Long After the Start of the "War on Terror," a Conflict of Interest about an Anthrax Scare Comes to Light

In May, David Willman writing for the Los Angeles Times broke a <a href="http://www.latimes.com/news/nationworld/nation/la-na-anthrax-resistant-20130519-dto,0,3192936.htmlstory">story</a> of a somewhat new variant on the conflict of interest theme, one that has not gotten a lot of attention, but should.<br /><br />The issue was medical, with a twist, - how to best treat a bioterror attack with anthrax engineered to be resistant to multiple drugs, an event that luckily is not known to ever have occurred.  The story came from the bad old days of the "war on terror," but only has now come to light years later. <br /><br /><b>The Alarm Raiser</b><br /><br />The story opened thus,<br /><br /><blockquote class="tr_bq">Over the last decade, <i>former Navy Secretary Richard J. Danzig, a prominent lawyer, presidential advisor and biowarfare consultant to the Pentagon and the Department of Homeland Security, has urged the government to counter what he called a major threat to national security. </i><br /><br /><i>Terrorists, he warned, could easily engineer a devastating killer germ: a form of anthrax resistant to common antibiotics.</i></blockquote><br />In particular,<br /><br /><br /><blockquote class="tr_bq">Danzig began warning about antibiotic-resistant anthrax after the terrorist attacks of Sept. 11, 2001, and the mailings of anthrax-laced letters that fall.<br /><br />The powdered anthrax in the letters killed five people but was not resistant to common antibiotics. Asked what gave rise to his <i>concern about resistant strains,</i> Danzig cited conversations with 'people whose technical skills exceed mine.' One of them, Dr. Robert P. Kadlec, a bioterrorism advisor in the Bush White House, said he and others were concerned that terrorists could develop such a weapon.<br /><br />Danzig has s<i>ounded the alarm in published papers and in private briefings and seminars for biodefense and intelligence officials.</i><br /><br />In a 2003 report funded by the Pentagon, "<a href="http://documents.latimes.com/catastrophic-bioterrorism-what-be-done/" target="_blank">Catastrophic Bioterrorism — What Is To Be Done?</a>" he wrote that it would be '<i>quite easy' for terrorists to produce antibiotic-resistant anthrax.</i> He has expanded on that theme over the years, including in a 2009 paper for the Pentagon.<br /><br />In the 2003 report, published while raxi [raxibacumab, an anthrax anti-toxin] was in development at Human Genome, Danzig said<i> a drug to combat resistant strains of anthrax should be produced 'as soon as possible' and that stockpiling such a treatment, 'even if expensive and in limited supply' would deter an attack</i>.<br /><br />John Vitko Jr., a top Homeland Security official during the Bush and Obama administrations, said he turned frequently to Danzig for advice on biodefense matters — and<i> read and 'paid attention to' his 'Catastrophic Bioterrorism' report.</i></blockquote><br />Note that while Danzig is a lawyer, and certainly not a physician or biomedical researcher, he had major credibility in the defense field, particularly in anti-terrorism, so his recommendations had great influence.<br /><br /><blockquote class="tr_bq">He served as a Pentagon appointee during the Carter administration and as undersecretary and then secretary of the Navy under President Clinton. He has a long-standing interest in biowarfare.<br /><br />During the 2008 presidential campaign, Danzig advised then-Sen. Barack Obama on national security and bioterrorism. After Obama's election, Danzig was named to the Pentagon's Defense Policy Board and the President's Intelligence Advisory Board, in addition to his consulting positions with the Defense Department and Homeland Security.</blockquote><br />So apparently at least partly due to Mr Danzig's persistent warnings, the government took action,<br /><br /><blockquote class="tr_bq"> In 2004, President Bush signed into law Project BioShield, which provided billions of dollars for biodefense drugs.<br /><br />The contracts are administered by the Department of Health and Human Services, based on advice from federal agencies and consultants. Homeland Security must certify the need for a drug before the government can buy it.<br /><br /> <i>Danzig, through his seminars, writings and consulting duties, has helped frame the discussion over whether a given biological threat is 'material' </i>and whether the government should stockpile medicines to defend against it.</blockquote><br />Also,<br /><br /><br /><blockquote class="tr_bq">Speaking of Danzig's broader role as a government advisor, Vitko said:<i> 'Richard's got incredible insights into this and I think has made major contributions'</i><br /><br />He called Danzig one of '<i>the major bio player'</i> and said his views had informed a range of policy considerations, including 'how many countermeasures do you need, of what kind.'<br /><br />It was in response to advice from Vitko and his staff that Homeland Security Secretary Tom Ridge in 2004 <i>declared anthrax a 'material threat,'</i> the certification required for the government to buy drugs to fight it.<br /><br /><i>The drug the government bought was raxibacumab, or raxi, an anthrax anti-toxin made by Human Genome Sciences Inc.  </i><br /><i><br /></i><i>In 2006, the Department of Health and Human Services finalized its first order of raxi — 20,000 doses at a cost of $174 million.</i><br /><br />That year, Ridge's successor, Michael Chertoff, signed a second, more specific declaration, <i>adding 'multi-drug-resistant' anthrax to the government's list of material threats.</i><br /><br />Asked the basis for the second declaration, Vitko said: 'I think the concern was more forward-looking, and saying, 'How could the threat evolve, and are we prepared for that?''<br /><br />Since 2009, the Obama administration has ordered an additional 45,000 doses of raxi for $160 million.</blockquote><br />There was just one catch.<br /><br /><b>The Undisclosed Conflict</b><br /><br />Mr Danzig had a largely undisclosed conflict of interest.  He was on the board of directors of Human Genome Sciences Inc, the company whose drug his constant warnings and exhortations lead the government to buy.<br /><br /><blockquote class="tr_bq">When <i>Human Genome named Danzig to its board on May 24, 2001,</i> the company's chief executive said his high-level federal experience would 'serve us well.'</blockquote><br />He thus was on the board on September 11, 2001, and later when the events on that day and soon after apparently induced him to start sounding the alarm about resistant anthrax, and he stayed on the board as he continued sounding alarms, and after the government started buying his company's drug.<br /><br /><br /><blockquote class="tr_bq">During his 11-year tenure on the board, which ended in August, <i>Danzig collected at least $1,054,255 in director's fees and by cashing in grants of Human Genome stock and stock options,</i> according to Fred Whittlesey of Compensation Venture Group, who reviewed the company's Securities and Exchange Commission filings for The Times.<br /><br />Nearly half of Danzig's compensation came from the stock options, of which he had been granted 184,000 by the end of 2011, Whittlesey said.</blockquote><br />Danzig did not seem to think that serving on the board of the company which made the primary drug directed at the perhaps hypothetical disease about which Danzig was sounding the warning constituted any sort of conflict of interest.<br /><br /><br /><blockquote class="tr_bq">Danzig said in an interview that he believed his position at Human Genome<i> posed no conflict.</i><br /><br />He said he had tried to improve policymakers' understanding of biodefense issues, including the threat of antibiotic-resistant anthrax, but <i>never lobbied the government to purchase raxi.</i><br /><br />'My view was I'm not going to get involved in selling that,' Danzig said. 'But at the same time now, should I not say what I think is right in the government circles with regard to this? And my answer was, 'If I have occasion to comment on this, it ought to be<i> in general, as a policy matter, not as a particular procurement.'</i><br /><br />'I feel that I've acted very properly with regard to this'' he said.</blockquote><br />He also apparently did not feel he needed to disclose his board membership to most of the people he was trying to persuade to be alarmed about resistant anthrax, and to pursue a treatment, such as that made by the company on whose board he sat.<br /><br /><blockquote class="tr_bq"> A number of senior federal officials whom Danzig advised on the threat of bioterrorism and what to do about it said they were unaware of his role at Human Genome.<br /><br />Dr. Philip K. Russell, a biodefense official in the George W. Bush administration who attended invitation-only seminars on bioterrorism led by Danzig, said<i> he did not know about Danzig's tie to the biotech company until The Times asked him about it.</i></blockquote><br />Also,<br /><br /><blockquote class="tr_bq"> <i>Vitko said he knew nothing of Danzig's involvement with Human Genome until a Times reporter asked him about it.</i><br /><br />'I'm surprised I didn't,' Vitko said. 'I'm not aware of it.'<br /><br />Five other present or former biodefense officials who conferred with Danzig said they, too, had been unaware of his position with the company. Danzig, they said, made no mention of it in their presence during group discussions he led or in smaller meetings.</blockquote><br />Furthermore,<br /><br /><br /><blockquote class="tr_bq">A Times search found seven papers Danzig had written on bioterrorism since 2001. <i>In only one of those did he disclose his tie to Human Genome.</i><br /><br />As an advisor to the federal government, Danzig is required to file confidential forms annually, revealing any outside affiliations but not his related compensation. Danzig said he had noted his position with the biotech firm on the forms.<br /><br />Asked whether he mentioned his corporate role during contacts with government officials, Danzig replied: 'If I thought any of it posed a potential conflict that might cause somebody who knew about it to discount my views, I would tell them.'</blockquote><br />Some people disagreed with Danzig's failure to perceive a conflict of interest<br /><br /><blockquote class="tr_bq"><i> 'Holy smoke—that was a horrible conflict of interest,' </i>said Russell, a physician and retired Army major general who helped lead the government's efforts to prepare for biological attacks.</blockquote><br /><br /><b>The Take-Over by a Familiar Corporation</b><br /><br />By the way, Human Genome Science was eventually bought out by a bigger company which has had its own sets of issues regarding conflicts of interest, GlaxoSmithKline,<br /><br /><blockquote class="tr_bq"> Human Genome was acquired by GlaxoSmithKline in August [presumably 2012] for $3.6 billion.</blockquote><br />It may yet stand to make even more money from raxi,<br /><br /><blockquote class="tr_bq"> Because raxi loses its potency after three years in storage, the government's supply will expire as of 2015, according to federal documents and people familiar with the matter. </blockquote><br /><b>Summary</b><br /><br />This appears to be a variant on the "key opinion leader" (KOL) theme writ large.  Mr Danzig clearly functioned as a very major key opinion leader about bioterrorism.  Like many KOLs we have previously discussed, he had financial interests that favored the company whose drugs his key opinion leadership seemed to be favoring.  His influence seems to have lead to huge purchases of these drugs. Like many KOLs who are physicians or health care academics, Mr Danzig seems utterly blind to the possibility that his multiple efforts to emphasize the importance of the supposed disease for which his company made a drug could somehow be viewed as a conflict of interest, or to why failure to tell his audiences about his major relationship to this company might have appeared just a small bit dishonest.  We have seen many medical/ health care KOLs who deny that somehow their opinions could have been influenced by their financial relationships, or that their audiences deserved at least to be aware of these relationships.  Yet, of course, Mr Danzig is not a doctor, and he was trying to influence government purchasers of drugs, not physician prescribers of it.<br /><br />It does seem that the leadership of health care organizations, particularly but certainly not limited to pharmaceutical and biotechnology companies, have no lack of imagination about how to construct financial relationships with influential people who could help sell their products, whether or not they acknowledge what amounts to their marketing roles. <br /><br />Given that this story involved influencing the government, it will be interesting to see at this late date whether it results in any legal action.  After all, as David Willman pointed out,<br /><br /><blockquote class="tr_bq"> Federal law bars U.S. officials, including consultants, from giving advice on matters in which they or a company on whose board they serve have 'a financial interest.'</blockquote>It will also be interesting to see if it gets any more attention.  Only a few blogs have noted it, but at least they included <a href="http://www.the-scientist.com/?articles.view/articleNo/35639/title/Selling-an-Anthrax-Scare-/">The Scientist</a>.<br /><br /><br />Yet our country has an unfortunately very long history of corporate leaders getting close to political leaders who then may overlook the legal niceties when their friends' interests are at stake.  Nonetheless, true health care reform would require all those who have decision making power over patients, health policy, or the public health to be completely transparent about their conflicts of interest, and would ban the more serious variants of conflicts of interest, even if that might cost some already rich people a bit of money.  I am not holding my breath, however, about when this might happen.<br /><br />

