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Being a Non-Profit Hospital CEO Means Never Having to Say You Are Sorry

When my arm was twisted heartily to see the movie "Love Story" a very long time ago, I could never understand why so many audience members sighed upon hearing that immortal line, "love means never having to say you're sorry."  I could not understand it then, and still cannot. However, it seems that for reasons that are not any more clear, being the CEO of a not-for-profit hospital or hospital system also means never having to say you are sorry, as shown in some recent stories from the media. Not Sorry for Leaving Originally <a href="http://www.inforum.com/event/article/id/323133/">published</a> in the Fargo (ND) InForum: <blockquote>The merger 1½ years ago of Sanford Health and MeritCare created a new entity that doubled in size and covers a service area of more than 130,000 square miles. But the unified health care giant needed only one top executive, and the departing chief administrator received a $1 million contract buyout, according to documents obtained by The Forum. Dr. Roger Gilbertson, a neuroradiologist who had served as MeritCare’s top executive since its founding 17 years earlier, received a 'separation payment' provided by his contract of $1,000,920, according to a report Sanford filed with the Internal Revenue Service that recently became available.</blockquote> Not only did Dr Gilbertson not have to say he was sorry for leaving, he collected what amounted to a million dollar plus bonus just for going out the door. Not Sorry for Leaving Amidst Financial Losses A long <a href="http://www.ajc.com/news/atlanta/hospital-ceo-pay-has-997155.html">story</a> in the Atlanta Journal Constitution discussed compensation for a number of Atlanta area hospital and hospital system CEOs.  For example, <blockquote>Edward Bonn of Southern Regional Health System, which operates Southern Regional Medical Center and two affiliated facilities, made $2,610,175 in fiscal 2009. Bonn left the system that year and received his pay of $421,822 plus $2.2 million from a retirement plan. Hospital CEOs commonly receive extra pay from retirement plans when they leave. Bonn did not receive a bonus because the hospital system lost $12 million that year, the hospital said.</blockquote> Mr Bonn apparently did not need to say he was sorry for collecting over $2 million when that amount was equal to about one-sixth of his system's yearly loss. Not Sorry for Financial Losses Plus a "Culture of Entitlement" This <a href="http://www.thepeterboroughexaminer.com/ArticleDisplay.aspx?e=3053430">story</a> was in the Peterborough (NH) Examiner: <blockquote>Former Peterborough Regional Health Centre CEO Paul Darby was given at least $340,126 plus benefits as a financial package after his retirement in December 2009. He didn't work a single day or offer a single service in 2010 while earning the second top salary at PRHC, just behind current CEO Ken Tremblay. 'The compensations with Paul were in line with similar arrangements with other CEOs and other public hospitals which include support to the executive following the employment period,' board chairwomen Barb Cameron said. 'It is important that we are able to make transitions between leaders smoothly and these kinds of arrangements with the executive allow us to do that.' Darby retired before a whirlwind of controversy hit the hospital last year including a scathing peer-review report blaming hospital top brass for a 'culture of entitlement' leading to spiraling, cumulative debt. When Darby left, the hospital faced a growing deficit of just under $25 million. He was paid $364,275 in 2009, $310,983 in 2008 and $269,419 in 2007.</blockquote>At least his severance package was less than one-sixth of the deficit. Not Sorry for Not Even Revealing One's Salary Here is a local Rhode Island <a href="http://blogs.wpri.com/2011/06/22/hospital-group-care-ne-wont-reveal-new-ceos-pay-package/">story</a> reported by WPRI: <blockquote>The nonprofit group that runs three Rhode Island Hospitals including Women & Infants won’t say whether its new chief executive will receive a seven-figure pay package that matches his predecessor’s. Care New England tapped Cambridge Health Alliance CEO Dennis Keefe as its new president and CEO this week. He will succeed John Hynes, who is retiring, in August. Care New England spokeswoman May Kernan said the organization would not release details about Keefe’s compensation. 'Other than complying with public reporting requirements as part of the federal [IRS] 990 forms, we do not disclose personal salary information,' she told WPRI.com in an email. Hynes’ compensation totaled $1.5 million in 2008-09, up from $873,332 in 2007-08, tax records show.</blockquote>Note that the hired executives of big for-profit corporations also are increasingly uncomfortable about public discussion of their compensation (see<a href="http://hcrenewal.blogspot.com/2011/06/ceo-compensation-nothing-to-see-here.html"> this post</a>). Where All CEOs Are Above Average The rationales presented for such apparently exceptional treatment given non-profit hospital CEOs (and other hired health care managers) are those we have heard before. The most prominent rationale for exceptional treatment of an individual CEO is that he (or rarely she) was such an exceptional leader. This would be more believable if it was not used so often, suggesting that those who defend these leaders, often including the boards of trustees who are supposed to supervise them, believe all hospital CEOs, like the mythical children of Lake Woebegone, are above average. For example, the InForum article provided this explanation of Dr Gilbertson's compensation: <blockquote>The only comment Sanford provided The Forum was a statement about Gilbertson’s contributions to MeritCare over his long tenure. 'Dr. Gilbertson’s gift to this region is invaluable – 30 years in medicine and 17 years as President/CEO of MeritCare only glance the surface,' said Andrew Richberg, a Sanford executive vice president. 'His vision for health care integration, medical knowledge and dedication to patients made him a pillar in our industry.' Gilbertson’s legacy, Richberg added, is 'strong, safe and sustainable health care for all people, in their hometowns, all across the region.'</blockquote> While the article did not suggest Dr Gilbertson's leadership was poor, it is hard to believe that he alone was responsible for "strong, safe and sustainable health care for all people ... all across the region." I am sure there are many other health care professionals in North Dakota who have worked for many years, and who have a strong vision, good medical knowledge, and dedication to patients.  