healthy4u

NIST on the EHR Mission Hostile User Experience: Blame the User? Nyet...

I have often had to respond to those who claim that EHR's don't cause medical errors, users do. That subset of the health IT irrationally exuberant seem common in the health IT industry and pundit channels. <a href="http://www.nist.gov/index.html">NIST</a> (The U.S. National Institute of Standards and Technology) has recently issued a draft report "NISTIR 7804: Technical Evaluation, Testing and Validation of the Usability of Electronic Health Records." It is available at <a href="http://www.nist.gov/healthcare/usability/upload/Draft_EUP_09_28_11.pdf" rel="nofollow">http://www.nist.gov/healthcare/usability/upload/Draft_EUP_09_28_11.pdf</a> (PDF). The report is quite negative concerning the low usability of today's commercial health IT, and recommends significant improvements that have been standard practice in other mission- and life-critical IT sectors for decades. I will have more to write about this report, but I found a passage and footnote early in the report striking. Of note, from the new NIST draft report: This passage, from page 10: <blockquote>The EUP (EHR usability protocol) emphasis should be on ensuring that necessary and sufficient usability validation and remediation has been conducted so that use error [3] is minimized. [3] “Use error” is a term used very specifically to refer to user interface designs that will engender users to make errors of commission or omission. It is true that users do make errors, but many errors are due not to user error per se but due to designs that are flawed, e.g., poorly written messaging [or lack of messaging, e.g., no warnings of potentially dangerous actions - ed.], misuse of color-coding conventions, omission of information, etc. </blockquote>This passage describes what I have termed a <a href="http://www.tinyurl.com/hostileuserexper">mission hostile user experience</a>. "Blame the user" as the default, reflex reply to clinical IT-related medical errors, and the "<a href="http://www.ischool.drexel.edu/faculty/ssilverstein/cases/?loc=cases&sloc=koppel_kreda">hold vendor harmless for defects</a>" clauses that facilitate this excuse are now heading to the junkpile - in the clinic, hospital, and courtroom. It is my hope that the the Wild West, free-for-all, cavalier, get out of jail free days of the health IT industry are coming to a close. Hint to health IT industry: you may actually need to invest in people who know what they're doing, instead of hiring the cheapest labor possible. (See, for example, my Aug. 2010 post "<a href="http://hcrenewal.blogspot.com/2010/08/epics-outrageous-recommendations-on.html">EPIC's outrageous recommendations on healthcare IT project staffing</a>" for more on that issue.) -- SS Oct. 25, 2011 Addendum: <a href="http://histalk2.com/2011/10/24/thoughts-on-nists-ehr-usability-document-102411/#comment-17581"> This comment</a> (#5, October 25th, 2011 at 12:38 pm) by "a practicing front-end designer and application developer" over at HIStalk is quite interesting. The writer points out the differences between designers and developers, and opines that: <blockquote>If you’re going to improve vendor design, it has to begin with an internal commitment to value designers and what they contribute to the product development process. They can not be an afterthought. There are very few companies with this mindset. Almost all HIT companies are developer-driven, so the first thought, and one that is promoted in this report, is to turn developers into designers. This will not work! A developer and a designer require two fundamentally different skill sets that are not easily transposed. Developers are trained to think rationally and analytically; design requires empathy for the user. </blockquote> In health IT, empathy for the patient as well, I might add. -- SS

NIST on the EHR Mission Hostile User Experience: Blame the User? Nyet...

I have often had to respond to those who claim that EHR's don't cause medical errors, users do. That subset of the health IT irrati...

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Steve Jobs: Computer Geniuses and Medical Mysticism, a Very Bad Combination

Brilliant computer innovators may not be so brilliant in all domains. It is <a href="http://www.ncbi.nlm.nih.gov/pubmedhealth/PMH0001283/">well known</a>, and well documented for many decades, that pancreatic cancer is often extremely aggressive and detected relatively late due to lack of early symptoms. Its detection should lead to aggressive treatment ASAP, such as radiation/chemotherapy or the <a href="http://www.hopkinsmedicine.org/promise/pancreatic?ibp-adgroup=google&utm_source=eruptr&utm_medium=cpc&utm_campaign=pom_panc_whipple_proc">Whipple procedure</a>, if the person is to survive. I consider this tragic: <blockquote></blockquote><blockquote><a href="http://www.nytimes.com/2011/10/21/technology/book-offers-new-details-of-jobs-cancer-fight.html">Jobs Tried Exotic Treatments to Combat Cancer, Book Says</a> New York Times Steve Lohr Oct. 21, 2011 ... His early decision to put off surgery and rely instead on fruit juices, acupuncture, herbal remedies and other treatments — some of which he found on the Internet — infuriated and distressed his family, friends and physicians, the book says. From the time of his first diagnosis in October 2003, until he received surgery in July 2004, he kept his condition largely private ... Mr. Jobs put off surgery for nine months, a fact first reported in 2008 in Fortune magazine. (Per <a href="http://finance.yahoo.com/news/Jobs-questioned-authority-all-apf-1873950574.html?x=0">Yahoo finance)</a> ... he also was influenced by a doctor who ran a clinic that advised juice fasts, bowel cleansings and other unproven approaches, the book says, before finally having surgery in July 2004. </blockquote> I would replace the term "doctor" above with the onomatopoeia imitating the noise made by females of the species <a href="http://en.wikipedia.org/wiki/Mallard">Anas platyrhynchos</a>. Medical mysticism and "alternative therapies" may have their place, especially in hypochondriacs and for relatively minor problems (in my view, via the placebo effect), but not in dire, well studied conditions such as cancer of the pancreas. A brilliant computer entrepreneur, one of the world's best, may have been unnecessarily lost due to the seduction of medical mysticism. In such diseases, sadly, an Apple a day does not keep the doctor - or the grim reaper - away. -- SS 10/22/11 Addendum: This story has a personal angle of sorts to it. In the early 1970's when I began my fascination with computers, I became friends with Hank, a brilliant computer programmer and fellow ham radio enthusiast, shown stting in this picture from the George Washington High School (Phila., PA) 1973 yearbook in front of our high school's <a href="http://www.youtube.com/watch?v=--l7FhoXZb4">DEC PDP-8/S</a>: <div style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgIzhDFLM7nnYVAvQKYf2viVCS-V77LJbVWCxojxWZGS42BWuK4OTbPmcUFaujHbzDFTKGEfw8hpE4BLHrg3ExFa7yi2DqW-45C2j_IHzx9JNiTnM65FZLc0vy3aAjkY6LjaRc4kAqTpbS1/s1600/gw-pdp8s.jpg"><img alt="" border="0" id="BLOGGER_PHOTO_ID_5666315868221160882" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgIzhDFLM7nnYVAvQKYf2viVCS-V77LJbVWCxojxWZGS42BWuK4OTbPmcUFaujHbzDFTKGEfw8hpE4BLHrg3ExFa7yi2DqW-45C2j_IHzx9JNiTnM65FZLc0vy3aAjkY6LjaRc4kAqTpbS1/s320/gw-pdp8s.jpg" style="display: block; margin: 0px auto 10px; text-align: center; cursor: pointer; width: 225px; height: 320px;" /></a>Me (standing, right), Eric Benshetler (standing, left), and Hank O'Neill (sitting), 1973. <div style="text-align: left;"> Hank had a distrust of medicine. I last saw him when I was in Residency, when he visited my home to see my ham radio setup. He became a programmer working on military weapons systems, the B1B bomber I was told. I was told this, unfortunately, at his funeral just a few years ago. He'd developed a severe respiratory infection and tried to "tough it out." He died at home, apparently of pneumonia. A few dollars worth of antibiotics would probably have saved him. At the funeral, his friends told me he spoke occasionally of his former computer friend who'd gone into medicine. I was quite sad at his funeral. All he'd needed to have done would have been to call me. I'm sure I could have talked him into treatment. -- SS </div></div>

Steve Jobs: Computer Geniuses and Medical Mysticism, a Very Bad Combination

Brilliant computer innovators may not be so brilliant in all domains. It is well known , and well documented for many decades, that pancre...

