Friday, June 24, 2011

Embedded Networks of Influence in Health Care: An Illustrative Case

At the 12th International Anti-Corruption Conference (IACC), sponsored by Transparency International, one of the plenary sessions was devoted to the topic of "embedded networks of influence."  The session description included this description of the topic as:
the major stumbling block in the fight against corruption, namely, the power of 'embedded networks' in advancing personal or group interests through state institutions. The extent of their power can create what is known as “state capture” meaning democratic governance failure. It will take a close look at the influential role of private sector, especially of the multinational private sector.
A recent investigative report in the Chronicle of Higher Education illustrated a striking case of how one key individual has affected health care through multiple connections to what can be regarded as embedded networks of influence, thus tying in to many of the topics we have discussed on Health Care Renewal.

The article focused on the University of Miami and its current President, Donna Shalala. Let me summarize the set of relevant topics in roughly chronological order and note how the article links them to President Shalala.

Speech Codes and Restrictions on Free Speech within Academia

As I wrote in my 2003 article, (Poses RM. A cautionary tale: the dysfunction of the American health care system.  Eur J Int Med 2003; 14: 123-130.  Link here), speech codes and other restrictions on free speech within academia created the framework for the suppression of clinical research that may offend those with vested interests:
Failure of universities to champion the academic freedom of their clinical researchers may stem from their abandonment of their own academic core value of free enquiry. There is abundant evidence that universities may restrict expression and limit academic freedom. In The Shadow University, Kors and Silverglate charged that 'universities have become the enemy of a free society.' Universities have punished faculty and students who raised unpopular viewpoints.

In the Chronicle,
Ms. Shalala, ... was previously president of Hunter College of the City University of New York and chancellor of the University of Wisconsin at Madison....

The Shadow University, the pioneering work on challenges to individual rights by leaders at academic institutions, dealt with Ms Shalala's role as a leading early proponent of silencing speech that offended academic leaders.
Wisconsin chose to enact a speech code. On March 29, 1990, the Wisconsin ACLU joined a suit against the university, announcing that the important moral goals of toleration and equal opportunity 'can be accomplished through means other than the creation of rules which infringe upon the fundamental freedom to express ideas.'

The speech code was drafted with the help of UW-Madison Law School professors Richard Delgado, Gordon Baldwin, and Ted Finman.... On June 9, 1989, upon recommendation by Chancellor Shalala, it was adopted by the Board of Regents...."
The speech code was soon declared unconstitutional by a federal court, which held:
the policy was unconstitutional precisely because 'the UW rule regulates its speech upon its content.'
Ms Shalala then:
recommended a new code to the regents in the spring of 1992, which they adopted in March.
Faced with another lawsuit, the regents reversed themselves
For these and similar efforts, as discussed by Evans and Novak in 1993, Ms Shalala was dubbed "the Queen of PC" [political correctness].

Speech codes and other restrictions on free speech in the academic setting seem mainly to be used to target speech that administrators find offensive, including speech critical of management practices. This is echoed in the Chronicle story, which suggested how fearful University of Miami faculty now are of criticizing Ms Shalala:
Others, including several current and former faculty members, outline their complaints in far more detail. But they do so anonymously, saying they don't want to tangle head-on with such a politically powerful president.
Ms Shalala's prominence in academics, probably more due to rather that in spite of her hostility to free speech and free enquiry, may have enabled her to join another and even more powerful network of influence, this one at the center of the US political world.
The Rise of Commercial Health Insurance 

In Deadly Spin, former CIGNA executive Wendell Potter documented how clever and unscrupulous use of public relations and marketing techniques enabled commercial health care insurance and managed care companies to increase dominance of US health care, while allowing health care costs to soar, and denying access to larger numbers of patients. 

The Chronicle article briefly alluded to Ms Shalala's role in the rise of for-profit health insurance.  Despite being labelled "farthest to the left and most controversial of all President-elect Clinton's Cabinet appointments," again per Evans and Novak, Ms Shalala departed the University of Wisconsin in 1993 to become US Secretary of Health and Human Services. In that role, she presided over the administration's failed attempt at health care reform, as Potter wrote,
When President Bill Clinton was forced to give up on comprehensive health care reform in 1994, the damage was far more extensive than anyone could have imagined - the administration's defeat emboldened health insurance companies to totally redefine the mission and methods of an industry that now strands nearly fifty million people without insurance.

As I outlined..., insurers knew after the Clinton disaster that the coast was clear for them to abandon nonprofit practices, long-standing commitments to public service, and traditional insurance models and turn instead to satisfying Wall Street investors' desire to make money, by limiting spending on health care.
Note that my only quibble with what Wendell Potter wrote is that it may be that the insurance companies' top executives, rather than their stockholders who benefited the most from these changes, as we will address below.

