Some people have reacted negatively to the idea of a reduced-reward diet because it strikes them as difficult or unsustainable. In this post, I'll discuss my thoughts on the practicality and sustainability of this way of eating. I've also thrown in a few philosophical points about reward and the modern world.
Read more »
The Case of the Bleeding Heart Prosecutors - How the Justice Department Became Lenient with Corporate Wrong-Doing
We have frequently posted, some may say tiresomely, about the lack of consequences or negative incentives for health care organizational leaders involved in wrong-doing. For example, see the numerous cases against health care organizations that resulted in legal settlements, almost never requiring any penalties against individuals who authorized, directed, or implemented the behavior in question.
Now a major article in the New York Times by Gretchen Morgenson and Louise Story explains some of the history behind this aspect of the decreasing accountability of corporate leadership. Their article focused on financial corporate leadership, but clearly is generalizable to health care corporate leadership.
Banks Asked to Report Their Own Misbehavior
The Times article documents how the US Department of Justice deliberately became more lenient in the 1990s, supposedly to conserve scarce investigational resources:
The Effect of the Arthur Andersen Case
Around the beginning of the 21st century there had been some vigorous prosecution of corporate financial wrong-doing:
However, for reasons that were not explained, a single unsuccessful case caused reconsideration of this approach:
Sympathy for the Targets of Investigation
The pullback was rationalized for a sudden sympathy for the objects of investigation:
Note that while the emphasis of this article was on the financial services industry, big health care organizations were also benefiting from more lenient treatment. Note also that one firm given lenient treatment, AIG, went on to threaten collapse, a collapse that was feared could take down the entire world financial system, and hence was given a very generous government bail-out, which has not be paid back to this day.
Formalized Leniency
In 2008, the approach was formalized:
Less Deterrence
The NY Times article documented a number of opinions that increasing leniency was resulting in less deterrence of bad behavior:
Why So Much Sympathy from Prosecutors?
What was not really clear from the article is why US federal prosecutors seemed to go from their stereotypically tough on crime personas to bleeding hearts for corporate criminals. The one rationale the article provided from the Department of Justice was:
This, however, makes no sense. Well directed prosecutions of the people who apparently authorized, directed or implemented the wrong-doing ought to have very little effect on "innocent parties." The only jobs and pensions that should be lost should be those of the accused.
Conclusions
This seems to be the most recently documented example of important but overlooked, or concealed changes in government policies that have enabled the health care system to become more unethical, dishonest and corrupt, and hence more dysfunctional.
Here we discussed a Supreme Court decision interpreting US anti-trust law that has been used to prevent medical societies from enforcing ethical rules, and hence helped medicine to become increasingly commercialized, and to increasingly put money ahead of patient care.
Here we discussed little discussed legislation from 1945 that allowed US insurance companies/ managed care organizations to avoid federal anti-trust investigation and enforcement, and hence to increased market power.
Here we discussed failure of the executive branch, and especially the Department of Justice to use existing legal doctrine, the Responsible Corporate Officer Doctrine, available since 1943, to make corporate leaders responsible for their companies' bad behaviors, leading to their increasing lack of accountability and less deterrence of malfeasance.
Now we have seen a deliberate turn away from even direct penalties on corporations which have misbehaved, in return basically for a promise that "we won't do it again."
The first two examples may be of unintended consequences.
The last two seem to signal an increased coziness between some in government and corporations. The origins of this coziness just beg for investigation.
Meanwhile, there seems to be no evidence that the government's new leniency has protected innocent people who would have been harmed by the previous tougher approach. Instead, there seems to be a growing tide of bad behavior by health care organizations, exemplified by the nature of some of the bad behavior that lead to the march of legal settlements, and to the deferred prosecution agreements and corporate integrity agreements generated in response to the new policies.
What Is to Be Done?
- There clearly needs to be investigation, both by journalists and at a congressional level, of Department of Justice policies that have been increasingly lenient to and cozy with large corporations, including health care corporations.
- Current Department of Justice officials need to be reminded that their clients are the US people, not corporate executives, no matter how hearty and well-met.
ADDENDUM (12 July, 2011) - See this related post on the Naked Capitalism blog.
