicity: <blockquote>McLeod seemed uninterested in the details of how the streamlined department would actually function. Even top deputies say she was virtually unapproachable, preferring to communicate by e-mail and quarterly videocast. McLeod's primary focus was the care and feeding of the CEO. She became Kindler's protector and surrogate, whispering in his ear, controlling access to him, delivering his blunt messages. Kindler admiringly called her 'Neutron Mary,' after his hero, Jack Welch. McLeod seemed to encourage his harshest nature, telling him, according to a person who was present, that one senior executive was 'a B player,' another too ambitious, someone else a 'crybaby.' McLeod also publicly denigrated her employees, announcing at one town hall meeting in 2008 that two big positions would have to be filled from outside because no one inside Pfizer was capable of doing the job.</blockquote> Yet Mr Kindler seemed to make sure Ms McLeod's compensation reflected his good relationship with her, not her relationship with the rest of the company: <blockquote>McLeod's emoluments were so lavish they might make her one of the company's five most compensated employees, which would require Pfizer to disclose the details in its annual proxy statement. In early 2008 company governance chief Peggy Foran investigated the issue and tallied nearly $1 million in payments to McLeod, including those relating to her various houses, the helicopter use, and a large bonus to buy her out of a consulting partnership. Then there was McLeod's salary and regular bonus of $900,000 and restricted stock and options.</blockquote> As Mr Kindler continued to flounder, his excess faith in Ms McLead undercut his support among other executives: <blockquote>loyalty to the CEO among members of his 'executive leadership team,' or ELT, was growing tenuous. One catalyst for the disaffection was Mary McLeod. With the CEO's support, she had become feared inside Pfizer. Kindler seemed blind to her shortcomings, opening up a divide within the ELT. Says one executive: 'There was Mary and Jeff, and then there was the rest of us.'</blockquote> When the board finally realized how much dysfunction Mr Kindler's trust in Ms McLead was causing, it was the beginning of the end of his CEO-ship. Her increasingly bizarre behavior lead to an inquiry: <blockquote>The two-week investigation was conducted by Bart Friedman, an attorney with Cahill Gordon & Reindel who specializes in corporate governance work. After interviewing all of McLeod's direct reports, Friedman found nothing illegal. He did, however, conclude that HR was thoroughly dysfunctional, and riven by inept management. In his view, this was a simple case of incompetence. On Wednesday, Dec. 1, Pfizer's executive team gathered for a day of meetings with the CEO. Mary McLeod was missing. After hearing Friedman's report, Kindler had finally parted ways with his controversial HR chief -- though not without a generous severance package. Now it was Kindler whose job was threatened.</blockquote> Summary: Per Fortune <blockquote>Indeed, what has occurred at the company -- whose $68 billion in annual sales are built on blockbuster drugs such as Lipitor and Viagra -- is extraordinary. Once a Wall Street darling and corporate icon, Pfizer has tumbled into disarray. In the decade that ended with Kindler's departure, its stock price sagged from a high of $49 down to $17 and its drug pipeline dried up (problems the company continues to grapple with today). Pfizer lost its way, stumbling through a frantic series of zigzags in the hopes of finding new blockbusters to sustain its prodigious profits in the future. Meanwhile, its managers descended into behavior that would do Shakespeare -- or Machiavelli -- proud. There was the ex-CEO who couldn't relinquish his power and quietly maneuvered to undercut two successors he had helped install. Then there was the human resources chief who divided the staff rather than uniting it. Most of all, there was Kindler himself, a bright man with some fresh ideas for reforming Pfizer but a person who agonized over decisions even as he second-guessed everybody else's actions. The story of Jeff Kindler's tumultuous tenure at Pfizer is a saga of ambition, intrigue, backstabbing, and betrayal -- all of it exacerbated by a board that allowed the problems to fester for years.</blockquote> Health Care Dysfunction Made Visible In <a href="http://www.ejinme.com/article/S0953-6205%2803%2900029-3/abstract">"a cautionary tale: the dysfunction of American health care,"</a> published in 2003, I postulated causes of our country's health care malaise based on qualitative interviews with physicians and cases I found that instantiated their concerns. One major concern was about "ill-informed, incompetent, self-interested, or even corrupt leadership." Since then, on Health Care Renewal, we have discussed a large number of cases of such bad leadership. However, most cases have come from news reports which cover only a single incident or small slice of time. The Fortune article on Pfizer covered 10 years of leadership that at least appeared ill informed and of doubtful competence. Given that Pfizer is the world's largest pharmaceutical company this long duration case narrative does underscore our concerns. That such an important health care organization could be so badly lead for so long suggests that our fears about the problems of leadership of large health care organizations were, if anything, understated. As the Fortune article's authors put it: <blockquote>Pfizer is an enterprise with the noble calling of easing pain and curing disease. Yet its leaders spent much of their time in the tawdry business of turf wars and political scheming.</blockquote> When these sorts of sentiments start appearing in business magazines, health care professionals and policy makers ought to realize how overdue are our serious efforts to improve leadership and governance in health care.

