"Living High Life on Money to Treat the Poor"

Here is another story that has developed over the last week about questionable goings on at a not-for-profit health care organization.  The organization in question this time was the not-for-profit, but state government supported Medicaid managed care organization/ health insurer for the Louisville, Kentucky region.  The details came from a Louisville (Kentucky) Courier-Journal article about a state auditor's report on the Passport Health Plan:

The organization providing Medicaid services in Jefferson and surrounding counties has spent lavishly on such things as travel, meals, salaries, bonuses and lobbying in recent years, the state auditor’s office said in a report released Tuesday.

The scathing report, which Gov. Steve Beshear described as 'disheartening,' said two Passport Health Plan officials — Executive Vice President Shannon Turner and Associate Vice President Nici Gaines — were paid well, ate well and traveled extensively.

'Lodgings were often luxury spas and resorts,' the report said. 'The executives used limousine services and dined at expensive restaurants. While these types of expenditures may be routine for many private, for-profit companies, they should not be typical in nonprofit, health care organizations.'

The report also said Passport made extraordinary efforts to burnish its public image and gain political support by spending $1 million since 2007 on lobbying and public relations, as well as $423,000 in donations and sponsorships.

Many of the donations had no connection with health care, the report said — including $600 to sponsor a reception for the Senate Republican majority in 2009, $10,000 to sponsor an 'inflatable character' for the Kentucky Derby Festival's Pegasus Parade, and contributions to the Boy Scouts, Kentucky Opera, Volunteers of America and others.

Here are some more specifics about amounts spent:

Travel: Passport spent $106,722 on more than 36 trips including trips to conferences at resorts in New Orleans, Key West, Las Vegas, Seattle, Philadelphia, Tucson, Washington and Coeur d'Alene, Idaho.
Meals: Spent $72,994 on 753 meals for groups large and small. These were mostly at Louisville restaurants but included tabs at some famous restaurants outside Kentucky, such as Emeril's and Commander's Palace in New Orleans.
Limo services: Five uses of limos totaling $3,996.
Lobbying and public relations: Spent $1 million.
Donations and sponsorships: Spent $423,000, some with no connection to health care, including $10,000 to be an “Inflatable Character Sponsor” for the Kentucky Derby Festival.
Gifts: Spent $9,311 for 95 gifts, which included flowers and Christmas gifts.
Salaries: Paid salary and bonuses of $303,750 to Executive Vice President Shannon Turner and $156, 000 to Associate Vice President Nici Gaines in most recent year.

Here are more specifics about conflicts of interest:

Conflicts of interest: Both Turner and Gaines received additional compensation in contracts with subcontractor they were overseeing, AmeriHealth Mercy. Also, Larry Cook, Passport's chairman and CEO, had divided loyalties because he serves as an executive vice president of U of L. He also was reimbursed $1,717 by AmeriHealth for expenses for a trip to Ireland in 2007.
Grants: Many grants were made by Passport to groups with ties to staff and/or board members

The organization also was charged with distributing additional funds to area health providers based on their initial investment in the not-for-profit managed care organization, but not on the amount of care they were providing to Medicaid patients:

[State Senator Tim] Shaughnessy was particularly concerned about distributions of $10 million in excess funds in late 2008 and again in and 2009 to the large Jefferson County health-care providers that formed Passport.

These distributions were reported to the Kentucky Department of Insurance as grants to cover indigent care costs incurred by Passport's provider partners — University Medical Center, University Physician Associates, Norton Healthcare, Jewish Hospital and St. Mary's Healthcare, and the Louisville/Jefferson County Primary Care Association.

But the auditor’s report said the money was distributed based on the percentage of the providers' initial investments to create Passport — not the amount of indigent care they provided. And the report said this money was placed in the general funds of these providers 'rather than specifically set aside for uncompensated indigent care.'

Finally, it appears that Passport tried to block disclosure of important information, including the compensation of its executives, even though it is a not-for-profit organization entirely funded by the government:

Early this year The Courier-Journal filed a request under the state open records law seeking Passport records on compensation of its executives and minutes of its board meetings. But Passport refused to release them, claiming that the law did not apply.

The attorney general's office disagreed, saying that Passport is 100 percent publicly funded and must release the records. But Passport again refused and took the matter to Jefferson Circuit Court, where it is pending.

So again we have the same tiresome features of leaders who apparently regard their organization as their own personal sandbox: lavish compensation, given the context, luxuries supplied the leadership out of organizational funds, conflicts of interest that apparently increased further the leaders' personal gains, and attempts to keep the whole thing secret. As a Lexington (Kentucky) Herald-Leader editorial ("Living High Life on Money to Treat the Poor") noted, given the mission of the organization, this sort of sleaze is particularly unfortunate:

In one way, though, Passport's profligacy deserves special condemnation. Every dollar Passport executives spent on their own pleasurable pursuits, on lobbying to insure tax money kept flowing their way, on buying goodwill in the Louisville area or on any other unnecessary expense was a dollar taken away from providing Medicaid services to the most vulnerable, needy members of society.

This case resembles one we discussed previously, that of the non-profit community health agency in Florida whose leaders again seemed to regard their job as an opportunity for personal enrichment.  It seems that even leaders of non-profit organizations whose mission is to help the needy may seem to put their own needs before those of their disadvantaged constituents.  Of course, given they may have seen leaders of not-for-profit universities and hospital systems making millions, and leaders of for-profit pharmaceutical, device, and especially managed care organizations/ health insurers making tens of millions, and conclude that their six-figure salaries and occasional luxuries were barely adequate compensation.

As we have noted before, the "executives take all" mentality of an era economically dominated by financiers as aristocrats seems to have infected health care.  Somehow we have to restore the idea that executives and managers  like doctors and nurses, should regard their work as calling meant to put the needs of patients and public health first, rather than a quick way to get rich. 

A University President on Commission

The Miami Herald reported on the latest thing in executive compensation for leaders of academia (and academic medicine):

Florida State University's new president will have a larger salary than his predecessor, T.K. Wetherell, and stands to make even more in bonuses as a reward for big-time fundraising.

FSU trustees chairman Jim Smith confirmed Monday that Eric Barron has signed a contract that includes a base salary of $395,000 a year in state and private dollars, plus the chance to earn annual bonuses of $100,000 for every $100 million in private donations raised. He'll also get free housing and a car, Smith said, as well as a retention bonus of $200,000 after a few years.

Housing and car allowances have become standard fare for university president contracts, and in recent years Florida's university presidents have ranked among the top in the country for salary and compensation packages. But the bonus provision in Barron's five-year contract is a signal that the trustees want to see FSU's $447-million endowment grow by $1 billion over the next five years.

'We said $1 billion in five years, and we're serious about that,' Smith said Monday. FSU's trustees gave him the authority to negotiate with Barron, 58, and sign a contract.

Note that Florida State University is the parent institution for the Florida State University College of Medicine.

We have all heard jokes that university presidents now need to spend more time fund raising than doing anything else. Also, we have all heard the phase "no margin, no mission" too many times. However, in this case, the search for margin seems to have completely trumped the mission. As the article implied, I have not previously heard of a university president who gets bonuses only according to how much money he or she raises. I also have not previously heard of such bonuses being based simply on a percentage of the money raised. Thus effectively, the new president is being paid on commission, the commissions being based purely on fund-raising.

The problems are obvious.  First, structuring a bonus so that it is only a function of fund-raising raises fund-raising above upholding the university's mission.  Yet the board of the university has a duty of obedience, which  "requires board members to be faithful to the organization's mission. They are not permitted to act in a way that is inconsistent with the central goals of the organization."  Making the university president's bonus solely dependent on the dollar amount of funds raised would seem to violate that duty.

Second, structuring a bonus so that it is only a function of fund-raising suggests that where or how the funds are raised is no longer important.  Fund-raising done wrong can lead to conflicts of interest, obligations to unsavory people, or other ethical or legal issues.  Yet the proposed bonus would apparently be paid according to the amount paid, no matter what.

Perhaps in this era of "greed is good," such a brutal reminder that academics are now expected to care more about revenue that teaching and research should not be a surprise.  But if the only incentive the university president has is fund-raising, what sort of academic institution do we expect will result?

Non-Profit Health Care Organization Executives: Pay Them Millions or Lose Them?

CareSource is a US not-for-profit managed care organization for Medicaid patients.  This week, the Dayton (Ohio) Daily News ran an investigative series on its leadership and governance which may provide a larger lesson on the disconnect between the high ideals and high costs of the dysfunctional US health care system. 

