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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

At UPMC: Dealings with Board Members' Firms and Executives' Relatives, a $5 Million Plus CEO, and 8 $1 Million Plus Executives

Last year we noted that the US Internal Revenue Service (IRS) required more detailed reporting starting in 2009 by US not-for-profit organizations.  Many US health insurance companies/ managed care organizations, most hospitals, nearly all medical associations, nearly all disease advocacy organizations, all health care charities, and nearly all medical schools are not-for-profit organizations.  We suggested then that this reporting might lead to more transparency about the leadership and governance of these organizations.  Some of these new 990 forms are now being publicly disclosed, with some interesting findings. 

The Pittsburgh Tribune-Review just reported some interesting findings about financial ties between the University of Pittsburgh Medical Center (UPMC) and its board members and hired executives.

Health giant UPMC paid more than $10 million last year to companies and individuals with ties to its directors and high-ranking executives, newly released tax records show.

The payments include more than $3 million in salaries and contracts to relatives of UPMC CEO Jeffrey Romoff, who earned $5.16 million in fiscal 2009.

It was no surprise that a UPMC spokesman pooh-poohed the significance of these relationships.

'Given that UPMC is the largest employer in Pittsburgh and attracts talent from across the world, it's easy to understand why there are hundreds of employees with family members who also work at UPMC,' said spokesman Paul Wood.

'We seek to hire the best and brightest in every position, regardless of family relationships, and take appropriate steps to manage any conflicts that those relationships might entail.'

The specifics about payments to the relatives of top hired executives were:

Tax records show UPMC paid $264,274 to Rebecca Kaul, the CEO's daughter. Wood said UPMC then billed a contractor for her services. Kaul now works for UPMC as executive director of the Technology Development Center, Wood said.

UPMC paid $259,488 to Scott Gilstrap, who joined the health care giant before marrying Romoff's daughter. Gilstrap, now divorced, no longer works for UPMC, Wood said.

Wood said UPMC's contract for $2.48 million with Paradise Group, an advertising firm owned by the CEO's brother, Douglas Romoff, was not renewed after its March 2009 expiration.

'Jeffrey Romoff was not involved in any of the decisions pertaining to this contract,' Wood said.

In addition to Romoff's family connections, the tax records show UPMC paid Scott Cindrich, son of its chief counsel Robert J. Cindrich, $141,599.

Wood said the younger Cindrich joined UPMC before his father left a federal judgeship in 2004 to become UPMC's top lawyer. Robert Cindrich was paid $1.86 million.

Cindrich did not return telephone calls seeking comment.

The specifics about dealings between UPMC and its board members were:

Tax records show companies affiliated with board member Anne V. Lewis do the most business with UPMC. Oxford Development Company, where Lewis is board chair, received $4.84 million from UPMC.

Lewis is affiliated with Central Securities Services, which received $201,198 from UPMC, and Central Property Services, which received $457,051. Lewis did not return repeated telephone calls from the Tribune-Review.

According to the returns, the Downtown law firm of Pietragallo Gordon Alfano Bosick and Raspanti earned $348,616 in legal fees. William Pietragallo is a UPMC board member. The law firm paid $792,215 to UPMC for heath insurance.

Pietragallo said he filled out a conflict-of-interest form, as he has in past years.

'It reminds me of how much I pay for health insurance,' he said.

IGate Mastech, the tech company founded by UPMC board member Sunil Wadhwani, received $204,215 for computer services. JJ Gumberg and Co., affiliated with board member Ira Gumberg, was paid $103,521, tax records show. Neither Wadhwani nor Gumberg returned telephone calls.

Board member John R. McGinley Jr.'s law firm, Eckert Seamans Cherin and Mellott, was paid $804,414 for legal services, according to the returns. McGinley and board member Robert A. Paul and members of their families are affiliated with Pittsburgh Steelers Premium Tickets LP, which was paid $129,425, tax returns show.

McGinley said he believed the figures UMPC reported are correct. Paul did not return telephone calls.

Also, in a separate article, the Tribune-Review noted transactions between UPMC's insurance subsidiary and its board members' firms

Recent federal tax filings show companies associated with some UPMC board members also buy their employee health insurance through the health care giant's insurance arm.

The tax returns show that health insurance premiums paid by the companies affiliated with board members totaled about $8 million in the fiscal year ending June 30, 2009. Nine firms affiliated with board members purchased UPMC health insurance.

That figure includes nearly $1.8 million by Bank of New York Mellon. UPMC board member Stephen Elliott is affiliated with the bank.

Oxford Development paid $2.1 million in premiums. The development firm's chairman is Anne Lewis, a UPMC board member.

The law firm headed by UPMC board member William Pietragallo paid $792,215 in premiums, according to the returns. AMPCO-Pittsburgh, which is affiliated with UPMC board member Robert A. Paul, paid a little more than $1 million in premiums.

Of course, Mr Wood pooh-poohed that too:

UPMC spokesman Paul Wood said the premiums paid by the companies were at "market rates."

He also apparently stated that the hospital system follows "strict conflict-of-interest rules. Board members are barred from voting or acting on matters relating to their business interests...." 

The standard approach of most not-for-profit organizations to conflicts of interests involving their board members or executives is to have these people recuse themselves from votes or actions that directly affect their own or their families' business interests.  I submit that whether this prevents the conflict of interest from influencing decision making by the organizations is questionable.  I doubt that the board members are unaware of their fellow members' and executives' direct or familial business interests.  The fact that certain individuals need to step out of meetings when votes come up on particular contracts would be a good reminder that they or their relatives have business interests at issue at these times.  Board members tend to keep their seats for a long time, and tend to get to know their fellow members pretty well.  Even if an individual member cannot vote on a contract or action relating to his or her business interests, would it be any surprise that his or her buddies on the board might look favorably on such a contract?

Furthermore, would it really be that hard to find development companies, property management firms, advertising agencies, law firms, or information technology companies in a large metropolitan area that are not affiliated with board members or top executives and their families?  Instead, UPMC seems to have found quite a few vendors affiliated with board members which do not seem particularly specialized in their organizational attributes.  Can we be sure that they are run by the best and the brightest?

Maybe board members who are too cozy with each other, and too cozy with the hired executives they are supposed to supervise, would be distracted from the attentiveness required to their organization's mission by their buddies' businesses? 

Perhaps coziness among board members and hired executives might have something to do with the munificent compensation given to numerous hired leaders of UPMC.  A separate article in the Pittsburgh Post-Gazette stated:

Jeffrey Romoff, president and CEO of the University of Pittsburgh Medical Center, received $3.563 million in salary in 2009, a 24.4 percent decrease from his 2008 salary of $4.711 million.

However,

In addition to Mr. Romoff's $4.711 million in cash compensation in 2008, he received $428,214 in deferred compensation and $21,671 in nontaxable benefits, for a total package valued at $5.161 million.

In addition,

Other top UPMC earners include Elizabeth Concordia, executive vice president and president of the Hospital and Community Services Division, $2.139 million; Amin Kassam, the department of neurological surgery chair who resigned in July, $2.083 million; Robert Cindrich, senior vice president and chief legal officer, $1.869 million; neurosurgeon Ghassan Beijani, $1.798 million; neurosurgeon Adnan Abla, $1.620 million.

Also, Marshall Webster, executive vice president and chief medical officer, $1.514 million; Diane Holder, president and CEO of UPMC Health Plan, $1.485 million; James Luketich, co-director of surgical affairs at the University of Pittsburgh Cancer Institute, $1.442 million; Daniel Drawbaugh, senior vice president and chief information officer, $1.335 million; and David Farner, senior vice president and chief of staff in the office of the president, $1.253 million.