I am sure almost none got $1 million severance packages.  If health care in North Dakota is really that good, is that not because of a lot of hard work by a lot of health care professionals? The rationale of exceptional treatment for exceptional individuals would also be more believable if it was not used to defend CEOs whose organization performed poorly under their leadership. For example, in the Peterborough Examiner: <blockquote>'I would like to acknowledge that these are big salaries, but they are big positions in a large hospital involving large responsibilities and requiring unique skills,' [hospital board of trustees chairwoman] Cameron said,.... </blockquote> Would not having the large responsibility for a large deficit argue against a large severance package? The Market Made Us Do It Despite substantial evidence and strong arguments (see <a href="http://hcrenewal.blogspot.com/2010/08/how-fallacy-of-perfect-health-care.html">here</a>) that health care cannot approach being an ideal free market, another favorite rationale for CEO exceptionalism is that the market made us do it. For example, per the AJC: <blockquote>The number of people who can manage these facilities is limited and recruitment is competitive, [Georgia Hospital Association President Joseph] Parker said. Qualified leaders will gravitate to other fields over time if compensation for nonprofit CEOs is decreased, [executive search consulting company Mercer Inc partner Jose] Pagoaga said. The 'substandard leadership' that replaces them will degrade the quality of medical care for the community. There’s debate on the issue. It’s hard to believe that people who choose the field of charitable medical care would leave because they make only $800,000 a year instead of $1.5 million, said Mark Rukavina, executive director of the Access Project, a Boston patient advocacy organization. But Pagoaga said nonprofit hospitals cannot count on their charitable duty to attract and retain the best administrators. 'Yes, it’s a social mission, but this is not the priesthood and these people have not taken a vow of poverty,' he said. 'You can’t discount the views of people that look at this as an altruistic mission and think that pay should therefore be limited. All I’m saying is there is an entirely different point of view based on free-market principles.'</blockquote> In the real world, of course, poverty would hardly be defined as an income less than $1 million a year. Mr Pagoaga never explicated the point of view based on "free-market principles," but I wonder if it can be summarized as "greed is good?"  It would be interesting to see how Mr Pagoaga could explain how health care is like unto an ideal free market.   Non-Profit Organizations are Not Very Different from For-Profit Perhaps the most intriguing argument was found in the AJC article: <blockquote>Pay in excess of $1 million a year may seem high for an organization subsidized by taxpayers, but hospital executives and industry representatives said the public should think of these hospitals not as charities, but as complex, billion-dollar organizations. Georgia hospitals report to 27 state and federal agencies and engage in multimillion-dollar building projects. The larger hospital systems have billions in revenue and are among the largest employers in their communities. Many also operate for-profit subsidiaries. 'You can’t lose sight of the fact that it’s not an ice cream shop on the side of the street,' said Joseph Parker, president of the Georgia Hospital Association.</blockquote>Note that currently US non-profit organizations do not have to report much data on their for-profit subsidiaries.  The above argument suggests they deserve considerably more scrutiny. Of course, that last explanation begs the question of why the compensation of for-profit hired executives should be even higher, with CEO compensation often well more than two orders of magnitude, that is, hundreds of times higher than that of the lowest paid also hired employees (see <a href="http://hcrenewal.blogspot.com/2011/06/ceo-compensation-nothing-to-see-here.html">this post</a>). Summary I submit that non-profit hospitals and hospital systems do have a "social mission," which ought to be upheld by their leadership. Despite the rationales supplied above, the leaders ought to be accountable, which may sometimes mean having to say they are sorry. As I have repeated endlessly,... health care organizations need leaders that uphold the core values of health care, and focus on and are accountable for the mission, not on secondary responsibilities that conflict with these values and their mission, and not on self-enrichment. Leaders ought to be rewarded reasonably, but not lavishly, for doing what ultimately improves patient care, or when applicable, good education and good research. On the other hand, those who authorize, direct and implement bad behavior ought to suffer negative consequences sufficient to deter future bad behavior. What Is to Be Done? Based on our ever enlarging <a href="http://hcrenewal.blogspot.com/search/label/executive%20compensation">file of cases on compensation</a> of the top hired managers of non-profit health care organizations, let me make some concrete suggestions, based on my humble opinion. A step forward would be to make the finances and compensation arrangements of health care non-profit organizations at least as transparent as those of large public for-profit organizations. So my big idea is: - Non-profit health care organizations above a reasonable threshold size should provide prompt, public, annual reports analogous and very similar to the reports required by the US Securities and Exchange Commission of public, for-profit companies. These reports should include, at a minimum, a summary of financial and operational status, an audited financial report, an explanation and accounting for any for-profit subsidiaries and any interlocking non-profit organizations, the compensation given to the CEO and some minimum number of the top-paid officers and employees, a detailed explanation and rationale for the pay of these individuals, and a listing of other affiliations and all conflicts of interest affecting them. If need to supply such information causes non-profit health care organizations' hired executives and boards of trustees some cognitive dissonance, that would be a good thing.