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Why 99 Percent of the Irrationally Exuberant About Health IT Need To Be Removed From Healthcare

At Roy Poses' cross post "<a href="http://www.kevinmd.com/blog/2011/10/99-percent-health-care-angry.html">Why 99 percent of health care should be angry</a>" over at the KevinMD blog, I introduced a comment into the "eruption of controversy" (his term <a href="http://hcrenewal.blogspot.com/2011/10/peer-benchmarking-lake-wobegone-effect.html">here</a>) caused by his post. My comment was on the topic of government and health IT: <div class="dsq-comment-header-meta-wrapper"> <cite id="dsq-cite-339026207" class="dsq-comment-cite"> <a href="http://twitter.com/scotsilv" id="dsq-author-user-339026207" rel="nofollow" target="_blank"></a></cite></div><blockquote><div class="dsq-comment-header-meta-wrapper"><cite id="dsq-cite-339026207" class="dsq-comment-cite"><a href="http://twitter.com/scotsilv" id="dsq-author-user-339026207" rel="nofollow" target="_blank">scotsilv</a> </cite><a href="http://www.kevinmd.com/blog/2011/10/99-percent-health-care-angry.html#comment-339026207" title="Link to comment by scotsilv">3 days ago</a> </div> <div class="dsq-comment-text" id="dsq-comment-text-339026207"> As one of Roy Poses' co-bloggers and a Medical Informaticist, I can say with certainty that government involvement in healthcare has been disastrous. Specifically, via ONC, ARRA and the HITECH Act, prematurely pushing still-experimental healthcare information technology on an unsuspecting medical profession (for the most part) and public. See "An updated reading list on health IT" at <a href="http://tinyurl.com/emrreadinglist" rel="nofollow">http://tinyurl.com/emrreadingl...</a>, .</div></blockquote><div class="dsq-comment-text" id="dsq-comment-text-339026207"> </div> A reply typical of the irrationally exuberant was added to the thread (emphases mine): <div class="dsq-comment-header-meta-wrapper"> <cite id="dsq-cite-340176765" class="dsq-comment-cite"> </cite></div><blockquote><div class="dsq-comment-header-meta-wrapper"><cite id="dsq-cite-340176765" class="dsq-comment-cite">Brett Mello </cite> <a href="http://www.kevinmd.com/blog/2011/10/99-percent-health-care-angry.html#comment-340176765" title="Link to comment by Brett Mello">1 day ago</a> <a class="dsq-reply-link" href="http://www.kevinmd.com/blog/2011/10/99-percent-health-care-angry.html#comment-339026207" title="Jump to comment">in reply to scotsilv</a> </div> <div class="dsq-comment-text" id="dsq-comment-text-340176765">What are you basing your "certainty" on? The examples discussed in the links sound like a case of bad configuration of an EMR. It could also be a just a poor solution from a vendor. Do you know if these were even a certified applications? I would like to suggest not painting all EMR implementations and the overall value of EMR’s from a single, albeit tragic, example. [I.e., an "anecdote" - ed.] A well implemented EMR, configured in collaboration with an organization’s physicians, has been repeatedly proven to reduce medical and medication errors. Why would any educated person, including legislators and executives, support the use of a tool that would increase harm, not safety. Education aside, we will all be patients at some point so our innate need for self preservation would seem contrarian to arbitrary investments in useless technology to manage our care. Our current health delivery method produces far more harm than the new technology being implemented to address it. We need to embrace technology and make it work for us rather than putting our heads in the sand. Take the following quote as an example: "That it will ever come into general use, notwithstanding its value, is extremely doubtful because its beneficial application requires much time and gives a good bit of trouble, both to the patient and to the practitioner because its hue and character are foreign and opposed to all our habits and associations." - The London Times, 1834 commenting on the "stethoscope"</div> </blockquote>Note that this reply came after I presented a link to a <a href="http://tinyurl.com/emrreadinglist">long list of articles</a>, more than 50, with links to each article or its abstract for ease of reference, and a personal account of healthcare IT failure. The articles challenge the beliefs in technological determinism common about health IT, i.e., that computers + medicine 'automagically' lead to better medicine, because, well, of the addition of computers, which must improve medicine, just - because. The reason I write that the reply was typical of the irrationally exuberant is due to the interrelationship between irrationality, logical fallacy, and absence of evidence. These characteristics are usually present in the writings proffered by those so afflicted - and, to those with vested interests in health IT, a.k.a. conflicts of interest, I should add. I replied: <div class="dsq-comment-header-meta-wrapper"> <cite id="dsq-cite-340927212" class="dsq-comment-cite"> <a href="http://pulse.yahoo.com/_TKZLL7R5AHU4BRHMNQSSX4TFPU" id="dsq-author-user-340927212" rel="nofollow" target="_blank"></a></cite></div><blockquote><div class="dsq-comment-header-meta-wrapper"><cite id="dsq-cite-340927212" class="dsq-comment-cite"><a href="http://pulse.yahoo.com/_TKZLL7R5AHU4BRHMNQSSX4TFPU" id="dsq-author-user-340927212" rel="nofollow" target="_blank">medinf</a> </cite><a href="http://www.kevinmd.com/blog/2011/10/99-percent-health-care-angry.html#comment-340927212" title="Link to comment by medinf">16 hours ago</a> <a class="dsq-reply-link" href="http://www.kevinmd.com/blog/2011/10/99-percent-health-care-angry.html#comment-340176765" title="Jump to comment">in reply to Brett Mello</a> </div> <div class="dsq-comment-text" id="dsq-comment-text-340927212"> You are lacking references supporting your arguments, which in themselves display logical fallacy. I urge all readers to see my linked references list at the top of this thread, examine some of them (such as Jon Patrick's work on gross EHR defects, the ECRI Institute's Top Ten List of Healthcare Hazards, Romano et al.'s "Electronic Health Records and Clinical Decision Support Systems: Impact on National Ambulatory Care Quality" and others). There are articles from reputable sources indicating today's health IT, lacking cognitive support and other necessities for clinicians (such as per the National Research Council itself in an investigation led by health IT pioneers Octo Barnett and William Stead, see <a href="http://www8.nationalacademies.org/onpinews/newsitem.aspx?RecordID=12572" rel="nofollow">http://www8.nationalacademies....</a> ) does not improve quality of care, and can cause harm. These articles should raise caution in any physician, nurse or hospital contemplating use of this technology. These reports should not be cavalierly ignored, but should be a flag for great caution. The point is, with the literature conflicting, the technology should be considered experimental and caution used when deployed on human subjects. That includes both patients and clinicians, the former who can be injured or killed, the latter whose careers can be ruined through computer-caused or computer-aggravated errors. [Note: in health IT experiments, clinicians are, in fact, also experimental subjects - ed.] Re: "The examples discussed in the links sound like a case of bad configuration of an EMR" - you omit the existence of clinical IT defects and problems such as poor software engineering causing unreliability, mission hostile human-computer interfaces (e.g., see <a href="http://www.tinyurl.com/hostileuserexper" rel="nofollow">http://www.tinyurl.com/hostile...</a> ), incorrect or incomplete decision support algorithms, terminological problems, and other issues. You seem to indicate the findings in the reading list may be "anecdotal." A crushing reply to that line of thought, from an expert in Australia, is here: <a href="http://hcrenewal.blogspot.com/2011/08/from-senior-clinician-down-under.html" rel="nofollow">http://hcrenewal.blogspot.com/...</a> . As far as "certification" of HIT, this has little if anything to do with safety, reliability, usability, etc. ( e.g,, see <a href="http://hcrenewal.blogspot.com/2010/03/on-oncs-proposed-establishment-of.html" rel="nofollow">http://hcrenewal.blogspot.com/...</a> ). "Certification" of health IT is not validation of safety, usability, efficacy, etc., but a pre-flight checklist of features, interoperability, security and the like. The certifiers admit this explicitly. See the CCHIT web pages for example. You use the logical fallacy of "appeal to authority" - or show severe naivete - in asking "why would any educated person, including legislators and executives, support the use of a tool that would increase harm, not safety." "We need to embrace technology and make it work for us rather than putting our heads in the sand" - I ask - why now, if the technology is not ready? This seems like an appeal to novelty and perhaps the bandwagon fallacy (see <a href="http://www.nizkor.org/features/fallacies/" rel="nofollow">http://www.nizkor.org/features...</a> ). Regarding your 1834 London Times quote, that was in a time before the human subjects experimentation guidelines such as the Belmont Report, World Medical Association Declaration of Helsinki, Guidelines for Conduct of Research Involving Human Subjects at NIH, the Nuremberg Code, and others came into being. That said, the use of the 1834 stethoscope analogy is a type of red herring fallacy (<a href="http://www.nizkor.org/features/fallacies/red-herring.html" rel="nofollow">http://www.nizkor.org/features...</a> ). A stethoscope and enterprise clinical IT have little in common, the latter being potentially harmful to the point of causing patient death through interference in clinical care. (I note that if the 1834 story was brought up as an allusion to doctors and nurses who dislike today's IT being "Luddites" or the like, then that's an ad hominem fallacy.) We as a society have supposedly learned something since 1834 regarding experimental medical devices. Or have we? FDA's Jeffrey Shuren MD, JD, Director of CDRH has admitted explicitly that health IT are medical devices with definite, but unknown, levels of risk - FDA stats "may represent only the tip of the iceberg in terms of the HIT-related problems that exist" were the exact words. That is prima facie evidence the devices are experimental. However FDA refrains from regulating them under the FD&C Act, as they do pharma IT, other medical devices, drugs, etc. because they are a political "hot potato" - as at <a href="http://hcrenewal.blogspot.com/2011/04/fda-decides-regulating-implantable.html" rel="nofollow">http://hcrenewal.blogspot.com/...</a> , <a href="http://hcrenewal.blogspot.com/2010/02/fda-on-health-it-adverse-consequences.html" rel="nofollow">http://hcrenewal.blogspot.com/...</a>, and <a href="http://hcrenewal.blogspot.com/2010/08/smoking-gun-internal-fda-memorandum-of.html" rel="nofollow">http://hcrenewal.blogspot.com/...</a> ). As is customary at Healthcare Renewal, at those three posts are links to source, quoted in full context.</div></blockquote> I've replied to so many irrationally exuberant commenters on this very blog, that I could have authored the reply above in my sleep. Two points: 1. My reply and its links (and the source those links lead to) can and should be used as a "template" by clinicians to educate themselves, to reply to the health IT irrationally exuberant in their organizations, and to those in government prematurely pushing this technology onto clinicians; 2. The health IT irrationally exuberant, being irrational, ill-informed, and often markedly resistant to education, need to be removed from healthcare entirely. Their cavalier attitudes about cybernetic medical experiments are dangerous, and have no place in medical affairs. Such people impede, rather then help remediate the quality, safety, usability, and efficacy of health IT. In doing so, they contribute to increased risk and to actual patient harm. The irrationally exuberant are part of the problem, not part of the solution. -- SS

