Some Call it "Tyranny" - Top Leaders of University of California (Including Leaders of Academic Medicine) Demand Bigger Pensions for Themselves

The state of California, and its flagship university system, the University of California, have been under extreme financial pressure lately. 

The 36 Executives' Demands

However, that apparently has not decreased the University's hired managers' and executives' sense of entitlement.  They are threatening to sue if their pensions are not increased.  As reported by the San Francisco Chronicle,

Three dozen of the University of California's highest-paid executives are threatening to sue unless UC agrees to spend tens of millions of dollars to dramatically increase retirement benefits for employees earning more than $245,000.

'We believe it is the University's legal, moral and ethical obligation' to increase the benefits, the executives wrote the Board of Regents in a Dec. 9 letter and position paper obtained by The Chronicle.

'Failure to do so will likely result in a costly and unsuccessful legal confrontation,' they wrote, using capital letters to emphasize that they were writing 'URGENTLY.'

Their demand comes as UC is trying to eliminate a vast, $21.6 billion unfunded pension obligation by reducing benefits for future employees, raising the retirement age, requiring employees to pay more into UC's pension fund and boosting tuition.

The fatter executive retirement benefits the employees are seeking would add $5.5 million a year to the pension liability, UC has estimated, plus $51 million more to make the changes retroactive to 2007, as the executives are demanding.

The executives fashioned their demand as a direct challenge to UC President Mark Yudof, who opposes the increase.

'Forcing resolution in the courts will put 200 of the University's most senior, most visible current and former executives and faculty leaders in public contention with the President and the Board,' they wrote.

Background to the Case
Here is the relevant background:

The roots of the pension dispute go back to 1999, five years after the IRS limited how much compensation could be included in retirement package calculations. But even after the IRS granted UC's waiver in 2007, nothing changed.

University executives were having troubles of their own that year.

President Robert Dynes resigned in 2007 after it was discovered that UC was awarding secret bonuses, perks and extra pay to executives. State auditors also found that UC's compensation practices were riddled with errors and policy violations.

UC officials also had become aware of another big problem: UC's pension obligations were about to outstrip its ability to pay retirees. Neither UC nor its employees had paid into the fund since 1990.

It took until this year for UC to act. In September, a retirement task force offered Yudof several options for closing the $21.6 billion gap - and one to widen it: increasing executive pensions.

Health Care Executives Included

Note that in addition to a bunch of finance officers and portfolio and asset managers, the demanding executives included quite a few leaders of the medical schools, and academic medical centers, including:

UC System's Central Office
Dr. Jack Stobo, senior vice president, health services and affairs

UCSF
Dr. Sam Hawgood, vice chancellor and dean, School of Medicine
Ken Jones, chief operating officer, medical center
Mark Laret, CEO, medical center
Larry Lotenero chief information officer, medical center
John Plotts, senior vice chancellor

UC Davis
William McGowan, CFO, health system
Dr. Claire Pomeroy, CEO health system, vice chancellor/dean, School of Medicine
Ann Madden Rice, CEO Medical Center

UCLA
Dr. David Feinberg, CEO of the hospital system; associate vice chancellor
Dr. Gerald Levey, dean emeritus
Virginia McFerran, chief information officer of the health system
Amir Dan Rubin, chief operating officer of the hospital system
Dr. J. Thomas Rosenthal, chief medical officer of the hospital system; associate vice chancellor
Paul Staton, chief financial officer of the hospital system

UC San Diego
Dr. David Brenner, vice chancellor for health sciences; dean of the School of Medicine
Tom Jackiewicz, CEO, associate vice chancellor of the health system
Dr. Thomas McAfee, dean for clinical affairs

UC Irvine
Terry Belmont, CEO, Medical Center

The Outraged Reaction
The executives' demands sparked anger on campus.

Dissenting members of the task force said it would be unseemly' to expand executive pensions. Tuition had just been increased by 32 percent this fall, and the regents were poised to raise it another 8 percent for fall 2011. They also voted to shift more money into the retirement fund from employees' pockets, as low-wage workers worried about retiring into poverty.

'I think it's pretty outrageous that this group of highly compensated administrators of a public university are challenging the president and the chair of the Board of Regents, said Daniel Simmons, chairman of UC's Academic Senate and a law professor at UC Davis.

'What outrages me the most is that these 36 people are blind to the fact that this is a public entity in dire straits,' said Simmons, who also served on the retirement task force and opposed the higher pensions.

The demands prompted outrage from politicians and editorialists. A few choice samples:

- The executives are "tarnishing the university's name with greed," editorial (UCLA) Daily Bruin.

- "Very out of touch," by Governor Elect Jerry Brown; "truly living in an ivory tower...." while "people are suffering in the rest of the state and losing their homes," by Assemblyman Jerry Hill, D- San Mateo (per the San Francisco Chronicle)

- "Uncaring and divisive," "undercuts public support for one of California's most treasured institutions," "sending out its own special-interest message: what's in it for me," - editorial, San Francisco Chronicle.

- "despicable threat," the California Regents (UC board of trustees) should not "claim that lavish pension may be needed to recruit good people to UC. Good people don't threaten lawsuits against a cash-strapped sate to enrich themselves." editorial, Sacramento Bee.

- Governor-Elect B4rown should issue an executive order "to eliminate any position in the University of California system paying $245,000 a year or more," (thus effectively firing all the 36 complaining executives); "free taxpayers and students alike from the tyranny of those whose main objective during any time - tough or otherwise - is to keep milking the state for every penny the can squeeze out," editorial, Manteca Bulletin.

Summary

We have posted frequently about hired managers and executives of health care organizations receiving compensation and benefits out of all proportion to their apparent performance. The case of the demanding University of California executives is just one of many. However, what is really remarkable about this case is the reaction to it. We are hearing top leaders, including many of the top leaders of the state's medical schools and academic medical centers, called uncaring, greedy, and despicable by well-known politicians and in newspaper editorials, and we are hearing calls that they be fired, en masse.

Maybe we are at a tipping point.

Of course, hired health care managers and executives are not entitled to line their own pockets while patients and their other constituencies suffer during the great recession. They are not entitled to continually drive health care costs up while they enrich themselves.

However, apathy, learned helplessness, and the anechoic effect have let them promote themselves into a de facto new aristocracy (just like the hired managers and executives of some other non-profit organizations, for-profit corporations, and especially financial service corporations have turned themselves into the rest of that aristocracy.)

If we do not reclaim health care from these new oligarchs, we will all end up not just with expensive, difficult to access, mediocre health care, but under their tyranny.

Post-Script

This is just the latest example of the sense of entitlement displayed by the hired managers and executives of the University of California. Outrageous pay and benefits unjustified by any measure of performance for University of California's hired managers and executives has been grist for the Health Care Renewal mill since 2005.  A few samples:
-  The ranks of those paid more than $200 K rose much faster than those paid less, while lower paid employees endured a pay freeze, and the university cut its budget.  Managers got bonuses for extra work, while faculty did not.  Managers got housing allowances, and other perks.  (November, 2005) 
- UC-Irvine managers were paid lavishly while presiding over debacles involving transplant services  (liver transplants, November, 2005; bone marrow transplants, January, 2006; kidney transplants, January, 2006)
- UC - San Diego Chancellor was paid $359 K plus a bonus of $248 K for supposed full time work while serving on ten for-profit corporate and non-profit boards, including directorships of for-profit health care corporations that were conflicts of interest with her role overseeing the medical school and medical center.  This was the first case of what we later called the "new species of conflicts of interest" posted on the blog.  (January, 2006)
- UC - Irvine managers got bonuses while its medical center failed an inspection (January, 2010), as did managers at other UC campuses (January, 2010).

Maybe if these older stories produced more outraged, the current situation would not have occurred.

You heard it first on Health Care Renewal

Hat tip to Prof Margaret Soltan on the University Diaries blog.

University of California CEO - You Can Reduce My Pay if "You Throw In Air Force One"

The San Francisco Chronicle recently reported how students at the University of California have been providing a satirical approach to the problems of the university's leadership:

It's been a seriously dramatic year at the University of California, where hundreds of students seized buildings, demonstrated and shut down regents meetings last fall to protest rising tuition and the perceived privatization of the public school.

It's also been a satirically dramatic year, thanks to the UC Movement for Efficient Privatization, a fledgling group of mostly grad students in business attire that uses humor tinged with sarcasm to lampoon UC officials.

Their own name is an example. Many UC students believe leaps in tuition and reduced state funding are turning the public university into a private institution.