Being a Non-Profit Hospital CEO Means Never Having to Say You Are Sorry

When my arm was twisted heartily to see the movie "Love Story" a very long time ago, I could never understand why so many audience...

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Law firms as enablers of HIT experiments? Familiar law firm now regular reader of Healthare Renewal

It continues to amaze me that unregulated, unvetted healthcare information technology of unproven benefit and proven harm continues to spread like wildfire. This occurs even when people are killed, such as the infant deaths I outlined <a href="http://hcrenewal.blogspot.com/2011/06/babys-death-spotlights-safety-risks.html">at this post</a> being defended by obstructionist law firms. This phenomenon has enablers. Among those, which include HIT vendors, their marketing arm HIMSS, large consultant companies, HIT pundits, the government, etc., law firms seem to have become enablers of hospitals' experiments with unproven, unqualified, unregulated healthcare information technology - in part by defending the medical mistakes that result. Lawyers defending blatant IT-related errors impede correction of the defects and impaired "<a href="http://www.ischool.drexel.edu/faculty/ssilverstein/cases/?loc=cases&sloc=ecosystem">HIT ecosystem</a>" that causes the problems. After all, they can simply tell a hospital a case is not defensible (and, for example, advise them to settle). Accepting cases is entirely voluntary. For example, take the law firm of MARSHALL,DENNEHEY,WARNER,COLEMAN defending the hospital that caused my mother's IT-related year-long suffering starting May 2010, and then death exactly one month ago on June 6, 2011. They have become a regular reader of Healthcare Renewal, and I can believe it's not to help the hospital improve its HIT. It's not as if lawyers are not writing on these issues, such as Case Western School of Law's Sharona Hoffman in "<a href="http://works.bepress.com/sharona_hoffman/7/" target="_blank">E-Health Hazards: Provider Liability and Electronic Health Record Systems</a>". That work is a comprehensive analysis of the liability risks associated with use of clinical IT. <div style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjCRFz75Cia3uR-_cGJZZq9m__nHNAo4hVOEyOr54_1QaPF9gbFpGYfe4kLCvicqhOKb4bhQoECn8f1A6x1wgIyPJTVDprUocf1_2xH79kbxSGMsc-0RdVkShYV7EY0UZG8CyljWVLUdpqT/s1600/coffin.jpg"><img alt="" border="0" id="BLOGGER_PHOTO_ID_5626254650137511602" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjCRFz75Cia3uR-_cGJZZq9m__nHNAo4hVOEyOr54_1QaPF9gbFpGYfe4kLCvicqhOKb4bhQoECn8f1A6x1wgIyPJTVDprUocf1_2xH79kbxSGMsc-0RdVkShYV7EY0UZG8CyljWVLUdpqT/s320/coffin.jpg" style="cursor: pointer; display: block; height: 108px; margin: 0px auto 10px; text-align: center; width: 281px;" /></a>The real-world result of health IT interfering in simple care processes. Law firms that defend HIT-caused medical errors are enablers in use of these experimental technologies.</div> Perhaps they should have advised their clients of the risks of health IT before my mother was maimed? Or did they not know of these risks, something any law firm advising healthcare clients in 2010-2011 <a href="http://hcrenewal.blogspot.com/2011/02/updated-reading-list-on-health-it.html">knew, should have known, or should have made it their business to know</a>? Some tracking examples among a larger set: <blockquote>Today: Domain Name (Unknown) IP Address 12.104.41.# (MARSHALL,DENNEHEY,WARNER,COLEMAN) ISP AT&T WorldNet Services Location Continent : North America Country : United States (Facts) Language English (U.S.) en-us Operating System Macintosh WinNT Browser Safari 1.3 Mozilla/5.0 (Windows NT 6.1) AppleWebKit/535.1 (KHTML, like Gecko) Chrome/13.0.782.41 Safari/535.1 Javascript version 1.5 Monitor Resolution : 1280 x 1024 Color Depth : 32 bits Time of Visit Jul 6 2011 10:08:54 am Last Page View Jul 6 2011 10:30:45 am Visit Length 21 minutes 51 seconds Page Views 5 Referring URL <a href="http://www.google.com/search?sourceid=chrome&ie=UTF-8&q=there%27s%20also%20been%20a%20baby%20death%20locally%20to%20me%20that%20is%20allegedly%20due%20to%20HIT%20PACS%20interference%20in%20otherwise%20simple%20care">http://www.google.com/search?sourceid=chrome&ie=UTF-8&q=there%27s%20also%20been%20a%20baby%20death%20locally%20to%20me%20that%20is%20allegedly%20due%20to%20HIT%20PACS%20interference%20in%20otherwise%20simple%20care</a> Search Engine google.com Search Words there's also been a baby death locally to me that is allegedly due to hit pacs interference in otherwise simple care Visit Entry Page http://hcrenewal.blogspot.com/2011/06/babys-death-spotlights-safety-risks.html Visit Exit Page <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> Out Click Time Zone UTC-5:00 Visitor's Time Jul 6 2011 10:08:54 am Visit Number 902,836</blockquote> <blockquote>Yesterday: Domain Name (Unknown) IP Address 12.104.41.# (MARSHALL,DENNEHEY,WARNER,COLEMAN) ISP AT&T WorldNet Services Location Continent : North America Country : United States (Facts) Language English (U.S.) en-us Operating System Macintosh WinNT Browser Safari 1.3 Mozilla/5.0 (Windows NT 6.1) AppleWebKit/535.1 (KHTML, like Gecko) Chrome/13.0.782.41 Safari/535.1 Javascript version 1.5 Monitor Resolution : 1280 x 1024 Color Depth : 32 bits Time of Visit Jul 5 2011 9:07:13 am Last Page View Jul 5 2011 9:08:46 am Visit Length 1 minute 33 seconds Page Views 4 Referring URL h<a href="ttp://www.google.com/search?sourceid=chrome&ie=UTF-8&q=health%20care%20renewal">ttp://www.google.com/search?sourceid=chrome&ie=UTF-8&q=health%20care%20renewal</a> Search Engine google.com Search Words health care renewal Visit Entry Page <a href="http://hcrenewal.blogspot.com/">http://hcrenewal.blogspot.com/</a> Visit Exit Page <a href="http://hcrenewal.blogspot.com/2011/06/electronic-medication-prescribing-magic.html">http://hcrenewal.blogspot.com/2011/06/electronic-medication-prescribing-magic.html</a> Out Click Time Zone UTC-5:00 Visitor's Time Jul 5 2011 9:07:13 am Visit Number 902,285</blockquote> and an older one: <blockquote>Domain Name (Unknown) IP Address 12.104.41.# (MARSHALL,DENNEHEY,WARNER,COLEMAN) ISP AT&T WorldNet Services Location Continent : North America Country : United States (Facts) Language English (U.S.) en-us Operating System Macintosh WinNT Browser Safari 1.3 Mozilla/5.0 (Windows NT 6.1) AppleWebKit/534.24 (KHTML, like Gecko) Chrome/11.0.696.28 Safari/534.24 Javascript version 1.5 Monitor Resolution : 1280 x 1024 Color Depth : 32 bits Time of Visit Apr 4 2011 12:12:05 pm Last Page View Apr 4 2011 12:33:44 pm Visit Length 21 minutes 39 seconds Page Views 30 Referring URL Visit Entry Page <a href="http://hcrenewal.blogspot.com/">http://hcrenewal.blogspot.com/</a> Visit Exit Page <a href="http://hcrenewal.blogspot.com/2009/03/malpractices-of-multitudes-mission.html">http://hcrenewal.blogspot.com/2009/03/malpractices-of-multitudes-mission.html</a> Out Click Time Zone UTC-5:00 Visitor's Time Apr 4 2011 12:12:05 pm Visit Number 860,621</blockquote> Note 30 page views in the latter data. -- SS

Law firms as enablers of HIT experiments? Familiar law firm now regular reader of Healthare Renewal

It continues to amaze me that unregulated, unvetted healthcare information technology of unproven benefit and proven harm continues to sprea...

