Monday, March 20, 2017

Who Benefits? - From the Mayo Clinic Explicitly Putting Commercially Insured Patients Ahead of Some Government Insured Patients?

Amidst all the chaotic noise emanating from Washington, DC, little snippets of news keep slipping out reminding us that the US health care system remains monumentally dysfunctional, and that the dysfunction serves the interests of the system's insiders.

Putting Commercially Insured Patients First

On March 15, 2017, the Minneapolis Star-Tribune first reported that the CEO of the august Mayo Clinic had stated in a late 2016 speech to Clinic personnel that henceforth the institution would preferentially accept patients with private insurance over those with public (Medicaid or Medicare) insurance under certain circumstances.

when two patients are referred with equivalent conditions, he said the health system should 'prioritize' those with private insurance.

'We’re asking ... if the patient has commercial insurance, or they’re Medicaid or Medicare patients and they’re equal, that we prioritize the commercial insured patients enough so ... we can be financially strong at the end of the year to continue to advance, advance our mission,' [CEO Dr John] Noseworthy said in a videotaped speech to staff late last year. The Star Tribune obtained a transcript of the speech, and Mayo has confirmed its authenticity.

In response to the Star-Tribune, spokesperson Kari Oestreich stated:

Mayo remains committed to publicly funded patients — who make up half the health system’s business — even with the new policy.

'We can provide the care they require for complex medical issues,' he said. 'However, we need to balance requests from these patients with their specific needs — if it’s necessary for them to come to Mayo — as well as the needs of commercial paying patients.'

CEO Noseworthy felt that the problem was that publicly insured patients did not bring in enough money:

In his speech, Noseworthy said a recent 3.7 percent surge in Medicaid patients was a 'tipping point' for Mayo.

'If we don’t grow the commercially insured patients, we won’t have income at the end of the year to pay our staff, pay the pensions, and so on,...'

Note that this tipping point was apparently reached under the US Affordable Care Act (ACA, or "Obamacare") and had nothing to do with any attempts to "repeal and replace Obamacare" by the current Trump administration.

Was the CEO Just Being Honest?

A variety of people interviewed by the Star-Tribune and other news sources suggested that other hospitals may have previously thought to subtly discourage patients whose insurance coverage was less lucrative for the hospitals. However, what was unusual was that this policy at the Mayo was expressed openly, at least to hospital personnel if not the larger world.

The Star-Tribune reported, without further comment:

'The most interesting thing isn’t that it’s happening, it’s that a high level executive actually said it out loud,' said Mat Keller, who monitors health care policy and hospital finances for the Minnesota Nurses Association.

StatNews reported,

'There is this thought that hospitals treat whoever comes to their door, but this is a statement that lays out what happens,' said Christine Spencer, a health economist at the University of Baltimore. 'It’s a surprise to hear it out loud like that, but hospitals, probably for decades, have engaged in these more subtle attempts to get privately insured patients over Medicaid or the uninsured.'
Maybe CEO Noseworthy is just more honest than leaders at other institutions?

A Violation of Mission

Similarly, some experts also raised ethical concerns about the new  Mayo Clinic policies. For example, as reported by Modern Healthcare,

'A cornerstone of our ethical thinking is you get the same care whether you're rich or you're poor, and we don't triage by the size of your wallet,' Caplan said. 'A wealthy leader like Mayo is sending a grim message not only to other hospitals but to those who rely on Medicare and Medicaid.'

Also, per the Rochester (MN) Post-Bulletin,

Dr. Gerard Anderson, the director of the Johns Hopkins Center for Hospital Finance and Management who writes many national papers about health care funding, said Noseworthy's directive was like something from a Third World country.

'This is what happens in many low-income countries. The health system is organized to give the most affluent preference in receiving health care. It does not happen in most affluent counties,' he wrote in response to the Star Tribune article. "Hospitals spend nearly all the money they get. If private insurers pay less than public insurers, then it will appear that public payers are paying less than costs. However, what is really happening is that hospitals are spending all the money they receive and those that pay less are accused of not paying the full cost.'

 Putting more lucratively insured patients first seems to violate the Mayo  whose Mayo Clinic Mission 

To inspire hope and contribute to health and well-being by providing the best care to every patient through integrated clinical practice, education and research.
and hence is an example of mission-hostile management.

Moreover, the new policy seemed to directly contradict other policies of the Mayo Clinic:

Mayo Clinic's nondiscrimination policy statement states, 'As a recipient of federal financial assistance, Mayo Clinic does not exclude, deny benefits to, or otherwise discriminate against any person” based on race, gender, religion and other characteristics, including “status with regard to public assistance.' This statement applies to 'admission to, participation in, or receipt of the services and benefits under any of its programs and activities,' through Mayo itself or any contractors.

The system also states on its website that it 'appropriately serves patients in difficult financial circumstances and offers financial assistance to those who have an established need to receive medically necessary services and meet criteria for assistance.'
Note that ideally, the whole purpose of a non-profit organization is defined by its mission.  Non-profit organizations ostensibly raise money, through contributions, and by charging for programs and services, to support that mission.  To repeat, the money is supposed to support the mission.  The money is supposed to be a means to an end.  The mission is not too make money.

So the explicit choice to go against the mission for the purposes of making more money should be a red flag, and should only be justified if there is real peril of immediate financial collapse threatening the whole mission.  I did not see any evidence suggesting such a danger in the articles describing Dr Noseworthy's speech.

A Violation of Non-Discrimination Policies, or Even Laws and Regulations?

It seems possible that the explicit policy to disfavor patients with government insurance vis a vis those with private insurance could violate existing regulations or laws.  For example, per the Rochester (MN) Post-Bulletin, the new Mayo Clinic policy was raising related concerns on the behalf of Minnesota state government.

Minnesota Department of Human Services Commissioner Emily Piper, who oversees the agency that manages the state's MinnesotaCare and Medicaid programs, said she was surprised and disturbed to read the comments that Noseworthy made in an internal message to employees.

'Fundamentally, it's our expectation at DHS that Mayo Clinic will serve our enrollees in public programs on an equal standing with any other Minnesotan that walks in their door,' she said Wednesday afternoon. 'We have a lot of questions for Mayo Clinic about how and if and through what process this directive from Dr. Noseworthy is being implemented across their health system.'
Fear of Catastrophe, or Inconveniencing the Rich?

The new explicit Mayo Clinic policy to disadvantage patients insured by Government programs compared to those insured by commercial insurers has caused some experts to question whether Clinic leadership has proposed mission-hostile, discriminatory, unethical, or even illegal behavior.  Is the threat the Clinic faces justify  taking such actions?

As noted earlier, the Mayo Clinic CEO implied the institution was in danger of running out of money at the end of the year "if we don’t grow the commercially insured patients,..." But was that a serious concern?  Or when he said "we won’t have income at the end of the year to pay our staff, pay the pensions, and so on,..." was he really worried about the ability of the Clinic to pay its top leadership in the style to which they have become accustomed?

The CEO did not present and evidence that the Clinic is in such dire straits that it is likely to go bust this year.  The Clinic does not rapidly disclose details of its finances.  However, the latest Mayo Clinic Facts stated that total revenue from current activities is approximately $10,315,000,000.  The most recently available detailed financial report in the form of a Form 990 filed with the US Internal Revenue Service by the Clinic  in 2014, covering 2013, stated 2013 total revenue as $4,560,196,033. This suggests a greater than 100% increase over four years.  That seems to be an impressive growth rate, not suggesting imminent risk of bankruptcy.

