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Legal Settlements Have Become So Common that They are Barely News

<a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements">Legal settlements</a> by big health care organizations have become so common that those of less than blockbuster size barely seem to qualify as news.  They have become "dog bites man" stories.  For example, the following stories barely got noticed in the media (presented chronologically). Novartis Settles Price Misrepresentation Suit for $150 Million This story was mentioned as an aside in a a <a href="http://www.businessweek.com/news/2011-09-15/watson-sandoz-pay-145-million-to-settle-drug-price-case.html">news story</a> covering a settlement by Watson Pharmaceuticals in September.  In slightly more detail, it has only appeared <a href="http://www.pharmalot.com/2011/11/novartis-pays-150m-to-settle-pricing-fraud">in PharmaLot</a> in November.  In a very small nutshell, <blockquote>the Sandoz unit of Novartis earlier this week agreed to pay $150 million to settle lawsuits filed by the states of Florida and California, as well as a whistleblower, to settle charges that it deliberately misreported pricing information in order to hike reimbursements from Medicaid.</blockquote> By the way, per <a href="http://freepdfhosting.com/0885cf397f.pdf">the settlement document</a>, the allegations were that Novartis' subsidiary knowingly maintained, set or reported "false, fraudulent, and/or inflated Reported Prices," yet, as is typical of nearly all settlements, the settlement "shall not constitute or be construed as an admission of fault, liability, or unlawful conduct." Roche Settles Off-Label Promotion, Physician Kickback Suit for $20 Million This story was reported briefly in some blogs, including again PharmaLot, and in the most detail <a href="http://www.bizjournals.com/sanfrancisco/blog/biotech/2011/12/genentech-roche-rituxan-whistleblower.html">in the San Francisco Business Times</a>. The basics of it were: <blockquote>Genentech Inc. will pay $20 million to settle a whistleblower lawsuit around off-label marketing of the cancer-fighting drug Rituxan.</blockquote> It only took eight years since a whistle-blower raised the issue: <blockquote>John Underwood, ... was a senior manager of sales development from the start of Genentech’s oncology franchise in 1997. When Underwood filed the suit in July 2003 in U.S. District Court for the Eastern District of Pennsylvania, he was a senior hospital systems specialist for Genentech.</blockquote> This suit is actually of particular interest because it was not just about off-label promotion, <blockquote>Genentech, the suit claimed, retained doctors to act as independent speakers on behalf of Rituxan and its off-label uses, paid kickbacks to doctors that were disguised as consulting payments, 'exerted significant pressure' on sales reps to increase off-label uses of Rituxan, and devised and conducted 'selling skills workshops' for sales reps devoted to non-label uses, What’s more, the suit claimed, Genentech invited doctors to attend “medical education seminars” at 'luxurious locations' and gave financial incentives to sales reps to get doctors who sold the most Rituxan to attend the events.</blockquote> These were serious allegations, involving allegedly direct efforts by the company to subvert physicians' ethics by tying their decisions for individual patients to payments for prescribing specific products whatever the benefits and risks of those products for those patients.  The allegations suggested that "consulting payments" to physicians may be nothing more than disguised bribes, and that the companies making these payments may be quite conscious of this.  Nonetheless, as usual, <blockquote>Genentech, the South San Francisco-based U.S. subsidiary of Swiss drug giant Roche, did not admit wrongdoing....</blockquote> So, as in the famous recent Citigroup case (see <a href="http://hcrenewal.blogspot.com/2011/11/will-citigroup-ruling-challenge-health.html">this post</a>), the settlement obfuscates the crucial question, did the corporation involved commit illegal acts? It seems likely that what they did was in some sense unethical, since they were willing to pay millions not make the matter go away. By the way, one member of the Executive Committee of Genentech at the time these events were allegedly occurring is now the <a href="http://ucsfchancellor.ucsf.edu/leadership/susan-desmond-hellmann-md-mph">Chancellor of the University of California - San Francisco</a> (See our post <a href="http://hcrenewal.blogspot.com/2009/05/bio-tech-u.html">here</a>). Maybe concerned students or faculty might ask her what really went on. CVS Caremark Settles Fraud Suit for about $20 Million As <a href="http://latimesblogs.latimes.com/money_co/2011/12/cvs-caremark-to-pay-20m-to-three-states-over-fraud-allegations.html">reported</a> briefly in the Los Angeles Times, <blockquote>Pharmacy and prescription drug management company CVS Caremark Corp. has agreed to pay nearly $20 million to settle three lawsuits involving allegations that the company defrauded pension systems in three states, including California’s giant pension fund, attorneys said. The whistleblower lawsuits, filed by two former CVS Caremark pharmacists, accused the company of reselling returned drugs, changing prescription orders to make them more expensive and submitting false reports about how long it took to fill prescriptions.</blockquote> Not the least bit surprisingly, the company did not admit liability in the settlement, and had no comment for the Times. Ho, hum, another big company paying millions to make allegations of fraud go away... nothing to see here, so we will just move on. Merck Settles Fraud Suit for $24 Million This story was picked up by AP, so a very brief version of it did appear in a variety of locations. A longer version was <a href="http://bostonglobe.com/business/2011/12/21/merck-pay-overcharging-case/05zJqmztpJGuD3elBs0HkM/story.html">published</a> by the Boston Globe, At this point, it should be no surprise that it took a long time to get to this settlement, eight years in fact, just as in the case above, <blockquote>Merck & Co. has agreed to pay $24 million to the state Medicaid program to settle long-running civil charges that it charged too much for some drugs, in the largest single-case Medicaid fraud settlement in Massachusetts history. The agreement, unveiled yesterday by Attorney General Martha Coakley’s office, closes out a 2003 lawsuit....</blockquote> Again, the allegations were of fraud, <blockquote>Coakley said her office’s Medicaid fraud division wanted to hold accountable drug companies that defraud taxpayers. </blockquote> Again, "hold accountable" did not translate into establish the allegations as true, <blockquote>Ron Rogers, a spokesman at Merck corporate headquarters, said the drug company did not admit liability or wrongdoing in the settlement. He said Merck agreed to resolve the claims to put the matter behind it.</blockquote>Nothing more to see here, so we will move on again. Summary Every month, it seems that<a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements"> more settlements</a> are announced of cases alleging all sorts of wrongdoing by major health care organizations. Very often, the allegations are of wrongdoing that appears serious to the uninitiated. For example, most of the above cases involved allegations of fraud, and one involved allegations of kickbacks, that is, bribes to doctors. Yet, in every one of these cases - - The monetary penalties were barely more than pocket change for the corporations involved. - The payments were made by the organization as a whole, and hence would disadvantage many people who were not involved in and did not benefit from the specific actions alleged. Such de facto victims of the settlement included company shareholders, employees, and probably patients (who may have paid prices raised to pay for settlements), and the public (who may have indirectly paid these higher prices through insurance premiums or taxes.) - The organization did not have to admit any facts, leaving the record foggy, and clouding the chances for any people who might have been hurt by the actions to take legal action. - No people who actually authorized, directed, or implemented the apparent bad behavior suffered any negative consequences. Thus, these settlements, like many others we have discussed, did not appear to be any major deterrent of future bad behavior. These settlements do provide a public, if largely ignored, record that suggests how a miasma of sleazy behavior, if not outright corruption has settled over health care. These settlements do provide the context for many pithy questions that could be asked of health care organizational leaders, if anyone dared to do so. The settlements do suggest a need for wholesale, real health care reform that would make health care leaders accountable for what their organizations do, particularly when these organizations misbehave.

Legal Settlements Have Become So Common that They are Barely News

Legal settlements by big health care organizations have become so common that those of less than blockbuster size barely seem to qualify as...