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Here Comes Your New Doctor, Brought to You By UnitedHealth

A long time ago, practicing physicians were mainly self-employed solo practitioners. As health care became more bureaucratic, physicians formed group practices as partnerships, which sometimes employed additional junior or part-time physicians. Some physicians worked for non-profit practice foundations, often affiliated with academic medical institutions, sometimes with non-profit physician-run health insurers, like some Kaiser plans. However, traditionally, almost no practicing physicians were employed by for-profit corporations. In fact, until about 30 years ago, it was considered unethical for physicians' practices to be "commercialized, or treated like a commodity in trade." (See posts <a href="http://hcrenewal.blogspot.com/2007/12/relman-in-jama-on-threats-to-physicians.html">here</a> and <a href="http://hcrenewal.blogspot.com/2009/06/why-did-us-physicians-give-up-their.html">here</a>.) That is all changing, and apparently quickly. We recently <a href="http://hcrenewal.blogspot.com/2010/03/now-private-equity-jumps-into-health.html">discussed</a> how a private equity company, Cerberus Capital Management, bought out a formerly non-profit hospital system, Caritas Christi, and its associated physicians' practices. Thus, what were formerly Caritas Christi physicians ended up employed by for-profit Steward Health Care, owned entirely by Cerberus (see <a href="http://hcrenewal.blogspot.com/2011/02/new-steward-health-care-will-superbowl.html">this post</a>). For-Profit Health Insurance Companies Hiring Physicians to Take Care of Their Patients Not it is commercial health insurance companies rushing to hire physicians, as <a href="http://www.washingtonpost.com/insurers-quietly-gaining-control-of-doctors-covered-by-companies-plans/2011/06/29/AG5DNftH_story.html">reported</a> by the Washington Post and Kaiser Health News: <blockquote>United health services wing is quietly gaining control of doctors who treat patients covered by United plans — buying medical groups and launching physician management companies, for example. It’s the latest sign that the barrier between companies that provide health coverage and those that provide care is crumbling. Other large insurers, including Humana and WellPoint, have announced deals involving doctors in recent months, part of a strategy to curb rising health costs that could cut into profits and to weather changes to their business arising from the federal health law. But United is the biggest insurer by revenue, making the trend much more significant. </blockquote> As they are supposed to do, the reporter clearly included both sides of the story, including how UnitedHealth justified its new business strategy: <blockquote>Employers and other customers 'are saying, I want more value for the dollars I spend in health care,' said Dawn Owens, chief executive officer of OptumHealth, United’s health services subsidiary. But, 'there’s also a realization that the delivery system isn’t ready for that kind of change. That’s where we come in.' The tools needed to control costs and improve care are things insurers have 'invested in over the years,' she said. 'The provider community doesn’t have those tools.'</blockquote> The article even got a UnitedHealth board member to provide a somewhat confusing defense of the new practice: <blockquote>Gail Wilensky, a United board member and health official in President George H.W. Bush’s administration, said the insurer doesn’t seek to control every doctor who sees patients enrolled in its health plans. Typically, insurers contract with doctors to care for their policyholders. She also cautioned the strategy is in the early stages and has not yet proven its success. 'It’s just trying many different ways to see what appeals to the American public and what adds value,' she said. 'Whether it will actually mark the trend of the future, I don’t know.'</blockquote>"Incentivizing" Doctors to Do Less At least the WaPo/ Kaiser Health News story cautiously tip-toed up to the obvious potential downside of commercial health insurers employing doctors to see patients, the issue of whose interests such employed physicians might put first: <blockquote>Many patients insured by these companies are going to see much tighter management of their care. 'Health-care costs are still going to rise,' said Wayne DeVeydt, chief financial officer of WellPoint, which entered the business of running clinics in June with the announcement that it would acquire CareMore, a health plan operator based near Los Angeles that owns 26 clinics. 'But the only way to stem those costs in the long term is to manage care on the front end.' That means enlisting doctors. Their orders drive most health-care spending, including the wasteful share: treating heart patients with expensive stents when cheaper drugs might work, or overusing high-tech imaging devices, for example. By managing doctors directly, insurers believe they can reshape the practice of medicine — and protect their profits. For instance, Cigna, another large insurer, saves 9 percent on patients treated by doctors in a Phoenix medical group it controls, said Stephanie Gorman, president of Cigna Arizona. Cigna has expanded the group over the past 18 months in response to the health law, and it now serves patients at 32 locations. 'The doctors, at the end of the day, control the patients, and currently they’re financially incentivized to do more tests, more procedures,' said Chris Rigg, a Wall Street analyst for Susquehanna Financial Group. 'But, if they’re employed by a managed care company, they’re financially incentivized' to do less. That thought unnerves consumer advocate Anthony Wright of Health Access in Sacramento, who worries that profit pressure could affect care. But Wright also said there may be upsides to more tightly managed care: 'No patient wants to get more procedures than they actually need.'</blockquote>How Doing Less Can Harm Patients Let us look at that from a different angle. Commercial insurance companies increase revenue when they decrease their "medical losses," that is, the money they pay for policy-holders' care. Physicians employed by such companies, but who take care of patients who may be those companies' policy-holders, could be "'incentivized' to do less." That is more than "unnerving." It is widely accepted that many patients get tests and treatments whose benefits do not outweigh their harms, and the costs of such interventions increase the costs of health care while doing patients no good, and perhaps harm. If we could eliminate those unneeded tests and treatments, we could decrease costs and improve patients' outcomes. Yet another important driver of health care costs are tests and treatments whose benefits outweigh their costs, but which are priced much higher than could be justified by their benefit/harm ratio. It could also be that many tests and treatment are priced fairly. So "incentivizing" physicians to do less across the board could very well harm patients by depriving them of interventions whose benefits outweigh their harms. It appears that for-profit insurers who hire physicians are likely to place their physician employees in a situation in which incentives to do less may conflict with the physicians' duties to do what is best for each patient. That is more than unnerving. Hiding Physicians' Commercial Employment That this new sort of employment requires much more scrutiny very quickly is also suggested by how the commercial health insurance companies are trying to hide their new relationships with physicians. As reported in the article, UnitedHealth Group's subsidiary: <blockquote>Optum and its Collaborative Care unit have acquired Memorial Healthcare IPA and AppleCare Medical Management in Orange County, Calif., as well as WellMed Medical Management, which runs clinics in Texas and Florida. Collaborative Care also launched Lifeprint in Phoenix. In some cases, the company obscured its role. For instance, a Collaborative Care business, NextDoor Health, which is partnering with a local doctors group to open retail clinics at Wal-Mart stores in Texas and other states, describes itself on its Web site as 'a privately held LLC based in Minneapolis.' United is based just outside of Minneapolis.</blockquote>The Mirror Image: "Leakage Reduction" Note that the essential conflict caused by a doctor hired to take care of patients by a company that profits from decreasing care across the board is the mirror image of the conflict caused by a doctor hired by a for-profit hospital system. In the latter case, the doctor is hired by a company which profits from increasing those services which are particularly well reimbursed. So we <a href="http://hcrenewal.blogspot.com/2011/02/new-steward-health-care-will-superbowl.html">noted previously </a>that doctors hired by the for-profit Steward Health Care system were being pushed to reduce "leakage," that is, referral of patients outside of the system for well-reimbursed services. "Leakage reduction" could also harm patients, although in a more subtle way, perhaps. Doctors incentivized to refer more patients within the system for well-reimbursed services, which are now mostly invasive procedures and high-technology tests may get patients to undergo interventions which are unnecessary, and sometimes whose harms outweigh their benefits, thus leading to adverse effects without any benefits. Summary So in my humble opinion, the sudden rush of for-profit health care companies to hire doctors to take care of patients ought concern patients, health care professionals, and health care policy makers a lot. Physicians employed by for-profit corporations whose revenues are affected by their own decisions have serious conflicts of interest. Just how bad these conflicts are may be difficult to determine, because there seems to be little public knowledge about how physicians are actually "incentivized" by these corporations. Note that the WaPo article never discussed the details of the incentives the insurance companies imposed on their employed physicians. Note also that our previous discussion of "leakage" reduction was not based on any public knowledge about how the employed physicians might have been influenced to reduce leakage. Also, just how frequent these conflicts may be may also be difficult to determine, because it appears that employed physicians do not always reveal who their employers are. What is To Be Done? I strongly suggest that Patients: - Find out if their physicians are employed, and if so, by whom. - Find out what incentives their physicians have, if employed, to recommend more or less care of certain types. -  Find out whether other aspects of the physicians' employment arrangements, e.g., contractual confidentiality clauses, could affect his or her relationships with patients - Avoid doctors employed by for-profit companies who have incentives to provide more or less care than what may be best for the patient Physicians: - Do not accept any employment offer or contract which has incentives to provide more or less care than is best for individual patients - Who are already employed disclose to their patients such employment, and any incentives it may provide to provide more or less care Policy-makers: - Rapidly investigate the extent that for-profit companies whose revenues depend on physicians' decisions are hiring physicians to take care of patients, and the incentives and influences that these companies use to affect physicians' decisions - Develop regulations that force disclosure of all such employment and relevant incentives and influences - Consider whether such "commercial practice of medicine" ought to be once again banned.