In particular, they drew attention to the university president's sense of entitlement:

UCMeP has made itself known on the Berkeley campus since September. That's when UC President Mark Yudof, who earns about $600,000, drew students' ire for telling the New York Times he'd take a $200,000 pay cut for salary parity with President Obama - if Air Force One were part of the package.

Seeing this as a philanthropic opportunity, UCMeP issued fundraising flyers: 'Help Buy Mark Yudof a Plane!'

The relevant parts of the New York Times interview, which I regret to say I missed at the time it was published, are:

Some people feel you could close the U.C. budget gap by cutting administrative salaries, including your own.
The stories of my compensation are greatly exaggerated.

When you began your job last year, your annual compensation was reportedly $828,000.
It actually was $600,000 until I cut my pay by $60,000. So my salary is $540,000, but it gets amplified because people say, 'You have a pension plan.'

What about your housing allowance? How much is the rent on your home in Oakland?
It’s about $10,000 a month.

Does U.C. pay for that on top of your salary?
Yes, and the reason they do that is because they have a president’s house, it needed $8 million of repairs and I decided that was not the way to go. Why the heck would I ever authorize $8 million for a house I didn’t want to live in anyhow?

Why can’t you have architecture students repair the house for course credit?
Let me ponder that.

What do you think of the idea that no administrator at a state university needs to earn more than the president of the United States, $400,000?

Will you throw in Air Force One and the White House?

While Yudof's response is clearly sarcastic, he obviously never substantively addressed why he is entitled to be paid comparably to the President of the richest country in the world.

We have written a few times about the travails of the University of California, some of its multiple campuses, and in particular its medical schools and teaching hospitals.  Most recently we have written about how leaders of its teaching hospitals also seemed to feel entitled to substantial compensation, including bonuses for "performance" even when their institutions were receiving bad publicity for quality problems (posts here and here).

Again and again we see examples of leaders of academic medical institutions, and health care organizations in general who seem to feel entitled to be judged differently, and rewarded differently than the common folk.  These entitlements exist even when the economy, or the financial performance of the specific organization prevents other people from making any economic progress. This entitlement exists even if those other poeple actually do the work, and ultimately provide the money that sustains the organization.


Although the executives of not-for-profit health care organizations generally make far less than executives of for-profit health care corporations, collectively, hired managers of even not-for-profit health care organizations have become richer and richer at a time when most Americans, including many health professionals, and most primary care physicians, have seen their incomes stagnate or fall. They are less and less restrainted by passive, if not crony boards, and more and more unaccountable. In a kind of multi-centric coup d'etat of the hired managers, they have become our new de facto aristocracy.

Or as we wrote in our previous post, executive compensation in health care seems best described as Prof Mintzberg described compensation for finance CEOs, "All this compensation madness is not about markets or talents or incentives, but rather about insiders hijacking established institutions for their personal benefit." As it did in finance, compensation madness is likely to keep the health care bubble inflating until it bursts, with the expected adverse consequences. Meanwhile, I say again, if health care reformers really care about improving access and controlling costs, they will have to have the courage to confront the powerful and self-interested leaders who benefit so well from their previously mission-driven organizations. It is time to reverse the coup d'etat of the hired managers.

More California Medical Centers Plagued by Quality Problems While Their Executives Get Bonuses for "Improved Patient Care"

Earlier this week, we noted that while executives at one University of California medical center were getting large bonuses supposedly for "improved patient health," the hospital was being cited for serious health care quality deficiencies.  Now, more stories have appeared that raise questions about the rationale for the generous bonuses handed out to multiple top hospital executives at University of California hospitals. 

University of California - San Diego

First, in alphabetical order by city, the San Diego Union-Tribune reported on penalties for poor quality care announced by the California Department of Public Health:

UCSD Medical Center in San Diego was fined $50,000.... The state said the hospital staff failed to follow its surgical policies and procedures, which resulted in a patient having to have a second surgery to remove a foreign object — a guide wire that was left in the patient when a central venous catheter was inserted into the patient’s right femoral vein in the groin area in January 2009. The wire migrated into a chamber of the patient’s heart.

The procedure was done by a first-year intern and supervised by a third-year resident.

This marks the third time the state has penalized UCSD, with the first penalty issued in May 2008 and the second in May 2009.

However, a few days earlier, the Union-Tribune had reported:

Despite criticism from union leaders and rank-and-file employees, University of California regents yesterday overwhelmingly approved $3.1 million in incentive payouts to 38 medical center executives.

The payouts mean, for instance, that former UC San Diego Medical Center CEO Richard Liekweg will receive $136,174 in performance pay for the last fiscal year, added to his base of $660,500.

Regents justified the payments by noting that incentive programs are common in the health care industry, and necessary to compete for top talent.

'It’s the way this industry works,' said Regent William De La Pena, an ophthalmologist and medical director of eye clinics throughout Southern California.

At UCSD Medical Center, 10 senior managers will receive a combined $754,650 for surpassing goals set in areas ranging from improved patient safety to increased revenue. The bonuses amount to 14 to 23 percent added to executives’ salaries.

University of California - San Francisco
Meanwhile, the San Francisco Chronicle reported that a major University of California - San Francisco teaching hospital was also cited by the state Department of Public Health for quality problems:

San Francisco General was fined $25,000 for leaving a piece of surgical gauze in a patient who underwent an eight-hour operation for two types of cancer in September 2008. The foreign object was discovered about three months later and was removed without surgery during an office visit.

The Chronicle also reported a possibly major breach in the confidentiality of patient records at the UCSF Medical Center:

Medical records for about 4,400 UCSF patients are at risk after thieves stole a laptop from a medical school employee in November, UCSF officials said Wednesday.

The laptop, which was stolen on or about Nov. 30 from a plane as the employee was traveling, was found in Southern California on Jan. 8.

There is no indication that unauthorized access to the files or the laptop actually took place, UCSF officials said, but patients' names, medical record numbers, ages and clinical information were potentially exposed.

The security breach is UCSF's second in recent months. Last month, UCSF officials revealed that a faculty physician responding to an Internet 'phishing' scam potentially exposed the personal information of about 600 patients.

However, despite these obvious quality problems, the San Francisco Business Times reported

University of California regents approved $500,000 in bonuses to six top officials at the UC San Francisco Medical Center, part of a package of $3.1 million in payments to 38 hospital executives across the UC system.

In an interview last week with UCSF Chancellor Susan Desmond-Hellman, she said that the executive bonuses were tied to meeting specific performance goals, such as reducing clinical infections and increasing satisfaction ratings by patients. She also pointed out that additional payments of $14.3 million to the UCSF Medical Center’s 6,600-strong workforce were approved earlier.

The UCSF officials awarded bonuses were:

* Mark Laret, chief executive officer, $181,227;
* Ken Jones, chief financial officer, interim chief operating officer, $89,162;
* Larry Lotenero, chief information officer, $66,045;
* John Harris, chief strategy and business development officer, $63,196;
* Susan Moore, finance director and interim chief financial officer, $53,261; and
* Sheila Antrum, chief nursing/patient care services officer, $49,280.

Summary

So, in summary, multiple executives at three major University of California medical centers received generous bonuses.  The rationale for these bonuses, given out at a time when the university system was under major financial constraints, was that they were incentives for exemplary performance and patient care. 

Yet almost simultaneous with announcement of the bonuses were news reports indicating serious patient care problems at the same medical centers.  The point I am NOT trying to make is that the care at any of these medical centers is bad.  The examples of quality problems were limited.  I am sure that many other major medical centers hae had such quality problems as well.  However, the cases cited above were sufficient to argue that the care at these medical centers was not outstanding, not exemplary.  Yet, the bonuses were awarded not for acceptable performance or average quality.  Their rationale was exceptional performance and quality.  Thus, the rationale for the performance bonuses seems at best naive, if not foolish. 

I would suggest, instead, that the sorts of bonuses given out at the University of California are a product of the current management culture that has been infused into nearly every health care organization in the US.  That culture holds that managers are different from you and me.  They are entitled to a special share of other people's money.  Because of their innate and self-evident brilliance, they are entitled to become rich.  This entitlement exists even when the economy, or the financial performance of the specific organization prevents other people from making any economic progress.  This entitlement exists even if those other poeple actually do the work, and ultimately provide the money that sustains the organization. 

Although the executives of not-for-profit health care organizations generally make far less than executives of for-profit health care corporations, collectively, hired managers of even not-for-profit health care organizations have become richer and richer at a time when most Americans, including many health professionals, and most primary care physicians, have seen their incomes stagnate or fall.  They are less and less restrainted by passive, if not crony boards, and more and more unaccountable.  In a kind of multi-centric coup d'etat of the hired managers, they have become our new de facto aristocracy. 

