Abort, Retry, Fail? - Lancet Avoided Much Recent Unpleasantness in Reporting on New Gates Foundation CEO (Including Her Defense of $55,000 a Year for Bevacizumab)

The April 26, 2014 issue of the prestigious journal Lancet used two full pages and two separate articles by the same author to discuss the ascension of the Gates Foundation new CEO, Dr Susan Desmond-Hellmann.(1-2)

Two Somewhat Redundant Lancet Articles

Dr Desmond-Hellmann trained as an oncologist, spent time working on AIDS and Kaposi's Sarcoma in Uganda, but then spent much of her career as a pharmaceutical/ biotechnology executive, as described in the first article,(1)

After returning from Uganda, Desmond-Hellmann joined the nascent Taxol development programme at Bristol-Myers Squibb, before being poached by Arthur Levinson, the then Head of Research and Development at Genentech. Levinson was convinced Genentech had a strong pipeline of anticancer therapies, and brought Desmond-Hellmann on board to help guide them through to approval. The pipeline went stratospheric, and took Desmond-Hellmann with it. By 2009 she had been promoted to President of Product Development, having overseen the introduction of two of the first gene-targeted therapies for cancer, bevacizumab and trastuzumab.

After Genentech was bought out by Roche, Dr Desmond-Hellmann became Chancellor of the University of California, San Francisco,

Over the next 5 years, Desmond-Hellmann instituted wide-ranging reforms at UCSF, including aggressively cutting administrative waste and putting a greater emphasis on partnerships with the biotech and pharmaceutical sectors, coming in for some criticism in the process. 'Some of the press suggested one of Sue's goals was to take UCSF out of the public system', says [current UCSF interim Chancellor Sam] Hawgood. 'Nothing could be further form the truth. She was very proud of the public mission of UCSF, and had no intent to alter that.' Mindful of how damaging perceived conflicts of interest could have been to her credibility during her time at UCSF, Desmond-Hellmann says she 'specifically avoided being on pharma and biotech boards'.

The article suggested we should expect nothing but great things from Dr Desmond-Hellmann at the Gates Foundation,

it is Desmond-Hellmann's ability to forge partnerships and her wide network of contacts, rather than her knack for cutting administrative overheads, that will have seemed most attractive to the Gates Foundation as it looks to speed up the process of translating research into results.

The second article used remarkably similar wording(2), e.g., regarding her career in the pharmaceutical business,

Soon after joining the Taxol team, Desmond-Hellmann was leading it; the kind of progress that was bound to catch the eye of Genentech's then Head of Research and Development Arthur Levinson. What happened next is part of pharmaceutical folklore, as Desmond-Hellmann helped to mastermind one of the most profitable drug-development pipelines in history, including the approval of two of the first targeted cancer therapies, for Genentech.

Also, regarding her career at UCSF,(2)

 Desmond-Hellmann from embarking on a programme of structural reforms to cut administrative inefficiency and forge closer links with private industry, something that still stirs up controversy. 'There definitely were concerns, and there remain concerns in academia, about conflicts of interest, privatisation. I think what helped most was that I was clear in my actions that I did and do value that UCSF is a public institution, and I think my actions spoke and speak for themselves', she says. But Desmond-Hellmann is robust in her defence of the importance of public—private partnerships for driving innovations that ultimately benefit society.

Finally, regarding expectations for her performance in the future,

'There are a lot of people who are looking to the foundation, and in the world of philanthropy there's a lot of visibility to the Bill & Melinda Gates Foundation, so I certainly feel accountable and responsible for doing a good job.' But, she asserts, 'I'm up for it'. With a track record that ranges from clinical research, global health, and the sharp end of commercial drug development, she seems to be made for it.

So Lancet, a very well known journal which normally is very parsimonious about its use of the printed page, used two full pages for two very similar articles about the new Gates Foundation CEO.  Both articles made the same points,
-  Dr Desmond-Hellmann had a brilliant career in the pharmaceutical/ biotechnology business, and was responsible for the development of several important cancer drugs
-  Dr Desmond-Hellmann made major reforms at UCSF, including pushing for some sort of privatization, and for public-private partnerships, while dismissing concerns about any resulting conflicts of interest
 -  Dr Desmond-Hellmann is likely to be very successful as Gates Foundation CEO.

What the Articles Did Not Say

When Dr Desmond-Hellmann's appointment as Chancellor of UCSF was announced in 2009, I suggested that she was a very unusual choice because of aspects of her track record in the pharmaceutical/ biotechnology business.  Yet the Lancet's two articles on her prospects as new Gates Foundation CEO ignored these considerations, and ignored or downplayed aspects of her track record as UCSF Chancellor.  In particular,

Defending $55,000/ Year Bevacizumab

As I noted in 2009, Dr Desmond-Hellmann's defense as a Genentech executive of the sky high prices the company was charging for its new drugs was well documented in an article in the Journal of the National Cancer Institute)(3)

And cancer biologics, though among the most costly drugs, are still only a tiny fraction of total GDP, said Genentech's Susan Desmond-Hellmann, president for product development, at AACR.

Hellmann and others argue that with these drugs’ potential to alleviate the huge societal burden of cancer, biologics are worth the cost.

The industry has responded to concerns about costs by putting more resources into patient assistance programs. When Genentech received U.S. Food and Drug Administration approval for bevacizumab in lung cancer last October, it also announced a cap on expenditures for the drug for patients with family incomes less than $100,000 a year. In 2005, the median household income was $46,326.

Originally announced as $55,000, the cap actually doesn't kick in until after a patient has received 10,000 mg. At the wholesale acquisition cost, 10,000 mg is about $55,000, said Genentech spokesperson Edward Lang.

What the companies have not done so far is reduce prices. The reason, industry representatives say, is the need to recoup massive research and development costs, including high manufacturing costs for biologics. These costs have long kept biotech companies from making much of a profit overall, Hellmann said. She noted that profit levels of publicly held biotech firms have 'hovered close to zero' throughout the life of the industry.

Whatever the company's nominal profit levels, its executives, including Dr Desmond-Hellmann, have made extremely good money.   According to Genentech's 2008 proxy statement, (the last available, since the company has been bought out by Roche), Dr Desmond-Hellmann's total compensation was $8,361,348 in 2007 and $7,820,142 in 2006. In 2007, her total compensation was equal to 0.3% of the firm's total net income.

Of course, since 2007, and especially since 2009, the problem of hugely expensive pharmaceuticals as a driver of health care costs, especially in the US, has become all too apparent.  The Lancet articles were completely silent about this aspect of Dr Desmond-Hellmann's track record, and what implications it might have for her new role of a foundation that spends $3 billion a year, mainly ostensibly to improve the health of poor people.

Since she began as Chancellor of UCSF in 2009, other aspects of Dr Desmond-Hellmann's track record came to light that might have a bearing on how she will conduct herself as Gates Foundation CEO. 

Investments in Tobacco Stocks

As I posted in 2010, then NY Times reporter Duff Wilson discovered that Dr Desmond-Hellmann and her husband (also a physician), had stock holdings in Altria, the parent company of tobacco company Phillip Morris USA, worth between $100,000 and $1,000,000.  When this made public, they abruptly sold the stock.  The head of the UCSF tobacco control center then said,  “I do find that kind of shocking, but at least she got rid of it,...”

The goals of tobacco companies seem completely antithetical to those of a medical school, especially one with a tobacco control center, and incidentally seem antithetical to those of the Gates Foundation, which has a tobacco control initiative, with a stated goal:

to reduce tobacco-related death and disease in developing countries by preventing the initiation of new smokers, decreasing overall tobacco use, and reducing exposure to secondhand smoke.

The Lancet articles were silent on this issue.  

Questions Whether Industry Partnerships Threaten the University Mission

In 2011, I posted about Dr Desmond-Hellmann's vigorous push to create public-private partnerships, which seemed meant to turn UCSF into a de facto drug company research and development contract shop.  At the time, I noted that many of her arguments seemed to be based on logical fallacies, and that she never provided any good evidence for her claims of marvelous new "innovations" that would result from such supposed partnerships.  The Lancet articles did not mention any substantive concerns about this issue.

