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Presto Chango - UPMC Tries to Make its Employees All Disappear

This story is just in time for Halloween.  The Lawsuit Challenging the Non-Profit Status of UPMC Back in March, 2013, we <a href="http://hcrenewal.blogspot.com/2013/03/the-push-back-continues-mayor-of.html">discussed</a> a lawsuit initiated by the then Mayor of Pittsburgh that challenged the tax-exempt, non-profit status of giant hospital system UPMC.  The suit charged that UPMC functions more like a for-profit corporation based on its large surplus (recently $1 billion), larger reserves ($3 billion), minimal commitment to charitable care, and generous executive pay (recently $5.9 million  to CEO Jeffrey Romoff, 19 executives paid more than $1 million, and ownership of a jet aircraft).  By the way, Romoff's latest total compensation was said to be $6.1 million (look <a href="http://hcrenewal.blogspot.com/2013/08/should-we-cry-for-non-profit-hospital.html">here</a>), and UPMC just bought an even fancier corporate jet, a Bombardier Global Express worth $51 million (look <a href="http://www.post-gazette.com/business/2013/10/25/New-jet-to-fly-UPMC-corporate-flag/stories/201310250134">here</a>). The Employees Vanish The Pittsburgh Post-Gazette just <a href="http://www.post-gazette.com/business/2013/10/22/UPMC-says-it-does-not-have-employees-1/stories/20131022033">described</a> UPMC's remarkable response to the lawsuit. <blockquote class="tr_bq"> For purposes of the city's payroll taxes, [an attorney representing UPMC] Mr. [William] Pietragallo explained, UPMC's subsidiaries -- like UPMC Shadyside and Western Psychiatric Institute and Clinic -- file separate forms. Employees work for those legal subsidiaries. But UPMC itself? 'We don't have employees,' Mr. Pietragallo said. The question is central to the city's suit to strip UPMC of its status as a purely public charity. UPMC argues the city can't challenge its exemption from payroll taxes because it technically has no employees. It's a case where the legal reality may differ significantly from the one that UPMC, which on its website claims to have 55,000 employees, markets on a regular basis. 'You can't pay employment taxes unless you have employees,' Mr. Pietragallo said.</blockquote> This is not the first time UPMC has made this claim in response to a legal action, <blockquote class="tr_bq">Earlier this year, when UPMC faced 80 complaints of unfair labor practices, it argued that it was only a holding company and did not technically employ those in the complaints. The complaints alleged, among other things, that UPMC employees were being punished for attempting to unionize. UPMC ultimately settled.</blockquote> Obvious Contradictions These claims of invisible employees appear to be contradicted by UPMC's own public relations, <blockquote class="tr_bq"> UPMC touts it large workforce. Its 2012 annual report, for example: 'The economic impact of UPMC is more substantial than most people realize. The organization is the largest nongovernmental employer in the Commonwealth of Pennsylvania, and more than $6.2 billion in total labor income can be attributed directly or indirectly to UPMC.' UPMC's website and media releases say the hospital giant employs in the range of 55,000 people. And when UPMC made the top rankings of U.S. News & World Report's Best Hospitals, it did so as a conglomeration of several facilities attorneys are now arguing are separate subsidiaries.</blockquote> Also, <blockquote class="tr_bq">[An attorney representing the city of Pittsburgh, Ronald]   Barber argued that even for tax purposes, UPMC has documented having employees. In a Form 990 filed for the 'UPMC Group,' the hospital network said it employed around 52,000 people.</blockquote> A few days later, the Post-Gazette <a href="http://www.post-gazette.com/business/2013/10/28/City-of-Pittsburgh-fires-back-against-UPMC-claim-of-not-having-employees.print">reported</a> that the city responded to these UPMC claims in matter-of-fact way, <blockquote class="tr_bq"> On its website, in its annual report and in some tax filings, UPMC purports to have employees -- sometimes tens of thousands of them, the city of Pittsburgh's attorneys said in a court filing.</blockquote> Furthermore, <blockquote class="tr_bq"> The city also argued that those working for subsidiaries are UPMC employees as well, pointing to UPMC's 2012 Annual Report and website, which tout the hospital system as one of the state's largest employers. Attorneys also pointed to a lawsuit in which UPMC claimed to 'extend offers of employment.'</blockquote> How Complexity Benefits Bureaucrats and Managers It is Halloween coming up, not April Fool's Day, and the claims made on behalf of UPMC do not appear to be jokes.  Instead, I believe they underline two serious problems with how large health care organizations are currently lead. The first is that health care organizations often have exceedingly complex structures for reasons that have nothing to do with fulfilling their health care mission.  One reason may be that the complexity creates options for plausible deniability.  In particular, when such organizations are accused of bad behavior, as they now often are, subsidiaries may be set up to "take the rap."  For example, we <a href="http://hcrenewal.blogspot.com/2013/06/pfizer-may-no-longer-be-able-to-delay.html">discussed</a> how Pfizer Inc has been using the bankruptcy filing of its Quigley subsidiary made as if that subsidiary were independent to delay resolution of claims that the subsidiary sold hazardous asbestos products.    This tactic of having the subsidiary take the rap may be particularly useful when taking the rap may lead to a severe penalty for the organization, such as disbarring it from being paid by the government.  A disbarred subsidiary may simply be dissolved and its work transferred to other parts of the organization.  For example, in May, 2013 we <a href="http://hcrenewal.blogspot.com/2013/05/ghosts-in-criminal-machine-how-drug.html">discussed</a> a settlement in which Baush and Lomb subsidiary Ista Pharmaceutical would be disbarred from participation in government programs.  However, Baush and Lomb itself would not be disbarred, and would be able to "wind down" Ista's operations and transfer its products to other parts of the larger company.  The current example appears to be a more creative use of subsidiaries to claim deniability, although whether the arguments about disappearing employess above are even plausible is open to question. Complex organizations also offer many opportunities to employ and enrich administrators, bureaucrats and managers, and to justify ever larger <a href="http://hcrenewal.blogspot.com/search/label/executive%20compensation">compensation for the top executives</a> who purport to run the whole thing.  That such proliferation of management and management compensation may detract from the mission does not appear to be a big concern of the sorts of people who now run health care. Contempt for Truth The second problem is that the leadership of large organizations seem to have little use for the truth.  Instead, they may put lots of faith in their marketers, public relations people, and legal staff to obfuscate the truth in pursuit of ever more revenue and executive enrichment.  As management becomes less and less reality-based, however, it may be less likely to be able to respond to the very reality-based needs of patients and the public. Conclusion I hope that the outlandish claims now being sanctioned by UPMC leadership may raise awareness of what is going wrong with the leadership of health care organizations in general.  As we have been saying for years, health care leadership that puts its self-interest ahead of patients and the public, and which disregards the truth in service of self-interest may be the biggest cause for ever increasing health care costs, and ever declining access and regard for the health of patients and the public.  True health care reform would encourage leadership that puts the mission ahead of self-interest, and values honesty more than personal profit. It would promote regulation that holds top leadership of organizations accountable for their organizations' actions and not allow the leadership to hide behind complex organizational structures.