Why 99 Percent of the Irrationally Exuberant About Health IT Need To Be Removed From Healthcare

At Roy Poses' cross post " Why 99 percent of health care should be angry " over at the KevinMD blog, I introduced a comment in...

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"Peer Benchmarking," the "Lake Wobegone Effect," and Outsize Executive Compensation: the Amgen Example

We recently <a href="http://hcrenewal.blogspot.com/2011/10/health-cares-99-percenters.html">discussed </a>why health care's 99 percent may have reason to be upset with the one percent, the elite that run health care organizations. Once <a href="http://www.kevinmd.com/blog/2011/10/99-percent-health-care-angry.html">cross-posted on the KevinMD blog</a>, it caused an eruption of controversy. This included some anonymous commentators who insisted that top leaders' made contributions to health care that were so heroic that their compensation was insufficient. So conveniently an <a href="http://www.washingtonpost.com/business/economy/cozy-relationships-and-peer-benchmarking-send-ceos-pay-soaring/2011/09/22/gIQAgq8NJL_story.html">article</a> this month in the Washington Post dissected the mechanisms that let pay of top health care leaders inexorably rise whatever their and their organizations' performance.  The Amgen CEOs Compensation It used as an example the compensation given to Kevin W Sharer, the CEO of Amgen, the biotechnology and pharmaceutical company. <blockquote>Sharer, a 63-year-old former Navy engineer, was already earning lots of money — about $15 million in the previous year, plus such perks as two corporate jets. The board decided to give Sharer more. It boosted his compensation to $21 million annually, a 37 percent increase, according to the company reports.</blockquote> This outsize compensation has allowed Mr Sharer to live large. <blockquote>He owns at least three homes, according to property records: a $2 million home in Los Angeles, a $6 million spread in Vail, Colo., and a $5 million place on Nantucket. </blockquote>The Company's Less Than Stellar Performance This huge raise on top of an already huge compensation package, however, seemed completely unrelated to the performance of the company Mr Sharer lead. <blockquote>Shareholders at the company, one of the nation’s largest biotech firms, had lost 3 percent on their investment in 2010 and 7 percent over the past five years. The company had been forced to close or shrink plants, trimming the workforce from 20,100 to 17,400.</blockquote> In addition, <blockquote>by 2006, the growth that once distinguished Amgen had begun to taper off. In 2008, Forbes magazine named ... [Sharer] among among the country’s most overpaid bosses because the company’s returns had dipped 4 percent annually over six years while he’d earned an average of $12.3 million. The lack of enthusiasm was even more noticeable among the people who know most about Amgen — insiders. Companies are required to report when their officials sell stock. Since 2002, the ratio of share sales to purchases has been 12 to 1, according to Bloomberg data reviewed last fall by Christopher.</blockquote> "Peer Benchmarking" The Post article then analyzed the process used to set CEO pay at Amgen, and at many other corporations and organizations, and how it lead to such extreme results. <blockquote>This is how it’s done in corporate America. At Amgen and at the vast majority of large U.S. companies, boards aim to pay their executives at levels equal to or above the median for executives at similar companies. The idea behind setting executive pay this way, known as 'peer benchmarking,' is to keep talented bosses from leaving. </blockquote> We have discussed examples of peer benchmarking before, most recently <a href="http://hcrenewal.blogspot.com/2011/08/what-goes-up-non-profit-hospital-ceo.html">here</a>. Yet I believe the Post article has the clearest explanation to date of how this works and what its results are. Note that: <blockquote>It wasn’t until recently, however, that its pervasiveness and impact on executive pay became clear. Companies have long hid the way they set executive pay, but in late 2006, the Securities and Exchange Commission began compelling companies to disclose the specifics of how they use peer groups to determine executive pay.</blockquote> Peer benchmarking has two components. First the pay of peers are assessed, that is, benchmarked: <blockquote>Amgen selected 11 companies in the biotech/pharmaceutical field, which seems natural enough. </blockquote> However, how the peers are chosen is important (just as how the comparator treatment is chosen in a clinical trial of a drug is important.) In this case, <blockquote>But most of the companies on the list are far larger than Amgen. Amgen’s revenue in 2010 was $15 billion; the median revenue of its peer companies was $40 billion, according to Equilar. The practice of choosing peers that boost pay is common. Studies by Faulkender, Bizjak and ISS Corporate Services have shown that when choosing 'peers' for pay-setting purposes, companies tend to choose larger firms or firms with more highly paid chief executives.</blockquote> Then an assessment is made, almost always by the organizations board of directors or trustees, of how the CEO compares to these supposed peers: <blockquote>Maybe even more significantly, however, the Amgen compensation committee also decided that Sharer, despite being at a smaller company, should earn stock compensation at the 75th percentile of peers. This is critical because stock compensation tends to be the largest component of executive pay.</blockquote> What is missing in the Post article is any rationale for the assessment that Sharer was doing so much better than the median CEO of these questionably comparable companies. The information presented in the article suggested instead that the company was doing badly, with decreasing revenue, decreasing share prices, and declining employment. Cronyism on the Boards Serving on the board of directors of a for-profit corporation requires board members to "demonstrate unyielding loyalty to the company's shareholders" [Per Monks RAG, Minow N. <a href="http://www.amazon.com/Corporate-Governance-Robert-G-Monks/dp/1405116986">Corporate Governance</a>, 3rd edition. Malden, MA: Blackwell Publishing, 2004. P.200.] (Boards of trustees of non-profit organizations have duties of loyalty, "a board member must give undivided allegiance when making decisions affecting the organization" and duty of obedience, "board members [must] ... be faithful to the organization's mission. They are not permitted to act in a way that is inconsistent with the central goals of the organization," per <a href="http://www.boardsource.org/Knowledge.asp?ID=3.364">BoardSource</a>.) Rather than representing the interests of stockholders, however, many boards seem to put the interests of the CEO and top management first: <blockquote>The practice has persisted because corporate board members, many of whom have personal or business relationships with the chief executive, have been unwilling to abandon the practice. At Amgen, for example, four of the six members of the board compensation committee had <a href="http://www.washingtonpost.com/business/economy/ties-to-board-members-aided-amgens-ceo/2011/09/29/gIQAAuXPJL_story.html">personal or business connections to Sharer </a>before joining the board. In fact, he nominated at least two of the six to the board, according to a company source and reports. These kinds of ties — between chief executives and the boards that oversee them — permeate corporate America. On a typical board, the chief executive considers about about 33 percent of the board of directors as “friends” rather than as mere “acquaintances,”according to a survey of chief executives at about 350 S&P 1500 corporations conducted over 15 years by University of Michigan business professor James Westphal. More tellingly, the chief executive is likely to find even more friends on the compensation committees of corporate boards — almost 50 percent.</blockquote> The Obvious Problems with Peer Benchmarking <blockquote>But the practice has long been controversial because, as critics have pointed out, if every company tries to keep up with or exceed the median pay for executives, executive compensation will spiral upward, regardless of performance. Few if any corporate boards consider their executive teams to be below average, so the result has become known as the 'Lake Wobegon' effect. It wasn’t until recently, however, that its pervasiveness and impact on executive pay became clear. Companies have long hid the way they set executive pay, but in late 2006, the Securities and Exchange Commission began compelling companies to disclose the specifics of how they use peer groups to determine executive pay. Since then, researchers have found that about 90 percent of major U.S. companies expressly set their executive pay targets at or above the median of their peer group. This creates just the kinds of circumstances that drive pay upward. Moreover, the jump in pay because of peer benchmarking is significant. A chief executive’s pay is more influenced by what his or her 'peers' earn than by the company’s recent performance for shareholders, according to two independent research efforts based on the new disclosures. One was by Michael Faulkender at the University of Maryland and Jun Yang of Indiana University, and another was led by John Bizjak at Texas Christian University. 'Peer benchmarking has a significant influence on CEO pay,' Bizjak said. 'Basically, you can’t have every CEO paid above average without pay ratcheting upward over time.' The gap between what workers and top executives make helps explain why income inequality in the United States is reaching levels unseen since the Great Depression. Since the 1970s, median pay for executives at the nation’s largest companies has more than quadrupled, even after adjusting for inflation, according to researchers. Over the same period, pay for a typical non-supervisory worker has dropped more than 10 percent, according to Bureau of Labor statistics. Critical to executive pay levels is peer benchmarking. Even before the extent of the practice was known, it drew criticism from prominent business figures. After the Enron scandals, a blue-ribbon committee led by Peter G. Peterson, then chairman of the Federal Reserve Bank of New York, and John Snow, former chairman of the Business Roundtable, called for setting executive pay 'unconstrained by median compensation statistics.' Legendary investor Warren Buffett, in one of his famously plain-spoken letters to investors, likewise derided the method. 'Outlandish ‘goodies’ are showered upon CEOs simply because of a corporate version of the argument we all used when children: ‘But, Mom, all the other kids have one,’' he wrote. Similarly, former Federal Reserve chairman Paul Volcker called it the 'Lake Wobegon syndrome' in congressional testimony in 2008, referring to Garrison Keillor’s fictional town where 'all the children are above average.'</blockquote> Summary Peer benchmarking, as it currently is implemented, is an irrational system that has nothing to do with the free market. It shows how perverse the incentives given to top health care leaders have become. It shows how top hired executives of health care organizations are no longer are accountable to anyone. The boards that are supposed to exercise stewardship over them have become their cheerleaders, possibly because they are populated by cronies, and current and former hired executives of other organizations who are more interested in preserving the wealth and power of hired executives than representing shareholders, or upholding organizations' missions. The problems caused by such perverse incentives include: - Paying the leaders so well (and supporting the public relations staff who sing their praises) costs money that could better be used to improve patients' and the public's health. - Providing such perverse incentives, which seem entirely unrelated to the organizations' primary missions, is likely to distract leaders from the organizations' abilities to support these missions. - It is likely that employees of such organizations who actually try to uphold the mission will be demoralized by the realization that their leaders' enrichment comes first, further damaging the organizations' ability to uphold the mission. - Finally, it is possible that such perverse incentives attract leaders who are particularly unsuited to the task of upholding the mission. So, ad infinitum, I repeat.... 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.

