An Example of How the Complex Takes Control - A Board Dominated by Hired Managers Levitates Its Hired CEO's Pay

The Indianapolis Star published the latest story about anti-gravity health care executive compensation.  The report emphasized how the largest hospital systems in the metropolitan area raised CEO pay faster than any reasonable metric:

CEO pay is up, sharply in some cases, at Indianapolis' four large hospital groups, as the systems have grown and dumped more responsibilities on their top leaders.

Total pay for those CEOs rose anywhere from 15 percent to 53 percent from 2008 to 2010. While experts say the pay is in line with executive compensation at other large hospital groups, the rate of the increases far outpaces the minimal wage gains that area health-care workers (1.7 percent) and hourly workers (3.1 percent) have seen over the same time.

The rising CEO pay comes at one of the shakiest financial periods ever for hospitals, as they struggle with cuts in reimbursements for care from federal Medicare and Medicaid programs and private insurers.

CEO Pay Up More than Revenue

Pay at specific health care systems also rose faster than revenue. At the Indiana University Health System:

At the top of the best-paid list: IU Health's President and Chief Executive Daniel F. Evans Jr., who pulled down $2.08 million in compensation in 2010, up 17 percent from 2008. Subtracting Evans' retirement payouts, which vary year to year, his base pay jumped 19 percent since 2008.

However,

From 2008 to 2010, IU Health has seen revenue grow 10 percent to $2.46 billion,...

At St Vincent Hospital and Health Care

Close behind comes Vincent Caponi, CEO of St. Vincent Hospital and Health Care Center, who took in $1.86 million in 2009-10, a two-year jump of 44 percent, or 64 percent when retirement is removed.

However,

Revenue over the two years rose 28 percent at St. Vincent,...

At Franciscan Alliance,

Robert Brody of Franciscan Alliance earned $1.27 million in 2010 (53 percent more than in 2008),...

However, over that period revenue only rose 17%.

At Community Health Network,

Bryan A. Mills, the relatively new CEO of Community Health Network, received $1.35 million, or 15 percent more than his predecessor, William Corley, collected in 2008. (Corley retired in 2009.)

while revenue only rose 4%.

The Usual Talking Points

At this point, it should come as no surprise that hospital leadership trotted out the same old talking points to account for the ever upward trajectory of CEO pay as used in other areas and to account for the pay of leaders of other kinds of health care organizations (look here). These included...

We Pay What Everyone Else Pays

It was easy to find a professional compensation consultant to repeat this one:

Jim Otto, senior principal in Atlanta for the Hay Group, a consultant on executive benefits, said pay to top hospital CEOs in Indianapolis appears in line with rising compensation, including retirement benefits and bonuses, being paid nationally to most large-system hospital executives.

CEOs Work Hard and Are Brilliant

So we read:

At IU Health, formerly Clarian Health Partners, where Evans has been CEO since 2002, 'The system's grown significantly. It makes us think twice about the difficulty of running such a system. We literally cover the entire state of Indiana. And much of that has been under Dan's oversight,' said Charles Golden, an IU Health board member and chair of its compensation committee.

Also,

Golden says Evans 'has done a really superb job. Almost everything favorable to our system has been positive in his time.'

Here is the version pertaining to St Vincent's

Caponi 'is on an airplane and out of town a good bit, running a much bigger area' for Ascension, said Bill Estes, chairman of St. Vincent's board. 'That's the way we justify (higher CEO pay) and feel comfortable with that.'

High Pay is Needed to Attract Competent, if not Brilliant People

From Mr Otto, the compensation consultant:

Large hospital groups make certain they pay similar to their peers to remain competitive.

One reason for rising pay, Otto says: 'These aren't easy jobs. They are not easy to fill. The candidate pool isn't terribly large.'

Furthermore, Mr Golden, from the IU Board, added,

'Unless you want to default to mediocrity, I suppose you can do that (cut CEO pay),' he said. 'But I don't think that's where we are going. I don't think these (hospital) systems will get any easier to manage.'

Talking Points Sans Justification

As in previous cases, no one that reporter Jeff Swiatek could find provided any specifics to back up these talking points. It is striking that those who stewarded all the major hospital systems in this one area
felt the need to raise executive pay substantially faster than the rate of rise of revenue, that is from 1.7 times to 3.75 times the rate of revenue rise.

Why Are Hospital Boards So Nice to CEOs?

In the interests of full disclosure, I noticed this article because reporter Jeff Swiatek chose yours truly, plus fellow blogger Dr Howard Brody (look here) to comment for it.

'Whenever the nonprofit sector starts acting more like the for-profit sector, I start to get worried,' said Dr. Howard Brody, director of the Institute for the Medical Humanities. 'It just becomes crony capitalism. If one executive gets paid $3 million instead of $1 million, then every executive wants $3 million. It just becomes a vicious cycle of inflation of CEO benefits.'

Also, I suggested:

Put more noncorporate members on hospital boards because they'd be less inclined to endorse large compensation packages that are more typical of for-profit companies.

'Boards are populated by wealthy executives, who themselves are getting increasing compensation, rather than by community representatives or patient representatives,' Poses said.

Could the Composition of the Board Explain Excess Deference to the CEO?

I made the above comments after hearing approximations of the compensation given out by the hospital systems, but without any knowledge of the composition of the boards that approved that compensation. I am guessing that Dr Brody also was not told anything about board composition when he suggested the possibility of crony capitalism.

However, now that the article is out, I think it makes sense to look at the composition of at least one of the boards involved. I chose IU Health, since it is the largest of the systems, paid the most to its CEO, and was kind enough to list board members' brief biographies on a web-page.  Here they are, listed with their primary affiliations, and some notable other affiliations.

- Judge Sarah Evans Barker, former federal district court judge.
- Dr D Craig Brater, "dean of the Indiana University School of Medicine and director of IU Medical Center." Also on  the Board of Advisors of Spring Mill Venture Partners, "an early stage venture capital firm focused on investing in high-growth information technology and life sciences companies;" recipient of consulting and travel money from Pfizer (per ProPublica); and who was listed as having "a financial interest/relationship or affiliation in the form of: Consultant for AstraZeneca Pharmaceuticals; BioGen, Inc.; Forest Laboratories; Merck & Co., Inc.; Pfizer Inc.; and Pharmacia and Upjohn Company" per CMECorner.
- William R Cast, "CEO of NoMore Clipboard, an online, patient-controlled personal health record management system."
- Thomas W Chapman, "president and CEO of The HSC Foundation in Washington, DC, the parent corporation for two subsidiaries, The HSC Pediatric Center and Health Services for Children with Special Needs. He was previously senior associate vice president for Network Development and Professor of Health Services Management and Policy at George Washington University Medical Center in Washington, DC."
- Bishop Michael J Coyner, "Bishop of the Indiana Area United Methodist Church"
- J Scott Davison, "chief financial officer for OneAmerica and its affiliated companies," and member of the board of directors for Indiana Bond Bank."
- Daniel F Evans Jr - CEO of IU Health, also member of the board of Lakeland Financial Corp, (per Bloomberg)
- Charles E Golden, "retired from Eli Lilly and Company in 2006 as executive vice president and CFO and a member of the board of directors. He was previously a corporate vice president of General Motors...." He is also currently on the boards of Unilever, which makes health care related products, and Hill-Rom, which makes medical devices and supplies.
- David W Goodrich, "retired in 2005 as president and CEO of Central Indiana Corporate Partnership, Inc."
- V William Hunt, "chairman of Hunt Capital Partners, LLC, a venture capital and consulting firm based in Indianapolis. Until August 2001, he was the vice chairman and president of ArvinMeritor Inc...."
- Dr James E Lingeman, "long-standing member of the IU Health Methodist Hospital medical staff," but also according to a 2009 American Urologic Association Education and Research paper, Consultant or Advisor to, and Meeting Participant or Lecturer for Boston Scientific Corp and Lumenis, scientific investigator for Boston Scientific and Olympus, investor in Beck Analytical Laboratories and Midstate Mobile Lithotripsy, and having "Other" financial relationships with Beck and Midstate.
- Angela Barron McBride, " distinguished professor and university dean emerita at Indiana University School of Nursing"
- Michael A McRobbie, "Indiana University President," also on the board of OneAmerica (look here).
- Anne Nobles, "senior vice president for Enterprise Risk Management and chief ethics and compliance officer for Eli Lilly and Company."

