A Severance Package to an Un-Severed CEO - A Manifestation of "CEO Disease?"

The latest jaw-dropping story about executive compensation in health care has been unfolding in California, but at least now I have a diagnosis for this syndrome. 

A Generous Retirement Package, Paid Before Retirement

In April, the Los Angeles Times reported about the generous retirement package given to an outgoing public hospital district CEO in California:

When he turned 65 two years ago, Samuel Downing received a $3-million retirement payment from a public hospital district in Salinas, Calif., where he serves as president and chief executive.


But Downing continued working at his $668,000-a-year job for another two years, and after he retires this week, he will receive another payment of nearly $900,000. That comes on top of his regular pension of $150,000 a year.

Note that not only was this pension package large in an absolute sense, but it was provided before the CEO actually retired. This compensation was clearly out of the ordinary:

The payments amount to one of the more generous pension packages granted to a public official in California and come amid growing debate about 'supplemental' pensions that some officials receive on top of their basic retirement benefits.

Though Downing's case is extreme, it follows the disclosure of extra pension benefits received by employees in municipalities including Bell and San Diego. Earlier this year, a state watchdog group called for stricter pension rules, saying California's retirement plans are 'dangerously underfunded, the result of overly generous benefit promises, wishful thinking and an unwillingness to plan prudently.' Seventy percent of Californians support a cap on pensions for current and future government workers, according to a recent Los Angeles Times/USC Poll.

Furthermore, there was a disconnect between the size of the pension payments and the hospital district's financial situation:

But the $3.9 million in supplemental retirement payments to Downing has come during a period of cutbacks at the hospital, including the reduction of 600 positions through layoffs and attrition.

Hospital representatives said the cuts were mainly a response to recent economic conditions. The hospital has faced declining revenues and patient admissions and has been burdened by construction costs of a state-mandated retrofit project, they said.

Hospital district apologists had the usual excuses: the pensions reflected the market, and the CEO is brilliant:

Officials at the Salinas Valley Memorial Healthcare System defended the payouts, saying they need to pay private-sector-level benefits to retain top talent. They described Downing as a gifted and experienced administrator.

'I think I've earned it,' Downing said in an interview. 'I've stayed here out of my commitment to try to build a great hospital.... I worked for this institution and gave them my heart and soul.'

As usual, left unsaid were how the CEO's "brilliance" was justified, other than by his own assertion, and why the CEO deserved so much credit for the performance of a hospital system that employed many other people.

A Generous Severance Package, Paid to Someone Still Employed 

Yesterday, it turned out that there was even more to Mr Downing's compensation. As again reported by the Los Angeles Times,

A Salinas public hospital district, already under fire for granting its outgoing chief executive $3.9 million in retirement payments, also gave him nearly $1 million as part of an unusual severance agreement, according to records obtained by The Times.

The payment fattened what was already considered one of the more generous public pensions ever given in California. Its disclosure prompted the state Assembly earlier this month to order an audit of the hospital district's finances.

The Salinas Valley Memorial Healthcare System board gave Samuel Downing a cash payment of $947,594 in 2008, according to a hospital report on his compensation. The money came from a special severance fund set aside for when Downing ended his employment with the agency.

But the board decided to award him the money while he was still CEO.

By the time Downing retired last month, he had received a series of supplemental retirement benefits totaling $3.9 million, in addition to the severance payment. He will also be paid a regular pension of $150,000 a year. He earned about $670,000 in base salary during his final years of employment, along with other benefits such as a car allowance and paid time off.

The details of how the CEO became entitled to this severance agreement, and how a severance payment was made to someone whose employment was not severed was sketchy:

Salinas Valley officials said the severance payment stemmed from a handshake agreement in the 1980s between Downing and a previous president of the board of directors. In 2000, the hospital's board agreed to a contract in which Downing would be paid 18 months' salary upon the end of his employment. In 2008, the board voted to give Downing that money, which totaled nearly $948,000.

It's unclear exactly why the board of directors decided to grant Downing the cash-out. The five board members, who are elected at-large by residents of the hospital district, didn't return calls seeking comment.

Mr Downing, of course, once again asserted he deserved the money:

Downing said he felt he deserved the pay after a long and successful career at the hospital, where he started in 1972.

'It sounds like a lot of money to everybody … but I know what the industry is and I know the board did an independent study,' he said. 'The board did an excellent job. They made sure we had competitive salaries.'

Once again, a hospital district public relations person went to bat for him, by blaming previous board members:

A hospital district spokeswoman released a statement Wednesday saying the current hospital directors were 'obligated by a previous board' to pay out Downing's severance.

At least no one so far is claiming that this part of Mr Downing's compensation was determined by the almighty "market." In fact,

But several outside experts said it is unusual for an entity to award severance to someone who remains an employee.

Typically, they said, severance is promised to employees only in the event that they are pushed out of their jobs. Downing's severance was also atypical because he was entitled to it even if he retired of his own accord rather than being forced to leave.

'It's absolutely outside of the industry standard to pay a severance upon retirement,' said Jeff Christenson, a compensation consultant at the firm Integrated Healthcare Strategies. 'The theory of severance pay is to protect an executive or an employee from an unforeseen termination.'