Now a major article in the New York Times by Gretchen Morgenson and Louise Story explains some of the history behind this aspect of the decreasing accountability of corporate leadership. Their article focused on financial corporate leadership, but clearly is generalizable to health care corporate leadership.
Banks Asked to Report Their Own Misbehavior
The Times article documents how the US Department of Justice deliberately became more lenient in the 1990s, supposedly to conserve scarce investigational resources:
dating to the mid-1990s ... banks were asked to regularly report suspicious activities to the Treasury Department, an effort that aimed at relieving regulators of some of their enforcement loads.
The Effect of the Arthur Andersen Case
Around the beginning of the 21st century there had been some vigorous prosecution of corporate financial wrong-doing:
The names have become synonymous with corporate wrongdoing — and forceful prosecution: Not just Enron, but also WorldCom, Tyco, Adelphia, Rite Aid and ImClone. In the early part of the last decade, senior executives at all these companies were convicted and imprisoned.
However, for reasons that were not explained, a single unsuccessful case caused reconsideration of this approach:
The department began pulling back from a more aggressive pursuit of white-collar crime around 2005, say defense lawyers and former prosecutors, after the Supreme Court overturned a conviction it won against the accounting firm Arthur Andersen. That ended an era of brass-knuckle prosecutions related to fraud at companies like Enron.
Sympathy for the Targets of Investigation
The pullback was rationalized for a sudden sympathy for the objects of investigation:
But by 2005, a debate was growing over aggressive prosecutions, as some business leaders had been criticizing the approach as perhaps too zealous.
That May, Justice Department officials met ahead of a session with a cross-agency group called the Corporate Fraud Task Force. It was weeks after Justice Department lawyers had presented to the Supreme Court their case against Arthur Andersen, which was seeking — successfully, it would turn out — to overturn its criminal fraud conviction in a prominent case.
In the meeting, the deputy attorney general at the time, James B. Comey, posed questions that surprised some attendees, according to two people there who asked to remain anonymous because they were not supposed to discuss private meetings.
Was American business being hurt by the Justice Department’s investigations?, Mr. Comey asked, according to these two people, who said they thought the message had come from others. He cautioned colleagues to be responsible. 'It was a total retrenchment,' one of the people said. 'It was like we were going backwards.'
Mr. Comey said recently that he did not recall this conversation.
Around the same time, the Justice Department was developing instructions on dealing with companies under investigation — particularly companies that work with the government. It issued a memo in 2003 that gave companies more credit for cooperating than in the past. That message was reinforced in another memo in 2006.
As the first memo put it, 'it is entirely proper in many investigations for a prosecutor to consider the corporation’s pre-indictment conduct, e.g., voluntary disclosure, cooperation, remediation or restitution, in determining whether to seek an indictment.'
During this period, the Justice Department increased the use of deferred prosecutions or even nonprosecution agreements.
Many well-known companies have benefited. In 2004, the American International Group, the giant insurer, paid $126 million when it entered a deferred prosecution agreement to settle investigations into claims that it had helped clients improperly burnish financial statements.
Deals over accounting improprieties also were struck that year by Computer Associates International, a technology company, and in 2005 by Bristol- Myers Squibb, a pharmaceutical concern. Prudential Financial entered into a deferred prosecution in 2006 over improper mutual fund trading.
Note that while the emphasis of this article was on the financial services industry, big health care organizations were also benefiting from more lenient treatment. Note also that one firm given lenient treatment, AIG, went on to threaten collapse, a collapse that was feared could take down the entire world financial system, and hence was given a very generous government bail-out, which has not be paid back to this day.
Formalized Leniency
In 2008, the approach was formalized:
As the financial storm brewed in the summer of 2008 and institutions feared for their survival, a bit of good news bubbled through large banks and the law firms that defend them.
Federal prosecutors officially adopted new guidelines about charging corporations with crimes — a softer approach that, longtime white-collar lawyers and former federal prosecutors say, helps explain the dearth of criminal cases despite a raft of inquiries into the financial crisis.
