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What Goes Up - Non-Profit Hospital CEO Compensation Continues to Defy Gravity

We have frequently discussed the disconnect between incentives, particularly <a href="http://hcrenewal.blogspot.com/search/label/executive%20compensation">total compensation</a>, given to the leaders of health care organizations and their roles, or lack thereof, in improving the health care of their patients or the public. One measure of that disconnect is how leaders' pay continues to defy gravity while the economy continues to suffer, and health care dysfunction continues to fester. In particular, total compensation given to CEOs of ostensibly not-for-profit hospitals and hospital systems is increasingly passing the magic $1 million mark. A round up including two recent articles and others from the last four months that we have not discussed before revealed more "million dollar babies" amongst the ranks of these leaders.  (Note that most of the data came from 2009, not a particularly good year for the economy as a whole.) UA Healthcare, Phoenix area, Arizona - $1.7 million As <a href="http://azstarnet.com/news/local/govt-and-politics/article_d29148ec-9f3b-56c7-8ab0-8847a71bf68e.html">reported</a> by the Arizona Daily Star in April, "UA Healthcare interim CEO Kevin Burns received a financial package worth about $1.7 million when he left his post last week, the chairman of the UA Healthcare board said. Under terms of his contract, Burns qualified for two years' base pay plus benefits when he left his position. His annual base pay as interim CEO was $620,000, said Granger Vinall, UA Healthcare board chair." Baptist Health, Jacksonville area, Florida - $1.2 million <a href="http://jacksonville.com/news/health-and-fitness/2011-05-31/story/first-coast-hospital-ceos-pay-complex-formula">According to </a>the Florida Times-Union in May, Hugh Green, CEO of the Baptist Health system, made $1.2 million. Florida Hospital Waterman, Orlando area, Florida - $1.7 million As <a href="http://articles.orlandosentinel.com/2011-04-08/news/os-lk-lauren-ritchie-hospital-adminis20110408_1_waterman-employees-hospital-district-three-hospitals">reported</a> by the Orlando Sentinel in May, in 2009, Ken Mattison, president and CEO of Florida Hospital Waterman had total compensation of $1.7 million, which included "a lump sum pay-out of pension monies." Multiple hospitals, Boston, Massachusetts - $1.2 - $2.1 million <a href="http://articles.boston.com/2011-08-16/business/29893104_1_compensation-teaching-hospital-top-executives">According to </a>an August Boston Globe article, in 2009, reported salaries of CEOs at Boston hospitals including: for the late CEO of Partners HealthCare, "then-chief executive James J. Mongan earned a total of $2.1 million, including salary, bonus, and other compensation"; for CEOs of two Partners hospitals, "current Partners chief executive, Gary L. Gottlieb, earned $1.6 million in 2009 as president of Brigham and Women’s, the same amount he got in 2008. Peter L. Slavin, president of Mass. General, earned $1.4 million in 2009, also the same as the year before"; "Elaine S. Ullian, former chief executive of Boston Medical Center, a Boston University teaching hospital, drew total compensation of $1.8 million in 2009"; and "Tufts Medical Center paid its chief executive, Ellen M. Zane, about $1.2 million in 2009, equal to her 2008 compensation." Multiple hospitals, mid-west US - $1.8 - $6 million <a href="http://www.medcitynews.com/2011/08/nonprofit-hospital-ceo-salaries-in-the-midwest-whos-on-top/">Per</a> MedCity News in August, "Nine percent of nonprofit hospital chief executives in the Midwest are paid more than $1 million a year, according to a new report." The top 20 CEOs in terms of compensation, based on the latest (2008 or 2009) figures were: <blockquote>Randall O’Donnell; Children’s Mercy Hospital and Clinics; Kansas City, Missouri: $6 million Javon Bea; Mercy Health System; Janesville, Wisconsin: $4.5 million James Skogsbergh; Advocate Health Care; Oak Brook, Illinois: $4 million Dean Harrison; Northwestern Memorial Hospital; Chicago, Illinois: $3.4 million Richard Pettingill; Allina Health System; Minneapolis, Minnesota: $3.3 million Joseph Swedish; Trinity Health; Novi, Michigan: $2.7 million Lowell Kruse; Heartland Regional Medical Center; St. Joseph, Missouri: $2.5 million Steven Lipstein; BJC Health System; St. Louis, Missouri: $2.2 million Kevin Schoeplein; OSF Healthcare System; Peoria, Illinois: $2.2 million Thomas Sieber; Genesis Healthcare System; Zanesville, Ohio: $2.1 million Paul Pawlak; Silver Cross Hospital; Joliet, Illinois: $2 million Toby Cosgrove; Cleveland Clinic; Cleveland, Ohio: $1.9 million William Petasnick; Froedtert Memorial Hospital; Milwaukee, Wisconsin: $1.9 million Fred Manchur; Kettering