Long After the Start of the "War on Terror," a Conflict of Interest about an Anthrax Scare Comes to Light

In May, David Willman writing for the Los Angeles Times broke a story of a somewhat new variant on the conflict of interest theme, one that...

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Want to help a hospital go bankrupt? Get a bad EHR - Westchester hospitals' sale price over $54 million, Hospitals' debt about $200M

<div style="text-align: center;">- Posted at the Healthcare Renewal Blog on June 3, 2013 -  </div><br /><a href="http://www.ssmc.org/homepagess.cfm">Sound Shore Medical Center</a> (New Rochelle, NY) is filing for bankruptcy protection:<br /><br /><blockquote class="tr_bq">Montefiore Medical Center is offering to buy Sound Shore Health System for $54 million plus furniture and equipment, according to the latter’s bankruptcy filing — which also reveals just how far the troubled Westchester health network had fallen into the red. <br /><br />Sound Shore Medical Center in New Rochelle, Mount Vernon Hospital and five related entities have about $200 million in debts owed to more than 3,000 creditors, while possessing only $159.6 million in assets, the U.S. Bankruptcy Court documents show. <b>Sound Shore filed for Chapter 11 bankruptcy protection Wednesday as the first step in discharging its debts and selling itself to the Montefiore system.</b></blockquote><br />Why were they in the red?<br /><br />You can read the full article "<b>Westchester hospitals' sale price over $54 million; Hospitals' debt about $200M</b>" in The Journal News for yourself at this link: <a href="http://www.lohud.com/article/20130530/NEWS/305300081/Westchester-hospitals-sale-price-over-54-million?odyssey=tab|topnews|text|News&gcheck=1">http://www.lohud.com/article/20130530/NEWS/305300081/Westchester-hospitals-sale-price-over-54-million?odyssey=tab|topnews|text|News&gcheck=1</a>, but there's this interesting passage:<br /><br /><blockquote class="tr_bq">... Beginning in 2006, the hospitals saw falling patient volume and a change in their case mix. That led to “significant” losses in recent years, negative cash book balances and bills paid more than 225 days late. <b>A 2011 electronic medical record and billing system conversion caused major delays in billing and cash collection that still haven’t been fully solved. </b></blockquote><br />(This passage has a familiar ring to it; e.g., see SEC Count 9 at "<b>Florida Hospital gets an 'F' on Informatics</b>" at  <a href="http://www.ischool.drexel.edu/faculty/ssilverstein/cases/?loc=cases&sloc=miami">http://www.ischool.drexel.edu/faculty/ssilverstein/cases/?loc=cases&sloc=miami</a>.)<br /><br />A 2011 EHR and billing conversion?  It's now 2013.<br /><br />How many hospital IT personnel does it take to <strike>screw in</strike> implement a <strike>light bulb</strike> new EHR?<br /><br />-- SS<br /><br />

Want to help a hospital go bankrupt? Get a bad EHR - Westchester hospitals' sale price over $54 million, Hospitals' debt about $200M

- Posted at the Healthcare Renewal Blog on June 3, 2013 -  Sound Shore Medical Center (New Rochelle, NY) is filing for bankruptcy protectio...

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Is the Patient Centered Outcomes Research Institute Really More Industry-Centered?