Here Comes Your New Doctor, Brought to You By UnitedHealth

A long time ago, practicing physicians were mainly self-employed solo practitioners. As health care became more bureaucratic, physicians for...

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Nice post-holiday story with a happy ending

Nice post-holiday story with a happy ending

Totally unrelated to medicine, but a nice post-holiday story with a happy ending as a break from our routine of grim news. Kitten rescue fro...

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BLOGSCAN: Forensic Statistics

Several interesting points are raised in the newsletter of the <a href="http://www.aapsonline.org/">American Association of Physicians and Surgeons</a> (AAPS) in a post entitled "Forensic Statistics" in their <a href="http://www.aapsonline.org/index.php/site/article/aaps_news_july_2011_-_numbers/">July 2011 newsletter</a> headlined "Numbers." Healthcare Renewal is cited: <blockquote>Forensic Statistics While claims from RCTs fail to replicate about 20% of the time, the problem with epidemiology is so bad as to constitute a crisis, writes S. Stanley Young (“<a href="http://nisla05.niss.org/talks/Young_Safety_June_2008.pdf" style="color: rgb(128, 0, 0); text-decoration: underline; font-weight: normal;" target="_blank">Everything Is Dangerous: a Controversy</a>,” National Institute of Statistical Sciences, June 2008, <a href="http://www.niss.org/" style="color: rgb(128, 0, 0); text-decoration: underline; font-weight: normal;" target="_blank">www.niss.org</a>). Fewer than 20% of nonrandomized trials [e.g., observational studies - ed.] replicate; i.e. 80%-90% of epidemiologists’ claims are false. More than $1 billion in grant/tax money flows to institutions with reproducibility problems, Young states. A fundamental flaw in their methodology is to ask multiple, often hundreds to thousands of questions, of the same data set. It’s like playing “maverick solitaire”: given 25 randomly selected cards from a deck of 52 playing cards, the probability of being able to arrange them into 5 “pat hands” (e.g. a full house) is 98%. Since data miners are good at concealing their footsteps, critics need full access to the raw data and the code used for the statistical analysis—often not forthcoming. The EHR software that is supposed to support all this “research” and to guide medical treatment also needs a forensic evaluation, writes Scot Silverstein, M.D., of Drexel University (see <a href="http://hcrenewal.blogspot.com/2011/03/on-emr-forensic-evaluation-from-down.html" style="color: rgb(128, 0, 0); text-decoration: underline; font-weight: normal;" target="_blank">http://hcrenewal.blogspot.com</a>). He cites such an evaluation of the Cerner FirstNet system used in New South Wales, Australia, done by Prof. Jon Patrick. The authoritarian implementation processes of the governmental HIT “support” staff were familiar to Silverstein, such as disenfranchising the clinical staff and failing to acknowledge the validity of complaints. “Healthcare reform” demands acceptance because it claims to be based on science. But then, so did Communism.</blockquote> The "maverick solitaire" data mining issues (to be used, no doubt, in future "comparative effectiveness research" based on EHR data) are a additional concern to those I raised in an essay "<a href="http://www.jpands.org/vol14no2/silverstein.pdf">The Syndrome of Inappropriate Overconfidence in Computing: An Invasion of Medicine by the Information Technology Industry?</a>" in the AAPS journal several years ago (PDF). I can also add: where are the RCT's of EHR/CPOE systems? -- SS

BLOGSCAN: Forensic Statistics

Several interesting points are raised in the newsletter of the American Association of Physicians and Surgeons (AAPS) in a post entitled ...