And of course the severance was not even paid on retirement, but paid while Mr Downing was still working.

Summary - A Manifestation of "CEO Disease?"

Once again we see how top health care leaders are different from you and me.  Despite the fact that executives are paid employees, they seem to be entitled to special treatment far beyond that afforded other employees.  While the modern treatment of health care executives as minor deities seemed to start in the private health care sector, it seems to be extending even into government.

It turns out, over 20 years ago, the BusinessWeek cover story was entitled "CEO Disease."  It summarized the pathology that now seems to be the major cause of health care system dysfunction.  Yet the warning still goes largely unheeded:

Pampered, protected, and perked, the American CEO can know every indulgence. The executive who finally reaches the top of a major corporation enters an exclusive fraternity. The CEO's judgment and presence are eagerly sought by other captains of industry and policymakers. CEOs zip around the world in private jets and cash the heftiest personal paychecks in industry. They take home 85 times what the average blue-collar worker makes, unlike their counterparts in Japan, where the ratio is closer to 10 to 1 (page 60). [That was in 1991.  For larger US companies, the ratio was 343 in 2010.  See this link. -Editor]

It is a job that can easily go to one's head--and often does. 'Too many people treat CEOs as some kind of exalted, omnipotent leader,' says John Sculley, CEO of Apple Computer Inc. 'The real danger is that you start believing that stuff.' Sculley took a sabbatical in 1988 as a way of "reacquainting myself with the fact that I'm a mere mortal."

Many chief executives come to believe that they are much more than that. The perquisites and deferences create a protective cocoon--if not a full-fledged fantasy world--for the chieftains of some of the nation's largest companies. 'Many CEOs take on a level of self-importance that goes way beyond reality,' says Douglas D. Danforth, former CEO of Westinghouse Electric Corp. and now a director at several large corporations. 'They view the company as their own . . . . Some people's personalities change completely. If you're not careful, you can be seduced.'

Call it CEO Disease. The symptoms are all too familiar: The boss doesn't seem to understand the business anymore. Decisions come slowly, only to be abruptly changed. He (there are only two women CEOs in the BUSINESS WEEK 1000) feels he can do no wrong and refuses to concede any mistake. He begins to surround himself with sycophants in senior management and on the board.

TELLTALE SIGNS. Increasingly, the boss may seem out of touch--spending too much time away from the job, playing the role of statesman for the sake of personal recognition. He may even compete with industry counterparts over how much money he makes, how big the headquarters building is, or how many corporate jets are parked on the landing strip. And when it's time to leave the job, the boss just hangs on, often by undermining potential successors.

In 1991, the BusinessWeek article suggested some ways to prevent CEO disease. In 20 years, these suggestions have been largely ignored in health care corporations, and in the larger health care system and the surrounding economy:

A few fairly simple reforms would go a long way toward preventing many cases of CEO Disease, at least in its most virulent form. One obvious answer is to disperse decision-making. An advantage of this approach is that it focuses attention on a group of executives, not just the CEO.

The prevalence of the problem also makes an overwhelming case for more involvement at the board level. To be effective, boards must be composed of a sizable percentage of outside directors who have the time to learn enough about a company and its management to make informed decisions about its leadership.

If the boss isn't receptive and problems mount, a responsible director has no choice but to press for change. On four separate occasions since he started serving on boards, Jewel's Perkins says, 'I've sat down with the CEO and said: `In my judgment, you've made the contribution you can to this organization.' Three CEOs took early retirement.

Ultimately, the power to prevent, and if necessary, cure CEO Disease rests with the shareholders. They have the right, and the duty, to insist on a board of competent and aggressive outsiders. At least, they do in theory. In reality, shareholders are often either passive, indifferent, or only invested in the stock on a short-term basis.

CEO disease would seem to be an explanation for why a public hospital district gave an outlandish retirement package and a severance payment to a CEO who was still in office. CEO disease would describe much of the bad management we have described on this blog.

So, as I have said before,.... 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.


If we do not fix the severe problems affecting the leadership and governance of health care, and do not increase accountability, integrity and transparency of health care leadership and governance, we will be as much to blame as the leaders when the system collapses.

We need to launch a crash program to prevent CEO disease and cure existing cases, before it kills off our health care system. 

Conflicts of Interest, Government Leaders, and Private Health Care Organizations

There seems to be a small surge of stories about conflicts of interest regarding health care affecting government leaders who can affect health care. 

The Institute of Medicine defined conflict of interest in medicine as "circumstances that create a risk that professional judgments or actions regarding a primary interest will be unduly influenced by a secondary interest."  So we will summarize these stories by first showing what each leader's secondary interests are, and then show how they may influence carrying out his leadership responsibilities.  (We used "his" because all examples are of male leaders.)

Florida: Governor Scott and Solantic

Rick Scott, the new Florida Governor, apparently still has strong ties to a for-profit chain of urgent care centers, as reported by the Palm Beach Post:

As Florida Gov. Rick Scott reorganizes health agencies, cuts spending and pushes for new free-market health policies, his ownership of Solantic, the urgent care chain, increasingly poses conflict of interest questions.