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More Tales of the Hospital CEO Compensation Bubble

The hospital <a href="http://hcrenewal.blogspot.com/search/label/executive%20compensation">CEO compensation</a> bubble continues to grow. As the year draws to a close, I have found another set of stories about outsized payments to health care executives.  While their repetitive features suggest the magnitude of the issue, they featured some twists on the usual justifications given for large compensation packages. Presented in order of the size of the compensation package..... Maxis Health System, Pennsylvania The Scanton Times-Tribune <a href="http://thetimes-tribune.com/news/marian-community-hospital-to-leave-behind-more-than-19-million-in-liabilities-1.1240913">reported</a>: <blockquote>Mary Theresa Vautrinot, president and CEO of parent company Maxis Health System, earned a little more than $464,000 in salary and other compensation, according to 2010 tax forms filed by the hospital.</blockquote> These days, compensation under a half a million dollars may not seem like all that much, but it should be viewed in context. Maxis Health Systems actually actually owns only one hospital, Marian Community Hospital. In 2010, that hospital, already small, shrunk further, <blockquote>In January 2010, the 70-bed hospital scaled back operations to just 35 beds. For the past six months, Marian Community Hospital has had about 20 inpatients each day.</blockquote> Now it will close: <blockquote>Last Monday, parent company Maxis Health System announced the Carbondale hospital's impending closure, citing ongoing financial pressures and a dwindling patient population</blockquote> $464,000 seems like a lot of money to run a tiny hospital under "ongoing financial pressure" into bankruptcy. This seems like another example of pay for poor performance. Summa Health System, Akron Children's Hospital, Akron General Health System, Ohio In a survey of local hospital CEO compensation, the Akron Beacon-Journal <a href="http://www.ohio.com/news/top-stories/hospitals-disclose-executive-pay-charity-care-1.248669">noted</a>, <blockquote>Children’s President and Chief Executive William Considine received compensation and other benefits totaling $1,560,659 in 2010. Thomas J. Strauss, president and chief executive of Summa Health System, received a total compensation and bonus package worth $1,408,062 last year. For Akron General, 2010 was a year of leadership transition, with a former, interim and current leader all receiving executive pay. Alan J. Bleyer, who retired as the hospital’s leader in 2009, received $677,267 in compensation. Michael Rindler, a national health-care consultant who was interim chief executive and continued in a consulting role through the year, made $983,744. Vincent J. McCorkle, who took over as president and chief executive on July 1, 2010, received $568,605 in total compensation last year.</blockquote>Lest anyone think that these hospitals were paying their CEOs a lot of money, <blockquote>Nonprofit hospital executives could make substantially more if they worked in for-profit industries, [Ohio Hospitals Association spokesperson Mary] Yost said. 'A million dollars certainly is a decent package, but it’s not the highest thing that these people could command,' she said. 'We’re blessed that there are people who want to work for a nonprofit that has the mission of serving its community and they’re not just in it for the money.'</blockquote> Only within the protected world of top executives would $1 million a year seem only a "decent package."  The stock defense of lavish executive pay is <a href="http://www.nizkor.org/features/fallacies/appeal-to-common-practice.html">an appeal to common practice</a>, i.e., the pay is justified because so many organizations pay their executives similar amounts.  This version of the defense lacked even the common accompanying assertions that the particular executives are so brilliant and hard-working that they would be assured of a high market price. Furthermore, let us consider another comparison.  Consider the following data, <blockquote>Summa’s revenue exceeded expenses by $31.7 million, for an operating margin of about 3 percent. Akron General Medical Center’s revenue exceeded expenses by about $8 million, resulting in an operating margin of 1.7 percent. Parent company Akron General Health System posted a loss of about $1 million on revenue of $854,207, according to IRS filings. The health system's filings reflect investment income and the costs of providing health screenings to the public, not hospital operations, Akron General spokesman Jim Gosky said. Revenue at Children’s exceeded expenses by about $35.3 million for a 7.4 percent operating margin.</blockquote>These data implied that the CEOs of Summa and Childrens' each received compensation equal to about 5% of their organization's total operating margins. The two people who acted as CEO at Akron General received together an amount that was larger than their system's operating loss, so had they been paid $1 million less, their system would have broken even. In this case, the newspaper found no one to quote who would assert that the former CEOs' performance was so good as to command that much of the hospital's excees, or the latter CEO's performance was so good as to be worth putting the hospital system into a deficit.   Mercy Health Systems, Wisconsin The Janesville, Wisconsin Gazette published a story about one CEOs response to previous reporting of his compensation, <blockquote>Javon Bea saw the August article in a Madison newspaper that questioned the salaries of area health care leaders. Bea, the president and chief executive officer of Janesville-based Mercy Health System, was singled out for receiving considerably more than hospital executives in Madison. The article was based on 2009 tax filings, which show that Mercy paid Bea $3.6 million in total compensation. That included compensation of nearly $2 million and deferred pension payments of just more than $1.6 million. The newspaper reported that the national average was $630,000 and included base salaries, bonuses, pensions and other benefits.</blockquote> Many stories of executive pay have shown leaders who make many times other employees' compensation.  In this case, however, a CEO tried to assert that he did many times other employees' work.  Bea defended his salary by arguing he did the work of at least three, perhaps six people: <blockquote>Bea said the Madison newspaper story compared executives at individual operations to him, an executive of a system that has three hospitals and 61 other facilities in 24 communities in southern Wisconsin and northern Illinois. 'To equal the job description of the CEO of Mercy Health System, you'd have to (add together) the salary of the CEO of DeanCare insurance, the salary of the CEO of Dean Clinic and the salary of the CEO of St. Mary's Hospital,' Bea said. 'And then you'd better throw in the chief operating officers at all three.' Bea said Mercy doesn't have COOs and that he does that work.</blockquote>Mr Bea did not explain how he found enough time in a 24 hour day to do the work of three to six people.  This seems to be a particularly hyperbolic version of argument that the executive is so brilliant and hard-working as to command such a high market price. Perhaps Mercy does not have CEOs or COOs of individual hospitals, but its 2010 Form 990 (from Guidestar <a href="http://www.guidestar.org/FinDocuments/2010/390/816/2010-390816848-0734ca49-9.pdf">here</a>) documents that it has ten vice-presidents who each make approximately $200,000 to over $375,000 a year. Why Mr Bea would need to do the work of three or six people when he has so many other well-executives around to help was not clear. Furthermore, Mr Bea came up with an apparently unique justification for his high pay, that its source was some sort of magic money that did not add to health care costs, <blockquote>Bea said his salary has no effect on health care costs or the premiums MercyCare subscribers pay each year. He likened his salary to capital costs, which he also said don't affect what patients are charged. John Cook, Mercy's chief financial officer, said Medicare, Medicaid and private insurance companies don't pay providers based on the costs of capital improvements or salaries, which in Bea's case is determined by a board of directors that works with national consultants and attorneys. 'My salary isn't going to affect your health care cost,' Bea said.</blockquote> Maybe Mr Bea needs a second opinion from another CFO. His compensation appears to come from the hospital system's budget, per its 990 form, so it affects hospital costs as much as any other expense of the same amount. Furthermore, it is well known that hospital systems negotiate payment rates with private insurers, and that larger systems with more market power may negotiate higher rates.  Finally, it is also well known that different hospitals collect different amounts from government insurance programs for patients with apparently similar problems.  Thus, the notion that executive pay has no effect on health care costs, and the implication that it somehow comes from a magical place outside of the budget, seems to be an entirely new rationale for huge executive compensation.  From a psychological standpoint, it appears to be based on wishful or magical thinking.  Another way to look at it is as a logical fallacy, a <a href="http://www.nizkor.org/features/fallacies/special-pleading.html">special pleading</a>, an assertion without a clear basis that the usual rules or principles do not apply. Montefiore Medical Center, New York-Presbyterian Medical Center, and Others, New York, New York A brief <a href="http://www.nypost.com/p/news/local/rich_ceos_performing_cashectomy_neFNAu2KnwUlm3Wi3rWVSK">article</a> in the New York Post focused on the bonuses given to some local CEOs, <blockquote>Dr. Kenneth Davis, the head of Mount Sinai hospital and medical school, raked in a $1.2 million bonus in 2010, and Michael Dowling, the CEO of the North Shore-LIJ Health System, got $1 million. Louis Shapiro, president of the Hospital for Special Surgery, got a $1.5 million bonus and $992,215 salary. Some CEOs also got a housing allowance, car and driver, and first- or business-class air travel. Montefiore Medical Center in The Bronx paid CEO Steven Safyer $1.4 million plus a $359,845 bonus. The hospital also put $2.2 million into Safyer’s retirement fund, which he can take only when he leaves.</blockquote> In addition, <blockquote>The highest total compensation — $4.3 million — went to Dr. Herbert Pardes, the retiring head of New York-Presbyterian Hospital, who got $1.7 million in salary, a $1.9 million bonus and $648,686 as “other” compensation.</blockquote> The Post found someone to provide the usual rationale, <blockquote>Brian Conway, a spokesman for the Greater New York Hospital Association, defended the packages. 'Hospital CEO compensation reflects their myriad responsibilities, the complexity of running a medical center, and the national market for their talents,' he said.</blockquote> That was a quick one-sentence summation of the "market" and "brilliant, hard-working" arguments.  Note that, as usual, no justification of why the particular people involved should be considered particularly brilliant or hard-working, and no comparison of their dedication or brilliance to that of lesser paid hospital employees was supplied.  Note also that CEO compensation is usually determined not by the market, but by a biased <a href="http://hcrenewal.blogspot.com/2011/10/peer-benchmarking-lake-wobegone-effect.html">benchmarking process,</a> see post here. Note further that this process almost never includes comparisons with employees who are not CEOs, nor includes explicit comparison of particular CEOs dedication, brilliance, etc with either that of other CEOs or other employees. Premier Health Partners, and Others, Cincinnati, Ohio The Middletown (Ohio) Journal <a href="http://www.middletownjournal.com/news/middletown-news/some-health-ceos-earned-millions-1297729.html">reported</a>, <blockquote>Jim Pancoast, president and CEO of Premier Health Partners, the parent organization of Atrium Medical Center in Middletown, had the highest pay in 2010 of information available to date from that year. Pancoast collected about $4.6 million in 2010, most of which is a lump sum paid out through a supplemental executive retirement program.</blockquote> The year before saw someone get even richer compensation, <blockquote>Kettering Health Network’s former Chief Executive Officer Frank Perez and UC Health’s former CEO Kenneth Hanover topped the list in 2009, with each receiving more than $2.6 million. Frank Perez’ total reportable pay in 2009 of more than $5.5 million included a more than $4.5 million lump-sum, taxable retirement payment. </blockquote> Ron Seifert, executive compensation practice leader for the health care practice at Hay Group, supplied the usual rationale, <blockquote>'No one, including the boards of these organizations, denies this is a lot of money. But what they’ll tell you is this takes a special leader,' he said. 'They come with a price tag.'</blockquote> As is also usual, why the particular leader should be considered so special, particularly in comparison to other lesser paid hospital employees,  was not specified.. Northwestern Memorial Healthcare System, Chicago, Illinois Last but not least, we address the compensation given Dean M Harrison, the CEO of Northwestern Memorial Healthcare System, as discussed in an editorial in FierceHealthFinance, entitled, "<a href="http://www.fiercehealthfinance.com/story/evaluating-eight-figure-paychecks-and-near-poor-patients/2011-11-28">The problem of 8-figure hospital paychecks and near-poor patients</a>." In summary, <blockquote>Harrison was paid an astonishing $10.2 million in 2010, the result of a $7.5 supplemental retirement fund payout.</blockquote> The ire this generated, so unlike the tone in the typical news article about executive compensation,  is worth quoting: <blockquote>There are hundreds of nonprofit hospital CEOs like Harrison, compensated with millions of dollars while their institutions throw a few bread crumbs to the poor living in their service areas. Many these institutions spend more on CEO pay than charity care. Alan Sager, a professor of health policy and management at Boston University, recently told Crain's Chicago Business what a lot of healthcare pay and governance experts dare not say: 'There's an enormous sense of self-entitlement among CEOs. It started in the for-profit corporate sector, but it has sloshed over into the non-profit hospital world.' I worked up some talking points for Northwestern Chief Financial Officer Peter J. McCanna that he can bring to the next board meeting, although I'm guessing he won't do so. For those CFOs actually willing to rock the boat, these bullet points work for practically any large urban hospital in the country: • Dean Harrison's 2010 compensation was approximately 170 times that of a charge nurse on their feet 12 hours a day. Does Dean Harrison work 170 times harder? • Dean Harrison's compensation was approximately 20 times that of a cardiac surgeon performing 300 to 400 high-revenue procedures a year. Does Dean Harrison provide 20 times the benefit? • Dean Harrison's compensation could be used to cover the first 10,000 uninsured patients who come through the emergency room each year. Which would provide a greater benefit to the hospital and community? • The purpose of a supplemental retirement plan is to ensure its recipient maintains a reasonable standard of living past their working years. Given the tens of millions of dollars Dean Harrison has already received during his career and the six-figure pension and high five-figure Social Security income he is guaranteed upon retirement, will the $7.5 million payout actually accomplish its goal? Or will it merely be gravy for his heirs?</blockquote> He concluded, <blockquote>Meanwhile, if your hospital has a single patient who works hard, will be bankrupted by the bill they receive, and no one on your staff has walked them through every step of a charity care claim, that is where some imagination and original thought is sorely needed. Too much money in some places, and not enough in others. Someone needs to announce that the buck stops here. And start moving around all the other bucks.</blockquote> Summary In a health care system with ever rising costs, declining access, and stagnant quality, we no longer can tolerate the perverse incentives generated by unaccoutanably high compensation to top executives. As long as top executives continue their sense of "self-entitlement," and can continue their current management practices reinforced by ever rising pay checks, expect poor leadership to undermine any attempts to improve health care.  Tired repititions of the usual rationales, that the CEOs are brilliant and hard-working, and that their compensation is mandated by the market do not make these rationales true. We need health care leadership that has compassion for the increasing hardships that their patients have to endure, and that puts doing the right thing for patients' and the public's health ahead of self-interest.