Medical Center; Dayton, Ohio: $1.9 million Patrick Magnon; Children’s Memorial Hospital; Chicago, Illinois: $1.8 million Kenneth Hanover; University Hospital; Cincinnati, Ohio: $1.8 million J. Luke McGuinness; Central Dupage Hospital; Winfield, Illinois: $1.8 million Daniel Evans Jr.; Clarian Health Partners; Indianapolis, Indiana: $1.8 million James Madera; University of Chicago Medical Center; Chicago, Illinois: $1.8 million James Anderson; Cincinnati Children’s Hospital Medical Center; Cincinnati, Ohio: $1.8 million</blockquote> Where All CEOs Are Above Average A repeated theme of these articles was that CEO pay continues to rise because those who set it often seem to believe that their CEOs, like the children of mythical Lake Woebegone, are above average, or at least that they are never below average. For example, in the Arizona Star article we learn: <blockquote>UMC Corp. raised Burns' pay after consulting with a third-party compensation and benefits expert, and the salary is in approximately the 25th percentile when compared to like institutions on a national basis, [UA Healthcare board of trustees chair Granger] Vinall said. He said that UA Healthcare board's approved policy is to pay in the 50th percentile</blockquote> In addition, in the [Jacksonville, FL] Times-Union article we find this about Baptist CEO Hugh Greene: <blockquote>He deserves more because he doesn't just manage one hospital, said Robert Hill, chairman of the Baptist board. Greene oversees a complex health system that includes four adult hospitals, a children's hospital, a large physician network and other subsidiaries. 'We think he's an exceptional CEO,' said Hill, CEO of sales and marketing company Acosta.</blockquote> That article also included this summary: <blockquote>hospital boards, which usually consist of community heavy-hitters and local business leaders, often rely on consultants to help set CEO pay. 'The consultants survey the field, looking at salaries of CEOs at nonprofit and for-profit institutions, see what the 50th percentile is and then in many cases offer 20 percent or 30 percent above to qualified candidates,' Maggie Mahar of the nonpartisan think tank the Century Foundation wrote in a recent blog. There's a problem with this system, she added: 'Mathematically, this keeps the 50th percentile moving up, and what the IRS considers 'reasonable' also moves up.'</blockquote> Furthermore, the report on mid-west CEOs in the MedCity News provided this opaquely worded corroboration: <blockquote>'It seems there is a possibility that when executive compensation firms are hired by boards and/or CEOs to provide multiple examples of comparable compensation, the firms may report out the higher end of the comparables,' said Pamela Knecht, president of Accord Limited, a Chicago-based healthcare governance consulting firm, in the report.</blockquote> Summary I am willing to admit that it may make sense to set compensation for hospital (and other health care) leaders in the context of what the population of such leaders are paid.  However, it makes no logical sense for the boards of trustees who set non-profit hospital CEOs' pay to deny the possibility that some of these CEOs must be below average.  Yet boards never seem to allow that their CEOs could be below average at the times when the pay decisions are made.  The only times we seem to hear about less than average CEOs are when their performance has been publicly embarrassing enough for them to lose their jobs, if not go to jail.  Even in such situations, the bad behavior never seems to have been foreshadowed in any way, particularly not by previous pay cuts (see <a href="http://hcrenewal.blogspot.com/2011/08/best-and-brightest-behaving-badly.html">this post</a> for recent examples.)  So why do hospital (and other health care) boards seem to deny the possibility that their CEOs may be below average, or worse?  As we have <a href="http://hcrenewal.blogspot.com/2010/07/where-no-hospital-ceos-are-below.html">discussed before</a>, perhaps it is due to ego bias.  Judgment and decision psychologists have shown that people often overestimate their own performance, or the performance of those with whom they are affiliated.  Also, the boards of trustees who are supposed to steward hospitals and other health care non-profits are often made up of current or retired CEOs or other top leaders of other organizations.  They may overestimate the performance of fellow members of the C-level officers' guild, or be afraid to criticize it. In any case, we are seeing more and more flagrant examples of the perverse incentives existing in health care, especially as given to health care leaders, resulting in worsening accountability and increasing sense of entitlement.  So I say again....  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.