By my count, that was eight executives with yearly total compensation greater than $1 million (in addition to two very well paid neurosurgeons.)  These payments, which most people would say are sufficient to make their recipients rich, were handed out by a not-for-profit organization whose mission statement includes being "committed to providing premier health care services to our region and contributing to this community" at the end of a bog of business-speak.  I suspect most people would think "contributing to this community" means something in addition to contributing to the wealth of a few top executives, and contributing to the business income of board members and executives' relatives.  Again, are board members who have become cozy with each other and the executives they are supposed to supervise more likely to be distracted from their fiduciary duty to the not-for-profit organization by their buddies' friendships?

We often discuss conflicts of interest on this blog.  Many of these involve financial relationships among health care professionals and academics on one hand, and pharmaceutical, biotechnology, device and other health care corporations on the other.  However, I suspect that conflicts involving leadership of hospitals and local businesses and vendors may be more common.  The latter may not always have as much influence on the quality of care, teaching and research as former group of conflicts.  However, they may have more effects on the total costs of health care, and may contribute more to the coziness, sense of entitlement, and inattention to the mission that seem to characterize much of health care leadership.  They may contribute to the perception that health care, like finance, may now be about , as Prof Mintzberg said, "All this compensation madness is not about markets or talents or incentives, but rather about insiders hijacking established institutions for their personal benefit."

The new version of the IRS forms are just beginning to become public, so we expect to see many more juicy stories about the financial and family ties of leaders of health care not-for-profit organizations.  Watch your local newspapers for details about conflicts of interest at your local health care not-for-profit organizations.

Maybe as more is revealed, the need for more transparent, accountable, and ethical governance of health care organizations will become apparent.

Who Guards the Guardians? - the Case of Boston Scientific

The fallout from the case of the faulty implantable cardiac defibrillators continues.  To summarize the story thus far,

We started posting about Boston Scientific's travails in 2005, starting with allegations that Guidant, which is now a Boston Scientific subsidiary, hid information about defects in the implantable cardiac defibrillators (ICDs) the company manufactured. As we noted in early 2005 here, Guidant executives allegedly knew that ICDs made from 2000-2002 were at risk for short-circuiting and failing, thus making them unable to deliver potentially life saving electrical shocks meant to prevent cardiac arrests, but the company only revealed the problem in 2005. By failing to notify physicians and the public, Guidant executives let expensive and profitable, but potentially useless devices to continue to be implanted, potentially increasing the risk of sudden death for the patients who received them. Then here we noted reports that Guidant continued to ship failure-prone devices even after it had designed and started to manufacture new ICDs that were supposed to be less likely to fail. By June, 2005 we posted that Guidant had recalled thousands of ICDs, including models that were previously not identified as likely to fail. Later that year, the case rated an article by Robert Steinbrook in the New England Journal of Medicine. Towards the end of 2005, we noted that Eliot Spitzer had sued Guidant for fraud.  At the end of the year, more information appeared, suggesting that Guidant knew the ICDs were flawed, but continued to sell them. Still more appeared early in 2006. Then the business media became interested in the bidding war between Johnson and Johnson and Boston Scientific for Guidant, provoking a bit more interest in the tale of the suppression of data about the flawed ICDs.

Then all was quiet until 2009, when Guidant, now a Boston Scientific subsidiary, pleaded guilty to two criminal misdemeanor charges that it failed to properly notify the FDA about problems with its ICDs (see post here). Later, the Guidant subsidiary of Boston Scientific settled charges that it gave doctors kickbacks as part of a "seeding study" to use its devices. At that time, it came to light that Boston Scientific had made another settlement, in 2007, of civil lawsuits alleging that the company hid problems with its products (see post here).

More details about this guilty plea have just been reported.  As noted by the Minneapolis Star-Tribune,

A federal judge on Monday delayed a decision on whether to accept a $296 million plea agreement between the U.S. Justice Department and Boston Scientific Corp.'s Guidant subsidiary, which was charged with concealing critical safety information involving some of its top-selling heart devices.

If approved, the criminal penalty would rank as the largest ever in medical technology for a company that violated the federal Food, Drug and Cosmetic Act. But lawyers representing victims implanted with the potentially faulty devices threw a wrench into what was expected to be a routine hearing by demanding a piece of the settlement.

It appears that this settlement would not do any specific good for patients who claim to have been harmed by being implanted with a device that the manufacturer knew at the time to be faulty.

Also, the Star-Tribune noted:

Boston Scientific bought Guidant Corp., whose cardiac rhythm division is based in Arden Hills, for $27 billion in 2006. Though troubled, the division that makes pacemakers and defibrillators reported $2.6 billion in sales last year and still employs 2,000 people locally.

Thus, the financial penalty to be paid by Boston Scientific only would amount to little over ten percent of the yearly sales generated by the division which failed to disclose the faulty devices.

Adding to the sense that Boston Scientific and its leadership will feel little pain from the "largest criminal penalty ever assessed against a medical device company" (see this AP report) was this op-ed in the Boston Globe. It summarized just how richly the former CEO of Boston Scientific, Jim Tobin, who presided over the acquisition of Guidant and thus became responsible for its ethical lapses, and the current CEO, Ray Elliott have been compensated, in contrast to this supposedly large penalty. Re Tobin:

Tobin came to Boston Scientific in 1999 with similar instructions to clean up somebody else’s mess. He had to close facilities, ward off competitors, and, yes, settle patent lawsuits even back then. His carrot: A million stock options, a big deal in those days.

Tobin did fix some problems, and he brought the company’s new drug-eluting stent to market. Boston Scientific shares climbed, and he made about $39 million on options over the years. But Tobin also collected problems, the ones now in Elliott’s lap, and Boston Scientific shares fell again.

So here’s what the board did in February last year: It awarded Tobin 2 million more stock options, just a few months before announcing his retirement.

Adjusting for a stock split, the second option grant is the same size as what he got upon arrival.

And re Elliott:

Elliott, the man named as CEO of Boston Scientific Corp. last summer, became one of the best-paid chief executives in America in 2009. Separate national surveys published in the past week by The Wall Street Journal and The New York Times, although incomplete, come up with just one or two large-company CEOs with compensation packages that could outdo Elliott’s $33.5 million payday.

And see also this Health Care Renewal post. 

TheBoston Globe editorialist asked "so what exactly was the point of the second award [to Tobin]?"  Perhaps this question should be directed to the Boston Scientific board who approved it, and also approved Elliott's outsize pay package. 

The current board includes two co-founders of the company and the current CEO, two retired politicians, a few others with whom I am not familiar, but also two academics who may be quite familiar to Health Care Renewal readers. 

Recalling that Boston Scientific tried to plead guilty to charges of "making false statements ... to the FDA," and "failing to promptly notify regulators," it is striking that both these academics have had issues with transparency and free speech.  We just posted about the repeated failure of Prof Uwe Reinhardt to acknowledge the conflict of interests generated by his numerous memberships in the boards of health care companies, including Boston Scientific, when writing about health policy issues.  We have previously posted about the the conflicts of Marye Anne Fox, the Chancellor of the University of California - San Diego and hence leader of its medical school and academic medical center.  Chancellor Fox has just been criticized by FIRE (the Foundation for Individual Rights in Education) for allowing the silencing of a student publication and television station which had published or broadcast opinions that apparently offended university leaders.

So who in this sorry tale will stand up for quality care of patients?  The US Department of Justice is to be commended for pursuing deception by a large medical device company, but apparently could not bring itself to request a punishment for unethical practices likely to even inconvenience those responsible for the bad behavior.  The previous and current company CEOs have become quite rich without having to stand up for honesty, or patient safety.  The board of directors who are supposed to take responsibility for the overall direction of the company seem to have been happy just to go along.