More Tales of the Hospital CEO Compensation Bubble

The hospital CEO compensation bubble continues to grow. As the year draws to a close, I have found another set of stories about outsized pa...

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David Pogue: "The Year of C.E.O. Failures Explained" and Why IT is so Bad

David Pogue is a prolific writer on IT, having written some of the most popular books on MacIntosh, e.g., the Mac Secrets series. In an article in the Dec. 15, 2011 New York Times on "CEO's idiotic blunders" as he calls them, he reveals why IT generally, HIT included, may be so poorly done: <blockquote>The Latest in Technology from David Pogue <a href="http://pogue.blogs.nytimes.com/2011/12/15/the-year-of-c-e-o-failures-explained/?ref=personaltechemail&nl=technology&emc=cta1" style="font-weight: bold;">The Year of CEO Failures Explained</a> New York Times Dec. 15, 2011 ... But it doesn’t seem like you’d need a business degree to appreciate that these [decisions by CEO's on making major changes to businesses] would be bad decisions. Whenever I see a company shooting itself in the foot like that, I always wonder: how could anyone be so stupid? When do people become so stupid? Last spring, I taught a class at the Columbia Business School called “What Makes a Hit a Hit—and a Flop a Flop.” I focused on consumer-tech success stories and disasters. I distinctly remember the day I focused on products that were rushed to market when they were full of bugs — and the company knew it (can you say “BlackBerry Storm?”). I sagely told my class full of twentysomethings that I was proud to talk to them now, when they were young and impressionable — that I hoped I could instill some sense of Doing What’s Right before they became corrupted by the corporate world. But it was too late. To my astonishment, hands shot up all over the room. These budding chief executives wound up telling me, politely, that I was wrong. That there’s a solid business case for shipping half-finished software. “You get the revenue flowing,” one young lady told me. “You don’t want to let your investors down, right? You can always fix the software later.” You can always fix the software later. Wow. That’s right. Use your customers as beta testers. Don’t worry about burning them. Don’t worry about souring them on your company name forever. There will always be more customers where those came from, right? </blockquote> In health IT, beta-testing unregulated, experimental software medical devices on patients is commonplace. And patients do get burned. Literally. <blockquote>That “ignore the customer” approach hasn’t worked out so well for Hewlett-Packard, Netflix and Cisco. All three suffered enormous public black eyes. All three looked like they had no idea what they were doing. Maybe all of those M.B.A.’s pouring into the workplace know something we don’t. Maybe there’s actually a shrewd master plan that the common folk can’t even fathom. </blockquote> Actually, no. If anything, IMO the MBA's suffer the <a href="http://en.wikipedia.org/wiki/Dunning%E2%80%93Kruger_effect">Dunning-Kruger effect</a>. <blockquote>But maybe, too, there’s a solid business case to be made for factoring public reaction and the customer’s interest into big business decisions. And maybe, just maybe, that idea will become other C.E.O.s’ 2012 New Year’s resolution.</blockquote> I doubt it. In healthcare IT, it will take a few more years - and much more litigation - before the frankly immoral and nihilistic attitude of "we can fix the software later" becomes taboo. It may also take some of those sage MBA's realizing that their loved ones have no "reset button" when they've been "burned" by faulty health IT, and that their loved ones - unlike software - cannot be "fixed later." -- SS

David Pogue: "The Year of C.E.O. Failures Explained" and Why IT is so Bad

David Pogue is a prolific writer on IT, having written some of the most popular books on MacIntosh, e.g., the Mac Secrets series. In an arti...