One of the biggest reasons our health care system seems so dysfunctional is that clinicians and patients have great difficulty determining what might be the appropriate management of particular clinical problems.  Due to endless and sometimes <a href="http://hcrenewal.blogspot.com/search/label/deception">deceptive</a> marketing,<a href="http://hcrenewal.blogspot.com/search/label/conflicts%20of%20interest"> conflicts of interest</a> affecting health care professionals and academics, and <a href="http://hcrenewal.blogspot.com/search/label/manipulating%20clinical%20research">manipulation</a> and <a href="http://hcrenewal.blogspot.com/search/label/suppression%20of%20medical%20research">suppression </a>of clinical research, making truly evidence based decisions that put individual patients interests first has become very difficult.  Instead, we may end up using excessively expensive, relatively ineffective, and more dangerous than anticipated drugs, devices, and diagnostic and therapeutic strategies, thus leading to poor patient outcomes and high costs.<br /><br /><b>Background - the Patient-Centered Outcomes Research Institute (PCORI)</b><br /><br />One lingering hope has been that better clinical research, particularly focusing on the outcomes that are most important to patients (patient-centered outcomes), and comparing clinical strategies that may be widely used but poorly evaluated (<a href="http://hcrenewal.blogspot.com/search/label/comparative%20effectiveness%20research">comparative effectiveness research</a>) would help dissipate the fog.  An attempt to promote such research in the US appeared in our recent health reform legislation, the Affordable Care Act.  It authorized the creation of the <a href="http://www.pcori.org/">Patient Centered Outcomes Research Institute </a>(PCORI).<br /><br />However, as we <a href="http://hcrenewal.blogspot.com/2010/03/health-care-reform-bill-and-health-care.html">observed</a>, how good a solution this would be would depend on the details.  Our concerns were that PCORI, which is an independent although government sponsored institute, not a government agency, might be too beholden to "stake-holders" including the large organizations, device and pharmaceutical companies, insurance companies, hospital systems, etc, that already dominate health care and may promote their and particularly their executives' interests ahead of patients.<br /><br />Recently, Merrill Goozner, the editor of Modern Healthcare, <a href="http://www.modernhealthcare.com/article/20130427/MAGAZINE/304279990">raised similar concerns</a>,<br /><br /><blockquote class="tr_bq">there is the law's requirement for stakeholder boards to set PCORI research priorities. They must include representatives of researchers, clinicians, patients, providers, insurers, employers and industry. <i>The interests of those groups are not the same. Priority-setting by stakeholder boards could turn into a prescription for steering clear of the most controversial, and therefore most significant, questions.</i></blockquote><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"><br />So,</div><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"><br /></div><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"><blockquote class="tr_bq">There is no shortage of drug and device firms, specialty hospitals and medical specialty societies with a vested interest in leaving certain questions unasked or muddying the waters with methodological quibbles. <i>They shouldn't be allowed to hijack or soften the agenda.</i></blockquote><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"><br /></div></div><br />PCORI is now in operation, but has seemingly not gotten a lot of scrutiny. What scrutiny it has received as not allayed these concerns.<br /><br /><b>The PCORI Advisory Panels</b><br /><br />Recently, the publication of the membership of four key advisory panels for PCORI got the attention of  Michael Millenson, <a href="http://thehealthcareblog.com/blog/2013/04/05/why-the-pcori-picks-matter/">blogging on</a> the Health Care Blog.  He noted that initially the members of the panels were identified only by name and city of residence, without any information on their other affiliations or characteristics.  He suggested,<br /><br /><blockquote class="tr_bq"> PCORI isn’t a church, where all are created equal in the eyes of God, but <i>a politically created, politically governed, controversial dispenser of a very large amount of money that a host of interest groups would like to control.</i> PCORI staff chose the panel members in part by looking at their affiliations, and those connections (or lack of them) should be an immediate part of the public record when the appointments are announced. <i>By being vague, PCORI obfuscates political and power relationships and makes it more difficult for the public and industry stakeholders to either approve of or criticize those choices.</i></blockquote><br />Eventually, PCORI did release somewhat more information on membership of these panels, on <a href="http://www.pcori.org/get-involved/pcori-advisory-panels/advisory-panel-on-addressing-disparities/">Addressing Disparities</a>, <a href="http://www.pcori.org/get-involved/pcori-advisory-panels/advisory-panel-on-assessment-of-prevention-diagnosis-and-treatment-options/">Assessment of Prevention, Diagnosis, and Treatment Options</a>, <a href="http://www.pcori.org/get-involved/pcori-advisory-panels/advisory-panel-on-improving-healthcare-systems/">Improving Healthcare Systems</a>, and <a href="http://www.pcori.org/get-involved/pcori-advisory-panels/advisory-panel-on-patient-engagement/">Patient Engagement</a>.  Mr Millenson was able to review the membership of one panel, and noted some strange anomalies in a comment to his original blog post. <br /><br />One panel member who supposedly represents "patients, caregivers, and patient advocates" had a full time position with a pharmaceutical company.  Another worked for a big consumer organization which is heavily funded by the pharmaceutical industry. <br /><br />This raised concerns that PCORI may get guidance from people whose interests are actually different from those they are supposed to represent. <br /><br />Therefore, I attempted to review the stated affiliations of all PCORI advisory panels.<br /><br />Review of the what was made public about the membership of the advisory panels revealed several additional important anomalies.  Members said to be representing "patients, caregivers, and patient advocates" appeared to have positions working for organizations who might have their own, and different interests from the group they were supposed to be representing.  <br /><br />Let me summarize the apparent anomalies by advisory panel.  In each case, in alphabetical order by panel,  I will list the panelists name, supposed representation, and affiliation, with my comments.  <br /><br /><u>Addressing Disparities</u><br /><br />Monique Carter MS - Dallas, TX<br />representing: patients, caregivers, and patient advocates<br />affiliation: <i>Senior Research Scientist, AROG Pharmaceuticals Inc</i><br /><br />So this person would appear to be more of an industry (pharmaceuticals) representative.<br /><br />Venus Gines, MA, P/CHWI - Manvel, TX<br />representing: patients, caregiver, and patient advocates<br />affiliation: <i>Instructor, Chronic Disease Prevention and Control Research Center, Department of Medicine, Baylor College of Medicine</i><br /><br />So this person appears to be more of a clinician, or health system representative<br /><br />Doriane C Miller MD - Chicago, IL<br />representing: patients, caregivers, and patient advocates<br />affiliation: <i>Director, Center for Community Health and Vitality, University of Chicago Medical Center</i><br /><br />So this person also appears to be more of a clinician, or health system representative.<br /><br />Carmen E Reyes, MA - Whittier, CA<br />representing: patients, caregivers, and patient advocates<br />affiliation: <i>Center and Community Relations Manager, Los Angeles Community Academic Partnership in Research in Again, UCLA</i><br /><br />So this person appears to be more of a health system representative.<br /><br />Mary Ann Sander, MHA, MBA, NHA - Pittsuburgh, PA<br />representing: patients, caregivers, and patient advocates<br />affiliation: <i>Vice President, Aging  and Disability Services, UPMC Community Provider Services</i><br /><br />So this person appears to be more of a health system representative<br /><br />Deborah Steward, MD, MBA - Jacksonville, FL<br />representing: clinicians<br />affiliation: <i>Florida Blue</i><br /><br />So in summary, this panel included five people who ostensibly represent patients, caregivers, and patient advocates but who actually work for large academic medical centers or health systems, and one who was there to ostensibly represent patients, caregivers, and patient advocates who works for a pharmaceutical firm.  (In addition, one person supposedly representing clinicians apparently works full time for a health insurance company.)<br /><br /><u>Assessment of Prevention, Diagnosis, and Treatment Options</u><br /><br />Karen Chesbrough, MPH - Annandale, VA<br />representing: patients, caregivers, and patient advocates<br />affiliation: <i>Scientific Program Administrator, Foundation for Physical Therapy.</i><br /><br />Note that the <a href="http://foundation4pt.org/get-involved/about/">stated mission</a> of the Foundation for Physical Therapy is that it "supp<span style="font-size: small;"><span>orts the physical therapy profession’s research needs," and the foundation is funded in part by companies that make physical therapy devices and supplies  (look <a href="http://foundation4pt.org/get-involved/partners/">here</a>).  Therefore, this person appears to be more of a representative of clinicians, or perhaps industry (devices).</span></span><br /><br /><span style="font-size: small;"><span>Bettye Green RN - South Bend, IN</span></span><br /><span style="font-size: small;"><span>representing: patients, caregivers, and patient advocates</span></span><br /><span style="font-size: small;"><span>affiliation: <i>Community Outreach Nurse and Associate Director of Advocacy, Alliance for Clinical Trials in Oncology, Saint Joseph Regional Medical Center</i></span></span><br /><br /><span style="font-size: small;"><span>So this person appears to be more of a health system representative.</span></span><br /><br /><span style="font-size: small;"><span>Debra Madden - Newtown, CT</span></span><br /><span style="font-size: small;"><span>representing: patients, caregivers, and patient advocates</span></span><br /><span style="font-size: small;"><span>affiliation:<i> Clinical Applications Systems Analyst, Associated Neurologists</i></span></span><br /><br /><span style="font-size: small;"><span>So this person appears to be more of a clinician representative.