As I have said before, endlessly, we will not deter unethical behavior by health care organizations until the people who authorize, direct or implement bad behavior fear some meaningfully negative consequences.  Relatively small fines imposed on large corporations pain workers on the line and stockholders while sparing the richly paid top hired management and the boards that will not reign them in. 

Real health care reform needs to make health care leaders accountable, and especially accountable for the bad behavior that helped make them rich. 

More Doubts About Private Equity Taking Over Not-for-Profit Hospital Systems

Last week, we posted about how buy-outs of not-for-profit hospital systems by private equity firms seemed to be a new fashion in health care.  Since then, new doubts have been raised about whether this is a good idea.

Detroit Medical Center, Vanguard Health, and the Blackstone Group

Letters to the Detroit Free Press raised concerns,

As a nonprofit corporation, DMC's mission is to provide quality health care to the community. Management is accountable to Detroit area citizens and health care consumers, not to profit-motivated investors.

As a private, for-profit corporation, its mission will be to provide profit for its shareholders. Management will be accountable to shareholders and will be rewarded in relation to the rate of return on their investments.

Also, the Free Press reported that a coalition of local not-for-profit organizations challenged the legality of the proposed sale,

The sale of the Detroit Medical Center to a for-profit Nashville company violates state law and raises issues about whether poor patients who depend on the DMC will be assured of care for years to come, three nonprofit Michigan organizations said today.

Marjorie Mitchell, executive director of Michigan Universal Health Care Network, said the organizations e-mailed today a three-page list of concerns about the sale to Michigan Attorney General Mike Cox.

Mitchell testified briefly today at the Detroit City Council about the issue and distributed the letter. The two other nonprofit organizations signing the letter were Metropolitan Organizing Strategy Enabling Strength, or Moses, an organization of community and religious leaders active on health issues, and Michigan Legal Services, a Detroit legal aid organization. The three groups called themselves the Coalition to Protect Detroit Health Care.

Citing a provision in state law, the letter said Michigan law is clear that nonprofit companies should not 'permit assets … to be used, conveyed or distributed for non-charitable purposes.'

'The mission of a for-profit is to serve the stockholders,' the letter to Cox said. The letter said it is the opinion of the three groups that the purchase by Vanguard of the DMC 'violates Michigan’s nonprofit corporation statute.'

The three organizations asked Cox to hold public meetings to answer questions about the impact of the proposed sale on the health of Detroiters, particularly uninsured people.

The groups also have questions about how the DMC’s $140-million charitable assets will be used as well as concerns that use of state Renaissance Zone money would benefit a for-profit company.

Caritas Christi Health Care and Cerberus Capital Management

Boston Globe news articles noted that Cerberus failed recently not only in its management of Chrysler, but of GMAC (now also bailed out by the US government), its management is secretive even for the opaque world of private equity, and it has no experience running "large medical systems." 
 
A letter by Dr Arnold Relman, distinguished former editor of the New England Journal of Medicine, warned,

Cerberus promises to keep the present hospital management, add much money beyond the purchase price toward the operation and improvement of the hospitals, maintain charity support, and not sell the system — for three years. After that, who knows? Cerberus follows its own interests, and it will take money out of the community, not contribute to it.

As a close observer of the for-profit hospital industry ever since its beginnings, I predict that Cerberus will sell to another business sooner or later, and the initial promises will be forgotten. That’s what happened at Framingham’s MetroWest Hospital.

Control over the kinds of medical services provided by the hospital would be lost. Unprofitable services such as pediatrics, obstetrics, and outpatient psychiatry would disappear. Business-owned hospitals will resist major reforms to control medical costs or reorganize a community’s medical services in the public interest.

Caritas Christi ran an advertisement in local papers that referred to Cerberus as its new "financial sponsor," suggesting that the company was going to give a still not-for-profit health care system a grant, quite different from what was really proposed, which was that Cerberus would become the owner of a formerly not for-profit health care system, thus rendering it into a privately held, for-profit system.  One wonders why the public relations people thought they needed to spin the deal thus.

Finally, the Boston Globe profiled current Caritas Christi CEO Dr Ralph de la Torre, who apparently negotiated a deal that would leave him "as chief executive of Caritas, while also putting him in charge of acquiring other hospitals for Cerberus." But the article raised questions about what sort of leader he would be. It characterized him as transformed "from doctor to dealmaker," who now "stands to win a much bigger payout." Worse, it suggested that winning, as evidenced by making more money than anyone else, rather than access to quality patient care, is his prime motivation.

He used to say, ‘It’s not about the money, but that’s one way people keep score.’

In addition, Dr De la Torre has now so transformed into a CEO that "he let his medical license lapse."

Summary

Let me note some people think that the notion that how much money one makes should be considered a "score," and that he who dies with the most money wins, was one of the central reasons for the global financial collapse. For example, Nancy Rapoport suggested some New Year's resolutions for corporate boards (in 2008!), including:

I will remind myself and my colleagues that the level of CEO compensation is not an indicator of the company’s performance and that the arms race towards excessively high executive compensation is not a winnable race. At the point when money becomes just a way of keeping score, compensation is probably too high.

Earlier in 2007, Michael Kinsley wrote presciently in Time about,

a development in the larger economy. For most people, the point of money is that you can buy things with it. But at the top, where people already can buy whatever they want, the purpose of money is keeping score: making sure that you don't slip down in the Forbes 400 list.

So, putting someone who believes that he must always make more money in order to keep "winning" in charge of a large health care system does not seem to be a recipe for better patient care or more access, but rather for ever-increasing executive compensation while making money becomes the overwhelming priority for the organization, completely eclipsing such quaint concepts as quality of care, reasonable costs, or adequate access.

Recent history has not shown that for-profit hospitals deliver cheaper, better, or more accessible care than not-for-profit institutions. While their presence has influenced not-for-profit hospitals to behave more like for-profit institutions, costs have risen inexorably while quality and access decline.  

Moreover, for-profit hospitals run by private equity (as opposed to publicly traded corporations) would likely to be even more opaque than they were when they were not-for-profit. Increasing opacity of health care would likely worsen, not improve our current problems.

Deals that turn not-for-profit hospital systems into privately held for-profit systems ought to be scrutinized ith extreme skepticism. The questions raised above about the currently proposed deals ought to be addressed, In addition, I would suggest that all such deals should be conditioned on a requirement that the taken-over hospitals, and their parent private equity companies have to disclose at least as much as both public for-profit health care corporations and not-for-profit health care organizations are required to disclose, e.g., their ownership, the make-up of their boards of directors, the compensation, in detail, of their most highly paid officers, employees, and board members, all conflicts of interest affecting their leaders, etc. By the way, maybe such disclosure should be required of all health care organizations above some reasonable minimum size. If private equity companies are unwilling to make such disclosures, maybe they should not be allowed to run health care organizations.

The Price is What?

Many in the US believe that a free market in health care is a good idea.  Some actually assert that the US health care system amounts to a free market. 

More evidence against that assertion was provided this week by an article in our local paper, the Providence Journal, by Felice Freyer. For the first time ever, the Rhode Island state health insurance commissioner published a report comparing what insurers pay different hospitals for the same services:

If you had surgery at Kent Hospital, your insurer would pay Kent significantly more than if you had the exact same procedure at South County Hospital –– even if the same doctor did the work.

On average, Kent is getting paid nearly twice as much as South County for inpatient care, according to a new report from the health insurance commissioner that is causing a stir across the state’s health-care industry.

It is well-known that hospitals get paid different amounts for the same services. But the report, for the first time, reveals the winners and losers, and quantifies the disparities –– with numbers showing the differences to be greater than many people thought.