Presto Chango - UPMC Tries to Make its Employees All Disappear

This story is just in time for Halloween. The Lawsuit Challenging the Non-Profit Status of UPMC Back in March, 2013, we discussed a lawsui...

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Proof positive of government incompetence and recklessness in information technology - H.R.3303 - Bipartisan call for exemption of health IT from the FD&C Act

Here's proof positive of government incompetence and recklessness in information technology. A new proposed bill that would exempt health IT from the Food, Drug & Cosmetic Act and FDA regulation. Rep. Marsha Blackburn (R-TN) calls for exemption of healthcare software from FDA regulation with bipartisan co-sponsorship from Reps. Gene Green (D-TX), Phil Gingrey, M.D. (R-GA), Diana DeGette (D-CO), Greg Walden (R-OR) and G.K. Butterfield (D-NC). H.R.3303 - SOFTWARE Act of 2013 - referred to House Energy & Commerce on 10/22/2013 <a href="http://beta.congress.gov/bill/113th/house-bill/3303/text">http://beta.congress.gov/bill/113th/house-bill/3303/text</a> This remarkable and unprecedented regulatory accommodation is based on nebulous, speculative and largely imaginary grounds that translate to - just because:   <blockquote class="tr_bq">... (c) Sense of Congress.--It is the sense of the Congress that--             (1) clinical software and health software (as defined in         section 201(tt) of the Federal Food, Drug, and Cosmetic Act, as         added by subsection (a)) [can]--                     (A) advance the goals of enhanced patient safety                 and continued innovation;                     (B) hold much promise to lower costs and improve                 the health of patients; and                     (C) can improve the quality and efficacy of health                 care provider services </blockquote> This is despite known defects and harms in-the-now (e.g., ECRI Deep Dive Study with 8 injuries and 3 possible deaths in 9 weeks from 171 health IT 'mishaps', voluntarily reported in just 36 hospitals,<a href="https://www.ecri.org/EmailResources/PSRQ/ECRI_Institute_PSO_Deep%20Dive_HIT_TOC.pdf"> https://www.ecri.org/EmailResources/PSRQ/ECRI_Institute_PSO_Deep%20Dive_HIT_TOC.pdf</a>; Emergency Department EHR dangers as at <a href="http://hcrenewal.blogspot.com/2013/10/quality-and-safety-implications-of.html">http://hcrenewal.blogspot.com/2013/10/quality-and-safety-implications-of.html</a>; innumerable "glitches" that can kill, <a href="http://hcrenewal.blogspot.com/search/label/glitch">http://hcrenewal.blogspot.com/search/label/glitch</a> and <a href="http://hcrenewal.blogspot.com/2011/01/maude-and-hit-risk-mother-mary-what-in.html">http://hcrenewal.blogspot.com/2011/01/maude-and-hit-risk-mother-mary-what-in.html</a>; baby deaths, <a href="http://hcrenewal.blogspot.com/2011/06/babys-death-spotlights-safety-risks.html">http://hcrenewal.blogspot.com/2011/06/babys-death-spotlights-safety-risks.html</a> etc.) Instead this group of intrepid Cybernetic Crusaders, to whom your life is valuable (as a guinea pig, it seems) call for -- <blockquote class="tr_bq">"the President and the Congress [to] work together to develop and enact legislation that establishes a risk-based regulatory framework for such clinical software."</blockquote> With the Obamacare/Obamaware debacle still in progress ... (see "Drudge Report, Oct. 10, 2013, 9 AM EST: All that needs to be said about government, computing and healthcare" at <a href="http://hcrenewal.blogspot.com/2013/10/drudge-report-oct-10-2013-9-am-est-all.html">http://hcrenewal.blogspot.com/2013/10/drudge-report-oct-10-2013-9-am-est-all.html</a>) ... All I can say is: REALLY? -- SS p.s. perhaps I should have entitled this post "Look, Ma, No Regulation!" (See <a href="http://hcrenewal.blogspot.com/2011/06/my-mother-passed-away.html">http://hcrenewal.blogspot.com/2011/06/my-mother-passed-away.html</a>.) -- SS

Proof positive of government incompetence and recklessness in information technology - H.R.3303 - Bipartisan call for exemption of health IT from the FD&C Act

Here's proof positive of government incompetence and recklessness in information technology. A new proposed bill that would exempt healt...