</span></span><br /><br /><span style="font-size: small;"><span>Daniel Wall - Spencer, WI</span></span><br /><span style="font-size: small;"><span>representing: patients, caregivers, and patient advocates</span></span><br /><span style="font-size: small;"><span>affiliation: <i>Analyst, Biomedical Informatics Research Center, Marshfield Clinic Foundation</i></span></span><br /><br /><span style="font-size: small;"><span>So this person appears to be more of a clinician or health system representative</span></span><br /><br /><span style="font-size: small;"><span>So in summary, this panel included four people who ostensibly represent patients, caregivers, and patient advocates but who actually work for health systems or clinician organizations, and one of the latter organizations appears to be heavily funded by the medical device and supplies industry.</span></span><br /><br /><span style="font-size: small;"><u><span>Improving Healthcare Systems</span></u></span><br /><br /><span style="font-size: small;"><span>Susan Diaz MPAS, PA-C - Jacksonville, FL</span></span><br /><span style="font-size: small;"><span>representing patients, caregivers, and patient advocates</span></span><br /><span style="font-size: small;"><span>affiliation: <i>Physician Assistant in Liver Transplant, Mayo Clinic in Florida</i></span></span><br /><br /><span style="font-size: small;"><span>So this person appears to be more of a clinician, or health system representative.</span></span><br /><br /><span style="font-size: small;"><span>Anne Sales PhD-  Ann Arbor, MI</span></span><br /><span style="font-size: small;"><span>representing: patients, caregivers, and patient advocates</span></span><br /><span style="font-size: small;"><span>affiliation: <i>Professor, School of Nursing, University of Michigan</i></span></span><br /><br /><span style="font-size: small;"><span>So this person appears to be more of a clinician, or health system representative.</span></span><br /><br /><span style="font-size: small;"><span>Jamie Sullivan MPH - Silver Spring, MD</span></span><br /><span style="font-size: small;"><span>representing: patients, caregivers, and patient advocates</span></span><br /><span style="font-size: small;"><span>affiliation: <i>Director of Public Policy, COPD Foundation.</i></span></span><br /><br /><span style="font-size: small;"><span>Note that the COPD Foundation receives support at least from "</span>Boehringer-Ingelheim/Pfizer Inc. and Grifols" (look <a href="http://www.copdfoundation.org/Home/AboutUs/PartnersSponsors.aspx">here</a>).  .</span><br /><br /><span style="font-size: small;">So this person appears to be at least somewhat an industry (pharmaceutical) representative. </span><br /><br /><span style="font-size: small;">So in summary, this panel includes three people who ostensibly represent patients, caregivers, and patient advocates, two of whom actually work for large health system, and one who works for a foundation with significant pharmaceutical industry support.  </span><br /><br /><span style="font-size: small;"><u>Patient Engagement</u></span><br /><br /><span style="font-size: small;">Stephen Arcona MA PhD - East Hanover, NJ</span><br /><span style="font-size: small;">representing patients, caregivers, and patient advocates</span><br /><span style="font-size: small;">affiliation:<i> Executive Director, Outcomes Research Methods & Analytics, Department of Health Economics and Outcomes Research, Novartis Pharmaceuticals Corporation</i></span><br /><br /><span style="font-size: small;">So this person appears to be more of a researcher, and industry (pharmaceutical) representative. </span><br /><span style="font-size: small;"><br /></span><span style="font-size: small;">Marc Boutin JD - Washington, DC</span><br /><span style="font-size: small;">representing patients, caregivers, and patient advocates</span><br /><span style="font-size: small;">affiliation: <i>Executive Vice President and Chief Operating Officer, National Health Council </i></span><br /><span style="font-size: small;"><br /></span><span style="font-size: small;">Note that while the National Health Council <a href="http://www.nationalhealthcouncil.org/pages/page-content.php?pageid=53">claims</a> to be an advocate for people with chronic disease and disability, its core membership includes "<span><span style="font-family: Verdana;"><span style="font-family: Times,"Times New Roman",serif;">major pharmaceutical, medical device, health insurance, and biotechnology companies</span>." </span></span>and it receives considerable industry support.  For example, it <a href="http://www.nationalhealthcouncil.org/pages/corporate-partners.php">disclosed</a> contributions in the $100,000 - $300,000 range from Amgen, Astra-Zeneca, Eli Lilly, Novartis, Pfizer, and the Pharmaceutical Research and Manufacturers of America (PhRMA), and smaller but still significant contributions from other pharmaceutical companies and other industry associations.  So this person appears to be at least somewhat of an industry (pharmaceutical) representative.</span><br /><span style="font-size: small;"><br /></span><span style="font-size: small;">Charlotte W Collins JD - Elkridge, MD</span><br /><span style="font-size: small;">representing patients, caregivers, and patient adovcates</span><br /><span style="font-size: small;">affiliation: <i>Vice President of Policy and Programs, Asthma and Allergy Foundation of America</i></span><br /><span style="font-size: small;"><br /></span><span style="font-size: small;">Note that while the Asthma and Allergy Foundation of America claims to be a patient advocacy organization, it <a href="http://www.aafa.org/display.cfm?id=10&sub=27&cont=250">disclosed</a> financial support from many pharmaceutical, device, and health insurance companies, and from major health care systems</span><br /><span style="font-size: small;"><br /></span><span style="font-size: small;">So this person appears to be at least somewhat an industry, health insurance, and/or health system representative.</span><br /><span style="font-size: small;"><br /></span><span style="font-size: small;">Amy Gibson, RN MS - Washington, DC</span><br /><span style="font-size: small;">representing patients, caregivers, and patient advocates</span><br /><span style="font-size: small;">affiliation: <i>Chief Operating Officer, Patient-Centered Primary Care Collaborative (PCPCC)</i></span><br /><span style="font-size: small;"><br /></span><span style="font-size: small;">Note that the PCPCC has an <a href="http://www.pcpcc.net/executive-members">executive committee</a> that includes multiple pharmaceutical, device, and health insurance companies, and health systems.  So this person appears to be at least somewhat an industry, health insurance, and/or health system representative.</span><br /><span style="font-size: small;"><br /></span><span style="font-size: small;">Julie Ginn Moretz - Augusta, GA</span><br /><span style="font-size: small;">representing patients, caregivers, and patient advocates</span><br /><span style="font-size: small;">affiliation: <i>Associate Vice Chancellor, Patient- and Family-Centered Care, University of Arkansas for Medical Sciences</i></span><br /><span style="font-size: small;"><br /></span><span style="font-size: small;">So this person appears to be more of health system representative.</span><br /><span style="font-size: small;"><br /></span><span style="font-size: small;">Sara Triagle van Geertruyden - Washington, DC</span><br /><span style="font-size: small;">representing patients, caregivers, and patient advocates</span><br /><span style="font-size: small;">affiliation: <i>Executive Director, Partnership to Improve Patient Care (PIPC)</i></span><br /><span style="font-size: small;">(Note: this affiliation appears incomplete.  Sara van Geertruyden is <a href="http://thornrun.com/contact">listed</a> as <i>a <a href="http://thornrun.com/sara-van-geertruyden">current partner </a>of Thorn Run Partners,</i> a <a href="http://thornrun.com/">lobbying firm</a>, with a major <a href="http://thornrun.com/practice-areas">practice area</a> in health care, boasting, "Thorn Run Partners offers one of Washington, DC’s most comprehensive, competent and effective health policy practices."</span><br /><br /><br /><span style="font-size: small;">Note also that PIPC has <a href="http://www.improvepatientcare.org/pipc-member-list-0">membership</a> that includes many specialty physician societies, and a <a href="http://www.improvepatientcare.org/steering-committee">steering committee</a> that includes the Biotechnology Industry Organization, and PhRMA.  </span><br /><span style="font-size: small;"><br /></span><span style="font-size: small;"><span>So this person appears to be more of an industry (pharmaceutical and biotechnology) representative.</span></span><br /><br /><span style="font-size: small;"><span>So in summary this panel includes six members who ostensibly represent patients, caregivers, and patient advocates, but who work for either patient advocacy organizations that get considerable industry support, or a health system, or a pharmaceutical company.  One person whose affiliation was listed as a patient advocacy organization also somehow appears to be a full-time lobbyist.   </span></span><br /><br /><span style="font-size: small;"><span><b>Summary </b></span></span><br /><span style="font-size: small;"><span><br /></span></span><span style="font-size: small;"><span>While PCORI has set up advisory panels that seem to strongly emphasize representation of patients, caregivers, and patient advocates, a substantial fraction of the people who are supposed to provide this representation seem to work for patient advocacy groups with considerable industry support, or directly for industry or health care systems.  Some of them may work as clinicians or researchers, but many appear to have high level executive positions with these organizations.  One appears to be a full-time lobbyist at a firm that has a strong health care practice.  </span></span><br /><span style="font-size: small;"><span><br /></span></span><span style="font-size: small;"><span>Thus it appears that PCORI advisory panels actually may be as much about the interests of big health care organizations, including pharmaceutical and device companies, health insurance companies, and large hospital systems, as they are about patients, caregivers, or patient advocates.  </span></span><br /><span style="font-size: small;"><span><br /></span></span><span style="font-size: small;"><span>I am afraid my and Merrill Goozner's original fears that PCORI may end up being more about industry-centered interests than patient-centered outcomes may not be paranoid.  I do hope that PCORI leadership manages to put improving patients' and the public's health ahead of making industry executives happy.  </span></span><br /><span style="font-size: small;"><span><br /></span></span><span style="font-size: x-small;"><span style="font-size: small;">by Roy M. Poses MD, for Health Care Renewal</span></span>