On the other hand, the Mayo Clinic leadership does seem accustomed to living in style.  While Mayo Clinic executive salaries since 2013 have not been disclosed, the same 2014 990 form showed that in 2013 CEO Noseworthy received $2,336,662 in total compensation.  Other executives receiving more than $1 million in total compensation included Trustee and VP Dr William C Rupp ($1,049,333), Assistant Treasurer Paul A Gorman ($1,117,598), Treasurer Harry N Hoffman III ($1,835,134), and former CAO Shirley A Weis ($1,530,320).  In addition, the form included statements that trustees received reimbursements for first-class travel for themselves and spouses; the institution purchased the former chief administrative officer's (CAO) house when she relocated; many leaders received lucrative supplemental retirement plans (whose value was included in total compensation);  inventors including named employees are "entitled to a share of royalties received by Mayo, including instances where such royalties are in the form of equity-based instruments;" named employees received "tax -indemnifaction and gross-up payments," and that named employees included personal services (e.g., maid, chauffeur, chef). This seemed to be pretty rich living for leaders of a non-profit institution whose mission, to repeat is

To inspire hope and contribute to health and well-being by providing the best care to every patient through integrated clinical practice, education and research.
So is the Mayo Clinic about to go bankrupt if it does not move selected patients with less lucrative government insurance coverage to the back of the line?  Or are its executives so used to their remunerative bubble that they simply cannot conceive of trying to control costs to uphold the mission if such stringencies might reduce the money flowing to management?

Similarly, StatNews quoted [Chief executive of the Center for Healthcare Quality and Payment Reform Harold] Miller.
'True leadership would be to figure out how to deliver high-quality services at the lowest cost possible,' Miller said. 'If institutions are simply going to say, ‘I’m not going to serve patients unless I get paid more,’ that’s only contributing to the problem.'

 But these days, the actual leaders of health care organizations have become accustomed to the pay and perks of top executives of big commercial firms.  We have documented again and again the ever rising and increasingly monumental pay of health care CEOs, even of ostensibly non-profit organizations, seemingly out of proportion to their organizations' abilities to help patients' and the public's health.

This has gone on in an era of ascendant neoliberalism.  Krimsky summarized the tenets of neoliberalism in his review of Science-Mart by Phillip Mirowski.

The term neoliberal, which arises from the work of post–World War II economists such as Friedrich Hayek, Milton Friedman and others belonging to the 'Chicago school' of economics and law, has little in common with what is usually thought of as liberalism. The important tenets of neoliberalism, Mirowski says, include such propositions as the following: 'The Market' is a better processor of information than the state; 'politics operates as if it were a market'; 'corporations can do no wrong'; 'competition always prevails'; the state should be 'degovernmentalized' through 'privatization of education, health, science and even portions of the military'; a good way to initiate privatization is to redefine property rights; 'the nation-state should be subject to discipline and limitation through international initiatives'; 'the Market . . . can always provide solutions to problems seemingly caused by markets in the first place'; 'there is no such thing as a ‘public good’'; 'freedom' means economic freedom within the Market. 

The logic appears to be that leaders of organizations that can do no wrong should be entitled to market levels of compensation, however high they may be, and without concern of whether the market is perfect (because all markets are by definition, perfect).  Also, the logic appears to be that corporations that can do no wrong should be immune from questions about actions that appear to not put patients first.

All the distractions in Washington, DC should not put us off how the commercialization of health care in an era of neoliberalism (and managerialism) has led to ever worsening dysfunction, and ever increasing advantages to the insiders within the system.

But where will patients end up in such an era?

We need true health care reform that would enable leadership that understands the health care context, upholds health care professionals' values, and puts patients' and the public's health ahead of extraneous, particularly short-term financial concerns. We need health care governance that holds health care leaders accountable, and ensures their transparency, integrity and honesty.  What we will get is endless resistance to such reform from those who personally profit from the current dysfunctional, and increasingly corrupt system. And the current chaos and dysfunction in government at large is making it easier for those who personally profit to profit even more. 

Wednesday, March 15, 2017

A Beach Too Far - Ill-Informed, Conflicted Members of the "Beachhead Team" for the Department of Health and Human Services

ProPublica recently published an article describing the so-called "beachhead teams" sent by the Trump administration to various US federal departments and agencies.  The article stated
While President Trump has not moved to fill many jobs that require Senate confirmation, he has quietly installed hundreds of officials to serve as his eyes and ears at every major federal agency, from the Pentagon to the Department of Interior.

Unlike appointees exposed to the scrutiny of the Senate, members of these so-called 'beachhead teams' have operated largely in the shadows, with the White House declining to publicly reveal their identities.

Why these teams were described in terms of a military invasion is not clear.  A beachhead more usually looks like:

[Assault landing, one of the first waves at Omaha. The Coast Guard caption identifies the unit as Company E, 16th Infantry, 1st Infantry Division. Photo courtesy of Center of Military History. Look here.]

However, a Politico article suggested

Trump’s team has long worried that career federal workers and President Barack Obama’s political appointees will seek to undermine the president-elect’s agenda. The transition sees the beachhead teams, named after the line of defense that the military constructs as it lands in enemy territory, as a check on existing agency officials.
Who Are These People?

The ProPublica article suggsted that some of the personnel on these teams might have conflicts of interest, including 
dozens of Washington insiders who could be reasonably characterized as part of the 'swamp' Trump pledged to drain.

The list is striking for how many former lobbyists it contains: We found at least 36, spanning industries from health insurance and pharmaceuticals to construction, energy and finance. Many of them lobbied in the same areas that are regulated by the agencies they have now joined.

The ProPublica article provided more detail about specific people, including a few on the Department of Health and Human Services (DHHS) "beachhead team."  To supplement this information, I attempted to identify and characterize the background of all 32 members of this team contained in the ProPublica roster.

The full list of names, my characterizations, and its sources appear at the end of this post.  There were 5 people I could not identfy,  Of the 27 I could, I found they included...

Corporate Advocates/ Lobbyists

The ProPublica article profiled three people in detail, as "swamp denizens, including health care lobbyists hired by HHS Secretary Tom Price."  These were:

Alexandra Campau, hired at the department of Health and Human Services, was formerly a lobbyist in Washington for the law firm Cozen O’Connor. According to disclosure records, her firm’s clients included a licensee of insurance giant Blue Cross Blue Shield, and Fresenius Medical Care, a German company that specializes in medical supplies for renal dialysis.

Timothy Clark, a senior adviser to HHS Secretary Tom Price, ran his own political consulting firm in California. His past clients included PhRMA, the powerful trade group that represents the pharmaceutical industry.

Keagan Lenihan, also a senior adviser to Price, was a director of government relations at McKesson Specialty Health, a firm that supports independent health providers. Disclosure records show Lenihan directly lobbied HHS. For Lenihan, the new post represents a return trip through the revolving door between government and the private sector, and a reunion with an old boss. Before registering as a lobbyist, she was a senior legislative assistant for Price, when the now-HHS secretary was in Congress.

Asked about the three HHS staffers, an agency spokeswoman said: ''e are not confirming or commenting on personnel at this time.'

In addition to these three, I found:

John Kalavritinos, who was a global lobbyist for Covidien, a pharmaceutical company, from 2008-2015, as we discussed here.

Lance Leggitt, who has become Secretary of DHHS Dr Tom Price's chief of staff, "oversaw health care lobbying for Baker Donelson for 11 years," according to StatNews.

Paula Stannard, formerly a lawyer for Alston and Bird, who "joined the health care practice of this law firm after serving in the last Republican administration as deputy general counsel to the Department of Health and Human Services. She was responsible for food and drug issues and other matters, including federal health insurance and public health preparedness,..." according to StatNews.  But also, the "firm has earned more than $4.4 million lobbying so far this year for health care companies and trade groups including Novartis AG, Verax Biomedical, the American Hospital Association, St. Jude Children’s Research Hospital, and Aetna...."

Former Political Staffers

The largest group of people on the list were former staffers for US legislators, US congressional committees, and state officials.  I counted 12.  Apparently all the legislators they served were Republicans.  Some worked in health policy.