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The Restless Shade of AHERF and the Return of Merger Mania: Highmark Tries to Buy Another Insurance Company, a Hospital System, a Medical School, and Physicians' Practices

Starting in the 1990s, as US health care became more commercialized, a wave of mergers lead to super-sized hospital systems, insurance companies, and pharmaceutical companies.  Not all those mergers, especially involving hospitals, prospered.  Although the mergers were justified as drivers of increased efficiency, health care has become decreasingly accessible, increasingly expensive, and of no better quality.  However, now a whole new wave of mergers seems to be upon us.  The Proposed Highmark Blue Cross/ West Penn Allegheny Health System Merger The latest example to get national attention is the proposed combination of already large non-profit health insurer Highmark Inc, a Blue Cross Blue Shield plan, and non-profit hospital system Allegheny Health System.  The national attention was in a Wall Street Journal <a href="http://online.wsj.com/article/SB10001424052702303627104576413580875856442.html">article</a> by Anna Wilde Matthews, which described the proposed transaction: <blockquote>Pittsburgh insurer Highmark Inc. struck a deal to acquire the second-largest hospital chain in its region, an ambitious, controversial step that would further blur the lines between those who pay for medical care and those who provide it. Under the tentative plan, nonprofit Highmark will pump as much as $475 million into the five-hospital West Penn Allegheny Health System, which has been operating in the red for the past five years. If state and federal regulators sign off on the plan, Highmark officials say the deal will allow them to move away from traditional fee models that reward providers for providing unnecessary procedures and services. Instead they would pay salaries to doctors, offering them incentives to achieve quality and efficiency goals. The integrated model would also rely on primary-care doctors to coordinate patients' care and focus on preventive efforts. Highmark officials said the deal is the best way to keep West Penn in business. 'It brings our expertise as an insurance company into the provider system,' said Kenneth R. Melani, Highmark's chief executive. </blockquote> This deal is unusual because it would unite a health care insurance company/ managed care organization with a hospital system. The Context: An Already Concentrated Health Care Environment The deal appears in the context of and may be in response to an already concentrated health care environment.  Per the WSJ: <blockquote>The newly combined Highmark-West Penn will face off against the University of Pittsburgh Medical Center, which is officially known by its acronym, UPMC. The prestigious $8 billion,19-hospital network employs 2,881 doctors and has about 56% of the inpatient market share in Allegheny County. It also owns a health plan with about 1.6 million members. UPMC's current contract with Highmark runs out next June. Paul Wood, the hospital system's vice president for public relations, said the network won't sign a new one after the acquisition. 'In effect, Highmark expects UPMC to subsidize our competitor,' he said.</blockquote>UPMC has had its issues, too, as discussed in posts <a href="http://hcrenewal.blogspot.com/search/label/UPMC">here</a>.  The deal is also more extraordinary because it was accompanied by several other proposed deals that would create quite a sprawling health care entity. The Extended Scope of the Merger First, and as noted in the WSJ article, the proposed deal would involve physicians' practices: <blockquote>Highmark may also buy or invest in other providers, including doctor practices, Dr. Melani said.</blockquote>However not noted in the WSJ article, or in a contemporaneous Pittsburgh Post-Gazette <a href="http://www.post-gazette.com/pg/11179/1156765-100.stm">article</a>, was that since 2010 there has also been a proposal on the table for Highmark to merge with a non-profit Blue Cross Blue plan in neighboring Delaware. The latest discussion of this deal can be <a href="http://www.delawareonline.com/article/20110626/BUSINESS/106260317/Layoffs-would-pay-top-execs-well">found on </a>DelawareOnline, and was just noted in a Philadephia Inquirer <a href="http://www.philly.com/philly/insights/in_money/124837394.html">commentary</a>. <blockquote>In Delaware, a bill that would remove a major obstacle to Highmark's proposed affiliation with Blue Cross Blue Shield of Delaware sailed through the legislature, passing the Senate unanimously Tuesday and the House, 34-5, Wednesday.</blockquote> That is not all. It seems that while pursuing the merger with Highmark, West Penn Allegheny Health was also pursuing an arrangement with Temple University to set up a branch of its medical school in Western Pennsylvania. As<a href="http://www.pittsburghlive.com/x/pittsburghtrib/news/health/s_741530.html"> noted </a>by the Pittsburgh Tribune Review: <blockquote>West Penn Allegheny Health System leaders expressed optimism on Friday about their partnership prospects with Highmark Inc. as they announced plans with Temple University to establish a four-year medical school campus in the North Side.</blockquote>So it appears that lined up against the UPMC behemoth could be another behemoth combining a large Pennsylvania insurance company, a Delaware insurance company, a good-sized hospital system, physicians' practices, and a branch of a medical school.  So we see a new effort to divide the health care supposed "market" among a few large, vertically-integrated health care systems. The Eerie Shadow of AHERF Maybe all these simultaneous deals, which would apparently create a conglomerate of Highmark Blue Cross, Delaware Blue Cross Blue Shield, West Penn Allegheny Health System, Temple University Medical School, and possibly a large group of doctors' practices, were all being discussed separately because of how they could be seen as a strange shadow of the spectacularly failed Allegheny Health Education and Research Foundation (AHERF) of the late 1990s. As discussed <a href="http://hcrenewal.blogspot.com/2008/07/10-years-later-eerie-echo-of-fall-of.html">here</a>, AHERF was a large integrated health care system formed out of multiple mergers.  