Is the Patient Centered Outcomes Research Institute Really More Industry-Centered?

One of the biggest reasons our health care system seems so dysfunctional is that clinicians and patients have great difficulty determining w...

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Marin General Hospital's Nurses are Afraid a Defective EMR Implementation Will Harm or Kill Patients .. CEO Cites Defective HHS Paper and Red Herrings As Excuse Why He Knowingly Allows This To Continue

<div style="text-align: center;">- Posted at the Healthcare Renewal Blog on May 30, 2013 - </div><br />The following appeared in the Marin County Independent Journal about an EHR system so bad the nurses at Marin General Hospital were publicly complaining, putting their careers at risk (see my May 17, 2013 post "<a href="http://hcrenewal.blogspot.com/2013/05/marin-general-hospital-nurses-warn-that.html">Marin General Hospital nurses warn that new computer system is causing errors, call for time out</a>"):<br /><br /><blockquote class="tr_bq"><b>National critic of health care information technology says Marin General should heed nurses' advice</b><br /><div class="articleByline" id="articleByline"><a class="articleByline" href="mailto:rhalstead@marinij.com?subject=Marin%20Independent%20Journal:"><span class="author vcard"><span class="fn"></span></span></a><br /><div class="Byline"><a class="articleByline" href="mailto:rhalstead@marinij.com?subject=Marin%20Independent%20Journal:">By Richard Halstead<br />Marin Independent Journal<span class="source-org vcard"></span></a></div></div><div class="articleDate" id="articleDate">Posted:   05/27/2013 04:03:00 PM PDT</div></blockquote><br />The critic is me.   I spoke to the reporter but did not know he would publish:<br /><blockquote class="tr_bq"><span id="rds_global"></span><br /><div class="bodytext">A nationally known critic of electronic health records has harshly criticized managers at Marin General Hospital for their response to a plea by nurses to hold off on a new computer system to prevent potentially dangerous errors.</div><br />"The executives at the hospital should be taking out extra insurance policies because they're setting themselves up for a massive corporate negligence lawsuit," said Dr. Scot Silverstein, an adjunct professor of health care informatics at Drexel University in Philadelphia.<br /><br />Silverstein, who contacted the Independent Journal after reading about the Marin General situation, doesn't dispute the potential of digital records; but he believes implementation has been rushed. He thinks electronic health records should be regulated by the federal Food and Drug Administration, much like medical hardware or pharmaceuticals. </blockquote><br />Or regulated by someone with experience in similar mission critical software, and with regulatory teeth.  Paper tigers and bad health IT are a very poor mix where patients' rights are concerned IMO.<br /><br /><blockquote class="tr_bq"><span id="rds_global"></span><br />At issue is a new computerized physician order entry system, known as CPOE; doctors place medication orders for patients directly into the system.<br /><br />At a meeting of the Marin Healthcare District board on May 14, a group of Marin General <b>nurses told the board problems with the new computer system were diverting them from their patients and causing errors, such as sending orders to the wrong patients. One nurse reported that a patient had received a medication to which he was allergic. </b></blockquote><br />That is a very direct calling out of the potential for harm and death by front line clinical personnel.  To ignore it is grossly if not criminally negligent.<br /><br /><span id="rds_global"></span><br /><table border="0" cellpadding="0" cellspacing="0" style="width: 100%px;"><tbody><tr><td class="articleBox" style="width: 100%;"><a href="https://www.blogger.com/null" name="top"></a><span class="articleFooterLinks"></span></td></tr></tbody></table><blockquote class="tr_bq"><span id="rds_global">Lee Domanico, who serves as the CEO of both Marin General and the Marin Healthcare District, assured the board <b>that </b></span><span id="rds_global"><b>the hospital was safe, despite "glitches" in the new system. </b>Domanico said he was working to fix the problem.</span></blockquote><br /><span id="rds_global">Glitches = safe?  The Board must be highly gullible if they believe this  See </span><a href="http://hcrenewal.blogspot.com/search/label/glitch">http://hcrenewal.blogspot.com/search/label/glitch</a> for more on "safe" glitches.<br /><br /><blockquote class="tr_bq">Silverstein said, "Glitches are a euphemism for life-threatening electronic health record malfunctions and defects."<br /><br /><span id="rds_global"></span><br />"What they need to do is exactly what the nurses are asking for," Silverstein said. "They need to turn the system off and put it through rigorous testing and confirm the thing is going to work properly with no glitches before they use it on patients."</blockquote><br />That's not rocket science - its common sense - unless they think their own nurses are lying.<br /><br />Of course, as computers have more rights than patients, and bonuses might be affected, the system will likely continue in full operation, with patients as guinea pigs, and the nurses punished for informing the public that perhaps they should consider other hospitals while the "glitches" in this enterprise clinician command-and-control system are worked out.<br /><blockquote class="tr_bq"><br /><span id="rds_global"></span><br />Two days after the Marin Healthcare District meeting, Domanico issued a press release stating, "We have not received any medication error incident reports resulting from the implementation of computerized physician order entry."<br /><br />On Friday, however, Barbara Ryan, a Marin General registered nurse who serves as the California Nurses Association/National Nurses United representative, said, <b>"I can't understand why that statement was made."</b><br /><br />Ryan said <b>nurses have told her of errors, and information about errors appears in "Assignment Despite Objection" forms that nurses have filed since implementation of the computerized order system began on May 7. Nurses file the forms to document formal objections to an unsafe, or potentially unsafe, patient care assignment. </b></blockquote><br /><span id="rds_global">The statement's reason and purpose seems fairly obvious. </span><br /><br /><blockquote class="tr_bq"><span id="rds_global"><span id="rds_global">Ryan said Marin General nurses have filed close to <b>50 such forms so far this month; she said typically 10 to 20 such forms are filed per month at the hospital.</b><br /><br />"There are still problems with the system," she said. "There are still mistakes being made." Ryan <b>said the hospital needs to boost nurse staffing ratios during the implementation.</b></span></span></blockquote><br /><span id="rds_global">That would increase costs (and probably decrease the pool of money for bonuses).</span><br /><br /><blockquote class="tr_bq"><span id="rds_global"><span id="rds_global">Jon Friedenberg, Marin General's chief fund and business development officer, said the hospital is in the process of upgrading computer servers and adding memory to work stations to increase the speed of the new computerized order system.<br /><br />"<b>We completed an upgrade of memory to 200 of the work stations</b>, and 120 of the work stations have been replaced," Friedenberg said.</span></span></blockquote><br /><span id="rds_global">This reminds me of a similar IT fiasco I faced some years ago, when the brilliance of IT personnel really shone through regarding an ICU monitoring system that crashed regularly.  Their solution?  Add more RAM.  (See "<b>Serious clinical computing problems in the worst of places: an ICU</b>" at <a href="http://www.ischool.drexel.edu/faculty/ssilverstein/cases/?loc=cases&sloc=clinical%20computing%20problems%20in%20ICU">http://www.ischool.drexel.edu/faculty/ssilverstein/cases/?loc=cases&sloc=clinical%20computing%20problems%20in%20ICU</a>).</span><br /><br /><blockquote class="tr_bq"><span id="rds_global">... Silverstein earned a medical degree from Boston University and subsequently completed a two-year fellowship in medical informatics at Yale University School of Medicine. He served as Merck Research Laboratories' director of scientific information in the early 2000s before serving for a time as a full-time professor at Drexel University. Today, in addition to teaching part-time, Silverstein works on <span style="color: red;"><i><b>[EHR-related - ed.] </b></i></span>medical liability cases for plaintiff attorneys. <span style="color: red;"><i><b>[And the defense too</b></i></span></span><span style="color: red;"><i><b>, when asked; I'd rather advise on how to prevent mistakes, in fact, than get involved after the fact when someone's been injured or killed - ed.] </b></i></span></blockquote><span id="rds_global"></span><br /><br />What was not mentioned was that I was a CMIO in a major hospital in the mid to late 1990s.<br /><br />But of course, I - and similarly trained Medical Informatics experts - "don't have enough experience" to lead (as opposed to being an 'internal consultant') health IT projects, a refrain I've often heard from hospital executives.<br /><br /><br /><blockquote class="tr_bq"><span id="rds_global">Silverstein said he started assisting on the liability cases after his mother died as the result of an electronic health care record error that resulted in her not being given the proper heart medicine. Silverstein said his mother's case was not an anomaly. </span></blockquote><blockquote><span id="rds_global"><span id="rds_global">For example, he pointed to the results of a recent Emergency Care Research Institute study of 36 hospitals conducted over a nine-week period. Asked to report electronic record problems on a volunteer basis, Silverstein said the hospitals reported <b>170 malfunctions, including eight incidents that resulted in patient harm, three of which may have contributed to patients' deaths. </b> </span></span><span id="rds_global"><span id="rds_global"><span id="rds_global">Although the federal Food and Drug Administration does not regulate health care information technology, some manufacturers have voluntarily supplied data to the FDA. In February 2010, the F<b>DA reported it had been notified of 260 problem events involving health care information technology in the previous two years that were linked with 44 injuries and six deaths.</b></span></span> </span></blockquote><br /><span id="rds_global">See my Feb. 28, 2013 post "</span><b>Peering Underneath the Iceberg's Water Level: AMNews on the New ECRI Deep Dive Study of Health IT Events</b>" at <a href="http://hcrenewal.blogspot.com/2013/02/peering-underneath-icebergs-water-level.html">http://hcrenewal.blogspot.com/2013/02/peering-underneath-icebergs-water-level.html</a>.  Also see my Aug. 5, 2010 post "<b>Internal FDA memorandum of Feb. 23, 2010 to Jeffrey Shuren on HIT risks. Smoking gun? I report, you decide</b>" at <a href="http://hcrenewal.blogspot.com/2010/08/smoking-gun-internal-fda-memorandum-of.html">http://hcrenewal.blogspot.com/2010/08/smoking-gun-internal-fda-memorandum-of.html</a>. I merely report what ECRI, AMA and FDA have reported.<br /><br />Finally:<br /><br /><blockquote class="tr_bq"><span id="rds_global">In his press release, however, [CEO] Domanico stated that "more than 150 studies conducted since 2007 have confirmed that organizations using health information technology, like CPOE, have seen positive outcomes."</span> </blockquote><br />I believe he's referring to a highly biased and scientifically defective ONC paper of 154 selected studies: "<b>The Benefits Of Health Information Technology: A Review Of The Recent Literature Shows Predominantly Positive Results</b>."<br /><br />What an unbelievably cavalier attitude.<br /><br />My colleagues and I refuted (dare I say trashed) that paper pretty thoroughly here: <br /><a href="http://hcrenewal.blogspot.com/2011/03/benefits-of-health-information.html" rel="nofollow nofollow" target="_blank">http://<wbr></wbr>hcrenewal.blogspot.com/<wbr></wbr>2011/03/<wbr></wbr>benefits-of-health-informat<wbr></wbr>ion.html.</a><br /><br />Even worse, the mention of that paper, or EHR benefits in general, is a diversion, an in-your-face <b>red herring</b> (at best; an inability to reason logically at worst), steering away from the real issue:  an EHR implementation about which nurses are complaining ... in the now.<br /><br /><blockquote class="tr_bq"><span style="font-family: Arial Black; font-size: medium;"><span style="font-family: arial; font-size: small;"><a href="http://www.nizkor.org/features/fallacies/red-herring.html">http://www.nizkor.org/features/fallacies/red-herring.html</a>:  A Red Herring is a fallacy in which an irrelevant topic is presented in order to divert attention from the original issue. </span></span></blockquote><span id="rds_global"><br /></span><span id="rds_global">That a CEO of a major hospital relies on one defective paper - one that he most likely lacks the experience and expertise to understand, let alone critically evaluate - and red herrings is a poster example of why medical and medical informatics amateurs should not be running hospitals or clinical IT projects.</span><br /><span id="rds_global"><br /></span><span id="rds_global">-- SS</span>