Though little noticed outside legal circles, the guidelines were welcomed by firms representing banks. The Justice Department’s directive, involving a process known as deferred prosecutions, signaled 'an important step away from the more aggressive prosecutorial practices seen in some cases under their predecessors,' Sullivan & Cromwell, a prominent Wall Street law firm, told clients in a memo that September.
The guidelines left open a possibility other than guilty or not guilty, giving leniency often if companies investigated and reported their own wrongdoing. In return, the government could enter into agreements to delay or cancel the prosecution if the companies promised to change their behavior.
Less Deterrence
The NY Times article documented a number of opinions that increasing leniency was resulting in less deterrence of bad behavior:
'If you do not punish crimes, there’s really no reason they won’t happen again,' said Mary Ramirez, a professor at Washburn University School of Law and a former assistant United States attorney. 'I worry and so do a lot of economists that we have created no disincentives for committing fraud or white-collar crime, in particular in the financial space.'
Why So Much Sympathy from Prosecutors?
What was not really clear from the article is why US federal prosecutors seemed to go from their stereotypically tough on crime personas to bleeding hearts for corporate criminals. The one rationale the article provided from the Department of Justice was:
Defending the department’s approach, Alisa Finelli, a spokeswoman, said deferred prosecution agreements require that corporations pay penalties and restitution, correct criminal conduct and 'achieve these results without causing the loss of jobs, the loss of pensions and other significant negative consequences to innocent parties who played no role in the criminal conduct, were unaware of it or were unable to prevent it.'
This, however, makes no sense. Well directed prosecutions of the people who apparently authorized, directed or implemented the wrong-doing ought to have very little effect on "innocent parties." The only jobs and pensions that should be lost should be those of the accused.
Conclusions
This seems to be the most recently documented example of important but overlooked, or concealed changes in government policies that have enabled the health care system to become more unethical, dishonest and corrupt, and hence more dysfunctional.
Here we discussed a Supreme Court decision interpreting US anti-trust law that has been used to prevent medical societies from enforcing ethical rules, and hence helped medicine to become increasingly commercialized, and to increasingly put money ahead of patient care.
Here we discussed little discussed legislation from 1945 that allowed US insurance companies/ managed care organizations to avoid federal anti-trust investigation and enforcement, and hence to increased market power.
Here we discussed failure of the executive branch, and especially the Department of Justice to use existing legal doctrine, the Responsible Corporate Officer Doctrine, available since 1943, to make corporate leaders responsible for their companies' bad behaviors, leading to their increasing lack of accountability and less deterrence of malfeasance.
Now we have seen a deliberate turn away from even direct penalties on corporations which have misbehaved, in return basically for a promise that "we won't do it again."
The first two examples may be of unintended consequences.
The last two seem to signal an increased coziness between some in government and corporations. The origins of this coziness just beg for investigation.
Meanwhile, there seems to be no evidence that the government's new leniency has protected innocent people who would have been harmed by the previous tougher approach. Instead, there seems to be a growing tide of bad behavior by health care organizations, exemplified by the nature of some of the bad behavior that lead to the march of legal settlements, and to the deferred prosecution agreements and corporate integrity agreements generated in response to the new policies.
What Is to Be Done?
- There clearly needs to be investigation, both by journalists and at a congressional level, of Department of Justice policies that have been increasingly lenient to and cozy with large corporations, including health care corporations.
- Current Department of Justice officials need to be reminded that their clients are the US people, not corporate executives, no matter how hearty and well-met.
ADDENDUM (12 July, 2011) - See this related post on the Naked Capitalism blog.
How Does Gastric Bypass Surgery Cause Fat Loss?
Gastric bypass surgery is an operation that causes food to bypass part of the digestive tract. In the most common surgery, Roux-en-Y bypass, stomach size is reduced and a portion of the upper small intestine is bypassed. This means that food skips most of the stomach and the duodenum (upper small intestine), passing from the tiny stomach directly into the jejunum (a lower part of the upper small intestine)*. It looks something like this:
Read more »
Read more »
Guest Blog: Health Care in Dangerous Times
Health Care Renewal presents another guest blog by Steve Lucas, a retired businessman who formerly worked in real estate and construction who has a long standing interest in business ethics, and has long observed the health care scene.