When considering the composition of this board, note that members of non-profit organizations' boards generally are said to have three duties, as per BoardSource:
- The Duty of Care: "a board member owes the duty to exercise reasonable care when he or she makes a decision as a steward of the organization."
- The Duty of Loyalty: "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."
- The 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."

The Duties of Care and Obedience require board members to exercise prudent and reasonable supervision over hired managers, and provide these managers reasonable pay and incentives.  However, boards dominated by hired managers may put the interests of such managers ahead of their organizations' missions. 

So of the 14 members of the IU Health board, 8 are current or retired top level corporate executives or corporate board members, 4 of which have such leadership positions at financial service companies, (two at OneAmerica). In addition, 5, including 4 apparently ex-officio members, had or have top leadership positions in academic institutions. The board also included one Methodist Bishop and one federal judge. All but two board members are thus current or former top level hired managers of for-profit corporations or non-profit organizations.

Thus this board is largely populated by executives who are likely to be wealthy. Thus it is similar to many other boards of health care corporations (e.g., look here and here) and non-profit organizations  (e.g., look here,  here, and here) which we have discussed.  It stands to reason that boards dominated by hired managers will feel comfortable with and look kindly on the hired managers whom they are supposed to supervise, and view their compensation sympathetically.  Thus such boards may not exercise the Duties of Care and Obedience.

Furthermore, the Duty of Loyalty requires boards not to be affected by conflicts of interest. 
 
However, many of the IU Health board members have financial relationships that could be considered conflicts of interest. Two have or had executive positions at the same pharmaceutical company, Eli Lilly, one of whom also was on the board of medical device and supply company. In addition, both of the doctors on the board have or had significant disclosed financial relationships with drug, device, or biotechnology firms.  Again, it is like other boards affected by such conflicts that we have discussed.  Again, such boards may not exercise the Duty of Loyalty.
 
Summary
 
Combined with other examples of the composition of boards of for-profit health care corporations, and non-profit health care organizations, the latest example suggests the complex has taken control.  Nearly every board we have scrutinized is dominated by hired managers of other companies, and salted with conflicts of interest.  It seems likely that such boards will put the interests of hired managers ahead of those of the shareholders of for-profit corporations, and ahead of the missions of non-profit organizations. 
 
The complex that has taken control looks like a confederation of hired managers.  In 2003, five years before the fall of Lehman Brothers ushered in the global financial collapse, John C Bogle warned of the "grotesque transformation" of capitalism into an oligarchy of hired managers:

The root causes of the disease in our system are deep, and the remedies that are required to cure it will not be easy to come by. For what we have witnessed in the failure of corporate governance in America has been, as journalist William Pfaff described it, 'a pathological mutation in capitalism.' He was right on the mark. The classic system—owners capitalism—had been based on a dedication to serving the interests of the corporation’s owners, maximizing the return on their capital investment. But a new system developed—managers capitalism—in which 'the corporation came to be run to profit its managers, in complicity if not conspiracy with accountants and the managers of other corporations.' Why did it happen? 'Because,' in Mr. Pfaff’s words, 'the markets had so diffused corporate ownership that no responsible owner exists. This is morally unacceptable, but also a corruption of capitalism itself.'

This plague of managers' capitalism seems not to have spared health care, and to have infected the non-profit as well as public for-profit sphere.

To stave off the coming dystopia, we must return the control of for-profit corporations, including health care corporations, to their owners, and stewardship of non-profit organizations to those who will put their missions ahead of self-interest.

Human Subjects Experimentation Directives Ignored in the Grand Health IT Experiment?

The following represents some very inconvenient truths that have long been ignored.

Health IT is an experimental technology. The literature in 2012 remains conflicting on benefits and risks (the latter which is acknowledged, but whose magnitude is uncertain).

At NIH study sections, for example, research proposals that involve health IT (even modifications to existing applications) are subjected to far more scrutiny around human subjects protections, of both patients and investigators, than the typical wide-scale hospital implementation of enterprise health IT systems. The latter are validated and approved by - nobody.

How many of these directives are ignored in the Grand Health IT Experiment?

I've bolded the issues that I believe are ignored.

See "Reading list on health IT" for more information on conflicts in the literature:

---------------------------------------------

Directives for Human Experimentation

NUREMBERG CODE

1. The voluntary consent of the human subject is absolutely essential. This means that the person involved should have legal capacity to give consent; should be so situated as to be able to exercise free power of choice [that is, to opt-out - ed.], without the intervention of any element of force, fraud, deceit, duress, over-reaching, or other ulterior form of constraint or coercion; and should have sufficient knowledge and comprehension of the elements of the subject matter involved as to enable him to make an understanding and enlightened decision. This latter element requires that before the acceptance of an affirmative decision by the experimental subject there should be made known to him the nature, duration, and purpose of the experiment; the method and means by which it is to be conducted; all inconveniences and hazards reasonable to be expected; and the effects upon his health or person [information on HIT risk exists, such as on this blog - ed.] which may possibly come from his participation in the experiment. The duty and responsibility for ascertaining the quality of the consent rests upon each individual who initiates, directs or engages in the experiment. It is a personal duty and responsibility which may not be delegated to another with impunity.
2. The experiment should be such as to yield fruitful results for the good of society, unprocurable by other methods or means of study [such as small scale controlled clinical trials with full informed consent and opt-out provisions- ed.], and not random and unnecessary in nature.
3. The experiment should be so designed and based on the results of animal experimentation and a knowledge of the natural history of the disease or other problem under study that the anticipated results will justify the performance of the experiment.
4. The experiment should be so conducted as to avoid all unnecessary physical and mental suffering and injury.
5. No experiment should be conducted where there is an a priori reason to believe that death or disabling injury will occur; except, perhaps, in those experiments where the experimental physicians also serve as subjects.
6. The degree of risk to be taken should never exceed that determined by the humanitarian importance of the problem to be solved by the experiment. [The magnitude of HIT risks are unknown - ed.]
   
7. Proper preparations should be made and adequate facilities provided to protect the experimental subject against even remote possibilities of injury, disability, or death.
8. The experiment should be conducted only by scientifically qualified persons. [Yet the HIT field is filled with amateurs - ed.] The highest degree of skill and care should be required through all stages of the experiment of those who conduct or engage in the experiment.
9. During the course of the experiment the human subject should be at liberty to bring the experiment to an end [go back to paper - ed.] if he has reached the physical or mental state where continuation of the experiment seems to him to be impossible.
10. During the course of the experiment the scientist in charge must be prepared to terminate the experiment at any stage [go back to paper - ed.], if he has probable cause to believe, in the exercise of the good faith, superior skill and careful judgment required of him that a continuation of the experiment is likely to result in injury, disability, or death to the experimental subject.

Reprinted from Trials of War Criminals before the Nuremberg Military Tribunals under Control Council Law No. 10, Vol. 2, pp. 181-182.. Washington, D.C.: U.S. Government Printing Office, 1949.

I'd thought these issues were settled after WW2, but apparently not.

-- SS

To all physicians: Fools hiring amateurs, to control you and land you in court?

Health IT systems will be/are used to control you - a medical professional - in your treatment of patients, and could land you in court if they contribute to your making a medical mistake.

They could also land you in a sham peer review for being a "disruptive" physician if you complain about a poor EHR.

Here's an example of who gets hired to run such systems. Note the "Education" and "Qualifications Knowledge, Skills, and Abilities Required" I bolded.

This job description is not atypical of many "clinical informatics" job descriptions:

HCA

Clinical Informaticist(Job Number: 25388-35620)

https://hca.taleo.net/careersection/0hca/jobdetail.ftl?lang=en&job=1112401&src=JB-11444

More About HCA.....