Dismissing Concerns about Conflicts of Interest

In 2012, I posted about how Dr Desmond-Hellmann also dismissed concerns that public-private partnerships could lead to damaging conflicts of interest, again employing several logical fallacies.  In particular, she implied that medical academics should no longer just do research to advance knowledge, but had become responsible for getting their "discoveries to society," and therefore would have to "start a company or work with a company to commercialize a product."  She did not seem to acknowledge the possibility that academics could make discoveries, but perhaps other people would be better at turning these discoveries into useful products.  The Lancet articles were silent on these issues.

Minimizing Concerns about Conflicts of Interest due to Membership on the Board of Corporations with Health Care Agendas

As noted above, Dr Desmond-Hellmann stated that she demonstrated her sensitivity to the issue of conflicts of interest affecting academic health care by avoiding membership on boards of directors of "pharma or biotech" companies.  These, of course are not the only sorts of for-profit corporations who have health care agendas.  This statement appears to have been carefully worded to avoid dealing with Dr Desmond-Hellmann's membership since 2010 on the board of directors of Procter & Gamble (see the company's 2013 proxy statement.)   While Procter & Gamble is no longer a major pharmaceutical company, it has a Global Health and Grooming unit, whose products include over the counter pharmaceuticals (e.g., Pepto-Bismal, Metamucil, Prilosec OTC).  Also, while Procter & Gamble does not make it very obvious, it has also owned MDVIP, a company that employs physicians to provide concierge medical services, since 2010, although as Cincinnati.com just reported, it will soon sell this unit to private equity.   So while perhaps Dr Desmond-Hellmann could claim that while she was UCSF Chancellor she was not on the board of directors of any pure pharmaceutical or biotechnology company, she was certainly on the board of a major international company that sells pharmaceuticals and other health care related products, and employs physicians to provide direct patient care.  (Presumably, she will be staying on the P&G board while she is Gates Foundation CEO.)  The Lancet did not mention this issue. 

Privatizing UCSF

Also, the Lancet articles seemed to contradict other reports that Dr Desmond-Hellmann made a serious attempt to privatize at least some aspects of UCSF, but that this effort failed. (Note that quote by Dr Hawgood from the first article above.)    

However, in 2012, I posted about a prevalent conspiracy theory that University of California managers were trying to take the university private.  However, it seemed to be more of a theory, because at least one news report included statements that Dr Desmond-Hellmann wanted to take UCSF out of the state university system.  This week, an article in the San Francisco Business Times suggested that this was a serious plan, in that Dr Desmond-Hellmann

ran into opposition when she  proposed in early 2012 that some of UCSF's functions be separated from the rest of the UC system.

The autonomy coming from the separation, Desmond-Hellmann argued at the time, would have meant that the sole graduate-level-only campus in the 10-campus UC system would no longer subsidize UC undergrad programs. It also would have translated into UCSF having more control over the money it generates from its medical center and other operations.

However, the same article noted that the current University of California President,

dismissed as 'loose talk' a more than two-year-old plan for UCSF to weaken its ties to the larger UC system. 'UCSF is firmly part of the system and will remain so,...'

The current president seemed to thus acknowledge that this plan existed, however "loose" it may have been.  Clearly, the Lancet articles suggested rather that Dr Desmond-Hellmann did not have any privatization plans, whatever the criticisms people could have made of them.  

Summary

We have often discussed the anechoic effect, how it seems taboo to discuss certain unpleasant facts and issues relevant to the health care system, especially those that might lead to questions about the abilities of the current leadership of large health care organizations.  This taboo seems to particularly affect public discourse within the health care system, such as is found in medical and other scholarly health care journals.

The Lancet is one of the largest circulation and most prestigious medical journals.  The Gates Foundation is one of the biggest foundations working in the health care sphere.  In their latest letter, Bill and Melinda Gates stated,

Our foundation is teaming up with partners around the world to take on some tough challenges: extreme poverty and poor health in developing countries, and the failures of America’s education system.

Yet when the Lancet devoted two full pages to often repetitive discussion of the new leader of the Gates Foundation, it avoided discussion of several issues that might have lead to questions about whether her future leadership would really be about challenging "poor health in developing countries," rather than promoting the interests of large pharmaceutical/ biotechnology and other health care related companies, as she had apparently tried to do before.  That such an important medical journal would publish such incomplete health news reporting suggests the operation of the anechoic effect.

I hope the questions that ought to be raised about Dr Desmond-Hellmann's priorities as CEO of the Gates Foundation will eventually be put to rest.  It would be more reassuring, however, if they could be confronted directly rather than obfuscated.  As long as big health care journals remain so deferential to big health care leaders, concerns we have raised before about whether health care is now primarily lead by a small in-group of executives and managers who may put private interests ahead of entrusted responsibilities remain acute.

As we have said many, many times, true health care reform would ensure that leaders of big health care organizations really put patients' and the public's health ahead of private interests. 


References

1.  Holmes D. New CEO takes the reins at the Gates Foundation.  Lancet 2014; 383: 1440.  Link here.
2.  Holmes D. Susan Desmond-Hellmann taking charge at the Gates Foundation.  Lancet 2014; 383: 1455.  Link here.
3.  McNeil C. Sticker shock sharpens focus on biologics.  J Nat Cancer Instit 2007; 99: 910-914.  Link here.

ADDENDUM - Material about MDVIP as subsidiary of Procter & Gamble added 5 May, 2014 PM. 

Another Major HIT Project Setback at UCSF: Vendor, Client or Both at Fault?

In yet another example of a major health IT project setback, in August I wrote about UCSF's apparent problems with health IT implementation that I learned about through anonymous comments at the HisTALK blog. At "Lessons Unlearned: Health IT Failure, Act 2" I wrote:

I find it remarkable that this resource-wasting scenario (with possible adverse patient care repercussions) can occur:

• In a state that's in a severe economic crisis,
• At an organization that failed severely in a HIT and administrative IT merger ten years ago (in the failed, late 1990's attempted merger between UCSF and Stanford's medical centers, see the 2000 stories "UCSF/Stanford: Marriage was rough; divorce is expensive" here and "A thousand MIS personnel cannot merge two healthcare systems" here),
• With an EHR product, Centricity, that is the descendant of Logician that others have implemented successfully (including myself, speaking from experience),
• With GE, a major global high technology vendor, presiding over this new failure at a major academic medical center,
• With ample preventive material available in books, journals on the web about such failures (e.g., at the many pages and links here and here, as just a few examples).
  

I asked if vendor and hospital executives bother to read such materials.

Here is an update in this poorly-covered mystery:

Friday, October 9, 2009
UCSF halts clinical IT installation
San Francisco Business Times - by Chris Rauber

Dr. Sam Hawgood, newly appointed dean of the University of California, San Francisco's School of Medicine, confirmed that UCSF has put the brakes on installation of a $50 million clinical IT system from General Electric [which had acquired Medicalogic's "Logician" EHR some years ago - ed.]

In late August/early September, the Business Times was unable to reach high-ranking UCSF officials to comment on anonymous reports on the respected HISTalk blog and by sources that UCSF was unhappy with early results of the electronic medical records system installation. An informed insider says GE was “way behind schedule” in writing code, and “UCSF got fed up with the endless GE delays,” and is looking to identify other vendors for a drug order entry system.

“We are taking a pause to evaluate our best options moving forward, and we will be making a decision in the next two to three months, and then moving forward aggressively,” Hawgood said. The delay will not put the IT project behind schedule, he said, because “once we make a decision regarding the vendor, we’ll be back on track for an aggressive installation.” [Unfortunately, that sounds like wishful thinking or spin to me - ed.]

UCSF has brought in consultant Kurt Salmon Associates to help it evaluate the IT project’s woes, which were said to be creating considerable frustration within UCSF Medical Center, and obviously the School of Medicine as well.

This setback is of great concern to me. I believe such scenarios could become commonplace in coming years as healthcare organizations bow to the ARRA-created pressure to computerize "or else" by 2014 - that is, suffer reimbursement penalties for not being "meaningful users" of HIT. (Whatever that somewhat presumptuous term describing a largely experimental technology will ultimately come to mean.)

I have frequently written about the HIT vendors being dominated by those with an MIS (management information systems or "business computing") background, and unshakably and arrogantly deficient in talent management where Medical Informatics expertise is concerned. GE may also suffer from domination by engineers whose primary experience is at the level of capital equipment, PACS etc., much as I wrote about competitor Philips Medical here and here.

Having once worked for a GE competitor myself, Comdisco Healthcare Group, and having asked GE representatives about what a phrase on a banner at an RSNA show stating "GE: Leader in Radiology Informatics" meant -- and getting blank stares and comments that "it has something to do with the computers connected to our xray devices" back in return-- my concern was that the problems are not just UCSF centric but vendor centric as well.