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Over At The Health Care Blog, Aneesh Chopra Distorts IT Failure Reality

I feel sorry for President Obama.  I really do.  He's been deceived by IT hyperenthusiasts who, in addition to their hyperenthusiasm, probably heaped him a big helping of plain old lies. I warned of this in my Feb. 18, 2009 Letter to the Editor published in the Wall Street Journal (at <a href="http://online.wsj.com/news/articles/SB123492035330205101">http://online.wsj.com/news/articles/SB123492035330205101</a>, third letter): <blockquote class="tr_bq">Dear Wall Street Journal: You observe that the true political goal is socialized medicine facilitated by health care information technology. You note that the public is being deceived, as the rules behind this takeover were stealthily inserted in the stimulus bill. I have a different view on who is deceiving whom. In fact, it is the government that has been deceived by the HIT industry and its pundits. Stated directly, the administration is deluded about the true difficulty of making large-scale health IT work. The beneficiaries will largely be the IT industry and IT management consultants. For £12.7 billion the U.K., which already has socialized medicine, still does not have a working national HIT system, but instead has a major IT quagmire, some of it caused by U.S. HIT vendors. [That project, the National Programme for IT in the NHS or NPfIT, was since abandoned - ed.] HIT (with a few exceptions) is largely a disaster. I'm far more concerned about a mega-expensive IT misadventure than an IT-empowered takeover of medicine. The stimulus bill, to its credit, recognizes the need for research on improving HIT. However this is a tool to facilitate clinical care, not a cybernetic miracle to revolutionize medicine. The government has bought the IT magic bullet exuberance hook, line and sinker. I can only hope patients get something worthwhile for the $20 billion.</blockquote> Now, more spin and misinformation by Aneesh Chopra, senior fellow at the Center for American Progress, and the former U.S. chief technology officer in the Obama Administration over at the Health Care Blog at a piece "What's Next For Healthcare.gov?" (<a href="http://thehealthcareblog.com/blog/2013/10/25/whats-next-for-healthcare-gov/">http://thehealthcareblog.com/blog/2013/10/25/whats-next-for-healthcare-gov/</a>). Like a cybernetic <a href="http://en.wikipedia.org/wiki/Grigori_Rasputin">Rasputin</a>, Chopra writes: <blockquote class="tr_bq">The launch of <a href="http://healthcare.gov/" target="_blank">HealthCare.gov</a> certainly didn’t go as planned. Due to technical errors, millions of Americans were sent to the functional equivalent of a waiting room before they could enter the shopping portion of the site. Historically, projects of such complexity and demand have encountered early problems yet still often achieve great success. While much of the commentary has focused on coding problems, the site still has the potential to spur innovation — be it public or private —  that will result in quality improvement and lower costs.</blockquote> (Note the definitive "will", without evidence.  Mr. Obama's probably been hearing a lot of non-evidence-based wishful thinking about health IT in recent years.) The statement about future success is belied, for example, by the National Programme for IT in the NHS (NPfIT) failing and going "pfffft" as just one example (<a href="http://hcrenewal.blogspot.com/2011/09/npfit-programme-going-pffft.html">http://hcrenewal.blogspot.com/2011/09/npfit-programme-going-pffft.html</a> and other links). More generally, there's this article by Shaun Goldfinch, formerly at the U. Otago in New Zealand: <blockquote class="tr_bq">"Pessimism, Computer Failure, and Information Systems Development in the Public Sector."  (Public Administration Review 67;5:917-929, Sept/Oct. 2007, Shaun Goldfinch, University of Otago, New Zealand). </blockquote> Unfortunately it's not freely available, but a free first-page preview is at <a href="http://www.jstor.org/discover/10.2307/4624644?uid=3739864&uid=2129&uid=2&uid=70&uid=4&uid=3739256&sid=21102828298677">http://www.jstor.org/discover/10.2307/4624644?uid=3739864&uid=2129&uid=2&uid=70&uid=4&uid=3739256&sid=21102828298677</a>: Summary: <blockquote class="tr_bq">The majority of information systems developments are unsuccessful. The larger the development, the more likely it will be unsuccessful. Despite the persistence of this problem for decades and the expenditure of vast sums of money, computer failure has received surprisingly little attention in the public administration literature. This article outlines the problems of enthusiasm and the problems of control, as well as the overwhelming complexity, that make the failure of large developments almost inevitable. Rather than the positive view found in much of the public administration literature, the author suggests a pessimism when it comes to information systems development. Aims for information technology should be modest ones, and in many cases, the risks, uncertainties, and probability of failure mean that new investments in technology are not justified. The author argues for a public official as a recalcitrant, suspicious, and skeptical adopter of IT. </blockquote> Article start: <blockquote class="tr_bq">The majority of information systems (IS) developments are