• HCA has been Recognized in Computerworld Magazine's Top 100 Workplaces to work for Information Technology Professionals for the 3^rd consecutive year, coming in this year at #32.
• HCA has been recognized by the Ethisphere Institute as one of the 2011 World's Most Ethical Companies.

Summary of Duties

The Clinical Informaticist is accountable for driving successful adoption and clinical process optimization of clinical information systems. This is done through the application Clinical Adoption Methodology, incorporating best practice and evidence-based knowledge. Utilizes the knowledge and skills of clinical practice to determine clinical functions that are suitable for computer application and to ensure the information systems are consistent with professional standards of clinical practice. Acts on behalf of the Director of Applications in absence of said director.

Duties Include But Are Not Limited To

• Facilitates knowledge of current state, desired state, and gap analysis of core clinical processes that are enabled by clinical information technology, being mindful of operational requirements/ constraints and conflicts. Works collaboratively with QA to evaluate outcomes, and opportunities for improvement.
• Maintains a trusting and effective relationship with all customers. Assists clinical managers in identifying information systems needs and project management related to information systems.
• Maintains membership or consultation to appropriate committees, work groups or task forces as needed to facilitate the ongoing process of the design, implementation, and revision of the automated and manual components of the clinical information system. Conducts meetings and presentations, effectively and professionally.
• Maintains a current knowledge of a) trends and issues in health care, nursing practice, healthcare informatics, regulatory/accreditation requirements; b) organizational policies and procedures related to clinical practice and the legal implications of the clinical information system; c) structure and hierarchy of the organization.
• Functionality expertise for clinical applications supporting core patient care processes and their relationship to other organizational information systems.
• Works closely with counterparts in appropriate user organizations to ensure consistent and effective use of technology resources and optimization of installed applications and sustainability.
• Adheres to Code of Conduct and Mission & Value Statement. Understands the personal obligation to report any activity that appears to violate applicable laws, rules regulations or the Code of Conduct itself. Maintains confidentiality, promotes system security to promote compliance.
• As facility-care-area based position must learn and comply with System and facility safety policies and rules; must use appropriate safety equipment and procedures at all times; must immediately report all unsafe conditions to supervisors; must be familiar with all safety features of equipment, tools or materials encompassed by job duties; and must check with supervisors (prior to job performance) if there is a question as to the safe procedure to be used for any job function.
• Participate in special projects as needed and performs other duties as assigned.

Qualifications Knowledge, Skills, and Abilities Required

• Membership in an appropriate organization is required (HIMSS, AMIA, for example) that is specifically targeted to informatics in healthcare
• Working knowledge of Microsoft Office products (WORD, EXCEL, PowerPoint, Project Plan, and VISIO)
• Strong oral, written, and interpersonal communication skills; strong analysis/problem solving and critical thinking; strong leadership, facilitation and coaching skills; current knowledge of patient care practices; clinical expertise; ability to work in multi-disciplinary teams.

Preferred:

• Knowledge and skill in selection, implementation, and training of clinical information systems
• Project management skills
• Previous experience utilizing Meditech documentation system
• Previous experience with Quality Improvement initiatives and clinical process re-engineering

Education

• BSN or Bachelors degree in other Allied Health Professional degree from an accredited college
• Current (10/08) department incumbents must achieve Bachelors requirement by 12/31/2012

Wow...

BSN, allied health bachelors, or "must achieve Bachelor's by 12/31/12"?

Some (at best) MBA-level fool wrote this 'description' for the hiring of some amateur with a BS - or no degree - to perform functions that will seriously affect how you, with 4 years college, four years med school, PGY internship, residency, perhaps fellowship or other post doctoral experience, perform your profession?

Your kids may have more professional education and qualifications than your hospital's "health computing experts." Fantastic.

I add this:

Health IT cannot be made to work properly - ever - when being mismanaged by fools and amateurs.

-- SS

Despite Recalls, Legal Settlements and Guilty Pleas - A $143.5 Million (or Perhaps $197 Million) Golden Parachute for the Former Drug Representative Who Is Now CEO of Johnson and Johnson

After 30 separate product recalls since 2009, and multiple legal settlements and guilty pleas, we noted that the former pharmaceutical representative who is now the CEO of Johnson and Johnson will be retiring. 

The $143.5 Million (or Perhaps $197 Million) Golden Parachute

The Wall Street Journal just reported his retirement will come with an immense golden parachute:

Johnson & Johnson Chairman and Chief Executive William Weldon stands to collect pension benefits and deferred compensation currently valued at $143.5 million after his retirement, according to new details released by the health-care conglomerate.

The details were:

Mr. Weldon, who will be succeeded as CEO by Vice Chairman Alex Gorsky, stands to collect benefits from two main sources. The present value of his accumulated pension benefits is $48.4 million, portions of which are paid out as a monthly annuity for life, according to Wednesday's filing with the Securities and Exchange Commission.

His pension's value places Mr. Weldon well into the top 10% of CEOs of Standard & Poor's 500 companies, said Paul Hodgson, chief communications officer and senior research associate at GMI Ratings, which tracks corporate-governance information.

Mr. Weldon also has amassed $95.1 million in nonqualified deferred-compensation plans. This represents parts of his salary and bonus that had been deferred in prior years, as well as company contributions to savings plans. Portions of Mr. Weldon's deferred compensation have been recorded each year as part of his total annual pay.

Of the $95.1 million, more than $70 million represents Mr. Weldon's accumulated balance from a legacy cash-incentive plan that J&J has discontinued and replaced with a new executive-compensation plan. This sum would be paid to Mr. Weldon at retirement, J&J said. All deferred compensation is subject to taxes.

Actually, an argument that the $143.5 million figure is an major under-estimate appeared in the Shearlings Got Plowed blog:

The MSM reports calculate only the cash values for soon to be Ex-CEO Weldon, not the present value of his stock options, at today's NYSE closing price for J&J of $65.08. So, that -- plus the vesting of his February 2012 JNJ RSUs and Stock Option awards [see page 45 of the link (but such amounts are ommitted from the year end 2011 proxy, on which the WSJ relied)] -- add about $53.47 million to the Weldon walkaway haul.

Thus, Mr Weldon's golden parachute may be as big as $197 million.

The Board's Justification for the Riches

Of course, the Johnson and Johnson board justified the latest additions to Mr Weldon's wealth, as reported by the WSJ:

In a regulatory filing Wednesday, the board said Mr. Weldon 'successfully managed our company through a challenging economic environment in 2011,' with solid financial results and advances in J&J's pharmaceutical pipeline.

The board added that while J&J made progress in addressing manufacturing-quality issues in 2011, 'continued focus is needed to address critical product supply and quality issues that impact our responsibility of being able to deliver products to patients and customers who need them.'

Johnson and Johnson's Recent Record

The board's upbeat assessment sharply contrasts with Johnson and Johnson's actual recent record.

As we discussed recently, Johnson and Johnson seems to have lost the ability to manufacture high quality products. It has had to make 30 separate product recalls since 2009. The latest was Liquid Infant Tylenol. (The current WSJ Health Blog list of recalls can be found here.)  This seems to be more than a "rough patch," which is how the WSJ article described the manufacturing problems.

In addition, the WSJ article failed to mention that Johnson and Johnson also has an amazing recent record of ethical lapses and guilty pleas, including:
- Convictions in two different states in 2010 for misleading marketing of Risperdal
- A guilty plea for misbranding Topamax in 2010
- Guilty pleas to bribery in Europe in 2011 by J+J's DePuy subsidiary
- A guilty plea for marketing Risperdal for unapproved uses in 2011 (see this link for all of the above)
- Accusations that the company, which makes smoking cessation products, participated along with tobacco companies in efforts to lobby state legislators (see post here)
- A guilty plea to misbranding Natrecor by J+J subsidiary Scios (see post here)
- More recently, in 2012, testimony in a trial of allegations of unethical marketing of the drug Risperdal (risperidone) by the Janssen subsidiary revealed a systemic, deceptive stealth marketing campaign that fostered suppression of research whose results were unfavorable to the company, ghostwriting, the use of key opinion leaders as marketers in the guise of academics and professionals, and intimidation of whistleblowers. After these revelations, the company abruptly settled the case (see post here).
-  Most recently, there are reports that the company is in negotiation with the US Department of Justice to settle other lawsuits about the marketing of Risperdal, perhaps for as much as $1.8 billion (see this BusinessWeek story.)