10 Years of Pfizer Leadership - "A Saga of Ambition, Intrigue, Backstabbing, and Betrayal"

A remarkable story about mismanagement of health care has appeared in the mainstream media, and most remarkable is that this article in Fo...

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Executives Get Rich Despite Ethical and Legal Questions about For-Profit Hospices

We recently <a href="http://hcrenewal.blogspot.com/2011/07/prepare-them-to-die-for-profit-hospices.html">posted</a> about some shocking allegations suggesting that the for-profit corporations that now dominate hospice care may prey on vulnerable patients to increase their revenues, and may specifically recruit patients who are not terminally ill for hospice, and then neglect to attend to their treatable medical problems.  The post was based on a Bloomberg investigative <a href="http://www.bloomberg.com/news/2011-07-22/preparing-americans-for-death-lets-for-profit-hospices-neglect-end-of-life.html">report</a>. The Bloomberg report focused on two large for-profit hospice providers, Vitas, a subsidiary of Chemed, and VistaCare, a subsidiary of Gentiva. We have repeatedly seen a pattern in numerous other health care organizations, non-profit as well as for-profit: despite questionable corporate behavior that appears to violate the values of health care professionals, executives receive rich compensation overseen by complacent corporate stewards. So, using publicly available information, I compared and contrasted the two for-profit hospice corporations' health care missions, behavior with respect to core values, executive compensation, and board composition. Stated Mission Chemed (including Vitas Hospice Care) <a href="http://www.vitas.com/Aboutus/Values.aspx">Vitas Mission and Values</a> <blockquote>VITAS Values Patients and families come first. We take care of each other. I’ll do my best today and do even better tomorrow. I am proud to make a difference. VITAS Mission We are a growing family of hospices providing the highest quality human services, products and case management to terminally ill and other appropriate patients and their families with measurable advantages for the patient, the family, the medical community, the employee and the stockholder.</blockquote> Gentiva (including VistaCare, part of Odyssey Healthcare) Gentiva's <a href="http://www.gentiva.com/about/">"about us" web page </a>declares: <blockquote>We are committed to clinical excellence and determined to continually raise the bar in home healthcare by setting new industry standards for quality care and personalized service. That’s why thousands of patients every day choose us for their home healthcare needs. </blockquote> Gentiva's <a href="http://www.gentiva.com/hospice/">hospice website </a>declares: <blockquote>Our hospice services allow patients to make the most of each day, at home surrounded by friends and family in a familiar, comfortable environment. Because at Gentiva, we believe that every moment matters. </blockquote> So both organizations affirmed "warm and fuzzy" commitments to put patients first and to quality of care. Behavior Chemmed The Bloomberg article noted that the Vitas subsidiary of Chemed is being sued for elder abuse and wrongful death based on allegations that the company put a patient who did not appear to be terminally ill in hospice care, and then failed to adequately treat the infection that appeared to eventually cause her death. In addition, the <a href="http://media.corporate-ir.net/media_files/irol/72/72704/AR_2010.pdf">2010 Chemed Annual Report</a> noted that the company is now the subject of two ongoing investigations. The first involves: <blockquote>In May 2009, VITAS received an administrative subpoena from the U.S. Department of Justice requesting VITAS deliver to the OIG documents, patient records, and policy and procedure manuals for headquarters and its Texas programs concerning hospice services provided for the period January 1, 2003 to the date of the letter.