Or as we wrote in our previous post, executive compensation in health care seems best described as Prof Mintzberg described compensation for finance CEOs, "All this compensation madness is not about markets or talents or incentives, but rather about insiders hijacking established institutions for their personal benefit." As it did in finance, compensation madness is likely to keep the health care bubble inflating until it bursts, with the expected adverse consequences. Meanwhile, I say again, if health care reformers really care about improving access and controlling costs, they will have to have the courage to confront the powerful and self-interested leaders who benefit so well from their previously mission-driven organizations.  It is time to reverse the coup d'etat of the hired managers.

UCI Medical Center Fails Inspection, UCI Executives Get Bonuses

Back in the early days of Health Care Renewal, we had many occasions to write about problems with the leadership of the University of California - Irvine (UCI) medical school.  Starting in late 2005, we posted  about various management problems at the institution, involving its liver transplant service, cardiology division, and bone marrow transplant service, (see posts here and here) which lead the new chancellor of the campus to "acknowledge a failure of leadership and accountability" (see post here.) Slightly more recently, we noted the almost 20 year history of questionable financial relationships that involved one of UCI's "biggest stars" in clinical researach and several pharmaceutical companies (see post here).  Then, in 2007, we wrote about some strange contracting practices involving UCI and a local orthopedic practice (see post here).

So it was deja vu all over again when last week the Los Angeles Times reported about the latest batch of problems at UC Irvine Medical Center:

Federal investigators found scores of problems at UC Irvine Medical Center during a fall inspection that again put the troubled hospital's Medicare funding at risk, according to report released Thursday.

In an 85-page report on their surprise October inspection, regulators said they observed poor oversight and mistakes by UCI doctors, nurses and pharmacists, leading to inadequate care that in some cases harmed patients.

Among the findings:

* An 82-year-old man was mistakenly given a narcotic patch by a medical resident, without approval of doctors or pharmacists. The patch led to an overdose that required emergency intervention and may have contributed to his death a week later.

* A patient in the neuropsychiatric unit fell twice in three days and despite yelling 'Help me, doctor, help me,' suffered a head injury and had to be taken to intensive care.

* An on-call resident did not respond to repeated emergency pages from nurses in the neurological intensive care unit, where a patient with an irregular heartbeat languished for more than an hour.

* Pharmacists failed to monitor and store drugs correctly, allowing nurses to carry narcotics in their pockets and inject patients without proper oversight.

The report comes a year after investigators from the Centers for Medicare and Medicaid Services documented repeated examples of poor oversight at the hospital and threatened to cut Medicare funding.

In July, Medicare officials issued a finding of immediate jeopardy after investigators discovered that five UCI patients had received overdoses because nurses using pain medication pumps were not properly trained. UCI officials immediately began training nurses to use the pumps, the finding was lifted within 24 hours and the hospital submitted a plan of correction.

However, the 2010 continuation of the sad tale of UCI adds an interesting contrast.

UCI nurses said Thursday that many of the latest problems stem from understaffing and other cost-cutting, even as the facility turned a $54.2-million profit last year and the chief executive earned an $83,250 bonus.

'This is a problem of money. To provide extra training, extra staffing, is money,' said Beth Kean, California Nursing Assn. director for UC nurses, including 1,000 at UCI.

Terry A. Belmont, who took over as the hospital's chief executive last year, disputed that the facility was understaffed.

The new wrinkle in the UCI saga seems to be that now the leadership of UCI has been raking in bonuses while the mismanagement of the organization apparently continues.

Indeed, also last week several California newspapers reported on a series of bonuses granted to the top executives of the University of California system.  For example, per the Los Angeles Times,

The University of California regents Thursday approved the controversial payment of $3.1 million in performance bonuses to 38 senior executives at UC's five medical centers.

The regents emphasized that the payments were linked to improved patient health and stronger hospital finances and said they were important tools to attract and retain talent. They said the bonuses were part of a 16-year-old plan funded by hospital revenue, not state funds or student fees. An additional $33.7 million is distributed among 22,000 lower-ranking medical employees.

However, union activists denounced the executive bonuses as unconscionable as other parts of the university were coping with pay cuts and layoffs.

'This is appalling to do this when they are telling the lowest-paid workers to stay in poverty,' said Lakesha Harrison, president of the American Federation of State, County and Municipal Employees Local 3299, which represents about 20,000 UC workers, including hospital technicians and campus custodians.

Some of the union's members get bonuses of about $300 a year, Harrison said. In contrast, the payments to the 38 senior managers range from about $30,100 to nearly $219,000.

The incentives were awarded after the UC medical center system met such targets as reducing catheter-related infections and saving money through group purchases of supplies, officials said.

Among the payments approved Thursday by the regents in San Francisco were $218,728 to UCLA Medical Center Chief Executive David Feinberg, on top of his $739,695 base salary; $181,227 to UC San Francisco medical center Chief Executive Mark Laret, on top of $739,700 in pay; and $87,000, in addition to his $580,000 salary, for John Stobo, the UC system's senior vice president for health sciences.

Corroborating the assertion that the bonus plan is not new is a document that lists executive compensation at the University of California in 2008. (2009 data does not yet seem to be available on the web.) This document noted the following bonuses paid to University of California - Irvine medical leaders in 2008:
- Susan J Rayburn, Executive Director of Clinical Enterprise - Base Salary= $212,700, Bonus=$28,401
- Lisa M Reiser, Chief Patient Care Services Officer - $243,000, $26,507
- Eugene Spiritus, Chief Medical Officer - $310,000, $38,373
- Patricia D Thatcher, Executive Director - HR and Customer Service, Medical Center - $197,547, $17,542
- Cynthia A Winner, Chief Ambulatory Care Officer - $238,200, $24,371
- Maureen L Zehntner, Associate Vice Chancellor/ Chief Executive Officer, Medical Center - $555,000, $74,432

Note that Dr Spiritus, the Chief Medical Officer, did not mention that he was a 2008 bonus recipient when he defended bonuses given to UCI leaders in the LA Times article,

'Everybody's fallible. We just have to make sure we have the right processes in place' to catch errors, said Dr. Eugene Spiritus, UCI Medical Center's chief medical officer.

Spiritus also defended the compensation for hospital managers, saying they need to stay competitive in order to attract and keep talented managers, especially given the cost of living in California.

F Scott Fitzgerald wrote, "the very rich are different from you and me."  These days, it is executives and managers who are very different from you and me. 

Physicians are beginning to dread the notion of "pay for performance," which may mean tiny increases in fees paid to physicians who uncritically follow wooden-headed guidelines based on over-simplified notions of disease, poor measurement schemes, and manipulated and suppressed clinical data. 

However, for health care organization executives, "pay for performance" seems to mean lavish bonuses only tenuously related to any rational notion of performance.  In the example above, it seems that multiple UCI executives earned bonuses for their management of clinical affairs at the medical center in 2008, and at least the medical center CEO earned a bonus in 2009 for "improved patient health" while outside review of the medical center's performance in 2009 revealed "scores of problems" sufficient to threaten withdrawal of Medicare funding.  One wonders about the basis for all the millions in bonuses that have been paid to University of California executives over the years?

In fact, the executive "pay for performance" programs that started in the for-profit corporate world, and now are prevalent in not-for-profit health care organizations, seem to reflect the culture of executive entitlement now so prevalent in the US (and maybe most developed countries.)  First, executives claim credit for any improvements in their organizations, while the workers in the trenches who actually accomplished the improvements get chump change.  Second, when things go wrong, the workers face salary cuts and lay-offs, while the executives' total compensation never seems to go down. 

As we mentioned before, executive compensation in health care seems best described as Prof Mintzberg described compensation for finance CEOs, "All this compensation madness is not about markets or talents or incentives, but rather about insiders hijacking established institutions for their personal benefit." As it did in finance, compensation madness is likely to keep the health care bubble inflating until it bursts, with the expected adverse consequences. Meanwhile, I say again, if health care reformers really care about improving access and controlling costs, they will have to have the courage to confront the powerful and self-interested leaders who benefit so well from their previously mission-driven organizations.

Boston Scientific (Again) Settles - This Time, Charges of Kickbacks Disguised as Clinical Studies

One would think that the stories about bad behavior by health care organizations would quiet down just before Christmas, but no...

As reported by the AP:

U.S. attorneys in Boston said Wednesday heart device maker Boston Scientific will pay $22 million to resolve allegations its Guidant division paid kickbacks to doctors to get them to use its heart devices.