What Goes Up - Non-Profit Hospital CEO Compensation Continues to Defy Gravity

We have frequently discussed the disconnect between incentives, particularly total compensation , given to the leaders of health care organi...

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The Best and the Brightest Behaving Badly

To err is human, and any group of humans can be expected to include those who stray.  However, the constant spin that surrounds most top leaders of health care organizations seems to suggest that these people are different.  In particular, the lavish compensation given leaders of health care organizations is often justified by claims that those in leadership positions are the best and the brightest.  Catching up after a vacation afforded me the opportunity to go through a large volume of news stories, leading to a collection of those from the last year that showed the contrast between such compensation and behavior that was far from the "best and the brightest. " North Memorial Health Care CEO Pleads Guilty to Engaging in Prostitution As <a href="http://blogs.citypages.com/blotter/2011/02/david_cress_guilty_prostitution.php">reported</a> by the Minneapolis Star-Tribune, after David Cress "was arrested Sept 1 [2010] during a vice operation."  The plea bargain will allow that "the charge against him will be vacated in a year." According to the health care system's <a href="http://www.guidestar.org/FinDocuments/2009/410/729/2009-410729979-069d9e95-9.pdf">2009 IRS form 990</a>, Mr Cress total compensation was then $984,412.  In addition, that year he received a SERP [ supplemental executive retirement plan] payment of $3,393,712. Childrens' Hospital of Philadelphia Chief Counsel Pleads Guilty to Theft As <a href="http://articles.philly.com/2011-07-13/news/29769347_1_guilty-today-fake-invoices-thefts-first">reported</a> by the Philadelphia Inquirer: <blockquote>Roosevelt Hairston Jr., 46, the former general counsel of Children's Hospital of Philadelphia, pleaded guilty today to stealing $1.7 million from the institution. He could face six or more years in federal prison.</blockquote> Although his attorney claimed that Hairston is not "a greedy person," he did live "in a 7,000-square-foot home."  The hospital's <a href="http://www.guidestar.org/FinDocuments//2010/231/352/2010-231352166-073cf591-9.pdf">2009 IRS form 990</a> showed that Hairston's total compensation then was $602,982. Franciscan Hospital for Children CEO Dismissed for Financial Irregularities As <a href="http://articles.boston.com/2011-07-16/business/29782055_1_severance-franciscan-hospital-largest-hospitals">reported</a> by the Boston Globe, <blockquote>The board of Franciscan Hospital for Children in Boston, one of the country’s largest hospitals for severely disabled children, has fired its longtime chief executive, Paul J. DellaRocco, citing financial irregularities. Board chairman Robert Needham said yesterday in written comments to the Globe that DellaRocco was 'inappropriately submitting and documenting expenses.' 'This type of behavior is clearly at odds with both our policies and our nonprofit mission,' he said. 'We therefore took proactive steps to remove him from the position.'</blockquote> This seems worse because of the hospital's difficult financial position: <blockquote>Franciscan, which has relied on donations and state Medicaid funding to cover its costs for most of its 60-year history, had struggled financially in recent years. In 2009, the hospital laid off 40 people, or 10 percent of its workforce, and asked all employees, including DellaRocco, to take a 2 to 3 percent pay cut.</blockquote> Nonetheless, "the hospital had loaned DellaRocco $150,000 a year earlier to help him finance construction of a retirement home on the Caribbean island of St Martin...." Furthermore, findings released after divorce litigation revealed DellaRocco's lavish lifestyle apparently at the hospital's expense: <blockquote>DellaRocco owns a company, Haelen Health Systems Inc., which has a management contract with Franciscan. He used Haelen’s assets to pay for many of his personal expenses, including entertainment and interest on his personal loan from Franciscan, according to Judge Dorothy M. Gibson of Middlesex Probate and Family Court in her findings of fact in the divorce. He and his wife invested more than $1.8 million in the St. Martin villa, much of it coming from Haelen, the judge wrote. In the divorce, Gibson noted the 'upper middle-class lifestyle' the DellaRoccos enjoyed. They honeymooned for a month in Tahiti, Thailand, Bali, Singapore, and Australia. He furnished their $950,000 Weston home with more than $85,000 in furniture, jewelry, electronics, and antiques. DellaRocco’s compensation from Franciscan was $225,000 in the fiscal year that ended in September 2009, according to the hospital’s most recent filings with the Massachusetts attorney general’s office. His total income, including wages from the hospital, capital gains, and profits from his company, was about $674,000 in 2007 and about $348,000 in 2008.</blockquote> Slidell Memorial Hospital CEO Fired After Second DWI Arrest As <a href="http://www.nola.com/northshore/index.ssf/2011/07/slidell_memorial_hospital_ceos.html">reported</a> by Nola.com, <blockquote>Slidell Memorial Hospital's chief executive officer lost his job Thursday after a recent drunken driving arrest, his second in six years. The nine members of the public, not-for-profit hospital's board of commissioners fired Robert Hawley Jr. at the end of a regular public meeting held at a cancer treatment complex he helped build. Immediately after his fate was decided, Hawley left the room silently, rode an elevator to the bottom floor, climbed into the passenger seat of a sport-utility vehicle waiting for him in the parking lot and drove off. 'Mr. Hawley's ... arrest ... made this decision necessary,' board Chairman Larry Englande said. 'As a community hospital, we insist upon the highest standards of care for the patients and families we serve.' 'We require that our physicians, nurses, employees and management team live up to those high standards. We must expect no less from our chief executive officer.'</blockquote> The account of his arrest was as follows: <blockquote>On the day he was jailed, Hawley drove a blue, convertible BMW past crossover No. 1 near the end of the northbound Causeway about 4 a.m. A bridge police officer reportedly noticed him weaving in and out of his lane. The officer got behind Hawley, but Hawley allegedly changed lanes and accelerated to about 80 mph, or 15 mph over the speed limit, still swerving, bridge general manager Carlton Dufrechou has said. The officer turned his patrol lights on and pulled over Hawley immediately after they exited the Causeway. Hawley had bloodshot eyes and the smell of alcohol on his breath, the officer reported. He also allegedly swayed when he got out of the car, told the officer he was going home after 'having a couple of beers' on the south shore and performed poorly in a field sobriety test, Dufrechou said Thursday. Hawley underwent a breath test. Although his precise blood-alcohol level has not been publicized, the test indicated that 'he was impaired,' or over the state's limit of 0.08, Dufrechou added. It was Hawley's second DWI arrest since 2005. A state trooper pulled him over on the early morning of March 13 that year for supposedly driving left of center on U.S. 190 south of Interstate 12 near Mandeville. State Police alleged Hawley had an open alcoholic beverage in his car. He submitted to a breath test, registered 0.124 and spent several hours in jail. Court records do not show how the case was disposed of. Hawley has declined to discuss it.</blockquote> I cannot find any public record of Mr Hawley's compensation. Summary As noted earlier, we are all human, and we are all prone to failings.  That health care organizational executives sometimes are also prone to failings should not be news.  It is only because their fawning public relations departments and cozy boards have insisted they have no failings, which is why they are paid so much more than most of their dedicated employees who actually care for patients. We should not expect health care leaders to be perfect.  However, we also should not award them power and pay as if they were.

The Best and the Brightest Behaving Badly

To err is human, and any group of humans can be expected to include those who stray. However, the constant spin that surrounds most top lea...