</blockquote> In addition, <blockquote>In February 2010, VITAS received a companion civil investigative demand ('CID') from the state of Texas Attorney General’s Office, seeking related documents. In September 2010, it received a second CID and a second administrative subpoena seeking related documents.</blockquote> The second involves: <blockquote>In April 2005, the Office of Inspector General ('OIG') for the Department of Health and Human Services served VITAS with civil subpoenas relating to VITAS’ alleged failure to appropriately bill Medicare and Medicaid for hospice services.</blockquote> This is still active, <blockquote>In March 2009, we received a letter from the government reiterating the basis of their investigation.</blockquote> Gentiva The Bloomberg article noted that VistaCare, part of Odyssey Healthcare, which is a Gentiva subsidiary, is being sued by a former employee who alleged that her job was to entice patients who did not have terminal conditions into hospice, and that the company used other unethical tactics to enroll more patients. Also, according to the <a href="http://files.shareholder.com/downloads/GTIV/1338648526x0x456437/CEA1782E-FB2C-4850-A530-9CF06AA6C55B/Gentiva_AR_2010.pdf">2010 Gentiva Annual Report</a>, the company's Odyssey subsidiary is currently operating under a corporate integrity agreement: <blockquote>On July 6, 2006, Odyssey entered into a five-year Corporate Integrity Agreement (“CIA”) with the Office of Inspector General of Health and Human Services. The CIA imposes certain auditing, self-reporting and training requirements that Odyssey must comply with. If Odyssey fails to comply with the terms of its CIA, it could subject us to substantial monetary penalties and/or suspension or termination from participation in the Medicare and Medicaid programs.</blockquote> There are also numerous ongoing investigations and regulatory actions ongoing, including: <blockquote>On February 14, 2008, Odyssey received a letter from the Medicaid Fraud Control Unit of the Texas Attorney General’s office notifying Odyssey that the Texas Attorney General was conducting an investigation concerning Medicaid hospice services provided by Odyssey, including its practices with respect to patient admission and retention, and requesting medical records of approximately 50 patients served by its programs in the State of Texas.</blockquote> Also, <blockquote>On May 5, 2008, Odyssey received a letter from the DOJ notifying Odyssey that the DOJ was conducting an investigation of VistaCare, Inc. ('VistaCare') and requesting that Odyssey provide certain information and documents related to the DOJ’s investigation of claims submitted by VistaCare to Medicare, Medicaid and TRICARE, from January 1, 2003 through March 6, 2008, the date Odyssey completed the acquisition of VistaCare. Odyssey has been informed by the DOJ and the Medicaid Fraud Control Unit of the Texas Attorney General’s Office that they are reviewing allegations that VistaCare may have billed the federal Medicare, Medicaid and TRICARE programs for hospice services that were not reasonably or medically necessary or performed as claimed. The basis of the investigation is a qui tam lawsuit filed in the United States District Court for the Northern District of Texas by a former employee of VistaCare. The lawsuit was unsealed on October 5, 2009 and served on Odyssey on January 28, 2010. In connection with the unsealing of the complaint, the DOJ filed a notice with the court declining to intervene in the qui tam action at this time. The Texas Attorney General also filed a notice of non-intervention with the court. These actions should not be viewed as a final assessment by the DOJ or the Texas Attorney General of the merits of this qui tam action.</blockquote> Also, <blockquote>On January 5, 2009, Odyssey received a letter from the Georgia State Health Care Fraud Control Unit notifying Odyssey that the Georgia State Health Care Fraud Control Unit was conducting an investigation concerning Medicaid hospice services provided by VistaCare from 2003 through 2007 and requesting certain documents</blockquote> Also, <blockquote>On February 2, 2009, Odyssey received a subpoena from the OIG requesting certain documents related to Odyssey’s provision of continuous care services from January 1, 2004 through February 2, 2009. On September 9, 2009, Odyssey received a second subpoena from the OIG requesting medical records for certain patients who had been provided continuous care services by Odyssey during the same time period.