Former Employees of Ideologically or Religously Oriented Non-Profit Organizations

I identified 7 people who worked for organizations I loosely characterized as ideologically or religiously oriented non-profits.  The details are below, but the organizations included the National Council of Catholic Women, the Alliance Defending Freedom, the Committee for a Responsible Federal Budget, the Heritage Foundation, Concerned Women for America, and the American Media Institute.

[But No] Health Care Professionals, Biomedical Scientists, Public Health or Health Care Researchers

I could find no one who clearly was a health care professional, no one who clearly had worked in patient care, no one who was a biomedical scientist on the list.

The closest I came was Kamran Daravi, described in an article in Politico as someone who "graduated from St. John's University in New York City in 2014 and received his master's in public health from the school earlier this year. Most recently, Daravi was with the United Nations."


The purpose of the "beachhead teams" dispatched to the DHHS is still obscure.  It seems likely that  the team is meant to have a major early influence on operations of the Department, which has very important health care regulatory responsibilities, sponsors major biomedical and health care research programs, and administers the major government health insurance programs.  Given that, why the Trump administration chose thes particular team members is more obscure.  None have apparent experience as health professionals or as medical or health care researchers, and many do not seem to have any knowledge of or affinity for health care, biomedical science, or public health. 

Those who may have some knowledge of health care seem to all have significant conflicts of interest.  They knew health care in that they had previous experience advancing the interests of large health care corporations, again without the benefit of any health care professional or scientific background.  They all could be regarded as having transited the revolving door from industry to government.  Recall that some experts believe that the revolving door goes beyond conflicts of interest and crosses the line over to true health care corruption

As we have noted (here, here, here, here, and here) the people the Trump administration has chosen so far for health care leadership positions have had conflicts of interest remarkable for their prevalence and severity.  While President Trump claimed famously that he would drain the Washington, DC "swamp," he seems to be rapidly repleting that swamp's health care subdivision. 

True health care reform requires well-informed leaders who uphold health care professionals' values, put patient's and the public's health ahead of all other considerations, avoid self-interest and conflicts of interest, are honest and ethical, and surely are not corrupt.  We seem to be getting farther and farther from that ideal. 

Appendix: List of DHHS "Beachhead Team" Members

Anna K Abram
former Sen Richard Burr (R-NC)  health policy director, look here

Alexander Aramanda
deputy legistlative director, Sen Ted Cruz (R-TX), look here

Juanita Balenger
administrator, National Council of Catholic Women, look here

Matthew Bowman
Senior Legal Counsel with Alliance Defending Freedom, look here

Brady Brookes
deputy legistlative director, Gov Michael Pence (R-IN), look here

John Brooks
department head of health policy at the MITRE Corp, previously an associate at Vinson & Elkins, look here

Alexandra Campeau
lobbyist, see Pro Publica
her husband is manager for major gifts from corporations and individuals at the Heritage Foundation; in laws own assisted living center,look here

Timothy Clark
lobbyist, se ProPublica

Kamran Daravi
adviser to the United Nations Economic and Social Council,  look here

Carla DiBlasio
health care policy adviser, Rep Tom Price (R-GA), look here

Heather Flick
Senior Partner, Flick Law Group, former Director, Citizens Bancorp, look here

Darcie Johnston
former State Director (VT) for Donald Trump campaign, look here

John Kalavritinos
global lobbyist for Covidien through 2015, look here

Lance Leggitt
formerly led health care lobbying for Baker Donelson, look here and here

Keagan Lenihan
lobbyist, see  ProPublica

Matthew Lloyd
former spokesman and deputy chief of staff for for former Gov Michael Pence (R-IN), look here and here

Tyler McGuffee

Marie Meszaros
policy analyst at the Committee for a Responsible Federal Budget, former legislative staffer, Rep Mark Sanford (R-SC), look here

Dolly (Mari) Moorhead

Patrick Murphy

Brian Neale
former health policy director for Gov Michael Pence (R-IN), reported to be named as director of Medicaid and CHIP services, look here

Randolph Pate
formerly at Heritage Foundation, look here

Anna Pilato
executive, Concerned Women for America, look here

Mary Powers
Deputy Director of Development at the American Media Institute, look here

Nina Schaefer

Paula Stannard
attorney, health care practice, Alston and Bird, former deputy general counsel, DHHS under Pres GW Bush, look here and here

Heidi A Stirrup
staffer, multiple R house members, formerly House Energy and Commerce Committee staff, look here

Amanda Street
House Budget Committee (recommended by Rep Tom Price [R-GA]), look here

Beth Tignor

Laura Trueman
former Heritage Foundation director of strategic operations, then senior policy adviser, Rep Steve Scalise (R-LA), look here

Steven Valentine
staff, Rep Chris Smith (R-NJ), look here

Kyle Zebley
former legislative director, Rep Tom Price (R-GA), look here

Friday, March 10, 2017

Whose Costs? Who Benefits? - A Close Reading of a Hospital System CEO's Prescription for Controlling Health Care Costs

The attempt to "repeal and replace" the Affordable Care Act has suddenly made health care dysfunction a hot topic in the US.  

For example, today, in my local paper, the Providence Journal, Dr Timothy J Bainbeau, the CEO of the Lifespan Health System,  the biggest regional health system weighed in on the problem of high and increasing health care costs.  A close reading of his commentary suggests how the leadership of big US health care organizations needs to think about whether their actions have become more of the problem than a source of solutions.

The CEO's Diagnosis and Prescription

 Dr Babineau began unremarkably with:

American health care is expensive. Too expensive. On this, there is little debate. In 2001 the median U.S. household spent 6.4 percent of its income on health care; by 2016, the same household spent 15.6 percent of its income on health care. That bigger share of the pie leaves less for other essential purchases, such as food, education and housing.

What was his diagnosis?  He stated that most costs are incurred in the care of severe acute or chronic illnesses.  So his prescription was:

A critical (but often overlooked) point is the fact that as much as 40 percent of spending during chronic and complex episodes is avoidable if providers and systems adhere to established standards of care. Reining in runaway health-care spending must involve better management of high cost episodes of chronic and complex care.


Rather than debate the actual percentage that is 'wasteful spending' (now commonly referenced at around 30 percent) we would be better served by continuing the hard work of identifying and eliminating areas within our own systems where needless variations in care add cost without improving outcomes.

To translate, most of health care spending is for severe acute or chronic illnesses.  For patients with these problems, we do too much, that is, by failing to "adhere to established standards of care."  Therefore, we must learn to do less, by "eliminating areas within our own systems where needless variations in care add cost without improving outcomes."  His entire focus is on ending needless utilization, presumably of specific diagnostic tests, therapies and programs.

As an aside, his assertions ignore some real controversies.  Dr Babineau implied that "variation" means needless or bad care.  This echoes the old "practice variation" research school, which showed that the rate of certain services, that is tests or treatments, varies in different geographic areas.  The problem is that this school has never clearly shown how much variation is due to variation in patients' characteristics, including illness severity and preferences, and is therefore "appropriate" in some sense.  It also fails to take into account how much variation is due to the inevitable uncertainty in diagnosis, and in predicting response to treatment.  Few diagnostic tests are perfect, so test results can rarely prove a disease is present or absent, but just can suggest how probable it might be.  Similarly, no treatment always cures, and most treatments have adverse effects.  So at best physicians can only predict the probability that a patient will improve, remain the same, or be harmed by a treatment.

Whose Costs?  Who Benefits? 

It is odd, though, that while Dr Babineau wrote an essay on reducing costs, he did not even mention how much anyone pays for any particular test, treatment, program, service, etc.  Nor did he mention whose costs most need reduction: patients', health care systems', insurance companies', governments', or "society's" costs?   That was probably due to his point of view, from the bubble of the hospital system C-suite, from which the viewof the outside world may be distorted.