"Peer Benchmarking," the "Lake Wobegone Effect," and Outsize Executive Compensation: the Amgen Example

We recently discussed why health care's 99 percent may have reason to be upset with the one percent, the elite that run health care orga...

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President of the American College of Physicians on Electronic Medical Records

I've taken so much flak over the years for being an "anti-EHR zealot", "a critic of the use of computerized medical records in hospitals", or similar canards [see note below] that I am letting someone else be a spokesperson today. I am simply posting a link to this essay by <a href="http://www.acponline.org/about_acp/leadership/executives_staff/#pres">Virginia L. Hood, MBBS, MPH, FACP</a>, President of the <a href="http://www.acponline.org/">American College Of Physicians</a> (ACP) with only one comment: <a href="http://www.acpinternist.org/archives/2011/10/presidents.htm" target="_blank"></a> <blockquote>Electronic Medical Records have Yet to Fill Their Potential <a href="http://www.acpinternist.org/archives/2011/10/presidents.htm" style="font-weight: bold;" target="_blank">http://www.acpinternist.org/archives/2011/10/presidents.htm</a> From the October ACP Internist, copyright © 2011 by the American College of Physicians</blockquote> Read the whole essay at that link. Nearly every issue mentioned is addressed extensively on this blog since 2004 and at my educational website "Contemporary Issues in Medical Informatics: Common Examples of Healthcare Information Technology Difficulties" <a href="http://www.ischool.drexel.edu/faculty/ssilverstein/cases/">at this link</a>. The latter site was started not just last month or last year, but in 1999. My only comment is that I was more than a decade ahead of my time in recognizing and writing about many of the issues she discusses. Sadly, few were listening; now physicians are not just being encouraged, but in fact prematurely coerced to adopt this technology - in the deficient state as it exists today - by HHS. Tens if not hundreds of billions of dollars have been earmarked for our 'National Program for IT in the HHS.' Ready, shoot ... aim. -- SS [Note] In reality, I am a critic of the use of poorly designed, poorly implemented and poorly managed clinical IT in hospitals.

President of the American College of Physicians on Electronic Medical Records

I've taken so much flak over the years for being an "anti-EHR zealot", "a critic of the use of computerized medical recor...

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Logical Fallacies to Support Putting a Major Academic Medical Center into the Contract Research Organization Business