Ms Shalala remained Secretary of HHS until 2001, but after the failure of the health care reform proposal in 1994, her department apparently did nothing to try to ameliorate the changes to health care that Potter described above.

Bloated Executive Compensation Disproportionate to Any Measure of Organizational Performance

We have frequently discussed how health care leaders now seem entitled to get huge amounts of compensation disproportionate to their organizations' performance and their responsibility for it. 

Despite Ms Shalala's reputation in the 1990s as an extreme leftist, upon leaving her role in the Clinton administration, she almost immediately embraced the for-profit corporate model of health insurance. In a notable example of what now is called the "revolving door" that went unnoticed at the time,  Ms Shalala went from would be regulator of commercial managed care to leader of commercial managed care.  As noted by the Chronicle:
Debates over ethical boundaries are not new to those involved in the university's growth surge. Ms. Shalala was on the compensation committee of the board of the health insurer UnitedHealth Group when it was caught in one of the nation's largest-ever stock-options scandals. She also received low-cost loans in 2002 as part of a favors-for-politicians scandal at Countrywide Financial Corporation.

Both Ms. Shalala and [University of Miami medical school dean] Dr. Goldschmidt have served on the boards of companies directly or indirectly affected by the university's business decisions. The university had $30-million in annual business with UnitedHealth Group when Ms. Shalala was on its board.
Note that Ms Shalala served as Secretary of Health and Human Services from 1993 to 2001, (see this list), then joined the board of UnitedHealth Group within months (see this article.)

We discussed in considerable detail the ethical failings of UnitedHealth Group while Ms Shalala had fiduciary responsibility as a board member for its conduct. A particularly striking failing was how the board of directors granted sufficient back-dated stock options to the company's former CEO to make him a billionaire on paper.  The resulting scandal was followed by his resignation.  Later, Dr McGuire was forced to give back some the options.  The final settlement of the fiasco cost UnitedHealth $895 million, and Dr McGuire $30 million and the cancellation of 3.6 million stock options.  As we most recently summarized here, former CEO William McGuire was one of the top 10 best compensated CEOs of the first decade of the 21st century, despite the company's multiple ethical failings. 

Conflicts of Interest, Especially Involving Key Opinion Leaders who Promote Marketing Objectives Cloaked in Academic Respectability

We have extensively discussed the web of conflicts of interest that now pervades health care. For academic health care leaders, the most intense kind of conflict of interest may be created by service on the board of directors of a for-profit health care corporation.  Note that corporate directors, as we have discussed previously, have a fiduciary duty to exhibit "unyielding loyalty" to the stockholders of the company and their interests  [Per Monks RAG, Minow N. Corporate Governance, 3rd edition. Malden, MA: Blackwell Publishing, 2004. P.200.].  We first started to discuss the intense conflicts of interest generated when leaders of academic medicine are also members of boards of directors of for-profit health care corporations in 2006.  The issue really made the big time in 2010 when the New York Times published a front page article in its Sunday Business section about whether university presidents who also were corporate directors were part of an "academic-industrial complex."  As we noted above, Ms Shalala's service on the board of UnitedHealth Group created such a conflict, and she apparently presided a similar board level conflict of interest affecting her medical school dean. 

A particularly pernicious kind of conflict of interest may be created when a company selling health care goods or services pays an academic to become a "key opinion leader."  Industry spokespeople and key opinion leaders themselves tout KOLs as clinical, educational, and/or scientific experts chosen for their expertise to advance medicine, science and public health.  There are documented instances (e.g., see posts here and here) in which defectors from marketing departments of commercial health care corporations described KOLs as salespeople who could be more influential hidden within their professional or academic cloaks.  Even some physicians paid to be speakers on behalf of pharmaceutical corporations have acknowledged their role as salespeople in fancy dress (see post here).  There are cases of documents revealed by discovery in legal actions that show how companies planned organized stealth marketing efforts for drugs that included activities by KOLs (e.g., see post here about marketing of Lexapro, and here about Neurontin).