Marin General Hospital's Nurses are Afraid a Defective EMR Implementation Will Harm or Kill Patients .. CEO Cites Defective HHS Paper and Red Herrings As Excuse Why He Knowingly Allows This To Continue

- Posted at the Healthcare Renewal Blog on May 30, 2013 - The following appeared in the Marin County Independent Journal about an EHR system...

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Ghosts in the Criminal Machine - How a Drug Company Can Plead Guilty to Federal Fraud, Yet No One is Held Responsible

We have often discussed how leaders of health care organizations have become increasingly unaccountable for their actions.  A recent, slightly obscure story shows how a corporate admission of guilt to a felony can be used to prevent anyone, including anyone in corporate management, from being held responsible for that fraud.<br /><br /><b>Basics of the Settlement</b><br /><br />The case was that of ISTA Pharmaceuticals.  The basics appeared in brief wire service articles, like <a href="http://www.foxbusiness.com/industries/2013/05/24/bausch-lomb-ista-admits-to-kickbacks/">this one</a> from Rueters (via Fox News):<br /><br /><br /><blockquote class="tr_bq"><i>Ista Pharmaceuticals pleaded guilty on Friday to charges it used kickbacks and improper marketing to boost sales of a drug </i>meant to treat eye pain and agreed to<i> pay $33.5 million to settle criminal and civil liability</i>, the U.S. Department of Justice said.<br /><br /> The unit of eye care company Bausch & Lomb <i>pleaded guilty to conspiracy to offer kickbacks to induce physicians to prescribe Xibrom,</i> a drug meant to treat pain after cataract surgery, and <i>conspiracy to promote that drug for unapproved uses</i>, including after Lasik and glaucoma surgeries.<br /><br /> Ista agreed as part of a criminal settlement to a $16.63 million fine and an $1.85 million asset forfeiture. It also agreed to a $15 million civil settlement to resolve allegations that its marketing of Xibrom caused false claims to be submitted to government health care programs.</blockquote><br /><b>Kickbacks Disguised as Honoraria and Consulting Fees </b><br /><br />Note that unlike many such legal settlements involving large health care organizations, this one involved admissions of guilt to felonious criminal offenses.  The severity of the charges apparently arose out of the egregious conduct of company executives.  Colorful details were <a href="http://www.buffalonews.com/apps/pbcs.dll/article?AID=/20130524/CITYANDREGION/130529545/1005">supplied</a> by the Buffalo (NY) News:<br /><br /><blockquote class="tr_bq">ISTA, which is based in California, <i>admitted using kickbacks to doctors and an illegal marketing campaign </i>as part of an elaborate scheme to increase its sales of Xibrom.<br /><br />The scheme, outlined in detail in newly released court papers, ranged from company-provided instruction sheets for doctors to continuing medical education programs to promote the drug.<br /><br />In many cases, <i>ISTA employees were told not to leave printed materials behind in doctors’ offices or to keep records of their meetings with doctors in order to avoid detection </i>by others.<br /><br />The company went so far as to <i>offer speaking engagements and consulting appearances to doctors in hopes that they might use Xibrom</i> for non-authorized treatments.<br /><br />Doctors can legally prescribe drugs for non-FDA approved treatments, but drugmakers are prohibited from promoting their products for those uses.<br /><br />'Essentially <i>they entered into consulting arrangements to induce physicians to prescribe their drug</i>,' said Jeffrey I. Steger, a lawyer in the Consumer Protection Branch of the U.S. Department of Justice.<br /><br />When [US District Judge Richard J] Arcara asked if money was the doctors’ motivation, Steger said yes.<br /><br />'Thousands of dollars,' he told the judge. </blockquote><br />So here we have a company admitting that it bribed doctors to prescribe its drug, and its techniques of administering bribes included paying the doctors honoraria to give talks, and paying the doctors as consultants.  As an aside, note that many defenders of "collaboration" among doctors and industry sign the praises of doctors "consulting" for industry, and often see nothing wrong with industry paying doctors for "educational" speeches.  Yet here is more evidence that such paid talks and consulting assignments may be nothing more than marketing, and at times are merely disguised bribery. <br /><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"><br /></div><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"><b>An Apparently Tough Penalty</b></div><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"><br /></div><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;">An unusual feature of this settlement was that (per Reuters):</div><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"><br /></div><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"><blockquote class="tr_bq">As part of the settlement, <i>Ista will be barred from participating in Medicare and Medicaid,</i>...</blockquote><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"></div></div><br /><br />That would appear to be the death knell for the company, as reported by Reuters, <br /><br /><blockquote class="tr_bq">Bausch & Lomb, which is based in Rochester, New York, said it was pleased to settle the matter, which involved conduct between January 2006 and March 2011, and that it knew of the government probe well before it purchased Ista.<br /><br /> That purchase closed in June 2012 and Bausch and Lomb <i>plans to wind down the Ista corporate entity by year end.</i></blockquote><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"><br /></div>So Bausch and Lomb bought a company that turned out to be valueless?  But wait,...  there's a trick. <br /><br />As <a href="http://www.fiercepharma.com/story/ista-excluded-medicare-335m-label-settlement/2013-05-28">detailed</a> in FiercePharma,<br /><br /><blockquote class="tr_bq"> ISTA will be barred from doing business with Medicare, Medicaid, et al, for 15 years. Luckily for Bausch + Lomb, however, it bought ISTA in June 2012,  late enough in the game to actually escape the ramifications of exclusion. <i>The exclusion won't begin until 6 months after the settlement date, giving Bausch + Lomb time to transfer ISTA's products out of that subsidiary and shift the drugs over to the Bausch + Lomb label.</i></blockquote><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"><br /><b>A Crime Committed by... No One?</b></div><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"><br /></div><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;">So Bausch and Lomb gets ISTA's drugs, and essentially can resolve the company's felony convictions by relatively small fines, and through management sleight of hand, can finesse ISTA's disbarment from federal programs..  This will occur despite admissions that someone within ISTA, presumably within ISTA management, perhaps high up in ISTA management, per FiercePharma, </div><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"><br /></div><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"><blockquote class="tr_bq"><i>instructed reps to avoid leaving a paper trail of their off-label discussions with doctors. </i>Prosecutors had enough evidence of this to <i>persuade ISTA to plead guilty to a felony fraud charge.</i> 'These instructions were given in order to avoid having their conduct relating to unapproved new uses being detected by others, the Justice Department said. 'ISTA agreed that this conduct represented an intent to defraud under the law.'</blockquote><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"><br />So felony fraud was committed, but no person apparently committed it.  It was as if a ghost committed the crime.</div><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"> </div><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;">Not only was a crime committed, but apparently by nobody, the corporation within which the crime was committed also becomes obscure.  ISTA became responsible, but by being bought out by Bausch and Lomb, the more severe penalty directed against ISTA will be meaningless.  </div><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"> </div><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;">Should Bausch and Lomb be responsible?  Of course, they claim they should not.  As <a href="http://www.bloomberg.com/news/2013-05-24/bausch-lomb-unit-pays-33-5-million-in-misbranding-case.html">reporte</a>d by Bloomberg, </div><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"> </div><blockquote class="tr_bq"><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"> Rochester, New York-based Bausch & Lomb said the actions occurred 'well before' it acquired Ista in 2012. </div></blockquote><div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"><blockquote><br />'Bausch & Lomb is committed to earning trust in everything that we do and is pleased to have resolved this pre-acquisition issue,' Bob Bailey, a Bausch & Lomb spokesman, said in a statement. </blockquote><br />In fact, The Hill<a href="http://thehill.com/blogs/regwatch/healthcare/301949-drug-company-pleads-guilty-to-felony-kickback-scheme-pays-335m"> reported</a> that the bad behavior took place from 2005 to 2010: <br /><br />But consider that while ISTA recently became part of Bausch and Lomb, since 2007, Bausch and Lomb has been wholly owned by private equity firm Warburg Pincus.  In fact, as we <a href="http://hcrenewal.blogspot.com/2009/06/was-private-equity-takeover-of-bausch.html">discussed</a> in in 2009, some people suspected that this maneuver would have allowed Baush and Lomb to settle multiple suits alleging that its products were faulty and dangerous out of the public eye.  So while ISTA is now really Bausch and Lomb is now really Warburg Pincus, no one in the management of ISTA, Bausch and Lomb, or Warburg Pincus apparently will be held responsible for criminal fraud and kickbacks to doctors, even though guilty pleas for these felonies have been made.  So somehow we have admissions that crimes were committed, crimes that compromised the integrity of doctors, and exposed patients to needless side effects, yet these crimes were apparently committed by ... nobody, by a ghost, and even the machine that ghost was in - was it ISTA, Bausch and Lomb, or Warburg Pincus? - becomes a mystery.  Where is Sherlock Holmes when we need him most?.<br /><br /><b>Summary</b><br /><br />This case thus becomes a really striking example of the impunity of health care corporate managers.  They can commit crimes, even felonies, yet the company, but no human beings, is held responsible.  But the company being a company, it cannot go to jail.  And through the magic of obfuscatory corporate take-overs, which company is guilty is not even apparent. <br /><br />As we have said ad infinitum, <br /><br /> We will not deter unethical behavior by health care organizations until the people who authorize, direct or implement bad behavior fear some meaningfully negative consequences. Real health care reform needs to make health care leaders accountable, and especially accountable for the bad behavior that helped make them rich. </div></div>