Health Care Renewal has often covered the disconnect between the stated goals of companies and the realities of their day to day operations. This raised the following question: Has medicine moved from being dysfunctional to being dangerous?
There is certainly no lack of material to support this question as in the last two weeks we can find examples of pharma/biotech/device companies all engaged in questionable behavior.
Medtronic and Manipulation of Study Data
In the print media, The Wall Street Journal, a pro-business newspaper regularly highlights stories questioning the actions of companies.
In the June 29 story titled "Medtronic Surgeons Held Back, Study Says" by John Carreyrou and Tom McGinty we find doctors being paid by Medtronic held back information regarding negative out comes of a bone growth product.
Chantix's Cardiac Adverse Effects
In the July 5 story, "Pfizer Drug Tied To Heart Risk" by Thomas M. Burton covers the increased cardiovascular problems with Chantix that only now seemingly have become evident.
Overuse of Cardiac Stents
In the July 6 article, "Heart Treatment Overused" by Ron Winslow and John Carreyrou we find the over use of stents and the profit potential for doctors and hospitals.
Untested Imported Drug Ingredients
In the July 6 Op-ed, "Beware the Risk of Generic Drugs" by Roger Bate reinforces a point made often on Health Care Renewal when he covers the importation of untested or tainted product used in our pharmaceuticals.
Moving on to widely read blogs,
Ghost Writing and Risperdal
1BoringOldMan in his post on bipolar kids and the doctors involved in the Harvard debacle discussed an article favorable to the drug ostensibly written by Harvard Professor Josephy Biederman:
1BoringOldMan continues with this post that since we have identified children as bipolar we are free to ignore other factors and simply medicate them to death.
Bayer's Use of Social Media to Market Drugs
Pharma does adjust to the times and market, if it is not explicitly forbidden then it is fair game.
Per a post in Pharmalot entitled, "To Tweet or not to Tweet"
Much like shooting a gun into a crowd and then claiming they had no way of knowing they would injure someone, a tweet is sent with the full knowledge the first thing everybody will do is hit the forward to all button.
Pharma's Public Relations People Infiltrate Patient Support Groups
Per a post on the HealthReviewNews Blog we have one of the most frightening posts possible since it shows pharma following individuals and a willingness to intrude into their personal lives.
Marilyn Mann is approached on her Facebook page set up to support parents of children with lipid disorders by a drug PR person to promote a drug.
In the comment section we find this:
What do all of these references have in common? Senior executives, and health care academics, removed from the day to day work of helping people being able to claim they are not responsible while making ever larger incomes.
Natrecor Shown Not to Work
The corporate culture of medicine has become so perverse that even selling a drug that has no benefit becomes acceptable.
Per this item in the Heart Health Center Health Day News:
Summary: The Most Dangerous Game
So, back to my original question: Has medicine become dysfunctional or dangerous? I would contend dangerous. There is nothing magical about the above listed articles or posts. I am not a professional medical person, nor an academic, only someone concerned by the continued decline of medicine and medical care due to a corporate culture that promotes profit above all else.
When I meet doctors socially they all speak of being small businessmen. Time and time again we see hospital administrators of all types speaking about being the CEO’s of multi-billion dollar organizations.
Drug companies speak of blockbuster drugs as being those with sales of over one billion dollars and fines become the cost of doing business.
Today we have a small, but vocal group of people who feel all drugs should be offered to the public and it is up to them to decide if they are appropriate. They also want the government and insurance companies to pay for this return to the pre-FDA days.
How will the FDA itself withstand the onslaught of new technologies given out current Federal budget concerns? Tweets and Facebook represent only the beginning of a whole new wave of ways to communicate.
My personal opinion is this is a very dangerous time for doctors and patients. Doctors are being pushed into corporate practices where financial gain is the main driver, not health care. Information given to doctors can be so tainted by commercial interest as to be of no value.
Patients have no way of knowing where the doctor’s loyalty lies, with them or the practice? DTC ads are full of half truths and fear mongering. Patients need to bring even more information and skepticism to the doctor/patient relationship.
I fear we do live in dangerous times. The word “good” has left much of medicine.
Steven Lucas MBA
Health Care Renewal has often covered the disconnect between the stated goals of companies and the realities of their day to day operations. This raised the following question: Has medicine moved from being dysfunctional to being dangerous?