UCSF is a big, complex organization, with a lot of very smart clinicians and lots of politics, and I conjecture that GE bit off more than it could chew regarding development, customization and deployment of major health IT at such an organization. It requires far more than technical excellence.

My concern is that GE, along with many if not most of the other major health IT vendors, lack the Medical Informatics and Social Informatics talent and depth to make our ambitious national EHR plans a reality. The overselling of vaporware and "yes, we can do that, no problem" promises by sales and marketing are also a concern, as I find common in HIT where salespeople promise the world to close a deal. Then, the technical people need to play catch up to the grandiose promises made by their creative sales colleagues.

I fear in a few years we will be in the situation that the UK's National Programme for IT (NPfIT) in the NHS is in now.

If we want to avoid that fate, we as a country must:

• Increase transparency and information diffusion about HIT difficulties and failures greatly. That my website on HIT failures is still nearly unique on the Web after ten years is symptomatic of a true lack of information sharing on real world HIT problems. My monitoring of access patterns to the site as reported in this 2006 AMIA poster (PDF) strongly suggests the demand for such material far exceeds the supply. The AMIA/AHIMA book of which I am an associate editor entitled "H.I.T. or Miss: Lessons Learned from Health Information Technology Implementations" and the new journal "Applied Clinical Informatics" whose Editor-in-Chief is Dr. Chris Lehmann, informaticist at Johns Hopkins, are a start -- but just a start on candid information diffusion about applied HIT realities.

• Health IT vendors need to understand that those in MIS and engineering are, in the context of complex clinical settings where clinician-supportive HIT is to be developed and deployed, often dyscompetent (they fail to maintain acceptable standards in one or more areas of professional practice) or even incompetent (lacking the requisite cognitive and non-cognitive abilities and qualities to perform effectively in the scope of professional practice). Lacking an understanding of medical culture and the nature of medical settings is a highly compromising deficit. It leads to mission hostile HIT devices such as shown here. There needs to be much better talent management in that regard.

• Suboptimal HIT vendor performance, and defective HIT devices, should not be tolerated. Repeat purveyors of such technology should be materially sanctioned for wasting precious healthcare resources. Whether this happens primarily in the courtroom, or in the court of "consumer opinion" by HIT buyers -- based on transparent consumer reports on HIT - remains to be seen.

-- SS

Addendum: a reader familiar with the UCSF situation largely confirms my suspicions as above regarding vendor capabilities and the vendor's biting off more than it could chew, greatly delaying deliverables. They did say, however, that I was not correct (in this case) about the issue of salesperson "promise the moon" behavior, and that this was not a factor in the project stoppage.

After Firing Dean, UCSF Stalls Release of Audit

We previously posted about the firing of Dr David Kessler as Dean of the University of California -San Francisco (UCSF) medical school, after he complained about financial irregularities at the school. UCSF top leadership had countered with their own claims that internal reviews and an independent audit of its finances found no serious problems.

The San Francisco Chronicle just reported that UCSF is stalling the release of the independent audit.

In response Tuesday to a Public Records Act request by The Chronicle, UCSF officials released information from two internal reviews, but declined to release the independent financial review or the name of the firm hired by the university for $165,000 to carry it out.

UCSF spokeswoman Corinna Kaarlela said the contract does not allow UCSF to release that information without permission of the firm, and the accounting firm has yet to grant it.

Citing similar objections from the accounting firm, UCSF also refused to provide a copy of the contract itself.

Given that UCSF is a public institution, the delay in producing this report created concern, if not outrage.

Reached Tuesday, Kessler said he wants the independent report released. It is essential,' he said.

State Sen. Leland Yee, D-San Francisco, who authored a new law to require the University of California to be more open to the public, said UC should release the documents immediately.

"They are the ones receiving the services," he said. "If they want to give out the audit, they can. They are the holder of it because they purchased it."

A number of consumer advocates and experts in public records law agreed.

"It is an absolutely outrageous, high-handed abuse of the public's right to know what is going on with its money," said John Simpson, of the Foundation for Taxpayer and Consumer Rights in Santa Monica. He said the public has a right to see the documents and know the terms of the contract.

Peter Scheer, a lawyer and executive director of the California First Amendment Coalition in San Francisco, said it is common for private consulting firms to require confidentiality to protect what they consider proprietary techniques or trade secrets. It often costs more, he said, to retain the services of a firm without that secrecy requirement. However, he contends that does not release a public agency from state public access laws.

"The mere fact that they have agreed to that isn't the end of the matter. It is possible that that promise is simply one that they cannot keep," Scheer said.

This case is far from resolved, but if nothing else, the latest developments demonstrate how opaque the management of many respected health care institutions has become. And the more efforts the leaders of health care organizations make to hide information, the more questions ought to be raised about why they want to hide it.

Lessons Unlearned: Health IT Failure, Act 2

The following appeared on the HISTalk site on 8/14/2009 from a writer with the screen name UCSFWatch:

From UCSFWatch: “Re: UCSF CIO’s e-mail. The GE Centricity Enterprise project is in full stop mode.” The attached and unverified e-mail from CIO Larry Lotenero says this: “The medical center’s Senior Management Group has engaged Kurt Salmon Associates (KSA) to assist us with a review of our IT clinical strategy. We are doing the review because we are dissatisfied with our progress to implement clinical applications to support the care of our patients. KSA will arrange interviews with many of you to capture your insights for the strategy planning. They will be on-site to begin their interviews on August 18. If KSA contacts you, I ask that you be as flexible as possible with your schedule to accommodate this process. We expect to receive a final report before November. For now, all activities associated with developing the GE clinical system should immediately be put on hold. Despite this action, we remain fully focused on our goal to complement our excellent clinical care providers with equally excellent clinical applications as soon as possible.”

If true (as it likely is), I find this remarkable.

I would have to refer to it as "UCSF Healthcare IT Failure, Act 2" for reasons just below.

I find it remarkable that this resource- and money-wasting scenario (with possible adverse patient care repercussions) can occur:

• In a state that's in a severe economic crisis,

• At an organization that failed severely in a HIT and administrative IT merger just ten years ago (in the failed, late 1990's attempted merger between UCSF and Stanford's medical centers, see the 2000 stories "UCSF/Stanford: Marriage was rough; divorce is expensive" here and "A thousand MIS personnel cannot merge two healthcare systems" here),

• With an EHR product, Centricity, that is the descendant of Logician that others have implemented successfully (including myself, speaking from experience),

• With GE, a major global high technology vendor, presiding over this new failure at a major academic medical center,
  

• With ample preventive material available in books, journals on the web about such failures (e.g., at the many pages and links here and here, as just a few examples).
  

This last point raises additional questions:

• Do IT managers at UCSF and GE actually read the HIT literature and the web, I wonder? Have they ever done a Google search on "healthcare IT difficulties" or "healthcare IT failure", or related concepts?
  

• Do they think the materials found via such searches frivolous, useless, or not credible?
  

Finally, it is quite remarkable that the best UCSF can do is hire yet another expensive management consulting firm to try to remediate this failure. What are UCSF IT personnel paid to do, exactly?

Perhaps AMIA, AHRQ, HHS and others in the administration need to focus less on new research on figuring why these situations occur, and devote resources to ensuring modern knowledge of HIT failure scenarios already extant is leveraged.

If not, we're likely (as I fear) to have a lot of UCSF Act 2's in the next few years, as organizations attempt to implement HIT by 2014 so as to not be penalized by HIT provisions in the ARRA act.

Perhaps (again, if the HISTalk note is true), we need to bring back the likes of "Neutron Jack" (Jack Welch, well known for laying off less than stellar divisions at GE), and perhaps the Governator needs to "terminate" the roles of the leadership of this project.

Gov. Schwarzenegger had a way with those
who fiddled around destructively with computers...

See other disappointing stories about events at UCSF on this blog at this link.

-- SS

More California Medical Centers Plagued by Quality Problems While Their Executives Get Bonuses for "Improved Patient Care"

Earlier this week, we noted that while executives at one University of California medical center were getting large bonuses supposedly for "improved patient health," the hospital was being cited for serious health care quality deficiencies.  Now, more stories have appeared that raise questions about the rationale for the generous bonuses handed out to multiple top hospital executives at University of California hospitals. 