Ghosts in the Criminal Machine - How a Drug Company Can Plead Guilty to Federal Fraud, Yet No One is Held Responsible

We have often discussed how leaders of health care organizations have become increasingly unaccountable for their actions.  A recent, slight...

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The Best Governance for Medicines ... is in Thailand

<b>The Best Health Care System in the World?  </b><br /><br />Here in the US, a lot of people have been convinced that we have the best health care system in the world.  For example, during the 2012 US presidential campaign, Politi-Fact <a href="http://www.politifact.com/truth-o-meter/statements/2012/jul/05/john-boehner/john-boehner-says-us-health-care-system-best-world/">reported</a>,<br /><br /><br /><blockquote class="tr_bq">House Speaker John Boehner, R-Ohio, says the health care law signed by President Barack Obama -- and upheld by the U.S. Supreme Court -- imperiled the nation’s health care system.<br /><br />'Gov. Romney understands that Obamacare will bankrupt our country and <i>ruin the best health care delivery system in the world,</i>' Boehner said, during the July 1, 2012, edition of <a href="http://www.cbsnews.com/8301-3460_162-57464563/face-the-nation-transcripts-july-1-2012-speaker-boehner-senators-schumer-and-coburn-governors-walker-and-omalley/?pageNum=2&tag=contentMain;contentBody">CBS’ <i>Face the Nation</i></a>.<br /><br />Boehner wasn’t the only one making that claim on the Sunday talk-show circuit. On <i><a href="http://www.foxnews.com/on-air/fox-news-sunday/2012/07/02/white-house-ready-move-and-implement-health-care-law-mcconnell-we-can-defeat-obamacare-no?page=4">Fox News Sunday</a></i>, Senate Minority Leader Mitch McConnell, R-Ky., added that the U.S. has '<i>the finest health care system in the world</i>.'</blockquote><br />More recently, as the Huffington Post<a href="http://maddowblog.msnbc.com/_news/2013/03/25/17455963-the-greatest-health-care-system-the-world-has-ever-known?"> reported</a>,<br /><br /><br /><blockquote class="tr_bq">Sen. Jeff Sessions (R-Ala.) charged Thursday that Obamacare is destroying the '<i>greatest health care system the world has ever known</i>' and that it was 'horrible' for anyone to suggest Americans receive anything less than the best care, even though they die younger on average than people in many other countries.<br /><br />'This is just one example of what happens in this country when people in Washington take on the arrogant view that they know how to fix the health care system -- one of <i>the most massive, complex, marvelous systems the world has ever known</i>,' Sessions said on the Senate floor.</blockquote><br />One would expect that the greatest health care system in the world would have the greatest pharmaceutical industry in the world too.  In fact, as noted by Politi-Fact,  that is pretty much what Congressman Boehner asserted,<br /><br /><blockquote class="tr_bq"> Boehner’s office also noted that wealthy foreigners flock to the U.S. to receive care because of its cutting-edge facilities, and that the U.S. is <i>among the leaders, if not No. 1, in medical research and pharmaceutical development.</i></blockquote><br /><b>Not the Best Governance for Medicines in the World </b><br /><br />A recent <a href="http://www.bernama.com.my/bernama/v7/wn/newsworld.php?id=951522">article</a> from the National News Agency of Malaysia will probably not get a lot of attention in the US, or other developed countries, but it does suggest another reason to be very skeptical about shouts of "USA Number 1" at least applied to health care.  The article's main point was:<br /><br /><blockquote class="tr_bq">The World Health Organisation (WHO) has <i>praised Thailand for the world's best governance for medicine</i>, Thai News Agency (TNA) reported.<br /><br />Public Health Minister Dr. Pradit Sintawanarong, who is attending the 66th World Health Assembly in Geneva, Switzerland, from May 20-28, told journalists on Wednesday that the <i>WHO has asked Thailand to co-organise a meeting on good governance for medicine, as the Thai Kingdom is considered the world's most advance in governance for medicine and should be a good example for other countries.</i><br /><br />Dr. Pradit, who was invited by the WHO to open a meeting on Thailand's governance for medicine and health systems, held as part of the 66th World Health Assembly, acknowledged that the WHO has also asked Thailand to share experiences in another side meeting on 'Good Governance in the Pharmaceutical Sector:The Case of Thailand and Malawi'.</blockquote><br /><br />Again, a lot of people think of the US health care system as a model of the rest of the world.  Here is one little bit of data that maybe it should not be the model for "governance for medicine."  Of course, that phrase itself is almost never used here.  Its definition, however, should be instructive.<br /><br />The World Health Organization has had a small "Good Governance for Medicines" program since 2004.  We first discussed it <a href="http://hcrenewal.blogspot.com/2008/12/two-important-resources.html">here</a> in 2008  On the <a href="http://www.who.int/medicines/ggm/en/">program web-site</a>, its goal is defined: <br /><br /><blockquote class="tr_bq">contributing to <i>health systems strengthening and preventing corruption</i> by promoting good governance in the pharmaceutical sector.<br /><br />Specifically the programme aims:<br />-To <i>raise awareness on the impact of corruption in the pharmaceutical sector and bring this to the national health policy agenda</i><br />- To <i>increase transparency and accountability in medicine regulatory and supply management systems </i> - To promote <i>individual and institutional integrity</i> in the pharmaceutical sector<br />- To<i> institutionalize good governance in pharmaceutical systems</i> by building national capacity and leadership. </blockquote><br />So if Thailand received recognition for having the best governance for medicines, the implication is that the US does not.<br /><br />In fact, we and other dissidents have documented a host of problems with individual and institutional integrity in the pharmaceutical sector, lack of transparency and accountability in medicine regulatory and supply management systems, and actual corruption in the pharmaceutical sector.  Some of the most recent big examples on Health Care Renewal since December, 2012, include:<br />-  the CEO of drug and biotechnology company Amgen collected tens of millions of dollars while his company settled lawsuits alleging it gave kickbacks to doctors, pharmacists and others to use potentially dangerous medicines (post <a href="http://hcrenewal.blogspot.com/2013/05/amgen-ceos-prosper-despite-or-because.html">here</a>)<br />-  Pfizer's 14 legal settlements since 2000, including settlements of allegations of fraud, illegal promotion of hazardous drugs, kickbacks given to physicians, bribery of foreign officials, etc.  The biggest was for $2.3 billion.  In one case, the company was convicted of being a racketeering influenced corrupt organization (RICO) (post <a href="http://hcrenewal.blogspot.com/2013/01/pfizers-pfourteenth-settlement-small.html">here</a>).<br />- Three settlements in the US by GlaxoSmithKline in 2012, of allegations including deceptive marketing to hide drugs' adverse effects, improperly preventing generic competition, and a $3 billion settlement for deceptive marketing and improper promotion of multiple drugs (post <a href="http://hcrenewal.blogspot.com/2012/12/tis-season-for-legal-settlements.html">here</a>). <br />- Eli Lilly settled allegations that it bribed foreign officials.  (In 2009 it pleaded guilty to criminal charges arising from deceptive marketing of Zyprexa) (post <a href="http://hcrenewal.blogspot.com/2012/12/tis-season-for-legal-settlements.html">here</a>)<br />- After making two settlements of overcharging the US government in 2007 and 2009, Sanofi settled US allegations of giving kickbacks to doctors (post <a href="http://hcrenewal.blogspot.com/2012/12/tis-season-for-legal-settlements.html">here</a>)..<br />-  The pharmaceutical paid "key opinion leader" who was most influential in promoting widespread use, and probably overuse of opiates, admitted it was all "misinformation" (post <a href="http://hcrenewal.blogspot.com/2012/12/the-king-of-pain-recants-pharmaceutical.html">here</a>).<br /><br />See also our posts on <a href="http://hcrenewal.blogspot.com/search/label/bribery">bribery</a>, <a href="http://hcrenewal.blogspot.com/search/label/kickbacks">kickbacks</a>, <a href="http://hcrenewal.blogspot.com/search/label/fraud">fraud</a>, <a href="http://hcrenewal.blogspot.com/search/label/crime">crime</a>, and <a href="http://hcrenewal.blogspot.com/search/label/health%20care%20corruption">corruption</a>, not to mention <a href="http://hcrenewal.blogspot.com/search/label/deception">deception</a>, <a href="http://hcrenewal.blogspot.com/search/label/stealth%20marketing">stealth marketing</a>, <a href="http://hcrenewal.blogspot.com/search/label/conflicts%20of%20interest">conflicts of interest</a>, <a href="http://hcrenewal.blogspot.com/search/label/institutional%20conflicts%20of%20interest">institutional conflicts of interest</a>, etc. <br /><br /><b>Participatory Democracy in Health Care </b><br /><br /><br />So good for the Thais for apparently doing much better with far fewer resources.  One reason seems to be that the government has made good governance for medicines, defined as above, a big priority:<br /><br /><blockquote class="tr_bq">According to the public health minister, the <i>Thai government and his ministry have adhered great importance to good governance for medicine (GGM) and health systems</i> and Thailand has also joined the WHO's campaigns on the GGM from the first stage, concerning the assessment of the situation and the installation of relevant systems.</blockquote><br /><br />I can also speculate that one reason they have done better is their conscious effort to enlist the public at large in discussing and setting the direction of their health care system.  For example, as we <a href="http://hcrenewal.blogspot.com/2009/09/making-health-care-more-representative.html">discussed</a> in 2009,  Thailand has set up by law a National Health Assembly, with its <a href="http://en.nationalhealth.or.th/Health_Assembly">stated goal</a> to be:<br /><br /><blockquote class="tr_bq"><span style="font-family: Times,"Times New Roman",serif;"><span style="font-size: small;"><span style="color: #333333;">an instrument as well as a learning process to develop <i>participatory public polices on health and pushing for practicability.</i></span></span></span></blockquote><br />Assemblies have been held yearly since 2008.  A detailed report on the 2008 assembly is <a href="http://www.who.int/sdhconference/resources/rasanathan_healthexpectations.pdf">here</a>. [Rasanathan K, Posayanonda T, Birminghan M et al.  Innovation and participation in the first National Health Assembly in Thailand. Health Expectations 2012; 15: 87-96].  The most recent was in December, 2012 (look <a href="http://en.nationalhealth.or.th/nha2012">here</a>.)   <br /><br />Such a mechanism for broad public input into health care does not obviously occur in the US.  Instead, we have corporations spending billions on <a href="http://hcrenewal.blogspot.com/search/label/stealth%20lobbying">lobbying</a>, <a href="http://hcrenewal.blogspot.com/search/label/public%20relations">public relations</a>, <a href="http://hcrenewal.blogspot.com/search/label/stealth%20health%20policy%20advocacy">stealth advocacy</a>, and campaign contributions.  We have the constant interchange of top government and corporate health care leaders via the <a href="http://hcrenewal.blogspot.com/search/label/revolving%20doors">revolving door</a>.<br /><br />We do not have any significant public discussion of good governance for medicines, or anything like it.  (The few, rare exceptions about which I know are the recent Healthy Skepticism meeting on <a href="http://sellingsickness.com/">Selling Sickness</a>, and the now yearly meetings organized by <a href="http://pharmedout.org/">PharmedOut.org</a>)  Discussion of deception, conflicts of interest, crime and corruption affecting large health care organizations is muted and <a href="http://hcrenewal.blogspot.com/search/label/anechoic%20effect">anechoic</a>.  I know of precisely one course on health care corruption in any US medical, public health, or health administration school (look<a href="http://hcrenewal.blogspot.com/2009/12/how-to-give-course-on-corruption-in.html"> here</a>, and its focus is on developing countries.)<br /><br />Time to head to Bangkok?....  But if we all cannot...  <br /><br />In the US, we will not have a chance of meaningfully improving our health care system until we start listening to unbiased health care professionals and academics (in particular, who have not been paid off by vested interests),  civil society organizations, and people and patients at large, and stop getting all our insight from corporate executives, their cronies, and their paid experts.  We will not have a chance until we allow discussion of all the problems, including bad leadership and governance, dishonest and deceptive practices, conflicts of interests, and outright crime and corruption.  We will not have a chance until we put our priority on patients' and the public's health, not the vested interests of those who have gotten rich off the current dysfunctional system.  <br /><br /><br />.