The factor determining which hospitals are paid the highest rates, according to the report, is whether the hospital is part of a group. Such hospital systems have the clout to negotiate higher prices than independent hospitals.

'We’ve never had this kind of data [before],' said Christopher F. Koller, state health insurance commissioner. 'The results and analysis show that higher payments to hospitals are associated with system affiliation, and the current contracting method does not appear to encourage the fair treatment of providers.' There is no evidence connecting higher pay to higher quality, he said.

What is striking is the reason why such a comparison has never appeared up to now:

Koller’s report shines a flashlight beam into the murky world of hospital finance. Hospitals negotiate privately with insurers to establish how much they will be paid for each service. These talks are largely unregulated, and always private, so that no hospital knows exactly what its neighbor is being paid. All are forbidden by contract to reveal their rates.

Koller collected data from Blue Cross & Blue Shield of Rhode Island and UnitedHealthcare of New England concerning payments to 11 acute-care hospitals in 2008. He is the first public official to obtain this confidential information, saying he was entitled to it because a 2004 law requires him to promote the affordability of health care and ensure the fair treatment of providers.

Thus, the prices of commonly used medical services provided by hospitals were largely secret.

On obvious requirement for the function of a free market is price transparency. When making a purchasing decision, one needs to know what prices different sellers charge.

In a recent commentary in the Wall Street Journal, Alan S Blinder, a Princeton economics professor, and former Vice Chairman of the Federal Reserve Board, described the basic requirements of a free market:

When economists first heard [movie character Gordon] Gekko's now-famous dictum, 'Greed is good,' they thought it a crude expression of Adam Smith's 'Invisible Hand' — which is one of history's great ideas. But in Smith's vision, greed is socially beneficial only when properly harnessed and channeled. The necessary conditions include, among other things: appropriate incentives (for risk taking, etc.), effective competition, safeguards against exploitation of what economists call 'asymmetric information' (as when a deceitful seller unloads junk on an unsuspecting buyer), regulators to enforce the rules and keep participants honest, and—when relevant—protection of taxpayers against pilferage or malfeasance by others. When these conditions fail to hold, greed is not good.

Clearly, one cannot have appropriate incentives when prices are secret. Secret prices are also a glaring example of "asymmetric information." (Hospitals know what different insurance companies pay them for specific services, but not what the companies pay other hospitals for those services. Insurance companies know what they pay to different hospitals for the same services, but not what other companies pay. Patients, physicians, policy-makers and the public heretofore had no idea what any hospital was paid by any insurance company.)

The question begged is why neither hospitals nor health insurance companies wanted to make the prices public. One wonders if it were fears of looking incompetent (by paying to much, or charging to little), or worse, of revealing collusion. One also wonders if it were fears of revealing how anti-competitive is the current way of doing business.  At the time of data collection, Rhode Island had only two health insurers.  As noted above, large hospital networks got the highest prices.  Price differences did not obviously relate to quality of care, or costs of teaching programs. 

Note that we previously discussed secret agreements between a dominant health care insurance company and the largest hospital system in our northern neighbor, Massachusetts, and how these agreements resulted in payments to that system far greater than those paid to any other hospital.  I suspect that secret deals resulting in wide pricing discrepancies are the rule, rather than the exception in the US, and that such deals overwhelmingly favor the largest organizations, but not the best care. 

As we have been saying repeatedly since we started Health Care Renewal, the leadership of the large organizations that now dominate health care lacks accountability and transparency, and often fails to exhibit integrity and honesty.  Deliberately concealing price information obviously is an example of failing to be accountable and transparent. 

Now that the events have conspired to slow the US health care reform juggernaut, maybe we can reconsider whether meaningful health care reform can be accomplished without improving accountability, integrity, transparency and honesty of health care oganizations and their leaders.

Office of the National Coordinator for Health Information Technology (ONC): A One Man Show?

Generally, transparency in government means that the public it serves knows who that government is.

Yet the "Office of the National Coordinator: Key Personnel" page at HHS shows only this, the name of the Coordinator himself, Dr. David Blumenthal:

Only one person works at ONC? click to enlarge

What about the others as per the Org Chart?

ONC Org Chart (click to enlarge)

In the case of the Office of the National Coordinator for Healthcare IT, there are a number of possibilities for this apparent informational lapse:

• There is only one person working in this office;

• Only one person is considered "Key Personnel";

• This office, responsible for the national program for health IT and Electronic Medical Records in the U.S. that will "revolutionize" healthcare through better record keeping, has been careless in updating its Electronic Personnel Records;
  

• The names are buried somewhere not easy to find, or the identities of the personnel are being entirely withheld from the public to prevent the public from knowing who they are and what their past and present affiliations might be.

Why might that be an issue? Pro-IT industry conflicts of interest, qualifications, and anti-physician biases come to mind as just a few possibilities.

Where's the transparency?

Just asking.

-- SS

Addressing Drug, Biotechnology, and Device Companies' Payments to Physicians: the Thai National Health Assembly

We have frequently discussed how financial relationships among physicians, other health care professionals, and health care academics, on one hand, and drug, biotechnology, medical device and other health care corporations may have adverse effects on patient care and medical teaching and research.  A first step towards addressing these relationships would be their full disclosure.  Here in the US, Senators Grassley (R-Iowa) and Kohl (D-Wisconsin) have been pushing for a Physician Payments Sunshine Act which would require all such companies to disclose all such payments.  Whether it will become law, as part of health care reform legislation or independently, is now anyone's guess.

Since we are based in the US, we tend to discuss such issues from a US viewpoint.  Just to show that these problems are global, and that some countries may have more fruitful approaches to them than others, see a recent article from the Bangkok Post on the run up to the Thai National Health Assembly:

Over-prescription of pills and medicines by doctors under pressure from pharmaceutical companies is being condemned by senior doctors ahead of a national health assembly on the issue this week.

In some cases, drug sales representatives were criticised for wearing 'inappropriate outfits' and offering gifts to secure orders.

Doctors say they are quite prepared to join any public sector moves to end unethical drug promotion to protect patients and cap soaring national health care costs and irrational drug use.

At a forum on ethical criteria for promoting medicines, physician Prasert Palittapongarnpim, of Chiang Rai's Prachanukroh Hospital, said big pharmaceutical firms use many different methods to encourage doctors to prescribe their drugs.

They range from small gifts and stationery to lucrative luncheon lectures, seminar sponsorships and overseas trips.

Dr Prasert said he was once offered a huge sum of cash by a drug salesperson to change his drug order.

Some senior doctors also tell their medical students to buy drugs of smaller dosages so they can increase the size of their orders.

At the close of the Assembly, the Bangkok Post reported:

Curbing the influence of pharmaceutical firms on doctors topped the agenda of the three-day National Health Assembly which ended yesterday.

A better regulation was needed to govern the promotional activities and the sale of medicine to solve the problem of unnecessary and excess drug prescription by physicians, the annual health forum was told.

Unethical sales of drugs were among 11 health-related issues discussed during the second National Health Assembly (NHA2009).

Suwit Wibulpolprasert, the assembly's chairman, said the problem of over-prescription was rampant and worrying.

There are doctors who only place orders with a firm offering them lucrative inducement packages in return, such as overseas trips and expensive gifts.

'We need to have a regulation which would require these drug firms' sponsorship to doctors to be made public,' said Dr Suwit. He said a group of experts were working on a bill to prevent a conflict of interest between doctors and pharmaceutical companies. When ready, it would be submitted to the national drug system development panel, chaired by the prime minister, for consideration.

Dr Suwit has recommended that an independent body be set up to monitor and report the unethical behaviour of doctors and concerned agencies until the enforcement of the new law.