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A "safe" technology? Factors contributing to an increase in duplicate medication order errors after CPOE implementation

An article "<a href="http://jamia.bmj.com/content/early/2011/07/28/amiajnl-2011-000255">Factors contributing to an increase in duplicate medication order errors after CPOE implementation</a>" by Wetterneck et al. appeared recently in JAMIA (<cite><abbr class="slug-jnl-abbrev" title="Journal of the American Medical Informatics Association">JAMIA</abbr> doi:10.1136/amiajnl-2011-000255).</cite> It is not available free, but the questions I want to raise are valid just from the abstract available free at the above link: <blockquote><div id="abstract-1" class="section abstract"> <h2 style="font-weight: bold;">Abstract</h2> <div id="sec-1" class="subsection"> Objective To evaluate the incidence of duplicate medication orders before and after computerized provider order entry (CPOE) with clinical decision support (CDS) implementation and identify contributing factors. </div> <div id="sec-2" class="subsection"> Design CPOE with duplicate medication order alerts was implemented in a 400-bed Northeastern US community tertiary care teaching hospital. In a pre-implementation post-implementation design, trained nurses used chart review, computer-generated reports of medication orders, provider alerts, and staff reports to identify medication errors in two intensive care units (ICUs). </div> <div id="sec-3" class="subsection"> Measurement Medication error data were adjudicated by a physician and a human factors engineer for error stage and type. A qualitative analysis of duplicate medication ordering errors was performed to identify contributing factors. </div> <div id="sec-4" class="subsection"> Results Data were collected for 4147 patient-days pre-implementation and 4013 patient-days post-implementation. Duplicate medication ordering errors increased after CPOE implementation (pre: 48 errors, 2.6% total; post: 167 errors, 8.1% total; p<0.0001). Most post-implementation duplicate orders were either for the identical order or the same medication. Contributing factors included: (1) provider ordering practices and computer availability, for example, two orders placed within minutes by different providers on rounds; (2) communication and hand-offs, for example, duplicate orders around shift change; (3) CDS and medication database design, for example confusing alert content, high false-positive alert rate, and CDS algorithms missing true duplicates; (4) CPOE data display, for example, difficulty reviewing existing orders; and (5) local CDS design, for example, medications in order sets defaulted as ordered. </div> <div id="sec-5" class="subsection"> Conclusions Duplicate medication order errors increased with CPOE and CDS implementation. Many work system factors, including the CPOE, CDS, and medication database design, contributed to their occurrence. </div></div></blockquote> Duplicate orders can result in over-medication, failure to discontinue, or other medication errors if not caught. They by definition increase risk. The questions are simple: Considering that this was a "Northeastern US community tertiary care teaching hospital", not a small hospital in a remote town somewhere lacking in HIT experience, and that "duplicate medication order errors increased with CPOE and CDS implementation", is CPOE: <ul><li>A safe technology, in a practical sense in the complex clinical setting (with complexities that are '<a href="http://www.ctlab.org/documents/Hiding%20in%20plain%20sight.pdf">Hiding in Plain Sight</a>'), in 2011?</li><li>A technology ready for sanction-enforced national rollout?</li></ul> I leave it to the reader to decide. -- SS<cite> </cite>

A "safe" technology? Factors contributing to an increase in duplicate medication order errors after CPOE implementation

An article " Factors contributing to an increase in duplicate medication order errors after CPOE implementation " by Wetterneck e...

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From a Senior Clinician Down Under: Anecdotes and Medicine, We are Actually Talking About Two Different Things

<div style="font-family: arial;">A poster who wishes to remain anonymous, a Senior Clinician in the state of Victoria, Australia, added this comment to my March 2011 post on 'anecdotes.' (That post was entitled "<a href="http://hcrenewal.blogspot.com/2011/03/australian-ed-ehr-study-putting-lie-to.html">Australian ED EHR Study: An End to the Line "Your Evidence Is Anecdotal, Thus Worthless?</a>".)</div><div style="font-family: arial;">He makes a critical point I think has gotten lost in the HIT domain (emphases mine): </div><blockquote dir="ltr" style="font-family: arial; margin-right: 0px;"><div dir="ltr"> </div><div dir="ltr"> </div><div dir="ltr"> Anonymous <a href="http://hcrenewal.blogspot.com/2011/03/australian-ed-ehr-study-putting-lie-to.html?showComment=1313458003470#c4442262074669998129">August 15, 2011 9:26:00 PM EDT</a> said... Anecdote and Medicine. We are actually talking about two different things here. 1. Anecdotal reporting of a new and potentially exciting finding in Medicine is NEVER a reason to widely implement a new treatment or procedure. It represents the lowest category of evidence in any systematic review In any orthodox system of medicine in the developed world a new intervention would not be ratified or re-imbursed without EXTENSIVE study in Randomised trials - ie the mandatory three phase trial arrangement for new drugs. 2. Anecdotal reporting of side effects/failure for an implemented treatment is a crucial part of any risk management strategy within a healthcare setting. Individual incident reporting of harmful events AND near misses is crucial to help organisations (and regulatory agencies) understand where risks to patients and staff are to be found. A root cause analysis can then be undertaken and corrective measures introduced and their subsequent impact assessed. The process of 'closing the audit loop' is required or no reduction in risk can be verified. This is separate from the regular audit cycle which each Department should apply to aspects of its work, usually reviewing a particular intervention in rotation. In the above debate the pro e-Health lobby find themselves mis-interpreting both definitions. They support the positive anecdotes for the adoption of Electronic Health Records WITHOUT proper randomised evidence being available and they decry the anecdotes of negative experiences of implemented systems that in reality represent episodes of incident reporting. It appears the over-exuberant proponents of e-Health in general and for everything, need to attend revision courses in research methodology and risk management... [a fascinating observation - ed.] nb Irony of irony; Victoria now has State-wide implementation of risk management software which for all healthcare staff is the obligatory reporting mechanism for all incidents and near-misses. The system is so user unfriendly and time demanding virtually none of the busy hospital doctors I have spoken to access the system, even though 'training' has been undertaken. The system has been widely condemned at our Medical Staff Committee. Victoria has recently congratulated itself for a fall in annual number of critical incidents occurring in public hospitals! I will leave it to you to work out how such a positive risk management statistic could be generated in a healthcare system working near capacity with increasing year on year demand for its services...</div></blockquote> Per these observations: A critical distinction that seems to have become lost, even among the Medical Informatics academic elite (see, for instance, my Sept. 2010 post "<a href="http://hcrenewal.blogspot.com/2010/09/dangers-of-critical-thinking-in.html" style="font-family: arial;">The Dangers of Critical Thinking in A Politicized, Irrational Culture</a>"), is the distinction between research observations on the one hand, and risk management-relevant incident reports on the other. It seems a form of erroneous thinking or logical fallacy. The lost distinction between research methods and risk management methods, that require very essential, very different consideration of "anecdotes", and the conflation of the two types of "anecdotes", are brilliant observations. Finally, the loss of consideration of the distinctions between the two different types of "anecdotal reporting" is part of what I have termed the lack of the rigor of medicine itself in HIT. -- SS