There is certainly no lack of material to support this question as in the last two weeks we can find examples of pharma/biotech/device companies all engaged in questionable behavior.
Medtronic and Manipulation of Study Data
In the print media, The Wall Street Journal, a pro-business newspaper regularly highlights stories questioning the actions of companies.
In the June 29 story titled "Medtronic Surgeons Held Back, Study Says" by John Carreyrou and Tom McGinty we find doctors being paid by Medtronic held back information regarding negative out comes of a bone growth product.
'Medtronic paid millions to doctors and those same doctors, oddly enough, published the 'science' Medtronic needed to sell a product,' says Paul Thacker, a former aide to Sen. Charles Grassely…'
Chantix's Cardiac Adverse Effects
In the July 5 story, "Pfizer Drug Tied To Heart Risk" by Thomas M. Burton covers the increased cardiovascular problems with Chantix that only now seemingly have become evident.
However, J. Taylor Hays, a Mayo Clinic doctor who has received funding from Pfizer for research on Chantix, responded in a commentary, 'The risk for serious cardiovascular events is low and is greatly outweighed by the benefits of diminishing the truly 'heartbreaking' of smoking.'The article then continues:
'Some people have had changes in behavior, hostility, agitation, depressing mood, suicidal thoughts or actions while using Chantix to help them quit smoking,' Pfizer says in safety information.
Overuse of Cardiac Stents
In the July 6 article, "Heart Treatment Overused" by Ron Winslow and John Carreyrou we find the over use of stents and the profit potential for doctors and hospitals.
Outside of heart attacks, doctors are often quick to use a common $20,000 procedure to treat patients suffering from coronary artery disease, a new study suggest.
Untested Imported Drug Ingredients
In the July 6 Op-ed, "Beware the Risk of Generic Drugs" by Roger Bate reinforces a point made often on Health Care Renewal when he covers the importation of untested or tainted product used in our pharmaceuticals.
China is now the largest supplier of pharmaceutical chemicals – hundreds of tons annually – to the world. And pharmaceutical companies that buy these chemicals do not test them.
Moving on to widely read blogs,
Ghost Writing and Risperdal
1BoringOldMan in his post on bipolar kids and the doctors involved in the Harvard debacle discussed an article favorable to the drug ostensibly written by Harvard Professor Josephy Biederman:
This covers the reworking of a previously done study to promote the use of drugs in children with this printed at the bottom of the first page:
“"Printed in the USA. Reproduction in whole or part is not permitted. Copyright © 2006 Excerpta Medica, Inc."
1BoringOldMan continues with this post that since we have identified children as bipolar we are free to ignore other factors and simply medicate them to death.
As reported by '60 Minutes' in September of last year, Rebecca Riley died on December 13, 2006, at her home in Hull, Massachusetts, due to an overdose of psychiatric drugs. The drugs — Depakote (divalproex; Abbott), Seroquel (quetiapine; AstraZeneca), and clonazepam — were prescribed by Tufts psychiatrist Kayoko Kifuji for the child’s bipolar disorder, which was diagnosed at the age of 2 years.This covers the death of a child, a child, using the above ghost written drug information.
Bayer's Use of Social Media to Market Drugs
Pharma does adjust to the times and market, if it is not explicitly forbidden then it is fair game.
Per a post in Pharmalot entitled, "To Tweet or not to Tweet"
'To Tweet or not to Tweet?' That is a question that Bayer Healthcare will be pondering for some time. The drugmaker was upbraided by the UK’s Prescription Medicines Code of Practice Authority for recently Tweeting about two medicines, which was deemed to be a cause for concern since the information went directly to the public.
Much like shooting a gun into a crowd and then claiming they had no way of knowing they would injure someone, a tweet is sent with the full knowledge the first thing everybody will do is hit the forward to all button.
Pharma's Public Relations People Infiltrate Patient Support Groups
Per a post on the HealthReviewNews Blog we have one of the most frightening posts possible since it shows pharma following individuals and a willingness to intrude into their personal lives.
Marilyn Mann is approached on her Facebook page set up to support parents of children with lipid disorders by a drug PR person to promote a drug.