The U.S. Department of Justice said Guidant paid physicians $1,000 to $1,500 each in 2003 and 2004 to participate in four studies, called RaCE, RaCE II, RaCE III, and MERITS. It said the studies were designed to increase sales of pacemakers and defibrillators.

Federal officials said the company targeted doctors who favored products made by other companies, hoping the payments would induce them to use Guidant devices more often. They said Guidant submitted claims for payment on the devices to Medicare.

Boston Scientific did not admit wrongdoing as part of the civil settlement. Under the agreement, its cardiac rhythm management division will have to publicly disclose payments to physicians on a Web site. Boston Scientific also entered into a corporate integrity agreement.

So here we have an example of a "seeding study," that is, a marketing effort to persuade physicians to prescribe a product disguised as a clinical research study, but for medical devices, not drugs.  Seeding studies seem to combine multiple kinds of unethical behavior, deceptive marketing and manipulated research.  There had been some question in the past whether seeding studies exist, but this is the second recent example to come to light, suggesting that not only do they exist, but that they are used by device as well as pharmaceutical companies.

Note that, as Bloomberg reports, this is the third major settlement of allegations of bad behavior made by Boston Scientific,

The company agreed last month to pay $296 million to settle a Justice Department probe into Guidant’s handling of heart devices and restated third-quarter results. [See post here.] In 2007, Boston Scientific agreed to pay $240 million to settle more than 8,000 lawsuits claiming Guidant hid defects in defibrillators, which are devices that shock the heart back into regular rhythm.

Cataloging legal settlements seems to be a useful way to assess the sorts of bad behavior manifested by large health care organizations (see some posts here). However, as we have said frequently, such settlements, including the "corporate integrity agreements" now frequently attached to them, seem to have done little to deter bad behavior.  Usually, the companies involved only need to pay fines, and no individual who performed, directed or approved unethical or illegal acts will suffer any negative consequences. I submit once again that such fines are viewed merely as costs of doing business by the affected companies, and do not deter future bad behavior.

I submit that would-be health care reformers who want to improve care, reduce costs and improve access should advocate for real negative consequences for people who implement, direct or approve the various versions of fraud, kickbacks, and miscellaneous corruption and malfeasance we have discussed on Health Care Renewal.

By the way, the board of directors of Boston Scientific includes two noted academics with leadership roles in academic health care.  Marye Anne Fox is the Chancellor of the University of California - San Diego, and hence the leader of a major medical school and academic medical center.  The university's mission statement, alongside which sits her picture, proclaims it "strives to maintain a climate of fairness, cooperation, and professionalism." Uwe Reinhardt, Professor at Princeton, is a noted health care economist, and blogger on the Economix blog for the New York Times.  Perhaps such august academic personages could tell  us how they are assuring that the company they are paid well to oversee upholds, rather than undermines professionalism and fairness.

Did a Yakuza Boss Pay "A Million Dollars for One Liver?"

One of the more bizarre stories to appear on Health Care Renewal just resurfaced.  To summarize, in June, 2008, we posted about the strange case of four Japanese men, allegedly affiliated with Yakuza criminal organizations, who received liver transplants from the UCLA Medical Center, apparently with some alacrity. All likely paid full list prices for their procedures, and two later donated $100,000 each to the medical center. The case raised concerns by several notables (including Senator Charles Grassley, and Professor Arthur Caplan) about the integrity of the transplant system. Presumably these concerns were based on suspicions that the four may have received a higher priority than others on the list. More concerns should have been raised after it was revealed that shadowy characters threatened a reporter who started to investigate the case in Japan, and the reporter's family (see post here).  Later, the Chancellor for Medical Sciences and Dean of the David Geffen School of Medicine's public response to the case side-stepped all the important concerns while deploying a series of logical fallacies (see post here).

Then, despite all the colorful details and ethical concerns presented by this story, it faded from view for a year and a half. 

Last night, the US investigative reporting television show "60 Minutes" aired a follow-up on the Yakuza transplants, following closely on the publication of a book, Tokyo Vice, by Jake Adelstein, the reporter who first broke the story.

The web-based version of the 60 Minutes story reprised the main points, but added emphasis to a few of interest to Health Care Renewal. 

First, the 60 Minutes piece raised suspicions that the Yakuza members paid a premium to jump the UCLA liver transplant priority list:

Getting into the U.S. was one thing, but getting a liver transplant at a leading American medical center like UCLA was something else altogether.

'What's the average waiting time for someone in California waiting for a liver transplant?' [CBS correspondent Lara] Logan asked California attorney Larry Eisenberg.

'It's probably realistically three years. And it could be much longer,' he replied.

Not for Tadamasa Goto, who got a liver in just six weeks. Eisenberg finds that surprising, especially since Goto was number 80 on the waiting list.

'It should not be possible that an unsavory character from out of the country, with ties to organized crime, comes into the United States and gets a priority and obtains a transplant,' Eisenberg said.

Two families, Eisenberg's clients, both lost loved ones waiting for livers at another transplant center in the same area: Salvador Ceja was number two on the waiting list; John Rader was number five.

'Do you think, for one second, that this was legitimate? That they stood in line and waited just like your husband did?' Logan asked Rader's widow Cheryl.

'Absolutely not,' she replied. 'No. Because nobody gets a liver that quickly.'

'I think they were playing God,' Yolanda Carballo, Ceja's stepdaughter, added. 'Now, I think they were picking and choosing who they wanted to give a liver to.'

'So, in your minds, what was this about?' Logan asked.

'Money,' Rader said. 'Spoke loud and clear. And they listened.'

'That's what it was all about. Money,' Carballo agreed.

Three of Goto's Yakuza cronies also got liver transplants at UCLA. For them, money was no object. UCLA says each of their transplants cost about $400,000 dollars; the Yakuza all paid cash.


The hospital also acknowledged Goto and another Yakuza each made $100,000 donations to the transplant center.


Adelstein says Goto paid even more. 'According to police documents and sources, a million dollars for Goto. A million dollars,' he told Logan.

'A million dollars for one liver?' she asked.

'A million dollars for one liver,' Adelstein said.

Second, 60 Minutes emphasized the risk Mr Adelstein faced after he drew attention to the story of the Yakuza liver transplants at UCLA:

Tadamasa Goto returned to his life of crime as a Yakuza godfather and it all stayed hidden until Adelstein was tipped off. It took him years to piece together the details for a newspaper story. Then, when word got out that Adelstein knew, the Yakuza tried to buy his silence, offering him half a million dollars.

Asked if he was tempted by the cash offer, Adelstein said, 'Of course I'm tempted. You know? When someone offers you half a million dollars not to write something, but then again, you know I don't want to be owned by organized crime the rest of my life.'

Adelstein wrote the story for 'The Washington Post' and it eventually made its way back to Japan. The news infuriated the Yakuza bosses. For Goto, it was a humiliating blow from which he would never recover.

'I heard from someone very close to him that as he was leaving and getting in his car he said, 'That goddamn American Jew reporter, I wanna kill him,'' Adelstein said.

Japanese and U.S. law enforcement agents took Goto's threat seriously.

Adelstein now lives alone, under Tokyo police protection; his wife and children are in hiding.

'Are you concerned that there is an American citizen here whose life is at risk?' Logan asked the U.S. Embassy's Mike Cox.

'Very much so. I mean, we think the Japanese police are doing what they can to make sure that no harm comes to Mr. Adelstein. I mean, we certainly don't want to see anything happen to him,' Cox said.

'What do you have to do in your daily life to stay alive?' Logan asked Adelstein.

'You have to keep your rooms shuttered, because you don't want a sniper to pick you off across from somebody’s house,' he said.

Asked if he lives in darkness, Adelstein said, 'When I'm up in my room typing, yes. All the rooms are shuttered. You gotta be very careful on rainy days. Because when Yakuza take people out, they like to do it on rainy days, because fewer people are on the streets and the rain washes away trace evidence.'

Even in disgrace, Tadamasa Goto still has a small army of loyal soldiers and a hit out on Jake Adelstein. The Yakuza say he will never be safe.

'When someone does something that causes them (Yakuza) to lose face, they will use any means possible, legal or illegal, to crush the person who has gotten in their way, who has humiliated them,' the disguised Yakuza boss told Logan.