University of California - San Diego

First, in alphabetical order by city, the San Diego Union-Tribune reported on penalties for poor quality care announced by the California Department of Public Health:

UCSD Medical Center in San Diego was fined $50,000.... The state said the hospital staff failed to follow its surgical policies and procedures, which resulted in a patient having to have a second surgery to remove a foreign object — a guide wire that was left in the patient when a central venous catheter was inserted into the patient’s right femoral vein in the groin area in January 2009. The wire migrated into a chamber of the patient’s heart.

The procedure was done by a first-year intern and supervised by a third-year resident.

This marks the third time the state has penalized UCSD, with the first penalty issued in May 2008 and the second in May 2009.

However, a few days earlier, the Union-Tribune had reported:

Despite criticism from union leaders and rank-and-file employees, University of California regents yesterday overwhelmingly approved $3.1 million in incentive payouts to 38 medical center executives.

The payouts mean, for instance, that former UC San Diego Medical Center CEO Richard Liekweg will receive $136,174 in performance pay for the last fiscal year, added to his base of $660,500.

Regents justified the payments by noting that incentive programs are common in the health care industry, and necessary to compete for top talent.

'It’s the way this industry works,' said Regent William De La Pena, an ophthalmologist and medical director of eye clinics throughout Southern California.

At UCSD Medical Center, 10 senior managers will receive a combined $754,650 for surpassing goals set in areas ranging from improved patient safety to increased revenue. The bonuses amount to 14 to 23 percent added to executives’ salaries.

University of California - San Francisco
Meanwhile, the San Francisco Chronicle reported that a major University of California - San Francisco teaching hospital was also cited by the state Department of Public Health for quality problems:

San Francisco General was fined $25,000 for leaving a piece of surgical gauze in a patient who underwent an eight-hour operation for two types of cancer in September 2008. The foreign object was discovered about three months later and was removed without surgery during an office visit.

The Chronicle also reported a possibly major breach in the confidentiality of patient records at the UCSF Medical Center:

Medical records for about 4,400 UCSF patients are at risk after thieves stole a laptop from a medical school employee in November, UCSF officials said Wednesday.

The laptop, which was stolen on or about Nov. 30 from a plane as the employee was traveling, was found in Southern California on Jan. 8.

There is no indication that unauthorized access to the files or the laptop actually took place, UCSF officials said, but patients' names, medical record numbers, ages and clinical information were potentially exposed.

The security breach is UCSF's second in recent months. Last month, UCSF officials revealed that a faculty physician responding to an Internet 'phishing' scam potentially exposed the personal information of about 600 patients.

However, despite these obvious quality problems, the San Francisco Business Times reported

University of California regents approved $500,000 in bonuses to six top officials at the UC San Francisco Medical Center, part of a package of $3.1 million in payments to 38 hospital executives across the UC system.

In an interview last week with UCSF Chancellor Susan Desmond-Hellman, she said that the executive bonuses were tied to meeting specific performance goals, such as reducing clinical infections and increasing satisfaction ratings by patients. She also pointed out that additional payments of $14.3 million to the UCSF Medical Center’s 6,600-strong workforce were approved earlier.

The UCSF officials awarded bonuses were:

* Mark Laret, chief executive officer, $181,227;
* Ken Jones, chief financial officer, interim chief operating officer, $89,162;
* Larry Lotenero, chief information officer, $66,045;
* John Harris, chief strategy and business development officer, $63,196;
* Susan Moore, finance director and interim chief financial officer, $53,261; and
* Sheila Antrum, chief nursing/patient care services officer, $49,280.

Summary

So, in summary, multiple executives at three major University of California medical centers received generous bonuses.  The rationale for these bonuses, given out at a time when the university system was under major financial constraints, was that they were incentives for exemplary performance and patient care. 

Yet almost simultaneous with announcement of the bonuses were news reports indicating serious patient care problems at the same medical centers.  The point I am NOT trying to make is that the care at any of these medical centers is bad.  The examples of quality problems were limited.  I am sure that many other major medical centers hae had such quality problems as well.  However, the cases cited above were sufficient to argue that the care at these medical centers was not outstanding, not exemplary.  Yet, the bonuses were awarded not for acceptable performance or average quality.  Their rationale was exceptional performance and quality.  Thus, the rationale for the performance bonuses seems at best naive, if not foolish. 

I would suggest, instead, that the sorts of bonuses given out at the University of California are a product of the current management culture that has been infused into nearly every health care organization in the US.  That culture holds that managers are different from you and me.  They are entitled to a special share of other people's money.  Because of their innate and self-evident brilliance, they are entitled to become rich.  This entitlement exists even when the economy, or the financial performance of the specific organization prevents other people from making any economic progress.  This entitlement exists even if those other poeple actually do the work, and ultimately provide the money that sustains the organization. 

Although the executives of not-for-profit health care organizations generally make far less than executives of for-profit health care corporations, collectively, hired managers of even not-for-profit health care organizations have become richer and richer at a time when most Americans, including many health professionals, and most primary care physicians, have seen their incomes stagnate or fall.  They are less and less restrainted by passive, if not crony boards, and more and more unaccountable.  In a kind of multi-centric coup d'etat of the hired managers, they have become our new de facto aristocracy. 

Or as we wrote in our previous post, executive compensation in health care seems best described as Prof Mintzberg described compensation for finance CEOs, "All this compensation madness is not about markets or talents or incentives, but rather about insiders hijacking established institutions for their personal benefit." As it did in finance, compensation madness is likely to keep the health care bubble inflating until it bursts, with the expected adverse consequences. Meanwhile, I say again, if health care reformers really care about improving access and controlling costs, they will have to have the courage to confront the powerful and self-interested leaders who benefit so well from their previously mission-driven organizations.  It is time to reverse the coup d'etat of the hired managers.

UCSF Medical School Dean Fired After Protesting Financial Irregularities

Multiple news reports over the weekend recounted the firing of the Dean of the University of California - San Francisco (UCSF) medical school, Dr David Kessler, after he claimed he tried to identify and rectify financial irregularities at the school. First, here are the main points from the San Francisco Chronicle:

Dr. David Kessler, the onetime commissioner of the Food and Drug Administration who became dean of the UCSF School of Medicine in 2003, was fired Thursday night after years of discord over finances at the prestigious medical school.

Kessler's boss, campus Chancellor Michael Bishop, announced the dean's departure Friday morning in an internal e-mail to faculty members but did not disclose the reason.

Hours later, Kessler told The Chronicle that he had been labeled a 'whistle-blower' by the University of California after he repeatedly sought to uncover what he called 'financial irregularities that predated my appointment.'

At the heart of the dispute, Kessler said, are tens of millions of dollars in funds that he believes should have been in the dean's office account prior to his starting the job, but have never been properly accounted for because of what he called 'poor financial controls.'

UC officials countered that Kessler was mistaken about how much money should have been in the fund, and a university spokeswoman said Friday that two audits done after he raised the matter found no irregularities.

The spokeswoman said Kessler first raised the issue in the spring of 2005.

If so, that was after an anonymous complaint was sent accusing Kessler of lavish spending. An internal UC audit found no support for the anonymous allegations against Kessler.

Kessler talked to the Chronicle reporter about what happened.

In an exclusive interview with The Chronicle, Kessler claimed the firing was the culmination of a long effort on his part to straighten out the finances of the medical school dean's office - an effort that he said remains unfinished.

'It was a matter of financial integrity,' he said. 'I tried to work within the system for 2 1/2 years, to get it fixed. I wanted to protect the school, the institution.'

He said that Bishop had asked him to resign last summer, but that he had refused. When Bishop asked him to resign again on Thursday, Kessler said, he once again declined and was fired.

At issue, according to Kessler, was his discovery after a year in office that the amount of money available to run discretionary programs in the dean's office was millions of dollars less than he was promised when he took the job. He conducted his own financial analysis in December 2004, concluding the source of the problem was an $18 million annual discrepancy dating from the fiscal year ending in 2002, a year before he arrived.

Kessler told The Chronicle that he had been provided financial documents before he joined showing there would be an annual infusion of $46.4 million for the dean's office to spend on a variety of programs, but he subsequently discovered the figure was $28.8 million.

With each successive year since 2002, the discrepancy has been accumulating, reducing the financial viability of the dean's office.

An interview with the New York Times provided more detail,

Dr. Kessler said that before he accepted the position as dean in 2003, he requested information on the medical school’s financial condition. The documents he received showed that the institution expected generally to take in more, from grants and other sources, than it spent.