unsuccessfu1. The larger the development, the more likely it will be unsuccessful. Though the exact numbers are uncertain and depend to some extent on how success is measured, something like 20 percent to 30 percent of all developments are total failures in which projects are abandoned. Around 30 percent to 60 percent are partial failures in which there are time and cost overruns or other problems. The minority are those counted as successes (Collins and Bicknell 1997; Corner and Hinton 2002; Georgiadou 2003; Heeks and Bhatnagar 1999; Heeks 2002, 2004 ; Iacovou 1999; James 1997; Korac-Boisvert and Kouzmin 1995 ; Standish Group 2001, 2004). A U.S. survey of IS projects conducted by the Standish Group in 2001 found that success rates varied from 59 percent in the retail sector to 32 percent in the financial sector, 27 percent in manufacturing, and 18 percent in government. Overall, the success rate was 26 percent. In all, 46 percent of projects had problems, including being over budget and behind schedule or being delivered with fewer functions and features than originally specified. Another 28 percent failed altogether or were cancelled. Cost overruns averaged nearly 200 percent. Th is success rate varied dramatically by total project budget: For projects under US$750,000 the success rate was 55 percent; for those with budgets over US$10 million, no projects were successful (SIMPL/NZIER 2000). More recent Standish Group (2004) estimates saw a success rate of 29 percent, but 53 percent of projects had problems and 18 percent failed. A New Zealand government study judged 38 percent of government projects a success, while 59 percent involved problems and 3 percent were a complete failure or were cancelled. Government success rates, at 31 percent, were slightly higher than private sector success rates. Above the NZ$10 million mark, however, the success rate for both was zero (SIMPL/ NZIER 2000). One study of hundreds of corporate software developments found that five out of six projects were considered unsuccessful, with one-third cancelled outright. Of the two-thirds that were not cancelled, price and completion times were almost twice what had originally been planned (Georgiadou 2003). The Royal Academy of Engineering and the British Computer Society (2004) found that 84 percent of public sector projects resulted in failure of some sort. The sums involved in such projects can be staggering.  A study of IS developments in the British public sector estimated that 20 percent of expenditures were wasted, and a further 30 percent to 40 percent led to no perceivable benefits (Wilcocks 1994). In 1994, the U.S. General Accounting Office reported that spending of more than US$200 billion in the previous 12 years had led to few meaningful returns.</blockquote> The article is extensively referenced, and nothing has changed since it was published.  While the article's cost from the jstor.org site is $25 (US I think), it is well worth reading for anyone involved in large public sector IT projects. Especially, the President of the United States and his staff. It is my belief the same actors who've misled him about health IT and the supposed ease of building a national insurance portal for 300 million+ people are going to mislead him about remediation of the latter, resulting in yet more embarrassment, and perhaps eventually patient harm and death when someone, somewhere, is denied care or has delayed care due to insurance loss. Finally, I note this in Chopra's bio at the Health Care Blog Piece: <blockquote class="tr_bq"> <a href="https://twitter.com/aneeshchopra" target="_blank">Aneesh Chopra</a> is a senior advisor at The Advisory Board Company</blockquote> The Advisory Board Company (<a href="http://www.advisory.com/About-Us">http://www.advisory.com/About-Us</a>) is: <blockquote class="tr_bq">... a performance improvement partner for 165,000+ leaders in 4,100+ organizations across health care and <a href="http://www.eab.com/" target="_blank">higher education</a>.</blockquote> The Advisory Board Company has been an advisor on hospital management and technology for decades. Perhaps they're another piece in the puzzle as to why hospital executives are implementing bad health IT (<a href="http://cci.drexel.edu/faculty/ssilverstein/cases/">http://cci.drexel.edu/faculty/ssilverstein/cases/</a>) technology in droves, such as in the ED where many underprivileged people get primary and emergency care.  (See "Quality and Safety Implications of Emergency Department Information Systems: ED EHR Systems Pose Serious Concerns, Report Says" at <a href="http://hcrenewal.blogspot.com/2013/10/quality-and-safety-implications-of.html">http://hcrenewal.blogspot.com/2013/10/quality-and-safety-implications-of.html</a>, for example.) After all, with senior advisors to a major healthcare organization consultant in denialist roles, if the IT's bad now, it will be just great in ver. 2.0. (See "The Denialists' Deck of Cards: An Illustrated Taxonomy of Rhetoric Used to Frustrate Consumer Protection Efforts" by Chris Jay Hoofnagle, available at <a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=962462">http://papers.ssrn.com/sol3/papers.cfm?abstract_id=962462</a>.) The same Denialist Deck of Cards is being played, I fear, to frustrate taxpayer attempts at hemming in waste ... and to frustrate the President of the United States' efforts to leave a good legacy. -- SS

