Tuesday, July 01, 2014

Health Care Corruption, "No Dirty Little Secret," but "An Open Sore" - Lessons from India for the US

Health care corruption is widely prevalent around the globe, but remains the great unmentionable.

Introduction: Global Health Care Corruption

We have discussed health care corruption whenever we have an opportunity, but rarely does the topic appear in the English language media or in English language medical and health care journals, particularly in the US.  Some might think that this is because health care corruption is not so prevalent in the US and other "developed" countries.  However, our most read post of all time was about a Transparency International global survey that found that fully 43% of Americans believe our health care is corrupt. 

A recent editorial in the BMJ(1) opened thus,

Healthcare is a high risk sector for corruption. Best estimates are that between 10% and 25% of global spend on public procurement of health is lost through corruption. This is big bucks. Total global spend on healthcare is more than $7 trillion each year. Corruption takes many forms, depending on the country’s level of development and health financing system. The United States, for example, lost between $82bn and $272bn in 2011 to medical embezzlement, mostly related to its health insurance system. No country is exempt from corruption. Patients everywhere are harmed when money is diverted to doctors’ pockets and away from priority services. Yet this complex challenge is one that medical professionals have failed to deal with, either by choosing to enrich themselves, turning a blind eye, or considering it too difficult. Transparency International, a watchdog on these matters, defines corruption as the abuse of entrusted power for private gain, which in healthcare encompasses bribery of regulators and medical professionals, manipulation of information on drug trials, diversion of medicines and supplies, corruption in procurement, and overbilling of insurance companies. This is no dirty little secret. It is one of the biggest open sores in medicine.

When health care corruption is actually discussed in polite circles, including the scholarly literature about medicine and health care, the discussion usually refers to corruption elsewhere.  In particular, in developed countries, discussion of health care corruption usually focuses on less developed countries.
Thus, maybe it should not be a surprise that the editorial by Jain et al accompanied another BMJ article about health care corruption in India. Yet by reading between their lines, both articles have global application, and are just as relevant to those nations in which the powers that be seem to have smugly concluded that health care corruption is only a problem in benighted third world countries.

A Personal View on Health Care Corruption in India

David Berger a UK trained general practitioner (GP), discussed the corruption he found while volunteering in India.(2)  His introduction was,

'The corruption strangles everything, Sir. It’s like a cancer.' Accompanied by apologetic shrugs and half smiles, statements like this are commonly heard in India. I knew this was the case before I went to work as a volunteer physician in a small charitable hospital in the Himalayas, but what I didn’t realise was how far the corruption permeates the world of medicine and the corrosive effect it has on the doctor-patient relationship.

Berger raised several issues:

Neoliberalism and Privitization

The healthcare system itself is a model of inequity; it is one of the most privatised in the world, with out of pocket expenditure on healthcare at more than 70%, far higher even than in the United States. This phenomenon is at least partly the result of the neoliberal World Bank policies of the 1990s, which mandated a reduction in public financing of healthcare, fuelling growth of the private sector. The latest in technological medicine is available to people who can pay, albeit at a high price,...

Kickbacks to Physicians for Referrals

This is a common form of corruption in India.

all investigations attract a 10-15% kickback to the referring doctor. One day, the marketing executive for this clinic had turned up at the hospital with an envelope full of cash—the commission for investigations ordered in the past few months. The senior doctor refused it and stipulated that in future the commission was to be paid back to patients, which is why the resident had to sign the form. The country’s doctors and medical institutions live in an 'unvirtuous circle' of referral and kickback that poisons their integrity and destroys any chance of a trusting relationship with their patients.

Kickbacks from Pharmaceutical Firms

There is also widespread corruption in the pharmaceutical industry, with doctors bribed to prescribe particular drugs. Tales are common of hospital directors being given top of the range cars and other inducements when their hospitals sign contracts to prescribe particular antibiotics preferentially.

I met a former pharmaceutical sales executive who left the industry, sickened by the corrupt practices he was supposed to employ. Working for one of the largest drug companies in the country, he was expected to bribe doctors with money and luxury goods. The crunch came when a doctor demanded that the company fly him to Thailand for a holiday and then provide him with prostitutes at his home. When the company representative queried this, his manager told him to comply, and he felt he had no choice but to resign, protesting that he was 'not a pimp.'

Huge Fees Charged to Medical Students

Endemic corruption extends to medical studies themselves. In another 'unvirtuous circle,' students can have to pay very large “donations” (perhaps $200 000 or more, some 20 times the average doctor’s annual salary) to get into the rapidly increasing number of private medical colleges and to get on to sought after postgraduate training schemes. This means that doctors can have high levels of debt or family obligation when qualifying, which is a strong incentive against working as generalists in rural areas and favours them practising technological medicine for maximum profit in urban areas to try to recoup their investment.

The US Parallels

All the issues above have clear parallels in the US.  But in the US, hardly anyone talks about health care corruption as a local or national problem.  

 Neoliberalism and Privitization

The US is known for its increasingly private health care system, pushed by the ideology of "neoliberalism" or "economism."  US health insurance is mostly provided by private, for-profit corporations, not non-profits, or government agencies.  US hospitals and hospital systems are increasingly private, as are other organizations that provide direct health care, e.g., hospices.  US physicians are increasingly corporate employees.  India may be more privatized, but the US is close behind.