Hi Marilyn,
A few months ago, I had emailed you about some research I was doing about a new treatment for FH. I am now working with a pharmaceutical company, and the company currently has a drug in development to help treat people with severe FH that may not be responding to current therapies.
In the comment section we find this:
I'm a communications consultant to many big pharma firms and I'm not sure the PR person in this case did anything wrong. She was upfront and polite about her role, and asked if any patients would do what many have done, and be interviewed to raise the profile of FH.
The owner of the group politely declined as was her right.
It would have been a different case if there had been any subterfuge involved, but there wasn't.
I think on this occasion you have aimed at the wrong target.
Good luck with future postings.
What do all of these references have in common? Senior executives, and health care academics, removed from the day to day work of helping people being able to claim they are not responsible while making ever larger incomes.
Natrecor Shown Not to Work
The corporate culture of medicine has become so perverse that even selling a drug that has no benefit becomes acceptable.
Per this item in the Heart Health Center Health Day News:
Study Finds Heart Failure Drug Ineffective
Billions wasted on Natrecor in decade it took to find out it doesn't work, expert says.
By Steven Reinberg, HealthDay News
WEDNESDAY, July 6 (HealthDay News) — The heart failure drug Natrecor (nesiritide) is ineffective and linked to increased rates of potentially dangerous low blood pressure, a new study finds.
Summary: The Most Dangerous Game
So, back to my original question: Has medicine become dysfunctional or dangerous? I would contend dangerous. There is nothing magical about the above listed articles or posts. I am not a professional medical person, nor an academic, only someone concerned by the continued decline of medicine and medical care due to a corporate culture that promotes profit above all else.
When I meet doctors socially they all speak of being small businessmen. Time and time again we see hospital administrators of all types speaking about being the CEO’s of multi-billion dollar organizations.
Drug companies speak of blockbuster drugs as being those with sales of over one billion dollars and fines become the cost of doing business.
Today we have a small, but vocal group of people who feel all drugs should be offered to the public and it is up to them to decide if they are appropriate. They also want the government and insurance companies to pay for this return to the pre-FDA days.
How will the FDA itself withstand the onslaught of new technologies given out current Federal budget concerns? Tweets and Facebook represent only the beginning of a whole new wave of ways to communicate.
My personal opinion is this is a very dangerous time for doctors and patients. Doctors are being pushed into corporate practices where financial gain is the main driver, not health care. Information given to doctors can be so tainted by commercial interest as to be of no value.
Patients have no way of knowing where the doctor’s loyalty lies, with them or the practice? DTC ads are full of half truths and fear mongering. Patients need to bring even more information and skepticism to the doctor/patient relationship.
I fear we do live in dangerous times. The word “good” has left much of medicine.
Steven Lucas MBA
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 published in the Fargo (ND) InForum:
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 story in the Atlanta Journal Constitution discussed compensation for a number of Atlanta area hospital and hospital system CEOs. For example,
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 story was in the Peterborough (NH) Examiner:
Not Sorry for Not Even Revealing One's Salary
Here is a local Rhode Island story reported by WPRI:
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:
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:
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 here) 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:
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:
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 this post).
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 file of cases on compensation 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.
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 published in the Fargo (ND) InForum:
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.
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 story in the Atlanta Journal Constitution discussed compensation for a number of Atlanta area hospital and hospital system CEOs. For example,
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.
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 story was in the Peterborough (NH) Examiner:
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.At least his severance package was less than one-sixth of the deficit.
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.
Not Sorry for Not Even Revealing One's Salary
Here is a local Rhode Island story reported by WPRI:
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.Note that the hired executives of big for-profit corporations also are increasingly uncomfortable about public discussion of their compensation (see this post).
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.
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:
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.'
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:
'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,....
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 here) 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:
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.'
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:
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.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.
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.
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 this post).
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 file of cases on compensation 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.
Liposuction and Fat Regain
If body fat really is actively regulated by the body, rather than just being a passive result of voluntary food intake and exercise behaviors, then liposuction shouldn't be very effective at reducing total fat mass in the long run. People should return to their body fat "setpoint" rather than remaining at a lower fat mass.
