Conflicts of Interest and Jackson Memorial Hospital's Pharmacy Contract

The latest in the hit-parade of hospital management shenanigans, highlighting issues of conflict of interest, is this story in the Miami Herald.
The newspaper's investigation has uncovered a story of dubious management at Jackson Memorial Hospital, a major University of Miami teaching hospital.
In summary, after hospital President Ira Clark had announced his retirement in 2002, in 2003, the hospital's Fiscal Affairs Committee, chaired by Andres Murai Jr, hired Alson L. Cook as Vice President of Logistics, at a salary of $160,000. Cook advocated giving Cardinal Health a five-year, no-bid contract to manage Jackson Memorial's pharmacy, and to control its drug purchasing, worth $85 million a year.
Murai, it turns out, also is President and CEO of Berna Products Corp, a subsidiary of Acambis plc, which sells a typhoid vaccine to Cardinal Health.
The contract between Jackson Memorial and Cardinal in retrospect also had a significant built-in conflict of interest. "One branch of Cardinal was telling Jackson how much to pay for drugs - purchased from another branch of Cardinal," according to the Herald.
Cardinal's staff at Jackson Memorial included project manager Kevin Reece and pharmacy director Marc Calhoun.
In early 2004, G. William Tomecko Jr., the hospital's Associate Pharmacy Director, noticed billing errors in Cardinal's records. He wrote Calhoun, "This will cause serious consternation at the CFO level. We were supposed to reduce costs by $4 million." Tomecko said Calhoun resisted his enquiries, and "took all the documents from me and requested that I not continue to determine the concerns." Calhoun has since left Cardinal.
Tomecko also found invoices from Reece from a strip club, liquor stores, and fishing boat campgrounds. Reece has since been charged with fraud.
Cook, who had gone fishing with Reece, and approved his bills, resigned and moved out of state.
An outside audit showed that the contract with Cardinal, which was supposed to save $4 million a year, actually cost the hospital $15.5 million. The audit identified $3.1 million in incorrect billing, and $5.9 million in patient under-billing.
A million here, a million there, and after a while these add up to serious costs for the health care system....