Solantic co-founder Karen Bowling says Scott has taken steps to distance himself from the chain. He stopped regular business calls with her after he was elected.

'I don't talk to him anymore. Not since November. Really not much since April,' Bowling said.

Scott left the privately held company's board of directors in January 2010, during his campaign.

But the most important step the governor must take to avoid a conflict of interest, some ethics experts say, is to divest his Solantic interests.

In January, Scott did transfer his Solantic stock - to his wife.

There were obvious questions raised whether this transfer mitigated the conflict of interest:

Scott's efforts to distance himself appear to be designed to meet the letter of Florida ethics laws, if not the spirit.

They may not succeed if challenged, warned legal and ethics expert Marc Rodwin, a law professor at Suffolk University who is the author of several books on health care and conflicts of interest.

'Placing his ownership in the name of his wife is not an effective way to control for conflicts of interest and not generally accepted because they are personally related,' Rodwin said.


Rodwin said Scott's blindness to Solantic's daily business decisions likewise does not relieve his conflict.


'His family still benefits from it,' he said.

There are a number of issues before Florida government about which there appears to be a risk that Governor Scott's actions could be unduly influenced by his family's ownership interest in Solantic:

From the moment he was elected, Scott has said government has no business providing primary care.


His budget proposal eliminated state support for the clinics. The county's health department director warns that may leave 30,000 adults without a medical home.

Scott's decisions as governor are likely to affect Solantic in other, perhaps more significant ways.

Scott's budget would curb growth in Medicaid spending, the state-federal safety net insurance program, by requiring most recipients to join private HMOs. Solantic accepts Medicaid HMO reimbursements, but not state Medicaid, so adding clients could broaden the clinics' customer base.

But the greatest benefit for Solantic could come from Scott and other Republican governors' lobbying efforts in Washington.

They want the Obama administration to give states waivers from the Affordable Care Act, and provide them with a massive block grant to expand health coverage in the way they deem best for their states. Money slated to go to business' health insurance tax credits and lower income consumers' insurance subsidies could pay for the grants - to the tune of billions.

Obama has said he's willing to give the states waivers on a speeded-up timetable. His administration Thursday published new rules on how states could get that waiver.

Scott's health policy adviser Michael Cannon, an economist with the Cato Institute in Washington, favors giving consumers health vouchers that they would use either as cash for direct-pay medical care or to buy insurance.

The possible effect on Solantic and similar clinics could be huge, said Rodwin, the legal ethics expert.

'You have a major owner-operator of a set of clinics on the state level, and a major policy figure on a state level, making major changes that affect whether that kind of business will thrive or not, what their competition will be, and really reforming the whole health sector,'  Rodwin said. That's in my view a very dangerous role.'

Note that this is not the first whiff of scandal regarding Rick Scott's leadership role in health care.  As the article noted, Scott:

resigned as CEO of Columbia/HCA amid a federal billing fraud investigation. Columbia/HCA ultimately agreed to the nation's largest Medicare fraud settlement, a $1.7 billion criminal and civil penalty.

Although the company had admitted to criminal wrongdoing, Scott himself was never charged, and he has denied knowledge of the illegal activities.

Scott left Columbia/HCA with more than $5 million in severance and $300 million worth of stock and options.

See our most recent detailed post on Mr Scott's history here.

Massachusetts: House Health Finance Committee Chair Walsh and Health Care Industry Lobbyists

The newly appointed chair of the Massachusetts House committee on health care finance has strong relationships to health care industry lobbyists, according to an editorial in the Boston Globe:

Speaker Robert DeLeo has chosen a health-finance committee chairman, Steven M. Walsh of Lynn, whose family is to lobbying what the Mannings are to NFL quarterbacking. Walsh’s father-in-law represents the state’s health insurers, while his uncle’s firm blocks and tackles for Steward Health Care, new owners of the Caritas chain of Catholic hospitals.

Again, there are a number of issues before the Massachusetts legislature about which there appears to be a risk that Representative Walsh's actions could be unduly influenced by his family's lobbying work:

Next to the budget, the thorniest issue the Legislature will deal with this year will be changes in health care financing. Lawmakers will consider bills that may completely change how health care providers are paid. That shift — from fee-for-service payments towards a system based more on per-capita reimbursements — will set off a free-for-all among insurers, doctors, and hospitals.

So,

Walsh’s admirable efforts ... [to improve legistlation regarding lobbying] don’t erase the conflict of interest he faces on health care issues. Walsh can try to separate family feelings and events from his official role, but the companies paying his uncle’s firm and his father-in-law are still expecting them to use every opportunity to make the strongest possible case for their clients. And it’s no exaggeration that these clients — the state’s insurers and its newest hospital chain — have hundreds of millions of dollars at risk in the new payment system Walsh will be vetting.

Perhaps if the stakes were lower or the relationships more distant, Walsh could chair the health-finance committee without risking public confidence. But as it is, he will be in a position of representing the taxpayers’ interests against those of his close relatives.