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Health Care Policy of the Insiders, by the Insiders, for the Insiders - the Newt Gingrich Case Files

Newt Gingrich's rise to the top of the pack of Republican contenders for the US presidency has earned him increased scrutiny.  The resulting investigative reporting has provided a revealing set of case studies showing how insiders have come to dominate US health care policy. Below I have reorganized the information presented in a series of news articles from mid-November to mid-December, 2011. Mr Gingrich's Consulting Empire A general description of Mr Gingrich's health care "think tank" appeared in the Washington Post.(1) <blockquote>A think tank founded by GOP presidential candidate Newt Gingrich collected at least $37 million over the past eight years from major health-care companies and industry groups, offering special access to the former House speaker and other perks, according to records and interviews. The Center for Health Transformation, which opened in 2003, brought in dues of as much as $200,000 per year from insurers and other health-care firms, offering some of them 'access to Newt Gingrich' and 'direct Newt interaction,' according to promotional materials.</blockquote> Despite its name, the CHT was for-profit. Much of its actual workings are confidential, per the Post,(1) <blockquote>Susan Meyers, a center spokeswoman, declined to comment on the think tank’s income or staffing levels because it is a private-sector organization.</blockquote> Despite its pretentious name, the CHT was apparently a vehicle for its wealthy corporate clients to influence health policy to favor their business interests.  A NY Times article(2) reported that: <blockquote>His consultancy practice was centered around his ability to help big corporate interests speak the language of Republicans and navigate the corridors of Capitol Hill on issues vital to their businesses.</blockquote> According to a Bloomberg article(3), the work was quite lucrative: <blockquote>Two companies founded by Newt Gingrich announced yesterday that they had grossed $55 million between 2001 and 2010, part of an effort to quiet questions about how the former U.S. House speaker earned millions since he resigned from Congress in 1999. That revenue supports the Center for Health Transformation and The Gingrich Group LLC, which have a staff of as many as 30 people, stage health-care policy events, and provide advice to clients, Nancy Desmond, the chairman and chief executive officer of the firms, said in a written statement. </blockquote> The CHT was linked to a small corporate empire, as described by the Washington Post,(4) <blockquote>Former House speaker Newt Gingrich transfigured himself from a political flameout into a thriving business conglomerate. The power of the Gingrich brand fueled a for-profit collection of enterprises that generated close to $100 million in revenue over the past decade, said his longtime attorney Randy Evans. Among Gingrich’s moneymaking ventures: a health-care think tank financed by six-figure dues from corporations; a consulting business; a communications firm that handled his speeches of up to $60,000 a pop, media appearances and books; a historical documentary production company; a separate operation to administer the royalties for the historical fiction that Gingrich writes with two co-authors; even an in-house literary agency that has counted among its clients a presidential campaign rival, former senator Rick Santorum (R-Pa.). Separate from all of that was his nonprofit political operation, American Solutions for Winning the Future.</blockquote> Relationships with Big Health Care Corporations The Center for Health Transformation was largely funded by big health care corporations. The Post first noted,(1) <blockquote>The biggest funders, ... [included] firms such as AstraZeneca, Blue Cross Blue Shield and Novo Nordisk,...</blockquote> Also,(1) <blockquote>The center has listed scores of firms and industry groups as members over the years, amounting to a Who’s Who of the medical field, from GE Healthcare to the American Hospital Association to Wellpoint, the nation’s largest health insurer. </blockquote> Other clients were listed in a Bloomberg article,(5) <blockquote>Among the member companies were drugmaker Johnson & Johnson (JNJ) and health insurer Blue Cross and Blue Shield Association....</blockquote> Also,(5) <blockquote>Pfizer Inc. (PFE), the world’s largest drugmaker, had consulting contracts with Gingrich, according to two people familiar with the arrangements. Pfizer spokesman Ray Kerins didn’t respond to requests for comment. The Pharmaceutical Research and Manufacturers of America, the industry’s trade group, was also a client. His firm 'was retained by the PhRMA general counsel’s office at one time to provide advice on a positioning project,' the group said. </blockquote>In addition, as noted below, clients included important firms in the health care information technology (IT) sector, including GE, IBM, Microsoft, Allscripts, and Siemens. Below, we present several cases in which Mr Gingrich apparently intervened on behalf of his clients to promote their business interests in the guise of promoting his views on health policy solutions.  In some cases, the views he promoted did not fit with what is generally regarded as his political philosophy, suggesting that the interests of his paying clients overrode his political views. Case: End of Life Care The New York Times reported,(2) <blockquote>Writing on the Web site of the Washington Post, Mr Gingrich praised Gundersen Lutheran Health System of LaCrosse, Wis., for its successful efforts to persuade most patients to have 'advance directives,' saying if Medicare had followed Gundersen's lead on end-of-life care and other practices, it would 'save more than $33 billion a year.'</blockquote> Note that <blockquote>Gundersen was one of the paying clients of Mr. Gingrich's Center for Health Transformation....</blockquote> However, <blockquote>within weeks, Mr. Gingrich would find himself on the wrong end of what some Republicans labeled the 'death panel' issue.</blockquote> At that point, Mr Gingrich abruptly changed his tune, <blockquote>As it happens, shortly after Mr. Gingrich wrote his article praising Gundersen, he joined the conservative critics of the provision. 'You are asking us to trust turning power over to the government,' Mr Gingrich told George Stephanopoulos of ABC News that August 'when there are clearly people in America who believe in establishing euthanasia, including selective standards.'</blockquote> This suggested that Mr Gingrich took up the cause of end-of-life decision making not be cause he deeply believed in it, but because it was expeditious given the wishes of his clients, despite the assertion made by his spokesperson,(2) <blockquote>Mr. Hammond said that Mr. Gingrich did not take policy positions for pay; rather, he said, clients sought him out because of the views he already held and his expertise in communicating ideas.</blockquote> Case: Medicare Prescription Coverage Sans Negotiations about Drug Prices As reported by Bloomberg,(5) <blockquote>When U.S. House Republican leaders in 2003 were short of votes to pass a $395 billion Medicare prescription drug benefit, they recruited former House Speaker Newt Gingrich for help. In a hushed room on Capitol Hill, Gingrich told his former Republican colleagues that if he could endorse the measure, they should be comfortable with it, too, said two former senior House aides who attended the closed-door session. Two days later, after a vote was held open for three hours as leaders corralled the final ayes, the measure passed and was eventually signed into law by President George W. Bush. What Gingrich didn’t mention during the Republican caucus meeting was that he was also building a for-profit, health-care research company and seeking financing from drugmakers, which were investing $128.6 million in lobbying for passage of the new benefit for seniors. </blockquote> Note that the legislation that provided Medicare drug coverage forbade the government from negotiating prices with drugmakers.  This was unprecedented, because drug coverage from the US Veterans Administration and Medicaid did not come with the obligation to pay whatever the drug-makers charged.  The inability of Medicare to negotiate the prices it paid for drugs certainly helped the companies' revenues while driving up the costs of Medicare, the federal deficit and the costs of health care in general. Case: Promoting Expensive Diabetes Care The Washington Post reported,(4) <blockquote>Novo Nordisk, a Denmark-based drug firm that specializes in diabetes treatments.... paid a total of $1.2 million to Gingrich’s foundation over six years as a 'founding charter member.' 'It was strictly a business, nonpolitical relationship,' Novo Nordisk spokesman Ken Inchausti said. 'We admired his leadership on issues related to health-care delivery systems. We thought the CHT brought something to the table to us in terms of finding ways to help people prevent diabetes.' Gingrich loaned his celebrity to causes that, whatever their other merits, could also be good for Novo Nordisk’s bottom line. For instance, he was the keynote speaker at Novo Nordisk’s 'diabetes summit' in 2005 and joined the company in issuing a 'call to action' to fight diabetes in Texas and Georgia.</blockquote>One wonders how many of the widely promoted "summits" and other star-studded conferences on health care featuring corporate  and political leaders as speakers are just stealth health policy advocacy or stealth marketing. Case: Irrational Exuberance for Electronic Health Records My fellow Health Care Renewal blogger has often discussed the <a href="http://hcrenewal.blogspot.com/search/label/irrational%20exuberance">"irrational exuberance"</a> for electronic health records (EHRs) despite scant information about their benefits, and increasing data suggesting their harms.  It now appears that Mr Gingrich, sponsored by copious funds from the health care IT sector, has been a major source of such exuberance.  