From a Senior Clinician Down Under: Anecdotes and Medicine, We are Actually Talking About Two Different Things

A poster who wishes to remain anonymous, a Senior Clinician in the state of Victoria , Australia, added this comment to my March 2011 post ...

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Why bankers need to stick to banking, and keep their profound lack of knowledge of biomedicine and Medical Informatics to themselves

<div style="text-align: center;">[Note: this post is very rich with hyperlinks. To fully understand the post, at least open the hyperlinks in a separate window and browse their material - ed.] </div> In April 2011 I referenced a 2007 comment about health IT ROI, by then-Congressional Budget Office (CBO) head Peter Orszag, in a post entitled "<a style="font-weight: bold;" href="http://hcrenewal.blogspot.com/2011/04/medicaremedicad-cuts-spend-money-on.html">Medicare/Medicaid Cuts? Spend Money on Patients - Not Computer Experiments</a>": <blockquote>... More on purported cost savings - Peter Orszag, former head of the Congressional Budget Office, said the use of electronic health records, without a major change in health care delivery, "would not significantly reduce overall health care costs" <a href="http://www.ihealthbeat.org/articles/2007/11/14/budget-office-downplays-ehrs-effect-on-reducing-health-costs.aspx?topic=ehrs%20and%20phrs">in the agency's 2007 report</a> on long-term health care spending. He also said that according to data from the report, the return on investment for EHR's "is not going to be as substantial as people think." The CBO concluded that predictions of cost savings from EHR's relied on "overly optimistic" assumptions and said much is unknown about the potential impact of health information technology. [That is, it is an experimental technology - ed.] Mass savings from health IT is an assertion that is both unproven and highly unlikely in my view.</blockquote> Mr. Orszag is now Vice Chairman of Global Banking at Citigroup. He seems to have changed his tune somewhat. In an Aug. 16, 2011 piece in Bloomberg entitled "<a style="font-weight: bold;" href="http://www.bloomberg.com/news/2011-08-17/health-care-prognosis-better-with-digital-law-commentary-by-peter-orszag.html">Health Care Prognosis Better With Digital Law: Peter Orszag</a>" he opines: <blockquote> Even with the all-too- depressing illustrations of political paralysis we’ve seen recently, government can still act to improve our lives. A good case in point: The U.S. health sector is rapidly digitizing, and federal legislation from early 2009 , passed well before the health-care reform act, is an important reason why. </blockquote> He refers to the Health Information Technology for Economic and Clinical Health a.k.a. HITECH Act embedded in the 'economic stimulus' ARRA bill. <blockquote>... Partners HealthCare has used its health IT to be more selective about which patients should have diagnostic imaging tests, such as MRIs and CT scans. The cost to Medicare for imaging tests nationwide roughly doubled from 2001 to 2009. And such tests are not only expensive but potentially dangerous. Frequently imaged patients face an increased risk of cancer because of exposure to excessive radiation. [That risk is not very large; on the other hand, insufficiently imaged patients are playing the "slot machine of life", which when they are unlucky leads to missed diagnoses, injury and death - ed.] Doctors at Partners now order imaging scans through the computer system and are automatically queried about the patients’ characteristics. For each case, the software then provides an “appropriateness” score, reflecting evidence- based protocols [i.e., likely based on averages, not the individual patient's nuances - ed.] for the image requested. And in some cases, the program suggests an alternative to imaging. </blockquote> I presume doctors' use of imaging is monitored based on the cybernetic "score." Orszag states: <blockquote>Comparing doctors: the system is also used to compare doctors to one another, so they know if they use imaging tests more or less than their peers do. </blockquote> I have yet to see robust (e.g., RCT-based) outcomes of this "regulator of care" function of health IT, wherein the physician is no longer the learned intermediary between patient and computer, but the computer instead is the cybernetic regulator of care between doctor and patient. I do know of a case, however, where cybernetic "regulation" of imaging seems to have helped kill an infant at another hospital (<a style="font-weight: bold;" href="http://hcrenewal.blogspot.com/2011/06/babys-death-spotlights-safety-risks.html">link</a>). <blockquote>From 2006 to 2009, imaging rates at Partners flattened, and in some specialties even started to decline, sometimes significantly. The number of outpatient images per patient, for example, fell 25 percent in that period, even after adjusting for patient characteristics such as age, ethnicity, gender, medical history and medications. ... The IT interventions appear to have been effective at reducing imaging rates across the board, including among the doctors who ordered the tests most. By 2009, that doctor at the 90th percentile ordered 20 images per 100 patients, a decline of almost 10. This one doctor’s net decrease in scans was larger than the total number of scans ordered by the doctor at the 10th percentile even in 2006. And the low-use doctor reduced his rate, too, by about two images per 100 patients. </blockquote> I'm still not seeing comparisons of how patients fared under the cybernetic imaging-control regime. <blockquote>More