AHERF which went bankrupt in 1998, leading to massive layoffs, hospital closures, and the near dissolution of a medical school (which ended up taken over by Drexel University). The former AHREF CEO, whose high compensation (for the time) was accompanied by an autocratic management style, ended up in the local jail on a plea bargain. Note that West Penn Allegheny Health System was formed from some of the pieces of the failed AHERF, and seems to have never fully recovered from its previous troubles. Despite the fact that the AHERF bankruptcy was the second largest US bankruptcy up to its time, this vivid case was notably <a href="http://hcrenewal.blogspot.com/search/label/anechoic%20effect">anechoic</a>. The lack of echoes it originally produced made it prototypical of the anechoic effect. The link to AHERF was briefly noted in the Post-Gazette <a href="http://www.post-gazette.com/pg/11179/1156765-100.stm">article</a>: <blockquote>'They are well-capitalized, and we're not,' said David L. McClenahan, WPAHS board chairman, speaking of Highmark. 'That's putting it mildly.' In the decade since the collapse of the Allegheny Health Education and Research Foundation, whose bankruptcy eventually bore the West Penn Allegheny Health System, WPAHS has been persistently starved for capital, he said.</blockquote>So far, however, the ominous implications of that previous debacle have not been publicly discussed. How Some Executives Would Gain Perhaps the executives rushing to make a deal are being distracted by the potential for personal gain. The DelawareOnline article noted that current executives of Delaware Blue Cross Blue Shield may be able to pull the ripcords of their golden parachutes if its proposed merger with Highmark goes through: <blockquote>Seven executives at Blue Cross Blue Shield of Delaware, for example, are due a combined $6 million in severance pay -- equal to about three years of salary -- if they lose their jobs. Details of Blue Cross severance payout packages have attracted attention recently because top executives at Delaware's largest health insurer are busy pressing for a merger with Pittsburgh-based insurer Highmark Inc., which could mean the elimination of some top positions. Highmark has pledged that Blue Cross President and CEO Tim Constantine will keep his job after the merger's closing, if the deal is approved by state regulators. But Constantine, who has an annual salary of $420,000, would be due a $1.6 million payment if he were to lose his job. Six other top executives, who earn between $245,000 and $330,000 annually, have potential payouts equal to about $4.3 million. Highmark has not discussed the fate of those officers, who range in position from the company's general counsel to its chief medical and financial officers.</blockquote> That article further noted: <blockquote>Some observers worry that the prospect of large severance payments could cloud the judgments of executives working to close the deal. Considering the size of the Blue Cross payouts in relation to annual salaries, the payout promises deserve attention, said Ethan Rome, executive director of Health Care for America Now, a Washington consumer advocacy group. Severance agreements are typically in place to provide a cushion between jobs, he said. 'Three years is a long time,' Rome said. 'Three years is not a severance. It's a substantial payout.'</blockquote> One wonders which other executives involved in these potential deals may also have prospects for either larger compensation or golden parachutes. This could include executives in particular current executives of West Penn Allegheny.  One also wonders whether the creation of this new conglomerate will produce rationales for big raises for the current executives of all the organizations involved who get to work for the new merged entity.  Perhaps someone should ask them. Further Implications Of course the various mergers were touted as productive of new efficiencies, as attempts to obtain increased market power usually are. As reported by the Post-Gazette: <blockquote>While the short-term goal of this partnership is to preserve a 'fragile' Pittsburgh hospital system, the long term goal, said Highmark CEO and President Kenneth Melani, is the creation of a new model of health care, one that is outcomes based, with an integrated delivery and financing system. ;Health care services are becoming less affordable,' he said. 'It's important to have choice. It's important to have a second system.'</blockquote> And, as we discussed <a href="http://hcrenewal.blogspot.com/2008/07/10-years-later-eerie-echo-of-fall-of.html">here</a>, the former CEO of AHERF pledged "new forms of organization that are more flexible, more adaptive, and more agile than ever before." But common sense and history suggests that increasing market domination will be good mainly for the market dominators, not their customers, or in this case, their patients, clients and students. As Dr Westby Fisher <a href="http://www.medcitynews.com/2011/06/highmarks-hospital-acquisition-a-lose-lose-for-doctors-and-patients/">asserted</a> about how the new conglomerate will likely own physicians' practices: <blockquote>So doctors lose more professional independence and autonomy and have even more chance that clinical decisions will be compromised by bureaucratic dictates. Yet ask patients who they want steering the boat when they get sick: their doctor. It continues to be clear who the winners and losers are as health care reform unfolds. But when doctors lose autonomy, patients lose autonomy. It’s that simple. To argue that the only way to control the health care dollar is to bloat the bureaucratic levels of our system is a fool’s game. However, bureaucrats promote bureaucrats – it’s always been this way. Until doctors and the public speak up, there’s simply nothing to stop this train.</blockquote> So I wonder if this complex merger will get more scrutiny than the many mergers that have preceded it in the last 30 years. Someone who is more likely to get answers than I am should be asking: - What evidence is there that this merger will lead to any benefits to individual patients or to the public health? - How will any efficiencies achieved benefit anyone other than the organizations' current and future managers? - What sorts of management layers will the complexity of the multiple mergers proposed necessitate between current Highmark executives and current management of its new acquisitions? - If the current problem is existing market concentration, why will these mergers be a better solution than a direct approach to that concentration? - How will the current leaders of all the organizations involve personally benefit from this merger? Meanwhile, increasing concentration of power in health care continues to benefit the leaders of the enlarging health care organizations, while reducing the choice of individual patients and the autonomy of health care professionals.