The main issue uncovered by the investigation was CareSource's generosity to its CEO.  As reported in "CareSource CEO's compensation grew faster than revenues at nonprofit,"

From 2005 to 2008, CareSource more than doubled its total revenues — from $770 million to $1.8 billion.

It’s now the nation’s third largest nonprofit Medicaid HMO.

But CareSource’s phenomenal revenue growth was no match for the increase in total compensation for Chief Executive Pamela Morris, whose pay more than tripled — from $877,000 in 2005 to $2.9 million in 2008, according to IRS filings.

Did Pay Buy Performance?

Not only did the CEO's pay grow much faster than the organization she lead, it also seemed disproportionate to what ratings of the organization's performance are available.

In America’s Best Health Plans for 2009-2010 — a survey conducted by U.S. News & World Report and the National Committee for Quality Assurance (NCQA) — CareSource ranked 72nd in patient satisfaction and quality of care among 82 HMOs participating in the study. It was the lowest ranking among the four participating Ohio Medicaid plans.

"We Don't Want to Lose Her"

The chair of the organization's Board of Directors claimed that such pay was necessary to secure the CEO's loyalty, per the Daily News,

Ellen Leffak, chairwoman of the CareSource board, said a separate committee of the board sets the top executive salaries with the help of a consultant. The committee monitors what is being paid at both for-profit and non-profit competitors.

Leffak said Morris is worth her multimillion-dollar compensation.

'We don’t want to lose her' to another HMO, Leffak said. 'She has provided outstanding service to the organization and we think she should be adequately compensated.'

The implication, which perhaps Ms Leffak did not mean to openly convey, was that Ms Morris' dedication to the organization and its not-for-profit mission were less important than her desire for a multi-million dollar paycheck.  (Parenthetically, Ms Leffak also failed to specify how Ms Morris' service was determined to be "outstanding,")

Furthermore, The Daily News also reported:

CareSource officials say Morris’ pay hike, which included a $1.2 million incentive payout in 2008 from her supplemental retirement plan, is in line with salaries paid top executives with similar experience at its for-profit competitors. Morris is 61 and has been with CareSource for 24 years.

The newspaper provided a table of CEO compensation at such for-profit competitors. The best-paid CEO in the table was Heath G Schiesser of Wellcare Health Plans, who received $8,077,718. The article did not mention that not onlyh is Wellcare for profit, but it claims to be a "nation-wide" operation.  It also did not mention that in August, 2009, Wellcare paid a fine for findings, which it did not contest, that it paid political contributions in Florida that violated state law (see post here).  Also, in May, 2009 we posted about WellCare's submission to a deferred prosecution agreemeent based on charges that it defrauded state programs by inflating its expenses. In 2007, we posted about how the state of Connecticut stopped WellCare from running a plan for poor children after the company refused to reveal what it was paying physicians, and why it was failing to pay for particular services. So WellCare has paid three penalties for three different kinds of unethical behavior in the last two years.

To be clear, it was the newspaper that stated Wellcare ought to be a standard of comparison, not Ms Leffak, Ms Morrison, or any CareSource official.  However, the choice of comparison further suggests how money may trump mission.

Competing Against Stock Options
Meanwhile, the Dayton Daily News published another article ("Critics question hospitals' CEO on CareSource board) which suggested that the governance of CareSource may have resonated with the notion that the leadership of not-for-profit health care organizations may be more motivated by money than mission.

Since the HMO’s inception in 1983, Tom Breitenbach, chief executive of Premier Health Partners, has had a hand in shaping CareSource. He continues today on the governing board of its parent, CareSource Management Group Services.

But in recent months, health care officials and providers have raised questions about whether the head of the region’s largest hospital system should sit on the board of the parent organization of the region’s largest source of Medicaid payments.

'How can that not be a conflict of interest?' said Dr. Larry Litscher, a Dayton area urologist. 'They (the CareSource board members) have to determine the reimbursement levels' for hospitals and doctors providing service to CareSource patients. 'How can that not be interpreted as a big advantage for the hospitals?'

But beyond the issue of conflict of interest, last year, the Dayton Daily News reported on Mr Breitenbach's own incentives:

In 2001, as Premier Health Partners Chief Executive Tom Breitenbach neared age 55, he was given an executive investment plan in addition to his supplemental retirement benefits that paid him nearly $9 million from 2002 to 2007. The requirements were that Breitenbach assume the risk of the investment and stay on as head of Premier until age 60.

In 2001, MedAmerica Health Systems Corp., the parent company of Premier Health Partners and six smaller for-profit subsidiaries, found a novel way to help keep Breitenbach at the helm — they invested some of the supplemental retirement benefits he had accrued over 25 years into an executive option plan of mutual funds, in which Breitenbach assumed all risk. Breitenbach cashed out $6.7 million from the plan in 2003, another $660,000 in 2006 and a final payment of $1.5 million in 2007, for a total of $8.9 million, IRS documents show.

Also, according to the MedAmerica Health Systems 2007 Form 990 (available through Guidestar), Mr Breitbach's total compensation was $4,044,915.

Again, the reason to pay so well seemed to be the fear that in the absence of for-profit levels of compensation, executives of not-for-profit organizations would quit to seek higher recompense in the for-profit world.

In setting compensation levels, local hospital officials say they must compete with for-profit enterprises that can offer top executives hefty stock options, country club memberships and other perks that nonprofits can't. 'For-profit or nonprofit, it really has to do with attracting and retaining talent,' said Pete Luongo, who sits on the compensation committee of Kettering Adventist Healthcare, the parent of Kettering Health Network and its six hospitals.

The implication is that not-for-profit health care organizations can and should hire people who care more about the level of compensation offered than the not-for-profit organizations' lofty missions.

In this case, CareSource Says its mission is:

to make a difference in the lives of underserved people by improving their health care.

At CareSource, our mission is one we take to heart. In fact, we call our mission our 'heartbeat.' It is the essence of our company, and our unwavering dedication to it is a hallmark of our success.

Our Vision is to be an innovative leader in the management of quality public-sector health care programs.

Premier Health Partners says its mission is:

We will build healthier communities with others who share our commitment to provide high-quality, cost-competitive health care services.

What cognitive dissonance is created by an organization dedicated to serving the "underserved" and another which espouses "cost-competitive" health care lead by CEOs who can only be retained by making them multi-millionaires. 


Summary and Conclusions
Leaders of not-for-profit organizations, starting with their boards of trustees, are supposed to subscribe to the duty of  obedience, "to be faithful to the organization's mission,"  and the duty of loyalty, " give undivided allegiance when making decisions affecting the organization." Presumably, that can be extended to the requirement that the top hired executives of not-for-profit put the mission ahead of their own personal gain.  Thus, boards of trustees who feel that they can only retain hired CEOs by pay so high that they will not be tempted by offers from for-profit corporations have failed in their duty by hiring CEOs who put their personal financial interests ahead of the mission. 

I believe that the compensation given to CareSource and Premier Health Care CEOs, and the rationale for it, are not anomalies.  There have been many other reports about leaders of not-for-profit health care organizations compensated enough to make them multi-millionaires, justified mainly by the need to provide pay "competitive" with that available from for-profit corporations  (e.g., see posts here and here).  Yet not-for-profit CEOs mercenary enough so that they can only be retained by for-profit levels of pay seem to be exactly the sort of people who should not be running what are supposed to be mission-oriented organizations.  Of course, the problem is only amplified when the same mercenary CEOs sit on each others' boards.

When money becomes the only value for health care leaders, the health care system will cost a lot, but provide neither health nor care.  The only way to improve health care is to give it leadership that values health and caring for it more than money.    

"Organisational Ethics Policies; A Primer"

I regret that it took me so long to find an essay on "Organisational Ethics Policies" by Howard Whitton, available from the European U4 Anti-Corruption Resource Center. While it was written with international non-governmental organisations (NGOs) who "administer aid programs" in mind, it seems applicable to all kinds of NGOs and not-for-profit organizations, including those in health care. In the US, most medical schools and their parent universities, most hospitals and academic medical centers, essentially all medical societies and disease advocacy groups, and some insurance companies and managed care organizations are not-for-profit.

The main points of the paper are its summaries of the basic elements of "effective ethics policies."

First, such a policy

- must first have unequivocal authority and the endorsement of boards and senior management, and must be:
o founded on the organisation’s core values, mandate, and ethical principle
o developed in consultation with those affected by it
o realistically achievable
o written in plain language, coherent with other policies, and easily available
o clearly understood by staff, and by other stakeholders
o consistent with the organisation’s policies on rewards and sanctions
o regularly reviewed and evaluated with all stakeholders
o universally applied, and transparently enforced.