broadly, health IT is a necessary but not by itself sufficient step toward improving value in health care. A review of the health IT studies by the Congressional Budget Office, published in 2008, while I was the director of that agency, concluded that it “has the potential to significantly increase the efficiency of the health sector by helping providers manage information.” The CBO also found, however, that health IT couldn’t realize this potential without a supportive health-care delivery system that uses it aggressively. The most auspicious examples of IT use were in relatively integrated systems, such as Veterans Affairs, Partners HealthCare, Kaiser Permanente and Group Health Cooperative in Seattle. </blockquote> Here's where Orszag goes off the irrational-exuberance rails. He states the "potential" of HIT to "help providers manage information" is not reached because HIT is not widespread enough. He omits the potential of the technology to cause providers to mismanage information. Such mismanagement turned a close relative of mine into <a style="font-weight: bold;" href="http://hcrenewal.blogspot.com/2011/06/my-mother-passed-away.html">roadkill</a>, which apparently is OK on the road to HIT utopia. He cites the VA, where highly specialized non-commercial HIT took decades to develop under relatively ideal conditions far removed from the traditional management information systems morass in the private sector (<a style="font-weight: bold;" href="http://www.amazon.com/Medical-Informatics-Electronic-Collaboration-Innovation/dp/0763739251">link</a>), and Kaiser (with <a style="font-weight: bold;" href="http://hcrenewal.blogspot.com/2006/11/kaiser-healthcare-it-meltdown.html">this history</a>) and Group Health, who are not exactly prolific publishers about their mishaps and travails with HIT. He omits the fact the FDA admits they know of HIT-related injury and deaths (link to <a style="font-weight: bold;" href="http://hcrenewal.blogspot.com/2010/08/smoking-gun-internal-fda-memorandum-of.html">FDA internal memo of Feb. 2010</a>), do not know the true levels of it but that their data probably represents the "tip of the iceberg" (<a style="font-weight: bold;" href="http://hcrenewal.blogspot.com/2010/02/fda-on-health-it-adverse-consequences.html">link</a>), and that HIT is a medical device that should fall under the FD&C Act, but that is left unregulated (<a style="font-weight: bold;" href="http://hcrenewal.blogspot.com/2011/04/fda-decides-regulating-implantable.html">link</a>) because it's a "political hot potato." (Thus, in effect, its subjects, patients, are experimental test subjects without having given informed consent.) He omits the mission hostile nature of much commercial HIT (e.g., as demonstrated in the nine-part series <a style="font-weight: bold;" href="http://www.tinyurl.com/hostileuserexper">here</a>). He omits a growing body of literature suggesting health IT's outcomes are neutral or negative, despite billions of dollars of expense (link to <a style="font-weight: bold;" href="http://hcrenewal.blogspot.com/2011/02/updated-reading-list-on-health-it.html">Reading List</a>). He omits acknowledged national HIT failures in the UK (<a style="font-weight: bold;" href="http://hcrenewal.blogspot.com/2011/08/you-saw-it-here-first-uk-nhs-pulls-plug.html">link</a>, <a style="font-weight: bold;" href="http://hcrenewal.blogspot.com/2011/08/national-programme-for-it-in-nhs-aug.html">link</a>), and Australia and elsewhere (<a style="font-weight: bold;" href="http://hcrenewal.blogspot.com/2011/03/why-current-nature-of-healthcare-it.html">link</a>), in healthcare systems far smaller, more government-controlled and less complex than ours, efforts largely led by and utilizing American companies and products. He omits the apparently low quality and fundamental unreliability and unsuitability of today's commercial software (see examples at <a style="font-weight: bold;" href="http://sydney.edu.au/engineering/it/%7Ehitru/index.php?option=com_content&task=view&id=120&Itemid=116">link</a>, <a style="font-weight: bold;" href="http://sydney.edu.au/engineering/it/%7Ehitru/index.php?option=com_content&task=view&id=91&Itemid=146">link</a>). He omits independent, renowned medical device testing organizations listing health IT as one of the top health risks of 2011 (<a style="font-weight: bold;" href="https://www.ecri.org/Press/Pages/Top-10-Health-Technology-Hazards-List-2011.aspx">link</a>). He omits the general futility of large-scale government IT initiatives, as in an article hidden in the Public Administration Review that contains near 150 references (<a style="font-weight: bold;" href="http://www.ischool.drexel.edu/faculty/ssilverstein/Goldfinch_pessimism_PAR.pdf">link</a>, PDF). In effect, commercial health IT is nowhere near fit for national rollout in 2011. I have two suggestions: 1. Bankers need to stick to banking, and keep their embarrassing lack of knowledge of biomedicine and Medical Informatics to themselves. 2. Mr. Orszag needs to spend some time reading the IT literature, without wearing blinders. Finally, on a personal note, I will not be taking investment advice from Mr. Orszag. I would not trust it, often finding that those deficient in publicly-available knowledge in one domain are often lacking knowledge in others. That's simply my personal preference. -- SS

Why bankers need to stick to banking, and keep their profound lack of knowledge of biomedicine and Medical Informatics to themselves

[Note: this post is very rich with hyperlinks. To fully understand the post, at least open the hyperlinks in a separate window and browse ...