But Dr. Kessler said that he requested another such report once he was dean. He found that the two reports showed different numbers for years that had already passed.

'No accounting system should give you different numbers for the same closed fiscal years,' Dr. Kessler said. He said he took his concerns to the university. He said he also commissioned an outside report that found 'the financial practices of the school did not meet operating standards that would be expected at a large organization or business and that there was insufficient oversight.'

As did a report in the Los Angeles Times,

Kessler said UCSF officials from the time of his recruitment misled him about the financial health of the so-called central medical school, which provides funds available for use by the dean. Kessler provided The Times with several internal memos, financial spreadsheets and letters to support his contention.

The central fund's financial health affects the school's ability to remain competitive, recruit prominent faculty and launch innovative research.

According to a financial spreadsheet dated April 5, 2007, supplied by Kessler, the school's finance unit projected that the central medical school would run out of money in the 2008-09 fiscal year. By June 2011, it is projected to have negative net assets of $49 million.

According to financial estimates given to Kessler in June 2003, the school was projected to have revenue of $46 million to $47 million each year. In reality, Kessler said, the school's revenue was far below $40 million every year since he arrived, except in fiscal year 2006 because of a one-time patent settlement.

'If you had $47 million a year, you wouldn't be in a hole,' Kessler said in an interview.

In a letter dated July 5, 2007, [UCSF Chancellor and Nobel Prizer winner J. Michael] Bishop acknowledged to Kessler that the financial data provided to him during his recruitment 'did not accurately portray funds available to the dean for discretionary use. In retrospect, I can see how these presentations might have misled you and influenced your decision to accept the offer from UCSF. I regret this circumstance and apologize on behalf of the university.'

Furthermore,

Kessler said he relied upon detailed financial information shared with him by Jaclyne W. Boyden, who was then the medical school's vice dean for administration and finance. In a letter dated March 31, 2003, she said the dean's office had about $50.6 million in available funds in 2001-02 and was projected to receive about the same amount the following year.

That June, the school provided him with updated figures showing revenue was actually $46.4 million in 2001-02 and projecting revenue of $47.1 million in 2002-03.

But in December 2004, after Kessler had hired his own chief financial officer, he said he received new financial statements that greatly troubled him. The actual revenue in 2001-02 was only $28.3 million and revenue in 2002-03 was less than that.

'I get the December spreadsheet and I say, 'What's going on here?' ' he said. 'This thing looks all negative now.'

The next day, another article in the Los Angeles Times suggested that while Dr Kessler seemed willing to try to come up with some solution to the financial disagreements, the university was not interested,

During a three-hour interview Saturday at a San Francisco-area hotel, Kessler described the behind-the-scenes tension that he said led to his termination. He pointed to three actions he took that he believed may have played a role.

First, in April, he sent an e-mail to a university lawyer accusing the UC auditor of 'obfuscation or worse.' Then, he said, he provided a UC regent, whom he would not name, with documentation to support his allegations of financial improprieties. And finally, he called a meeting in April to share information about the financial position with medical school chairs and senior school leaders.

'It was clear that the university did not like us doing this,' Kessler said, referring to the chairs meeting. 'The chancellor was very upset.'

[Medical school Executive Vice Dean Keith R.] Yamamoto and Jed Shivers, the medical school's former vice dean for administration, finance and clinical programs, said Kessler was genuinely interested in finding a solution.

Shivers said he resigned in April to take a job in New York, in part because of the ongoing turmoil. He had worked with Kessler when Kessler was dean at Yale University School of Medicine, before coming to UCSF.

'My opinion is that they've resisted at every step of the way to really get to what occurred here,' Shivers said.

Yamamoto said he was baffled that the two sides couldn't work it out.

'David did everything that he could to actually solve the problem, to reach a resolution without anything blowing up,' he said. 'I believe he presented many options that could have gotten there, but they were rebuffed.'

Obviously there is an element of "he said, he said" in this story. In my personal opinion, Dr Kessler seems to have supplied the media with more evidence supporting his version of events than have the top UCSF leadership that fired him. In any case, the story suggests something was seriously wrong in the management of UCSF, whether it was attributable to the now former Dean (seemingly less likely), or to other university adminstrators (seemingly more likely).

We have not recently posted about problems in the leadership of UCSF, one of the US' premier medical schools. However, we posted quite often in the past about issues about the leadership of the University of California system as a whole (most recently here), and about the leadership of the University of California - Irvine (UCI) medical school (most recently here). It seems now a long time ago, but UCSF was the locus of the first more or less well-publicized stories from the 1990s about suppression of medical research (the "thyroid storm" case, see the Scientific Misconduct blog post here for its references, and the editorial in JAMA by Drummond Rennie [Rennie D, "Thyroid storm" JAMA, Apr 1997; 277: 1238 - 1243].)

Again, this is one more link in the chain of evidence that something serious has gone wrong with the leadership of major health care institutions. Now what are we going to do about it?

ADDENDUM (17 December, 2008) - see some comments on Wachter's World blog.

UC faulted for paying millions in bonuses

These are private-industry-level bonuses. One can argue that such bonuses are needed to retain top talent, but teaching hospitals do not have the income of, say, A Hewlett-Packard, IBM or Pfizer.

Do teaching hospitals needs to rethink their executive compensation? I'll bet most line clinicians and patients would agree.

-- SS

Excerpts:

The University of California gave nearly $2.4 million in bonuses to 65 top executives at its five teaching hospitals in 2004, with 11 administrators receiving more than $50,000 each. The bonuses averaged $36,000 and reached as high as $82,000, according to a report to the UC Board of Regents that was made public Wednesday by an employee union.

... the largest bonus went to UC Davis Medical Center chief executive officer Robert Chason. It totaled $82,000 -- 20 percent of his annual salary of $410, 000. At UC Davis Medical Center, 12 health care executives shared bonuses totaling $526,803.
At UCSF, chief executive Mark Laret received a $79,495 bonus, 18.3 percent of his $434,400 salary. The bonuses for UCSF executives totaled $583, 740.

"At every level of our organization, UCSF Medical Center strives to compensate its employees at the median of the market," Laret said in a statement released Wednesday. "UCSF Medical Center leaders receive their compensation in two parts -- a base salary plus an at-risk incentive based on performance. At this time, including both parts of their compensation, UCSF Medical Center leaders are paid well below the market for comparable academic medical centers."

According to university documents, the bonuses were approved in October by UC President Robert Dynes and were outlined to the Board of Regents last month.

The regents did not discuss the payouts publicly, and one reached Wednesday said he objects to the bonuses.

"I am very disappointed with the bonuses that UC has given its health care executives," said Regent Ward Connerly, whose term on the board expires March 1. "There is a pattern of indifference among some of our more elite people at UC to the plight of our lower-paid employees and to the appearance that some of these bonuses are obscene. This indifference is not confined to health care executives."

... Medical center workers say the bonuses are a slap in the face. Many have gone without raises for several years and are anticipating salary increases of just 3 percent this year. "They keep telling us how little money they have ... but they always seem to have money for people they want to give raises to, and it always seems to be people at the top," said Jeff Cox, a lead building maintenance worker at UCSF. "It says that I don't matter. It is hurtful."

... "We think that the money could have been better spent on patient care and low-wage workers and maintaining the quality of services," said Faith Raider, a union spokeswoman. "We have seen a lot of cutbacks in staffing and services, and we think this money could have gone to that."

Jennifer Lilla, president of the University of California Student Association and a biomedical sciences graduate student at UCSF, said the money also could have been used to offset cuts in student aid.

"That is half of the money we are trying to get returned to the financial aid pool,'' Lilla said. "Yes, it made a difference in a handful of people's lives, but it could have made a difference in literally thousands of students' lives had it been diverted elsewhere.''

Bio-Tech U

The San Francisco Chronicle just reported that a new Chancellor has been nominated for the University of California - San Francisco (UCSF). UCSF is functionally a health sciences university, and its Chancellor functions as its president. The UCSF medical school is generally considered one of the elite US academic medical institutions.

Genentech executive Susan Desmond-Hellmann has been nominated to be the next chancellor of UCSF, making her the first woman or biotech leader ever asked to run the research campus and hospital system that is San Francisco's second-largest employer.