One would think that having a National Health Assembly would orient health policy more towards the issues concerning people and patients rather than those pushed by health care corporate CEOs (as we discussed here).  Of course, here in the US, we have nothing that resembles the Thai National Health Assembly.  Maybe if we did, legislation like the Sunshine Act would get a more favorable reception.

Pfizer CEO Now Acknowledges "We Need to be Straight with People"

Even the CEO of the world's largest pharmaceutical company is now conceding that unethical behavior by large health care corporations has lead to trouble.  As reported by The Day (New London, CT, US): 

Three months after his company paid the largest criminal fine in U.S. history, Pfizer Inc. chief executive Jeffrey B. Kindler called on government and business leaders Tuesday to face up to the 'real and legitimate anger' of citizens fed up with ethics breaches.

'If we fail to change, the future will not be pretty - for business or for society as a whole,' Kindler said in a keynote address to the Boston College Chief Executives' Club at the Boston Harbor Hotel. 'People have had enough, and the backlash is real.'

Kindler told the luncheon meeting of about 250 chief executives in the Boston area that a recent survey found two-thirds of the American people now have less trust in corporations than they did a year ago - and the decline in their faith in government and public officials has been even more drastic.

'When the majority don't trust you, they will find a way to force you to change,' he said. These changes, he added, could include limits on businesses' licenses to operate and might affect private-sector innovation.

Pfizer, he acknowledged, has had ethical lapses as well, capped by the $2.3 billion in fines imposed in September for the company's illegal marketing of various drugs. The company's $1.2 billion criminal fine was the largest corporate penalty in U.S. history.
'It was a real blow to our employees,' Kindler said. 'It did not reflect the company we all knew.'

The government of Switzerland also fined Pfizer and two other firms a total of $5.7 million Tuesday for alleged price-fixing of erectile dysfunction drugs.

Mr Kindler also pledged there would be some changes:

Kindler said he understood those in the audience who might wonder, in the wake of Pfizer's own ethical problems, 'Who are you to talk about trust?'

But he said Pfizer has changed. Golf trips, fancy dinners and tchotchkes left for doctors are now out, and there are fewer company sales representatives in the waiting rooms. Results of clinical trials are now posted for all to see.

Also, according to a Boston Herald article:

'We need to be straight with people,' said Kindler at a Boston College Chief Executives’ Club lunch.

'It’s up to us to earn back the trust we’ve lost,' Kindler said.

Already, the company is much more transparent with its operations, he said. It has begun disclosing a number of its business relationships on its Web site and has ceased the high-priced wooing of the doctors who might prescribe its products.

Let me applaud Mr Kindler's declaration that we "need to be straight with people," and in the spirit of constructive criticism, give him some unsolicited advice about ways the company could be more "straight."

First, he might start by admitting the scope of past problems.  As we posted previously,  the $2.3 billion settlement alluded to above was  the company's fourth major settlement of charges of unethical marketing behavior since 2002, and also as alluded to above, it is not the company's most recent ethical problem.  For a catalog of Pfizer's ethical pfailures, see this link. 

Second, he might acknowledge some responsibility for past problems, or indicate that someone will be held accountable for them.  Note that according to the biographical statement in the 2009 Pfizer proxy, Mr Kindler has held leadership positions at the company since 2002. 

Third, he might consider a more vigorous transparency effort, starting with the company's relationships with physicians, and other health care professionals and academics.  The company has pledged to put some sort of information about payments to such people online, but not until 2010.  Maybe that schedule could be sped up.  Furthermore, it is not clear how much information will be disclosed, but the company ought to consider making it clear what payments are for, what division of the company (e.g., research and development, or marketing or public relations) made the payments, and how the payments were linked to particular Pfizer products.

Fourth, he might make a more vigorous effort to disclose the results of all clinical research sponsored by Pfizer.  In the past, Pfizer has allegedly been a party to suppression of results of clinical research that turned out not to favor its products (e.g., see this post).  It is true that Pfizer pledged to post the results of at least some unpublished studies on ClinicalStudyResults.org, but the completeness of its reporting is questionable.  But a report by the German Institute for Quality and Efficiency in Health Care suggested that through this year Pfizer has been dragging its feet about disclosing results that may not make its products look good.  Consequently, the Institute is now calling for compulsory disclosure of the results of all clinical trials. 

I do hope that Mr Kindler and Pfizer management are serious about their commitment to "earn back the trust we've lost."  If so, more power to them.

Making Health Care More Representative and Accountable - the Example of the Thai National Health Assembly

On Health Care Renewal, we have often shown how the governance of health care organizations may be unaccountable, unrepresentative of relevant constituencies, opaque, and not subject to ethical standards. Conversely, we have repeated the need to make the governance of health care organizations accountable, representative, transparent, and ethical. Meanwhile, our US debate about health care reform seems to be driven by leaders of powerful health care organizations, while common citizens need to scream to be heard.

Maybe we could benefit from a lesson from another country. As reported in the Bulletin of the WHO, Thailand seems to have found a way to get ordinary citizens and members of civil society involved in a civil, organized health care discussion.

For Dr Suwit Wibulpolprasert, chairman of the committee organizing Thailand’s first National Health Assembly (NHA), which took place from 11 to13 December 2008 in Bangkok, opening up the debate on public health is an essential part of developing effective national policy. 'In the past, health policy has tended to be drawn up by politicians and officials,' Wibulpolprasert says. 'But the National Health Assembly is a forum for the public to pool views and initiate health agendas that truly address people’s needs.'

More than 1500 people attended the conference, the first of its kind to take place since the passing into law of the National Health Act of 2007, which also brought the NHA into existence.

A broad cross-section of Thai society was represented, including 178 delegations from government agencies and provincial authorities, the private sector and civil society. In addition, groups including stateless people living near the Myanmar border gave presentations at technical briefings for participants. Dr Kumanan Rasanathan, from WHO’s Department of Ethics, Equity, Trade and Human Rights, described the meeting as 'a very interesting exercise in participatory governance'.

The 12 topics that were up for discussion were distilled from more than 68, including such familiar ones as universal access to medicines and equal access to basic public health services. Also addressed were matters as diverse as agriculture and food prices in the current economic crisis and safe media access for youth and family – an agenda that included a proposal for addressing problems of children addicted to online games and television.

'The broad slate of topics reflects the intention to encourage input from everyone,' says Rasanathan, 'and improve public participation as well as intersectoral collaboration.' In other words, the assembly’s organizers actively encouraged the participation of stakeholders from outside the field of public health – from education, agriculture and industry, to name but a few.

'The Thais have adapted much of the machinery of the World Health Assembly [WHO’s supreme decision-making body] for their own context,' says Rasanathan, who noted that each of the 178 constituent groups had equal speaking rights. Briefing papers were produced and resolutions were passed on each of the agendas. As with WHA resolutions, these resolutions are not binding.

According to Dr Amphon Jindawatthana, secretary-general of the National Health Commission Office, once the resolutions have been adopted they are considered by the National Health Commission, which reworks them for ministerial review and possible inclusion in national policy.

Given the hurdles that still need to be cleared once a resolution is passed at the Assembly, one might be forgiven for dismissing the body as something of a talking shop.

This is a charge that Wibulpolprasert firmly denies. He is convinced that NHA-formulated resolutions will certainly lead to policy, and policy that is closer to the needs of Thailand’s 63 million people.

The 2009 Assembly will be held in December. Details can be found here.

I wonder if we would be having a more productive health care debate in the US if the way had been prepared by a US National Health Assembly? Maybe if the multi-million dollar a year leaders of health care organizations had to listen to the concerns of ordinary people, and some practicing health care professionals, a little common sense might penetrate into the bubble created by their superclass membership.