The Chronicle recounted how Ms Shalala also was linked to one of the better known examples of industry paid KOLs:
Dr. Goldschmidt did not fully report the income from such corporate associations on the medical school's financial-disclosure Web site, even while promoting the site as evidence of his faculty's commitment to openness. He also brought to Miami a repeat violator of financial-conflict-of-interest standards, Charles B. Nemeroff, to serve as a professor and chairman of the department of psychiatry and behavioral sciences.
In a companion article, the Chronicle summarized Dr Nemeroff's career thus:
Dr. Nemeroff had quit as chairman of Emory University's psychiatry department in December 2008 after the university received complaints about his secretly receiving money from GlaxoSmithKline and other pharmaceutical companies while helping promote their products.
We (Dr Bernard Carroll more than yours truly)  have posted previously about Dr Nemeroff's exploits, including those at the University of Miami, numerous times

The Fall of Municipal Hospitals, the Rise of For-Profit Hospitals

We have frequently discussed how the leaders have undermined health care organizations' core missions, and particularly how hospitals and hospital systems have strayed from their patient care mission to make more money. The Chronicle suggested how Ms Shalala's leadership of the University of Miami has enriched the institution's teaching hospital at the apparent expense of the local municipal hospital system:
Another set of problems, cited by current and former university faculty and Jackson staff members, stems from the 2007 takeover of a facility that became the University of Miami Hospital, across the street from Jackson. The purchase has greatly expanded the university's ability to direct many of the area's most profitable patients and procedures to the new facility and to other university-owned hospitals, further worsening Jackson's own considerable budget woes.
In addition,
The university's patient-enrollment practices were part of the problem. The inspector general of the U.S. Department of Health and Human Services and the U.S. Attorney's Office for the Southern District of Florida are looking into the question of whether university doctors routinely enrolled Jackson patients in research projects without telling the hospital.

In a 2008 letter from Jackson officials to university leaders, Nathan Anspach, who was vice president for physician services at the hospital, described a series of failed efforts 'to stop new clandestine research' at Jackson by university doctors.

Meetings with university officials aimed at stopping the practice 'went badly,' Mr. Anspach wrote, and Dr. Goldschmidt, the medical-school dean, was 'outwardly annoyed' by Jackson's requests for information that would help it identify research patients in the building.

Ms. Shalala was copied on at least some of the correspondence, including a 2006 letter in which Marvin O'Quinn, then-president and chief executive of the Jackson Health System, which runs Jackson Memorial, warned Dr. Goldschmidt about the legal risks of submitting claims for patient care that should be covered by a medical study.

The current director of compliance at Jackson Health System, Diana Salinas, said the allegations are a matter of investigation by the two federal agencies. Ms. Shalala and Dr. Goldschmidt told The Chronicle that they were unfamiliar with the matter. 'This must not be a very big issue,' Ms. Shalala said, 'because none of the Jackson senior leadership has ever brought it up with me.'
And the departing chief executive of the Jackson Health System, Eneida O. Roldan, whose appointment two years ago was supported by the university, said medical-school officials made clear from the start 'that they were going to take cardiology across the street.'

Ms. Dixon-Shim, of the support-workers' union, is among those who say they've seen it happen. 'Most of the indigent patients, they're staying at Jackson,' she says. 'But most of the private patients, the physicians are taking them over to their area' at the university-owned hospitals.
Note that we previously discussed how Jackson's financial troubles lead to a bid by for-profit Steward Health Care to take it over.


So, through her mutiple roles that allowed her to serve at several key nodes of networks of influence in health care, one person has been linked to multiple dysfunctional aspects of US health care that arguably have been responsible for our increasing costs, declining access, and poor quality.  Note that these multiple roles seem to have been logically and even ideologically inconsistent, suggesting that multiplying her roles within the  networks may have been more compelling to her than logical or ideological rationales for particular actions.

We have discussed before, the leadership of health care organizations has become incredibly interrelated, interlocked, and incestuous. It appears that top leaders of various health care organizations may be more familiar with and identify more with each other, and with other hired executives and managers, than with their organizations, their organizations' missions, and their organizations' professionals, staff, students, clients, and patients.  It now appears reasonable to characterize the relationships among health care leaders as embedded networks of influence. 

So to repeat- I strongly believe that there needs to be much more investigation, academic, journalistic, and perhaps legal, of the identity, nature, and culture of the leaders of health care, and their relationships. A few bloggers cannot do it all. Obviously, the anechoic effect mitigates against medical and health care academics looking into their own leaders. However, failing to understand who is leading our march to the brink of health care failure ought not to be something such academics would want on their conscience.

Finally, and obviously, 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.

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.


Anonymous said...


This is a fabulous post. Thank you. The same situation applies to medical specialty societies that work for the benefit of their physician/researcher members rather than for patient benefit. The situation has become alarming because researchers with academic ties use the cloak of academic respectability to hide their commercial ties behind. Worse, they sit within government agencies like the CDC and call the shots to the detriment of patients. Such has been the fate of patients with Lyme disease, long abandoned by the medical society that should serve their interests, the Infectious Diseases Society of America. Forget the patents held by members of their guideline panels; forget the fact that the majority of funding for the society comes from pharmaceutical companies, but do be prepared for a response filled with righteous indignation should you question their "scientific" judgment and "expert" opinion.