Desmond-Hellmann has served most recently as president of drug development at Genentech, the South San Francisco biotech firm that was recently acquired by Swiss drugmaker Roche. She was trained as a physician, did her internship at UCSF and has taught there recently as an adjunct associate professor while working at Genentech.

Although prior UCSF chancellors have come from more academic or scientific backgrounds, [Dr Holly] Smith said Desmond-Hellmann's biotech connections would be an advantage as the university tries to translate scientific discoveries into medical treatments.

Dr Desmond-Hellmann is, in my humble opinion, a very unusual candidate to be Chancellor of one of the country's premier academic medical institutions. According to her official Genentech bio (taken off the Genentech server, but transiently available in the Google cache here), and a biography in Nature Drug Discovery, Dr Desmond-Hellmann, after getting both an MD and an MPH, spent two years doing AIDS research in Uganda as a UCSF junior faculty member, and then spent a few years in private practice hematology-oncology. She published few articles (5, according to Medline, last in 1995), and by 1993 went to work in industry, first for Bristol-Myers-Squibb. She started at Genentech in 1995, and worked her way up to her current position, "president, Product Development. In this role, Hellmann is responsible for Genentech's Development, Process Research & Development, Business Development, Product Portfolio Management, Alliance Management and Pipeline Planning Support functions. Hellmann is a member of Genentech's executive committee." Before her nomination to be Chancellor, Dr Desmond-Hellmann was "affiliated" faculty of the Department of Epidemiology and Biostatistics at UCSF, apparently with the rank of adjunct associate professor. In that capacity, she apparently gave a single seminar in 2007, and lectured in the Designing Clinical Research course in 2003.

So, on one hand, Dr Desmond-Hellmann, to be charitable, does not have much of an academic track record, at best approximating that of a very junior medical faculty member. She also certainly has no experience in academic administration. In general, people who lead academic medicine often have substantial track records in academics and in academic administration. So, in some sense, Dr Desmond-Hellmann's appointment seems to based on the theory of the generic manager. That is, the popular notion in the business world managers can manage anything, any organization, with any mission, in any context. Managing in the complex health care context, especially managing large, complex academic medical institutions, may not be easy for those used to managing elsewhere, even in the health care corporate world.

Furthermore, the complex mission of academic medicine, which includes providing excellent care of individual patients, while discovering and disseminating the truth in a spirit of free enquiry, is very different from the mission of a for-profit biotechnology company. How well someone used to the bottom-line mentality of the corporate world would uphold the academic mission is not clear.

Dr Desmond-Hellmann came from a company known for charging very high prices for the drugs it marketed, and Dr Desmond-Hellmann was on record personally defending this practice. Quoting from a news article in the Journal of the National Cancer Institute [McNeil C. Sticker shock sharpens focus on biologics. JNCI 2007; 99: 910-914.]

Never mind their novel targets and mechanisms. It's the cost of new biologic agents that's creating a buzz these days. At thousands of dollars a month, which can mean many tens of thousands for some regimens, sticker shock has generated recent, prominent articles in both the national and trade press.

On one level, the argument is about macroeconomics. Neal Meropol, M.D., of Fox Chase Cancer Center in Philadelphia, pointed out that cancer drugs account for 40% of all Medicare drug expenditures. That makes them a major contributor to the country's high health care costs, now about 17% of our gross domestic product (GDP) and growing. That percentage is much higher than in other developed countries with higher life expectancies, he said at a forum on cancer care costs at the American Association of Cancer Research annual meeting.

On the other side of the macroeconomic debate, experts point out that the U.S. has a high GDP to begin with and so can afford to spend more on health. And cancer biologics, though among the most costly drugs, are still only a tiny fraction of total GDP, said Genentech's Susan Desmond-Hellmann, president for product development, at AACR.

Hellmann and others argue that with these drugs’ potential to alleviate the huge societal burden of cancer, biologics are worth the cost.

The industry has responded to concerns about costs by putting more resources into patient assistance programs. When Genentech received U.S. Food and Drug Administration approval for bevacizumab in lung cancer last October, it also announced a cap on expenditures for the drug for patients with family incomes less than $100,000 a year. In 2005, the median household income was $46,326.

Originally announced as $55,000, the cap actually doesn't kick in until after a patient has received 10,000 mg. At the wholesale acquisition cost, 10,000 mg is about $55,000, said Genentech spokesperson Edward Lang.

What the companies have not done so far is reduce prices. The reason, industry representatives say, is the need to recoup massive research and development costs, including high manufacturing costs for biologics. These costs have long kept biotech companies from making much of a profit overall, Hellmann said. She noted that profit levels of publicly held biotech firms have "hovered close to zero" throughout the life of the industry.

But, while Dr Desmond-Hellmann was defending pricing drugs that at more than $55,000 a year, and complaining about low industry profits, she was pocketing lavish rewards. According to Genentech's 2008 proxy statement, (the last available, since the company has been bought out by Roche), her total compensation was $8,361,348 in 2007 and $7,820,142 in 2006. In 2007, her total compensation was equal to 0.3% of the firm's total net income, and the top five company executives' total compensation was equal to about 1.5% of the firm's total revenues. In 2007, the firm's stock price declined from 91.30 on 6 January 2007 to 66.38 on 4 January, 2008, or 27%, according to Google Finance. In 2007, she held 1,616,383 shares of stock, or stock options exercisable within 60 days of January 31, 2008. In 2007 she exercised 170,000 stock options, realizing $11,556,663. So perhaps those high drug prices were needed not only to pay for research, but to make top executives, including Dr Desmond-Hellmann, very rich.

This raises further questions about her inclination to uphold the university's mission in the future.

University of California, San Francisco is a leading university dedicated to defining health worldwide through advanced biomedical research, graduate-level education in the life sciences and health professions, and excellence in patient care.

In any case, hiring a lavishly compensated top executive from a biotech firm known for its high drug prices to run a public health sciences university does considerably blur the line between academic medicine and the health care industry. In the Chronicle article, Dr Desmond-Hellmann declared, "I began my career at UCSF and my heart has never left it." If she does become Chancellor, let us hope that her heart will speak louder than all those millions she used to make by, among other means, charging more than $55,000 a year for bevacizumab.

"Conspiracy Theory" Proven - Taking UCSF Private

Students and faculty at the University of California have come up with a vivid, and prescient example of how the hired executives and bureaucrats have taken over higher and health care education. 

"Run in the Interests of the Administration"

Two weeks ago, the Orange County Register reported:

Over the past few months, the University of California has raised undergraduate tuition by 18 percent, awarded raises of as much as 23 percent to a dozen high-ranking administrators and announced a possible 81 percent tuition increase over the next three years.

Students haven't taken the news well.

At campus rallies across the state, thousands of students and their faculty supporters have decried the actions, staging raucous rallies and 'Occupy'-style sit-ins that in some cases have ended in clashes with law enforcement. They've also descended en masse on UC regents' meetings, disrupting proceedings and even forcing officials to retreat to a private room.

Behind the angry chanting and acts of civil disobedience is a growing sense that the 10-campus UC system is no longer a public institution accessible to the middle class, but rather a sprawling bureaucracy of hospitals and auxiliary research institutions buffeted by an ever-expanding roster of administrators.

The problem, as the student activists see it, is that none of these functions translates directly into expanded course offerings or improved student-to-faculty ratios, even as their tuition dollars help sustain the system.

'The university is now being run in the interest of the administration,' said UC Irvine student activist Anne Kelly, a Ph.D. candidate in earth system science. 'They're promoting their own internal growth, asking us to sacrifice with higher tuition – but administrators have had raises.'

In higher education, as well as in health care education and in health care in general, the pattern is the same: rising costs without any obvious increase in quality or quantity of services. As in health care, however, the pain never seems to extend to administrators/ managers/ bureaucrats/ executives. Worse, as their numbers grow, these insiders seem to run organizations more for their own benefit, and less for the mission.

One Manager Per Faculty Member

Furthermore, UC faculty have data:

The students' growing frustration is fueled by UC employment data that show that almost three-fourths of UC's 152,500 employees last year were designated 'non-academic personnel,' according to an annual UC employment report.

In the report, UC characterizes the growth in its non-academic staff as the inevitable byproduct of 'an increasingly complex university system that 'requires greater professionalization of its staff, who must meet higher technical and competency standards.' Non-academic personnel includes everyone from custodians and food-service workers to accountants and plant operators. [The question begged is whether it was the managers and executives that caused this complexity - Ed.]