Finally, 60 Minutes found that the UCLA Medical Center continued to be uncooperative, cloaking its refusal to categorically refute allegations that it sold a liver for a million dollars in concerns with patient confidentiality:

Asked if UCLA knew who these people were, Adelstein said, 'When you see guys with lots of tattoos, missing fingers, wouldn't it occur to you, like, 'Oh, this guy is a gangster.' I can't believe they didn't know.'

Attorney Eisenberg says transplant rules require extensive background checks on every patient. Yet, UCLA insisted to federal investigators they had 'no knowledge' that Goto or his cronies had ties to Japanese organized crime.

UCLA declined all of 60 Minutes' requests for interviews. The only thing the medical center will say on the record is that their program has been reviewed and found to be in 'total compliance' with liver transplant rules.

The hospital told us, 'state and federal patient confidentiality laws prohibit UCLA from responding to the…issues raised by 60 Minutes.'

'In my opinion, the medical center has a moral and ethical obligation to determine the source of those funds,' Eisenberg said.

'A moral and ethical obligation, but apparently no legal obligation?' Logan asked.

'Well, it's not addressed in the rules specifically,' Eisenberg said

As I wrote in my first post on this case, you just can't make this stuff up...

However, the colorfulness of the case should not distract from its very serious implications.  We have written a lot in this blog about the anechoic effect, how cases with important implications about ethics, governance and leadership in health care often fail to attract the attention they deserve.  We have opined that academics and professionals have realized that it is simply "not done" to discuss cases which might offend the powerful leaders of health care organizations.  We have written about whistle-blowers who have lost jobs or been theatened with lawsuits.  But in this case, the journalist who wrote about the case allegedly has received death threats and lives in hiding under police protection.  This may be the most serious case of the anechoic effect known.

Furthermore, we have written a lot in this blog about how leaders of health care organizations ought to uphold their organizations' mission and the core values to which physicians and other health care professionals have sworn devotion.  The continued disinclination of UCLA leadership to respond to charges that its medical center accepted $1 million to put Japanese gangsters at the head of the liver transplant list may reflect fear of gangsters who also allegedly threatened the life of the journalist who reported the case.  But by failing to rebut such charges, the leadership leaves the impression that they cannot claim to be better than the moral equivalents of gangsters.  Institutions that aspire to join "the ranks of the nations [sic] elite medical schools" ought also to aspire to have leaders that have better ethics than Yakuza bosses.  

Transparency International has suggested that health care corruption is a global scourge that costs lives.  Serious health care reform cannot ignore health care corruption as a cause of excess costs, denied access, and poor quality.  Health care organizations ought to be held to a higher standard of ethics, and be less prone to corruption than, for example, garbage hauling firms.  Health care organizations ought to subscribe to rigorous codes of ethics, impartially enforced, which apply to all within the organizations, including top leaders.  While the accused need to be afforded due process, whistle-blowers must also be protected.  In my humble opinion, true health care reform requires so confronting health care corruption.  Maybe the leadership of the Gefen School of Medicine might want to consider setting an example in this regard. 

Note: Jake Adelstein's book is available here, and it was reviewed by Reuters here and by the AP (via the Canadian Press) here.

A University Leader's Goal: "Taking New Biotechnology ... to Market?"

An article from the San Francisco Chronicle noted how the new Chancellor of the University of California - Davis (UC-Davis), Linda Katehi, is already contending with controversy. One brief section about her goals for the campus caught my eye. The article noted that Dr Katehi (who has a doctorate in engineering) holds 16 patents, then:

Now Katehi wants to transfer that entrepreneurship to the campus she'll lead.

'The campus is in a wonderful position to become a major force in improving and strengthening the economy of the state,' Katehi told The Chronicle, adding that she'll help UC Davis to become more aggressive in taking new biotechnology and agriculture products to market.

So it would seem that Dr Katehi's goals are making UC-Davis more entrepreneurial, strengthening the California economy, and marketing selling biotechnology products. All of that would make some sense if UC-Davis were a biotechnology company.

However, it is not. UC-Davis, of course, is a major academic campus of the University of California system, with multiple graduate and professional schools, including a medical school. Its mission is:

Through a distinctive tradition of core-discipline excellence, interdisciplinary collaborations and productive partnerships, UC Davis teaches students to think critically, objectively and creatively and to be lifelong learners, engaged leaders and productive citizens; pursues research to advance knowledge and to address state, national and global challenges; and serves the public through the generation, broad dissemination and application of knowledge.

The statement does mention "application" as well as dissemination of knowledge. It seems quite a stretch, though, for that one word to justify putting a priority on entrepreneurship, economic development, and marketing biotechnology products. In fact, Dr Katehi's goals seem to be far removed from, if not in conflict with the university's mission. This is just a recent example of how the leaders of academic institutions seem to be forgetting or radically deconstructing their academic missions, and in particular, how leaders of academic medicine seem to think that their job is to sell drugs and devices.

Consider how Dr David Korn, then Senior Vice President, Division of Biomedical and Health Sciences Research of the of the Association of American Medical Colleges (AAMC), wrote that medical schools and their parent universities must confront "societal demands that they become engines of economic development," so that they must "create a precarious equipoise between the world and values of commerce and those of traditional public service." Furthermore, the government and the public, " impatient for new medicinal products, disease preventions, and cures," "fail to understand or too easily forget that in our capitalistic economy the pathway by which research invention becomes beneficial application is often totally dependent on venture capital, the availability of which commonly demands the active participation of the academic inventors in the commercial venture; put simply, no participation, no money. It is this demand, more than any other cause, that has driven the dramatic increase in medical faculty entrepreneurship." [Korn D. Conflicts of interest in biomedical research. JAMA 2000; 284: 2234-7. Link here.] Thus, nine years ago, Dr Korn, and the AAMC seemed to have acquiesced to a radical restructuring of the academic medical mission to put entrepreneurship, and the development and marketing of commercial products ahead of teaching, research and patient care.

This fundamental change of the focus on academic medicine seems to have been accepted, if not embraced by other academic leaders, like Dr Katehi. It does seem to correlate with some notable changes in how academic medical leaders think and act: devaluing the education mission and demanding that faculty put a priority on bringing in money (see post here); , forming their own, often highly lucrative financial relationships with health care corporations (see post here); acquiescing to faculty becoming "key opinion leaders" and thus supporting marketing of drugs and devices (see post here and this link); allowing continuing medical education to serve marketing purposes (see link here); allowing drug and device company sponsors of clinical research to suppress and manipulate the research (see link here and here); etc, etc. Thus it seems to underlie many of the most dysfunctional aspects of our current health care system.

I find it hard to believe that the public really would want existing respected academic institutions to be turned into biotechnology companies, without any plans to replace their academic roles, and that it wanted faculty members to turn into product developers and salespeople. (Yes, there may be good reason for faculty who do basic science, but not clinical research to consult for health care corporations, in certain instances. But that is a relatively minor, and somewhat separate point.)

In my humble opinion, one goal of meaningful health care reform would be to refocus academic medicine on its academic mission, and let drug and device companies alone develop and market their products.

Bio-Tech U

The San Francisco Chronicle just reported that a new Chancellor has been nominated for the University of California - San Francisco (UCSF). UCSF is functionally a health sciences university, and its Chancellor functions as its president. The UCSF medical school is generally considered one of the elite US academic medical institutions.

Genentech executive Susan Desmond-Hellmann has been nominated to be the next chancellor of UCSF, making her the first woman or biotech leader ever asked to run the research campus and hospital system that is San Francisco's second-largest employer.

Desmond-Hellmann has served most recently as president of drug development at Genentech, the South San Francisco biotech firm that was recently acquired by Swiss drugmaker Roche. She was trained as a physician, did her internship at UCSF and has taught there recently as an adjunct associate professor while working at Genentech.

Although prior UCSF chancellors have come from more academic or scientific backgrounds, [Dr Holly] Smith said Desmond-Hellmann's biotech connections would be an advantage as the university tries to translate scientific discoveries into medical treatments.

Dr Desmond-Hellmann is, in my humble opinion, a very unusual candidate to be Chancellor of one of the country's premier academic medical institutions. According to her official Genentech bio (taken off the Genentech server, but transiently available in the Google cache here), and a biography in Nature Drug Discovery, Dr Desmond-Hellmann, after getting both an MD and an MPH, spent two years doing AIDS research in Uganda as a UCSF junior faculty member, and then spent a few years in private practice hematology-oncology. She published few articles (5, according to Medline, last in 1995), and by 1993 went to work in industry, first for Bristol-Myers-Squibb. She started at Genentech in 1995, and worked her way up to her current position, "president, Product Development. In this role, Hellmann is responsible for Genentech's Development, Process Research & Development, Business Development, Product Portfolio Management, Alliance Management and Pipeline Planning Support functions. Hellmann is a member of Genentech's executive committee." Before her nomination to be Chancellor, Dr Desmond-Hellmann was "affiliated" faculty of the Department of Epidemiology and Biostatistics at UCSF, apparently with the rank of adjunct associate professor. In that capacity, she apparently gave a single seminar in 2007, and lectured in the Designing Clinical Research course in 2003.