The main content areas might include such "major areas of ethical risk" as:

o financial management and accountability standards
o internal and external audit processes
o professional ethics, conduct, and conflict of interest standards
o fair treatment rules for staff and clients
o processes for the prevention of fraud and other abuse of trust
o integrity mechanisms governing proper decision-making
o provision of transparent information to stakeholders
o complaints and whistleblower disclosure processes
o principled policy dispute processes
o transparent and objective evaluation mechanisms.

So, specific policies should include the following functional elements:

o a code of conduct/ethics based on the organisation’s core values
o professional practice standards interpreting the code’s principles
o procedures for managing conflict of interest situations (including the registration of relevant interests and assets of decision makers)
o procedures for offering and accepting gifts and business courtesies
o criteria for the proper use of organisational assets and authority
o prohibition of harassment and discrimination in the workplace
o criteria for protected reporting of unethical or illegal behaviour
o rights of clients to obtain service, including complaint procedures for failure to meet standards
o obligations for accountability and transparency,and information provision
o standards for dealing with confidential and privileged information
o constraints on ancillary and post-separation employment
o standards for providing reasons for administrative decisions.

Also the policies should include:

• A commitment to training staff in the full range of ethics-related activities. Training will improve personal awareness and strengthen the ability to define and manage improper conduct, whether by co-workers, managers, or external stakeholders.
The range of training themes should include the organisation’s integrity system, specific anticorruption measures, harassment-free workplaces, non-discrimination principles, financial management and audit, integrity in procurement practices, donor relations, personal and institutional conflict of interest, accountability, responsibility, procedural fairness, and strategic problem-solving.

• Policies and procedures for regular management reporting to boards and executives, in particular to enable monitoring of matters which may be of particular concern from time to time.

• Independent, external scrutiny of policies provide an important resource for boards and executives for ensuring that espoused core values and actual behaviours are aligned, and to identify areas of policy and management practice requiring
improvement.

• Policies and procedures for protected reporting of improper conduct, both to enhance worker and stakeholder confidence in the integrity of an organisation, and to provide avenues for early detection of inappropriate behaviour. Genuine
whistleblowing must be effectively endorsed, and effectively protected, to ensure the organisation’s credibility.

• Procedures for the sanctioning of improper conduct and failure to meet relevant standards by staff, structured so as to enhance management’s capacity to deal effectively with ethical issues in the workplace.

Such policies cannot be considered ethical panaceas, but in my humble opinion (and based, I believe, on at least a little cognitive psychology), visible, reasonable, clear ethics policies could reduce the sort of bad behavior that Health Care Renewal often discusses on the part of leaders of major health care not-for-profit organizations and NGOs.

So, those of you who work for or are otherwise affiliated with a not-for-profit university, medical school, hospital, academic medical center, medical organization, disease advocacy organization, or insurance company/ managed care organization might want to go through the exercise of answering these questions:
1 - Does your organization have anything that resembles an ethics policy?
2 - If so, which of the characteristics listed above does it have?
3 - Which of the content areas listed above does it include?
4 - Which of the functional and additional elements listed above does it include?

If much is missing, is there an obvious reason for what was omitted? If the policy seems poorly characterized or incomplete, why should it not be improved? Would you feel comfortable suggesting improvements? If not, why not, and what does that say about the organization?

Bloggers Can Spread the Word, Just Not About the Sponsors' Competitors

The internet, social media, web 2.0 etc have changed how important health care issues are discussed. So, it is not surprising that big health care organizations are trying to use these new media to promote their messages. New media, however, are no more immune from the effects of conflicts of interest than are old media.

An article from corporate communications company Ragan.com about how the American Heart Association (AHA) is using bloggers to get people interested in a heart-healthy diet and exercise program illustrates how even "civilian" bloggers can get caught up in the web of conflicts of interest that pervades health care. The background is:

Keeping track of the conversations on the array of social media networks can gobble up your workday. So why not find someone else to do it for you?

The American Heart Association did just that, approaching four established bloggers with a proposal: Write about our new campaign, Go Red For Women: BetterU, and we’ll link to your blog from our site. BetterU is a 12-week online nutrition and fitness program to improve heart health among women.

The blogs appear to be working. They’ve helped drive traffic to Go Red/BetterU since the program’s June 1 launch.

It did seem that the AHA went to considerable effort to make sure they had recruited just the right bloggers.

The AHA researched potential candidates with the help of agencies Edelman PR and Edelman Digital. After a month-and-a-half, they settled on four bloggers: Joshilyn, Nyasha, Stacey, and Nadia.

The criteria: The bloggers had to be female, have an enthusiastic following, be diverse in age and ethnicity, and have a high Technorati rating. Most important, their content and advertising had to align with the association’s values, says Director of Marketing Anu Gandhi.

'You’re really ultimately picking a spokesperson for Go Red for Women and the larger American Heart Association,' [senior manager for cause communications Megan] Lozito says. 'That’s a really important process for us — that it be correct and that it be the right people. So we spent a lot of time getting to know those ladies and making sure our mission would be aligned.'

More interesting was the values with which the bloggers were supposed to align, particularly those relating to the program's corporate sponsors (see the logos at the bottom right of the BetterU web-site).

From there, the association brought the bloggers to the Dallas headquarters for a full health screening at The Cooper Institute, a photo session, a preview of the BetterU program, and some message training.

Although the BetterU bloggers got some message training in Dallas, Gandhi says AHA has been hands off when it comes to what they can and can’t say about the program.

The bloggers are asked to post once a week about BetterU and follow basic guidelines—no profanity, no defamation, no writing about nor condoning any medications or treatments. She says they also ask bloggers not to talk about competitors of AHA’s two national sponsors: Macy’s and Merck Pharmaceuticals.

I would suspect that the explicit instruction not to favor Merck's competitors would also remind the bloggers not not do say anything that might make the giant pharmaceutical company unhappy.

Eight weeks into the program, they haven’t had any problems.

'There are things we don’t want them to write, like profanity, but that’s also part of the vetting in the beginning,' Lozito says. 'We wanted to find people who believe in our mission, who speak to the same type of audience, but at the same time we want them to have their own flavor and own tone, because it’s a blog.'

So the bloggers recruited by the AHA may be happy, since they now have a big organization's web-site driving traffic to their blogs. The AHA may be happy, since the bloggers can spread the word about their BetterU program. I imagine the marketers at Merck may be happy too, since the bloggers have been warned about the need to keep the corporate sponsors happy. However, what may be good for all the parties in this transaction may not be so good for the general public, as another opportunity for uninhibited, honest discussion of health care issues has been lost.

This is an explicit example of the adverse effects of commercial funding of not-for-profit disease advocacy groups. Corporate sponsors may not expect anything as gross as advertising in return for their money. However, they may expect something more subtle, a generally favorable attitude toward the sponsor, at least the disinclination to say anything that might put the sponsor in a negative light. After all, politeness requires that we be nice to the people who are nice to us. But being nice to sponsors may not be so nice for the people that a health care not-for-profit organization is supposed to serve.

PS - for those who like science fiction, see the preview of the new version of "V," in which Anna, the leader of the Visitors, an invasion force disguised as human-appearing, benign aliens, warns her television interviewer,

Just be sure not to ask anything that would put us in a negative light.

"Man's Best Hospital," Run by the Boss of a MECC (Medical Education and Communications Company)?

In January, 2009 we posted about how the CEO of Blue Cross Blue Shield (BCBS) of Massachusetts and of Partners HealthCare, made a secret oral agreement that BCBS would pay Partners at a higher rate than that given to other hospitals.

Why BCBS would want to pay so much to this one hospital system was never clear. Partners does include some extremely prestigious hospitals, including the Brigham and Womens Hospital, and the Massachusetts General Hospital, ("Man's Best Hospital" in the House of God), but there are some other very prestigious teaching hospitals in Boston that were not blessed by BCBS' largess.

We speculated about one possible cause: the leadership of the two organizations may have felt they had more in common with each other than with the constituencies of their own organizations. A few leaders of each organization had direct ties to the other. Many leaders of both organizations were simultaneously leaders of finance, the same sector that has brought us what is now called the Great Recession. Leadership of both organizations had conflicted loyalties. The organizations' CEOs at the time, and many members of their boards had divided loyalties and apparent conflicts of interest. For example, Jack Connors, the chair of the Partners HealthCare board, is also the Chairman Emeritus of marketing communications company Hill, Holliday, Connors, Cosmopoulos Inc, whose clients include pharmaceutical and pharmacy benefits manager CVS / Caremark, and is also a member of the board of directors of Covidien, a medical device company.