Captains Outrageous for Cape Anne's Health Care System

While on a brief vacation on lovely Cape Anne, Massachusetts, one of my daily automated Google searches provided an article of local interest. The person nominated to be CEO of the local hospital system had been at the center of controversy while in his previous position as leader of a hospital system in Cincinnatti, Ohio. When I got back, I put some relevant terms into Google, and lo and behold, came up with one of the more complicated and colorful, if unhappy stories about problems with health care leadership and goverance I have seen lately. So, to the tune of "lions and tigers and bears, oh my...."

Let me start with some background, and then to try to tell this story chronologically, noting issues as they came into public view. Northeast Health System is a regional hospital system in northeast Massachusets. It includes Addison Gilbert Hospital in Rockport, BayRidge Hospital in Lynn, and Beverly Hospital. Now bear with me through the amazing details.

Leadership Lacking in Transparency

The system's leadership seems to have recently inspired more than its share of controversy. Hints about the nature of the leadership problem appeared in an editorial in the Gloucester (MA) Daily Times in April, 2008.

Once again, Northeast Health System, the Beverly-based corporation that owns Gloucester's Addison Gilbert Hospital, is trying to have it both ways.

When it wants public support — including public money — it casts itself as serving the public. When it doesn't want the public looking into its affairs, it retreats behind the 'private corporation' wall.

That is not acceptable.

The latest example is Northeast's refusal to provide statistics on its diversion rate of patients from Addison Gilbert to Beverly Hospital during the past three years.

Although the editorial allowed that the diversion statistics might not prove to be that alarming, but

If there is not a problem here, the corporation is simply creating needless concern about it by its failure to be forthcoming.

Unfortunately, this is a continuing pattern for Northeast CEO Stephen Laverty, who apparently sees no problem with accepting subsidies of $500,000 from the state for two years running — subsidies secured in part through Tarr's efforts — but then ignoring reasonable requests for information about the corporation's operations, specifically as it pertains to Addison Gilbert.

Statistics on diversions should not be high-level trade secrets. Laverty must make Northeast more transparent.

Doctors Vote No Confidence

The pot really started to boil in May, 2008. At that point, as reported by the Boston Globe, its medical staff voted "no confidence" in CEO Stephen R Laverty:

In a private meeting, doctors at Beverly Hospital have taken a vote of no confidence in its chief executive, Stephen R. Laverty, citing frustration with his management.

The unusual step, made three weeks ago and acknowledged by hospital officials this week, was prompted by Laverty's alleged lack of communication and support in recent years, said several doctors who attended the April 29 meeting at the hospital.

'There's been a lot of cumulative dissatisfaction with how the physicians have been dealt with over a period of years in a variety of departments,' said Dr. Harriet A. Bering, an oncologist who was at the meeting. 'People had the same frustrations with incidents in which they hadn't been included in the decision-making process.'

A vote of no confidence, oh my. The article was not very specific about what lead to such an unusual step, but did note that doctors "accumulated grievances during Laverty's tenure. For instance, they said they were not properly consulted a few years ago when Beverly Hospital ended a successful cancer treatment program with North Shore Medical Center...." So this part of the story points to a hospital system management that does not see the need to communicate with and be transparent to dedicated health care professionals.

The Pregnancy Pact

In June, 2008, a story about a high school's unexpectedly high pregnancy rate and allegations that girls there entered into a "pregnancy pact" got international attention. The latter allegation was not proven, and although initial coverage did locate the story in Gloucester, MA (e.g., see the story in Time), the role of Northeast Health System was more obscure. Later we learned, in October, 2008, as reported in the Gloucester Times,

Addison Gilbert Hospital risked losing the state grant that pays for the operation of the Gloucester High School Health Center this spring when hospital leaders were reluctant to allow confidential access to birth control at the clinic, according to its former staff.

Debate about prescribing contraceptives erupted within a health center advisory board working on a response to the rise in teen pregnancies in Gloucester this year and turned public when the medical director and nurse practitioner resigned because representatives of Northeast Health Systems, the company that owns Addison Gilbert and runs the clinic, would not consider adding confidential prescription of contraceptives to the care offered.

A pregnancy pact, oh my. But this part of the story speaks to system management that seems unsympathetic to the concerns of its health professionals.

Nurses Vote No Confidence, and Allege a Punitive Culture and Intimidation; Vice President Accused of Art Theft

Also in October, 2008, the nurses also voted no confidence, again per the Gloucester Times in an editorial that provided more hints about the nature of the system's leadership problems,

Conflicts between Northeast Health System CEO Stephen Laverty and his subordinates are, unfortunately, nothing new.

By now, in fact, they have taken on a weary familiarity. After persistent rumors of unrest, a group of subordinates goes public with their frustration and resentment of the CEO. This past week, it was the nurses union, with members at both Beverly Hospital and Gloucester's Addison Gilbert Hospital, that took a 'no confidence' vote in Laverty.

The union is now trying to pressure the board of trustees to fire him, saying Laverty has created a 'punitive organizational culture (with) ... oppressive management practices.' And a 2005 Beverly Hospital citation by OSHA, which surfaced along with the nurses' discontent, gives credence to that claim.

The nurses, of course, are not alone. This past April, it was doctors who took a no confidence vote. In 2006, the Massachusetts Nursing Association filed a formal complaint against Laverty for entering operating rooms unannounced to observe surgeries.

Yet, the response from Laverty is always the same — no response. And his spokespeople offer little more than vague references to 'challenges' and 'competing agendas,' concluding with how proud they all are of themselves.

The editorial allowed, "It's also true that, in any large business, especially one as competitive as health care, there are sure to be conflicts between management and labor." However,

Still, it has to concern the Northeast trustees that every time there is trouble or unrest, Laverty is at the center of it.

It should concern them that morale continues to sink under his style of leadership, which most subordinates agree is a mix of arrogance and intimidation. Effective leaders don't assert their authority by demeaning their subordinates. They lead by building people up, not tearing them down. They lead by inspiring, not breeding resentment.

The truth is, Northeast still inspires shaky confidence among Cape Ann residents for a variety of reasons, including the corporation's out-and-out refusal to share numbers regarding the number of ambulance transport "diversions" from Addison Gilbert to Beverly — and, more recently, Northeast's stewardship over Addison Gilbert's wonderful endowment of artwork.

The recent arrest of a former Beverly Hospital associate vice president — a reported friend of Laverty — on charges of stealing donated art and antiques worth more than $200,000 from the hospital, hardly inspires confidence. And public confidence is one of the most important assets any health care institution has, since its patients are entrusting their health and livelihoods to it.

At times like this, when the public starts asking questions about problems, Northeast officials tend to retreat behind the 'private corporation' wall. It is true that Northeast is not part of the public sector. But it regularly seeks donations from the public. It has received at least $1.5 million in state money, supposedly to support its services to the public, but somehow still finds enough money to pay Laverty well more than $600,000 a year.

The trustees surely should not take the nurses vote as the only credible word on Laverty. But they need to take it, along with other continuing conflicts, very seriously.

Another no confidence vote, a punitive organizational culture and oppressive management, arrogance and intimidation, and art theft, oh my. So here we have much more detail about bad management, punitive, oppressive, arrogant, and ruling by intimidation. We also have allegations of criminal behavior by top managers.

Wait, what was that, a vice president of the system arrested for stealing art from it? In November, 2008, the Boston Globe suggested Laverty's imminent departure, and added more about the art theft.

The current situation comes after years of increasing resentment between Laverty and hospital staff. His internal relationships at the hospital were also damaged by his longstanding association with Paul G. Galzerano, Beverly's former associate vice president for support services. Galzerano sometimes argued with staff members, according to longtime employees, and often threatened them based on his close association with Laverty, according to former nurses.