Meanwhile, an article from the Wharton Business School suggested that the problems at Johnson and Johnson stemmed directly from former drug representative Weldon's management approach, which put short term revenues, "making the numbers," ahead of everything else, apparently including good manufacturing practices, or ethical business practices:

[University of Michigan Ross School of Business Professor Erik] Gordon argues that CEO Weldon's relentless focus on the bottom line -- the company's website touts its record of 27 consecutive years of adjusted earnings increases and 49 consecutive years of dividend increases -- is the reason for the current woes. 'Bill Weldon sets the priorities and the culture for the company,' says Gordon. And the problems, from overly aggressive marketing to underinvestment in safety and quality systems, reflect 'people trying to get their bonuses, hit their numbers and keep their job.'

No doubt the global economic collapse in 2008 put renewed pressure on managers at multinationals like Johnson & Johnson. John Kimberly -- a Wharton management professor and executive director of the Wharton/INSEAD Alliance who has worked with J&J executives in Europe since the late 1990s -- says he detected a shift among those managers starting in 2008. 'I got the sense that there were some things happening at corporate, and that messages were being sent about the need to deliver profitability,' Kimberly notes. 'It seemed as though the people I was working with were feeling pressure from above to pay closer attention to the bottom line. It was a palpable, tangible change.'

Wharton's Donaldson gives J&J management credit for the aggressive steps the company is now taking to overhaul its manufacturing processes and plants. But he also notes that the balance between profits and patients is a tricky one. Managers at J&J, he says, 'are juggling a lot of balls. In the credo, they say they put patients first and stockholders further down the line. But there is a red ball that every manager knows about, [which is] profit -- and they don't let that red ball drop.' Figuring out how to serve patients well and still deliver for Wall Street is not easy. 'J&J believes they can do both those things,' Donaldson says. 'But if the weight of one side of that formula gets too heavy, the entire structure collapses.'

Summary

The ongoing news from the once proud Johnson and Johnson, whose credo famously states:

We believe our first responsibility is to doctors, nurses and patients, to mothers and fathers, and all others who use our products and services. In meeting their needs, everything we do must be of high quality.

suggests that instead, the company's first responsibility is now to the hired managers, to obey their dictates no matter how they undermine the credo, and most importantly, to pay them so much as to make them some of the most wealthy people in the world. Johnson and Johnson has become exemplary, not of putting patients or health care professionals first, but of how hired managers took over health care, and turned it to their own advantage.

So should we trust Johnson and Johnson to do better, now that another former pharmaceutical representative will be its new CEO?

The case of Johnson and Johnson indicates why we need a huge change in how health care organizations are lead.

Health care organizations need leaders that uphold the core values of health care, and focus on and are accountable for the mission, not on secondary responsibilities that conflict with these values and their mission, and not on self-enrichment. Leaders ought to be rewarded reasonably, but not lavishly, for doing what ultimately improves patient care, or when applicable, good education and good research. On the other hand, those who authorize, direct and implement bad behavior ought to suffer negative consequences sufficient to deter future bad behavior.

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

EHRs and test ordering: Health Affairs authors reply to ONC

At my March 9, 2012 post "Increased Lab Ordering with EHR's?" I refuted ONC's response to a Harvard-based research study "Giving Office-Based Physicians Electronic Access To Patients’ Prior Imaging And Lab Results Did Not Deter Ordering Of Tests" that may contradict the notion that HIT reduces medical costs.

Now the authors themselves have responded to ONC. There are many similar themes in their response. I've bolded them below:

The Effect Of Physicians’ Electronic Access To Tests: A Response To Farzad Mostashari

March 12th, 2012
by Danny McCormick, David Bor, Stephanie Woolhandler, and David Himmelstein

Our recent Health Affairs article linking increased test ordering to electronic access to results has elicited heated responses, including a blog post by Farzad Mostashari, National Coordinator for Health IT. Some of the assertions in his blog post are mistaken. Some take us to task for claims we never made, or for studying only some of the myriad issues relevant to medical computing. And many reflect wishful thinking regarding health IT; an acceptance of deeply flawed evidence of its benefit, and skepticism about solid data that leads to unwelcome conclusions.

Dr. Mostashari’s critique of our paper, will, we hope, open a fruitful dialogue. We trust that in the interest of fairness he will direct readers to our response on his agency’s site. [If not, HC Renewal posts get highly ranked by Google - ed.]

Our study analyzed government survey data on a nationally representative sample of 28,741 patient visits to 1187 office-based physicians. We found that electronic access to computerized imaging results (either the report or the actual image) was associated with a 40% -70% increase in imaging tests, including sharp increases in expensive tests like MRIs and CT scans; the findings for blood tests were similar. Although the survey did not collect data on payments for the tests, it’s hard to imagine how a 40% to 70% increase in testing could fail to increase imaging costs.

Dr. Mostashari’s statement that “reducing test orders is not the way that health IT is meant to reduce costs” is surprising, and contradicts statements by his predecessor as National Coordinator that electronic access to a previous CT scan helped him to avoid ordering a duplicate and “saved a whole bunch of money.” A Rand study, widely cited by health IT advocates including President Obama, estimated that health IT would save $6.6 billion annually on outpatient imaging and lab testing. Another frequently quoted estimate of HIT-based savings projected annual cost reductions of $8.3 billion on imaging and $8.1 billion on lab testing.

We focused on electronic access to results because the common understanding of how health IT might decrease test ordering is that it would facilitate retrieval of previous results, avoiding duplicate tests. Indeed, it’s clear from the extensive press coverage that our study was seen as contravening this “conventional wisdom”.

Nonetheless, Dr. Mostashari criticizes us for analyzing the impact of physicians’ electronic access to imaging and test results, but not other aspects of electronic health record (EHR) use. We did, however, analyze the relationship of EHRs to test ordering in a subsidiary analysis. While physicians use of a full EHR was associated with a 19% increase in image ordering, as we noted in the paper this finding was not statistically significant. While we cautiously (and properly) interpreted this as a “null” finding, these data are inconsistent with Mostashari’s optimistic view that use of a full EHR reduces costs.

He asserts that our 2008 data are passe, and that health IT meeting today’s “meaningful use” criteria definitely saves money. The data we analyzed were the latest available data when we initiated the study. While the proportion of outpatient physicians utilizing health IT has grown since 2008, we are unaware of any “game changing” health IT developments in the past four years that are would produce substantially different results if the study were repeated today. The EHR vendors that dominated the market in 2008 remain, by and large, today’s market leaders, and their products have undergone mostly modest tweaks. Mostashari’s contention that 2012 EHRs – incorporating decision support and electronic information exchange – save money in ways not possible in 2008 should be tested through additional research but remains merely a hypothesis. We hope that some day his predicted savings can be achieved.

Dr. Mostashari offers his own explanation for our findings, suggesting that doctors who are inclined to order more tests are also inclined to purchase health IT for viewing test results electronically rather than on paper. He offers no evidence for this assertion and ignores the fact that we explored (and rejected) this explanation by analyzing subgroups of doctors who are unlikely to be the decision maker for IT purchases – e.g. employed physicians, those working in an HMO setting etc. In other words, electronic access to results predicted more test ordering whether or not the ordering physician was responsible for health IT purchases.