Two uncritically positive biographical features on UCSF Chancellor Susan Desmond-Hellmann MD appeared within the last two weeks, <a href="http://www.nytimes.com/2011/10/11/science/11profile.html">one in the New York Times</a>, suggesting the game is afoot.  That game appears to be the Chancellor's new strategic direction for the university.  A New Strategy for "Increasing Collaborations" with Industry Per the NY Times, the university has just made a huge investment in bricks and mortar, <blockquote>the school’s gleaming new building for stem-cell research and its enormous new waterfront campus, Mission Bay, which is becoming a medical and biotech empire. </blockquote> Now, perhaps to pay for it, <blockquote>Dr. Desmond-Hellmann hopes to supplement the usual sources of income like patient fees, grants and tuition by increasing collaborations between the university and the biotech companies that have sprung up in the Bay Area — many of them spinoffs from research that began at the university. </blockquote> Dr Desmond-Hellmann described the general direction thus: <blockquote>Her vision for the university is to make it 'the world’s pre-eminent health sciences innovator.' That means 'unparalleled' care for patients, brilliant faculty and staff paid enough to stay and fast translation of scientific discoveries into treatments. </blockquote>That seems worthwhile, if quite a bit vague. Making "Collaboration," "Innovation," and "Translation" More Explicit An <a href="http://www.xconomy.com/national/2011/10/03/why-universities-are-key-to-the-future-of-biotech-and-how-ucsfs-chief-is-showing-the-way">article</a> in Xconomy sounded similar themes, but was more explicit. First, Dr Desmond-Hellmann said, <blockquote>I’m sticking my neck out there and saying the world is changing very quickly, and yet our aspiration at UCSF is to be a world leader in health science innovation</blockquote> So it is time to jump on the bandwagon, <blockquote>The old way of doing things doesn’t really work anymore.</blockquote> But the Xconomy article was more explicit about what sort of changes she envisioned, what innovation she had in mind, and what "translation" means in this context: <blockquote>Often, some of the best research ideas would get handed off from academia to a company at a very raw stage of development. But few venture capitalists are funding startups at this early stage of development these days, and Big Pharma R&D has always tilted more heavily toward D than R. The economy has put more pressure on companies to tilt that balance even further away from research, and more toward late-stage development that has a chance to bear fruit in the near-term. Universities need to recognize this is how things are. If they want to truly translate their innovations into products that help patients, they will have to carry the research a little further downfield themselves. Some Big Pharma companies have already shown they are willing to sponsor this kind of on campus work at UCSF and elsewhere.</blockquote> So, <blockquote>Working in collaboration with pharma companies is definitely a part of the future of advancing health, Desmond-Hellmann says. Financially, these deals are small potatoes, and aren’t going to close any budget gap. Even if UCSF researchers made a breakthrough cancer drug that generates billions of sales per year, it would likely only throw off a royalty stream to the university worth a few million a year—nice, but not exactly a big deal for a multi-billion-dollar institution. Instead, the collaborations are about improving the flow of basic research through development. Pharma companies need new products to preserve and grow their bottom lines, and they aren’t doing so hot at inventing them on their own. When budget cutters ask questions about how taxpayer dollars are spent on campus, academic centers need to be able to say something like, 'We discovered a breakthrough drug that helps people live longer, better lives,' instead of just 'We got a cool paper published in Nature.'</blockquote> Just to underline that, <blockquote>Big Pharma R&D operations, rich as they may be, are feeling the same pressure to make cuts as universities. What’s needed now are the creative partnerships, where someone knowledgeable about the whole process (like maybe a Desmond-Hellmann) steps in and finds a way to more seamlessly bring together these two factions around what they have in common.</blockquote> And the brave new world is almost here already, <blockquote>UCSF has struck a number of creative partnerships with companies like Pfizer, Sanofi, and Bayer, which are being closely followed at other universities. UCSF has also found a way, with the help of some big-time philanthropy, to break ground on two ambitious projects—a $1.5 billion hospital complex and a $200 million neurosciences research facility in the Mission Bay district. There in the same neighborhood, the university has also continued to support QB3, an incubator where academic scientists are starting companies that test whether their ideas just might have what it takes to become new drugs, devices, or diagnostics.</blockquote> So let us try to make Dr Desmond-Hellmann's new direction clear: what she meant by innovation and translation was doing contract research and development for big pharma and big biotech. The goal is not just to discover new knowledge, but to develop new products.  That should bring in a lot of money, which can pay for all sorts of fancy new buildings. A New Direction Supported by Logical Fallacies The problem is, as I hinted above, the arguments for this new direction were mainly based on <a href="http://www.nizkor.org/features/fallacies/">logical fallacies</a>. Begging the Question Note that the key argument in support of turning the university into a pharma/ biotech research and development shop was, "if they [universities] want to truly translate their innovations into products that help patients," they must develop those products themselves.  This <a href="http://www.nizkor.org/features/fallacies/begging-the-question.html">begged these questions</a>: -  Should they want to develop products? -  Why are they the only ones who can do so?  These questions were never asked in either article, perhaps because their answers are obviously "no."  Universities' missions are to discover and disseminate knowledge.  Developing and marketing products are not part of their missions.  Furthermore, there are lots of corporations that ought to be able to develop and market pharmaceuticals and devices outside of universities. Appeal to Common Practice/ Bandwagon Another argument in favor of Dr Desmond-Hellmann's radical new plan was "universities need to recognize this is how things are," in that "the old way of doing things doesn't really work anymore." This is an example of two logical fallacies, the <a href="http://www.nizkor.org/features/fallacies/appeal-to-common-practice.html">appeal to common practice</a>, and maybe <a href="http://www.nizkor.org/features/fallacies/bandwagon.html">the bandwagon fallacy</a> more so. An assertion is made that the world is changing, the change cannot be stopped or even questioned, so we all just have to climb on the bandwagon. Straw Man and Begging the Question (Again) The Xconomy article also noted: <blockquote>Some academics sneer at this late-stage research/early-stage development work. It’s a cultural attitude Desmond-Hellmann wants to change. 'There’s a technical competence in taking a discovery from a lab and turning it into a medicine. It’s embarrassing that people don’t honor that technical competence. You sometimes hear it called 'applied' or 'obvious' or some other pejoratives. But it’s my expertise. I do take that personally. There is a technical competence. It needs to be understood, put into curriculum, and valued.'