</blockquote> Also, <blockquote>On February 23, 2010, Odyssey received a subpoena from the OIG requesting various documents and certain patient records of one of Odyssey’s hospice programs relating to services performed from January 1, 2006 through December 31, 2009.</blockquote> Also, <blockquote>In April 2003, the Company received a subpoena from the OIG. The subpoena sought information regarding the Company’s implementation of settlements and corporate integrity agreements entered into with the government, as well as the Company’s treatment on cost reports of employees engaged in sales and marketing efforts. In February 2004, the Company received a subpoena from the U.S. Department of Justice ('DOJ') seeking additional information related to the matters covered by the OIG subpoena. In early May 2010, the Company reached an agreement in principle, subject to final approvals, with the government to resolve this matter. Under the agreement, the Company will pay the government $12.5 million, of which $9.5 million was recorded as a charge in 2010 with the remaining $3 million covered by a previously-recorded reserve.</blockquote> Also, <blockquote>On July 13, 2010, the SEC informed the Company that the SEC had commenced an investigation relating to the Company’s participation in the Medicare Home Health Prospective Payment System, and, on July 16, 2010, the Company received a subpoena from the SEC requesting certain documents in connection with its investigation. Similar to the Senate Finance Committee request, the SEC subpoena, among other things, focused on issues related to the number of and reimbursement received for therapy visits before and after changes in the Medicare reimbursement system, relationships with physicians, compliance efforts including compliance with fraud and abuse laws, and certain documents sent to the Senate Finance Committee.</blockquote>In addition to the allegations detailed by the Bloomberg article, there are an impressive number of investigations going on.  In addition, Gentiva has already recently settled apparently two different legal actions.  Thus, many questions have been raised about the companies' ethics, and the extent that they really uphold the warm and fuzzy values portrayed by their marketing. Executive Compensation and Board Composition Chemed Based on the <a href="http://media.corporate-ir.net/media_files/irol/72/72704/proxy_2011.pdf">2011 Chemed proxy statement</a>, the company CEO, K J McNamara, got $5,848,230 total compensation in 2010. The four other most highly paid executives got from just over $1 million to over $2.5 million. Mr McNamara's compensation included over $150,000 for use of company aircraft. Other executives had use of the aircraft, of a company apartment, and of a company car, and company paid golf club memberships, and one got over $64,000 in housing costs. None apparently has any background in direct health care. Of the "independent" directors, one, Andrea R Lindell, is now the retired Dean and Professor of the College of Nursing at the University of Cincinnati, and retired Associate Senior Vice President of the Medical Center. She retired in 2011, but has been director of Chemed since 2008. None of other directors apparently has any direct health care background. They include five who are currently or were formerly in financial services, and one attorney. The majority hold or held executive positions at least at the Senior Vice President level for a variety of organizations.The independent directors generally got somewhat over $100,000 in compensation in 2010. Gentiva Based on the <a href="http://files.shareholder.com/downloads/GTIV/1338648526x0xS1193125-11-87507/1096142/filing.pdf">2011 Gentiva proxy statement</a>, the company CEO, Tony Strange, got $5,472,327 in total compensation in 2010.  