He incorrectly states that our analysis did not take into account patients’ severity of illness, physicians’ level of training, and the nature of physicians’ financial arrangements. In fact, we reported subsidiary multivariate analyses that included several serious diagnoses; all of our models included physician specialty (which we specified in several different ways); and all models included adjustment for an extensive list of indicators of financial arrangements (e.g. whether the physician owned the practice or was an employee; the type of office; whether the practice was owned by a hospital; whether the physician was a solo practitioner; whether the physician’s compensation was based, in part or whole on “profiling”; and whether the practice was predominantly prepaid). We also performed a series of subsidiary analyses that explored whether physicians with a proclivity to “self refer” patients for imaging tests accounted for our finding; they didn’t.

Dr. Mostashari criticizes us for failing to assess whether health IT improved the quality or appropriateness of care. Of course, these were not the topic of our research. Those are different studies for a different time. However, we would note that other large-scale studies have found no, or trivial quality improvements associated with HIT outside of a few flagship institutions^4-6.

Dr. Mostashari’s strongest claim is that observational studies like ours (and most other health policy studies, including some by Dr. Mostashari himself) cannot prove causation. This is surely true. As long time teachers of evidence based medicine we took care to couch our conclusions in cautious terms, stating only that “Computerization, whatever its other benefits, remains unproven as a cost control strategy.”

But Dr. Motashari is less cautious, asserting that the case for HIT is closed. The paper he cites to buttress this claim (authored by members of his own agency) culled studies reporting any impact of HIT on virtually any aspect of care, and accepted authors’ claims of benefit without regard to study quality or statistical niceties. Thus, a focus group’s impressions of benefit are accorded the same weight as nationwide studies of Medicare data showing virtually no impact of computerization on quality measures. Reports of a reduction from 70% to 38 % in “missed billing opportunities” or a $7,000 reduction in office supply costs are among the 92% of studies judged “positive”. While the literature review he cites is interesting, nothing in it contradicts our findings.

Dr. Mostashari is also correct in reiterating that randomized trials are the best way to assess health IT. In fact, no randomized trial has ever been published that examines patients’ outcomes or costs associated with off-the-shelf health IT systems that dominate the U.S. market. No drug or new medical device could pass FDA review based on such thin evidence as we have on health IT. Yet his agency is disbursing $19 billion in federal funds to stimulate the adoption of this inadequately evaluated technology. Dr. Mostashari is perhaps the only person in our nation who commands the resources needed to mount a well done randomized controlled trial to fairly assess the impact of health IT, and the comparative efficacy of the various EHR options.

Finally, Dr. Mostashari’s unbridled faith in technology is mirrored by his belief that ACOs are the next panacea for health costs and quality. That health policy flavor-of-the-month also remains wholly unproven.

I think readers comparing my response to the authors', and who are familiar with the many posts at HC Renewal going back to 2004, will recognize the themes I have bolded in the author's response to HHS.

-- SS

Nancy Finn, author of "e-Patients Live Longer", openly calls for unethical medical experimentation without consent

My construct of the "Ddulite" orientation largely driving health IT is not merely a theoretical construct. Ddulites (derived from the term "Luddite" with first four characters reversed) are:

Hyper-enthusiastic technophiles who either deliberately ignore or are blinded to technology's downsides, ethical issues, and repeated local and mass failures.

Here is an example of this disposition on display:

In a March 14, 2012 Pittsburgh Post Gazette article "Digital ease may complicate health care" by Bill Toland about the recent controversy caused by a Harvard study showing EHR's may actually increase test ordering thus raising, not lowering, medical costs, Nancy Finn, a medical consultant and author of "e-Patients Live Longer" is quoted as saying:

... In an ideal world, management would know if a software suite is going to improve health outcomes before it's rolled out, said Nancy Finn, a medical consultant and author of "e-Patients Live Longer." Unfortunately, though, uncertainty is built into the process.

"The only way to know [the systems] are inefficient and flawed is to deploy them, then correct them as we go," she said. [That is, they are experimental - ed.]

"That is the way that all of the new innovative technologies have worked over the years. We have to take the risk, and then improvements get made."

This statement in highly alien to medical ethics.

She is explicitly stating that this technology is experimental - "The only way to know [the systems] are inefficient and flawed is to deploy them" - and then states "We have to take the risk" where the "we" are unconsenting patients, i.e., not afforded the opportunity for true informed consent, and 'investigators' also often coerced to use these systems, i.e., clinicians themselves.

Never mentioned are the downsides of experimental technology such as health IT: patient injury, death, litigation against physicians and other clinicians entrapped into "use error" (errors promoted by the common mission hostility of today's health IT), or led into errors by poor software quality causing data corruption, misidentification or outright loss, and additional issues described by FDA (link) and others. Nor are ethical issues considered.

NO, Ms. Finn: "We" do NOT have to "take the risk."

There are scientific methods for improving experimental technologies such as "controlled clinical trials" with informed consent, opt-out provisions and built-in protections for patients and investigators.

The "trial and error", "learn-as-we-go", "computers' rights supercede patients' rights" approach you suggest, while perhaps appropriate for mercantile computing, is highly inappropriate for healthcare.

Such issues, I had believed, had been settled after WW2.

There is nothing to argue, and nothing to discuss.

-- SS

Logical Fallacies in Defense of the European Society of Cardiology's Lenient Approach to Conflicts of Interest

The European Society of Cardiology just published its recommendations for interactions between medical societies and industry.(1)   The report emphasized the supposed benefits of industry relationships and funding, and suggested few restrictions on current practices.  Like other defenses of leniency towards conflicts of interest, its arguments seemed to rest on a series of logical fallacies.  

Wonderful "Innovations ... Through Productive Collaboration" - Appeal to Belief and the Fallacy of Division

The report made several arguments about the benefits of professional - industrial interaction.  These included:

In recent decades, cardiology has been a fast-moving medical speciality. Many advances have come from basic and clinical research conducted by universities and by pharmaceutical and medical device companies. Innovations have been realized in part through productive collaborations between clinicians, academia, and industry. Such links are essential and need to be encouraged and supported by appropriate investment if medical progress is to be sustained.

The notion that interactions between physicians and industry is a source, perhaps the most important source of wonderful "innovations" is often used to justify the sorts of interactions, involving payments by industry to academia and physicians, that are now prevalent. In this report, this first appears as an assertion without any evidence to justify it.

Later, the report noted:

The Association of American Medical Colleges has stated that there are benefits from effective partnerships between industry and academic medical centres.

This statement came with a citation, to a 2008 report entitled "Industry Funding of Medical Education."(2) This AAMC report, in turn, contained many similar assertions, e.g.,

An effective and principled partnership between academic medical centers and various health industries is critical in order to realize fully the benefits of biomedical research and ensure continued advances in the prevention, diagnosis, and treatment of disease.

However, the AAMC report also failed to cite any evidence in support of these assertions.

There are two major problems with these assertions, which form the foundations of both reports. The first is they do not seem to have a clear evidence base.

While the notion that current research efforts marked by substantial interaction between physicians, academia and industry are producing wonderful innovations is appealing, what evidence there is suggests that clinically important innovation is rare. For example, I quote a 2009 review of global drug discovery by Light(3) on whether new drugs represent advances over older treatments:

the best evidence of clinical quality comes from systematic efforts to assess therapeutic advantage and adverse effects compared with existing drugs. A detailed analysis of therapeutic quality in new drugs over the past twenty years found that 14 percent of all new chemical entities are either therapeutic breakthroughs or substantially superior to existing medications. Likewise, a comprehensive review of all new drugs approved between 1989 and 2000 in the United States concluded that 14.8 percent were new chemical entities that provided significant clinical improvement, and a Canadian review board concluded that 10.7 percent of new chemical entities in 2000–2004 did so.

Thus while many new drugs are introduced, only a few introduced recently were chemically unique or had effects different than older treatments.  I would argue that most of these will prove not to be truly clinically innovative, in that good clinical research will not show that they produce substantial improvements in clinical outcomes without major adverse effects for a good number of patients with not uncommon problems.  (It is not hard to think of really important innovations developed before the era of major industry-academic-physician interactions: antisepsis for surgery, anesthesia for surgery, antibiotics, hormone replacement therapy with insulin, thyroid hormone, etc, smallpox vaccination, polio vaccination, etc, etc)  However, it is actually very hard to think of more than a handful of new drugs or devices discovered in the last 20 years which were that hugely innovative.  (The closest might be multi anti-viral drugs used to treat HIV, and Gleevec for chronic myelogenous leukemia.)  If there has been very little really important innovation in the last 20 plus year era of enhanced industry-academic-physician interactions, these collaborations could not have produced tremendous innovation. 

