Thursday, July 31, 2008

10 Years Later, An Eerie Echo of the Fall of AHERF

This week, as reported by Steve Twedt in the Pittsburgh Post-Gazette, accounting irregularities were found at the West Penn Allegheny Health System,

An independent review of West Penn Allegheny Health System finances has found that it overstated payments from vendors and patients by $73 million over the past two years, a move that is expected to result in substantial operating losses.

'This is significant,' said analyst Jeff Schaub of Fitch Ratings in New York, who spoke to WPAHS officials yesterday.

WPAHS President and Chief Executive Officer Dr. Christopher Olivia sent a system-wide e-mail yesterday morning assuring staff that the reductions 'have no direct implications on the System's pension plan' and that WPAHS has 'now adopted an industry 'best practice' accounting methodology to help ensure a mistake of this nature does not reoccur.'

Mr. Schaub said hospitals have to estimate revenues for patient services because payments generally don't match hospital charges, but in this case West Penn Allegheny used a flawed methodology to make those estimates.

While it's not unusual for those estimates to be off somewhat, a $73 million adjustment 'is not a trivial amount,' he said, particularly for a system that has relied on investment earnings to stay in the black.

Yesterday's announcement carries uneasy echoes of the 1998 financial meltdown of Allegheny General Hospital's former parent, Allegheny Health and Education Research Foundation, which aggressively expanded into the Philadelphia market only to end up in bankruptcy. Two years later, AGH merged with West Penn Hospital to create the West Penn Allegheny Health System.

In fact, last week, Moody's Investor Service issued a report on the 10 year anniversary of the fall of the house of AHERF (the Allegheny Health Education and Research Foundation). Per an article again by Steve Twedt in the Pittsburgh Post-Gazette, who also wrote a significant series in the same newspaper summarizing the collapse of AHERF,

From the distance of 10 years, the historic bankruptcy of Allegheny General Hospital's then-parent organization still offers valuable lessons for today's health-care industry, says a new report by Moody's Investor Service.

'AHERF left such a stain, such an indelible mark on hospital management teams, they realized that if one of the big systems can fail, no one is immune,' said Lisa Goldstein, leader of the Moody's health-care team that produced the report.

On July 21, 1998, Allegheny Health and Education Research Foundation (AHERF) defaulted, resulting in what is still the largest bankruptcy ever among the 560 Moody's-rated not-for-profit health-care entities. At the time, AHERF had $2 billion in revenue and $555 million in outstanding debt, according to the Moody's report.

Analyst Lisa Martin, who wrote the report, says industrywide forces converged with 'the organization's own management and governance failures' to cause the foundation's failure.

The external forces included Medicare reimbursement cuts -- still an issue a decade later -- and highly competitive markets in both Pittsburgh and Philadelphia.

But, she added, 'we believe its ultimate downfall was driven more by decisions of the organization itself -- weak governance, poorly executed strategies, lack of refined leadership, and absence of methodical execution.'

Although the AHERF bankruptcy appears to be the largest failure of a not-for-profit health care corporation in US history, its story has produced remarkably few echoes for doctors, other health care professionals, health care researchers, and health policy makers. I often use the fall of AHERF as major example in talks, at least the few talks I am allowed to give on such unpleasant subjects. Rarely have more than a few people in the audience heard of AHERF prior to my discussion of it. I only could locate one article in a medical or health care journal that discussed the case in detail, albeit incompletely since it was written before Abdelhak's guilty plea [Burns LR, Cacciamani J, Clement J, Aquino W. The fall of the house of AHERF: the Allegheny bankruptcy. Health Aff (Millwood) 2000; 19: 7-41.] I doubt the case is used for teaching in most medical or public health schools. The lack of discussion of such a significant case is a prime example of the anechoic effect.

Therefore, let me summarize some of important points not found above (see also this narrative, starting on page 5):

  • AHERF, one of the largest health care systems of its day, was built by the poster-boy for health care imperial CEOs, Sherif Abdelhak.
  • Abdelhak, who started as food services purchasing manager at Allegeheny General Hospital, was repeatedly hailed as a "visionary" (in the March, 1997, ACP Observer) a "genius," and the like. His plans to create a huge integrated health care system were part of the wave of the future. Abdelhak was even invited to give the prestigious John D Cooper lecture at the annual meeting of the American Association of Medical Colleges (AAMC), which was published in Academic Medicine [Abdelhak SS. How one academic health center is successfully facing the future. Acad Med 1996; 71: 329-336.] He proclaimed that "we will need to create new forms of organization that are more flexible, more adaptive, and more agile than ever before." And he announced that "my aim as chief executive has been to unleash the creativity and productive potential of every individual and to provide an environment that encourages teamwork"
  • While Abdelhak was making these grandiose promises, he paid himself and his associates very well. For example, he received $1.2 million in the mid-1990s, more than three times the average then for a hospital system CEO. He lived in a hospital supplied mansion worth almost $900,000 in 1989. Five of AHERF's top executives were in the top 10 best paid hospital executives in Philadelphia.
  • Although Abdelhak talked of teamwork, he warned the combined faculty of the new Allegheny University of the Health Sciences (AUHS): "Don’t cross me or you will live to regret it."
  • As AHERF was hemorrhaging money, Abdelhak continued to pay himself and his cronies lavishly.
  • After the AHERF bankruptcy, which was at the time the second largest bankruptcy recorded in the US, Abdelhak was charged with numerous felonies involving receiving charitable assets. In a plea bargain, he pleaded no contest to misusing charitable funds, a misdemeanor, and was sentenced to more than 11 months in county prison.