Patients who should sit at the center of healthcare reform are having a hard time elbowing their way into a room filled with commercial interests. Institutionally sanctioned corruption has undermined the academia and the medical profession. And, evidence based medicine, too often, has become a no more than a marketing tool used to further the goals of commercial interests.

Clearly, it's time for a change, but is there an honest man left in the room with the courage to lead the charge?

Lorraine Johnson, JD, MBA
California Lyme Disease Association

Afraid said...

A compelling story and likely one of many many such networks of influence that get more embedded each day. I dont know though, we cant vote them out, we arent the regulators and legislators who clearly have colluded with or perhaps are part of the influence network.

I cant suggest violence, two wrongs never make a right, and I cant boycott these institutions because I need healthcare.

What is a citizen to do?

Anonymous said...

As HCR has progressed over the years we seem to revisit ideas with ever increasing background information. As noted, this information is often brought to the fore by bloggers and the internet.

I often use the quote; “Facts are the enemy of truth” in many of my comments. The problem arises when, as I have commented, the “smart guys” manipulate the system to keep those facts from seeing the light of day.

The one quote in the post concerning an issue not being a problem since the competiting hospital’s management did not bring it to the attention of this senior management rang true with me, recalling the many times this statement has been used to stifle dissent.

These very liberal organizations take a very militaristic approach to “chain of command” in an effort to quell dissent. In today’s military you are more likely to hear the general ask the private what he sees and what is his recommended course of action. Instead we find stonewalling and an admonishment to “get on board” in those oh so liberal organizations who profess a great desire to see only the truth.

In a recent discussion with an older female minister I was struck with how quickly we both arrived at issues within our denomination. While she had to deal with the direct advances of a sexual predator, I only had to deal with the management issues. In both of our cases we found those in responsible positions not only knew of the issue, but were in some way participants.

I see a tie between the academic world, medicine, and the clergy. All three are based on a continuing search for information, more importantly; all three represent the bed rock or our moral code.

Medicine’s first rule is: Do no harm. The word truth will be found in almost every academic centers motto. The clergy are called on a quest to search for a higher meaning to life.

What we have seen is truth has been perverted to what I what it to be, I don’t care about the harm to others, and the highest meaning in life is personal satisfaction in the moment.

While a few brave voices have spoken to this chaos, it will take the efforts of others who do have the power to change the system to speak up. We only need to look at the fall of our major denominations to see the coming decline in our academic institutions. Medicine is already playing a game of self-deception with statements that the problems in pharma do not extend to the everyday physician.

I only have to look at psychiatry as a once great science that has helped people in the past, and will help people in the future, but right now I have to question every aspect of its current “science.”

What I see is chaos in our most basic moral code and in the institutions we look to for guidance. This chaos will consume us as a society as our only concern becomes personal advancement and satisfaction.

Steve Lucas

Anonymous said...

Thanks for connecting the dots. Academic institutions, especially hospitals, are geared to conduct business as does the leaders of Libya, Siria, and others. Leaders like Shalaka ruin lives of those who speak the truth, thus, anechoicism

Anonymous said...

I am disappointed in Obama. I had hopes that he would be interested in these issues enough to do something about them but he has failed us. I wonder what role the First Lady played on the BOD of U Chicago Med Center. I can only imagine, but unlikely to be other than the ilk of Shalala.

They do not get it as they allow this country to deteriorate.

InformaticsMD said...

Lorraine Johnson, JD, MBA wrote:

Clearly, it's time for a change, but is there an honest man left in the room with the courage to lead the charge?

Several such people write for this blog and others like it. We have the courage...but not the influence (yet).

-- SS

John M. Nardo MD said...

What a remarkably clear explication of the top of a problem the rest of us are picking at from below. As discouraging as some of the points you make are, they are, in fact, less so because you said them. A great piece of work...

SG said...

Epic. An instant classic of close analysis and logic.

With this post, you have left the elite media (New York Times, Newsweek/Time) hopelessly in the dust.

Let us hope that we are not, in Nietzsche's words, born posthumously, and can see the fruits of our insight in our lifetimes.

Judy B said...

Wow! When is any of this going to come out in the mainstream media? Why are there so few of us outraged by this takeover of medicine by so-called "leaders" who are only looking after themselves? Is it going to take the complete collapse of the medical industry to awaken people?