Dr Babineau introduced his prescription for cost reduction with a defense of  American hospitals.
American hospitals and health care systems are among the best in the world.  Rather than decrying 'American health care is broken' and in need of rebuilding from scratch, a better strategy may be to look at what works well within our system and ask how we can build on those strengths while facing the escalating costs head on.

Hospital systems are in the health-care business, and we should not be reluctant to say so. No matter what wellness and prevention programs we collectively offer, inevitably a small subset of the population will still get very sick, and it is a core mission of health systems — working in close partnership with our primary and specialty providers — to take the very best and most efficient care of them when that happens.

But should hospitals be "in the health-care business?"     Most physicians of a certain age swore oaths on medical school graduation that we would put care of individual patients ahead of all other concerns, including making money. We surely have not fulfilled those oathes perfectly. Yet at one time health care and medicine could be seen as callings, just ways to make money.

In 2007, Dr Arnold Relman wrote(1) (and see this post):

The law also has played a major role in the decline of medical professionalism. The 1975 Supreme Court ruling that the professions were not protected from anti-trust law7 undermined the traditional restraint that medical professional societies had always placed on the commercial behavior of physicians, such as advertising and investing in the products they prescribe or facilities they recommend. Having lost some initial legal battles and fearing the financial costs of losing more, organized medicine now hesitates to require physicians to behave differently from business people. It asks only that physicians' business activities should be legal, disclosed to patients, and not inconsistent with patients' interests. Until forced by anti-trust concerns to change its ethical code in 1980, the American Medical Association had held that 'in the practice of medicine a physician should limit the source of his professional income to medical services actually rendered by him, or under his supervision, to his patients' and that 'the practice of medicine should not be commercialized, nor treated as a commodity in trade.' These sentiments reflecting the spirit of professionalism are now gone.

The Supreme Court challenge to attorneys' and physicians' professionalism was orchestrated by extreme market fundamentalists. Since 1978 when I obtained my MD from Brown, market fundamentalism (sometimes confusingly called "neoliberalism") has become dominant in the US. 

On the (now sadly dormant) Hooked: Ethics, Medicine and Pharma blog, Dr Howard Brody discussed the application of this reigning orthodoxy in economic.  Basically, supporters of market fundamentalism et al seem to assume that all markets are idealized free markets, and that free markets are like a super computer combining all human thought to provide wisdom in the form of price information.  Furthermore, since the market is based on supposedly rational choices made by free individuals, one cannot go back to question such choices. 

Hence Dr Babineau is hardly alone in regarding all of health care now as a business. But he and many others like to ignore the theoretic problems with market fundamentalism applied to health care, specifically the possibilities that 1) people's choice may not be free, may not be rational, and may not be based on coldly rational cognition and the best possible knowledge; and 2) one person's economic choice may limit another person's choices, or directly harm another person.   And never mind that Dr Babineau leads a non-profit organization, which states (per the most recent, 2015 Rhode Island Hospital IRS Form 990) that its mission is "delivering health with care."

Market fundamentalism suggests that hospitals and other health care organizations should be run like businesses to improve efficiency.  Thus Dr Babineau allowed "it is a core mission of health systems — working in close partnership with our primary and specialty providers — to take the very best and most efficient care of them when that happens."  Efficiency requires the reduction of costs, but whose? 

The worry is that Dr Babineau is really out to improve his own institution's efficiency, very possibly because he has incentives to do so.  There is considerable anecdotal evidence that hospital CEOs are rewarded for efficiency, but the effiicency of their own hospitals, not the health care system.   CEOs may get incentives when they increase hospital efficiency by cutting the institution's costs and/or increasing its revenue (look here for some examples.)  Sometimes these incentives are hugely disproportionate to any improvements in net financial position (look here for examples).  Sometimes CEO compensation goes up even when CEOs have cut the pay of or laid off lesser employees to cut costs (look here for examples).  Sometimes their pay goes up even when their actions correlate with worsening quality of care (look here for examples).

I cannot find any published rationale for Dr Babineau's compensation, but it is certainly substantial.  According to the most recently available IRS Form 990 (2015) for Rhode Island Hospital, Dr Babineau's total compensation (in 2014) was $2,405,868. 

So the concern is that the sort of efficiency Dr Babineau advocates may benefit his organization's and his own bottom line, but maybe not patients, or society.  And the promise he made that his own hospital system will improve efficiency may actually conflict with his promise to improve patient care.  


I submit that if we are really worried about why our health care system is sick, why we as individuals pay more and more for health care that is not improving, we should look beyond limiting practice variation or eliminating obviously useless, and hence perhaps uncommon services to improve "efficiency."  Instead, we should question whether health care can ever really function as a free market, and certainly whether hospitals, other health care "providers," and health insurers should be businesses that put their revenues ahead of patients' and the public's health. 

I am not a Catholic, but found the clearest voices on this issue to be those of the current and former Popes.  Pope Benedict XVI decried the transformation of medicine and health care into a business.  As we noted here, he wrote

during the current economic crisis 'that is cutting resources for safeguarding health,'... Hospitals and other facilities 'must rethink their particular role in order to avoid having health become a simple 'commodity,' subordinate to the laws of the market, and, therefore, a good reserved to a few, rather than a universal good to be guaranteed and defended,'


'Only when the wellbeing of the person, in its most fragile and defenseless condition and in search of meaning in the unfathomable mystery of pain, is very clearly at the center of medical and assisted care' can the hospital be seen as a place where healing isn't a job, but a mission,...
More recently, Pope Francis said,

Doctors, nurses and those who work in the field of health care must be defined by their ability to help their patients and be on guard against falling down the slippery slope of corruption that begins with special favors, tips and bribes, the pope told staff and patients of Rome's 'Bambino Gesu' children's hospital Dec. 15.

'The worst cancer in a hospital like this is corruption,' he said. 'In this world where there is so much business involved in health care, so many people are tricked by the sickness industry, 'Bambino Gesu' hospital must learn to say no. Yes, we all are sinners. Corrupt, never.'

Thus, I challenge health care executives to state their willingness to  put the care of patients ahead of their  organizations' revenue and own pay.  Will anyone step up?


1. Relman AS. Medical professionalism in a commercialized health care market. JAMA 2007; 298: 2668-2670. [link here]

Sunday, March 05, 2017

Experts, anger, and the madness of crowds

We find ourselves in a most peculiar historical moment. Among other things--many other things--problems of health care policy, research, and clinical practice more and more resemble those of society at large. There's a general sense everywhere that, whatever the outfit, the Wrong Guy is in charge of it. Then like a snake eating its tail, we argue endlessly about the details.

It's enough to give one a migraine, bigly. Whether we're talking DC, the Oscars, or (OMG) yet another health care reorg: if only we could get rid of the Gang That Couldn't Shoot Straight. But replace [fill in the blank] ... with what?

Let's look at a couple of recent Anglo-American pieces--here and here--and try to understand this odd moment in time.

In a recent number of The Guardian, an editorialist links the recent Oscars fiasco to what we here at HCRenewal, along with many others have come to call managerialism. The reliance on, indeed the cult of well paid and generic consultancy over real expertise seems now to have metastasized throughout our society. Why should we be surprised if this blight turns out to've insinuated itself into every nook and cranny of our medical organizations?

The hallmarks are the same everywhere. Bigness.  The notion that generic managers know best. If you have a problem, do what you need to do. Bring in an outside hired-gun pseudo-expert and then keep your job. (Of course, occasionally the behavior is so laughably clumsy that some shmoe, like the accountant tweeting from the Academy Award wings, has to be thrown under the bus. So that their bosses can keep their jobs.)

The best bons mots in the Guardian piece: "[T]he kind of expertise worth paying for is almost always the least reassuring." So that, for example, in the case of Britain's National Health Service, "[i]t doesn’t take a consultant to understand, for example, that the NHS needs more money; but it takes a very special and expensive skill not to understand it."