The Restless Shade of AHERF and the Return of Merger Mania: Highmark Tries to Buy Another Insurance Company, a Hospital System, a Medical School, and Physicians' Practices

Starting in the 1990s, as US health care became more commercialized, a wave of mergers lead to super-sized hospital systems, insurance compa...

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Hospital system has major computer breakdown with "resultant chaos"; patients not adversely affected (of course)

As mentioned on this blog numerous times. Healthcare IT outages never, but never, adversely affect patients in any manner whatsoever: <blockquote>Traverse City Record-Eagle [Michigan - ed.] June 30, 2011 <a href="http://record-eagle.com/local/x981128298/Munson-has-4-hour-communications-failure/print">Munson has 4-hour communications failure</a> By Bill O'Brien bobrien@record-eagle.com TRAVERSE CITY — Munson Healthcare officials are trying to figure out how to avoid a repeat of a four-plus-hour data systems crash and "resultant chaos" that gripped local hospitals and clinics this week. A system failure Tuesday morning shut down computers, telephones, pagers and other telecommunications systems at Munson Medical Center and its Munson Healthcare affiliates in Frankfort and Kalkaska, an incident that administrators described as "unacceptable." [That sounds about right - ed.] Munson officials still aren't sure why a back-up fiber optic circuit failed during a planned outage that started Tuesday at 7:30 a.m. "You can rest assured we're looking very carefully at that," Munson Medical Center CEO Kathleen McManus said. "Of course, we need to know what happened." McManus said no patients were adversely affected during the outage. Even with the "resultant chaos" that gripped the local hospitals and clinics, no patients were adversely affected.</blockquote> Amazing. There must be a cybernetic angel department in heaven that prevents patients from harm - i.e., from missed or delayed treatments or treatment mistakes - during the "resultant chaos" of major systems outages. I'm sure insurers and risk managers have full confidence in Providence when these mishaps occur. -- SS July 1, 2011 update: The Traverse City Record Eagle has <a href="http://record-eagle.com/latest/x357283355/Munson-memo-explains-systems-failure">published a memo</a> explaining the outage: <blockquote> Munson Healthcare officials distributed a memo on Wednesday that explained Tuesday’s systems failure that affected Munson Medical Center, Paul Oliver Memorial Hospital and Kalkaska Memorial Health Center and various clinics. The following memo is attributed to Chris Podges, Munson’s vice president of information systems. “As you are all aware, we experienced an unplanned network downtime (Tuesday) that had widespread operational and clinical implications. Briefly, here is what happened: Munson’s data centers’ connectivity to the outside world runs primarily on two redundant high speed fiber optic circuits administered by Traverse City Light and Power. We were informed by them that they needed to take one of the circuits off-line in order for them to do maintenance. This would leave us operating on one circuit for the duration of their planned, 12-hour downtime. This shouldn’t have been any problem for us and is precisely why we have parallel, redundant technology on our most important systems and infrastructure. We have frequently tested for an event like this (losing one of the circuits) by manually “switching off” a fiber circuit. In our testing, the remaining circuit took on all the traffic, just as it was architected to do; no hiccups, no instability, no impact on users, no downtime. And that is what we fully expected yesterday morning when one of the circuits was taken off line.</blockquote> In medicine, or in any complex domain, one must expect the unexpected... <blockquote>Unfortunately, that isn’t what happened. The core switch of the remaining circuit became confused, couldn’t take over the role as the primary switch (a transition which is measured in milliseconds) and ultimately shut down. Once down, everything running on the network – applications, paging systems, wireless devices, IP phones, etc., went down with it.</blockquote> (I hear Kate Winslet humming in the background...) Anthropomorphism aside, it seems to me that switches and other inanimate objects don't become "confused." The engineers/programmers who designed them just didn't anticipate the event that sinks the Titanic. But let's roll the technology out nationally, now, rush...rush...rush...before it's too late. Computer bits get stale after awhile, after all.... Re: "Unplanned network downtimes." In the long running TV series <a href="http://stargate.mgm.com/">Stargate SG-1</a> there's a character, <a href="http://en.wikipedia.org/wiki/Walter_Harriman_%28Stargate%29#Walter_Harriman">Walter Harriman</a>, who runs the command console. Just about the only line he gets to say over the base PA system over 10 seasons is ... <blockquote>"UNSCHEDULED OFF-WORLD ACTIVATION!"</blockquote> ... when some person or alien attempts to come through from another Stargate somewhere in our galaxy or others nearby. Perhaps hospitals can use him as a role model to announce "unscheduled down time"... <blockquote>... During the downtime, we assembled a small army working on three objectives: 1. Make sure the hospitals and clinics could operate - especially as to the provision of patient care – on downtime procedures 2. Communicate as comprehensively and as often as we could 3. Fix the technical issues</blockquote> Aside from the fact that these "objectives" are obvious, now hospitals need "small armies" to protect patients when a network switch gets "confused." Pen and paper offer no analogous bellicose hostilities. <blockquote>While the reports are that all hospitals and clinics did a fantastic job surviving the down-time, we fully understand that it was very difficult to manage the resultant chaos and that downtimes like this are unacceptable.</blockquote> But no patient was hurt (as they never are when the IT goes down). <blockquote>Thursday morning at 2 a.m. we are going to re-introduce the second fiber optic circuit into our network architecture. While we expect no issues, we’re planning otherwise. This afternoon your organizations will receive specific instructions on how to prepare for the event of another network outage; What to print in advance of 2 a.m., what resources are available to you during the downtime, how to get needed clinical information without the use of computers, who to call for help, etc.</blockquote> Thank god. <blockquote>Again, we do not expect any downtime tomorrow morning, but we did re-learn some valuable lessons yesterday and the safety of our patients is the number one objective should the network experience another issue. We’ll be ready at 2 a.m. and we want your organizations to be ready, too.</blockquote> Why do such "lessons" need to be "re-learned" - EVER? <blockquote>We are working diligently to understand what happened yesterday and will share with you what we learn and our plans to remedy whatever may need attention.</blockquote> In effect, they really don't understand what caused the outage. This is similar to other cases of outages written about at Healthcare Renewal. There's never certainty, because these IT systems have become so complex and the support relatively diffused (via outsourcing, consultants, etc.) This is a fertile ground for patient injury and death when luck runs out. As stories like "Failures in care alleged after premature birth - $1,000,000 Settlement" from the Virginia Lawyer's Weekly I referenced <a href="http://hcrenewal.blogspot.com/2011/03/thanks-to-wonders-of-ehr-this-premature.html">here</a> imply, the cost of ownership of HIT will likely go way up once the multimillion dollar lawsuits start adding up. Considering the track record of health IT as it is in 2011 regarding reliability, risk/benefit and <a href="http://hcrenewal.blogspot.com/search/label/medical%20record%20privacy">security</a>, spending hundreds of billions of dollars to put patients at risk of life and limb, and risk of potentially career-ending or bankrupting loss of privacy, en masse nationally, is increasingly brainsick. -- SS

Hospital system has major computer breakdown with "resultant chaos"; patients not adversely affected (of course)

As mentioned on this blog numerous times. Healthcare IT outages never, but never , adversely affect patients in any manner whatsoever: Trave...

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