Note that we discussed Steward Health's possibly revolutionary role in commercializing physicians' practices here, and how a former Massachusetts government health care agency official exited via the revolving door to join Steward Health Care here.
New York: Governor Cuomo's Advisor and Major Hospital Systems

New York Governor Andrew Cuomo has a close advisor whom he just appointed to a "Medicaid redesign team" whose clients include large academic medical centers/ hospital systems, per the New York Times:

When Andrew M. Cuomo married Kerry Kennedy in 1990, Jeffrey A. Sachs served as an usher. When Mr. Cuomo’s daughter Michaela was born, he asked Mr. Sachs to be her godfather. When his marriage fell apart years later, Mr. Cuomo stayed in Mr. Sachs’s triplex near the United Nations.

Since Mr. Cuomo’s election as governor last fall, Mr. Sachs, 58, has taken on a powerful role among his health care advisers as the administration confronts crucial decisions, including how to overhaul New York’s $53 billion Medicaid program.

But at the same time, Mr. Sachs, known to many in Albany as 'Andrew’s best friend,' is working as a paid consultant to some of the biggest players in the New York health care industry, including Mount Sinai Medical Center, NYU Langone Medical Center and the state’s largest association of nursing homes, all of which have financial interests at stake in the coming Medicaid changes.

Mr. Sachs, whose firm is named Sachs Consulting, has never registered as a lobbyist, which would require him to divulge his clients and fees to the state ethics commission.

Again, there are a number of issues before New York government about which there appears to be a risk that Governor Cuomo's actions could be unduly influenced by his friend, advisor, and committee member's consulting relationships with major hospital systems.

Mr. Sachs was also an early advocate of the “Wisconsin model” of Medicaid, under which the governor would set a target for spending reductions and then appoint a task force of industry stakeholders to apportion the cuts. The approach has political appeal for the governor, in that it entices would-be opponents of spending reductions to participate in the plan rather than protest it. But it also endows the unelected team members with immense power.

Mr. Sachs made recommendations to Mr. Cuomo and his aides about whom to appoint to the Medicaid team, which Mr. Cuomo formed through an executive order in January. During the transition, Mr. Sachs also helped assemble a four-person policy team to begin meeting with state agencies about the best approach to reducing Medicaid spending

Moreover, the Times article recounted cases in which Mr Sachs appeared to influence policy in ways that benefited his consulting clients. For example:

While he was helping Mr. Cuomo assemble his health care staff, Mr. Sachs’s name arose in an unusual personnel matter, one that held great interest for one of his clients, NYU Langone Medical Center.

For at least a year, NYU Langone had had strained relations with Dr. Harold S. Koplewicz, a well-known psychiatrist who founded the hospital’s child psychiatry center but left in 2009 to start a competing research and clinical center.

Relations worsened because Dr. Koplewicz, who also served as director of the Nathan S. Kline Institute for Psychiatric Research, a state-run psychiatric center in Rockland County that also has a research affiliation with NYU, refused to allow NYU to screen those he hired at the institute, among other issues.

During an October meeting between Mr. Sachs and Dr. Koplewicz, Mr. Sachs suggested the doctor resign from the Kline Institute, people briefed on the meeting said. Should he lobby too aggressively to keep his job, Mr. Sachs warned, Mr. Cuomo, then widely expected to win election, might choose to close down the institute.

In a later meeting in December, Michael F. Hogan, state commissioner of mental health, told Dr. Koplewicz that he had been warned by Mr. Sachs that his reappointment by Mr. Cuomo would be jeopardized if Dr. Koplewicz did not resign, according to the people briefed.

Afterward, Dr. Koplewicz wrote Dr. Hogan a letter detailing his accomplishments as director of the institute and complaining of the pressure being exerted by Mr. Sachs.

'As you explained — and I appreciate your candor — you have been pressured by NYU through Jeff Sachs to have me resign as a condition for your reappointment as commissioner of mental health,' Dr. Koplewicz wrote in the letter.

In a response sent the following day, Dr. Hogan did not dispute Dr. Koplewicz’s account but suggested that he had been insufficiently cooperative with NYU and the Office of Mental Health.

'Accordingly, your service as director, Psychiatric Research Institute, will end effective Jan. 13, 2011,' Dr. Hogan wrote.

Dr. Koplewicz and Dr. Hogan both declined to comment, though neither disputed the authenticity of the letters.

This case is particularly disquieting because of Governor Cuomo's former role as a tough state attorney general who targeted white collar crime.

Summary

US health care is hugely complex. The interests of its increasingly large commercial players can be strongly affected by the actions of government at local, state and national levels.

We have previously discussed the pervasiveness of conflicts of interest throughout health care. It should come as no surprise that there are important conflicts affecting government leaders who have power over health care issues.

Although there may actually be more laws and regulations about conflicts of interest affecting government leaders than about those affecting, say, leaders of academic medical institutions, the increasingly incestuous nature of health care leadership seems to add impetus to entwine the system in ever increasing strands of conflict.