And here we come to the meat of the matter. We all have to get through each and every day. So how do we offload the big decisions? Do we think (as so many AMA docs do) that decisions in health care should go back into the hands of Everyman Physician? (Our new HHS Secretary has been sounding a lot like that.)

Do we place our trust in the hands of the generic Experts? Our lead blogger at HCRenewal has, over many years, shown us how that usually works out.

Or do we place our trust in the hands of those with serious domain knowledge? Ah, but you see, these are the elites. And right now, if you're a knowledgeable person who gets that label, you're out of favor. They say the most non-reassuring things. Who're you gonna believe: me or your lying eyes? So much easier to trust the Big Man, Mr. Authority, or, if we're doing Group Think, generic Manager Man.

Why are we, both without and within Health Care, so gullible? Roger Cohen, in his Times piece, provides some guidance. Anger. Hard to believe that matters of culture and emotion can be so impactful. But Cohen makes the case. He notes that "the attempt to squeeze the last cent of profit out of any operation has also squeezed the last trace of sentiment out of what passes for human interaction. [Individuals] see that technology serves relentless efficiency, and somewhere in that efficiency life gets joyless and existence precarious."

"They note," he continues, "that good unions, retirement benefits, manufacturing jobs, overtime and health care get eliminated or curtailed in pursuit of that last cent. They observe how put-together types with attitude and little qualification can make a bundle buying and eviscerating solid companies that actually produce things or setting up consultancies that trade on connections at the money-influence margins of politics. They know that if something goes wrong with the rigged system the losses will get 'socialized.'"

EMR, anyone?

In any case what's interesting is that this kind of anger can lead to vesting faith equally in a Bernie or a Donald. Masses of people are tempted to go for simplistic solutions. Polarization is inevitable. The crowd supports autocrats, narcissists and charismatics of left and the right,

Fortunately, as a part-way solution, Englightenment thinkers--the authors of the Constitution--created a creaky but resilient system that usually leads to a regression to the mean. Pull people back to the sensible center. That may well happen in health care. What's a lot more questionable is: what's going to happen about our cult of managerialism? It really is a ball and chain. In the Guardian, a secondary header fails to reassure: "In troubled times, the appearance of authority is worth far more than the content of advice."

Friday, March 03, 2017

Patient or Corporate Advocacy Organizations? - New Studies Shed Some Light


On Health Care Renewal we frequently discuss how people and institutions entrusted to promote patients' and the public's health instead promote commercial interests. 

For example, health care corporations, particularly drug/ biotechnology/ device companies may enlist key opinion leaders (KOLs).  These are nominally learned academics and distinguished professionals, but who have been paid to market the companies' products.  KOLs often fail to disclose their financial relationships and hence loyalties to these companies.

We have also noted that top leaders of academic medical institutions often serve on the boards of directors of big health care corporations.  In that capacity, they have fiduciary responsibilities to the companies and their shareholders.  They thus are expected to be loyal to these companies, even when corporate interests conflict with their academic organizations' missions.  Again, these relationships may not be well publicized.

Health care leaders and institutions may profess lofty goals, while they cultivate financial relationships that lead to personal gain, but leave them divided and conflicting loyalties.  Furthermore, individuals and institutions may fail to fully disclose these relationships, and thus may deceive health care professionals, patients and the public about the nature of their loyalties.

Institutional Conflicts of Interest and Patient Advocacy Organizations

In the last month, two scholarly articles that show the prevalence of such conflicts of interest (COIs) affecting patient advocacy organizations (also called disease advocacy organizations) were published.

McCoy et al. Conflicts of Interest for Patient-Advocacy Organizations(1)

Published today, March 2, 2017, the article's introduction gives this excellent overview:

Patient-advocacy organizations are nonprofit groups whose primary mission is to combat a particular disease or disability or to work toward improving the health and well-being of a particular patient population. As political actors, such organizations play an influential role in shaping health policy, pursuing agendas that include expanding coverage for drugs, devices, and diagnostic procedures; increasing support for medical research; and streamlining approval of experimental therapies.

Reports by media and watchdog groups have drawn critical attention to financial relationships between patient-advocacy organizations and drug, device, and biotechnology companies. Industry support can be an important resource for patient-advocacy organizations but can also give rise to institutional conflicts of interest, which exist when 'an institution’s own financial interests or the interests of its senior officials pose risks to the integrity of the institution’s primary interests and missions.' In the context of organization–industry relations, concerns have been raised that industry-supported patient-advocacy organizations have spoken out for access to drugs with questionable therapeutic benefit and remained silent on policy proposals, such as drug-pricing reforms, that might benefit their constituents.

This study analyzed public records (US Internal Revenue Service form 990 tax reports, annual reports and website) on the largest US based patient advocacy organizations, that is, those with revenues of at least $7.5 million.  Its goal was to determine how well these organizations disclose conflicts of interests, and how they have COIs, and what policies they have to mitigate their effects.

Its main results were that:

- Disclosure was modest.  88% of organizations disclosed their donors, 52% disclosed approximate amounts of donations, but only 5% disclosed exact amounts.  74% provided some information about the employment of their board members.

- COIs were common.  83% got funding from drug, device, or biotechnology companies.  Of the 57% of organizations that disclosed any information about the amount of funding, 39% received at least $1 million a year.   Furthermore, at least 39% of the companies had at least one current or former drug, device, or biotechnology executive on their own board of directs.

- Policies governing conflicts of interest were infrequent and weak.  Only 26% had publicly available COI policies, and and only 12% of these policies addressed the organizations' instutional conflicts of interest.

Rose SL et al. Patient Advocacy Organizations, Industry Funding, and Conflicts of Interest(2)

This study, published online on January 17, 2017, surveyed "a nationally representative sample of 439 PAO [public advocacy organizations'] leaders," from September 1, 2013 to June 30, 2014.  The survey response rate was 65.8%.  Its main results were that:

COIs were common.  Of the 245 organizations whose leaders responded, 67.3% received industry funding; 33.8% received more than one quarter of their funding from industry, and 11.9% received more than half from industry.  Of those receiving funding, a median of 45% of that funding was from drug, device or biotechnology companies.

Policies governing conflicts of interest were common, but often did not require public disclosure of conflicts.  63.9% of the organizations said they had policies, but only 25.7% had policies that required public disclosure.  The number of organizations that made their policies public was not clear.

So in summary, there is new data obtained systematically from observational studies suggesting that most patient advocacy organizations get substantial funding from health care corporations, especially drug, device or biotechnology companies.  These companies may be marketing drugs and devices for use by patients with the diseases for which the organizations advocate.  Furthermore, many organizations may also be governed by boards which include leaders of these companies.  Finally, disclosure of these COIs may be unreliable.  So health care professionals, patients and the public may not understand where these organizations' loyalties lie. 

Putting Patients and the Public, or Corporate Interests First?

Patient advocacy organizations, like many other kinds of health care organizations claim to put patients and the public's health first.  However such organizations frequently have large institutional conflicts of interest, and may not be at all transparent about such conflicts. 

Such conflicts of interest clearly raise the risk that the organizations may be influenced to put their financial sponsors' interests ahead of those of patients and the public.  However, the articles discussed above were not designed to discover how often such conflicts actually lead to abuse of these organizations' power.  Such abuse could be health care corruption, since corruption is defined by Transparency International as abuse of entrusted power for private gain.

In a New York Times article discussing the most recent study, representives of patient advocacy organizations denied that they possibly could be affected by all those dollars flowing into their coffers.

'Patient advocacy organizations are driven by their missions — putting patients first,' said Marc M. Boutin, the chief executive of the National Health Council, an umbrella group for patient-advocacy groups. 'To say otherwise negates the extraordinary work achieved by these organizations on behalf of their patients.' The health council had previously said that pharmaceutical companies accounted for 62 percent of the council’s $3.5 million budget in 2015.