Three senior vice presidents and "C" level officers got over $1.3, $2.1, and $3.1 million respectively.  One, the Chief Clinical Officer, has a nursing diploma and nursing experience (see management biographies <a href="http://investors.gentiva.com/management.cfm">here</a>.)  No others have apparent experience in direct clinical care. Of the "independent" directors, one, Dr Sheldon M Retchin, is a physician, and is now CEO of the Virginia Commonwealth University Health System and Vice-President for Health Sciences at Virginia Commonwealth University.  None of other independent directors apparently has any direct health care background. The majority hold or held chief executive positions at a variety of different kinds of firms. The independent directors generally got somewhat over $145,000 in compensation in 2010. Thus, despite the fact that the two companies provide direct clinical care to the most vulnerable of patients, their top leadership has very little background in direct patient care.  Only two directors, one of each company, are involved in health care, but their involvement may involved conflicts of interest.  Despite the apparent contrast between the companies' high-minded missions and the ethical questions besetting them, their top executives are compensated at a level sufficient to make them quite wealthy. Summary The pattern repeats again.  Not only has the compensation given to health care leaders got so large that it is per se a cause of increased health spending, but also, and more importantly, such compensation often provides perverse incentives that perpetuate mismanagement, raising costs and lowering quality. This situation appears to be enabled by governance by individuals who are often fellow members of the CEOs' club, and hence who may feel more sympathy with the executives they are supposed to supervise than the stockholders whose financial interests they are supposed to protect, or the public whom the companies' products and services are supposed to benefit. Moreover, these individuals often have conflicts of interest which may mitigate against objective scrutiny of the executives they are supposed to oversee. Finally, these individuals often may come from corporate cultures which do not espouse the values that we in health care are supposed to uphold. (See this <a href="http://hcrenewal.blogspot.com/2010/12/on-interconnectedness-of-leadership-of.html">post</a> and its links for other examples of the sorts of people who are supposed to provide stewardship to health care organizations.) So to reiterate- I strongly believe that there needs to be much more investigation, academic, journalistic, and perhaps legal, of the identity, nature, and culture of the leaders of health care, and their relationships. A few bloggers cannot do it all. Obviously, the anechoic effect mitigates against medical and health care academics looking into their own leaders. However, failing to understand who is leading our march to the brink of health care failure ought not to be something such academics would want on their conscience. Finally, and obviously, health care organizations need leaders that uphold the core values of health care, and focus on and are accountable for the mission, not on secondary responsibilities that conflict with these values and their mission, and not on self-enrichment. Leaders ought to be rewarded reasonably, but not lavishly, for doing what ultimately improves patient care, or when applicable, good education and good research. If we do not fix the severe problems affecting the leadership and governance of health care, and do not increase accountability, integrity and transparency of health care leadership and governance, we will be as much to blame as the leaders when the system collapses.

Executives Get Rich Despite Ethical and Legal Questions about For-Profit Hospices

We recently posted about some shocking allegations suggesting that the for-profit corporations that now dominate hospice care may prey on v...