Teri L. Hernandez and colleagues recently performed the first ever randomized liposuction study to answer this question (1). Participants were randomly selected to either receive liposuction, or not. They were all instructed not to make any lifestyle changes for the duration of the study, and body fatness was measured at 6 weeks, 6 months and one year by DXA.
At 6 weeks, the liposuction group was significantly leaner than the control group. At 6 months, the difference between the two groups had decreased. At one year, it had decreased further and the difference between the groups was no longer statistically significant. Furthermore, the liposuction group regained fat disproportionately in the abdominal area (belly), which is more dangerous than where it was before. The investigators stated:
Teri L. Hernandez and colleagues recently performed the first ever randomized liposuction study to answer this question (1). Participants were randomly selected to either receive liposuction, or not. They were all instructed not to make any lifestyle changes for the duration of the study, and body fatness was measured at 6 weeks, 6 months and one year by DXA.
At 6 weeks, the liposuction group was significantly leaner than the control group. At 6 months, the difference between the two groups had decreased. At one year, it had decreased further and the difference between the groups was no longer statistically significant. Furthermore, the liposuction group regained fat disproportionately in the abdominal area (belly), which is more dangerous than where it was before. The investigators stated:
We conclude that [body fat] is not only restored to baseline levels in nonobese women after small-volume liposuction, but is redistributed abdominally.This is consistent with animal studies showing that when you surgically remove fat, total fat mass "catches up" to animals that had no fat removed (2). Fat mass is too important to be left up to chance. That's why the body regulates it, and that's why any satisfying resolution of obesity must address that regulatory mechanism.
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 here and here.)
That is all changing, and apparently quickly.
We recently discussed 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 this post).
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 reported by the Washington Post and Kaiser Health News:
As they are supposed to do, the reporter clearly included both sides of the story, including how UnitedHealth justified its new business strategy:
The article even got a UnitedHealth board member to provide a somewhat confusing defense of the new practice:
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:
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:
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 noted previously 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.
That is all changing, and apparently quickly.
We recently discussed 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 this post).
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 reported by the Washington Post and Kaiser Health News:
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.
As they are supposed to do, the reporter clearly included both sides of the story, including how UnitedHealth justified its new business strategy:
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.'
The article even got a UnitedHealth board member to provide a somewhat confusing defense of the new practice:
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."Incentivizing" Doctors to Do Less
'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.'
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:
Many patients insured by these companies are going to see much tighter management of their care.How Doing Less Can Harm Patients
'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.'
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:
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.The Mirror Image: "Leakage Reduction"
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.
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 noted previously 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.
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 from my car fender:
http://thereporteronline.com/articles/2011/07/05/news/doc4e13335f93a76458921720.txt?viewmode=fullstory
-- SS
Kitten rescue from my car fender:
http://thereporteronline.com/articles/2011/07/05/news/doc4e13335f93a76458921720.txt?viewmode=fullstory
-- 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 "Forensic Statistics" in their July 2011 newsletter headlined "Numbers." Healthcare Renewal is cited:
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 "The Syndrome of Inappropriate Overconfidence in Computing: An Invasion of Medicine by the Information Technology Industry?" in the AAPS journal several years ago (PDF).
I can also add: where are the RCT's of EHR/CPOE systems?
-- SS
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 (“Everything Is Dangerous: a Controversy,” National Institute of Statistical Sciences, June 2008, www.niss.org). 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 http://hcrenewal.blogspot.com). 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.
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 "The Syndrome of Inappropriate Overconfidence in Computing: An Invasion of Medicine by the Information Technology Industry?" in the AAPS journal several years ago (PDF).
I can also add: where are the RCT's of EHR/CPOE systems?
-- SS
Food Reward: a Dominant Factor in Obesity, Part VIII
Further reading
I didn't come up with the idea that excessive food reward increases calorie intake and can lead to obesity, far from it. The idea has been floating around the scientific literature for decades. In 1976, after conducting an interesting diet study in humans, Dr. Michel Cabanac stated that the "palatability of the diet influences the set point of the ponderostat [system that regulates body fatness]" (1).