Furthermore, while "researchers pointed to the National Hemophilia Foundation as one group that is vague about its funding,"

the hemophilia foundation said it never allows its corporate sponsors to influence its decision-making, and that it also does not endorse specific products or favor certain companies.
But  as Joe Collier wrote, "In my experience, people who have conflicts of interest often find giving clear advice (or opinions) particularly difficult."(3) 

Furthermore, commonsense, history, and anecdotal evidence suggests that the conflicts of interest affecting patient advocacy organizations could influence their actions, and could at times lead to health care corruption.  For example, looking through our files, I found....

- Drug companies recruited patient advocacy organizations to advocate for less clinical trial transparency.  In a 2013 news article in the British Medical Journal, "a leaked memo sent to several drug companies from two trade association bodies ... showed that there were plans to recruit patient groups to resist moves that would force the companies to publish more raw trial data."

- Patient advocacy organizations advocated for pharmaceutical company donors' drugs. There are many anecdotes involving patient advocacy groups which receive money from specific drug companies strongly advocating for those companies' products. 

In 2014, a British Medical Journal article showed how two multiple sclerosis charities in the UK advocated that the British National Health Service pay for drugs manufactured by companies which contributed to those charities.

In 2016, two news articles (USA Today, NY Times) noted the curious silence of disease advocacy organizations on the then burning question of high and rising prices of drugs used for their diseases, but manufactured by their sponsors.  Yet the same organizations were quite vocal about the need for insurance companies to pay for these medications.

Furthermore, the NY Times article suggested that patient advocacy organizations which tried to protest high prices on behalf of patients might fight themselves in trouble:

And for patient groups, loudly addressing the issue can be perilous, as Cyndi Zagieboylo, the chief executive of the National Multiple Sclerosis Society, recently discovered.

She said members of her group, one of the most influential patient charities, had identified cost as a priority. The average annual cost for multiple sclerosis medications is $78,000 today, nearly 400 percent higher than the $16,000 average in 2004, the group says.

But as soon as Ms. Zagieboylo started discussing a plan — a modest proposal that involved bringing together drug makers, insurers and others to find solutions — she said she encountered resistance. Other patient groups would not join her, and she said she was told by members of Congress, as well as some of the pharmaceutical companies that donate to her group, to tread carefully.

'We were warned, you know, in a number of ways, just sort of to be careful about this,' Ms. Zagieboylo said. 'A couple of pharmaceutical companies mentioned, ‘Boy, we support you, why are you doing this to us?'

- Donors to patient advocacy organizations think they are buying influence.  An 2016 investigation by the Project on Government Oversight (POGO) showed that companies that fund patient advocacy organizations may think they are thus buying influence.  For example, the report noted vis a vis the National Health Council (whose CEO Marc Boutin was quoted defending its purity above):

In a filing with the Internal Revenue Service, the organization says its mission is 'TO PROVIDE A UNITED VOICE FOR PEOPLE WITH CHRONIC DISEASES AND DISABILITIES.' The filing says National Health Council is a tax-exempt 501(c)(3) corporation, otherwise known as a charitable organization.

The website of Pfizer, a big drug company, shows how Pfizer has categorized it.

Pfizer discloses its membership in National Health Council on a page headed 'Lobbying & Political Contributions,' listing National Health Council under 'Trade Association Memberships,' along with groups such as PhRMA, BIO, U.S. Chamber of Commerce, and Business Roundtable.
So while leaders of patient advocacy organizations may implausibly deny that they possibly could be influenced by corporate donations, there is certainly anecdotal evidence to suggest they may be very much influenced.  He who pays the piper....


We have often talked about the huge and complex web of conflicts of interest that binds many of the important decison makers and leaders in health care to each other, and to other large health care organizations, so that health care in the US has largely become a game for insiders.

This month, we see how frequently institutional conflicts of interest affect patient advocacy organizations, even though such organizations "wrap themselves in white as if they are pure," (per Dr Ezekiel Emanuel, author of the latest study, quoted in the NY Times).  Furthermore, there is ample reason to think that these conflicts often may influence these organizations to put their commercial sponsors' interests ahead of the patients for whom they ostensibly advocate.  Thus in some cases these conflicts may lead to health care corruption, keeping in mind that Transparency International defines corruption as abuse of entrusted power for private gain. 

Compounding it all is the propensity of these organizations to hide the details of their corporate funding.  It's not the crime, it's the coverup.....

Now we live in an era when conflicts of interest and corruption are in the headlines every day.  Maybe here in the USA we are starting to realize that conflicts of interest and corruption are not just some tiresome  concern of party poopers, wet blankets and curmudgeons.  We all have to wonder: are the people and institutions we think are sworn to uphold our interests are actually upholding someone else's interests?

As we have said again and again,...  The huge and complex web of individual and institutional conflicts of interest that binds much of the health care system, the government, and industry may be good for the insiders, but is stifling improvement in our dysfunctional health care system.  True health care reform would first expose these conflicts, then reduce or better yet, eliminate them, and make health care more about helping patients and less about making money by marketing commercial products.


1.  McCoy MS, Carniol M, Chockley K et al. Conflicts of interest for patient advocacy groups.  N Engl J Med 2017; 376: 880.  Link here.
2. Rose SL, Highland J, Karafa MT et al.  Patient advocacy organizations, industry funding, and conflicts of interest.  JAMA Intern Med 2017; doi:10.1001/jamainternmed.2016.8443.  Link here
3.  Collier J. The price of independence. Br Med J 2006; 332: 1447-9. Link here.

Tuesday, February 21, 2017

As US Attorney, Labor Secretary Nominee Enabled Drug and Biotechnology Executives' Impunity

The new Trump administration nominee for US Secretary of Labor is a former US Attorney for the southern district of Florida.  In that role, he seemed to uphold the ideas that certain big corporations, particularly big pharmaceutical and biotechnology corporations, are too big to jail, and that top executives of big corporations should not be held accountable for their corporations' actions.

He had central involvement in three big settlements of charges of corporate misbehavior which held no individuals accountable for enabling, authorizing, directing or implementing the bad behavior.  The settlements imposed only monetary penalties on the corporations as a whole, accompanied at times by corporate integrity agreements.  In some cases, the failure to charge any individuals at the corporation occurred despite the corporations' history of previous bad behavior.  In each case, the penalties seemed unable to deter more bad behavior by the corporations going forward.  It was not obvious that any of the corporate integrity agreements were enforced. Thus, he enabled the continuing impunity enjoyed by the leadership of large health care organizations. 

The three cases, all discussed on Health Care Renewal, were, in approximate chronologic order:

2005 - GlaxoSmithKline Settled Charges of Overbilling Medicare and Medicaid for Zofran and Kytril

As we discussed in 2005, GlaxoSmithKline has settled for $150.8 million US Department of Justice charges that the company fraudulently overbilled Medicare and Medicaid. The alleged scheme involved inflating average wholesale prices for Zofran and Kytril used to set reimbursement rates.  According to the 2005 Department of Justice news release, "GlaxoSmithKline has agreed to enter into an addendum to its existing Corporate Integrity Agreement with the Office of Inspector General of the Department of Health and Human Services that, among other things, will require the company to report accurate average sales prices and average manufacturer's prices for its drugs covered by Medicare and other federal healthcare programs."