Over At The Health Care Blog, Aneesh Chopra Distorts IT Failure Reality

I feel sorry for President Obama. I really do. He's been deceived by IT hyperenthusiasts who, in addition to their hyperenthusiasm, pr...

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There They Go Again - Omnicare to Settle for $120 Million

The march of <a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements">legal settlements</a> seems to be on its way again. The Latest Settlement The details, per Reuters, <blockquote class="tr_bq">n">Omnicare, Inc, a leading U.S. provider of pharmacy services to the elderly, has agreed to pay the U.S. government $120 million to settle allegations the company gave nursing homes steep discounts on prescription drugs in exchange for patient referrals. Cincinnati-based Omnicare announced the settlement on Wednesday in a filing with the U.S. Securities and Exchange Commission, but denied any wrongdoing. The lawsuit, filed in 2010 by former Omnicare employee Donald Gale, had been scheduled to go to trial on October 28. Gale accused the company of engaging in a kickback scheme called 'swapping' in which Omnicare allegedly gave nursing homes heavily discounted prescription drugs for inpatients covered by Medicare Part A. That federal benefit program pays skilled nursing facilities a fixed fee per patient, per day, for the first 100 days of a patient's stay, according to court filings. In exchange, the nursing homes allegedly referred their other patients, many covered by other federal benefit programs, allowing Omnicare to bill the full price of their prescription drugs and pharmacy services, the lawsuit said.</blockquote> As is usually the case,  <blockquote class="tr_bq">Omnicare's vice president of investor relations, Patrick Lee, said in an emailed statement that the company did not admit liability in settling the lawsuit.</blockquote> <blockquote> 'The Company agreed to settle the matter in order to avoid continued litigation and to focus on its mission of helping to ensure the health of seniors and other patient populations in a cost-effective manner,' he said.</blockquote> He did not comment on the discrepancy between the alleged kickback scheme apparently meant to increase company revenue and that bit about ensuring health in "a cost-effective manner." Will There be Still Others? In addition, the Cincinnati Business Courier <a href="http://www.bizjournals.com/cincinnati/news/2013/10/23/omnicare-to-pay-120-million-to-settle.html">quoted</a> another Omnicare executive, <blockquote class="tr_bq">'This settlement is not an admission of liability, and Omnicare continues to deny that there was any wrongdoing,' <a href="http://www.bizjournals.com/cincinnati/search/results?q=Robert%20Kraft">Robert Kraft</a>, chief financial officer for Omnicare, said Wednesday in a conference call with market analysts regarding the company’s third-quarter earnings. 'When we agree to settle these types of matters, we have and will continue to make decisions in the best interest of our shareholders. …' 'We operate in a highly regulated industry, and we believe additional matters will likely arise against the company in the future,' Kraft said. 'We believe the matters of which we are now aware, including the aforementioned settlement, are manageable given the company's financial position and cash-flow characteristics.'</blockquote> Was that an admission that the company often violates regulations?  It is hard to tell.  However, it is clear that this is not the first settlement of allegations of bad behavior that the company has made. The Previous Settlements The Cincinnati Business Courier article also stated,   <blockquote class="tr_bq"><a href="http://www.bizjournals.com/cincinnati/news/2013/08/16/omnicare-agrees-to-167-million.html?page=all">I reported in August on the settlement of a lawsuit filed on behalf of Omnicare,</a> which had alleged that a former president and CEO as well as some other former officers or directors of the company had violated federal laws related to kickbacks and false claims.</blockquote> That settlement was for a mere $16.7 million. In addition, as we <a href="http://hcrenewal.blogspot.com/2010/08/2-legal-settlements-1-corporate.html">discussed </a>in 2010, in 2009, we <a href="http://hcrenewal.blogspot.com/2009/11/omnicare-ivax-settle.html">discussed</a> a $98 million settlement made by Omnicare, US based corporation that manages pharmacy-benefits, of allegations that it received kickbacks from generic drug manufacturers for buying and recommending their drugs.  Omnicare had previously submitted to a corporate integrity agreement in 2006, and paid $102 million to settle allegations it defrauded Medicaid. So the count so far is four settlements for a total of approximately $337 million, and one corporate integrity agreement. Summary So Omnicare is yet another of the many large health care organizations which have been subject to various legal actions suggesting diverse kinds of bad behavior.  Omnicare, like many of these, has paid penalty upon penalty, yet each settlement seems to be made in a vacuum without reference to prior events.  Furthermore,  almost no settlement, and no settlement made by Omnicare, ever either imposed a large enough penalty on the company to deter further problems, or imposed any - I repeat any - negative consequences on anyone at the company who authorized, directed, or implemented the bad behavior.  So, as obliquely stated by the Omnicare CFO in this case, expect further "matters" to be addressed in the future. So as we<a href="http://hcrenewal.blogspot.com/2010/08/2-legal-settlements-1-corporate.html"> said</a> on the subject of Omnicare in 2010, <blockquote class="tr_bq"> the usual sorts of legal settlements we have described do not seem to be an effective way to deter future unethical behavior by health care organizations. Even large fines can be regarded just as a cost of doing business. Furthermore, the fine's impact may be diffused over the whole company, and ultimately comes out of the pockets of stockholders, employees, and customers alike. It provides no negative incentives for those who authorized, directed, or implemented the behavior in question. My refrain has been: 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. </blockquote> By Roy M. Poses on Health Care Renewal

There They Go Again - Omnicare to Settle for $120 Million

The march of legal settlements seems to be on its way again. The Latest Settlement The details, per Reuters, Omnicare, Inc, a leading U.S....

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Justice Delayed - Two Device Companies Still Settling Cases from 10 Plus Years Ago