So, on one hand, Dr Desmond-Hellmann, to be charitable, does not have much of an academic track record, at best approximating that of a very junior medical faculty member. She also certainly has no experience in academic administration. In general, people who lead academic medicine often have substantial track records in academics and in academic administration. So, in some sense, Dr Desmond-Hellmann's appointment seems to based on the theory of the generic manager. That is, the popular notion in the business world managers can manage anything, any organization, with any mission, in any context. Managing in the complex health care context, especially managing large, complex academic medical institutions, may not be easy for those used to managing elsewhere, even in the health care corporate world.

Furthermore, the complex mission of academic medicine, which includes providing excellent care of individual patients, while discovering and disseminating the truth in a spirit of free enquiry, is very different from the mission of a for-profit biotechnology company. How well someone used to the bottom-line mentality of the corporate world would uphold the academic mission is not clear.

Dr Desmond-Hellmann came from a company known for charging very high prices for the drugs it marketed, and Dr Desmond-Hellmann was on record personally defending this practice. Quoting from a news article in the Journal of the National Cancer Institute [McNeil C. Sticker shock sharpens focus on biologics. JNCI 2007; 99: 910-914.]

Never mind their novel targets and mechanisms. It's the cost of new biologic agents that's creating a buzz these days. At thousands of dollars a month, which can mean many tens of thousands for some regimens, sticker shock has generated recent, prominent articles in both the national and trade press.

On one level, the argument is about macroeconomics. Neal Meropol, M.D., of Fox Chase Cancer Center in Philadelphia, pointed out that cancer drugs account for 40% of all Medicare drug expenditures. That makes them a major contributor to the country's high health care costs, now about 17% of our gross domestic product (GDP) and growing. That percentage is much higher than in other developed countries with higher life expectancies, he said at a forum on cancer care costs at the American Association of Cancer Research annual meeting.

On the other side of the macroeconomic debate, experts point out that the U.S. has a high GDP to begin with and so can afford to spend more on health. And cancer biologics, though among the most costly drugs, are still only a tiny fraction of total GDP, said Genentech's Susan Desmond-Hellmann, president for product development, at AACR.

Hellmann and others argue that with these drugs’ potential to alleviate the huge societal burden of cancer, biologics are worth the cost.

The industry has responded to concerns about costs by putting more resources into patient assistance programs. When Genentech received U.S. Food and Drug Administration approval for bevacizumab in lung cancer last October, it also announced a cap on expenditures for the drug for patients with family incomes less than $100,000 a year. In 2005, the median household income was $46,326.

Originally announced as $55,000, the cap actually doesn't kick in until after a patient has received 10,000 mg. At the wholesale acquisition cost, 10,000 mg is about $55,000, said Genentech spokesperson Edward Lang.

What the companies have not done so far is reduce prices. The reason, industry representatives say, is the need to recoup massive research and development costs, including high manufacturing costs for biologics. These costs have long kept biotech companies from making much of a profit overall, Hellmann said. She noted that profit levels of publicly held biotech firms have "hovered close to zero" throughout the life of the industry.

But, while Dr Desmond-Hellmann was defending pricing drugs that at more than $55,000 a year, and complaining about low industry profits, she was pocketing lavish rewards. According to Genentech's 2008 proxy statement, (the last available, since the company has been bought out by Roche), her total compensation was $8,361,348 in 2007 and $7,820,142 in 2006. In 2007, her total compensation was equal to 0.3% of the firm's total net income, and the top five company executives' total compensation was equal to about 1.5% of the firm's total revenues. In 2007, the firm's stock price declined from 91.30 on 6 January 2007 to 66.38 on 4 January, 2008, or 27%, according to Google Finance. In 2007, she held 1,616,383 shares of stock, or stock options exercisable within 60 days of January 31, 2008. In 2007 she exercised 170,000 stock options, realizing $11,556,663. So perhaps those high drug prices were needed not only to pay for research, but to make top executives, including Dr Desmond-Hellmann, very rich.

This raises further questions about her inclination to uphold the university's mission in the future.

University of California, San Francisco is a leading university dedicated to defining health worldwide through advanced biomedical research, graduate-level education in the life sciences and health professions, and excellence in patient care.

In any case, hiring a lavishly compensated top executive from a biotech firm known for its high drug prices to run a public health sciences university does considerably blur the line between academic medicine and the health care industry. In the Chronicle article, Dr Desmond-Hellmann declared, "I began my career at UCSF and my heart has never left it." If she does become Chancellor, let us hope that her heart will speak louder than all those millions she used to make by, among other means, charging more than $55,000 a year for bevacizumab.

Amidst Budget Woes, University Leaders Rake In More Cash

Two stories recently appeared about the incentives given to top academic leaders.

First, from the San Francisco Chronicle, about the University of California system (which includes several medical schools and other health care related academic institutions):

UC Berkeley officials have acknowledged misleading the public in the controversial case of a high-paid executive aide who left her job at the university's headquarters and the next day began a new job on the Cal campus - qualifying for a $100,202 severance check along the way.

In November, when the severance payment became public, The Chronicle asked for an explanation of how Linda Morris Williams could get a buyout for leaving her $200,400-a-year headquarters job in Oakland and starting her new job paying the same salary in the office of UC Berkeley Chancellor Robert Birgeneau.

Williams and UC Berkeley spokesman Dan Mogulof released a statement suggesting that the Berkeley job opportunity had developed coincidentally after she had applied for the buyout.

'At the time of my Voluntary Separation Program application, the associate chancellor position on the Berkeley campus was not open and therefore played no role whatsoever in my decision making,' Williams said at the time.

In their latest statement, Williams and Mogulof apologized 'for our initial statement that unintentionally created an impression' that Williams was unaware of the possibility of future employment at the Berkeley campus.

'We sacrificed clarity and detail for the sake of brevity,' Mogulof said in an interview. 'We had no reason to be intentionally misleading.'

A review of documents and e-mails obtained under the state Public Records Act showed Williams was well aware of the UC Berkeley job when she filed for the buyout on Jan. 22, 2008 - including talks with Birgeneau.

E-mails show she had been virtually assured by Birgeneau's close aides that the job was hers and was even placed on a UC Berkeley organizational chart five days before she applied for the buyout.

This is not the first time Ms Williams has had some adverse publicity.

She had previously come to the public's attention during the university's salary scandal in 2006 after Dynes waived some rules and gave her some benefits, including a $44,000 relocation allowance and a low-interest $832,500 home loan, for which she was not otherwise entitled.

Her new responsibilities are beyond ironic:

In her new position at Berkeley, Williams oversees whistle-blower complaints and public records requests, along with crisis management duties as associate chancellor - government, community and campus liaison.

That should certainly encourage people at the University of California who might consider blowing the whistle on bad management.

Note that the University of California system is currently facing budget cuts due to the state's budget crisis. That did not seem to induce any sense of shame that a top administrator could take a generous severance package for "early retirement," then immediately sign on for another leadership position within the same university system.

Our second story is from the Miami Herald, about Florida International University, whose new medical school will be enrolling its first class this year:

At a time when Florida International University is hiking tuition, capping enrollment, cutting academic programs and eliminating jobs, outgoing President Modesto 'Mitch' Maidique negotiated new contract terms for himself and rewarded his two top executives with six-figure retention packages.

Under the contract revisions, ratified last year by the board of trustees, Maidique will receive the same base salary he currently earns as president -- $478,000 -- through 2015.

The $2.8 million, six-year package allows Maidique to take a one-year paid sabbatical before he becomes the highest-paid professor of management in the business school and head of an FIU leadership center.

In the four months before he formally announced his intended retirement in November, Maidique also altered the contracts of Chief Financial Officer Vivian Sanchez and Provost Ronald Berkman.

Records show:

• If Maidique's successor chooses to replace Sanchez, she would be entitled to another position at FIU at her current $334,090 salary through June 2012. The three-year package could be worth more than $1 million.

• If a new FIU president brings in a different provost, Berkman would receive a one-year paid sabbatical at his current salary of $334,560.

Note that Sanchez's responsibilities included "a leading role in planning for the new medical school...."