Mr Gingrich had a complex relationship with the health care information technology (IT) industry. It began to come out first in a NY Times story,(6) <blockquote>When the center [for Health Transformation] sponsored a 'health transformation summit' at the Florida State Capitol in March 2006, lawmakers who attended Mr. Gingrich's keynote speech inside the House chamber received a booklet promoting not just ideas but also the specific services of two dozen of his clients. Executives from some of those companies sat on panels for discussions that lawmakers were encouraged to attend after Mr. Gingrich's address. Gerard White, president of Clearwave, which paid about $50,000 to become a center member, used the occasion to pitch his company's system for managing patient data.</blockquote> This had all began earlier, <blockquote>Two years before the Florida 'summit,' Mr. Gingrich made a presentation to Republican lawmakers in Georgia, promoting the work of his member companies by citing specific benefits if they were hired. For example, 'VitalSpring could save the State Employee Program over $20 million a year.' Minutes of the members-only conference call from March 2004 said the center had 'arranged joint meetings' for members to present their work on electronic health records to top federal officials, noting that Mr. Gingrich 'reported very positive feedback overall from these meetings.' He also pressed for passage of a federal bill to increase the use of electronic health records, collaborating with one of its co-sponsors, Representative Patrick J. Kennedy of Rhode Island, and Senator Hillary Rodham Clinton of New York, both Democrats.</blockquote> Furthermore, <blockquote>Many of the ideas he has pushed involve the increased use of information technology, and companies specializing in that are well represented in the center's roster. They also figured prominently in an early center initiative, teaming up in 2003 with the conservative Georgia Public Policy Foundation to promote changes in health care in Mr. Gingrich's home state. At his discussion with Georgia House Republicans in 2004, Mr. Gingrich gave examples of companies whose services could 'both improve health and start saving money,' according to the center's summary of his presentation.</blockquote> And there is more, <blockquote>In Washington, Mr. Gingrich's push for electronic health records illustrated how his own policy advocacy and ties to former Congressional colleagues made him a sought-out consultant for companies like Astra Zeneca and Siemens. Mr. Gingrich hailed HealthTrio, one of the center's 'founding charter members,' during a hearing held in 2003 by Senator Larry Craig, Republican of Ohio. Telling the senator that HealthTrio's chief executive had helped design the electronic records program in the United Kingdon, Mr. Gingrich said the company 'estimates we could have an electronic health record for American for about 10 cents per month, per person.' The center later arranged for HealthTrio and I.B.M to meet with senior federal health officials and congressional leaders 'to review the U.K. approach and how it might be applied in the U.S.,' according to center records. Some of the ideas promoted by the center found their way into the electronic health records legislation proposed by Mr. Kennedy, which was prepared with input from Mr. Gingrich.</blockquote>This is especially ironic, given that the UK NHS electronic health record initiative has become a crashing failure (for example, see<a href="http://hcrenewal.blogspot.com/2011/08/you-saw-it-here-first-uk-nhs-pulls-plug.html"> this post</a>). Even more involvement with the push for electronic health records (EHRs) appeared in a Boston Globe article,(7) <blockquote>Newt Gingrich seized the TV airwaves in 2009 to bash President Obama’s stimulus package, calling it 'entirely a pork-barrel bill' that would do little to solve the recession. Later, in a separate web video, the former House speaker stepped back from his blanket criticism. He explained that he strongly supported spending $27 billion of stimulus funds to encourage doctors and hospitals to create electronic medical records for their patients. Left unsaid was that the Gingrich Group, his consulting business in Washington, received large payments from medical technology companies that stand to profit from the federal money.</blockquote> In particular, <blockquote>The stimulus infusion Gingrich supported is expected to benefit health care technology companies, including those who have been clients such as GE Healthcare and Allscripts. GE Healthcare said it pays Gingrich’s center to act as a 'collaborator and facilitator' among a diverse group of health care interests. 'We work with the Center for Health Transformation in an effort to improve the effectiveness of the health system through the use of information technology,' said GE Healthcare spokesman Corey Miller. Allscripts spokeswoman Ariana Nikitas said the company ended its relationship with Gingrich’s center two years ago but considered the venture 'a think-tank to advance health care efforts.'</blockquote> It does not stop there. Per the NY Times,(8) <blockquote>Mr. Gingrich was cheering a $19 billion part of the [Obama stimulus] package that promoted the use of electronic health records, something that benefited clients of his consulting business. 'I am delighted that President Obama has picked this as a key part of the stimulus package,' he told health care executives in a January 2009 conference call. After the bill was passed a month later, Mr. Gingrich's consultancy, the Center for Health Transformation, joined two of his clients, Allscripts and Microsoft, in an 'Electronic Health Records Stimulus Tour' that traveled the country, encouraging doctors and hospitals to buy their products with billions in federal subsidies. </blockquote>We, particularly InformaticsMD, have frequently commented on how health care information technology has been promoted not just by enthusiasts in the field, and by companies that manufacture such devices, but by the government.  The bandwagon has gone down the road despite little clinical evidence that such technology is beneficial, and increasing evidence of its harms.  Now it appears that an important reason for this ruch to promote expensive, but unproven devices comes from the sort of stealth health care policy advocacy on behalf of corporate vested interests described above. Summary So Newt Gingrich parlayed his political track record into a lucrative "consultancy" which enthusiastically promoted the health policy objectives of its clients, who included some of the biggest US health care corporations.  Some of the policy positions the consultancy promoted seemed to run counter to Mr Gingrich's political record.  Worse, some of the initiative he successfully promoted seem to have contributed to US health care dysfunction. These stories, some of which are many years old, only came out after Mr Gingrich became the front runner for the Republican nomination for US President.  Had he not chosen to re-enter politics, it is not clear when reporters would have had time to due the required investigations.  One wonders how many similar stories have not been made public because they do not involve prominent presidential candidates. The bottom line seems to be that there are myriad ways corporate and political insiders push health policy agendas because of self-interest, regardless of their effects on patients' and the public's health.  Health policy in the US has become an insiders' game.  Unless it is redirected to reflect patients' and the public's health, facilitated by the knowledge of unbiased clinical and policy experts rather than corporate public relations, expect our efforts at health care reform to just increase health care dysfunction.  Physicians, public health advocates, whatever unbiased health policy experts remain must educate the public about how health policy has been turned into a corporate sandbox.  We must try to somehow activate the public to call for health care policy of the people, by the people, and for the people. References 1.  Eggen D. Gingrich think tank collected millions from health-care industry.  Washington Post.  November 17, 2011.  Link <a href="http://www.washingtonpost.com/politics/gingrich-think-tank-collected-millions-from-health-care-industry/2011/11/16/gIQAcd72VN_story.html">here</a>. 2. Rutenberg J. Gingrich faces more scrutiny over corporate clients. NY Times, November, 17, 2011. Link <a href="http://www.nytimes.com/2011/11/18/us/politics/newt-gingrich-faces-more-scrutiny-on-corporate-clients.html">here</a>. 3. Benson C, Lerer L. Gingrich health center and group paid $55M. Bloomberg, November 22, 2011. Link <a href="http://www.bloomberg.com/news/2011-11-22/corporations-pay-gingrich-health-center-and-consulting-group-55-million.html">here</a>. 4. Tumulty K, Eggen D. Newt Gingrich Inc.: how the GOP hopeful went from political flameout to fortune. Washington Post, November 26, 2011. Link <a href="http://www.washingtonpost.com/politics/newt-gingrich-and-how-he-got-rich/2011/11/21/gIQAftOglN_story.html">here</a>. 5. Davis JH, Jensen K. Gingrich campaigning as change agent profited as an insider. Bloomberg, November 18, 2011. Link <a href="http://www.bloomberg.com/news/2011-11-18/gingrich-running-as-change-agent-profits-from-washington-insider-status.html">here</a>. 6. McIntire M, Rutenberg J. Gingrich gave push to clients, not just ideas. NY Times, November 29, 2011. Link <a href="http://www.nytimes.com/2011/11/30/us/politics/gingrich-gave-push-to-clients-not-just-ideas.html">here</a>. 7. Rowland C. Newt Gingrich supported $27 billion of President Obama's stimulus for electronic medical records, helping his consulting clients. Boston Globe, December 16, 2011. Link <a href="http://www.boston.com/Boston/politicalintelligence/2011/12/gingrich-stimulus-support-benefited-his-consulting-clients/IoXiAqmY1h1A74SYCwckdJ/index.html">here</a>. 8. Rutenberg J, McIntire M. Gingrich push on health care appears at odds with G.O.P. NY Times, December 16, 2011. Link <a href="http://www.nytimes.com/2011/12/16/us/politics/gingrichs-health-care-policy-history-at-odds-with-gop.html">here</a>.