UC Davis horticulture researcher Richard Evans, who has independently analyzed UC personnel data, offered a different take on the data, publishing a tongue-in-cheek piece for UC faculty in 2010 entitled 'Soon every faculty member will have a personal senior manager: Is this a good way to spend money?'

'Data available from the UC Office of the President shows that there were 2.5 faculty members for each senior manager in the UC system in 1993,' Evans wrote in his piece. 'Now there are as many senior managers as faculty. Just think: Each professor could have his or her personal senior manager.'

In his analysis, Evans compared the number of UC employees classified as either 'senior management' or 'managers and senior professionals' with the number of tenure-track UC faculty members.

As of spring 2011, UC employed 8,144 senior managers, managers and senior professionals, and 8,521 tenure-track faculty members, according to the latest available UC data.

This pattern is similar to that seen in some data we discussed a long time ago about the ever rising numbers of administrators/ managers/ bureaucrats/ executives in health care.  In 1988, Alain Enthoven advocated in Theory and Practice of Managed Competition in Health Care Finance, a book published in the Netherlands, that to decrease health care costs it would be necessary to break up the "physicians' guild" and replace leadership by clinicians with leadership by managers (see 2006 post here). Thus from 1983 to 2000, the number of managers working in the US health care system grew 726%, while the number of physicians grew 39%, so the manager/physician ratio went from roughly one to six to one to one (see 2005 post here). Health care went from being controlled by clinicians to controlled by a growing volume of managers.  Most of these managers were generic, in that they had little if any knowledge of, experience in, or sympathy to the values of health care. These generic managers have used the same techniques advocated for the management of supermarkets or automobile manufacturers to manage health care organizations, despite all the obvious differences in context, goals, values, and people involved.

A "Conspiracy Theory" About the Privatization of the University

At the University of California, the Register reported that there is a "conspiracy theory" about the next step to increase the domination of the managers:

The salaries and size of UC's administrative staff, in particular, have fueled conspiracy theories among students and faculty that the system has deliberately sought to 'privatize' itself – in other words, to compete with private universities on all fronts, from the scope of its non-instructional programs to executive compensation to the amount of tuition that students pay.

Three years ago, the head of a UC faculty group advanced the privatization theory in a multi-part series called 'They Pledged Your Tuition.'

Of course, the administrators denied, sort of, anything so far-fetched:

For its part, UC denies all such allegations, saying that while the university has arguably become privatized, outside influences beyond its control are entirely to blame.

"It is not something we advocate, not something we want,' Klein said. But, 'he added, 'times have changed; the economic model has changed.'

Not Just a "Conspiracy Theory" - UCSF Chancellor Advocates Privatization

It only took two weeks, however, for the notion of administrators taking the university private to go from "conspiracy theory" to official plan. Yesterday, the San Francisco Chronicle reported,

UCSF Chancellor Susan Desmond-Hellmann told the regents, delicately, that she wants out.

Under her proposal, UCSF's medical school, hospital, clinics and research facilities would remain a public university connected to UC, the chancellor assured the regents. But the tendrils connecting the two entities should be thinner than they are today.

Desmond-Hellmann said she envisions a relationship like those of UC Hastings College of the Law, Lawrence Livermore National Laboratory and Lawrence Berkeley National Laboratory, which contract with UC for health and pension services. While ultimately accountable to the regents, they are autonomous with their own boards of directors.

Referring to 'alternative governance models' and 'examining UCSF's financial relationship with UC,' the chancellor and campus executives talked of their ambition to become the world's leading innovator in the health field - a goal better achieved, they hinted, without the rest of the university weighing it down.

To Health Care Renewal readers, that UCSF would be proposed as the first part of the University of California to privatize should not come as a shock. After all, Chancellor Desmond Hellmann came not from academia, but from the world of for-profit biotechnology. She was a former president for drug development for Genentech.

Two and one half years ago I suggested that "hiring a lavishly compensated top executive from a biotech firm known for its high drug prices to run a public health sciences university does considerably blur the line between academic medicine and the health care industry." Furthermore, three months ago I noted that Dr Desmond Hellmann seemed be advocating that the university's focus turn to product development, so that it would start to emulate a contract research organization. Now it appears that Dr Desmond Hellmann wants to traverse the line between government and the private sector, so that the organization could "make a ton of money," and "focus on spinning innovations into business deals," according to the San Francisco Chronicle.

What any of this has to do with the university's fundamental mission to discover and disseminate knowledge, and with this health care university's mission to take the best possible care of its patients is not clear.

Summary

Turning UCSF into a private, quasi contract research organization might conceivably yield some good research and drug development. Why a formerly academic organization would be better at this than a purpose-built CRO is hardly proven. Whether UCSF recast as a CRO would yield better research, leading to better patient outcomes than would have resulted if it continued as a state government sponsored health care university is also hardly proven.

Turning UCSF into a quasi CRO, however, would likely be very much in the self-interest of its administrators/ managers/ bureaucrats/ executives who would be freed from any constraints on their incomes, and the disclosure of same that were previously obligated by the messy representative democracy to which they formerly had to answer.

On the other hand, it is hard to conceive of how such a privatization would be good for students or patients. In fact, it is not the least bit clear why a medical, nursing, or other health professional student would want to study within what would basically be a contract research organization. It is also unclear whether patients seeking care from such an organization could trust it to put their interests, rather than the organization's revenue and the self-interest of its administrators/ managers/ bureaucrats/ executives first.

We are now a good 30+ years into our ill-fated American experiment about the effects of turning medicine commercial and making health care a commodity. So far, it has yielded the highest costs in the world, but declining access, mediocre quality, and demoralized professionals. Turning one of our once proud and  prestigious state government sponsored academic medical institutions into a private contract research organization would be a powerful symbol of our final national health care decline.

Let us hope that the students and faculty whose "conspiracy theory" about privatization proved true will now mount a more effective protest before UCSF falls into the muck.

Logical Fallacies to Support Putting a Major Academic Medical Center into the Contract Research Organization Business

Two uncritically positive biographical features on UCSF Chancellor Susan Desmond-Hellmann MD appeared within the last two weeks, one in the New York Times, suggesting the game is afoot.  That game appears to be the Chancellor's new strategic direction for the university. 

A New Strategy for "Increasing Collaborations" with Industry

Per the NY Times, the university has just made a huge investment in bricks and mortar,

the school’s gleaming new building for stem-cell research and its enormous new waterfront campus, Mission Bay, which is becoming a medical and biotech empire.

Now, perhaps to pay for it,

Dr. Desmond-Hellmann hopes to supplement the usual sources of income like patient fees, grants and tuition by increasing collaborations between the university and the biotech companies that have sprung up in the Bay Area — many of them spinoffs from research that began at the university.

Dr Desmond-Hellmann described the general direction thus:

Her vision for the university is to make it 'the world’s pre-eminent health sciences innovator.' That means 'unparalleled' care for patients, brilliant faculty and staff paid enough to stay and fast translation of scientific discoveries into treatments.

That seems worthwhile, if quite a bit vague.
Making "Collaboration," "Innovation," and "Translation" More Explicit

An article in Xconomy sounded similar themes, but was more explicit. First, Dr Desmond-Hellmann said,

I’m sticking my neck out there and saying the world is changing very quickly, and yet our aspiration at UCSF is to be a world leader in health science innovation

So it is time to jump on the bandwagon,

The old way of doing things doesn’t really work anymore.

But the Xconomy article was more explicit about what sort of changes she envisioned, what innovation she had in mind, and what "translation" means in this context:

Often, some of the best research ideas would get handed off from academia to a company at a very raw stage of development. But few venture capitalists are funding startups at this early stage of development these days, and Big Pharma R&D has always tilted more heavily toward D than R. The economy has put more pressure on companies to tilt that balance even further away from research, and more toward late-stage development that has a chance to bear fruit in the near-term.

Universities need to recognize this is how things are. If they want to truly translate their innovations into products that help patients, they will have to carry the research a little further downfield themselves. Some Big Pharma companies have already shown they are willing to sponsor this kind of on campus work at UCSF and elsewhere.

So,

Working in collaboration with pharma companies is definitely a part of the future of advancing health, Desmond-Hellmann says. Financially, these deals are small potatoes, and aren’t going to close any budget gap. Even if UCSF researchers made a breakthrough cancer drug that generates billions of sales per year, it would likely only throw off a royalty stream to the university worth a few million a year—nice, but not exactly a big deal for a multi-billion-dollar institution.