The article said Maidique "will have to relinquish his university housing, care, expense account and performance bonuses...."

Sanchez had no apology for severance package, and seemed unfazed as to how it would look at a university coping with budget cuts and lay-offs:

In an interview, Sanchez said she could easily return to higher-paying jobs in the private sector but is committed to the long-term success of FIU.

'I bust my a-- for this university," she said.

On the other hand, Leslie Frazier, new president of the faculty union, noted:

Morale at FIU is pretty low - with faculty and students - after the cuts we went through last spring. People are very concerned for their jobs and the future of the university.

Having read a bit about the global financial collapse, I noted a similarity in the thinking of Ms Sanchez at FIU and top earners in the finance sector. Consider a statement in this op-ed in the New York Times,

Without those bonuses, firms simply couldn’t attract the best and brightest and certainly couldn’t get 100-hour work weeks out of them. And when profit is created through ingenuity and hard work, it deserves to be rewarded handsomely — that is the American way.

Of course, once upon a time, people thought some of the best and brightest went to medical school, and many worked 100+ hours a week as house staff, but their hourly pay was more like minimum wage. There are many people who work very hard in all sorts of jobs, but very few get within orders of magnitude of what our fearless leaders make.

I believe both the stories above reflect the sense of entitlement that has spread from Wall Street hot shots to many people in leadership positions of large organizations, now including those to whom academic medical institutions report. Their notion seems to be that they are so special, they deserve far more than those people in the cheap seats get. As a society, we have promoted the notion that when someone is hired as an executive, rather than as a doctor, lawyer, university professor, or practically anything else, one becomes especially entitled.

Leaders' sense of entitlement, of specialness, of not being constrained by the rules lesser people have to obey seems to be at the root of what went wrong with the global financial system, and what is still going wrong with health care.

Did Mrs. Jones receive her off-label failed spinal implant via excellent informatics data, or via a surgeon's visit to a prostitute?

In a story that leaves me at a loss for what has become of medical ethics, I read that Medtronic stands accused of, among other marketing tactics, inducing surgeons to use its spinal implant devices via kickbacks and outings to a now-closed Memphis strip club whose owners pleaded guilty to dancers engaging in acts of prostitution.

Apparently the devices were being used extensively for off-label uses, resulting in unexpected adverse events, some quite serious in nature.

I could not have made up this rather sordid story if I tried:

Wall Street Journal
Sept. 25, 2008

Lawsuit Says Medtronic Gave Doctors Array of Perks

(subscription required)

A lawsuit brought by a former Medtronic Inc. lawyer alleges the big medical-device maker gave surgeons a variety of incentives to use its products, including regular entertainment at a Memphis strip club, trips to Alaska and patent royalties on inventions they played no part in. The previously undisclosed allegations involve Medtronic's spinal-devices unit, which has $3 billion in annual revenue. The unit's business relationships with doctors who use its spinal-repair implants are being investigated by Sen. Charles Grassley and have been the focus of lawsuits by other former employees.

Sen. Grassley has been looking into whether inducements for doctors, like those alleged in the lawyer's suit, have led to what surgeons say is widespread off-label use of Medtronic spine products.

... Ms Kelley's [whistleblower Ami P. Kelley, a former senior legal counsel for the spine unit] lawsuit says kickbacks were "pervasive" and "the culture and way of doing business" at Medtronic. Sales staff, she said, "routinely took physicians" visiting the spine unit's Memphis headquarters to the Platinum Plus strip club, and picked up the tab for the dancers' services during "VIP visits." In 2007, Platinum Plus's owner pleaded guilty to charges related to dancers engaging in acts of prostitution, and the club has closed.

Ms. Kelley's lawsuit sought to recoup damages for the federal government, which prohibits companies from giving doctors inducements to use products covered by Medicare or Medicaid.

Her lawsuit and a separate one that also accused the spine unit of paying illegal kickbacks to doctors were the basis for a $40 million settlement deal between Medtronic and the government in 2006, according to the settlement document.

"VIP Strip Club" visits for orthopedic surgeons and neurosurgeons? I'm certain that only the most advanced scientific discussions between company and client occurred at such venues.

My questions are:

• Why would any physician allow themself to be taken by a vendor to a strip club? This is a questionable and unprofessional activity on its face, but in the context of vendor marketing to surgeons (presumably male), it is even more appalling. I personally would have rejected such an invitation out of hand as being sleazy and tawdry by its nature.
• Was there a genuine data-driven attempt to evaluate the off-label uses?
• What datasets were being collected by the company and the surgeons to support non-FDA-approved uses of the spinal implant devices?
  
• Who designed those datasets?

Not to mention:

• Did the wives and families of the surgeons know where their husbands and fathers were being taken on their "business trips to Medtronic?"
  

The names of the involved physicians are currently a closely-guarded secret:

The former Medtronic lawyer's allegations are contained in a 2002 suit filed in U.S. District Court in Memphis against Minneapolis-based Medtronic and 10 doctors. The lawsuit and other filings in the case remain sealed, except for a heavily redacted copy of the complaint, which contains none of the doctors' names nor specifics of the allegations.

Medtronic has refused repeated requests from the Senate Finance Committee's staff for an unredacted version. Sen. Grassley, an Iowa Republican, is the panel's ranking minority member.

... The Kelley lawsuit names several top spinal surgeons among the 10 doctor defendants and lists several others as receiving inducements.

The complaint clearly comes from the typical "disgruntled employee":

Ms. Kelley, who now works at another company, alleges she was dismissed by Medtronic after challenging improper payments.

One surgeon's name was apparently made available to the WSJ:

The suit says surgeon Jeffrey Wang, now director of the University of California at Los Angeles's Comprehensive Spine Center, "liked to be taken" to Platinum Plus and emailed Medtronic sales official Brad Hancock saying he was "looking forward to going" to the club with him.

Of course, UCLA has an air-tight explanation for this:

A UCLA spokeswoman said Dr. Wang, who isn't named as a defendant in the suit, "denies ever being entertained by Medtronic at the Platinum club" and doesn't recall sending any such email. If he did send it, she said, "it would have been done so in jest."

In jest? They mean to say, a top surgeon who claims he never went to the club, doesn't recall sending the email --- but if he did actually send it and simply forgot (meaning he would have known a vendor takes doctors on "VIP visits" to strip clubs / houses of prostitution but refused to go himself) then it was just a joke?

On the MedInformaticsMD scale of credibility, that rates about a 0.3 out of 10. It's not even good spin.

All is better now:

Medtronic declined to comment on the lawsuit's allegations. It said it has changed many business practices since the suit was filed, and is "committed to reform and transparency in the industry."

How reassuring.

Actually, not, considering the posts about Medtronic's practices on this blog here, here, here and here, among others.

Also not reassuring was the simplest Google news search on "spinal implant problem medtronic" which returns items like this:

Medtronic Will Settle Accusations on Kickbacks
New York Times - Jul 19, 2006
Medtronic was the subject of two lawsuits filed in Federal District Court in Memphis by whistle-blowers on the actions of its spinal-implant division, ...
All 14 related - Related web pages

Medtronic to settle with doctor over spinal implant invention.
Free with registration - Saint Paul Pioneer Press - AccessMyLibrary.com - Apr 23, 2005
Spinal implant devices are part of a division that accounted for 20 percent of Medtronic's $9.09 billion in total sales last year. In 1999, Medtronic paid ...
Medtronic to Pay $1.35 Bln to End Spinal Doctor... - Bloomberg
Medtronic to buy spine patents, ends legal battle - USA Today
Forbes - San Diego Union Tribune - All 22 related - Related web pages

Medtronic Sofamor Danek's Patent Infringement Lawsuit Begins.
Free with registration - Commercial Appeal - AccessMyLibrary.com - Jun 4, 2004
Medtronic Sofamor Danek and Dr. Gary Michelson are disputing patent rights over the Los Angeles surgeon's inventions in spinal implants, instruments and ...
All 2 related - Related web pages

Medtronic Must Pay Inventor $109 Million, Jury Says (Update3)
Bloomberg - Sep 28, 2004
28 (Bloomberg) -- A US jury told Medtronic Inc., the world's biggest maker of spinal implants, to pay at least $109 million to an inventor for violating ...
Medtronic Must Pay Inventor $109 Million, Jury... - Bloomberg
Memphis, Tenn., jury awards surgeon $110 million... - Commercial Appeal - AccessMyLibrary.com (Free with registration)
All 12 related - Related web pages

Medtronic Must Pay Surgeon $400 Mln Punitive Damages (Update2)
Bloomberg - Oct 12, 2004
Minneapolis-based Medtronic doesn't break out sales of spinal implants. The unit that includes spinal products, as well as ear-nose-and-throat devices, ...
Medtronic ordered to pay $400 million to Los... - Saint Paul Pioneer Press - AccessMyLibrary.com (Free with registration)
$400 Million Judgment Against Medtronic - New York Times
Los Angeles Times - Star Tribune - All 11 related - Related web pages

I'm not even going to attempt to dig any deeper. I fear I may lose my breakfast as a result.