Health Care Policy of the Insiders, by the Insiders, for the Insiders - the Newt Gingrich Case Files

Newt Gingrich's rise to the top of the pack of Republican contenders for the US presidency has earned him increased scrutiny. The resul...

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Hospital Executives - What Will They Think of Next?

Health care organizations are now most often run by people with management, not clinical backgrounds.  It seems like business schools have taught managers to sign on to whatever the latest management fashions are.  So what are the latest fashions in hospital management?  Here are a few hot items. Retreading Pharmaceutical Representatives My jaundiced reading of the business news suggests that most executives think that marketing is the most important part of their organizations, and that clever marketing can sell any product or service. For example, the pharmaceutical industry spends about twice as much on marketing as it does on research and development (despite pharma executives' protestations that they run research driven businesses) (see <a href="http://hcrenewal.blogspot.com/2008/01/blogscan-575-billion-spent-yearly-on.html">this post</a>). So it should be no surprise that now hospitals are using "hospital representatives" to market referrals to their institutions to doctors. From <a href="http://www.usatoday.com/money/industries/health/story/2011-12-13/hospitals-sales-reps/51887938/1">last week's USA Today</a>: <blockquote>n northwest Indiana, Carrie Sota visits five or six doctors' offices every workday as part of her new sales job. But Sota isn't selling the physicians on a prescription drug or a medical device. She's promoting her hospital — the University of Chicago Medical Center. Sota, 30, is one of four employees the academic medical center has hired in recent months to make 'sales calls' on physicians in the hope that they will send more patients to the hospital. 'We are trying to build meaningful relationships,' said Sota, who was previously a saleswoman for a small medical device company. The University of Chicago Medical Center is one of a growing number of hospitals nationwide hiring former drug and device sales reps to visit doctors' offices to persuade them to use their services over competing facilities. Rather than handing out samples of prescription drugs, the sales reps call on doctors armed with the latest information on how their facility is reducing hospital-acquired infections and improving patient-satisfaction scores. In visits that can last five to 20 minutes, reps try to win doctors' loyalty by helping them get better times on operating room schedules or easier patient referrals to hospital-based specialists. The sales reps can also carry messages back to the hospital, such as a doctor's request for a new medical device to be available in surgery.</blockquote> The article suggested a few problems with this approach. First, the point of the marketing is not to improve the match between patients' needs and the services the hospital provides. Rather, it is to generate referrals that have the potential to provide the maximum revenue: <blockquote>While hospitals have always tried to woo doctors to refer patients to them, the institutions are growing more direct in their efforts. The hospitals mine data to see which doctors have the most profitable, well-insured patients, and then they assign those doctors to a sales rep.</blockquote> So in particular, <blockquote>Many of the physician liaisons focus on specialists, who bring in patients for services with the highest profit margins, including orthopedics, cardiac care and cancer care, [Duke University Health System physician liaison manager Christine] Perry said.</blockquote> Second, the hospital reps have incentives based on revenue, not on value to the patient: <blockquote>About two-thirds of Tenet's liaisons are former drug and device sales reps, and they can make tens of thousands of dollars in bonuses if doctors increase their referrals to the hospitals. </blockquote> Third, across the system, the revenues generated may be much less than the costs incurred, since most of the marketing will only succeed in moving patients from one hospital to another: <blockquote>Paul Ginsburg, president of the non-partisan Center for Studying Health System Change, said, 'When you look at the health system, this is a waste of resources. It's a zero-sum game.' He added: 'The net results of changing physician-referral patterns is that one hospital gains at a cost of others, and all the hospitals burn resources to pay (sales)people who take up the doctor's time.'</blockquote> Of course, the reps could succeed in persuading doctors to refer patients to specific hospitals for services the doctors originally did not think the patients needed. That would be good were the patients to need those services, but bad if they were not. Fourth, we have discussed (for example, <a href="http://hcrenewal.blogspot.com/2007/05/fool-me-once-shame-on-you-fool-me-twice.html">here</a> and <a href="http://hcrenewal.blogspot.com/2008/04/more-about-cynical-world-of-drug-reps.html">here</a>) how pharmaceutical representatives use sophisticated psychological and emotional manipulation, despite claims that all they do is provide unbiased information and educational, to influence physicians to prescribe drugs. Again, this may result in patients getting drugs whose benefits do not outweigh their harms. It is possible that hospital representatives will do something similar: <blockquote>'These people are really good and really assertive and very sophisticated,' said Stephen Newman, Tenet's chief operating officer.</blockquote> Unbundling Payments The airlines decided a while ago that they could make more money by charging passengers for each checked bag, and even for those little meals on plastic trays. It looks like hospital executives have discovered a new way to unbundle. As reported last month by <a href="http://www.stltoday.com/business/local/outpatient-sticker-shock-for-a--minute-treatment/article_a2915e64-1499-11e1-bf45-001a4bcf6878.html">the St Louis Post-Dispatch</a>, hospitals have begun charging often hefty "facility fees" for patients seen as outpatients in hospital clinics or hospital owned practices, even for very minor procedures or just office visits, and even for Medicare patients. (Private physicians who see patients in their own offices cannot charge such fees to Medicare patients, and most private insurance companies will not cover such fees.): <blockquote>A few weeks after Allison Zaromb took her 4-year-old son Meir to see a dermatologist in an outpatient office at the SSM Cardinal Glennon Children's Medical Center campus, she received separate bills from the doctor and the hospital. The cost for a 3-minute procedure to treat Meir's warts totaled $538, which included a $220 bill for physician services - and a separate bill for a $318 hospital 'facility fee.' Zaromb, a periodontist who lives in University City, is now suing SSM Health Care Corp. and Cardinal Glennon Children's Medical Center in a proposed class action lawsuit on behalf of other patients</blockquote> More generally, <blockquote>With the proliferation of hospital-owned outpatient centers and hospital-owned physician practices, hospital 'facility fees' have become increasingly common. Such hospital facility fees often involve greater dollar amounts than the fees charged by physicians.</blockquote> Technically, it all appears to be legal: <blockquote>Under federal regulations, health systems are permitted to charge a hospital facility fee for an outpatient service if it's done in a clinic that is 'hospital-based' - meaning that the clinic is owned and operated as part of a hospital or health system, regardless of whether the clinic is physically located on the hospital grounds.</blockquote> This technique does seem to be a way to increase revenue. But one person's revenue is another person's cost, so it also seems to be a great way to further increase the already high cost of US health care. It is not obvious, however, that these increased costs will lead to increased quality of care or value for the patient: <blockquote>'From a consumer's perspective, when you go see your doctor, you go see your doctor - whether it's in an office inside a larger hospital complex or right across the street,' [Zaromb's lawyer John] Phillips said. 'The doctor's practice remains the same. ... They're making the doctor's office a ‘hospital-based' clinic for one reason: to make money by charging a facility fee, not to improve consumer service.'</blockquote> Negotiating the Costs of Medical Devices One of the favorite topics on <a href="http://hcrenewal.blogspot.com/">Health Care Renewal</a>, at least before we found even more outrageous subjects, was the stratospheric cost of medical devices. For example, look at posts from 2005 <a href="http://hcrenewal.blogspot.com/2005/09/1600-screw-and-other-outrages.html">here</a>, <a href="http://hcrenewal.blogspot.com/2005/08/imaging-test-pre-certification-blues.html">here</a>, <a href="http://hcrenewal.blogspot.com/2005/08/wooden-headed-health-care.html">here</a>, and <a href="http://hcrenewal.blogspot.com/2005/08/new-york-times-examines-why.html">here</a>. So last month we found out that hospital executives have come up with a revolutionary idea to combat the high cost of devices. They will actually try to see what prices the device companies charge other hospitals, and then negotiate the prices down, as <a href="http://www.reuters.com/article/2011/11/30/us-hospitals-idUSTRE7AS2ZI20111130">Reuters</a> reported as big news in late November: <blockquote>Implantable devices make up a sizable chunk of typical hospital budgets, and administrators are devising new ways to limit that cost as they brace for cuts to government reimbursement and treat more patients who can't pay for care. That means methodically working through each category of device, from heart valve replacements and stents to spinal products, to see where they can negotiate lower prices. It also means creating databases of shared information on pricing between hospitals.</blockquote> Imagine that! Of course, the notion that buyers ought to bargain with sellers to get the best price goes back a few years. However, only in 2011 did it apparently occur to hospital executives that they ought to negotiate the prices of one their most expensive purchases. This suggests that there has been something profoundly wrong with the basic assumptions underlying the commonly accepted wisdom that making the health care system more of a market will lead to more financially efficient care.  Summary In 1988, Alain Enthoven advocated in <a href="http://www.amazon.com/gp/product/0444703594/102-6581115-0444916?n=283155">Theory and Practice of Managed Competition in Health Care Finance</a>, a book published in the Netherlands, that to decrease health care costs it would be necessary to break up the "physicians' guild" and replace leadership by clinicians with leadership by managers (see 2006 post <a href="http://hcrenewal.blogspot.com/2006/03/consequences-of-breaking-physicians.html">here</a>). Thus from 1983 to 2000, the number of managers working in the US health care system grew 726%, while the number of physicians grew 39%, so the manager/physician ratio went from roughly one to six to one to one (see 2005 post <a href="http://hcrenewal.blogspot.com/2005/04/growing-proliferation-of-managers.html">here</a>). Health care went from being controlled by clinicians to controlled by a growing volume of managers.  Most of these managers were generic, in that they had little if any knowledge of, experience in, or sympathy to the values of health care. These generic managers have used the same techniques advocated for the management of supermarkets or automobile manufacturers to manage health care organizations, despite all the obvious differences in context, goals, values, and people involved. So these generic managers have brought us such "innovations" as the "hospital (marketing) representative," and the "facility fee" for outpatient visits, but only thought to negotiate device prices in 2011. But that is why we pay them <a href="http://hcrenewal.blogspot.com/search/label/executive%20compensation">the big bucks</a>. How many more arguments do we need that health care organizations ought to be lead by people who understand the health care context, share its core values, and are accountable for how these organizations affect patients' and the public's health?