</blockquote> Here Dr Desmond-Hellman seemed to be using the <a href="http://www.nizkor.org/features/fallacies/straw-man.html">straw man fallacy</a>, by setting up unattributed arguments against her cause that she could easily refute. Meanwhile, however, another <a href="http://www.nizkor.org/features/fallacies/begging-the-question.html">question she begged </a>was what exhibiting such technical competence has to do with the mission of the university. As we will discuss further below, the mission of a university is to discover and disseminate knowledge. "Technical competence" may be required to do so, but exhibiting technical competence per se is not the goal. (Consider: if the university had faculty members who were competent amateur automobile mechanics, would it fulfill the mission to establish a university automobile repair business using these faculty members' technical competence?) Another implied begged question was: if this competence ought to be a subject taught at the university, how would the need for such teaching require the university to do contract research and development for industry? Appeal to Authority Both articles also seemed to try to support Dr Desmond-Hellmann's ideas by emphasizing first that she had "a stunningly successful career in the pharmaceutical industry," perhaps so described because her "years in pharmaceuticals left her, by her own account, 'very, very wealthy," (It did allow that at the end of her career at Genentech, after she had become president of product development, "her compensation (base pay, stock and other payments) was more than $8 million a year. She also owned hundreds of thousands of shares of Genentech stock, worth $95 a share.") Also, despite her apparent membership in the top one percent of the population in terms of income, the Times article took pains to note "she is so nice," and again, "she's a very nice person." So the implication is that because she is successful, rich, and nice, her arguments and ideas must be correct.  This seems to be an <a href="http://www.nizkor.org/features/fallacies/appeal-to-authority.html">appeal to authority</a>. Questions That Should be Asked Neither the author of the NY Times article nor the author of the Xconomy article sought to ask her any of the questions that were begged, or to otherwise raised by Dr Desmond-Hellmann's grand plans.  So let me try. How Does Becoming a Contract Research Organization Fulfill the University's Mission? However her new plans are described, they entail hiring out the university's facilities and faculty to develop new products, drugs and perhaps devices. Yet the university's mission is to discover and disseminate knowledge. How will proprietary research and development fulfill that mission?  In fact, there are reasons to worry that the new focus on for-hire drug research and development will undermine the mission.  Any new knowledge produced is likely to be labelled trade secrets. Faculty who work as drug and device development contractors will not be teaching students. Students caught up in drug and device development will be working for big corporations, possibly without pay, and without any ownership of anything they may discover in the process. How Will the Resulting Institutional and Individual Conflicts of Interest be Managed? If the university becomes dependent on being paid for drug and device development, can university faculty remain unbiased teachers and researchers? Will they not feel pressured to show favor to the products, policy goals, and leadership of the corporations that are paying them? Why Would Faculty and Students Want to Participate in a Contract Research Organization Cloaked in Academic Robes? Will faculty want to be labelled as contract workers? What will that do for their academic credibility? Will students want to be educated by people beholden to specific corporations and corporate projects? Should Patients Want Care from a Contract Research Organization? How will they be confident that the drugs they are prescribed and the devices used in procedures they undergo are not chosen because their doctors and nurses feel beholden to the corporations that make them? Summary UCSF's new multimillionaire ex-biotechnology executive Chancellor seems determined to push the university into a much closer relationship with the drug, device and biotechnology industry. In fact, she seems to be advocating that the university should become, in effect, a contract research organization to service this industry. So far, this radically new direction seems to be provoking no questions, much less dissent, even though the public justification for it was apparently based on a string of logical fallacies. However, it is not clear how taking one of our major academic medical centers in this commercial direction will not harm, much less benefit its mission. For 30 odd years in the US we have been making health care more commercial, and have to show for it the world's most expensive but hardly the world's best health care system. This increasingly inaccessible system which provides care of uncertain quality has made the one percent who run it very rich. Those of us in the 99 percent need to question how making it even more commercial will do any of us any good. Post-Script: You Can Take the Executive Out of Biotech, But You Can't Take Biotech Out of the Executive When Dr Desmond-Hellmann first become UCSF Chancellor, we <a href="http://hcrenewal.blogspot.com/2009/05/bio-tech-u.html">questioned</a> how someone steeped in the culture of commercial biotechnology could distinguish that culture from the academic mission? (You heard that question here first.)  The answer now seems to be that her current ambitions substantially blur the academic mission with the pursuit of money and commercial success. Maybe one reason for this blurring of distinctions is that Dr Desmond-Hellmann apparently has not completely left the corporate world. - A <a href="http://www.athletepromotions.com/celebrity/Susan-Desmond-Hellmann-appearance-booking-agent.php">web-site </a>for a speakers' bureau in which she apparently still participates lists her as a current "Advisor of Genentech since April 2009." - In 2010, Dr Desmond-Hellmann joined the board of directors of Procter and Gamble, a company which makes many health related products, although it sold its global pharmaceutical business. Note that she got this position despite apparently not having any prior personal investment in P&G stock. However, per the company's <a href="http://www.pg.com/en_US/downloads/investors/annual_reports/2011/PG_2011_Proxy.pdf">2011 proxy statement</a>, she appears to be in line to collect over $250,000 a year in compensation for this position. It does not seem impossible that these ongoing commercial interests may influence how she acts in her role as Chancellor. ADDENDUM (5 November, 2011) - As <a href="http://www.reuters.com/article/2011/11/03/teva-pg-idUSN1E7A20BZ20111103">per Reuters</a>, <blockquote>Consumer products maker Procter & Gamble Co and Israeli drugmaker Teva Pharmaceutical Industries Ltd on Thursday gave details of a joint venture they have created to sell over-the-counter medicines. The joint venture, which was initially announced in March, will combine Teva's expertise in drug marketing with P&G's expertise in branding to expand their presence in the $200 billion consumer healthcare industry. </blockquote> So P+G is becoming more of a health care company, increasing concerns about how her position as a director of the company, which gives her fiduciary responsibility for its finances, may influence her in her role as Chancellor.