The Boston Globe just published a report that Mr Connors had even more intense conflicts that had not heretofore been made public.

He's chairman of New England's largest healthcare company, and that position atop Partners HealthCare has tested the limits of Jack Connors's considerable corporate dexterity.

Though he has no background in medicine, Connors has been Partners' chief overseer, champion, and its most public face for 13 years.

[One board member] is the cofounder and chairman emeritus of Partners' advertising firm. That would be Jack Connors. And that potential point of conflict has been disclosed....

But to the chagrin of some former board members, never brought up for board review was Connors's stake in a leading medical education firm whose sale in 2004 made Connors a very wealthy man.

Nor has the board notified public officials of Connors's ownership of a fledgling home healthcare firm that has directly solicited Partners' hospitals for business.

Connors and top Partners officials defended the decision not to publicly disclose Connors's potential conflicts, saying that because Partners did not directly contract with either of Connors's firms there were no conflicts to report. Connors also defended his right to be an entrepreneur in the healthcare business while also chairing Partners' board, and strongly denied ever using his position for personal or financial advantage.

The larger company, M/C Communications, grew to become the biggest commercial provider of continuing education to physicians in the decade between its inception in 1994 and when Connors sold it in 2004. It profited hugely from an exclusive commercial relationship it maintained with Harvard Medical School, whose faculty teach at seminars the company holds. Partners' signature institutions, Massachusetts General Hospital and Brigham and Women's Hospital, are major teaching affiliates of Harvard Medical School.

In addition, M/C Communications benefited financially from millions of dollars in sponsorship revenue paid it from major pharmaceutical firms eager to play to this professional audience.

Connors said he was under no obligation to disclose his ownership of M/C Communications to the Partners board. He said that while there is an 'affiliation' between Harvard Medical School and the two Partners hospitals, there is no formal contract between them.

Connors said he informed Partners executives of his ownership of M/C Communications, and that they determined it did not warrant disclosure to the full Partners board.

'There is no contract between Partners and Harvard,' Partners said in a statement to the Globe.

Connors made a name for himself as an executive with Hill, Holliday, Connors, Cosmopulos, the Boston advertising company that he helped found and guided throughout a long career. Less well known is that he made most of his fortune from M/C Communications, which he sold to Bain Capital for $450 million in 2004.

The sale was the largest of a private healthcare-related company in Massachusetts that year, according to TM Capital Corp., an investment banking company. Connors, who led an investor group that bought the firm outright for $13 million in 2000, made about $250 million from its sale.

After his 2004 windfall, he founded a company that helps elderly patients readjust to life at home after a hospitalization.

That company, Dovetail Health, has - Connors acknowledged - solicited business from hospitals owned by Partners. And Connors confirmed that after Dovetail executives failed to convince Blue Cross Blue Shield of Massachusetts to contract with the firm, he personally spoke to the giant insurer's president, Cleve L. Killingsworth, on Dovetail's behalf. Partners and Blue Cross Blue Shield regularly negotiate over $2.5 billion worth of medical business a year.

Connors acknowledged in an interview that it might have appeared 'inappropriate' to some for him to pitch Killingsworth. But he said the conversation stemmed from a shared belief that new ways must be found to reduce frequent return trips of elderly patients to the hospital. More recently, however, he said he does not believe his approach to Killingsworth was inappropriate.

So let's try to recap this.

While Jack Connors has been chairman of the board of Partners HealthCare, the largest and most prestigious hospital system in Massachusetts, he also ran an advertising agency that did business with Partners, and has been on the board of Covidien, a medical device company. Both of these relationships he disclosed to his fellow board members, although no one seemed troubled by them.

However, while a Partners board member, Connors was also the founder, and ultimately profited very handsomely from the sale of M/C Communications. M/C Communications apparently begat M/C Holding Corporation, which in turn owns M/C Communications and Pri-Med Institute LLC. M/C Communications now describes itself as " established in 1994 and has become a leading provider of medical education event management solutions for health care professionals and others around the globe." M/C Communications runs Pri-Med, which is described thus: "Pri-Med is a platform for science and medicine that includes meetings, resources, online, and new media tools designed to meet the information and education needs of today’s practicing physician." Pri-Med markets itself to industry, presumably the pharmaceutical, biotechnology, and device industry, "Sixty percent of doctors’ offices restrict rep access, making it more challenging than ever to get in front of your customers. But with Pri-Med, you get to meet clinicians in a professional environment where they seek you out. More than 66% of attendees say they come to Pri-Med events to meet you, industry representatives." So Connors' company was a medical education and communication company (MECC), which provided what appeared to be educational programs to physicians that in fact were also sold to the health care industry as marketing opportunities.

So Partners HealthCare, which includes two of the world's most prestigious teaching hospitals, has been run by the boss of a MECC? Say it ain't so.

Not only did Connors own a company that had an exclusive contractual relationship (as described above) with the Harvard faculty who staff the main Partners HealthCare hospitals, that company was engaged in marketing the products of sponsoring drug and device companies disguised as education. Finally, Connors denied that this presented any kind of conflict of interest, because Partners HealthCare has no explicit contract, just an "affiliation" with Harvard Medical School.

Finally, just to ice the cake, Connors' latest venture is a home health care company that did business with Partners, and tried to do business with BCBS, spearheaded by Connors' direct conversations with the BCBS CEO.

Jack Connors thus seems to have just become the latest poster boy for leaders of health care organizations who put their personal financial interests ahead of their responsibilities to those organizations, and function as a power elite whose collective interests trump those of the constituents of the organizations they run.

Quoting from BoardSource, the main duties of the leader of any US not-for-profit are:

Duty of Care

The duty of care describes the level of competence that is expected of a board member, and is commonly expressed as the duty of 'care that an ordinarily prudent person would exercise in a like position and under similar circumstances.' This means that a board member owes the duty to exercise reasonable care when he or she makes a decision as a steward of the organization.

Duty of Loyalty

The duty of loyalty is a standard of faithfulness; a board member must give undivided allegiance when making decisions affecting the organization. This means that a board member can never use information obtained as a member for personal gain, but must act in the best interests of the organization.

Duty of Obedience

The duty of obedience requires board members to be faithful to the organization's mission. They are not permitted to act in a way that is inconsistent with the central goals of the organization. A basis for this rule lies in the public's trust that the organization will manage donated funds to fulfill the organization's mission.

By leading companies that did direct business with Partners and its staff, and failing to disclose that he was doing so to his fellow Partners board members, Connors appeared to have violated the Duty of Loyalty.

By running a MECC that helps drug and device companies market to physicians in the guise of education, using faculty from the academic teaching hospitals that he lead, Connors seems to have mocked the mission of the academic hospitals within Partners, and thus appeared to violate the Duty of Obedience.

This episode certainly does suggest that health care, and the organizations involved in this case, are lead by an "old-boy network," as one person interviewed for the Globe article suggested. More than just an old-boy network, they seem to be lead by chummy members of the power elite whose collective personal interests supersede the missions of the organizations they are supposed to steward. When this happens, is it any surprise that health care becomes less accessible, more expensive, and of lower quality?

Yet challenging the power elite that are increasingly revealed as controlling much of health care seems to be something that one cannot talk about when discussing health care reform. However, failing to address this problem will likely doom any effort, no matter how well intentioned, to improve health care.

Hat tip to and see comments by Alison Bass on the Alison Bass Blog.

ADDENDUM (3 June, 2009) - See also comments by Dr Daniel Carlat on the Carlat Psychiatry Blog.

IRS Changes Form 990 to Make Not-for-Profit Organizations More Transparent and Accountable

In the US, many important health care organizations are not-for-profit organizations. Many US medical schools, and other health educational institutions, along with their parent universities are not-for-profit. (Essentially all the exceptions are supported by local or state government.) The majority of US hospitals and hospital systems, including academic medical centers, are not-for-profit. Some managed care organizations are not-for-profit. Medical and professional societies, health care advocacy groups, health care charities, and a variety of other groups are not-for-profit.

Not-for-profit health care organizations here have hardly been immune from leadership and governance problems. We have discussed numerous instances of ill-informed, conflicted, and even corrupt leadership of these organizations, and underlying problems with their governance, which may be unrepresentative of key constituencies, unaccountable, secretive and opaque, and not subject to clear ethical rules.

There may be some major changes coming, however, affecting leadership and governance of all US not-f0r-profit organizations, including health care organizations. The US Internal Revenue Service (IRS) has long required that not-for-profits that exceed certain minimums file and make publicly available certain information on a form 990. Relatively recent forms from most US not-for-profits are available online from Guidestar.org. The old forms provided for some minimal transparency. They displayed, for example, a list of the filing not-for-profit organization's trustees, and the salaries and retirement plans given to their five highest-paid employees.