So the report's arguments rests on an assertion that is not clearly justified, and which appears to be at best a huge exaggeration. Resting an argument on a belief that is not further supported by evidence amounts to a obvious logical fallacy.  It is an appeal to belief.

Furthermore, while both reports emphasize physician-industry collaboration or interaction, there are many ways interaction or collaboration can occur without involving substantial payments by the latter to the former. It is possible for two people or organizations to work together without one paying the other.  Yet both reports use the broad assertions about interaction and collaboration to justify interactions and collaborations in which industry makes substantial payments to physicians or academic institutions. This appears to be an example of the fallacy of division, that is, an unjustified assertion that "what is true of a whole must also be true of its constituents."

CME Would Wither if Financing Were Reduced, and Industry is the Only Possible Source of Such Money - A Slippery Slope and a False Dilemma

The ESC report made the argument that without industry funding, CME would wither. For example,

Should Europe choose to follow the strategy proposed in the USA, severing links between industry and medical societies, CME could be severely compromised. Relying completely on public funding is not a viable option for Europe at the moment. The removal of industry support for medical associations would be followed by increased fees and reduced attendance at congresses especially by clinical trainees and young fellows. It is the view of the ESC that in the absence of alternative funding, or until alternative funding is identified, maintaining links with industry is appropriate....

The argument is that CME would fail if financial support for it would be reduced, and that industry is the only possible source of financial support at the current level. The notion that CME must inevitably fail if financing of it were reduced is a slippery slope fallacy, that is, a statement that a inevitably causes b when such inevitability is not proven. Why could not adequate CME be done at a lower cost, even if the result were less luxurious? Furthermore, the notion that industry is the only source of funding is a false dilemma fallacy. In fact, there are other possibly sources of funding. Given that physicians are among the world's best paid professionals, why could they not pay for their own CME?

"Conflicts of Interest are Unavoidable and ... They Cannot Be Abolished" - False Dilemma

The third major argument on which the report bases its recommendations is encapsulated above, and was buttressed by:

The risk of bias in medical education is not restricted to activities that are supported by industry. It can affect any type of scientific communication, even an educational meeting organized independently by a university or medical association.

Underlying these assertions seem to be extremely broad definitions of bias and conflicts of interest, coupled with unwillingness to see a distinction between trivial and serious varieties of each. This again appears to be a false dilemma. The distinctions should be between no conflicts, trivial conflicts, and serious conflicts, not between no conflicts and any conflicts, even if trivial.  This also could be called an example of how "the perfect is the enemy of the good."  Even if perfectly preventing all conflicts of interest is impossible, does this imply that preventing serious conflicts of interest is not worthwhile.   

Summary

We have noted that logical fallacies are increasingly deployed to defend the status quo in health care, and particularly to defend the interests of those who are profiting the most from the current dysfunctional system.  We have noted that several defenses of the conflicts of interest generated by financial relationships between physicians and medical academics on one hand and commercial health care firms on the other, were based on logical fallacies.  (See examples here, here,  here, and here.)  I have yet to see a coherent, logical, fact-based argument that the benefits for patients' and the public's health of physicians and medical academics working part-time as consultants, advisers, speakers, and directors of health care corporations outweigh the obvious risks of biasing medical decision making, education and research in favor of vested interests.

So we add to our ongoing series how, based on a series of logical fallacies, the European Society of Cardiology provided a series of recommendations that allowed nearly any kind of relationship among CME speakers and selection committees and industry, as long as the relationships were disclosed.  The only relationships banned were those "which would represent a significant conflict of interest" for the Chairperson of a Congress Programme Committee.  Similarly, the only stipulations for the society's cardiology journals were that interests affecting editors and editorial board members must be declared, and board members and reviewers should decline reviews of manuscripts "relating to topics, drugs, or devices, in which they have significant commercial of academic interests."  The rules for guideline committees were somewhat more rigorous, but "receipt of consultancy fees or fees for lecturing would not debar an individual from being a member of a committee but must be fully disclosed."

It is discouraging that the web of conflicts of interest that currently enmeshes much of academic medicine and many medical professionals is so heavily defended.  It is more discouraging that its defenders include so many prominent academics and practicing physicians.  It is more discouraging that so many well trained people resort to logical fallacies to make their arguments, and do so in prestigious scholarly journals.

Our continuing series about how logical fallacies are used to support the status quo and the powers that be in health care suggests, if nothing else, that health care professional education ought to include courses in logic.

Finally,  in 2011, I noted, "I have also yet to see an argument in favor of conflicts of interest made by anyone who does not have such conflicts."At least, however, up to that point I had not noted any such arguments made by people who had much power to enforce their views, as opposed to the ability to just express them.  Last month, however, I discussed how the leader of one of the most acclaimed US medical schools made an argument in support of conflicts of interest based on logical fallacies,  Now we have just seen such arguments made by the leaders of European cardiology.  The new paper suggested that disclosure is the best way to manage conflicts of interest.  True to this belief, the paper included a disclosure section that took up an entire journal page.

It seems likely that number and magnitude of ongoing commercial interests so disclosed may have influenced the content of the position paper.  Yet while it may be unsurprising, it is most disappointing that conflicts of interest are now being uncritically and illogically publicly defended by people in positions to exert so much influence on health care.

The noted cognitive psychologists George Loewenstein, Sunita Sah, and Daylian Cain just asserted in JAMA(4):

Conflicts of interest, including fee-for-service arrangements, are at the heart of the astronomical increases in health care costs in the United States, and transparency is not substitute for more substantive reform.

True health care reform requires such substantive reform of the financial arrangements among corporations that sell health care services or products and health care professionals, others who make decisions about patients' or the public's health, and academic health care institutions. To decide how to accomplish such reform, we need a better discussion informed by logic and evidence, sans logical fallacies. Those who lead health care ought to be able to participate in this discussion under these conditions.

References
1. ESC Board. Relations between professional medical associations and the health-care industry, concerning scientific communication and continuing medical education. Eur Heart J 2012; 33: 666-674. Link here.
2. Association of Americian Medical Colleges. Industry Funding of Medical Education. Washington, DC: AAMC, 2008. Link here.
3. Light DW. Global drug discovery: Europe is ahead. Health Aff 2009; 28: w969-w977. Link here.
4. Loewenstein G, Sah S, Cain DM. The unintended consequences of conflict of interest disclosure. JAMA 2012; 307: 669-670. Link here.

A Case Demonstrating Links Between Poor Governance, Conflicts of Interest, and Excess Executive Compensation at a Hospital System

The Salinas Valley Memorial Healthcare System in California first appeared on our radar in 2011 for not only giving an improbably large severance package to its CEO, but doing so two years before he actually retired.   At the time, hospital "officials" gave the usual sorts of justifications we see for huge executive compensation packages.  They suggested the CEO is brilliant, in particular, "gifted and experienced," and that to retain him they needed to pay "private sector-level benefits."  Then it turned out the system was rapidly raising the compensation of other executives while laying off employees who actually took care of patients. 

A Government Audit

Because the system, despite its title, is actually a local government agency, these controversies triggered not only outrage, but also a state audit.  The Los Angeles Times described its results. 

The audit found that the Salinas Valley Memorial Healthcare System regularly did business with firms that the board and top officials had financial stakes in — in some cases in apparent violation of state conflict-of-interest laws.

The report stated that Salinas Valley lacks sufficient safeguards against making decisions that violate conflict-of-interest laws, and that the district therefore can't guarantee 'that it's board members and executives do not experience personal financial gain from its transactions with businesses.'