 Kickbacks to Physicians for Referrals

We have frequently posted about cases in which there was good evidence that physicians in the US got kickbacks, or bribes.  Most involved legal settlements of cases in which there were allegations of widespread kickbacks.  Some of them involved kickbacks for referrals (e.g., the settlement involving Omnicare in 2013, look here).  On the other hand, resolution of cases involving kickbacks to small groups of physicians for referrals are so common in the US that we rarely discuss individual examples. For example, I found the following headlines from the last few weeks:

NJ Arrests More than 12 in Alleged Kickback Scheme
Randolph Doctor Jailed for 20 Months for Role in Massive Kickback Scheme
O.C. Grand Jury Indicts 15 Doctors   

We have also written extensively about how corporate physicians are pushed to avoid "leakage," that is referral of patients to health care facilities not owned by their corporate employees (e.g., look here). 

Kickbacks from Pharmaceutical Firms

We have posted about numerous examples of widespread kickbacks given by health care corporations, particularly pharmaceutical, biotechnology, and medical device companies, to physicians to enhance their prescriptions for or use of their products.  Most recent examples include legal settlements by Pfizer about kickbacks to promote use of Neurontin (one of many by that company, look here); by Medtronic to promote use of its pacemakers and defibrillators (look here); and by Johnson and Johnson to promote use of Risperdal (look here).  Moreover, we have discussed many examples of physicians paid as "consultants" or given "honoraria" for talks by companies whose goal was to use these physicians as "key opinion leaders," actually covert marketers for their drugs or devices.  Many of the conflicts of interest we have discussed actually seemed to involve kickbacks or bribes, even though some physicians and policy-makers like to refer to them as "collaborations" with industry to increase "innovation." 

Huge Fees Charged to Medical Students

The huge tuition charged US medical students, their huge resulting debt, and their resulting tendency to pursue procedural specialties rather than cognitive specialties, particularly primary care, have become cliches.

So it seems that the US has some of the same possible risk factors for corruption as does India, that there are many cases in the US of activities that are called corruption in India, and that a near majority of US citizens feel their health care is corrupt.  But health care corruption remains a largely taboo topic in the US. 

Summary: Some General Approaches

The editorial by Jain et al that to its authors' credit emphasized that health care corruption is a global problem suggested some general approaches to corruption(2)

Good governance, transparency, and zero tolerance must form the basis of any anti-corruption strategy. Changes must be implemented in society at large for reform to be sustained. Better governance requires rigorous legislation and functioning administrative mechanisms to provide fiscal oversight. Ethical standards of conduct must be explicitly established and staff held accountable for their performance. Punitive measures should be available to serve as a deterrent. Honest behaviour must be rewarded. These policies may be ineffective, however, unless healthcare professionals are assured of a decent salary and fair opportunities for professional growth


Simple and effective channels for complaints must be established, and appropriate legal support and protection provided to whistleblowers. Looking deeper, underlying issues such as education and social justice must not be forgotten if the battle against corruption is to be sustained and eventually won. Answers may also lie outside the world of medicine.

Note that we have discussed all these approaches: accountability, transparency, governance, boards of trustees, boards of directors, ethics and integrity policies , impunity, legal settlements, and education about corruption (look here). 

Not that any of them have been widely adopted.

So to repeat an ending to one of my previous posts on health care corruption....  if we really want to reform health care, in the little time we may have before our health care bubble bursts, we will need to take strong action against health care corruption.  Such action will really disturb the insiders within large health care organizations who have gotten rich from their organizations' misbehavior, and thus taking such action will require some courage.


1.  Jain A, Nundy S, Abbasi K. Corruption: medicine's dirty open secret.  Brit Med J 2014.  Link here

2.  Berger D. Corruption ruins the doctor-patient relationship in India.  Brit Med J 2014.  Link here.


Steve Lucas said...

Corruption can take many forms; some are subtle, while others involve ethical issues as found in this link:


We find other examples of unnecessary testing and treatments, again subtle, but one person’s cost is another person’s revenue stream:


All the while pharma tries to control the narrative, while a few try to throw the curtain back:


All creating the highest cost medical system in the world:


With so much money floating around is it any wonder that doctors do not sell out:


Troubling is the feed the monster mentality expressed by so many doctors. Their major obligation is to a system that takes and takes the time and money of patients all in an effort to provide themselves, and their employers, with increasing revenue. Doctors create simplistic mind games where the elderly have time to sit in an office, and they do not need the tiny amount of money they have saved over a life time, it is better spent on unnecessary medical testing, since that supports the practice.

We have all seen medical care continued or stopped based on a person’s insurance coverage.

Pharma’s marketing mentality has overwhelmed medicine leaving us with a system where me first is the battle cry and money, like all good sales organizations, is the measure of success.

Steve Lucas

Anonymous said...

Our cheerleading media encourages us (by what they do and don't disseminate) to stick our index finger in the air and yell, "We're number one." It doesn't seem to matter what the target is, being number one is the GOAL. From the few intrepid whistleblowers that expose the truth, it appears in the arena of corruption, we may soon proudly hoist our finger and continue our march toward world dominance.


Anonymous said...

I agree with practicaly everything you said.
That is why I and 3 others are forming an insurance company.
We have had 2 meetings with the Texas Department of Insurance.
We hope to get our license as a life and health insurer in the next 2 weeks.
While a for-profot, we have a unique patented plan called Health Matching Insurance.
Initially offered to self-funded employers of 200 or more employees, our plan is designed to reduce premiums 60-80% over time.
Don Levit
Treasurer of National Prosperity Life and Health

Judy B said...