Hospital Executives - What Will They Think of Next?

Health care organizations are now most often run by people with management, not clinical backgrounds. It seems like business schools have t...

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EHR: "The Dangerous Decade"

A new perspective piece has appeared in the Journal of the American Medical Informatics Association. Although it is not freely available, I thought posting the abstract and the opening would be of interest: <a href="http://jamia.bmj.com/content/19/1/2.abstract"></a> <blockquote><a href="http://jamia.bmj.com/content/19/1/2.abstract">The dangerous decade</a> JAMIA Published Online First 24 November 2011 Enrico Coiera, Jos Aarts, Casimir Kulikowski Abstract Over the next 10 years, more information and communication technology (ICT) will be deployed in the health system than in its entire previous history. Systems will be larger in scope, more complex, and move from regional to national and supranational scale. Yet we are at roughly the same place the aviation industry was in the 1950s with respect to system safety. Even if ICT harm rates do not increase, increased ICT use will increase the absolute number of ICT related harms. Factors that could diminish ICT harm include adoption of common standards, technology maturity, better system development, testing, implementation and end user training. Factors that will increase harm rates include complexity and heterogeneity of systems and their interfaces, rapid implementation and poor training of users. Mitigating these harms will not be easy, as organizational inertia is likely to generate a hysteresis-like lag, where the paths to increase and decrease harm are not identical.</blockquote> The perspective piece then opens with this: <div id="p-2"></div><blockquote><div id="p-2">There is a paradox in the relationship between information and communication technology (ICT) and patient safety. ICT can improve the quality, safety and effectiveness of clinical services and patient outcomes,1 although the evidence base for this is sometimes weak.2 As a consequence, the rapid deployment of ICT on a national scale is a priority for many nations faced with a diminishing clinical workforce, increasing workloads, and resource constraints. 3 4<a class="xref-bibr" href="http://jamia.bmj.com.ezproxy2.library.drexel.edu/content/19/1/2.full#ref-4" id="xref-ref-4-1"></a></div><div id="p-3">However, ICT use can also lead to patient harm.5 Many commentators have raised concerns that ICT has yet to deliver on its promises,6 or that the rapid adoption of ICT is a risk.7 7a Errors persist in clinical practice even after ICT is introduced,8 because manual processes co-exist with the automated, and the interfaces between the two are seldom perfect. Others counter that such overemphasis on ICT-related harm only delays the implementation of a crucial technology that will save lives.9</div><div id="p-4">It appears that we are caught in a bind. The demands for health system reform are now so compelling that there appears no choice but to implement complex ICT on a large, often national, scale. Yet these ICT systems appear less mature than we would like and our understanding about how to implement and use them safely remains in its infancy. As such, we are faced with a pressing policy challenge on both the national and international stages.10</div></blockquote><div id="p-4"><a class="xref-bibr" href="http://jamia.bmj.com.ezproxy2.library.drexel.edu/content/19/1/2.full#ref-11" id="xref-ref-11-1"></a></div> They raise these rhetorical questions: <blockquote>... Where is the ‘kill switch’ in our health ICT systems when large-scale privacy breaches are occurring, or large volumes of critical patient data are being corrupted? Who is authorized to activate such a switch? </blockquote> The answers to these questions are, quite frankly: nowhere, and nobody. What we have instead is an environment of 'irrational exuberance' -- as well as 'rational exuberance', i.e., opportunism, often of a pecuniary nature. To the authors' other observations I would add that: 1) "Organizational inertia" is probably too narrow a concern. I would broaden it to "cultural inertia", especially since the <a href="http://www.ischool.drexel.edu/faculty/ssilverstein/cases/?loc=cases&sloc=ecosystem">health IT "ecosystem"</a> is grossly lacking of a culture of safety and accountability; 2) The authors note that "Predicting the actual harm rate and total patient harms that we will see through the use of ICT in healthcare over the next decade is currently not possible." While I agree, and agree this inability needs to be remediated, extrapolations can be performed to achieve estimates. Regarding increased ICT use increasing the absolute number of related harms, that number could already be quite substantial as I wrote in an April 16, 2010 thought experiment at "<a href="http://hcrenewal.blogspot.com/2010/04/if-benefits-of-hit-can-be-guesstimated.html">If The Benefits Of Healthcare IT Can Be Guesstimated, So Can And Should The Dangers</a>." Ironically and tragically, that post was written just five days before I wrote a confidential warning letter to a hospital about EHR deficiencies I'd noted in my mother's care there, and just one month before she was severely injured at that hospital by an EHR-related error of a nature as identified in the letter. Thus, the numbers in the thought experiment should be incremented accordingly; 3) I would say regarding safety that the health IT sector is roughly in the same place as aviation was in the 1920's (e.g., unregulated, experimental technology abounding), not the 1950's, and as the maritime passenger service was in ca. 1912 (April to be precise); and 4) The authors observe that "There is however caution in the [2011 IOM] report [on health IT safety <a href="http://www.ischool.drexel.edu/faculty/ssilverstein/Patient%20Safety%20and%20Health%20IT%20prepub.pdf" style="font-style: italic;">here</a>, PDF] that safety regulations would impede industry innovation, an argument which would literally not fly in the aviation industry ... the caution toward recommending regulation may however be misplaced. Simply put, if healthcare wants the benefits of ICT then it must actively manage its risks." I strongly agree that the IOM's cautions on regulation are misplaced, as I wrote <a href="http://hcrenewal.blogspot.com/2011/11/iom-report-on-health-it-safety-nix-fda.html">here</a>. Robust regulation could diminish ICT harm as in pharmaceuticals and medical devices (and aviation). Innovation will not be harmed, and the IT industry needs to -- and can afford to -- accept the responsibilities and obligations of being involved in healthcare. See for example "<a href="http://www.chtlj.org/sites/default/files/media/articles/v021/v021.i4.Zollers.pdf" style="font-weight: bold;">No More Soft Landings For Software: Liability for Defects in an Industry That Has Come of Age</a>" (PDF), Zollers, McMullin et al., Santa Clara Computer & High Technology Law Journal,<a href="" name="number4"> Vol. 21 No. 4, 2005.</a> -- SS