Here we go again.  After a hiatus during which the US media and perhaps parts of the government were preoccupied with such issues as the ongoing controversy over health care reform, and a government shutdown apparently arising out of this controversy, the <a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements">march of legal settlements</a> involving big health care organizations has resumed. In alphabetical order,... Boston Scientific <a href="http://www.startribune.com/business/228211891.html">From</a> the Minneapolis Star-Tribune on 17 October, 2013, an account of a settlement arising from alleged misbehavior that started in 2002, <blockquote class="tr_bq">A $30 million settlement between the U.S. Department of Justice and Boston Scientific will likely end a case involving the sale of defective heart devices from 2002 through 2005 by subsidiaries Guidant, Guidant Sales and Cardiac Pacemakers.</blockquote> Note that the allegations were particularly egregious since they involved a company selling products they knew to be defective in ways that could prove fatal as if they were quite safe, <blockquote class="tr_bq">The settlement closes a fraudulent-claims lawsuit that alleged Guidant knowingly sold defective implantable defibrillators to health care facilities that implanted them into thousands of Medicare patients. </blockquote> In particular, <blockquote class="tr_bq">The government’s complaint said that Guidant knew as early as April 2002 that its Prizm 2 line of devices was defective and knew in November 2003 that its Renewal 1 and 2 devices were capable of short-circuiting and delivering an electric shock that 'arcs' back onto the device instead of being directed to an irregularly beating heart. According to Boston Scientific’s website, 83 malfunctions and nine reported deaths have been connected with the Renewal devices and 40 confirmed malfunctions and five patient deaths have been associated with the Prizm devices. About 500 Renewal devices remain implanted worldwide; about 1,400 Prizm devices remain in patients, according to the website. Although Guidant took action to fix the defects, the government alleged that the company continued to sell its remaining stock of the old, defective versions of the devices. In fact, federal officials say that as Guidant learned about the cause of the defect, it took steps to hide the problem from patients, doctors and the Food and Drug Administration. According to the government, Guidant did not fully disclose the problem until May 2005, when two Minneapolis doctors publicly aired their concerns about one of the defibrillators after it failed to revive a 21-year-old Grand Rapids, Minn., patient. Guidant later admitted it had known for three years that the device could short-circuit, but chose not to alert doctors or the public.</blockquote> This is only the latest settlement made by Boston Scientific since 2005, <blockquote class="tr_bq">Boston Scientific paid $27.5 billion to acquire Guidant in 2006. It has been paying quite a bit since in relation to Guidant’s defective defibrillators. In 2007, Boston Scientific paid $240 million to settle claims with thousands of patients who had sued Guidant after the defective devices were recalled. Later, in February 2010, Guidant pleaded guilty to misleading the FDA about problems with the devices and paid a fine of $296 million.</blockquote> In fact, the then case of the allegedly concealed implantable cardiac defibrillators (ICD) was one of the first cases of apparently unethical health care corporate management behavior leading to bad patient outcomes we <a href="http://hcrenewal.blogspot.com/2005/05/guideants-short-circuit.html">discussed</a> on Health Care Renewal.  (Look <a href="http://hcrenewal.blogspot.com/2011/01/guidant-boston-scientific-gets.html">here</a> for a more recent summary of this case.) Yet despite the fact that this apparently deeply unethical conduct lead to patient deaths, no individual who authorized, directed or implemented the bad behavior has suffered any negative consequences for it over the eight years since the details first became public. One physician who helped bring this case to light was also apparently concerned about the impunity of those responsible, <blockquote class="tr_bq"> Dr. Robert Hauser, one of the doctors who went public back in 2005, criticized the settlement on Thursday. 'The $30 million should have little impact on their business,' Hauser said in an e-mail. 'I find it very disturbing that such a small settlement was accepted by the DOJ in view of the magnitude of wrongdoing by Guidant management.' </blockquote> Stryker Corp This week, MLive.com <a href="http://www.mlive.com/business/west-michigan/index.ssf/2013/10/stryker_to_pay_132_million_to.html">reported</a> on another settlement involving allegations of unethical behavior by a device company dating back to 2003, <blockquote class="tr_bq"> An investigation by federal authorities found that Stryker Corp. subsidiaries in five foreign countries made illicit payments and tried for several years to bribe doctors, health care professionals and government-employed officials in order to obtain or retain business. Stryker <a href="http://topics.mlive.com/tag/Stryker/index.html"> </a>has agreed to pay more than $13.2 million to settle the charges. The SEC charged the Kalamazoo-based medical technologies company with violating the Foreign Corrupt Practices Act,  alleging that its subsidiaries in Argentina, Greece, Mexico, Poland and Romania made illicit payments totaling approximately $2.2 million 'that were incorrectly described as legitimate expenses in the company’s books and records.' The SEC said descriptions of the payments varied from a charitable donation to consulting and service contracts, travel expenses, and commissions. The SEC states that Stryker made about $7.5 million in illicit profits as a result of the improper payments. It did not specify during what year all of the events occurred, but indicated some as far back as 2003.</blockquote> Note that the payments seemed deliberately designed to corrupt health care professionals and managers, for example, <blockquote class="tr_bq">According to the SEC’s order, Stryker’s subsidiary in Greece made a purported 'donation' of nearly $200,000 in 2007 to a public university in Greece to fund a laboratory that was a pet project of a public hospital doctor. In exchange for the payment, the doctor agreed to provide business to Stryker.</blockquote> Also, <blockquote class="tr_bq">The SEC stated that its investigation also found that Stryker subsidiaries bribed foreign officials by paying their expenses for trips that lacked any legitimate business purpose. 'For example, in exchange for the promise of future business from the director of a public hospital in Poland, Stryker paid travel costs for the director and her husband in May 2004,' according to the SEC. 'This included a six-night stay at a New York City hotel, attendance at two Broadway shows, and a five-day trip to Aruba.'</blockquote> As in the case above, it appears that no individual who authorized, directed or implemented the questionable payments will suffer any negative consequences.  In fact, as is usual in such cases, <blockquote class="tr_bq"> The settlement does not not require Stryker to admit or deny the allegations,...</blockquote> However, an SEC official did say, <blockquote class="tr_bq"> Stryker’s misconduct involved hundreds of improper payments over a number of years during which the company’s internal controls were fatally flawed. Companies that allow corruption to occur by failing to implement robust compliance programs will not be allowed to profit from their misconduct.</blockquote> While Health Care Renewal has not discussed this particular case before, it is hardly the first case of bad conduct by Stryker that we have discussed.  In the past we noted -  In 2012, a Stryker subsidiary pleaded guilty to misbranding in response to allegations that its marketers conspired to defraud physicians in order to sell a product to promote bone growth that proved harmful to patients (look <a href="http://hcrenewal.blogspot.com/2012/01/unequal-justice-under-law-comparing.html">here</a>). -  In 2010, Stryker settled a case alleging unfair and deceptive sales practices again used for bone growth accelerators (look <a href="http://hcrenewal.blogspot.com/2010/09/at-end-of-summer-everybody-well-nearly.html">here</a>).   -  In 2009, some apparently low-level Stryker employees pleaded guilty to promoting off-label use of these same products (look <a href="http://hcrenewal.blogspot.com/2009/02/three-troubled-device-companies.html">here</a>).  - In 2007, Stryker made an agreement allowing federal supervision after charges one of its units had violated anti-kickback laws when making supposed "royalty" payments, often huge, to orthopedic surgeons in connection with its production of prosthetic hips and knees.  Several other device companies signed deferred prosecution agreements, and as a result, for a time all had to make public their payments to doctors and various non-profit organizations.  (See summary <a href="http://hcrenewal.blogspot.com/2007/11/more-about-surgeons-who-received-large.html">here</a>.)  Summary  This recent crop of settlements has some features in common.  The settlements involved multinational device companies.  The settlements occurred at least a decade after the alleged bad behavior started.  The settlements required only small payments - at least on a corporate scale -from the companies involved, but no negative consequences for anyone who authorized, directed, or implemented the bad behavior.  Finally, the settlements were made by companies who had striking past records of previous settlements of bad behavior. The <a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements">march of legal settlements</a> demonstrates the pervasiveness of unethical behavior, often involving harm to patients or sullying of health care professionals, involving large, rich health care corporations.  It also demonstrates the impunity of the top leaders of such corporations who often make huge amounts of money despite, or perhaps because of their companies' misconduct.  Despite intermittent threats by US government officials to get tough with unethical behavior by health care corporations, this pattern has continued for years, as we have documented.  True health care reform would hold leaders of health care organizations accountable for their organizations' behavior, and its effects on patients and health care professionals.