The IRS has revised the forms starting with those to be filed in 2009, which will reflect 2008 data, so as to markedly increase organizational transparency. The actual forms can be found on this IRS web-page, and a discussion of key points can be found here on the GuideStar.org web-site.

For the first time, the forms will include information about certain aspects of leadership and governance.

Leadership Conflicts of Interest

The new form 990 will require each organization to establish the "independence" of the organizations' trustees, directors, officers, and key employees. Independent individuals would be those without any direct or indirect business relationships with the not-for-profit organization; without any relatives with such business relationships; and who were not serving as an officer, director, trustee, key employee, partner, or member of an organization doing business with the not-for-profit organization. The relationships preventing individuals from being independent would have to be documented.

It is likely that perusal of such information on the new form 990 would reveal to some extent the degree the organization's leaders are conflicted. Up to now, it has been very difficult to get information about conflicts affecting the leadership of health care organizations. We have reported numerous cases of seemingly high-level conflicts affecting leaders of not-for-profit health care organizations. It is likely that such conflicts affect the ability and inclination of leaders to uphold their organization's mission, that is, to fulfill their duty of obedience.

Leadership Compensation

The new form 990 will ask for detailed information about the total compensation given to officers, directors, and trustees, key and the five most highly paid employees, and former officers, directors, trustees, key and most highly compensated employees who continued to receive substantial amounts. This will include not only reportable and other compensation, but whether anyone received unusual compensation such as first-class or charter travel, companion travel, tax indemnification for gross-up payments, discretionary spending accounts, housing allowance or residence for personal use, payments for business use of personal residence, health or social club dues or fees, and personal services (e.g., maid, chauffeur, chef). Also, the form inquires about severance packages and supplemental non-qualified retirement plans.

Up to now, little information about the compensation of not-for-profit leaders beyond base salaries, contributions to employee benefit plans and deferred compensation, and expense allowances and the like was available. Clearly, while not reaching the stratospheric levels enjoyed by top leaders of for-profit health care corporations, some leaders of not-for-profit health care organizations have come to be paid enough to make them rich. It is possible that some now regard their positions as first a pathway to wealth, rather than a calling to improve the health of society, or to advance medical education or science. Furthermore, it is possible that some leaders have been receiving additional compensation which has made them even more wealthy, while particular "perks," like staffed houses, chauffeured cars, and first-class travel, has isolated them from the patients, clients, and/or students they are supposed to be serving.

Organizational Policies

The new form 990 will ask whether the organization has a written conflict of interest policy, and if so, how compliance is monitored and enforced, and a written policy to protect whistle blowers.

Summary

In my humble opinion, the IRS' new form 990 could make substantial improvements to the transparency and accountability of not-for-profit health care organizations. Review of form 990's filed starting this year could provide important information about conflicts of interest affecting organizational leaders, whether they have been distracted by new-found wealth, or decoyed by luxurious perks, and whether their organizations have clear policies meant to maintain certain ethical standards.

However, while the IRS will mandate that such information becomes available, it is not clear what it will do about the information so revealed. Additionally, the wealth of information that will be provided could easily bury the few watchdogs, including the Health Care Renewal bloggers, that have been trying to monitor the governance and leadership of health care organizations.

However, the new information provides an important opportunity to other people concerned about these issues. For example, perhaps some health professionals have concerns about how their alma maters are lead and governed. Maybe they will peruse the new information provided, and then try to use it to make their alma maters more accountable. It is at least possible to be optimistic.

What Is to Be Done?

If you are concerned about a particular not-for-profit health care organization, you can prepare for the availability of more information from the revised form 990 in several ways, by searching for already publicly available information. You can peruse older form 990s, which at least provides the names of trustees and officers, and officers' and key employees' salaries.

In addition, the web makes it possible to identify some conflicts of interest affecting current leadership. For example, try first entering each leader's name, surrounded by quotes, into Google, to look for biographical information that could reveal conflicts. Next, try searching on the name plus terms like "board of directors," "board of trustees," "consultant," or "advisory board," which may uncover some additional conflicts. If you find anything of concern, consider making it more public.

Remember, the best way to improve health care leadership is to hold it accountable to an activated public, preferably strongly infused with health care professionals who want to uphold their professionalism.

HisTalk defends CCHIT

(Addendum Feb 23 - see some answers here.)

The HIT industry sponsored "Healthcare IT News and Opinion" website HisTalk has taken to the defense of CCHIT in the recent controversy raised by a number of bloggers and commenters.

Below I comment on what was written at HisTalk here about my HC Renewal item A very troubling post about the CCHIT -

(not sure if my followup "Is CCHIT Registered as a 501(c)3 in Illinois, And if Not, Where is it Registered, and Why Was it Involuntarily Dissolved in April 2008?" was included in the HisTalk critique):

Don’t get too excited - nearly every point in the "very troubling post" is wrong, starting with the first paragraph (HBOC is indeed the former HBO & Company).

First, I agree. Nobody should get excited. In a"code blue" situation, as we physicians like to say, the first thing to do is take your own pulse.

However, I also don't think we should ignore this material. The implications are too important to the ultimate customer of all of our services - patients. And that includes ourselves when we find ourselves in that role.

Mr. HisTalk first points to my rather obvious typo about the differentiation of the HIT company whose former CEO was cooking the books from an entertainment company, i.e, regarding HBOC not being the same company as HBO. My accidentally adding "& Co." to the latter was surely the important point here, bar none. Well, not really.

I have since corrected the typo, and thank Mr. HisTalk for being so kind as to point it out, although using it as a point of discreditation seems just a bit harsh.

CCHIT was dissolved, but only to change its organization type.

Mr. HisTalk left out an important word.

The word is "involuntarily."

CCHIT was involuntarily dissolved for reasons unknown. Perhaps Mr. HIStalk through his HIT industry benefactors can enlighten us on the reasons. It probably is on a mundane issue as in my link to a book on such dissolutions in one state, but I for one would like to see the details from the State of Illinois. I'm sure others would as well in this age of unflattering business conduct. Some of the possible reasons for involuntary dissolution at that book are disconcerting.

CCHIT is still a private, non-profit organization and it’s entirely irrelevant as to which state it’s incorporated in since you don’t have to incorporate in the state in which you operate (surely everyone’s heard of the huge number of Delaware and Nevada corporations out there).

Perhaps; I am no business expert regarding where nonprofits need to be registered. I would agree with Mr. HisTalk here, that it may not matter in which second state a nonprofit chooses to be registered, except when the dissolution in state #1 was involuntary for some reason. Probably was for mundane reasons as I wrote, and if so I'll be the first to say "great!", but also might not be innocent. I simply do not know.

(Addendum 2/19/09 11 AM PST- it appears state of registration is not entirely irrelevant to CCHIT, as CCHIT is apparently re-registered in Illinois. The CyberDriveIllinois site today shows CCHIT as "Active" with an Annual Report Filing Date of - 2/19/09. I am not aware of what happened behind the scenes that led to this. Government error? CCHIT error? Something else?)

I am also still curious as to exactly where CCHIT is now registered. I cannot ascertain this from its website. Perhaps I'm missing it. I would welcome being pointed to the page if that is the case.

Conflicts of interest with HIMSS? Obviously - HIMSS, AHIMA, and NAHIT founded it in 2004, so clearly they share an agenda and aren’t exactly secretive about that fact.

This is a rather lame excuse to ignore this issue - 'the organizations were once joined at the hip and so clearly share an agenda, and aren't secretive about that.' One wonders where that argument would go in my former hunting grounds, the pharmaceutical industry. Come to think of it, the dismissive post at HisTALK blog is starting to sound a bit like that industry and its trade association, PhRMA.

Mark Leavitt of CCHIT used to work for HIMSS, but left to take the CCHIT job. CCHIT has paid staff, but most of the work is done by volunteer commissioners. CCHIT’s criteria are publicly vetted and open for anyone to see, so it’s not like they’re doing some kind of beauty pageant judging with no oversight.

Again, in my post I wrote: ... if CCHIT operates independently of HIMSS, AHIMA, and NAHIT [as stated by its marketing director], why are individuals from some of these organizations acting as Trustees? Why are vendor officials acting as Commissioners? It simply doesn't matter, I guess. No way such associations can affect decisions about anything important in any domain in any manner. I also wonder how that would go over in pharma.