Galzerano, who left the hospital last year, was arrested in October by Groveland police, who alleged he stole paintings, a grandfather clock, and furniture from Beverly Hospital. The items were found in his home, according to police, who alleged they were stolen when the hospital was undergoing renovations. Galzerano could not be reached for comment yesterday.

Threats by allegedly an art thief, oh my.

Birthing Center Threatened with Closure

But Laverty's departure did not end the controversy. Also in November, 2008, the Boston Globe reported,

A proposal to cease all deliveries at the North Shore Birth Center in Beverly - one of only two hospital-affiliated centers statewide that offer natural birth options - has ignited a passionate protest from women across the region.

With a debate and potential vote by Beverly Hospital's board of trustees expected Tuesday morning, women have been picketing the hospital, circulating fliers, writing letters to board members, blogging and organizing on Facebook, where more than 500 members have already signed on to the campaign.

Service cuts, oh my. After the art work was stolen, the system decided to cut costs by reducing an apparently very popular service.

Specialty Service Cuts, Bed Cuts, and Board Conflicts


An eloquent letter to the Cape Anne Beacon in January, 2009, (and an abbreviated version in the Gloucester Times) by Ms Beverly Quint of Drumlin Road, Rockport, provided much more detail about the legacy of the leadership and governance problems at Northeast Health Systems:

Since November, I’ve heard a number of people say on line at the market, or greeting one another for coffee or waiting for a movie to start, 'Thank goodness he’s gone. Now we can get somewhere without the worry.'

At first I thought they might be talking about the presidential election, but it became clear that most of them felt that anyone leading the country at this time was not expected to perform feats of magic. Then I wondered if they were talking about Father Time, himself, the old guy with the flowing robe and the long beard. It has, in fact, been a year of plunging confidence and quiet desperation. No, people were talking of neither of these; people were and are talking about the exit of Stephen Laverty, the much-criticized CEO of Northeast Health Systems, the corporation that 14 years ago merged with Addison Gilbert Hospital, our community hospital.

I wish I could share my neighbors’ rejoicing at Mr. Laverty’s exit, but I am more worried than ever about the potential loss of our hospital, the lifeline for Cape Ann citizens, isolated as we are from the mainland, connected by two not-always-reliable bridges. Here’s why I’m more worried than ever:

When NEHS announced its merger with AGH, it declared that the merger would benefit both parties. Almost immediately, NEHS began to dismantle AGH, service by service. Nor has NEHS ever made available to the community a detailed accounting of its use of $2 million given by the state Department of Public Health for the protection of emergency surgical and anesthesiologist services at AGH. Here it should be added that NEHS has never given a detailed accounting to the community of other sums taken from AGH, in the form of income from investments, real estate and an art collection estimated at $4 million.

Having downsized AGH’s bed capacity by refusing to use the beds on Steele Two and having sent patients to Beverly for every or no reason and having closed several departments, what remains in Gloucester is a shell. Even as such, we can still call it our community hospital so long — and only so long — as it provides eight services all under one roof, eight services essential for retaining its license. Now even that status for AGH is at risk. And that is why I am more worried than ever. If those eight services go, we lose all — and now they are being plucked at by NEHS. We are at the tipping point, with or without Stephen Laverty.

Let me give you a few examples. One of the eight services essential to our hospital’s survival is the availability of a surgeon 24/7. Instead, NEHS, without announcing it, sends any patient whom they think might need surgery to Beverly Hospital. Till Jan. 1 of this year, we had only one general surgeon based on Cape Ann. Now, again without publicizing it, he will not be available on call for emergency services.

The same is true of anesthesiologists. Without publicizing it, NEHS has not recruited anesthesiologists for AGH, even as it has not recruited surgeons for AGH. This, despite the previously mentioned $2 million received from DPH for bolstering those specialties.

Availability of hospital beds is another of the eight essential services required for AGH to stay alive, but NEHS refuses to open medical-surgical beds on Steele Two, sending patients away from their families, over the bridge instead.

NEHS has also not made an effort to insist that specialists, such as pulmonologists, see hospitalized patients at AGH, but are insisting that patients, instead, be moved to Beverly. As a by-product, this means that patients’ family members — many elderly, many handicapped, many who do not drive —are deprived of a closeness, something that can be emotionally important to patients’ recovery.

For starters, the present board of trustees needs to be questioned on the very high percentage of trustees who are physicians and executives employed by NEHS.

Cuts in surgical and anesthesia services, cuts in beds, shifting of medical sub-specialty services, and conflicted board members, oh my. So whatever the management is doing, it is not increasing services. Also, Ms Quint's letter suggested that conflicted governance may be enabling bad management.

Can It All Be Blamed on the Previous CEO?

In another letter published only last month, in August, 2009, Ms Quint suggested that things had not changed much under an interim CEO,

Not only has the Board of Directors of Northeast ignored a petition by 8,000 Cape Ann residents begging Northeast to disclose its plans and make a commitment in writing. Not only has Northeast ignored a petition by Rockport residents at Town Meeting to be more interactive in commitment to this issue.

Not only has it ignored Rockport selectmen's request to report at regular meetings to which the public could have input.

Not only has it snubbed overtures by state Sen. Bruce Tarr to meet regularly with his Task Force, it has systematically downsized, downsized, downsized Addison Gilbert.

Some of this has been ascribed to the particularly tyrannical nature of former Northeast CEO Stephen Laverty. Yet here is a most recent example that belies Mr. Laverty's personality as the supreme cause of the problems. On July 28, Dr. Henry Ramini, interim replacement for Mr. Laverty, spoke to Rockport selectmen on the status of Addison Gilbert. Did you know Dr. Ramini would be there? Nobody seemed to know.

Even the selectmen — one of whom, I understand, had been on vacation — seemed unprepared to publicize Dr. Ramini's appearance. What I later learned from people who happened to hear Dr. Ramini was that he is a much kinder, gentler appearing person than his predecessor. However, the content of his presentation was not particularly reassuring: He urged the town of Rockport to be nice to any future doctors who might deign to seek employment here.

Again, the suggestion is that there are systemic problems with governance and leadership

"An Ugly Set of Facts"

And that will bring us up to the story that my automated search produced. The candidate to be the new Northeast Health System CEO also has his issues. Per the Gloucester Times from August, 2009,

The man in line to become the next CEO of Northeast Health System is leaving behind a crumbling hospital system in Ohio that has been plagued by lawsuits and controversy.

Supporters of Kenneth Hanover say he does not deserve blame for the breakup of the Health Alliance, a $1.4 billion corporation that he served as president and chief executive officer.

But in two court decisions, judges ruled that the Health Alliance and Hanover failed to live up to a legal obligation to act for the benefit of two of its hospitals, improperly used 'enormous sums' of money to fight the lawsuit and gave bonuses to doctors to prevent them from working at those hospitals.

'The record is replete with evidence that the Alliance breached its fiduciary to (The Christ Hospital),' Judge Ralph Winkler wrote in his decision last year for the Ohio Court of Appeals.

Considering the turmoil surrounding Laverty's tenure at Northeast Health System, it might seem surprising that the organization would replace him with a man with such a controversial background of his own.

The breakup of the Health Alliance became so acrimonious that the Ohio attorney general's office stepped in. In July 2007, in the midst of the legal battle, the chairman of Christ Hospital wrote a letter calling for Hanover to be replaced.

Monica Rimai, the interim president at the University of Cincinnati and a former Health Alliance board member, acknowledged that the lawsuit and the breakup constitute 'an ugly set of facts and we lost.'