Justice Delayed - Two Device Companies Still Settling Cases from 10 Plus Years Ago

Here we go again. After a hiatus during which the US media and perhaps parts of the government were preoccupied with such issues as the on...

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Former FDA Commissioner, CMS Administrator McClellan adds Johnson and Johnson Board Membership to Positions with General Atlantic LLC, Capital Royalty, Castlight Health, and AvivReit

Our latest example of the interchangeability of top insiders within corporate health care and the government agencies that are supposed to regulate corporate health care comes via an <a href="http://www.investor.jnj.com/releaseDetail.cfm?ReleaseID=796836&year=2013">announcement</a> from Johnson and Johnson, <blockquote class="tr_bq">Johnson & Johnson (NYSE: JNJ) announced today that Mark B. McClellan, M.D., Ph.D., Senior Fellow in Economic Studies, and Director of the Initiative on Value and Innovation in Health Care, Brookings Institution, will join the Board of Directors on October 15, 2013.  Dr. McClellan will serve on the Regulatory, Compliance & Government Affairs Committee and the Science, Technology & Sustainability Committee of the Board. As former commissioner of the U.S. Food and Drug Administration (FDA) from 2002 to 2004, and as the former administrator of the Centers for Medicare & Medicaid Services for the U.S. Department of Health and Human Services from 2004 to 2006, Dr. McClellan has more than two decades of public service and academic research experience. From 2001 to 2002, he served as a member of the President's Council of Economic Advisers and senior director for health care policy at the White House. During President William J. Clinton's administration, Dr. McClellan held the position of deputy assistant secretary of the Treasury for economic policy.</blockquote> So Dr McClellan has gone from running the US Food and Drug Administration, the primary government regulator of the pharmaceutical industry, to stewardship of one of the biggest pharmaceutical (and biotechnology and device) companies. Not noted in that announcement was that Dr McClellan has been collecting positions in health care corporations since at least 2009.  The examples I found included in chronological order: 2009 - General Atlantic LLC This appears to be a private equity firm which <a href="http://www.generalatlantic.com/about-us/a-proud-legacy/">claims</a> to be a "leading global investment firm." From a 2010 a Mergers & Acquisitions <a href="http://www.themiddlemarket.com/news/General-Atlantic-Adds-Healthcare-Vet-201877-1.html">article</a>, <blockquote class="tr_bq">A year ago, the firm hired Dr Mark McClellan, previously a commissioner of the Food & Drug Administration, to its healthcare practice as a special advisor.</blockquote> According to the firm's <a href="http://www.generalatlantic.com/people/special-advisors/">current website</a>, he is still a special advisor.   2010 - Capital Royalty LP In a 2010 <a href="http://www.capitalroyalty.com/news/item/firm-news/capital-royalty-establishes-strategic-advisory-committee/">press release</a>, this apparently private equity firm claimed to be <blockquote class="tr_bq">a market pioneer and innovator in healthcare investing with a focus on intellectual property investments in FDA-approved biopharmaceutical assets</blockquote> In that release, it announced the creation of a Strategic Advisory Committee that included Dr Mark McClellan.  He <a href="http://www.capitalroyalty.com/about-us/strategic-advisory-committee/dr.-mark-mcclellan-md-phd/">still sits</a> on that committee.  2012 - Castlight Health In a 2012 <a href="http://www.castlighthealth.com/2012/mark-mcclellan-joins-castlight-health%E2%80%99s-advisory-board/">press release</a>, this firm claimed to be <blockquote class="tr_bq">developer of a personalized health care shopping portal offering unbiased information about health care cost and quality</blockquote> That press release announced the addition of Dr McClellan to the firm's Advisory Board, <a href="http://www.castlighthealth.com/company/advisory-board/">on which</a> he still sits.  2013 - AvivReit This firm "specializes in the ownership and triple-net leasing of post-acute and long-term care skilled nursing facilities (SNFs)" per its <a href="http://www.avivreit.com/about-aviv/">website</a>. Dr McClellan is currently on its <a href="http://ir.avivreit.com/od.aspx?iid=4328838">board of directors</a>.  He apparently was appointed in 2013.  Notably, I did not see anything in any of these firms' announcements about Dr McClellan or their biographies of him that noted his board or advisory committee positions with other firms. Summary Dr Mark McClellan rose through the ranks in the US executive branch ending with positions as FDA commissioner and administrator of the Center for Medicare and Medicaid Services (CMS) within the Department of Health and Human Services (DHHS).  He served under two presidents, Clinton and George W Bush.  Within 3 years of exiting DHHS, he picked up his first important commercial position, at General Atlantic LLC, and then added other positions with Capital Royalty, Castlight Health, AvivReit, and now the biggest of all, Johnson and Johnson.  