However, hopefully Sen. Grassley and his staff will dig deeper.

A lot deeper.

It's hard for Medical Informaticists and others to help usher in an era of data-driven healthcare when we are competing with strippers and prostitutes for the affection of our surgeons.

-- SS

Addendum:

I am increasingly coming to believe the executive resistance I faced to development of an advanced, very fine-grained, still-used Invasive Cardiology Clinical Database (ICCD) at a major heart center in Delaware late last decade was not based on scientific issues.

This information system could show whether a new device or treatment was effective or not in short order, affecting valuable orders for devices. In fact, in its first year it saved almost $1 million in expense through just that means.

Interestingly, the resistance was from administration and IT, not the doctors, who were the true cheerleaders of the system. Reading the increasingly common stories about the way business is conducted by such companies, I do wonder if cardiac device companies could have been in bed with administration in some way.

Additional addendum 9/28/08:

UC leadership is certainly aware of this issue as well as this posting, after reading it via a Google search on the terms "Medtronic" and "stripper." From the HCRenewal tracking logs:

Domain Name: ucsf.edu ? (Educational)
IP Address: 169.230.242.# (University of California San Francisco)
ISP: University of California, Office of the President
Operating System: Macintosh MacOSX
Browser: Firefox
Time of Visit: Sep 28 2008 6:35:33 pm
Last Page View: Sep 28 2008 6:35:33 pm
Referring URL: http://www.google.co...r&btnG=Google Search
Search Engine: google.com
Search Words: medtronic stripper
Visit Entry Page: http://hcrenewal.blo...eive-her-failed.html
Visit Exit Page: http://hcrenewal.blo...eive-her-failed.html

Strawmen, Red Herrings, and Liver Transplants for Yakuza

We recently posted about the strange case of four Japanese men, allegedly affiliated with Yakuza criminal organizations, who received liver transplants from the UCLA Medical Center, apparently with some alacrity. All likely paid full list prices for their procedures, and two later donated $100,000 each to the medical center. The case raised concerns by several notables (including Senator Charles Grassley, and Professor Arthur Caplan) about the integrity of the transplant system. Presumably these concerns were based on suspicions that the four may have received a higher priority than others on the list. More concerns should have been raised after it was revealed that shadowy characters threatened a reporter who started to investigate the case in Japan, and the reporter's family (see post here).

So I read with interest an op-ed on the case written by Dr Gerald S Levey, Vice Chancellor of Medical Sciences and Dean of the David Geffen School of Medicine at UCLA. He sought to address several points.

Troubling questions have been raised by reporting in the Los Angeles Times about whether doctors should consider the moral character or criminal history of patients before saving their lives with an organ transplant. Concerns also have been raised about whether a hospital should accept financial donations from grateful organ recipients, regardless of their backgrounds, and whether foreigners should be able to receive transplants in the U.S.

Dr Levey rebutted those who suggested that transplants should only go to those of good character:

Do we want to force caregivers to make a life-or-death decision based on whether a patient is a 'good' or bad' person?

In addition to medical considerations, UNOS guidelines require some 'nonmedical' judgments, such as whether patient behaviors are likely to result in failure of the new organ, or how well doctors think a transplant candidate would adhere to post-surgery protocols. Teams of physicians, nurses, clinical social workers and other experts make these judgments.

The need to apply these 'nonmedical' criteria relates solely to the future viability of the transplanted organ, not to the intrinsic worthiness of the recipient as a human being. No physician should be making that judgment; to do so would be to impose a death sentence on some patients, and, besides, matters of punishment are best left to the justice system.

The UNOS Ethics Committee states: 'Punitive attitudes that completely exclude those convicted of crimes from receiving medical treatment, including an organ transplant, are not ethically legitimate.' Moreover, doctors are ethically bound by the Hippocratic Oath: 'Most especially must I tread with care in matters of life and death. ... Above all, I must not play at God.'

Regarding financial donations, Dr Levey wrote:

As for the role financial donations, or the promise of them, might play in a patient receiving an organ, the strict rules governing transplant lists as well as periodic audits all but eliminate any possibility of manipulating the process. That said, there is nothing unusual or improper about patients or their families donating money following transplant surgery.

Finally, Dr Levey wrote this about recipients from other countries:

Regarding recipients from other countries, UNOS allows noncitizens to receive U.S. transplants not only for humanitarian reasons but because they are part of the donor pool -- in Southern California, about 20% of donors are foreign-born -- and excluding them might reduce the number of donors. The guidelines call for roughly 95% of all organs to go to Americans, and UCLA Medical Center has abided by this rule.

What I find troubling about this op-ed, written by an experienced physician who is one of the top leaders of UCLA Medical Center, is that it seems to side-step all the important issues. Instead, it deployed a series of straw man arguments and red herrings.

The most conspicuous straw man is the notion that UCLA is under attack by people who believe their should be a moral test for receiving any medical care, or that criminals should not receive any medical care. I haven't seen any suggestions that the major problem in this case was that criminals received medical treatment, per se. Instead, the concern seemed to be that people who could pay list prices, and were likely to give further donations to the institution on top of those payments, might have received higher priority for transplantation of scarce organs, despite their criminal ties.

Furthermore, the issue of moral worthiness for treatment gets a bit more complicated in the case of organ transplants, which require use of a scarce resource, a donated organ, that if given to one patient does not go to another. As Dr Levey pointed out, physicians must consider whether "patient behaviors are likely to result in the failure of the new organ." Certain kinds of behaviors common among members of organized crime might affect the likelihood of such failure. Some such behaviors may also appear to be immoral.

Leaving aside such complexities for the moment, Dr Levey never directly addressed the issue of whether criminals who paid list price, and also in some cases, made additional donations, might have been given a higher priority than ordinary patients whose insurance companies would have paid less, and were not wealthy enough to make additional donations.

He also failed to affirm that the four transplant recipients in question received transplants in strict accordance with their medical conditions and their resultant position on the priority list. Instead, he described how the process is supposed to work:

Under the guidelines, the liver transplant system is based primarily on disease severity. Patients are placed on a list, and UNOS prioritizes them according to need. As livers become available, organ procurement agencies match them to those at the top of the list, based on such factors as travel time, blood type of organ and patient and the quality of the organ.

But the decision as to whether a particular organ is best for a given patient must be made by the patient's physician. If the physician decides it can't be used for the patient designated by UNOS, the organ goes to the next person on the UNOS list, who may be waiting for the procedure at another hospital.

This appears to be something of a red herring. Nobody was arguing that the current transplant prioritization process is likely to give priority to patients who pay full list price, and are likely to make additional donations, even if they have a criminal background in another country. The questions were whether the process worked the way it should have in this case, whether it has loopholes, and whether some breakdown of the process facilitated these particular transplants. Dr Levey did not address these questions.

Dr Levey employed two other sets of straw men and red herrings.

Raising concerns about whether financial donations per se affected the patients' priority for transplants was another straw man argument. I don't believe anyone was arguing that hospitals should not accept donations from grateful patients. This was coupled to another red herring. Dr Levey reiterated that rigorous procedures "all but eliminate any possibility of manipulating the process." The issue was not about the the probability of manipulation. It was about whether manipulation occurred in this case.

Raising concerns about whether foreigners should get transplants was a final straw man argument. I don't believe anyone was arguing that patients should be denied transplants because they came from outside the US. Furthermore, Dr Levey's response, focused on foreign-born donors, was another. Maybe he should have cited statistics about how many donors were initially banned from entering the US due to alleged criminal activity, and only allowed on because of promises to reveal information about gang activity in this country.

In my humble opinion, the case of the Yakuza liver transplants raises some real questions about whether the process of allocating transplants miscarried in these specific circumstances. It is disappointing that a top official of the involved medical school chose to to avoid this issue when discussing the case. Furthermore, it is more disappointing that he did not condemn any threats that may have been meant to discourage reporting of the health care provided by his institution, and to offer some support for anyone who might have received such threats. Doing so would have given his declaration that his institution needs "to be accountable to the public" a bit more weight.