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"Prepare Them to Die" - For-Profit Hospices as the Real Death Panels

A Bloomberg news investigative <a href="http://www.bloomberg.com/news/2011-07-22/preparing-americans-for-death-lets-for-profit-hospices-neglect-end-of-life.html">report</a> illustrated the adverse effects of having for-profit corporations taking care of patients. Hospice as a Social Movement The corporations in question this time are for-profit hospices. Hospices in general gained a good reputation for improving the quality of life for patients near life's end: <blockquote>Hospice got its start in the 1960s as a social movement. Volunteers, often meeting in schools and church basements, organized care so patients could die at home with loved ones, instead of at the hospital laced with tubes. Dame Cicely Saunders, the pioneering English physician who opened St. Christopher’s Hospice in London in 1967, fought traditional methods of unconditional resistance to death, and brought the concept to U.S. shores. </blockquote> Hospices Become Commercial Subsequently, in the US, every part of health care has become commercialized, including hospices: <blockquote>hospice care has evolved from its charitable roots into a $14 billion business run mostly for profit,</blockquote> In addition, <blockquote>Of the hospices with two- thirds or more of their patients in nursing homes, 72 percent are for-profits. </blockquote> Commercial Hospices Expand Their Markets: "Stop All the Live Discharges" Hospices were originally meant to care for patients near death, however commercial hospices sought to expand their markets: <blockquote>Providers have been accused of boosting their revenues with patients who aren’t near death and not eligible for hospice -- people healthy enough to live a long time with traditional medical care. </blockquote> In particular, <blockquote>Two-thirds of patients in hospices run for profit have general diagnoses like 'failure to thrive' and 'debility' compared to half in non-profits, which cater more to faster- killing conditions like cancer, a Harvard University study found earlier this year. Patients stay an average of 98 days in for- profit hospices versus 68 days at non-profits, which have a 0.2 percent profit margin, according to Medicare. The margin at for- profits is 50 times higher at 10 percent. </blockquote> My comment is that "failure to thrive," and "debility" are not real diagnoses. At best, they are merely general descriptions of patients' conditions. Physicians have a hard enough time predicting the life span of patients with chronic, ultimately terminal, well-defined diseases, like specific types of metastatic cancer. How anyone can accurately predict the survival of patients who fail to thrive or exhibit debility is beyond me (and I have spent many years assessing the accuracy of physicians' predictions of a variety of outcomes, including the survival of critically ill patients, references provided on request). So, <blockquote>To be eligible for Medicare hospice coverage, a person must have a prognosis of six months or less to live, certified by two doctors. Yet 20 percent of hospice patients live beyond that term, with their providers receiving government checks via recertifications that can go on indefinitely. </blockquote> One case cited by the Bloomberg article includes allegations that a for-profit hospice held on to patients even though it had become clear they were not at the end of life. <blockquote>An executive of a hospice owned by Harden Healthcare LLC emailed managers in 2008 urging them to 'stop all these live discharges' of patients to keep enrollments high, according to a civil fraud complaint by the Justice Department in federal court in Kansas City, Kansas. Company spokeswoman Meg Meo said the alleged events occurred before Austin, Texas-based Harden owned the hospice. A whistleblower lawsuit brought by a former social worker for hospices run by Atlanta-based Gentiva Health Services Inc. (GTIV) said her job was to talk people who weren’t dying into believing that they were. The allegations predated Gentiva’s ownership of the chain, spokesman Scott Cianciulli said. Gentiva’s Odyssey hospice unit faces investigations by HHS’s Office of Inspector General and the state of Georgia, according to regulatory filings. The company, which is the second-largest hospice provider, is cooperating with investigators, Cianciulli said. </blockquote> Furthermore, <blockquote>Enrolling patients, retaining them as long as possible, and controlling costs are the top priorities at for-profit hospices, according to former and current employees interviewed by Bloomberg News. To increase revenues, hospices tie employee bonuses to enrollment, pay kickbacks to patients and referral sources, and use false diagnoses to admit ineligible patients, according to whistleblower, or qui tam, suits against three chains filed under the False Claims Act, which allows plaintiffs to share in any financial recovery for the government. </blockquote> The Bloomberg report contained an even more chilling case: <blockquote>One of the suits was filed by Misty Wall, a former social worker at Gentiva’s VistaCare hospice unit who said she was fired in 2005. Wall was assigned to convince people who weren’t dying that they were, she said in an interview. Wall, now an assistant professor of social work at Boise State University in Idaho, said one woman broke down in tears when Wall suggested her father was dying from renal failure. The man’s own doctor had declined to recommend hospice, prescribing dialysis instead. Wall said VistaCare sent her to the daughter to change the family’s mind. 