So, I humbly suggest, as a variation on a theme I have sounded before, that governmental leaders who have power over health care should put the health of patients and the population first, and should not have relationships that risk this mission in service of private gain.  Furthermore, leaders of civilian health care organizations, especially of hospitals, hospital systems and physicians' groups whose mission is also to improve care of individuals and society, should not seek to entangle government leaders in conflicts meant to serve private financial interests. 

Those Big Doors Keep Revolving

A few months ago, we discussed the revolving door that seems to connect US government leadership positions and leadership positions of commercial health care firms. There are other such revolving doors, like two recently discovered just north of here.

State Government to For-Profit Hospitals

As reported by the Boston Herald:

David Morales, a longtime trusted adviser to [Massachusetts] Gov. Deval Patrick, became the latest official to leave the administration as he stepped down from a top health-care post for a private sector gig.

Morales resigned abruptly yesterday to take a position with Steward Health Care System.

Furthermore,

Morales worked as a top adviser during the governor’s first term before taking a $128,000-a-year post in 2009 as commissioner of the Division of Health Care Finance and Policy. His resignation was effective yesterday.

Note that we have previously discussed the Steward Health Care System, the new name given to the Caritas Christi system after it was bought out by private equity firm Cerberus Capital Management. Steward's aggressive plan to stamp out "leakage" raised concerns that the new movement to make practicing physicians employees could push them to do what is best for the company's bottom line rather than for patients.

We previously suggested that deals that turn previously non-profit health systems and physicians' practices into for-profit corporations deserve considerable scrutiny. After Caritas became Steward, state government officials promised close oversight. Now Steward has acquired a new executive who has friends in state government.

Non-Profit Health Insurance/ Managed Care by Way of a Political Campaign to Health Care Venture Capital

This story also came from the Boston Herald:

Four months after his failed Massachusetts gubernatorial bid, Charlie Baker has landed a private-sector job at a Cambridge venture capital firm.

The former Harvard Pilgrim Health Care CEO is now an 'executive in residence' for General Catalyst Partners. He’ll focus on working with small and midsize health-care services companies for the VC firm, which has $1.7 billion under management across five funds.

In addition,

Health-related companies already in General Catalyst’s portfolio include iWalk, a Cambridge developer of orthotic and prosthetic devices, and North Carolina-based TearScience, which specializes in diagnostic and treatment devices for evaporative dry eye in addition to several still in stealth mode.

Note that managed care was originally touted as a way to control health care costs, and that the commercial health care insurance companies/ managed care organizations claim to be doing all they can to control costs. Such a focus on cost control would imply that they ought to be able to vigorously negotiate at arms' length with health care providers and drug and device companies.  Now some device companies have acquired a new venture capital overseer who has friends in insurance and managed care.

Summary

Not only are there revolving doors connecting the national government and large commercial health firms, but also connecting state government and regional hospital systems, and non-profit health care insurers/ managed care organizations and device companies.

This is just some more evidence that people in the leadership of large health care organizations have more in common with each other, even if their organizations are supposed to be competing or negotiating at arms length, than they have with patients, clients, customers and the public at large. 

The various revolving doors appear not to align the interests of leaders of health care organizations with their organizations' stated missions, or with promoting the health of patients.  To truly reform health care, we need to expose these doors to more sunlight, and then think about retarding their spin or even locking them in place.

Big Door Keeps On Turning - Bi-Directional Interchanges Among Government and Corporate Health Care Leadership

Recently we noted some complex examples of the health care "revolving door," cases of health care corporate leaders who came from government heading back into government.  The first was reported by Politico:

California Rep. Mary Bono Mack has hired PhRMA’s former chief spokesman as a senior adviser, adding another Republican lawmaker to the list of those who have recruited staff members with K Street ties.

Ken Johnson will serve as a senior policy and communications adviser to Bono Mack, chairwoman of a House Energy and Commerce subcommittee. Johnson has deep ties to the committee, having worked for former Republican Rep. Billy Tauzin when he headed the Energy and Commerce Committee.

When PhRMA hired Tauzin months after the Louisiana congressman helped pass the industry-supported Medicare drug benefit, Johnson followed. So it was not surprising that Johnson did not stay on with PhRMA last year after Tauzin stepped down.

In 2009, Tauzin made more than $4.5 million and Johnson pulled in more than $500,000, according to tax records.

Note that Mr Johnson went from an influential government position to a position representing the pharmaceutical industry, and then back to government
In the same vein and in the same article was:

House Speaker John Boehner hired the medical device industry’s chief lobbyist as his policy director.

Meanwhile, the Minneapolis Star-Tribune noted:

Minnesota health executive Lois Quam has signed to lead the multibillion dollar Global Health Initiative at the U.S. State Department.

A State Department spokesman confirmed Wednesday that Quam will be executive director of the initiative.

In 2009, President Barack Obama committed $63 billion over six years to the program aimed at helping developing nations fight disease, improve nutrition and provide more aid for prenatal and postnatal care.

Quam, of St. Paul, is a former UnitedHealth Group executive who co-founded a health consulting firm last year. She is married to Matt Entenza, a former state lawmaker who ran unsuccessfully for governor in 2010.

The appointment reunites Quam with Secretary of State Hillary Clinton. Quam was a senior adviser to Clinton's health care task force in the 1990s.