Currently there is a growing consensus that food reward/palatability is a major contributor to obesity. This is reflected by the proliferation of review articles appearing in high-profile journals. For the scientists in the audience who want more detail than I provide on my blog, here are some of the reviews I've read and enjoyed. These were written by some of the leading scientists in the study of food reward and hedonics:
Palatability of food and the ponderostat. Michel Cabanac, 1989.
Food reward, hyperphagia and obesity. Hans-Rudolf Berthoud et al., 2011.
Reward mechanisms in obesity: new insights and future directions. Paul J. Kenny, 2011.
Relation of obesity to consummatory and anticipatory food reward. Eric Stice, 2009.
Hedonic and incentive signals for body weight control. Emil Egecioglu et al., 2011.
Homeostatic and hedonic signals interact in the control of food intake. Michael Lutter and Eric J. Nestler, 2009.
Opioids as agents of reward-related feeding: a consideration of the evidence. Allen S. Levine and Charles J. Billington, 2004.
Central opioids and consumption of sweet tastants: when reward outweighs homeostasis. Pawel K. Olszewski and Allen S. Levine, 2007.
Oral and postoral determinants of food reward. Anthony Sclafani, 2004.
Reduced dopaminergic tone in hypothalamic neural circuits: expression of a "thrifty" genotype underlying the metabolic syndrome? Hanno Pijl, 2003.
If you can read all these papers and still not believe in the food reward hypothesis... you deserve some kind of award.
I didn't come up with the idea that excessive food reward increases calorie intake and can lead to obesity, far from it. The idea has been floating around the scientific literature for decades. In 1976, after conducting an interesting diet study in humans, Dr. Michel Cabanac stated that the "palatability of the diet influences the set point of the ponderostat [system that regulates body fatness]" (1).
Currently there is a growing consensus that food reward/palatability is a major contributor to obesity. This is reflected by the proliferation of review articles appearing in high-profile journals. For the scientists in the audience who want more detail than I provide on my blog, here are some of the reviews I've read and enjoyed. These were written by some of the leading scientists in the study of food reward and hedonics:
Palatability of food and the ponderostat. Michel Cabanac, 1989.
Food reward, hyperphagia and obesity. Hans-Rudolf Berthoud et al., 2011.
Reward mechanisms in obesity: new insights and future directions. Paul J. Kenny, 2011.
Relation of obesity to consummatory and anticipatory food reward. Eric Stice, 2009.
Hedonic and incentive signals for body weight control. Emil Egecioglu et al., 2011.
Homeostatic and hedonic signals interact in the control of food intake. Michael Lutter and Eric J. Nestler, 2009.
Opioids as agents of reward-related feeding: a consideration of the evidence. Allen S. Levine and Charles J. Billington, 2004.
Central opioids and consumption of sweet tastants: when reward outweighs homeostasis. Pawel K. Olszewski and Allen S. Levine, 2007.
Oral and postoral determinants of food reward. Anthony Sclafani, 2004.
Reduced dopaminergic tone in hypothalamic neural circuits: expression of a "thrifty" genotype underlying the metabolic syndrome? Hanno Pijl, 2003.
If you can read all these papers and still not believe in the food reward hypothesis... you deserve some kind of award.
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 article by Anna Wilde Matthews, which described the proposed transaction:
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:
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:
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 noted by the Pittsburgh Tribune Review:
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 here, 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 anechoic. 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 article:
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:
That article further noted:
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:
And, as we discussed here, 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 asserted about how the new conglomerate will likely own physicians' practices:
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 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 article by Anna Wilde Matthews, which described the proposed transaction:
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.
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:
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 has had its issues, too, as discussed in posts here.
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.
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:
Highmark may also buy or invest in other providers, including doctor practices, Dr. Melani said.However not noted in the WSJ article, or in a contemporaneous Pittsburgh Post-Gazette article, 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 found on DelawareOnline, and was just noted in a Philadephia Inquirer commentary.
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.
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 noted by the Pittsburgh Tribune Review:
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.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 here, 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 anechoic. 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 article:
'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.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:
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.
That article further noted:
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.'
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:
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.'
And, as we discussed here, 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 asserted about how the new conglomerate will likely own physicians' practices:
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.
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.
Langganan:
Postingan (Atom)