Robert Weigel, chairman of Fort Hamilton Hospital, which is in the processing of withdrawing from the Alliance, said Hanover is "one of the smartest men I know." He also said Hanover has a forceful manner than can rub some people the wrong way.

"I have a lot of respect for his abilities and his thinking, but he can be tough to deal with," said Weigel....

An ugly set of facts about the new CEO, oh my. One wonders if the NEHS board had investigated its new CEO candidate's previous performance. On the other hand, maybe the board is most comfortable with CEOs that are "tough [for others] to deal with."

Pregnancy pacts, art theft, no confidence votes, punitive corporate culture, threats and intimidation, closed wards and clinics, slashed services, oh my. You just can't make this stuff up.

On a slightly more sober note, the curious case of Northeast Health Systems is a good example of how governance and leadership can go wrong, and the downstream effect on health services.

Reorganizing the colorful facts above, we seem to start with poor governance, possibly by a conflicted board (per Ms Quint). That board seems most comfortable with aggressive leaders who seem more intent on imposing their will on dedicated, professional staff, rather than working collaboratively, and hiding behind a veil of corporate secrecy, rather than providing the transparency appropriate for a not-for-profit organization whose mission is to to serve the community. Meanwhile, services of all kinds decline, while the community that once supported the organization now regards it with suspicion and alarm.

The current debate about health care reform has focused - to the extent it has focused on anything - on financing and insurance. As we have said many times before, we cannot fix the health care crisis simply by changing financing mechanisms or money flows.

We can only improve health care by improving the leadership and governance of health care organizations, and by rethinking the size and scope of health care organizations. The most crucial part of health care is what goes on between individual health care professionals and individual patients. Yet our system is composed of endlessly enlarging bureaucracies run by self-interested, often clueless, and sometimes dishonest, if not criminal leaders. This must change, unless we want this crisis to get much, much worse.

The title of this post is a weakly satirical bow to the Rudyard Kipling novel set partially in Gloucester, MA.

Fighting Corruption in Health Care - Suggestions from Transparency International

The August issue of the Journal of Epidemiology and Community Health featured a number of articles on conflicts of interest (COI) and medical and public health education and research. One notable contribution included authors from the German chapter of Transparency International (Spelsberg A, Martiny A, Schoenhoefer PS. Is disclosure of potential conflicts of interest in medicine and public health sufficient to increase transparency and decrease corruption. J Epidemiol Community Health 2009; 63: 603-605. Link here, requires subscription.) Transparency International is a major international NGO respected for its stand against corruption, and for transparency and integrity.

The article's major premises deserve quotation:

When Transparency International was founded in 1993, the focus for fighting corruption was mainly on bribes and corruption of civil servants in developing countries. While our definition of corruption was broad from the beginning, that is abuse of power or of a powerful position for personal advantage or benefit, the concept of preventing corruption had to be adjusted more recently.

conflicts between private and professionally consigned interests—be it in public office or in the private sector—create susceptibility to corruption....

Conflicts of interests are now considered as a major gateway for corruption in medicine and public health.They predominantly affect the way that doctors evaluate and use the products of the pharmaceutical and medical device industry by a systematic and ubiquitous exposure during professional life, starting at medical school.

Independent clinical research which can produce reliable results on new drugs or new medical technology has almost vanished and has been progressively replaced by industry-sponsored studies which are dominated by marketing interest of the manufacturers, including misleading selection or extensive falsification of data and results. Consequently, evidence-based guidelines or practice guidance often can no longer be assumed to be unbiased and free of conflicts of interests. Meta-analyses are at risk of being seriously distorted, even after adjusting for publication bias, due to inaccessible, unpublished data on clinical trials or inappropriate, for example non-reproducible, inclusion of such data....

Nowadays, medical expert committees are obliged to disclose conflicts of interests. Nevertheless, rarely is any action taken to control or to exclude advisers or experts with conflicts of interest since the extensive ties to industry of panel members have become the norm. It is therefore illusory to expect that disclosure alone without sanctions will be sufficient to increase transparency and decrease corruption in medicine and public health. Even if adequate sanctions follow, individual professional behaviour may not suffice for reversing the detrimental dependency of the medical and scientific community on industry. By the same token, corporate responsibility endeavours of drug and medical device companies should not remain voluntary efforts without tangible sanctions.

Let me quote below their major recommendations, edited just a bit:

Individual level

Professional codes of conduct for physicians and other health professionals, individual drug and medical device companies, health maintenance organisations, sickness funds, research organisations, etc. The common denominator of such codices consists of the ban of offering/accepting any personal gifts, including food and travel.


Organisational level within the medical system

Codes of conduct for academic medical centres, medical associations, patient and consumer organisations, organisations of healthcare professionals and producers of pharmaceuticals and medical devices. Each institution or organisation in healthcare as well as each professional in these institutions or organisations should be obliged to make any payments, honoraria or other benefits by pharmaceutical or medical device companies transparent.

Public registry of all clinical trials and other research activities involving patients, including post-marketing and pharmacovigilance studies. Publication of all relevant outcomes and results including null results, adverse effects and stopping rules, administrated and monitored by an independent institution such as the National Institutes of Health. Full disclosure of funding agencies, companies and responsible data centres.

Education of healthcare professionals including continuous medical education must be disentangled from commercial interests. The healthcare professional organisations should integrate graduate and continuing medical education in their codes of conduct.

Political level

Drug and medical device approval legislation: necessary prerequisites for starting drug approval process should include a complete and consistent disclosure (including amount) of beneficiaries of involved institutions, experts and organisations.

Implementing an expert anti-corruption agency for health at the national level authorised to take legal action. This includes activities in prosecuting conflicts of interest among health professionals and their institution, since such conflicts often result in rising healthcare expenditures without benefit for the public.
Society level

Monitoring of influence of commercial interests on public health and outcomes of medical interventions: annual reports to the public on health indicators and international comparisons including healthcare expenditures, estimated losses due to corruption and fraud in healthcare and recaptured resources by anti-fraud and anti-corruption measures.

Health Care Renewal readers may find it a useful exercise to compare these recommendations with their local situation. As far as I can tell, here in the US, almost none of these recommendations now obtain. Going through the list:

Individual level - In the US, codes of conduct promulgated by most medical societies do not completely ban accepting gifts. Not all drug and device companies, health maintenance organizations, insurance companies (the equivalent of sickness funds here), and research organizations have visible codes of conduct, and those that exist do not completely ban accepting or giving gifts.

Organizational level - Not all academic medical centers, medical associations, patient and consumer organizations, organizations of health care professionals, and drug and device companies have visible codes of conduct, and those that exist hardly make all payments, honoraria and other benefits completely transparent.

- There is a clinical trials registry. I am not sure if it includes post-marketing and pharmacovigilance trials (readers may be able to help me here). I do not know of any independent institution that monitors in detail the publication of all study results.

- US education, including continuing education of health care professionals is considerably entangled with commercial interests. Codes of conduct relevant to the relationships among industry and education are weak.

Political level - Drug and device regulation does not require complete and consistent disclosure of payments to medical schools, medical centers, and other research organizations which implement relevant research.

- There is nothing resembling an expert anti-corruption agency for health at a national level. Nor do such agencies exist at the US state level.

Society level - There is no systematic ongoing monitoring of commercial influence on public health and outcomes of medical intervention. There are no national reports that cover fraud and corruption and health care.

So as best as I can tell, here in the US, we currently are following almost none of these recommendations.

Maybe in other countries things are a little better. It would be interesting to hear from readers around the globe about this.

As I have repeated again and again, I believe true US health care reform requires improved transparency, and mechanisms to improve integrity and ethics like those suggested by these Transparency International authors.