'I gave her this huge emotional blow, then sat there and soothed her,' Wall said. 'Of course she signed.' Wall’s lawyer, Loren Jacobson, said, 'It wasn’t her idea. She did it because that was what was expected of her as part of her job, and when she refused to do it anymore and complained, she was fired.' Jacobsen called her client 'an extremely good soul stuck in a bad situation.' Wall’s lawsuit, filed in federal court in Dallas, accuses VistaCare of paying illegal kickbacks to patients and nursing- home employees who referred residents to hospice. It also accuses VistaCare of doctor shopping to get patients certified. As part of its sales pitch, the hospice told prospects, 'The VistaCare Foundation is here to make all your dreams come true,' Wall said. 'We used it as a selling feature.' </blockquote> This case is particularly disturbing because patients with kidney failure actually may have quite a long life expectancy if they do not have serious co-morbid disease. Patients can be sustained on dialysis, and may be eligible for kidney transplants. Note also that in 2009 we <a href="http://hcrenewal.blogspot.com/2009/01/southerncare-settles.html">discussed</a> a case of SouthernCare, a for-profit hospice company which settled (for $24.7 million) a case alleging that it had enrolled patients who were not likely to die in six months to increase its revenue, further suggesting that this is a widespread problem among for-profit hospices. Limiting Care: "Prepare Them to Die"  So I am actually surprised that only 20% of hospice patients survived more than six months. However, putting patients who were not already near the end of life in hospice may mean denying potentially life saving care to patients who had the potential to live for at least a while: <blockquote>Providers have been accused of boosting their revenues with patients who aren’t near death and not eligible for hospice -- people healthy enough to live a long time with traditional medical care. In hospices, patients give up their rights to 'curative' measures because they are presumed to be futile. 'By admitting these folks to hospice, they are denied access to routine medical and rehabilitative care that they need to extend and improve their lives,' said Cristen Krebs, executive director of Catholic Hospice of Pittsburgh, a non- profit. 'A vulnerable and voiceless population is preyed upon for money.' </blockquote> So if "curative" measures are not used for patients who started with relatively favorable prognoses, but have developed new problems, guess what may happen? The Bloomberg article opened with another distressing case: <blockquote>With his mother wheezing and losing consciousness in a California nursing home, Robert Rogers wanted her moved to a hospital. Vitas Healthcare, her hospice provider, said that wasn’t in the plan. 'Our job is not to prepare them to live,' a Vitas nurse told Rogers on the phone, according to a deposition he gave in April. 'Our job is to prepare them to die.' Rogers called 911. At the hospital, an emergency-room doctor removed 11 maggots from an open wound on his mother’s big toe. Five days later, in September 2008, 91-year-old Thelma Covington died of a sepsis infection brought on by gangrene in her toe and poor circulation, her death certificate said. Rogers is suing Vitas, a unit of Cincinnati-based Chemed Corp. (CHE), in a California court for alleged elder abuse and wrongful death. Vitas, the biggest company in hospice care, has denied negligence and said that Covington and Rogers knew the risk involved in entering hospice. </blockquote> The article elaborated on Ms Covington's initial condition, and how she was enrolled in hospice despite of it: <blockquote>Vitas admitted Thelma Covington to hospice in November 2007, taking over her medical care at Willow Pass Healthcare Center in Concord, California. Her son, Robert Rogers, who had Covington’s power of attorney, said a Vitas salesperson called him and offered help so he wouldn’t have to be there so much. Rogers said he didn’t know he was giving up rights to curative care when he signed his mother up for hospice, and wouldn’t have done so if he did. He said he 'didn’t read the fine print' and gave his consent because he was told there would be more people looking after her, taking a load off him. He described her as alert on his visits, doing crossword puzzles, discussing movies and enjoying the Kentucky Fried Chicken he brought her. The Vitas admission assessment for Covington said she was terminally ill with 'debility, unspecified' and had various other conditions, including dementia, congestive heart failure and diabetes. Two doctors certified that she had less than six months to live. 