Logical Fallacies to Support Putting a Major Academic Medical Center into the Contract Research Organization Business

Two uncritically positive biographical features on UCSF Chancellor Susan Desmond-Hellmann MD appeared within the last two weeks, one in the ...

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Another Month, Another Set of Legal Settlements, Deferred Prosecution Agreements, and Jury Findings Adverse to Large Health Care Corporations

Another month, another series of adverse legal rulings suggesting misbehavior by large health care organizations.  In alphabetical order,... Baxter, McKesson, Teva Pay Punitive Damages As <a href="http://www.businessweek.com/news/2011-10-11/teva-jury-awards-162-5-million-in-damages-over-anesthetic.html">reported</a> by Bloomberg, <blockquote>A jury said Teva Pharmaceutical Industries Ltd. unit and two other drugmakers must pay $162.5 million in punitive damages for selling the anesthetic Propofol in a way that led three colonoscopy patients to develop Hepatitis C. Jurors in state court Las Vegas ordered Teva Parenteral Medicines Inc., Baxter Healthcare Corp. and McKesson Corp. to pay so-called punishment damages over sales of the anesthetic in vials large enough to be reused by doctors. Anne Arnold, Richard Sacks and Anthony Devito contend they contracted Hepatitis C from reused vials during colonoscopy procedures. They had sought more than $700 million in damages. It’s the second punitive award against Baxter and the unit of Petach Tikva, Israel-based Teva over a 2008 hepatitis outbreak in Nevada tied to Propofol. The first case resulted in a punitive verdict of more than $500 million against the drugmakers. Teva has agreed to cover all damage awards arising from the Nevada cases on behalf of Baxter and McKesson.</blockquote> In particular, <blockquote>The patients’ lawyers allege Teva intentionally sold Propofol in jumbo-sized vials to encourage doctors to reuse them, even with the risk of spreading blood-borne diseases such as hepatitis, an incurable liver disease.</blockquote> So the allegations are that the company intentionally put financial gain ahead of the safety of patients. Boston Scientific Settles Over-Billing Allegations Again <a href="http://www.businessweek.com/news/2011-09-26/boston-scientific-to-pay-9-25-million-in-whistleblower-case.html">per</a> Bloomberg: <blockquote>Boston Scientific Corp.’s Guidant LLC unit will pay $9.25 million to settle a whistleblower’s claim that the company over-billed the U.S. and private hospitals for heart pacemakers and defibrillators.</blockquote> The details: <blockquote>Guidant allegedly reneged on credits owed to the U.S. Department of Veterans Affairs for replacement of units still under warranty and is accused of over-charging hospitals for the devices, causing them to over-bill Medicare, according to an e-mailed statement from the Justice Department.</blockquote> Note that we have quite a extensive files on <a href="http://hcrenewal.blogspot.com/search/label/Boston%20Scientific">Boston Scientific</a>, and on <a href="http://hcrenewal.blogspot.com/search/label/Guidant">Guidant</a>, now its subsidiary. Hil-Rom Settles Fraud Allegations <a href="http://www.knoxnews.com/news/2011/sep/27/feds-announce-418-million-settlement-in-fraud">Reported</a> by the Knoxville News-Sentinel: <blockquote>Federal prosecutors announced Tuesday a $41.8 million civil fraud settlement in a 'whistle-blower' lawsuit against international medical equipment supply company, Hill-Rom Company Inc.</blockquote> The results also were that <blockquote>As part of the settlement, Hill-Rom has entered into a five-year 'corporate integrity agreement,' in which the firm will face close scrutiny by federal officials, Killian said.</blockquote>The allegations were: <blockquote>'Hill-Rom submitted false claims for medical equipment for patients who did not qualify for the equipment, including patients who had died, were no longer using the equipment or had been moved to nursing homes,' [US Attorney Bill] Killian said.</blockquote> In particular, <blockquote>The lawsuit alleged the firm was ripping off Medicare with its faulty billing practices. According to the lawsuit, unsealed Tuesday, Hill-Rom offered its sales representatives $200 gift certificates and 42-inch televisions as reward for boosting billings and, in 2001, laid off the lion's share of staff dedicated to ensuring compliance with Medicare rules.</blockquote> Note that this suggests a pattern of providing incentives to employees who "make their numbers," no matter how they do so. We have seen how making the financial numbers seems to take precedence over all else, including patients' well-being, in many contemporary health care organizations. Maxim Healthcare Settles Fraud Allegations In a <a href="http://www.baltimoresun.com/business/bs-bz-maxim-healthcare-settlement-2-20110912,0,4024222.story">story</a> in the Baltimore Sun, <blockquote>A Columbia-based health care firm has agreed to a $150 million settlement with the federal government and 43 states to resolve criminal and civil charges that it submitted claims for millions of dollars of work that it did not perform and operated offices that were not properly licensed, officials said Monday. A five-year federal investigation found that Maxim Healthcare Services Inc., one of the country's largest providers of home healthcare services, submitted $61 million in false claims for services to the federal government's Medicaid and Veterans Affairs health programs over an 11-year period from 1998 to 2009. Investigators said managers and workers at Maxim repeatedly modified time sheets and documents to cover up the fraud, creating a culture in which submitting false claims became 'common practice.'</blockquote> The settlement was of criminal as well as civil charges: <blockquote>The settlement includes a $20 million criminal fine and $130 million in civil settlements.</blockquote> It will also involve a deferred prosecution or corporate integrity agreement: <blockquote>In addition to the fines, Maxim also has been charged criminally with conspiracy to commit health care fraud. But the company could avoid conviction if it meets requirements outlined in the settlement.</blockquote> Unlike many such cases, this one involved criminal charges for and guilty pleas by some people involved in the wrong-doing, in this case, middle managers: <blockquote>Several regional account managers, a home health aid and a clinical services director also pleaded guilty to criminal charges, government officials said. They could face as much as $250,000 in fines and jail time for their roles in the fraud.</blockquote> Another atypical result was that the CEO who presided over the misbehavior actually suffered some consequences, although he did not have to pay fines for face criminal charges, <blockquote>Maxim officials said they take full responsibility for the violations. The company said it hired a new CEO in 2009 and changed its business practices to protect against a repeat.</blockquote> ProPublica published an <a href="http://www.propublica.org/article/troubled-health-care-staffing-chain-settles-with-government-for-150-million">article</a> at the same time which noted that Maxim's practices had come into question before, <blockquote>A different set of problems involving Maxim came up during a ProPublica investigation into the oversight of registered nurses in 2009. We identified several nurses who were hired by the Maryland-based company despite having a record of problems.