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What the Pfizer (III)? - Enormous Pay for Poor Performance

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 now discuss the discrepancy between the markedly dysfunctional leadership performance documented in the Fortune article and the pay given to the leaders involved. "Hank" McKinnell et al - 2003-2006 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> reported the total compensation received by Mr McKinnell from 2003-2005. 2003 - $10,706,002 2004 - $11,355,317 2005 - $12,767,270 Each line reflects the combination of salary, bonus, other annual compensation, restricted stock awards, securities underly  options, LTIP payouts, and all other compensation.    The four other best paid executives were Karen Katen, Vice Chairman and President, Prizer Human Health,  David Shedlarz, Vice Chairman, Jeffrey B Kindler, Vice Chairman and General Counsel, and John LaMattina PhD, Senior Vice President, President, Pfizer Global Research and Development.  Their total compensation for these years were Ms Katen 2003 -  $4,747,478 2004 -  $8,541,220 2005 - $6,663,283 Mr Shedlarz 2003 - $3,722,508 2004 - $6,743,591 2005 - $3,897,293 Mr Kindler 2003 - $3,113,308 2004 - $4,181,817 2005 - $3,338,728 Mr LaMattina 2003 - $2,228,804 2004 - $4,410,130 2005 - $3,558,415 Despite MrMcKinnell's poor performance, he never received less than $10 million a year in the three years before he was forced out.  Other top managers, despite never effectively compensating for Mr McKinnell's bad performance earned at least $ 3 million a year in these three years, with one exception, one manager who only made a bit over $2 million in one of the three years. Jeffrey Kindler et al 2007 - 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. The <a href="http://services.corporate-ir.net/SEC/Document.Service?id=P3VybD1odHRwOi8vaXIuaW50Lndlc3RsYXdidXNpbmVzcy5jb20vZG9jdW1lbnQvdjEvMDAwMTE5MzEyNS0xMC0wNTc5NDkvZG9jLzAwMDExOTMxMjUxMDA1Nzk0OS5wZGYmdHlwZT0yJmZuPTAwMDExOTMxMjUxMDA1Nzk0OS5wZGY=">2010 Pfizer proxy statement</a> revealed the total compensation received by Mr Kindler from 2007-2009. 2007 - $13,075,099 2008 - $15,547,600 2009 - $14,898,038 In this proxy statement, each line included salary, bonus, stock awards, option awards, non-equity incentive plan compensation, change in pension value and non-qualified deferred compensation earnings, and all other compensation.  The four other best paid executives were F D'Amelio, Chief Financial Officer, I Read, Group President, Worldwide Biopharmaceutical Business, M Mackay, President, Pharmatherapeutics Research & Development, and Dr F Lewis-Hall, Chief Medical Officer.  Their total compensation for these years was: Mr F'Amelio 2007 - $12,338,821 2008 - $6,979,111 2009 - $7,858,969 Mr Read 2007 - $4,560,869 2008 - $7,629,185 2009 - $9,447,036 Mr Mackay 2007 - $3,590,158 2008 - $6,718,580 2009 - $5,878,806 Dr Lewis-Hall 2009 - $5,087,263 (hired in 2009) Despite Mr Kindler's poor performance, he never received less than $13 million a year in the three years before he was forced out.  Other top managers, despite never effectively compensating for Mr McKinnell's bad performance earned at least $ 4.5 million a year in these three years, with one exception, one manager who only made a bit over $3.5 million in one of the three years. Summary   The business oriented leaders of health care, and some of their sympathizers in health care and policy research are given to preach that "pay for performance," (P4P) applied to health care professionals is a solution to the problem of ever rising health care costs, and ever declining health care access and quality.    Pay for performance applied to the top hired leaders of health care organizations has become a cruel joke.     The Pfizer example shows a company with chronically bad leadership paid hundreds of times what average workers receive.  Despite a parched drug pipeline and languishing stock price, top managers made millions a year, and CEOs who would eventually be forced out for poor performance made tens of millions a year.  One cannot help but conclude that the main goal of Pfizer was to enrich its top managers.  Managers whose main goal is to enrich themselves, of course, are unlikely to manage well, and unlikely to promote development and manufacturing of drugs whose benefits exceed their harms, and which decrease symptoms, improve function, prevent morbidity, extend life, and generally benefit health.      Now that the scope of the failings of Pfizer's hired leaders has been made clearer, the company has become one of the best, or worst examples of self-interested leadership and its perils for health care.    As I have repeated endlessly,... 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.

What the Pfizer (III)? - Enormous Pay for Poor Performance

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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The National Programme for IT in the NHS: an Aug. 2011 Public Accounts Committee update on the delivery of detailed care records systems