No individual who authorized, directed, enabled or implemented these alleged actions suffered any penalty.  The decision not to prosecute any individuals was made after the first (2004) famous Paxil case.  Paxil is the anti-depressant whose marketing lead GlaxoSmithKline (GSK) to settle allegations of fraud brought by then New York Attorney General Elliott Spitzer.  That case included allegations of suppression and manipulation of clinical research, and was discussed in great detail in the book Side Effects by Alison Bass.  We posted about various aspects of this case, e.g., here, here, and here

Since 2005, we have discussed myriad examples of misbehavior by GSK.  Notably the company made a $3 billion settlement in 2012 for all sorts of allegations involving multiple drugs, (see this post).  Its most recent settlement was in 2016 for bribing Chinese doctors (see this post).  Other cases included the manipulation of Study 329 (see this post), the manipulation and suppression of evidence about Avandia (see this post).  So the 2005 settlement seemed to have little deterrent effect.

The 2005 DOJ press release included this quote
'As our nation struggles to contain healthcare costs, we must ensure that drug manufacturers do not take advantage of the poor, the elderly or the sick by illegally inflating the price of prescription drugs. That a manufacturer would fraudulently inflate the cost of a drug used primarily to reduce the side effects of cancer treatments is unconscionable,' said U.S. Attorney R. Alexander Acosta of the Southern District of Florida.      

2007 - Bristol Myers Squibb Settled Charges of Kickbacks to Physicians and Fraudulent Marketing of Abilify 

As we discussed in 2007, BMS was charged by the US government for promoting the atypical anti-psychotic drug Abilify for use by children and the elderly absent any good evidence that it provided benefits that outweighed harms for these group. So such patients who received these drugs due to the overpromotion might have been harmed, and probably did not benefit.   One means used to promote the drug was giving kickbacks to physicians.  The settlement included monetary penalties to the company totaling $515 million, and a five-year corporate integrity agreement to ensure its compliance with the law.

Note that the corporate integrity agreement did not appear to have improved subsequent BMS behavior.  Since 2007, we have noted that:
 - In 2014, BMS settled allegations its subsidiary Lantheus Medical Imaging Inc evaded state taxes (per the Corporate Crime Reporter)
 - In 2015, BMS settled allegations by the US Securities and Exchange Commission (SEC) that it bribed physicians in China to induce them to prescribe its drugs.  (Look at our post here).

No individual who authorized, directed, enabled or implemented the actions alleged in the 2007 settlement suffered any negative consequences. The decision not to charge any individuals seemed to be made despite the company's history of previous bad behavior, which included:
 - In 2003, for $617 million, BMS settled suits alleging it tried to prevent competition from low cost generic versions of its products Taxol and Buspar (per the NY Times).
- In 2004, for $150 million, BMS settled suits by the SEC alleging accounting fraud (per the NY Times here).
- In 2007, BMS paid a $1 million dollar penalty while pleading guilty to lying to federal agents about a deal with the Canadian drug company Apotex (per Law360).   In 2009, it paid additional financial penalties in response to a US Federal Trade Commission charge about this case (per the FTC).

According to the 2007 Department of Justice news release,  one of the two US Attorneys involved in the 2007 BMS settlement was R Alexander Acosta of Florida.

2007 - Sanofi-Aventis Settled Charges of Overcharging Medicare for Anzemat

Per a 2007 post, Sanofi-Aventis settled allegations that it overcharged the US government for the drug Anzemet.  Of course, no individual who authorized, directed, enabled or implemented these alleged actions suffered any negative consequences.

As described by a Law360 post in 2007, he settlement also included yet another corporate integrity agreement.  This did not deter further misbehavior by Sanofi-Aventis.  It  settled charges of overcharging the US Medicaid system in 2009 for over $90 million  (see post here), and charges that it gave doctors kickbacks to induce them to prescribe the drug Hyalgan in 2012 (see post here).  In 2014, Sanofi's Genzyme subsidiary settled charges it promoted a surgical film product for unproven uses (see post here), and settled further charges from this case in 2015 (see post here).

Law360 also reported,

 U.S. Attorney for the Southern District of Florida R. Alexander Acosta said the lawsuit proved that corporations could not get away with misleading the government by exploiting a health care system based on honesty.

'Again, a corporation has been caught fraudulently inflating the cost of a drug used primarily to reduce the side effects of cancer treatments without regard to the increased costs borne by government health care programs or elderly and indigent patients,' Acosta said. 


President Trump promised time and again that he would stand up for the forgotten working people and families of the US, and would reduce the power of big corporate interests.  Now, his nominee to be Labor Secretary is an attorney who seemed unwilling to personally challenge top management of big drug and biotechnology companies when their companies misbehaved.  He did not hold management accountable even when their companies had previously and repeatedly misbehaved.  His failure to hold individuals accountable apparently failed to deter future bad behavior by the same companies.

There are many more examples on this blog of legal settlements, and even episodes involving bribery, fraud, kickbacks, and other crimes that demonstrate the continuing impunity of leaders of large health care organizations.  It is likely that such impunity has led to the general concerns that the system is "rigged" in favor of the wealthy, the well-connected, and the insiders.

And we have a President who has promised to act against the "rigged system," but seems to be bent on appointing wealthy, well-connected people to run his executive branch. Now he has just nominated someone who failed to hold wealthy, well-connected corporate executives accountable for their corporations bad behavior.  So, in any case, as we have said before...)

We once again see the perverse incentives at work that drive bad behavior by health care oragnizational leaders.  One can obviously become very rich by directing this bad behavior.  Up to now, the likelihood that one would eventually pay any penalty for doing so was tiny.  Now it is slightly higher.  Whether those up the ladder, who might have authorized the behavior, turned a blind eye to it, or avoided enquiring about anything that could be bad behavior, as long as the money came in, will suffer any negative consequences from these actions or inactions in the future is still unclear.

We will not make any progress reducing current health care dysfunction if we cannot have an honest conversation about what causes it and who profits from it.  True health care reform requires ending the anechoic effect, exposing the web of conflicts of interest that entangle health care, publicizing who benefits most from the current dysfunction, and how and why.  But it is painfully obvious that the people who have gotten so rich from the current status quo will use every tool at their disposal, paying for them with the money they have extracted from patients and taxpayers, to defend their position.  It will take grit, persistence, and courage to persevere in the cause of better health for patients and the public. 

Monday, February 20, 2017

A Voice for Reason - Dr Mickey Nardo

We mourn the loss of Dr Mickey Nardo, chief blogger at 1BoringOldMan, a voice of reason, a defender of truth in health care.  Dr Nardo was one of the principles in the famous re-analysis of Study 329, and has campaigned for rational use of clinical evidence in psychiatry.

For further details, see the apparently final post on 1BoringOldMan. We look forward to the prospect of the blog being transformed into a book.

Please consider signing this petition that Dr Nardo supported:

Stop False Reporting of Drug Benefits & Harms by Making FDA & NIH Work Together

Wednesday, February 15, 2017

Making Health Care Conflicts of Interest Great Again: A Consultant to Medicaid and Simultaneously to Medicaid Vendors for CMS?

President Trump campaigned on behalf of the neglected middle class, but at least in the health care sphere, those he has chosen for their advice or considered for nomination seemed to be more the corporate class.

Tomorrow, Ms Seema Verma, nominated by the Trump administration to be director of the Center for Medicare and Medicaid Services (CMS), one of the most powerful US government health care positions, will have an opportunity to appear before a Senate committee.  Ms Verma, unlike some other people President Trump has considered for health care leadership or advisory positions,  does seem to have a background in health care policy, if not actual on the ground health care.  But like many of those people, she has been accused of having important conflicts of interest.

Working as a Indiana State Consultant on Medicaid While Consulting for a Prominent Medicaid Vendor

Back in 2014, the Indianapolis Star reported on conflicts of interest affecting Ms Verma, then a consultant to Indiana state government on Medicaid services, while her company simultaneously worked for a Hewlett-Packard subsidiary that was a vendor to the Indiana Medicaid program.