The audit found 11 instances between 2006 and 2010 in which board members had reported economic ties — including stocks, salaries and other types of payments — to vendors with which the district did business.

Not all the cases represented violations of conflict-of-interest rules, state auditors said, but in two cases they found that officials may have broken the law.

One case involved former Chief Executive Samuel Downing, who had $50,000 in investments with 1st Capital Bank, an institution Salinas Valley and the executive agreed to deposit $1 million into.

In another case, the hospital made $5.6 million in disbursements to Rabobank, where a board member, Harry Wardwell, serves as a regional president and receives a salary of more than $100,000, according to his most recent statement of economic interest.

A San Jose Mercury News article listed some other problems found by the audit:

· Absence of a formal executive compensation policy despite paying its top administrators at the upper end of the industry scale. Downing received a nearly $5 million retirement payout, and other executives received generous pay topping out at $341,000 per year. The reported also cited supplemental pensions, which have been discontinued.

· Violations of state open-meeting laws as the board approved executive pay.

· Failure to ensure all employees who are required to file statements of economic interest had done so.

· Absence of a duly approved, legally binding conflict of interest code, which must be approved by the county Board of Supervisors. The report noted the hospital board instituted a properly approved code in December.

· Lack of proper documentation on the selection process for no-bid contracts, necessary to ensure the hospital gets the best value for its money. The report found only one of eight contracts reviewed during the audit included such documentation.

· Need for better oversight of hospital funding of community events, including the rationale for why and how they benefit Salinas Valley Memorial, to adhere to the ban on making gifts of public money. The report found the board delivered $54,000 to California Rodeo Salinas without any evidence it had considered how it furthered its public purposes.

Conclusions

First, this case should not be viewed as an indictment of hospitals run by local governments.  Rather than indicating that bad behavior is particularly likely at such hospitals, the fact that questionable behavior came to light at such a hospital is more likely due to better regulation of such hospitals leading to more transparency about them compared to other hospitals.  The regulations and laws governing the operations of non-profit hospitals not run by government agencies, or for-profit hospitals vary from US state to state.  To my knowledge, rarely do states strictly regulate conflicts of interest affecting, or require much transparency about governance at hospitals that are not government run.  There is a similar lack of state regulation of for-profit hospitals, and federal regulation of either non-profit or for-profit in these areas.  Thus it is extremely rare to see an audit or report about any non-governmental hospital like the one about Salinas Valley Memorial Healthcare.  Without the greater transparency produced by such investigations, there is little data about whether the practices seen at Salinas Valley are common at other hospitals, be they government run, non-profit and private, or for-profit.   

However, while this is just one case, it does allow an interesting comparison.  We have discussed the usual "talking points" proffered by management and boards to explain outsized compensation packages in health care.  They often include statements about the brilliance of the executives in question, almost never with any supporting evidence, and the need to pay "market" rates.  Although these, and other talking points may seem implausible, they are hard to challenge, because hospital and other health care organizations are usually able to conceal the processes which actually lead to compensation decisions. 

However, in this case there is documentation of problems with governance processes which may have plausibly enabled unjustified levels of compensation.  Failure to maintain processes to disclose and deal with conflicts of interest could increase the likelihood that conflicts would occur.  A board that included individuals who may have been personally profiting from their board membership might be inclined to go along to get along with the CEO.  Meeting in secret despite an open meeting law would prevent discovery of cronyism.

This case therefore suggests that governance that lacks transparency, accountability and integrity may lead to self-interested, conflicted leadership that responds to perverse incentives.  Such leadership is likely to pay more attention to its own interests than the health care mission, short-changing patients' and the public's health.

So once more with feeling.... health care organizations need leaders that uphold the core values of health care, and focus on and are accountable for the mission, not on secondary responsibilities that conflict with these values and their mission, and not on self-enrichment. Leaders ought to be rewarded reasonably, but not lavishly, for doing what ultimately improves patient care, or when applicable, good education and good research. On the other hand, those who authorize, direct and implement bad behavior ought to suffer negative consequences sufficient to deter future bad behavior.

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

Head of Lobbying Firm with Health Care Clients Walks Through Revolving Door into Executive Branch

A Washington Post op-ed described the latest case of a revolving door frequent flier, or perhaps frequent revolver, with health care connections. I will try to piece it together chronologically.

The story revolves around one Steven Ricchetti. His earlier career trajectory was:

Blue Cross Blue Shield, then the Democratic Senatorial Campaign Committee, then the Clinton White House, then lobbying, then back to the Clinton White House, then more lobbying, this time starting Ricchetti Inc. with his brother, Jeff. (A call seeking comment from Ricchetti Inc. wasn’t returned.)

Most recently, he "was tapped to be counselor to Vice President [Joseph] Biden."

His recent clients were"Fannie Mae, General Motors, the American Hospital Association, and Eli Lilly," obviously includeingtwo prominent health care organizations.

Previously he had represented

AT&T, Reed Elsevier, Pfizer, Sanofi-Aventis, Siemens, Sirius XM, Amgen, Boston Scientific, America’s Health Insurance Plans, eBay, Dow Chemical, the U.S. Conference of Catholic Bishops, among others, according to the Center for Responsive Politics. Cumulatively, they paid Ricchetti and his firms millions.

Eli Lilly, Pfizer, Sanofi-Aventis, Amgen, and Boston Scientific are obviously "pure" health care corporations. Reed Elsevier has a publishing subsidiary with important medical titles. Siemens Healthcare is an important part of that company. The links above are to our relevant posts about these firms, some of which describe various ethically questionable behavior.

Note that Mr Ricchetti's appointment apparently circumvented the President's previous statement that "lobbyists 'will not run my White House.'" He

achieved this feat — getting around the ban on lobbyists serving in the administration — by using one of Washington’s most-honored traditions: the loophole. Just as Obama won the presidency, Ricchetti de-registered as a lobbyist for his various clients. But he remained president of the lobbying firm that continued to work for many of those same clients, as well as a few more, such as the American Bankers Association.

While Mr Ricchetti is no doubt an intelligent and hard-working man, could not someone who was not so strongly financially tied to the leadership of some of the US' most ppowerful health care corporations be found who was well-qualified for this position?

Pending the answer to that question, which I do not expect to receive, this story becomes our latest example of the coziness between political and government leadership on one hand, and the leadership of large health care organizations, and those they choose as representatives.

We have seen all sorts of permutations of revolving door stories involving people with strong ties to the largest health care organizations. The implication is that both health care's private sector and the government functions meant to provide or regulate health care do not operate at arms' length, and in fact seem to be run by a group of insiders who overlap both, and may be more attuned to their self-interest and patients' and the public's health.

Health policy in the US has become an insiders' game. Unless it is redirected to reflect patients' and the public's health, facilitated by the knowledge of unbiased clinical and policy experts rather than corporate public relations, expect our efforts at health care reform to just increase health care dysfunction.

Physicians, public health advocates, whatever unbiased health policy experts remain must educate the public about how health policy has been turned into a corporate sandbox. We must try to somehow activate the public to call for health care policy of the people, by the people, and for the people.

Doctors and EHRs: Reframing the "Modernists v. Luddites" Canard to The Accurate "Ardent Technophiles vs. Pragmatists" Reality

One manner by which Healthcare's core values are usurped is via distortions and slander about physicians and other clinicians.

At "Health IT: Ddulites and Irrational Exuberance" and related posts (query link) I've described the phenomenon of the 'hyper-enthusiastic technophile who either deliberately ignores or is blinded to technology's downsides, ethical issues, and repeated local and mass failures.'

I have called this personality type the "Ddulite", which is "Luddite" with the first four letter reversed. I have also pointed out that the two are not exact opposites, as the Luddites did not endanger anyone in trying to preserve their textile jobs, whereas the Ddulites in healthcare IT do endanger patients.

Yet, in the 20 years I've been professionally involved in health IT, I have frequently heard the refrain, usually from IT personnel and their management, that "Doctors resists EHRs because they are [backwards, technophobic, reactionary, unable/unwilling to change, think they are Gods, ..... insert other slanderous/libelous comment].