Note that Ms Quam went from government leadership (in the Clinton administration's abortive attempt at health care reform via an elaborate version of managed care), to corporate leadership (in one of the largest commercial managed care organizations, some of whose exploits are discussed here), then back to government (now leading global health.  As an aside, UnitedHealth has been developing its global presence for years, e.g., see this post about its forays into the UK.)

We last discussed the "revolving door," that is, the easy interchange among leadership in government and health care corporations here.  The brief news items above shows how the door spins continuously, resulting not only in former government leaders ending up in influential, and well-recompensed positions in the health care industry, but also in industry leaders ending up in influential government positions.  In two cases above, people who started out in influential government positions transitioned to health care corporate positions, and then back to government. 

As we noted earlier, the continually revolving door is a sign of the increasingly corporatist nature of the US.  Government and the biggest corporations now seem to see themselves as natural allies, partially because their leadership increasingly forms a cozy combined group.  The big problem, of course, is such an alliance leaves out everybody else, from small business, to individual professionals, to the people at large. 

As I noted earlier, if we want health care to put the needs of individual patients first, we ought to consider ways to make both government and corporate health care leaders more responsive to the people rather than to their combined self-interest. 

New CMS Chief Donald Berwick: a Trojan Horse for Quackery?

On July 7, President Obama appointed Dr. Donald Berwick as Administrator of the Centers for Medicare and Medicaid Services (CMS). Dr. Berwick, a pediatrician, is well known as the CEO of the non-profit Institute for Healthcare Improvement (IHI), which "exists to close the enormous gap between the health care we have and the health care we should have — a gap so large in the US that the Institute of Medicine (IOM) in 2001 called it a 'quality chasm'.” Dr. Berwick was one of the authors of that IOM report. His IHI has been a major player in the patient safety movement, most notably with its "100,000 Lives Campaign" and, more recently, its "5 Million Lives Campaign."

Berwick's CMS gig is a "recess appointment": it was made during the Senate's July 4th recess period, without a formal confirmation hearing---although such a hearing must take place before the end of this Senate term, if he is to remain in the position. A recent story suggested that Obama made the recess appointment in order to avoid a reprise of "last year's divisive health care debate." The president had originally nominated Berwick for the position in April, and Republicans have opposed "Berwick's views on rationing of care," claiming that he "would deny needed care based on cost."

A "Patient-Centered Extremist"

If there is a problem with the appointment, it is likely to be roughly the opposite of what Republicans might suppose: Dr. Berwick is a self-described "Patient-Centered Extremist." He favors letting patients have the last word in decisions about their care even if that means, for example, choosing to have unnecessary and expensive hi-tech studies. In an article for Health Affairs published about a year ago, he explicitly argued against the "professionally dominant view of quality of health care":

I think it wrong for the profession of medicine—or any other health care profession, for that matter—to “reserve to itself the authority to judge the quality of its work.” I eschew compromise words like “partnership.” For better or worse, I have come to believe that we—patients, families, clinicians, and the health care system as a whole—would all be far better off if we professionals recalibrated our work such that we behaved with patients and families not as hosts in the care system, but as guests in their lives. I suggest that we should without equivocation make patient-centeredness a primary quality dimension all its own, even when it does not contribute to the technical safety and effectiveness of care.

A new definition. My proposed definition of “patient-centered care” is this: The experience (to the extent the informed, individual patient desires it) of transparency, individualization, recognition, respect, dignity, and choice in all matters, without exception, related to one’s person, circumstances, and relationships in health care.

Does this mean that Dr. Berwick would also eschew professional, i.e., expert, judgment in favor of patients' wishes? In a word, yes:

Evidence-based medicine sometimes must take a back seat. First, leaving choice ultimately up to the patient and family means that evidence-based medicine may sometimes take a back seat. One e-mail correspondent asked me, “Should patient ‘wants’ override professional judgment about whether an MRI is needed?” My answer is, basically, “Yes.” On the whole, I prefer that we take the risk of overuse along with the burden of giving real meaning to the phrase “a fully informed patient.”

Dr. Berwick is not so naive as this opinion might suggest. He envisions a "mature dialogue" in such a case, and argues that "if, over time, a pattern emerges of scientifically unwise or unsubstantiated choices...then we should seek to improve our messages..." He also admits that there might be an occasional patient whose demands are so unreasonable that "it is time to say, 'No'." That exception, he argues, should not dictate the rule.

There are situations in which most civilized people would agree with Dr. Berwick's view of 'patient-centeredness'. In both the Health Affairs article and in his recent address to the 2010 graduating class of the Yale School of Medicine, he offered real examples of petty, arbitrary hospital rules causing unnecessary sorrow for patients and their loved ones. It is in such contexts that he makes a convincing case that health professionals ought to behave "as guests in their lives." In an interview for the New York Times, he argued:

We don’t have a standard of services or processes that are comfortable for patients. We have built a technocratic castle, and when people come into it, they are intimidated.

Nothing to disagree with there. To create that standard, moreover, would not undermine settled medical practice ethics---it would celebrate them, even as it rightly embarrasses the profession for having taken so long to do so.