'She didn’t have no dementia,' Rogers said. No one said anything about his mother’s life expectancy, according to Rogers, 75, a retired longshoreman and Covington’s only child. For 10 months, Medicare paid Vitas $199 a day to provide palliative care for her at Willow Pass, bills show. </blockquote> Obviously, Ms Covington had more than 10 months to live. There is a major question whether she had anything resembling dementia. As noted earlier, "debility" is not a real diagnosis and does not imply a specific life-span. The details of how the hospice allegedly failed to treat a new condition which was eventually fatal for Ms Covington are gut-wrenching: <blockquote>On July 9, 2008, two months before her death, a Vitas doctor ordered a two-week cleansing and ointment treatment for an open wound on Covington’s toe, medical records show. The treatment was never carried out because the plan wasn’t placed in the 'treatment administrative record' that the nursing home used to implement orders, according to a deposition by Jennifer Bernal, one of Covington’s Willow Pass nurses. She called it 'a serious nursing error.' Nevertheless, Vitas 'discontinued' the toe treatment on July 28, according to notes written by one of its nurses, who added 'course complete.' Two days later, Covington was in agony from the wound; a Vitas nurse assessed her pain at level 10 on a 10-point severity index, records show. She was given morphine and a sedative. On Aug. 25, a nursing home employee noted in a 'skin condition report' that the toe was scabrous, swollen, contained pus and had developed black 'eschar' -- dead tissue that’s a sign of gangrene. 'Hospice notified,' the report said. Vitas’s notes on the toe for Aug. 25 and Aug. 27 again said 'interventions effective, continue plan.' On Sept. 5, a Vitas nurse described 'soft black eschar' on the toe. By then, Covington was in such pain from the wound that she lay moaning, 'Lo[r]d have mercy,' a Vitas nurse noted. On the morning of Sept. 7, a Vitas nurse discovered the gangrene and maggots, conferred with a Vitas doctor, washed the toe and wrapped it in plastic, according to nursing notes. Rogers said in his deposition that he learned of the maggots later that day from the emergency-room doctor. </blockquote>Summary There has been a lot of blather from politicians in the US about "death panels" in debates about health care reform. Many such politicians seem worried that the US government has or will have death panels under the new health care reform legislation. We have criticized that legislation for not addressing many important health care problems. No one, however, has convingly demonstrated how its provisions would convene "death panels." Wendell Potter argued in his book, <a href="http://wendellpotter.com/deadlyspin/">Deadly Spin</a>, (see this <a href="http://hcrenewal.blogspot.com/2011/02/wendell-potters-deadly-spin.html">post</a>) that for-profit insurance companies had their own "death panels." The Bloomberg article strongly suggests that for-profit hospices may also act like death panels. In search of more revenue, for-profit hospices may enroll patients who are not at the end of life, but then provide them only "comfort care," so that if they develop new conditions that are treatable, they are likely to die in the absence of treatment. I am waiting for the politicians who so enthusiatically condemned the supposed "death panels" to be found in health care reform legislation to condemn for-profit hospices for behaving like death panels.  In my humble opinion, the cases discussed above are the strongest argument yet that we need to reconsider our headlong rush to turn health care, particularly the direct care of patients, over to relatively unregulated, for-profit corporations. The cases above suggest that the pursuit of revenue ahead of patients' welfare by such organizations may lead to sick and dead patients. I cannot see how for-profit direct patient care can be made safe for patients without intense government regulation. If any of those vocal advocates of "free market" health care (in the absence of any good explanation of how health care can ever be an ideal free market, see this <a href="http://hcrenewal.blogspot.com/2010/08/how-fallacy-of-perfect-health-care.html">post</a>) can explain to me how for-profit hospices can be made safe for patients without such regulation, I would welcome their attempts. Meanwhile, this just calls out for legislative and legal investigation, and urgent policy changes.

"Prepare Them to Die" - For-Profit Hospices as the Real Death Panels

A Bloomberg news investigative report illustrated the adverse effects of having for-profit corporations taking care of patients. Hospice as...

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