At "<a style="font-weight: bold;" href="http://www.ischool.drexel.edu/faculty/ssilverstein/cases/?loc=cases&sloc=2009">2009 a Pivotal Year in Healthcare IT</a>" I linked to summary points of a Jan. 2009 report about the UK's National Program for IT in the NHS (NPfIT) entitled "The National Programme for IT in the NHS: Progress since 2006." The report was prepared by the Public Accounts Committee of the UK Parliament's House of Commons. That report summary (<a href="http://www.publications.parliament.uk/pa/cm200809/cmselect/cmpubacc/153/15304.htm">link here</a>) was not pretty. An August 2011 update has been issued by the same body entitled "The National Programme for IT in the NHS: an update on the delivery of detailed care records systems." The 2011 summary is even less pretty than the 2009 version (<a href="http://www.publications.parliament.uk/pa/cm201012/cmselect/cmpubacc/1070/107004.htm">link here</a>). I reproduce it below with almost no added comments, as it speaks for itself relative to the many years of posts on health IT difficulties, failures and mismanagement I've authored at this blog and elsewhere. (Also see my May 2011 post "<a style="font-weight: bold;" href="http://hcrenewal.blogspot.com/2011/05/national-programme-of-failed-it-in-uk.html">NPfIT: National Programme of Failed IT in the NHS</a>" that summarizes a number of press accounts of the project.) The 2011 report begins: <blockquote>The National Programme for IT in the NHS (the Programme) was an ambitious £11.4 billion programme of investment designed to reform how the NHS in England uses information to improve services and patient care. The Programme was launched in 2002, and the Department of Health (the Department) has spent some £6.4 billion on the Programme so far.</blockquote> Here is the updated "progress" summary: <blockquote>The National Programme for IT in the NHS: an update on the delivery of detailed care records systems - Public Accounts Committee Conclusions and recommendations 1. The Department has been unable to deliver its original aim of a fully integrated care records system across the NHS. Poor progress since 2002 has meant the Department has had to reconsider what the expenditure can deliver. Many NHS organisations will now not receive a system through the Programme which will not provide for the transmission of individual case records across the whole NHS. The Department should review urgently whether it is worth continuing with all elements of the care records system, to determine whether the remaining £4.3 billion could be used to better effect to buy systems that work, are good value and deliver demonstrable benefits for the NHS. 2. There has been a substantial reduction in how many NHS bodies will receive new systems but the Department failed to secure a comparable reduction in costs. This casts the Department's negotiating capability in a very poor light. In London, the Department's negotiations with BT resulted in far fewer systems to be delivered for only a marginal reduction in fee. We are worried that the Department will fare no better in its current negotiations with CSC [a U.S.-based computer consulting company - ed.], which has delivered only 10 of 166 of its 'Lorenzo' systems in the North, Midlands and East. The Department has been in negotiations with CSC for over a year, and told us that it may be more expensive to terminate the contract than to complete it, although we also note that CSC has informed the United States Securities and Exchange Commission that it may receive materially less than the net asset value of its contract if the NHS exercises its right to terminate the contract for convenience. Given the Department's failure to secure a good deal in its contract renegotiation with BT, and its weak position with CSC, we consider it essential that the Major Projects Authority now exercises very close scrutiny over the Department's continuing negotiations with CSC, and that Government gives serious consideration to whether CSC has proved itself fit to tender for other Government work. It is important that CSC, particularly given its proposed purchase of iSoft, does not acquire an effective monopoly in the provision of care records systems in the North, Eastern and Midland clusters. This could result in the Lorenzo system effectively being dropped as the system of choice and many Trusts being left with little choice but to continue with out-dated interim systems that could be very expensive to maintain and to upgrade, or to accept a system of CSC's choice. CSC should not be given minimum quantity guarantees or a licence to sell a product other than that procured and selected by the Programme within the LSP contract. 3. The Department is unable to show what has been achieved for the £2.7 billion spent to date on care records systems. The Department failed to meet its commitment to report to the Committee by summer 2010 on the benefits delivered by the Programme. A statement of benefits to March 2010 was not provided to the NAO until May 2011 - more than a year out of date. The Department should, by September 2011, provide us with an updated statement of benefits to March 2011, which we will ask the National Audit Office to audit. 4. We are very concerned at the lack of evidence of risk management of security issues which may arise as a result of medical records being held electronically. The Department must address possible compromises in data security. 5. Weak management and oversight of the Programme have resulted in poor accountability for project performance. Sir David Nicholson has not been able to fulfil his duties as the Senior Responsible Owner for the Programme effectively, given his significant other responsibilities, weakening accountability for the Programme's extensive delays and increasingly poor value for money. It is essential that there is proper accountability for the Programme, especially since the current health reforms, according to Sir David, make it "quite difficult to shift a system like that into that environment"[<a name="n2"></a><a href="http://www.publications.parliament.uk/pa/cm201012/cmselect/cmpubacc/1070/107004.htm#note2">2</a>]. [Of course, planned U.S. healthcare reforms are also highly complex, making "shifting systems into that environment" a predictable nightmare - ed.] Sir David should now expect much closer scrutiny and oversight of his actions by the Major Projects Authority, but he must remain Senior Responsible Owner for the Programme so there is a clear line of accountability and responsibility for performance as well as continuity in managing the substantial risks that remain. 6. NHS trusts will take over responsibility for care records systems from 2015-16, but they do not currently have the information they need about potential future costs. After the implementation of forthcoming health reforms, the organisations currently managing the Programme will no longer exist and the risks will transfer to NHS trusts. However, at present these trusts have no direct contractual relationship with existing suppliers and no information about the likely cost of using care records systems beyond 2015. The Department should write to every NHS Trust making clear the detailed implications of their future responsibilities for care record systems, and in particular the financial liability to which each trust will be exposed. This information should include information about exit costs from the LSP contracts and future maintenance and running costs for those Trusts that continue with the Programme, and this information must be provided within two months. It should also specify the support that the centre will provide to Trusts procuring outside the Programme, particularly where such systems can be shown to represent value for money to the NHS or greater functionality. 7. It is unacceptable that the Department has neglected its duty to provide timely and reliable information to make possible Parliament's scrutiny of this project. Basic information provided by the Department to the NAO was late, inconsistent and contradictory. We are surprised that in its memorandum to us of 7 June 2011, two weeks after our hearing, the Department did not mention that it made an advance payment to CSC of £ 200 million in April 2011. The Department must provide timely and reliable information in future to support effective accountability to Parliament. [One wonders if the U.S. ONC office (Office of the National Coordinator for health IT) in HHS will perform any better - ed.] 8. According to Sir David Nicholson, the Department may have to think about an interim step - a transitional body of some description- creating the impression of major uncertainty about how this work should be managed in the future. We will return to this issue in the future. </blockquote> The full 2011 report is <a href="http://www.publications.parliament.uk/pa/cm201012/cmselect/cmpubacc/1070/1070.pdf">at this link</a> (PDF). This report makes the success of a similar multibillion dollar national health IT initiative in the U.S., a far larger, more complex, and chaotic healthcare system, seem even more unlikely. -- SS

The National Programme for IT in the NHS: an Aug. 2011 Public Accounts Committee update on the delivery of detailed care records systems

At " 2009 a Pivotal Year in Healthcare IT " I linked to summary points of a Jan. 2009 report about the UK's National Program f...

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