As I wrote earlier, medical technology tester The ECRI Institute has a different approach:

Conflict of Interest - The Integrity of Independence

Remaining unbiased is difficult, if not impossible, when conflicts of interest are present [indeed - ed.] That is why we strictly enforce our conflict-of-interest rules and have carefully developed an environment that maximizes objectivity, productivity, and integrity of process.

We accept no grants, gifts, finder’s fees, or consulting projects from, and our employees are not permitted to own stock shares in, medical device or pharmaceutical firms. To make sure that is the case, we examine each employee’s federal income tax return after it is filed.

And, we accept no advertising revenues from any source.

Mr. HisTalk continues:

I could go on, but clearly it’s a waste of time — someone with an axe to grind decided to air their prolific ignorance or denial of the facts publicly.

It seems someone whose site bears more than a dozen industry sponsor logos in its left column might have an "axe to grind" too. I take no money from anyone, blogging as part of my occupation of medical informaticist and physician. However, I believe the debate should go on without resorting to "axe to grind" attacks. We all have axes to grind.

I do believe, however, that "CJ" should let us know more about him/herself.

The legitimate gripes about CCHIT are its fees (but it is a self-supporting nonprofit), its existence (but Brailer sold the world on CCHIT-certified EHRs for interoperability reasons even though most of the CCHIT criteria have nothing to do with interoperability), and its failure to get its stated job done (reducing EMR purchase risk of doctors to move the adoption needle).

I have no disagreements there, except to the term "The." I might say "Some legitimate gripes."

I can add a gripe regarding the potentially (mis)leading word "certification." To the uninitiated in general and to the non medical, non IT executive in particular, this word carries a heavy weight regarding fitness for purpose. A better description of CCHIT's activities might be "qualification" of HIT feature set and operations.

Finally, CJ has posted yet another comment here at the WSJ blog, bringing up HIMSS' acquisition of Government Health IT news among other items, which due to its strategic governmental audience would potentially make an excellent force multiplier for a lobbyist organization ... and its associates.

I again cannot vouch for his comments. They might lack merit, or they might be important. In any case, they are interesting and worthy of discussion, not spin.

(I note that after the takeover, my webcast at Government Health IT News on "HIT irrational exuberance" seems to have disappeared. Again, probably innocent.)

Finally, I can say this:

How anyone can blithely dismiss the writings of a person on a mission such as "CJ" just months after scandals such as the Madoff affair, a gubernatorial impeachment on sale of senatorial seats, the collapse of our banks and Wall St. due to closed door shenanigans, and the near collapse of the world economic order, is beyond me. (Weren't the Madoff whistleblowers similarly ignored?)

-- SS

Is CCHIT Registered as a 501(c)3 in Illinois, And if Not, Where is it Registered, and Why Was it Involuntarily Dissolved in April 2008?

At "A very troubling post about the CCHIT" I reported on a finding that the Certification Commission for Healthcare Information Technology's corporate status was "involuntarily dissolved 0n 4/11/08." Its current state appears as "dissolved" in the database of corporations/LLS's maintained by the Illinois state government, CyberDriveIllinois at http://www.ilsos.gov/corporatellc/CorporateLlcController.

I called the CyberDriveIllinois support number today (would have done so yesterday, but it was a holiday) listed on the Secretary of State Business Services Contact Form as "For certified copies and copy requests for corporations, please call (217) 782-6875."

Two different staffers told me the database is accurate and up to date, and confirmed that file 65254336, Certification Commission for Healthcare Information Technology, old name CCHIT, had a current status of "dissolved."

Therefore, might one not reasonably conclude the CCHIT, with administrative offices at 200 S. Wacker Drive, Suite 3100, Chicago, Illinois per its marketing director, is operating (in some manner) without being registered in the state in which it is conducting those operations?

I ordered a copy of the file on the dissolution and will report on what it contains.

Yesterday morning I also sent the following email to Sue Reber, Marketing Director, the contact person listed on a response posted to the WSJ blog and as a comment to "A very troubling post about CCHIT" here at Healthcare Renewal.

Ms. Reber had written that "CCHIT was founded originally as a LLC but has subsequently transitioned to a private, nonprofit 501(c)3 organization. That is its current status."

I asked:

To: sreber@cchit.org
Date: 02/16/2009 07:55AM
Subject: Question: Involuntary dissolution of 4/11/08

Dear Ms. Reber,

I am am medical informaticist and blogger at multiauthor blog "Healthcare Renewal."

With regard to your posted response to the WSJ health blog comment here about CHHIT, am still curious as to the involuntary dissolution of 4/11/08 -- what was that about? - and the absence of an "active" entry in the Illinois' online corporation/LLC search utility.

I have not received a response, but did receive this automated return receipt from my emailer:

Your message
To: Sue Reber
Subject: Question: Involuntary dissolution of 4/11/08
Sent: Mon, 16 Feb 2009 06:55:43 -0600
was read on Mon, 16 Feb 2009 10:43:20 -0600

I await a reply.

-- SS


Addendum:

At the original WSJ blog comments site where the first Feb. 13 comment from "CJ" and the response from Mr. Reber appeared, there is a new Feb. 17 comment by "Calvin Jablonski" (link).

The new comment makes, among others, claims that Mark Leavitt was employed by HIMSS for some period of time, that CCHIT jury observed testing is not independent 3rd party testing and validation because of who performs it, that there are numerous conflicts of interest with HIMSS and other organizations, that taxes have not been paid, and that CCHIT is a shell of some type.

I do not know if these are true and do not vouch for their accuracy.

However, the comment concludes with "the public has a right to know the truth from outside independent sources."

I tend to agree, considering that bad informatics can kill.

-- SS

A very troubling post about the CCHIT (Certification Commission for Healthcare Information Technology)

• NOTE - See my final Feb. 23 post "CCHIT - dissolved involuntarily in April 2008 for failure to file annual report required under laws of the state of Illinois." The posts before that date as below were written before I received requested documents from the Illinois Secretary of State's Dept. of Business Services. These documents are now posted at the link above.
  

• Also see my second Feb. 17 post here, and my third post on Feb. 19 here where I commented on HisTalk's take on these issues.

Feb. 13:

I have observed unseemly things about health IT in my nearly two decades in medical informatics. For example, my dealings with health IT vendor HBOC (no relation to HBO and now merged into McKesson) whose erstwhile CEO was cooking the books, and a-little-too-cozy relationships between hospital CIO's and health IT vendor CEO's.

Even considering those observations, the matter below is quite unsettling if its allegations are valid. It is additionally unsettling considering the many well-intentioned volunteers who give of their time in CCHIT activities, whose reputations might be unfairly tarnished if there are significant undisclosed problems. (I applied to be a volunteer some years ago, in fact, but was not selected initially, and did not reapply due to my work schedule).

Seen at the WSJ Health Blog here about the CCHIT (Certification Commission for Healthcare Information Technology) is the post below. An involuntarily dissolved organization? Conflicts of interest with HIMSS, the Healthcare Information and Management Systems Society (a healthcare IT vendor alliance), and other "front" organizations?

I do not know who posted this series of allegations, and importantly do not represent them as true; they may be rumors, misinformation, politically motivated or statements of disgruntled individual(s). However, I checked one of the allegations and verified it. I utilized Illinois' online corporation/LLC search utility at http://www.ilsos.gov/corporatellc/CorporateLlcController and did indeed find this puzzling entry for CCHIT as "involuntarily dissolved" on 4/11/2008. I could not find other entries even under the full name "Certification Commission for Healthcare Information Technology."

Here is the results screen (click to enlarge):




Edgar online company search finds no company listings for "CCHIT" or "Certification Commission for Healthcare Information Technology", either.

Another private nonprofit lookup of unknown reliability, Melissadata.com, shows CCHIT as a 501 (c)(3) in Chicago listed as "exempt" from taxes since October 2008, last 990 form ("Return of Organization Exempt from Income Tax") filed Dec. 2007, form 990 amount $4,740,146, as shown here. This would have been before the involuntary dissolution. No 2008 form 990 data is shown.

A number of reasons for involuntary dissolution of a nonprofit in one state can be seen here.

This certainly raise concerns and questions such as:

• Why was this not for profit "involuntarily dissolved" in April 2008? For what reason(s)?
• By whom?
  
• What replaced it?
  
• Why was this dissolution not widely known?
• What is CCHIT now? Is the Illinois online corporation/LLC database faulty? Does it remain a non-profit?
  
• If the Illinois database is not faulty, where is CCHIT now registered? Is it registered?
• Is it a subsidiary of HIMSS or other organization?
• Where do CCHIT monies go?
• Who controls the funds?
• Who assures that it is indeed impartial in its assessments?
  