Meanwhile he apparently continues at the Brookings Institution.  He must be one very busy man. This case could be lumped with those of another former FDA commissioner and Secretary of Health and Human Services who ended up as a Director of Medtronic (see <a href="http://hcrenewal.blogspot.com/2011/10/former-us-secretary-of-health-and-human.html">this post</a>),  another Secretary of DHHS who ended up on the boards of multiple health care corporations (see <a href="http://hcrenewal.blogspot.com/2011/06/embedded-networks-of-influence-in.html">this post</a>), a director of the National Institutes of Health (NIH) who became a Sanofi executive, etc, etc (see <a href="http://hcrenewal.blogspot.com/2010/12/former-nih-director-spins-trhough.html">this post</a>). While some might argue whether his acquisition of a leading advisory position with a private equity firm three years after he left DHHS technically constituted a spin through the <a href="http://hcrenewal.blogspot.com/search/label/revolving%20doors">revolving door</a>, Dr McClellan's cumulative acquisition of four more such positions within the following four years certainly demonstrates how our corporate dominated health care system and the government agencies which are supposed to be regulating it to assure the health and safety of patients, and the maintenance of the public health seem to be run by an interchangeable cast of insiders.  We have asked before whether we can trust federal regulators to put patients' and the public's health first when they know they could easily become  candidates for lucrative private positions in the companies they regulate, or which are affected by their regulations, presumably assuming they have not done too much during their time in government to offend the leaders of such companies. We have noted that the system in which government and big corporations largely overlap in terms of their leadership and presumably goals is called <a href="http://hcrenewal.blogspot.com/search/label/corporatism">corporatism</a>.  One can argue that such systems end up being run primarily for the benefit of corporate and government insiders.  Until we dispel the fog of corporatism that has spread over the government that was once supposed to be of the people, by the people, and for the people, expect no real health care reform, and expect continuing rising costs, declining access, and worsening patient care. Obviously, true health care reform would start with the government and its officials putting patients' and the public's health first, way ahead of the financial comfort of corporate leaders. I would note that neither the currently controversial and now operational Affordable Care Act, nor any of its opponents schemes for alternatives addresses this issue. by Roy M. Poses MD for Health Care Renewal

Former FDA Commissioner, CMS Administrator McClellan adds Johnson and Johnson Board Membership to Positions with General Atlantic LLC, Capital Royalty, Castlight Health, and AvivReit

Our latest example of the interchangeability of top insiders within corporate health care and the government agencies that are supposed to r...

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A new and very interesting EMR "glitch" - no warnings on stopping a medicine that diminishes the effects of a second medication

A new and very interesting EMR "glitch" from a report I received recently: <blockquote class="tr_bq">... I found a glitch with my [name redacted] EMR. It probably happens with all EMRs. I had a patient on primidone (<a href="http://en.wikipedia.org/wiki/Primidone">http://en.wikipedia.org/wiki/Primidone</a>) for essential tremor. Later, his primary care put her on warfarin [a "blood thinner" - ed.] for atrial fibrillation. Some time after that, I took her off of primidone.  Her INR jumped to 7 or 8. [High - ed.] What happens is that the EMRs warn a physician pretty well if you START a medicine that interacts with warfarin, but fails to warn if you STOP a medicine that interacts with warfarin. If you are used to relying on your EMR to warn you about drug interactions, you can fall into this trap easily, as I found out. Luckily, the patient was not harmed. </blockquote> In other words, if a medication that interacts with another medication by suppressing the latter's effects to some degree is discontinued, EMRs may not warn of it.  Stopping the former can accentuate the effects of the latter, and disaster can result.  A primidone metabolite, phenobarbital, decreases INR and the anticoagulant effects of warfarin (<a href="http://www.medscape.com/viewarticle/745645_3">http://www.medscape.com/viewarticle/745645_3</a>).  Stop primidone, but continue warfarin, and ... wham. The alert algorithms were apparently not designed with this eventuality in mind ... probably because the designers never thought of this issue.  Medicine is not as easy as it might appear to the outside, non-expert observer. -- SS

A new and very interesting EMR "glitch" - no warnings on stopping a medicine that diminishes the effects of a second medication

A new and very interesting EMR "glitch" from a report I received recently: ... I found a glitch with my [name redacted] EMR. It pr...

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