I've heard this at Informatics meetings, at medical meetings, at commercial health IT meetings (e.g., Microsoft's Health Users Group, and at HIMSS), at government meetings (e.g., GS1 healthcare), and others.

The summary catchphrase I've heard and seen (even in the comments on this blog) is that doctors are "Luddites" while IT personnel are forward-thinking, know better than doctors, and are "Modernists."

This slander and libel of physicians and other clinicians needs to stop, and the entire issue needs to be reframed.

Doctors are pragmatists. When a new technology is rigorously shown to be beneficial to patients, and (perhaps more importantly) rigorously shown not to be of little benefit or worse, significantly harmful, doctors will embrace it. There are countless examples of this that I need not go into. They also have responsibilities, obligations, ethical considerations, liabilities, and other factors to consider in their decisions:

Pragmatism (Merriam-Webster):

: a practical approach to problems and affairs

The reality is not:

Luddite doctors <---- are in tension with ----> Modernist IT personnel

but is:

Pragmatist doctors <---- are in tenstion with ----> Ardent technophiles (Ddulites)

The technophiles' views may be due, on the one hand, to ignorance of medicine's true complexities and "innocent" overconfidence in technology. Unfortunately, it is a gargantuan leap of logic to go from "well, computers work in tracking FedEx packages and allowing me to withdraw money from my U.S. bank when I'm abroad, to "therefore with just a little work they will transform medicine."

Anyone familiar with even the most fundamental issues in Medical Informatics is aware of this. (This is the problem with "generic management" of healthcare IT - healthcare amateurs are unfamiliar with these issues.) Due to the complex, messy social, scientific, informational, ethical, cultural, emotional and other issues relatively unique to medicine, that leap from banking/widget tracking/mercantile computing --> medicine is probably more naive than the leap in logic, for instance, that would have a person believe since a hot air balloon can go high in the sky, it can take a person to the moon, as I observed here.

On the other hand the technophile's expressed views can also be a territorial ploy with full awareness of, and reckless disregard for, the consequences of technology's downsides.

(The CIO where I was a CMIO was well-known to be an aficionado of Sun Tzu's "Art of War" in his corporate politics - the polar opposite of a 'team player.' I might add that the doctors were fully expected to be 'team players'.)

Part of the struggle between the health IT industry and medical professionals has also been control of information flow about HIT.

This has been brought to the fore by my observation of the almost uniformly negative comments on today's HIT at the physician-only site Sermo.com. Sermo is populated, I might add, not by computerphobes but by physicians in a wide variety of specialties using computers for social networking. These comments will hopefully soon be published.

(They are not dissimilar to the many comments I reported in my Jan. 2010 post "An Honest Physician Survey on EHR's", although some might call the sponsor of the latter survey, AAPS, biased. I do not think the same can be said of Sermo.com, an open site for all physicians.)

I have mentioned on this blog the numerous impediments to flow of information about health IT's downsides, and these impediments are well described, for example, in the Joint Commission Sentinel Events Alert on Health IT (link), the FDA Internal Memorandum on H-IT Safety (link) and elsewhere (such as at link, link).

The impediments effectively rise to the level of legalized censorship, as observed by Koppel and Kreda regarding gag and hold-harmless clauses in their JAMA article "Health Care Information Technology Vendors' Hold Harmless Clause: Implications for Patients and Clinicians", JAMA 2009;301(12):1276-1278. doi: 10.1001/jama.2009.398.

Ultimately, even when information on HIT risks or defects does surface, it is highly inappropriately labeled as "anecdotal" (see this post on anecdotes for why this behavior is inappropriate).

This "anecdotalist" phenomenon occurs right up to the HHS Office of the National Coordinator for Health IT (ONC), as I described in my post "Making a Stat Less Significant: Common Sense on 'Side Effects' Lacking in Healthcare IT Sector" and elsewhere.

Therefore, another part of reframing the pragmatism vs. technophilia issue is for clinicians to put an end to censorship of HIT adverse experiences.

I have the following practical suggestions, used myself, to start to accomplish the latter goal.

These suggestions are in the interest of protecting public health and safety:

When a physician or other clinician observes health IT problems, defects, malfunctions, mission hostility (e.g., poor user interfaces), significant downtimes, lost data, erroneous data, misidentified data, and so forth ... and most certainly, patient 'close calls' or actual injuries ... they should (anonymously if necessary if in a hostile management setting):

• Inform their facility's senior management, if deemed safe and not likely to result in retaliation such as being slandered as a "disruptive physician" and/or or being subjected to sham peer review (link).

• Inform their personal and organizational insurance carriers, in writing. Insurance carriers do not enjoy paying out for preventable IT-related medical mistakes. They have begun to become aware of HIT risks. See, for example, the essay on Norcal Mutual Insurance Company's newsletter on HIT risks at this link. (Note - many medical malpractice insurance policies can be interpreted as requiring this reporting, observed occasional guest blogger Dr. Scott Monteith in a comment to me about this post.)

• Inform the Joint Commission (or similar national accreditor of hospital safety if not in the U.S.) via their complaint site at http://www.jointcommission.org/report_a_complaint.aspx . Also consider writing the JC senior officers (link to officer's list), whose awareness of HIT issues I can personally attest to via our correspondences.

• Inform the FDA (or similar healthcare regulator if not in the U.S.) via the FDA Medwatch Form 3500 reporting site at https://www.accessdata.fda.gov/scripts/medwatch/medwatch-online.htm. An example of such an adverse event report I filed myself (when the involved hospital refused) is at this link in the FDA MAUDE (Manufacturer and User Facility Device Experience) database.

• Inform the State Medical Society and local Medical Society of your locale.
  

• Inform the appropriate Board of Health for your locale.

• If applicable (and it often is), inform the Medicare Quality Improvement Organization (QIO) of your state or region. Example: in Pennsylvania, the QIO is "Quality Insights of PA."

• Inform a personal attorney.

• Inform local, state and national representatives such as congressional representatives. Sen. Grassley of Iowa is aware of these issues, for example.
  

• As clinicians are often forced to use health IT, at their own risk even when "certified" (link), if a healthcare organization or HIT seller is sluggish or resistant in taking corrective actions, consider taking another risk (perhaps this is for the very daring or those near the end of their clinical career). Present your organization's management with a statement for them to sign to the effect of:

"We, the undersigned, do hereby acknowledge the concerns of [Dr. Jones] about care quality issues at [Mount St. Elsewhere Hospital] regarding EHR difficulties that were reported, namely [event A, event B, event C ... etc.]

We hereby indemnify [Dr. Jones] for malpractice liability regarding patient care errors that occur due to EHR issues beyond his/her control, but within the control of hospital management, including but not limited to: [system downtimes, lost orders, missing or erroneous data, etc.] that are known to pose risk to patients. We assume responsibility for any such malpractice.

With regard to health IT and its potential negative effects on care, Dr. Jones has provided us with the Joint Commission Sentinel Events Alert on Health IT at http://www.jointcommission.org/assets/1/18/SEA_42.PDF, the IOM report on HIT safety at http://www.modernhealthcare.com/Assets/pdf/CH76254118.PDF, and the FDA Internal Memorandum on H-IT Safety Issues at http://www.scribd.com/huffpostfund/d/33754943-Internal-FDA-Report-on-Adverse-Events-Involving-Health-Information-Technology.

CMO __________ (date, time)
CIO ___________ (date, time)
CMIO _________ (date, time)
General Counsel ___________ (date, time)
etc."

• If the hospital or organizational management refuses to sign such a waiver (and they likely will!), note the refusal, with date and time of refusal, and file away with your attorney. It could come in handy if EHR-related med mal does occur.

• As EHRs remain experimental, I note that indemnifications such as the above probably belong in medical staff contracts and bylaws when EHR use is coerced.
  

These measures can help "light a fire" under the decision makers, and "get the lead out" of efforts to improve this technology to the point where it is usable, efficacious and safe.

-- SS