EHR: "The Dangerous Decade"

A new perspective piece has appeared in the Journal of the American Medical Informatics Association. Although it is not freely available, I...

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As U.S. Presidential Campaign Ramps Up, Newt Gingrich Plays Down Support for Health IT

Presidential candidate Newt Gingrich, who I recall hearing in person as an an invited speaker at a health IT meeting some years ago (AMIA, I believe), has been pushing health IT rather uncritically in recent years. However, he seems to have backed off that position at the election cycle heats up: <blockquote><a href="http://www.ihealthbeat.org/articles/2011/12/16/as-campaign-ramps-up-gingrich-plays-down-support-for-health-it.aspx" style="font-weight: bold;">As Campaign Ramps Up, Gingrich Plays Down Support for Health IT</a> iHealthbeat.org Friday, December 16, 2011 Now that he is a frontrunner in the race for the Republican presidential nomination, former House Speaker Newt Gingrich (R-Ga.) is downplaying his previous support for health IT adoption, The Hill's "<a href="http://thehill.com/blogs/healthwatch/politics-elections/199643-gingrich-moves-away-from-electronic-health-records" target="_blank">Healthwatch</a>" reports (Pecquet, "Healthwatch," The Hill, 12/15). History of Supporting Health ITDuring the George W. Bush administration, Gingrich worked with former CMS administrator Mark McClellan and former National Coordinator for Health IT David Brailer on federal efforts to promote health IT, according to the <a href="http://www.nytimes.com/2011/12/16/us/politics/gingrichs-health-care-policy-history-at-odds-with-gop.html?pagewanted=2" target="_blank">New York Times</a> (Rutenberg/McIntire, New York Times, 12/16). Gingrich also worked with former Senate Majority Leader Tom Daschle (D-S.D.) to co-author the forward of a book titled, "Paper Kills 2.0," which gives examples of how federal funds for health IT could be used in pilot projects to improve health care (Rowland, <a href="http://bostonglobe.com/news/politics/2011/12/16/clients-gingrich-firm-benefited-from-his-support-stimulus-funds/Egk68IClYJMtuVYWr1Iz9K/story.html" target="_blank">Boston Globe</a>, 12/16). Shortly before the passage of the 2009 federal economic stimulus package, Gingrich criticized the legislation as a "big politician, big bureaucracy, pork-laden bill." However, at the same time, Gingrich praised a provision of the stimulus package that allocated $19 billion to promote the use of health IT. He said, "I am delighted that President Obama has picked this as a key part of the stimulus package."</blockquote><div style="BORDER-BOTTOM: medium none; TEXT-ALIGN: left; BORDER-LEFT: medium none; BACKGROUND-COLOR: #ffffff; COLOR: #000000; OVERFLOW: hidden; BORDER-TOP: medium none; BORDER-RIGHT: medium none; TEXT-DECORATION: none"><div style="BORDER-BOTTOM: medium none; TEXT-ALIGN: left; BORDER-LEFT: medium none; BACKGROUND-COLOR: #ffffff; COLOR: #000000; OVERFLOW: hidden; BORDER-TOP: medium none; BORDER-RIGHT: medium none; TEXT-DECORATION: none"><div style="BORDER-BOTTOM: medium none; TEXT-ALIGN: left; BORDER-LEFT: medium none; BACKGROUND-COLOR: #ffffff; COLOR: #000000; OVERFLOW: hidden; BORDER-TOP: medium none; BORDER-RIGHT: medium none; TEXT-DECORATION: none">His views have apparently changed somewhat: <blockquote>... Campaign Plays Down Health IT Support On Wednesday, Gingrich unveiled a new brain science initiative that does not include any mention of EHRs, even though the technology was a major component of the brain science proposals he discussed over the summer.</blockquote> Politics aside (it is probably not too far from the truth to say that all politicians hold out their fingers to see what direction the wind is blowing, although Mr. Gingrich is probably becoming more aware of HIT downsides thanks to lobbying of both sides of the aisle by people such as myself and like-minded experts [1]), I cannot disagree with this: <blockquote>In August, Gingrich said he aimed to bolster brain science research in part by modernizing FDA through the use of EHRs. Gingrich said EHRs would allow for "much faster [FDA] approval times because you can monitor in real time everyone who uses the drug. And if you start getting inappropriate responses, you can change within weeks" ("Healthwatch," The Hill, 12/15).</blockquote> In fact, I was championing exactly this idea ca. 2001 when I was employed at Merck Research Labs in the Research Information Systems division. Unfortunately, the answer from more senior personnel was that doing so would be "impossible" due to inability to blind, to control the data quality, etc., responses I considered unreasonable at the time but did not argue with to avoid getting on the Short List early in my employment there. I also tried to present the idea to Merck as a former employee in Nov. 2006, at an invited presentation to the Clinical Risk Management & Safety Surveillance department of MRL entitled “<a href="http://www.ischool.drexel.edu/faculty/ssilverstein/silverstein_merck_informatics_nov2006.ppt" style="font-weight: bold;">Medical Informatics Perspectives on Leveraging the EMR in Pharma</a>" (PPT). Also see my 2007 paper "<a href="http://www.ischool.drexel.edu/faculty/ssilverstein/Silverstein_Drug_Surveillance.pdf" style="font-weight: bold;">A Medical Informatics Grand Challenge: the EMR and Post-Marketing Drug Surveillance</a>" where I address a number of issues related to using EHR's in this fashion (PDF). Using EHR's (e.g., with special screens and training) for well-defined Phase IV post-marketing surveillance studies would be one of the best uses for the technology [2]. Finally, I note that we need post-marketing surveillance of EHR's, CPOE's and other clinical IT systems themselves, not just drugs. Information technology cannot improve healthcare until it itself is improved significantly regarding its current deficiencies (see "reading list" <a href="http://www.ischool.drexel.edu/faculty/ssilverstein/cases/?loc=cases&sloc=readinglist">here</a> for illustrations). -- SS Notes: [1] Health IT risks are a non-partisan issue. [2] I should note that while I believe EHR's could facilitate postmarketing surveillance of drugs and devices, I take a dim view of more grandiose proposed uses of EMR's such as for comparative effectiveness research (CER). See my essay in the Journal of the American Association of Physicians and Surgeons (AAPS) entitled "The Syndrome of Inappropriate Overconfidence in Computing: An Invasion of Medicine by the Information Technology Industry?" <a href="http://www.jpands.org/vol14no2/silverstein.pdf">here</a> (PDF). </div></div> </div>

As U.S. Presidential Campaign Ramps Up, Newt Gingrich Plays Down Support for Health IT

Presidential candidate Newt Gingrich, who I recall hearing in person as an an invited speaker at a health IT meeting some years ago (AMIA, I...

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