The posted comment at the WSJ health blog that caught my attention reads (emphases mine):

Why not pack CCHIT EHR certifications in Cracker Jack Boxes? If folks think CCHIT is a real organization and the certification is anything more then a stamp of approval from the HIMSS Circus they need to think again after looking at the facts.

Some facts are known about the Certification Commission for Health Information Technology. The Certification Commission for Health Information Technology (CCHIT) is a defunct Illinois Not-For-Profit 501(c) 3, which operates to take money from the Office of the National Coordinator and Vendors by offering to sell a “Certification”.

DID I say DEFUNCT? Yes I said DEFUNCT…please read on.

The Not-For-Profit 501(c) 3, Certification Commission for Health Information Technology (CCHIT), operates a “Front” office located at 200 S. Wacker Drive, Chicago, Illinois.

CCHIT, as it is known, represents itself as a government recognized organization for certifying electronic health records. CCHIT has received monies from the United States Government (estimated over $2.5 million to date) and monies from vendors of electronic health records.

CCHIT was formed as a NFP in the State of Illinois and is an entity spawned by none other, HIMSS.org. CCHIT is no longer a legal entity existing within the State of Illinois effective April 11, 2008, but continues to engage business as a 501(c) 3 accepting payments as reported by J. Morrisey, Director of CCHIT Communications (February 3, 2009).

CCHIT continues to hold itself out to take money for the sale of “Certification” (a rubber stamp device the buyer can display on his product if the fee is paid), a contrived performance standards product label developed by its parent organization, Healthcare Information and Management Systems Society (HIMSS), a lobbyist, with headquarters at 230 E. Ohio St., Chicago, Illinois.

CCHIT was also located within the HIMSS Headquarters at 230 E. Ohio Street in Chicago but moved to Wacker Drive apparently due to appearances of being too close to the lobbyist parent organization.

CCHIT, through the organization that spawned them—HIMSS.org, a lobbyist organization—recently asked for $25 Billion additional funds in an open letter to the Obama administration (http://www.himss.org/advocacy/). HIMSS, through its agent H. Stephen Lieber, provided CCHT with $300,000 seed money in 2006 with which to fund a startup operation.

HIMSS receives money from CCHIT as a subcontractor, as the payoff for seeding the startup. HIMSS provides public commentary through the use of its own members for certification criteria back to CCHIT. HIMSS is also the parent company for the Electronics Health Record Vendor Association (EHRVA), another Not-For-Profit housed at 230 E. Ohio St., Chicago, Illinois.

The Facts:

1. The Chairman of CCHIT is Mark Leavitt, MD, PhD. Mark Leavitt is also Chief Medical Officer with HIMSS.org. It is believed Mark Leavitt may be a relative of Mike Leavitt, former HHS Secretary [doubtful - ed.]

2. CCHIT takes federal money, and money from vendors, in exchange for the sale of “certification”. CCHIT does not have a legitimate physical address where it conducts its testing. CCHIT has a “front” office at 200 S. Wacker Drive, Chicago, Illinois, with previous headquarters at 230 E. Ohio St., Chicago, Illinois. CCHIT is, in fact, now defunct.

3. CCHIT has no legitimate registration certificate of good standing with the State of Illinois, the state in which it is purportedly chartered as a 501(c) 3. It is, in fact, listed as “involuntarily dissolved” effective April 11, 2008, file# 65254336. Illinois State listing here: http://www.ilsos.gov/corporatellc/

4. CCHIT does not provide independent inspections of its facility or 3rd party reviews of its findings. “Certification” status of vendor products granted by CCHIT after the Illinois State’s involuntary dissolution date of April 11, 2008 appears to be without merit or bogus, and CCHIT operates deceptively to convey legitimacy.

5. CCHIT operates fraudulently within the State of Illinois and in the United States to take money from vendors of electronic health record systems and from taxpayers; the CCHIT business practice presents as a Pay-For-Play scheme; if the vendor pays, CCHIT certifies the product conveying a competitive advantage in the marketplace. There is no transparent certification testing for 3rd party review. The costs to certify are in the many tens of thousands per vendor. Officers and Directors of CCHIT have taken money in exchange for “Certification“, knowing its 501(c) 3 operational status to be defunct.

6. CCHIT, a dissolved entity and defunct 501(c) 3 Not-For-Profit, receives funding from the Office of the National Coordinator (ONCHIT) and is tied to a lobbyist organization that claims to be a Not-For-Profit, HIMSS.org—the organization that spawned CCHIT and which formerly housed the entity in its corporate headquarters located at 230 E. Ohio St., Chicago, Illinois. Why does CCHIT continue to certify vendor products when its own corporation has been involuntarily dissolved? Does the word “MONEY” ring a bell?

CCHIT continues to hold itself out as a certifying entity when it can’t even certify to the state of its incorporation that it does in fact exist.

Closing thoughts:

The certification process and testing should be reviewed carefully, and those vendor companies whose products were certified after CCHIT’s involuntary dissolution should be contacted. Money should be returned to the vendors and the taxpayers- CCHIT is a bogus operation.

CCHIT should NOT be allowed to receive future Federal grants and monies from the United States Government as part of the stimulus package. CCHIT is defunct, moreover the cozy relationships between CCHIT, ONC, CMS, HITSP and others are bankrolled with taxpayer money and money from HIMSS.org and its others.

Through all the smoke and mirrors we the people are supposed to trust these [derogatory term redacted - ed.] and they actually think we are buying it?

There is no point in CCHIT holding itself out as a legitimate entity at HIMSS Annual Conference either, CCHIT is a defunct organization and has been since the beginning of 2008…DUH!

CCHIT has flown under the radar for a year and a half, the jig is up and the whistle has been blown.

CJ

Comment by cj - February 13, 2009 at 2:10 am

I find these allegations potentially very troubling regarding an organization that is supposed to be "impartial" and a judge of the suitability of electronic health records products for sale here in the U.S. The answers may be simple and straightforward. I hope they are. Healthcare IT already has significant problems and needs no more.

These are important issues worthy of clarification. I would welcome clarifications from CCHIT, which I will certainly publish here.

-- SS

Addendum

Feb. 15:

I note the following response at the WSJ blog:

The “facts” in the previous post are deliberate misinformation from an anonymous source.
1. Mark Leavitt, chair of the Commission, is not employed by HIMSS as CMO nor is he a relative of Mike Leavitt, previous Sec. of HHS.
2. CCHIT conducts jury-observed and technical testing of vendor-submitted products, requiring that the products meet 100% of the compliance criteria published at http://www.cchit.org/certify/index.asp. It’s current administrative offices are at 200 S. Wacker Drive, Suite 3100, Chicago, Illinois.
3. CCHIT was founded originally as a LLC but has subsequently transitioned to a private, nonprofit 501(c)3 organization. That is its current status.
4. CCHIT operates with the oversight of both its board of trustees - managing its business functions - and board of commissioners, which provides oversight of its certification development programs and inspection processes.
5. CCHIT’s trustees and commissioners receive no compensation; they serve in a volunteer capacity. CCHIT operates with a paid staff of about 20 personnel who support the work of the Commission and it’s 15 volunteer work groups, administer the certification inpections and provide outreach to its diverse stakeholders
6. CCHIT now operates independently of HIMSS, AHIMA and NAHIT - its founding organizations - and no money provided by ONC for developent or by vendors for the conduction of inspections is returned to those organizations.
Any questions about CCHIT’s operations may be directed to me at the following email address.
Sue Reber, Marketing Director
CCHIT
sreber@cchit.org

This still does not explain the involuntary dissolution nor the absence of an "active" entry in the Illinois' online corporation/LLC search utility. I have sent Ms. Reber an initial inquiry.

It also does not explain possible conflict of interest concerns. If CCHIT operates independently of HIMSS, AHIMA, and NAHIT, why are individuals from some of these organizations acting as Trustees? Why are vendor officials acting as Commissioners?

Organizations such as the ECRI Institute, that independently evaluates medical technologies, seems to have a credible approach to avoid appearances of conflict:

The Integrity of Independence

Our conflict-of-interest rules have been carefully developed to create an environment that maximizes objectivity, productivity, and integrity of process. We accept no advertising revenues from any source. Our employees are not permitted to own stock shares in medical device or pharmaceutical firms, and we verify this by examining each employee’s federal income tax return. We go beyond the industry norm to ensure that you receive unbiased guidance.

-- SS

(also see my Feb. 17 follow up post here.)