</blockquote> Although that previous article did not mention the company's name: <blockquote>The articles focused on how regulators across the country did little to scrutinize troubled nurses who crossed state lines to continue working. Our earlier stories did not identify Maxim by name. </blockquote> We have noted that organizations which misbehave once are likely to misbehave again. This may stem from an organizational culture that puts revenue ahead of ethics and patients' and the public's health, and the lack of negative consequences that people who respond to the resulting positive financial incentives are likely to suffer. Medicis Settles Shareholder Class-Action Lawsuit <a href="http://www.azcentral.com/business/news/articles/2011/09/28/20110928medicis-auditor-will-pay-18-million-settle-suit.html">Noted</a> by the Arizona Republic, <blockquote>Medicis Pharmaceutical Corp. and its auditing firm, Ernst & Young, have agreed to pay $18 million to settle a shareholder class-action lawsuit stemming from the pharmaceutical company's financial statements.</blockquote> The shareholders alleged that Medicis was not honest about its financial affairs: <blockquote>The shareholders' lawsuit stems from Medicis' announcement in September 2008 that it would restate earnings from 2003 through the first half of 2008. Shareholders alleged that Medicis offered its wholesale customers generous return policies for prescription drugs as part of an effort to inflate the company's revenue. Medicis would accept returned products that were expired or about to expire at either no cost or substantial discounts to the wholesale customers, according to the lawsuit.</blockquote> Summary The constant march of <a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements">legal settlements </a>by, jury verdicts against, and in some cases <a href="http://hcrenewal.blogspot.com/search/label/crime">criminal convictions </a>of or guilty pleas by large health care corporations indicate how common misbehavior by such organizations has become. Since it is likely that much misbehavior does not lead to publicly announced legal actions, what is published can only provide a floor for an estimate of how common it is. The march, which we have been documenting since starting Health Care Renewal, shows how sleazy and often corrupt health care has become, and how that sleaziness and corruption is prevalent not just among small players, but among the biggest and richest health care organizations, and their top leaders. One reason the situation continues to be so bad is that while the unethical behavior does sometimes result in pontificating by the civil authorities, and fines that may only be costs of doing business, it rarely leads to meaningful negative consequences for those who authorized, directed or implemented it. This was noted in the reporting of the Maxim Healthcare case above. For example, in the Baltimore Sun <a href="http://www.baltimoresun.com/business/bs-bz-maxim-healthcare-settlement-2-20110912,0,4927923,print.story">article</a> we found, <blockquote>One watchdog group called the penalty a drop in the bucket for a company that had $2 billion in reimbursements from 2003 to 2009. 'That is hardly crippling,' said Joe Newman, a spokesman for the Project on Government Oversight, which tracks government contractors. 'It is certainly something that stings Maxim's pocketbook, but they will be fine after that.' 'They won't be barred from the Medicaid program. That would hurt them.'</blockquote> Also, Sun columnist Jay Hancock <a href="http://www.baltimoresun.com/business/bs-bz-hancock-prmc-accountability-20110919,0,1446559.column">wrote</a>: <blockquote>Corporations are happy to be treated as people under the law, as we know from recent court decisions. They can own property. They can seek redress in Congress and the courts. They can make huge political contributions. But when it comes to being penalized for cheating the government, corporations quickly abandon their personhood and go back to being abstract blobs. 'I don't know about you, but if I hired a contractor to work on my house and he charged me a ton of extra money for work he didn't do, I wouldn't use that contractor again,' Minnesota Sen. Al Franken said in Congress a few months ago. 'And I would make sure my friends knew not to use them either. It seems like the same should be true of government contractors.'</blockquote> But that is often not the case. For years, government agencies have not vigorously enforced the law when doing so might inconvenience big corporations and their well-paid executives. Maybe this lenience stems from the loony philosophy of former Chairman of the Federal Reserve Alan Greenspan, who was once regarded as some sort of economic genius, who seemed to think that fraud cannot occur in his idealized idea of a free market, because somehow all bad actors would become widely known and therefore all counter-parties would avoid them. In an <a href="http://www.stanfordalumni.org/news/magazine/2009/marapr/features/born.html">article</a> in Stanford Magazine, <blockquote>The influential Greenspan was an ardent proponent of unfettered markets. Born was a powerful Washington lawyer with a track record for activist causes. Over lunch, in his private dining room at the stately headquarters of the Fed in Washington, Greenspan probed their differences. 'Well, Brooksley, I guess you and I will never agree about fraud,' Born, in a recent interview, remembers Greenspan saying. 'What is there not to agree on?' Born says she replied. 'Well, you probably will always believe there should be laws against fraud, and I don’t think there is any need for a law against fraud,' she recalls. Greenspan, Born says, believed the market would take care of itself. For the incoming regulator, the meeting was a wake-up call. 'That underscored to me how absolutist Alan was in his opposition to any regulation,' she said in the interview.</blockquote> It is a measure of the insanity of recent years that one of the chief leaders of government economic policy did not believe there was any need for laws against fraud. It appears that this daft idea has carried over to and still influences how many in government and out deal with health care. However, as we have d<a href="http://hcrenewal.blogspot.com/2010/08/how-fallacy-of-perfect-health-care.html">discussed</a>, health care is not and probably cannot ever be an ideal free market. Also, in health care, most of the bad actions remain <a href="http://hcrenewal.blogspot.com/search/label/anechoic%20effect">anechoic</a>, and in many cases it may be hard for counter-parties to avoid bad actors because they may dominate the market. Also, it may be those that make decisions about whether to deal with particular organizations may be executives, and sometimes health care professionals who have become indifferent to the ethical issues. As I have said again and again, pervasive bad behavior by large health care organizations has got to be a major cause of our ongoing health care dysfunction. So, to really deter bad behavior, those who authorized, directed or implemented bad behavior must be held accountable. As long as they are not, expect the bad behavior to continue.

Another Month, Another Set of Legal Settlements, Deferred Prosecution Agreements, and Jury Findings Adverse to Large Health Care Corporations

Another month, another series of adverse legal rulings suggesting misbehavior by large health care organizations. In alphabetical order,......

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