The Star described Ms Verma's work for the state thus:

Verma enjoys a tremendous amount of sway for a private contractor. She has her own office at the state government center. Earlier this year, Pence turned to her to broker a deal with the state's hospital industry to help finance his plan to expand the Healthy Indiana Plan. And when Verma and one of Pence's Cabinet members — Family and Social Services Administration Secretary Debra Minott — butted heads over how soon to roll out the program, it was Minott who lost her job.

Verma's influence reaches back at least a decade and across the administrations of four governors, two from each party. During his first term, Gov. Mitch Daniels tapped Verma to help create a new health-care plan to address the state's uninsured population. Her solution: the Healthy Indiana Plan, a new low-income health insurance program that features high deductibles and requires participants to contribute a portion of their income to a health savings account.

Furthermore, in 2014,

Now, Pence wants to expand the plan to an additional 350,000 low-income Hoosiers through what he's calling HIP 2.0. And like Daniels, he turned to Verma for help in developing the plan and negotiating a financing agreement with the state's hospital industry. If approved by the federal government, billions of new Medicaid funds would flow to the state.

However, at the same time Verma and her company had this powerful role for the state, she also worked for HP.

HP's claims management and information system contracts show it has agreed since 2007 to pay Verma's company $1.2 million as a subcontractor for 'health consulting services.'

Yet Verma's work for the state clearly affected HP.

her duties involve crafting requirements for contractors, negotiating with contractors and supervising vendors. Her company's website also says she provided 'requirements for the state's three technology vendors to support HIP.' That would include Hewlett-Packard. One contract gives her the authority to 'initiate and/or track' a contract or contract amendments with the state's fiscal intermediary, which is HP. Another puts her in charge of technical changes to the state's medical management information system, which is operated by HP.

HP clearly had a major relationship with the state.

During that time, HP received more than $500 million in state contracts, including millions of dollars in contract changes to accommodate the Healthy Indiana Plan that Verma helped create and other new programs.

In 2014, the Star made a strong argument that Verma had a major conflict of interest, yet she appeared not to have made it explicit, or perhaps disclose it at all. 

'Certainly on the face of it, there is the appearance of a conflict,' said Trevor Brown, an expert on government purchasing and director of Ohio State University's John Glenn School of Public Affairs.

If Verma was a federal contractor, her dual roles 'would certainly raise tremendous concern for regulators and purchasing officials,' he said. 'This is exactly the kind of thing that would land an agency in a hearing before a legislative oversight committee.'

Lawmakers in Indiana, however, were unaware of Verma's work for HP.

'I was only aware she was working for the state,' said Sen. Patricia Miller, R-Indianapolis, chairwoman of the Senate Health Committee.

'There certainly appears to be the potential for conflict, and appearances matter,' said Ed Clere, R-New Albany, chairman of the House Health Committee

Verma's arrangement with HP also came as a surprise to former FSSA Secretary Debra Minott, who said she learned about it sometime in 2013.

'We had delayed paying an HP invoice because of an issue we were trying to resolve, and HP sent Seema to our CFO to resolve the issue on their behalf,' Minott said. 'I was troubled because I thought Seema was our consultant.'

At the time, though, all of this was legal, since Indiana had very weak regulations on conflicts of interest affecting state government operations.

Minott said when she brought her concerns to FSSA's ethics officer, she was told Indiana's ethics rules didn't apply to conflicts of interests among state contractors.

The lack of any such rule is just the latest in a litany of loopholes that good government advocates say Indiana needs to address.

A 2017 Update: Still Working for Hewlett-Packard, While Advising Nine State Governments

Apparently there were no changes in Ms Verma's relationships with the state of Indiana, and in her conflicts of interest since 2014. In fact, on February 14, 2017, the Associated Press published an updated description of her conflicts (via WKRN). Apparently, her conflicts of interest actually affected eight states other than Indiana.

A review by The Associated Press found Seema Verma and her small Indianapolis-based firm made millions through consulting agreements with at least nine states while also working under contract for Hewlett Packard. The company holds a financial stake in the health care policies Verma's consulting work helped shape in Indiana and elsewhere.

Her business activities continued to be very lucrative.

Since 2011, her firm, SVC Inc., collected more than $6.6 million in consulting fees from the state of Indiana, records show. At the same time, records indicate she also received more than $1 million through a contract with Hewlett, the nation's largest operator of state Medicaid claims processing systems.

Last year, her firm collected an additional $316,000 for work done for the state of Kentucky as a subcontractor for HP Enterprises, according to documents obtained by AP through public records requests.


Verma reported her salary with SVC is $480,000 and her business income from the company as nearly $2.2 million.

The AP found more experts to state that Ms Verma has serious conflicts of interest,

However, legal and ethics experts contacted by AP say Verma's work for Hewlett, and offshoot HP Enterprises, raised questions about where her loyalties lay — to the company, or to state taxpayers.

Richard Painter, former President George W. Bush's chief ethics lawyer, called Verma's arrangement a 'conflict of interest' that 'clearly should not happen and is definitely improper.'

Such arrangements are typically prohibited for rank-and-file state employees under Indiana's ethics rules and laws, but they're murkier when it comes to consulting work. Contractors have often replaced state employees in a GOP bid to drive down the number of public employees and distinctions between the two can be hard to discern.

'She was cloaked with so much responsibility and so much authority, people thought she was a state employee,' said Debra Minot, a former head of Indiana's Family and Social Services Agency under Pence who worked with Verma.

Indiana University law professor David Orentlicher compared Verma's dual employment to an attorney who represents both the plaintiff and the defense in a lawsuit. It's also similar to federal contract negotiator with a side job for a company they regularly negotiate with, he said.

'If you have one person on both sides of the negotiating, they can't negotiate hard for both sides,' said Orentlicher, a former Indiana Democratic state lawmaker.
Ms Verma's conflicts got little notice at the time of her nomination, but the 2014 Indianapolis Star was first noticed by PRWatch in January.


Revelations about these ongoing conflicts of interest have not apparently caused the Trump administration to rethink her nomination to be head of CMS.

Ms Verma happily went along working as an authoritative consultant for multiple states' Medicaid programs while also working as a consultant for a prominent vendor to these programs.  The 2014 report about these conflicts did not deter her from continuing her lucrative work for parties on both sides of the table.  Apparently, she continued to have similarly conflicted relationships with multiple other states, without anyone being the wiser.

If Ms Verma saw no problem with acting while subject to these conflicts, does anyone seriously expect that as head of the Medicare and Medicaid programs for the whole country she will put theinterests of the forgotten middle, working, and lower class patients who get health care insurance from these programs ahead of the interests of her corporate buddies?

Previously, the Trump administration nominated another heavily conflicted individual to be Secretary of Health and Human Services (look here and here).  He has gotten health advice from a silicon valley magnate who declared corruption was needed to prevent boredom (look here).  Several people he has reportedly considered to run the US Food and Drug Administration had their own substantial conflicts.  One was a  and one was a former pharmaceutical and biotechnology executive (look here and here).  One of the first people he sent to oversee FDA operations was a former pharmaceutical company lobbyist (look here).  A person proposed as "health care czar" is a billionaire biotechnology CEO (look here). 

Are these the sort of people who will first think of the welfare of the forgotten multitudes, or how much wealth they and their cronies can attain?

Finally, the Medicaid program is meant to be part of the safety net for the poorest Americans who cannot afford health insurance.  It seems bitterly ironic that the person proposed to become its leader has become rich as a consultant to state Medicaid programs (note above that Ms Verma made a salary of $480,000 a year, and received "business income" of $2.2 million presumably also a year from her consulting firm).  It is also bitterly ironic that many states have turned much of the operations of their Medicaid programs over to vendors who similarly have made a lot of money from a program for the poor.  

True health care reform requires leadership that puts patients' and the public health ahead of corporate health and managers' enrichment.

NOTE - Post revised on 16 February, 2017, to update links and add discussion of Ms Verma's salary and income.