The Best Governance for Medicines ... is in Thailand

The Best Health Care System in the World?  Here in the US, a lot of people have been convinced that we have the best health care system in t...

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Executive Compensation as "Legal Corruption" - and the Continuing Example of the Troubles of Wake Forest Baptist

"Legal corruption" was the description of current <a href="http://hcrenewal.blogspot.com/search/label/executive%20compensation">executive compensation</a> practices <a href="http://online.wsj.com/article/SB10001424052970203922804578080670062571256.html">appearing</a>, of all places, in the Wall Street Journal.  The arguments, by Henry Mintzer of the Desautels Faculty of Management at McGill University, apply to health care, and provide a counterpoint to the usual talking points that are trotted out whenever a top health care manager, or his cronies, feels the need to justify his or her compensation. <br /><br /><b>A Rigged Game with Other Peoples' Money </b><br /><br />Prof Mintzer's arguments start with the assertion that executive bonuses are hopelessly rigged in favor of the managers who receive them.  In particular:<br /><ul><li> They represent gambling with "other people's money," in this case, "the stockholders [of large public corporations] not to mention the livelihoods of their employees and the sustainability of their institutions"</li></ul><ul><li>Bonuses are given just based on the appearance of winning, for example, when a company's stock goes up short term, regardless of long-term results.</li></ul><ul><li>Bonuses are given even when the company may lose, for example, the "golden parachute," or severance package that even executives forced to resign or retire may receive.</li></ul><ul><li>Bonuses are given for actions that at best only provide potential gains for the company, for example prior to a merger, but before it is known that the merger will be successful</li></ul><ul><li>Bonuses are given just for showing up, that is, "retention bonuses."</li></ul><br />Thus he contended that bonuses inspire executives to be gamblers in a game rigged in their favor.<br /><br /><b>Based on False Assumptions </b><br /><br />Furthermore, he argued that the current system of executive compensation is based on false assumptions.  These include:<br /><br /><u>"A company's health is represented by its financial measures alone - even better, the price of its stock."</u> <br /><br />However, as Prof Mintzer noted:<br /><br /><blockquote class="tr_bq">Companies are a lot more complicated than that. Their health is significantly represented by what accountants call goodwill, which in its basic sense means a company's intrinsic value beyond its tangible assets: the quality of its brands, its overall reputation in the marketplace, the depth of its culture, the commitment of its people, and so on.  </blockquote><br />I would note that this applies especially in health care, and more especially to organizations that provide direct patient care.  No hospital system, for example, could function at all without a corps of dedicated health professionals, physicians, nurses, therapists, etc. <br /><br />Furthermore, Prof Mintzer wrote,<br /><br /><blockquote class="tr_bq">All too often, financial measures are a convenient substitute used by disconnected executives who don't know what else to do—including how to manage more deeply.  Or worse, <i>such measures encourage abuse from impatient CEOs</i>, who can have a field day cashing in that goodwill by cutting back on maintenance and customer service, 'downsizing' experienced employees while others are left to 'burn out,' trashing valued brands, and so on. Quickly the measured costs are reduced while slowly the institution deteriorates </blockquote><br />This is obviously particularly pernicious in health care, a field in which institutions are complicated, and dependent on the efforts of some very highly trained and specialized people well beyond the management suite. <br /><br /><u>"Performance measures, whether short or long term, represent the true strength of the company."</u> <br /><br />Prof Mintzer pointed out the lack of accurate measures of the overall performance of a company or organization. <br /><br /><br /><u>"The CEO, with a few other senior executives, is primarily responsible for the company's performance."  </u><br /><br />Prof Mintzer asked,<br /><br /><blockquote class="tr_bq">In something as complex as the contemporary large corporation, <i>how can success over three or even 10 years possibly be attributed to a single individual?</i> Where is teamwork and all that talk about people being 'our most important asset?' <br /><br />More important, should any company even try to attribute success to one person? <i>A robust enterprise is not a collection of 'human resources'; it's a community of human beings. </i>All kinds of people are responsible for its performance. <i>Focusing on a few—indeed, only one, who may have parachuted into the most senior post from the outside—just discourages everyone else in the company.</i></blockquote><br />Again, this is obviously particularly the case in health care organizations, especially those that provide direct patient care. <br /><br /><b>Leading to the Worst Possible Leaders and Leadership</b><br /><br />Finally, Prof Mintzer argued that the current system is designed to promote the worst possible leadership, leading likely to the worst possible outcomes.  He opened with<br /><br /><blockquote class="tr_bq"> Executive bonuses—especially in the form of stock and option grants—represent<i> the most prominent form of <b>legal corruption</b> that has been undermining our large corporations and bringing down the global economy. </i></blockquote><br />Our argument has been that the current leadership of health care is similarly bringing down our health care system.<br /><br />He later noted that current compensation practices mainly function to select out the worst possible leaders:<br /><br /><blockquote class="tr_bq"> executive compensation these days <i>reinforces a class structure within the enterprise that is antithetical to its effective functioning</i>. Because of its symbolic nature, executive compensation as currently practiced sends out the worst possible signal to everyone in the enterprise.</blockquote><br />Furthermore,<br /><br /><blockquote class="tr_bq">bonuses can serve one purpose. It has been claimed that if you don't pay them, you don't get the right person in the CEO chair. I believe that <i>if you do pay bonuses, you get the wrong person in that chair. At the worst, you get a self-centered narcissist</i>. [Or even a full-fledged, if non-violent, psychopath, as noted <a href="http://hcrenewal.blogspot.com/2012/01/corporate-psychopaths-theory-of-health.html">here</a> - Ed] At the best, you get someone who is willing to be singled out from everyone else by virtue of the compensation plan. Is this any way to build community within an enterprise, even to foster the very sense of enterprise that is so fundamental to economic strength?<br /><br />Accordingly, executive bonuses provide the perfect tool to screen candidates for the CEO job. <i>Anyone who insists on them should be dismissed out of hand</i>, because he or she has demonstrated an absence of the leadership attitude required for a sustainable enterprise.<br /> <br />Of course, this might thin the roster of candidates. Good. Most need to be thinned, in order to be refilled with <i>people who don't allow their own needs to take precedence over those of the community they wish to lead.</i></blockquote><br />It will be interesting to see if anyone attempts a logical refutation of Prof Mintzer's arguments.  My guess is that we will see little response, based on the usual public relations dictum that it is best not to acknowledge one's detractors, even if they are right.  Furthermore, I predict that what responses there are will partake heavily of logical fallacies. <br /><br />Finally, it is worthwhile to think about Prof Mintzer's points when assessing the arguments made in favor of particular executives' outsized remuneration. <br /><br /><b>An Example - Continued Riches for Wake Forest Baptist Executives</b><br /><br /><u>Outsize Executive Compensation Continues </u><br /><br />A few weeks ago, we <a href="http://hcrenewal.blogspot.com/2013/05/clouded-visionary-leadership-wake.html">noted</a> that the leaders of this large medical center, while previously proclaimed as visionaries, and enjoying enlarging compensation, seemed to have lead the institution to a financial crisis due to difficulties with a poorly chosen or implemented electronic health record system. <br /><br />One follow up story updated compensation information and provided the official management rationale for the ongoing largess.  The redoubtable Richard Craver <a href="http://www.journalnow.com/business/business_news/local/article_5da8b354-bda0-11e2-b691-001a4bcf6878.html">wrote</a> in the Winston-Salem Journal,<br /><br /><span class="paragraph-0"> </span><br /><blockquote class="tr_bq"><span class="paragraph-0">Wake Forest Baptist Medical Center provided its top executive, Dr. John McConnell, an 11.9 percent raise in salary during 2011 to $983,777, although his total compensation dropped 18 percent, the center reported Wednesday as part of an annual regulatory filing.<br /><br /> </span> <span class="paragraph-1"> <i>McConnell was paid <b>$2.04 million</b> in total compensation,</i> compared with almost $2.5 million for 2010. Although Wake Forest Baptist operates on fiscal years that end on June 30, the pay for its top executives is required to be listed on a calendar-year basis.<br /><br /> </span> </blockquote><blockquote>The main difference between the 2010 and 2011 compensation totals for McConnell was $461,575 he received as a one-time payment that replaced the retirement benefits he forfeited upon leaving the University of Texas Southwestern Medical Center in Dallas. McConnell was required to work at Wake Forest Baptist for two years to receive the one-time payment.</blockquote><br />Keep in mind that in 2008-9x, Dr McConnell made a total of just over $700,000, so his compensation in 2011 was about three times that.<br /><br />The benevolent board of the medical center saw to it that Dr McConnell got money for all sorts of reasons:<br /><br /><blockquote class="tr_bq">McConnell received <i>$384,203 in bonus and incentives</i> in fiscal 2010-11. The center said the amount reflects the achievement of clinical quality, academic and financial goals set by the board of directors. The bonus was down $115,797 from fiscal 2009-10 primarily because the center reduced the potential percentage of the incentive compensation from 75 percent of his base salary to 53 percent.<br /><br /> McConnell received $38,511 in other reportable compensation, which the center listed: as <i>$8,797 in annual dues for Forsyth Country Club and Rotary Club membership</i>, defined as for business purposes; $16,500 qualified deferred compensation; $3,612 in after-tax life-insurance deduction; and <i>$9,602 in an automobile allowance.</i><br /><br /> He also received<i> $619,002 in contributions to retirement plans,</i> including a supplemental executive retirement plan solely for McConnell’s benefit.</blockquote><br />One wonders why, given his salary and bonus, Dr McConnell could not afford to pay dues to the country club and rotary on his own, or for his own car expenses, or to provide for his own retirement, for that matter?<br /><br />Other executives also continued to do very well:<br /><br /><blockquote class="tr_bq">Donny Lambeth, former president of N.C. Baptist Hospital, <i>received <b>$2.47 million</b> in total compensation.</i> Lambeth served as president of Davie County Hospital and Lexington Medical Center before retiring last year. He is now serving as an N.C. House representative.<br /><br /> Lambeth’s $495,595 in base salary represented an 8 percent decrease related to his reduced job responsibilities. His bonus and incentive compensation was down 2 percent to $181,988. The bulk of Lambeth’s compensation was $1.62 million related to a fully vested deferred compensation upon his retirement.<br /><br /> Dr. Thomas Sibert, president of Wake Forest Baptist Health and chief operating officer, received a 14 percent increase in <i>total compensation to <b>$1.13 million</b></i>, including $631,297 in salary (up 15.7 percent) and $234,540 in bonus and incentive compensation (up 41.3 percent). Sibert took over his role in September 2010.<br /><br /> Edward Chadwick, chief financial officer, received a less than 1 percent increase in <i>total compensation to <b>$979,420</b></i>. His salary rose 4.6 percent to $527,216, while his bonus and incentive compensation fell 5 percent to $189,929.<br /><br /> Russell Howerton, chief medical officer, was paid $295,714 in salary, $300,786 in bonus and incentive compensation and<i> <b>$657,025</b> in total compensation</i>. Doug Edgeton, former president of Piedmont Triad Research Park (recently renamed as Wake Forest Innovation Quarter), received $490,485 in salary, $162,367 in bonus and incentive compensation and <i><b>$710,729</b> in total compensation</i>.</blockquote><br /><b>The Chief Information Quietly Departs, with Some More Money </b><br /><br />Meanwhile, Mr Craver also <a href="http://www.journalnow.com/business/business_news/local/article_de6ed88a-bf47-11e2-b05e-0019bb30f31a.html">reported</a> the quiet departure of the executive who presided over the troubled implementation of the EHR,<br /><br /><span class="paragraph-0"> </span><br /><blockquote class="tr_bq"><span class="paragraph-0">The chief information officer for Wake Forest Baptist Medical Center is stepping down, effective May 31, the center confirmed Friday.<br /><br /> </span> <span class="paragraph-1"> Sheila Sanders has served in that role, as well as vice president of information technology, since being hired in 2009 to direct the center’s overhaul of its IT system.<br /> </span></blockquote><blockquote><div class="p402_hide"><div id="in-story"> </div></div><br />She is leaving at a time when the center is struggling financially and operationally with implementing the Epic electronic health records system — one of the largest overall projects Wake Forest Baptist and most health care systems have undertaken in recent years.</blockquote><br />Note that Ms Sanders was well rewarded for her questionable efforts,<br /><br /><br /><blockquote class="tr_bq">Sanders was paid $333,961 in salary, $89,145 in bonus and incentive compensation and <i><b>$464,543</b> in total compensation in 2011</i>, according to a regulatory filing that Wake Forest Baptist made public Wednesday. The center’s executive-compensation data typically is about 18 months old when released.<br /><br /> In terms of salary, Sanders <i>ranked sixth among the center’s 27 listed management officials.</i> </blockquote><br />It was clear that Ms Sanders ought to have been directly responsible for the EHR implementation,<br /><br /><blockquote class="tr_bq"> The center said Sanders’ duties included clinical information, administrative, business, academic and research support systems, as well as core IT functions that include a central IT help desk, email, computer desktop support, IT security and telecommunications.</blockquote><br />Nonetheless, the extremely well-paid top leadership did not seem to have hard feelings.<br /><br /><br /><blockquote class="tr_bq">Dr. John McConnell, the center’s chief executive, said in a statement that Sanders decided in January to <i>take 'a brief career break' </i>after completing major portions of the overhaul. He said Sanders is relocating to Florida to spend more time with her family.<br /><br /> Wake Forest Baptist spokesman Chad Campbell stressed it was Sanders’ decision to leave her positions, and it was not related to Epic, which went live in September on the center’s main campus.</blockquote><br />Also,<br /><br /><blockquote class="tr_bq">'We are deeply grateful to Sheila for her numerous contributions that will serve the medical center for years to come,' McConnell said. McConnell said senior IT officials will manage day-to-day IT operations with his oversight while the center conducts a national search for her replacement.</blockquote><br />But to reiterate,<br /><br /><blockquote class="tr_bq"> The center said May 2 it had launched another round of 'multi-million dollar' cost-cutting measures that will last through at least June 30, the end of its 2012-13 fiscal year, related to fixing Epic revenue issues.</blockquote><br /> Perhaps any attempt to saddle the chief information officer with responsibility would point out the lack of responsibility imposed on even higher level and better paid executives for apparently approving and authorizing her previous work.<br /><br /><u>The Usual Talking Points </u><br /><br />Instead, the official statement from hospital system management about top <a href="http://hcrenewal.blogspot.com/search/label/executive%20compensation">executives' compensation</a> trotted out the usual talking points in defense of all this lavish pay,<br /><br /><blockquote class="tr_bq">Wake Forest Baptist said in a statement explaining its executive compensation packages that as an academic medical center, it requires management with '<i>a special set of skills and experience</i> to manage relationships with physicians and researchers, the university, its patients and community. … It takes <i>proven talents</i> possessed by a small group of health care executives.'<br /><br /> 'Compensating executives, as we do all of our employees, <i>competitively and appropriately</i>, is crucial to the success of Wake Forest Baptist and to Northwest North Carolina.'</blockquote><br />In addition,<br /><br /><blockquote class="tr_bq"> Baptist said its executive compensation is based<i> primarily on comparisons </i>with 32 academic medical centers, including Duke University Hospital and UNC Hospitals. </blockquote><br />With regard to Dr McConnell's special retirement plan,<br /><br /><blockquote class="tr_bq">'This is a common benefit for executives at academic medical centers and health systems to <i>encourage retention and provide competitive retirement benefits</i>,' the center said in its statement.</blockquote><br />We first listed the talking points <a href="http://hcrenewal.blogspot.com/2011/09/talking-points-sans-original-thought-to.html">here</a>, and then provided additional examples of their use <a href="http://hcrenewal.blogspot.com/2011/09/more-repeats-of-talking-points.html">here</a>, <a href="http://hcrenewal.blogspot.com/2012/03/example-of-how-complex-takes-control.html">here</a> and <a href="http://hcrenewal.blogspot.com/2012/12/health-care-hired-managers-not-playing.html">here</a>.   The official administration discussion above does seem to include: <br />- We have to pay competitive rates<br />-  We have to pay enough to retain at least competent executives, given how hard it is to be an executive<br />-  Our executives are not merely competitive, but brilliant.<br /><br />Left out was any evidence about the executives' performance, much less their degree of responsibility for their institution's performance.  Why the few top paid executives should continue to get credit for the institutions' supposed, but unspecified successes, while escaping any accountability for its failures (including the looming problems with its commercial health care information technology) was of course not mentioned.  <br /><br />So here is a great, current example of how top health care executives are gambling with other peoples' money, in a game rigged so that they always win.  As long as we continue such perverse incentives in health care, they will continue to inspire leaders to line their own pockets at the expense of our health care institutions, and ultimately to the detriment of patients' and the public's health. <br /><br /><b>Conclusion </b><br /><br />So let me conclude with Prof Mintzer's conclusion,<br /><br /><blockquote class="tr_bq">All this compensation madness is not about markets or talents or incentives, but rather about <i>insiders hijacking established institutions for their personal benefit.</i><br /><br />Too many large corporations today are starved for leadership—true leadership, meaning engaged leadership embedded in concerned management. And the global economy desperately needs renewed enterprise, embedded in the belief that companies are communities. Getting rid of executive bonuses, and the gambling games that accompany them, is the place to start.</blockquote><br /><br />

Executive Compensation as "Legal Corruption" - and the Continuing Example of the Troubles of Wake Forest Baptist

"Legal corruption" was the description of current executive compensation practices appearing , of all places, in the Wall Street ...

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