Enter the Woo

Eschewing the scientific basis for modern medical practice, however, is another matter. In February of 2009, Dr. Berwick gave a 'keynote' address at the IOM and Bravewell Collaborative-sponsored Summit on Integrative Medicine and the Health of the Public. He shared the podium with Mehmet Oz, Dean Ornish, Senator Tom Harkin, and other advocates of pseudoscientific health claims. I wrote about the conference at the time, mainly to call attention to its misleading use of the term "integrative medicine": literature emanating from the Summit characterized it as "preventive" and "patient-centered," whereas the only characteristic that distinguishes it from modern medicine is an inclusion of various forms of pseudomedicine.


I noticed that Dr. Berwick was on the speaker roster, which I found disappointing: I imagined that he had either gone over to the Dark Side or, perhaps, was sufficiently naive about the topic to have been duped; or, more likely, that he had cynically accepted the offer to further his ambitions. I didn't bother to listen to his speech until the CMS appointment was announced a few days ago.

It is troubling, to say the least. Dr. Berwick did not argue, as he had in the NYT piece, that "If we doctors feel a person is going to make unwise choices, we have to take on the responsibility of being teachers, educators and informers." Rather, he praised his fellow speakers, most of whom were spouting nonsense, for their "reach" and "eloquence." He praised the IOM for its "glorious record...in pursuit of better designs in health care...traditional, allopathic curative care and now migrating into this distinguished and important new arena." He mentioned homeopathy and acupuncture, not to wonder why they should be promoted as effective, but merely to warn that they will fail---presumably in some economic sense---if they try to compete with each other for reimbursement.

Such language, and Dr. Berwick's very presence at the Summit, were a far cry from advocating "patient-centeredness." What they amounted to was a generous endorsement of pseudoscientific practices and of the socio-political movement that promotes them. Even granting some naivete on his part (he called himself "an amateur at this topic"), he must have known this. Such an endorsement, unlike tearing down the "technocratic castle," has ethical implications at least as profound as those that Dr. Berwick tacitly or explicitly relies upon to support his arguments for patient-centeredness.

"Physicians have no Immunity to Moral or Ethical Constraints"

The relevant medical ethics treatises (reviewed here) are in substantial agreement that it is unethical for physicians to prescribe scientifically implausible methods or to refer patients to other practitioners for the same purpose. They are also in agreement that it is unethical to prescribe a placebo to a patient while claiming that the treatment has specific biologic activity---a point that has been vigorously argued in the UK this year, with regard to homeopathy. These ethical tenets are not mere odes to nerdy, sciency thinking; they are matters of honesty and integrity---fundamental bases for ethical interactions between physicians and patients.

In 1983, philosophers Clark Glymour and Douglas Stalker published an article in the New England Journal of Medicine titled “Engineers, cranks, physicians, magicians.” They framed modern medicine as follows, comparing it to what was then called "holistic medicine" (the article is quoted extensively here):

Medicine in industrialized nations is scientific medicine. The claim tacitly made by American or European physicians, and tacitly relied on by their patients, is that their palliatives and procedures have been shown by science to be effective. Although the physician’s medical practice is not itself science, it is based on science and on training that is supposed to teach physicians to apply scientific knowledge to people in a rational way.

The practice of medicine in the United States and in other industrialized nations is a form of consultant engineering...

That statement is just as accurate now---even more so, in this era of Evidence-Based Medicine---as it was nearly 30 years ago, even if some might find the likening of medicine to engineering displeasing. Nor is it at odds with almost any definition of "patient-centeredness," other than one that presumes that the patient's desires trump the physician's ethics:

A physician engineer can act as consoler; nothing in either logic or social psychology forbids it. But certain combinations are impossible or extraordinarily unlikely. A physician engineer cannot honestly claim powers of magic or occult knowledge. The principles governing scientific reasoning and belief are negative as well as positive, and they imply that occult doctrines are not worthy of belief. Moreover, physician engineers have no immunity to moral or ethical constraints. On the contrary, they are by training and by culture enmeshed in a tradition of rational thought about
the obligations and responsibilities of their profession.

Dr. Berwick---if he really believes what his presence and words at the "Integrative Medicine" Summit imply---is playing with ethical fire. (If, as I hope, he doesn't really believe those things, he's playing with ethics of another kind). Will we begin to see pseudomedicine "integrated" into Medicare and Medicaid? That is certainly the expectation of those who observed Dr. Berwick's performance at the Summit, and who appear intent to hold him to his word.

KA

Two other blogs that have addressed this issue are:

Dr. RW: Not only evidence based medicine but science based medicine may take a back seat in Donald Berwick's vision for patient centered care

Dr. David Gorski: Dr. Donald Berwick and “patient-centered” medicine: Letting the woo into the new health care law?

A Source of the Anechoic Effect Discovered: the Public Relations Person in the Room

A series of posts in journalism blogs last month revealed a mechanism used by health care organizational leaders to shape discussion of the issues that affect their interests, but one that is probably unfamiliar to most health care professionals and the public at large.  Let me provide the key quotes in chronological order.