Ascension Health's Descent Away from its Mission

This week, the Wall Street Journal continued its series on US not-for-profit hospitals and health systems with a story about how Ascension Health is abandoning inner-city Detroit for the more affluent suburbs,

Ascension Health, the country's largest nonprofit hospital system, says its mission is to serve all, 'with special attention to those who are poor and vulnerable.' But in this city, where one in four people don't have health insurance, it's become harder for the poor and vulnerable to find Ascension.

Last year, Ascension's local subsidiary closed Riverview Hospital, the third hospital it has shut down in Detroit in the past 10 years and the only hospital that remained on the city's blighted east side. Meanwhile, 30 miles away, in a suburb of multimillion-dollar homes, Ascension is opening a new $224 million hospital.

Ascension's approach to the Detroit market is an increasingly common strategy among nonprofit hospital systems: Close money-losing facilities in poor areas where a large share of patients are uninsured, and build or refurbish hospitals in affluent places where people have private insurance coverage.

Before its closing, Riverview was one of the few remaining hospitals in the Detroit city limits. Of the 42 hospitals that dotted this 139-square-mile city in 1960, only four are now left. At the same time Detroit's hospitals have dwindled, its number of uninsured has grown. An estimated 200,000 of the city's 800,000 residents have no health insurance.

Located in one of Detroit's poorest wards, Riverview sits among empty buildings on East Jefferson Avenue, a thoroughfare sprinkled with subsidized senior housing, empty and overgrown lots, partially burned homes, and graffiti-stained shops.

Even in a struggling city, Riverview's neighborhood stands out for its abysmal statistics: Thirty-four percent of the population lives below the poverty line, infant mortality is more than double the national average and the rate of AIDS deaths is five times higher, according to Richard Lichtenstein, an associate professor at the University of Michigan's School of Public Health. Its poor patient base made Riverview a perennial money-loser.

The closing of Riverview Hospital by Ascension Health seems to be a product of Ascension's current business strategy.

Shutting down unprofitable operations and expanding profitable ones is a common business maneuver, but nonprofit hospital systems aren't ordinary businesses. They're required to provide benefits to their communities, such as free care for the indigent, in exchange for the billions of dollars in annual tax exemptions they receive.
Ascension, which is affiliated with the Roman Catholic Church, says its more profitable subsidiaries can't be used to subsidize those that are struggling. 'Such an approach would mean that needs in other communities may not be met,' says Ascension spokeswoman Trudy Barthels. The 38 subsidiaries, which Ascension calls 'health ministries,' operate with a large degree of independence and have to be 'self-sustaining,' she says. Ascension adds that it ties how much capital it allocates each subsidiary, in part, to its profitability.

How Ascension Health regards its individual hospitals is similar to how many academic hospitals now regard their departments and divisions. Each sub-unit is regarded as semi-independent, and responsible for bringing in its own revenue.

That makes sense, to a limited degree, if one regards each sub-unit as a separate production facility in a business.

BUT IT MAKES NO SENSE to run a not-for-profit health care organization in this manner. A not-for-profit first and foremost is supposed to fulfill its mission, not make a profit (hence, the term "not-for-profit.) Thus, in a not-for-profit, each sub-unit should be viewed in terms of how its work fulfills the total mission.

Thus, it might make sense for a hospital system whose mission is to care for the poor to allow certain sub-units to run at a financial loss if they are important to this mission. It might also make sense for an academic medical center whose mission is to provide education and research to allow certain sub-units to run at a financial loss if they are important to this mission.

So what is Ascension Health's mission? It is:

Rooted in the loving ministry of Jesus as healer, we commit ourselves to serving all persons with special attention to those who are poor and vulnerable. Our Catholic health ministry is dedicated to spiritually centered, holistic care, which sustains and improves the health of individuals and communities. We are advocates for a compassionate and just society through our actions and our words.

The hospital system states that:

We are called to:

Service of the Poor — generosity of spirit, especially for persons most in need

The abandonment of Riverview, apparently on financial grounds, appears to be in stark contrast to that mission.

Furthermore, per the WSJ, Ascension Health seems instead to be devoted to increasing its bottom line, and rewarding its top leader sufficiently to make him rich:

Net income at Ascension, which owns 67 hospitals located mostly in the Midwest, South and Northeast, nearly tripled to $1.2 billion between 2004 and 2007 thanks largely to investment gains. With financial markets struggling over the past year, Ascension reported net income of $351 million for the year ended June 30.

Ascension is also a well-oiled money machine with sterling credit ratings. Its cash and investments totaled $7.3 billion for the year ended June 30, including about $1 billion restricted to self-insurance trust funds or limited by donors for specific uses or to be maintained in perpetuity. Ascension's chief executive, Anthony Tersigni, earned $2.4 million in total compensation in 2006, according to the hospital system's latest filing with the Internal Revenue Service. Ascension declined to provide more recent compensation figures.

It appears that Ascension Health displays the most "generosity of spirit" to its own CEO.

I am not a Catholic, so perhaps am less qualified to comment than others. But it seems there ought to be some special place, not a comfortable one, reserved for organizations that promise service to the poor while raking in billions, and paying their leaders millions.

This appears to be a classic, and tragic example of mission-hostile management by the leadership of once proud not-for-profit health care organizations. It suggests why we need a wholesale reassessment of how such organizations are lead.

Is it any wonder that health care costs rise while access falls when those pledged to increase access mainly seem to be about increasing their own bottom line?

Astroturf Grows in Britain

This is just in case anyone thought this was only an American pheonomenon. As reported by the Independent.

The rising tide of protest over the refusal by the NHS to provide expensive drugs for cancer and other conditions is being funded by the pharmaceutical industry, an investigation by The Independent has revealed.

Patient groups that have been among the most vocal in spearheading attacks on the National Institute for Clinical Excellence (Nice) over decisions to restrict access to drugs on the NHS depend for up to half of their income on drug companies, but details are often undisclosed.

Protests have been launched by charities including the National Kidney Federation, the Arthritis and Musculoskeletal Alliance, the National Rheumatoid Arthritis Society, Beating Bowel Cancer, the Royal National Institute for the Blind and the Alzheimer's Society. All of these charities received sums of up to six figures from drug companies in 2007.

The extent of the drug companies' support for the smaller charities has led to criticisms that supposedly grassroots patient organisations are puppets of the pharmaceutical industry, being used to bludgeon Nice into making the drugs available on the health service.

Yet none of the charities named has criticised the high prices charged by the pharmaceutical companies for their products in their recent campaigns.

The National Kidney Federation (NKF) accused Nice of taking a "barbaric, damaging and unacceptable" decision when it turned down four kidney cancer drugs for NHS use this year and pledged to campaign against the decision. It did not criticise the cost of the drugs, at more than £3,000 for a 30-tablet pack. Half the NKF's £300,000 budget comes from the pharmaceutical and renal industries.

The Arthritis and Musculoskeletal Alliance (Arma) organised a protest letter from 10 professors of rheumatology, published in The Sunday Times last month, over a recent Nice decision to restrict access to arthritis drugs. The letter made no mention of the cost of the drugs but Ros Meek, chief executive, admitted that "half, or more" of the charity's £147,000 income came from the drug industry.

The National Rheumatoid Arthritis Society described the same Nice decision as "another nail in the coffin" for arthritis treatment and launched an appeal against it this week, with Arma and three drug companies. The society received 49 per cent of its £300,000 budget from the pharmaceutical industry in 2005-06, reducing to 26 per cent of its £472,000 budget in 2006-07.

We have heard physicians and leaders of not-for-profit organizations funded by pharmaceutical companies and other commercial health care organizations protest again and again that their activities and decisions are uninfluenced by the source of their money. For example, we recently posted about the President of the US American College of Cardiology who revealed that this medical society receives 38% of its funds from the pharmaceutical industry, but has "firewalls" that prevent this sum of money from having any effect on how the organization operates. Yet, as the saying goes, "he who pays the piper calls the tune."

The current example, from the UK, highlights how organizations that get substantial commercial support never seem to manage to criticize the policies or actions of those who provide the support. One would think a charity devoted to the interests of patients with a particular disease might protest when drug companies charge outrageous prices for treatments for that disease, but as noted above, not one of the charities listed above did so.

So in the absence of transparency, accountability, and clear and enforced codes of ethics, those with health care goods or services to sell are more than happy to plow substantial funds into non-profit, "grassroots" organizations with the not unreasonable hope that such organizations will then promote the requisite marketing or policy agenda. Thus these supposed "grassroots" organizations are really astroturf, and allow their sponsors to engage in stealth health policy advocacy.

Hat tip to Ed Silverman on PharmaLot.