Instead, the collaborations are about improving the flow of basic research through development. Pharma companies need new products to preserve and grow their bottom lines, and they aren’t doing so hot at inventing them on their own. When budget cutters ask questions about how taxpayer dollars are spent on campus, academic centers need to be able to say something like, 'We discovered a breakthrough drug that helps people live longer, better lives,' instead of just 'We got a cool paper published in Nature.'

Just to underline that,

Big Pharma R&D operations, rich as they may be, are feeling the same pressure to make cuts as universities. What’s needed now are the creative partnerships, where someone knowledgeable about the whole process (like maybe a Desmond-Hellmann) steps in and finds a way to more seamlessly bring together these two factions around what they have in common.

And the brave new world is almost here already,

UCSF has struck a number of creative partnerships with companies like Pfizer, Sanofi, and Bayer, which are being closely followed at other universities. UCSF has also found a way, with the help of some big-time philanthropy, to break ground on two ambitious projects—a $1.5 billion hospital complex and a $200 million neurosciences research facility in the Mission Bay district. There in the same neighborhood, the university has also continued to support QB3, an incubator where academic scientists are starting companies that test whether their ideas just might have what it takes to become new drugs, devices, or diagnostics.

So let us try to make Dr Desmond-Hellmann's new direction clear: what she meant by innovation and translation was doing contract research and development for big pharma and big biotech. The goal is not just to discover new knowledge, but to develop new products.  That should bring in a lot of money, which can pay for all sorts of fancy new buildings.

A New Direction Supported by Logical Fallacies

The problem is, as I hinted above, the arguments for this new direction were mainly based on logical fallacies.
Begging the Question

Note that the key argument in support of turning the university into a pharma/ biotech research and development shop was, "if they [universities] want to truly translate their innovations into products that help patients," they must develop those products themselves.  This begged these questions:
-  Should they want to develop products?
-  Why are they the only ones who can do so? 

These questions were never asked in either article, perhaps because their answers are obviously "no."  Universities' missions are to discover and disseminate knowledge.  Developing and marketing products are not part of their missions.  Furthermore, there are lots of corporations that ought to be able to develop and market pharmaceuticals and devices outside of universities.

Appeal to Common Practice/ Bandwagon

Another argument in favor of Dr Desmond-Hellmann's radical new plan was "universities need to recognize this is how things are," in that "the old way of doing things doesn't really work anymore." This is an example of two logical fallacies, the appeal to common practice, and maybe the bandwagon fallacy more so. An assertion is made that the world is changing, the change cannot be stopped or even questioned, so we all just have to climb on the bandwagon.

Straw Man and Begging the Question (Again)

The Xconomy article also noted:

Some academics sneer at this late-stage research/early-stage development work. It’s a cultural attitude Desmond-Hellmann wants to change. 'There’s a technical competence in taking a discovery from a lab and turning it into a medicine. It’s embarrassing that people don’t honor that technical competence. You sometimes hear it called 'applied' or 'obvious' or some other pejoratives. But it’s my expertise. I do take that personally. There is a technical competence. It needs to be understood, put into curriculum, and valued.'

Here Dr Desmond-Hellman seemed to be using the straw man fallacy, by setting up unattributed arguments against her cause that she could easily refute.

Meanwhile, however, another question she begged was what exhibiting such technical competence has to do with the mission of the university. As we will discuss further below, the mission of a university is to discover and disseminate knowledge. "Technical competence" may be required to do so, but exhibiting technical competence per se is not the goal. (Consider: if the university had faculty members who were competent amateur automobile mechanics, would it fulfill the mission to establish a university automobile repair business using these faculty members' technical competence?)

Another implied begged question was: if this competence ought to be a subject taught at the university, how would the need for such teaching require the university to do contract research and development for industry?

Appeal to Authority

Both articles also seemed to try to support Dr Desmond-Hellmann's ideas by emphasizing first that she had "a stunningly successful career in the pharmaceutical industry," perhaps so described because her "years in pharmaceuticals left her, by her own account, 'very, very wealthy," (It did allow that at the end of her career at Genentech, after she had become president of product development, "her compensation (base pay, stock and other payments) was more than $8 million a year. She also owned hundreds of thousands of shares of Genentech stock, worth $95 a share.")

Also, despite her apparent membership in the top one percent of the population in terms of income, the Times article took pains to note "she is so nice," and again, "she's a very nice person."

So the implication is that because she is successful, rich, and nice, her arguments and ideas must be correct.  This seems to be an appeal to authority.
Questions That Should be Asked

Neither the author of the NY Times article nor the author of the Xconomy article sought to ask her any of the questions that were begged, or to otherwise raised by Dr Desmond-Hellmann's grand plans.  So let me try.

How Does Becoming a Contract Research Organization Fulfill the University's Mission?

However her new plans are described, they entail hiring out the university's facilities and faculty to develop new products, drugs and perhaps devices. Yet the university's mission is to discover and disseminate knowledge. How will proprietary research and development fulfill that mission? 

In fact, there are reasons to worry that the new focus on for-hire drug research and development will undermine the mission.  Any new knowledge produced is likely to be labelled trade secrets. Faculty who work as drug and device development contractors will not be teaching students. Students caught up in drug and device development will be working for big corporations, possibly without pay, and without any ownership of anything they may discover in the process.

How Will the Resulting Institutional and Individual Conflicts of Interest be Managed?

If the university becomes dependent on being paid for drug and device development, can university faculty remain unbiased teachers and researchers? Will they not feel pressured to show favor to the products, policy goals, and leadership of the corporations that are paying them?

Why Would Faculty and Students Want to Participate in a Contract Research Organization Cloaked in Academic Robes?

Will faculty want to be labelled as contract workers? What will that do for their academic credibility? Will students want to be educated by people beholden to specific corporations and corporate projects?

Should Patients Want Care from a Contract Research Organization?

How will they be confident that the drugs they are prescribed and the devices used in procedures they undergo are not chosen because their doctors and nurses feel beholden to the corporations that make them?

Summary

UCSF's new multimillionaire ex-biotechnology executive Chancellor seems determined to push the university into a much closer relationship with the drug, device and biotechnology industry. In fact, she seems to be advocating that the university should become, in effect, a contract research organization to service this industry. So far, this radically new direction seems to be provoking no questions, much less dissent, even though the public justification for it was apparently based on a string of logical fallacies.

However, it is not clear how taking one of our major academic medical centers in this commercial direction will not harm, much less benefit its mission.

For 30 odd years in the US we have been making health care more commercial, and have to show for it the world's most expensive but hardly the world's best health care system. This increasingly inaccessible system which provides care of uncertain quality has made the one percent who run it very rich.

Those of us in the 99 percent need to question how making it even more commercial will do any of us any good.

Post-Script: You Can Take the Executive Out of Biotech, But You Can't Take Biotech Out of the Executive

When Dr Desmond-Hellmann first become UCSF Chancellor, we questioned how someone steeped in the culture of commercial biotechnology could distinguish that culture from the academic mission? (You heard that question here first.)  The answer now seems to be that her current ambitions substantially blur the academic mission with the pursuit of money and commercial success.

Maybe one reason for this blurring of distinctions is that Dr Desmond-Hellmann apparently has not completely left the corporate world.
- A web-site for a speakers' bureau in which she apparently still participates lists her as a current "Advisor of Genentech since April 2009."
- In 2010, Dr Desmond-Hellmann joined the board of directors of Procter and Gamble, a company which makes many health related products, although it sold its global pharmaceutical business. Note that she got this position despite apparently not having any prior personal investment in P&G stock. However, per the company's 2011 proxy statement, she appears to be in line to collect over $250,000 a year in compensation for this position.

It does not seem impossible that these ongoing commercial interests may influence how she acts in her role as Chancellor.

ADDENDUM (5 November, 2011) - As per Reuters,

Consumer products maker Procter & Gamble Co and Israeli drugmaker Teva Pharmaceutical Industries Ltd on Thursday gave details of a joint venture they have created to sell over-the-counter medicines.

The joint venture, which was initially announced in March, will combine Teva's expertise in drug marketing with P&G's expertise in branding to expand their presence in the $200 billion consumer healthcare industry.

So P+G is becoming more of a health care company, increasing concerns about how her position as a director of the company, which gives her fiduciary responsibility for its finances, may influence her in her role as Chancellor.