First, from the Covering Health blog of the Association for Health Care Journalism (10 June, 2010):

Have you recently tried to get information from the federal government or arrange an interview with a federal official?

AHCJ’s Right-to-Know Committee is calling on journalists to report their experiences, as part of a continuing effort to pry open the doors of the federal government. We’re looking for recent anecdotes about journalists’ experiences with public information officers, especially at the Department of Health and Human Services and any of the agencies that are part of it (e.g., CDC, FDA, CMS etc.).

Please write to Felice J. Freyer, Right-to-Know Committee chair, at felice.freyer@cox.net, about problems you have encountered, including mandates to clear interviews with the press office, slow responses, refused interviews, burdensome requirements (such as written questions and answers only), extreme time limitations on interviews, PIOs listening in on your conversations, or anything else that made it hard for you to get the information and quotes that you needed in time.

The implication here, of course, is that the committee was concerned that journalists attempting to interview employees and officials of US government health agencies may encounter a variety of problems, including public information officers "listening in on your conversation."

Of course, just because the committee was concerned about a possible problem does not mean the problem exists, or is if it exists, is important.

However, a week later this post appeared in the Covering Health blog (17 June, 2010):

MedPage Today, an online breaking-news service for physicians, today instituted a rule requiring reporters to inform readers whenever a press officer has listened in on an interview.

'If a source’s comments are monitored by a press officer, then the person may not have been speaking freely,' said Peggy Peck, vice president and executive editor. 'That’s information readers should have.'

Peck instructed her staff to use phrases like 'said in a telephone interview that was monitored by a public information officer' whenever using quotes from such an interview.

Peck emphasized that a reporter’s goal should be to avoid having a press officer listening to calls or attending face-to-face interviews. 'But if that is the only way a researcher will talk, we need to let our readers know that,' said Peck’s memo to eight reporters.

Peck is a member of AHCJ’s Right-to-Know Committee, and the rule sprang from the committee’s work to end interference by public information officers in newsgathering, especially in the federal government.

'I applaud MedPage Today for taking this step and encourage reporters and editors everywhere to follow suit,' said Felice J. Freyer, chair of the Right-to-Know Committee and a member of AHCJ’s Board of Directors.

'Reporters have come to accept the presence of public relations people at interviews, but it’s really not acceptable. We all know that such eavesdropping hinders the free flow of information – and we need to let our readers know that this is happening.'

Now this is much more clear. Apparently some, maybe most of the information obtained by journalists from interviews of officials and employees of government health care agencies was monitored by public relations people, presumably to keep the interviewees "on message," and remind them not to say anything that did not fit the party line.  Furthermore, such monitoring was not often disclosed by the reports when they wrote about the interview. 

In addition, Paul Raeburn posted this on the Knight Science Journalism Tracker blog:

I’ve long been troubled by the insistence of some 'public' information officers (they are paid to work for their institutions, not the public, although the interests of the two can sometimes coincide) to listen in or sit in on interviews. Even if they don’t say a word, their presence inevitably changes the interview.

Imagine telling colleagues about the last story you wrote, and what you had to do to get it. Now imagine the same conversation with your colleagues while your editor–on whom your livelihood depends–listens in. I don’t imagine myself dissembling in either set of circumstances, but I can certainly imagine myself telling the story a little differently in each case.

The point is not that information officers are always trying to limit or shape the interview, although that clearly happens. The point is not to challenge the integrity of information officers, although, like reporters, some are better at what they do than are others. The point is that the presence of an institutional representative changes the interview. And we owe it to out readers to conduct interviews without that presence whenever possible.

Mr Raeburn seemed to make an effort to be exquisitely polite, but still managed to affirm that the public relations person in the room is a real and important phenomenon in reporting about health care.
This reinforces the notion that monitoring of interviews with journalists by public relations people is common practice, but one heretofore not discussed publicly.  It seems obvious that the point of this practice was to keep the interviewee on message, and to restrain any discussion that might not fit with the public relations persons' bosses interests.

If we did not know about the practice of keeping a public relations person in the room for interviews with people working for the government, it seems likely that we also did not know about similar practices affecting interviews with people in other kinds of health care organizations, e.g., for-profit corporations, and not-for-profit organizations.

We have frequently discussed the "anechoic effect," how important cases, stories, and data about the negative effects of concentration and abuse of power in health care, and about ill-informed, incompetent, self-interested, conflicted, or even corrupt leadership of health care organizations, and the unaccountable, unrepresentative, opaque, and often unethical governance that enables it are often just not discussed, and when discussed, produce few echoes.  Now we see another mechanism that maintains this effect.  Large health care organizations deploy substantial money and personnel to market their products and massage their messages.  These people apparently use a variety of tactics to control the flow of information to journalists.  While journalists seem to be provide much more information about the problems in health care we discuss on Health Care Renewal than professional and academic publications and meetings, we now see one more mechanism that has impeded them from doing so openly and fully.

In my humble opinion, disclosing that interviews were monitored by public relations personnel is one small, but important step in beginning free enquiry into what has gone wrong with health care.  Bravo to the people who have stood up for it.