The story of AHERF is not merely that of an unlucky bankruptcy. It shows what can go wrong when health care adopts business practices such as jumping the latest management band-wagons and genuflecting before imperial CEOs.

Yet since the fall of AHERF, we are still hearing breathless stories about the latest wonderful plans to save health care (think about, for example, electronic medical records, pay for performance schemes, etc), and the brilliant CEOs (think about, for example, William McGuire, the former CEO of UnitedHealth) who will be our saviors.

We health care professionals need to stop falling for this hype and spin. Saving health care will take clear thinking and hard work by a lot of people. The "visionaries," if we let them, are likely to depart with a huge cache of money, leaving us and health care worse off. If it is just "not done" to talk about cases such as that of AHERF, and other examples of "recent unpleasantness," how will be learn not to fall for the propaganda?

Of course, it is those who benefit from the propaganda who do not want us catching on to their game.

If physicians, health professionals, health care researchers, and health policy makers do not learn the lessons of the fall of AHERF, they will be doomed to see its repetitions. What just happened to West Penn Allegheny Health Systems is only a small example of all the things that can go wrong.

Cancer Data Collection Outsourced, and Then Manipulated

I have a favorite quote about the impossibly complex bureaucratic structure of the American health care system from Oxymorons by JD Kleinke,(1) (which I used in my "Cautionary Tale" article in the European Journal of Internal Medicine[2]):

Tens of thousands of well-meaning people work throughout the health care system, none of whom ever see a patient or deliver any actual medical care. They preside over an infinity of rules, regulations, forms, processes, contract outsourcing, financial brokering, benefit plan tinkering, analytical processes, incompatible data systems, and dead forests of paperwork. Health care administration in America is a tower of Babel that reaches to the moon....

It seems impossible to keep track of all the administrative, managerial and bureaucratic organizations that now impact health care. All of them, however, seem greatly susceptible to mismanagement, and worse.

Here is the latest example, from the Baltimore Sun,

A state contractor tampered with Maryland's cancer registry, a database used by researchers to track the disease's impact, counting hundreds of patients as having cancer when they did not, according to a legislative audit released yesterday.

The company, Macro International Inc., found in an internal investigation that data were deliberately altered between August 2004 and December of that year. The company fired the employee responsible for the cancer registry. State officials said that Macro employees apparently overreported the incidence of cancer to ensure that the database met standards set by a national certification association, which closely monitors registries to ensure that states have a complete count of cases.

The misinformation led researchers to send an estimated 400 women letters beginning in 2005 asking them to participate in a cervical cancer study when they did not have the disease. About 10 of those women called the state Family Health Administration, part of the state's Department of Health and Mental Hygiene - one of the first indications that the cancer registry was inaccurate.

Guy Garnett, a Macro vice president, declined to comment, citing company policy not to discuss client issues. The company completed the contract term, earning $1.9 million to manage the registry for 18 months through January. The state hired a new vendor, Westat, beginning in February.

In 2003, when Macro submitted the 2001 cancer database to the North American Association of Central Cancer Registries, it did not receive certification as required under its contract. Auditors faulted the state agency for not taking action, such as terminating the contract.

The next year, Macro did receive certification, but the auditors noted that information was later found to be erroneous. Auditors outlined several red flags that were not raised until years later.

First, the state agency did not review the 2002 data until August 2005, when it found they showed a 90 percent increase in cervical cancer cases and a 70 percent increase in melanoma cases from 1998 to 2002. At the time, auditors said, Macro could not provide an adequate explanation for the staggering rise in cancer incidence.

Around the same time, as part of the state health department's study of breast and cervical cancer diagnosis in Maryland women, about 2,300 patients in the cancer registry were asked to participate in the study. The Family Health Administration later worked with Macro to comb through medical histories, comparing original laboratory reports with data in the cancer registry, and determined that 400 of them did not have cancer. The study was suspended.

Then in May 2006, a former Macro employee informed the state agency that data were deliberately altered. Macro's investigation found that more than 13 percent of all cases in 2002 showed signs of tampering, according to the audit. Macro concluded that the changes were 'methodical and were made by one or more persons with broad access to the system,' the audit said.

I am of course familiar with the concept of a state-wide cancer registry. I must say it did not previously occur to (even) me that states would out-source the operation of such registries, and if so, that they would not bother to supervise the companies entrusted with collecting and analyzing the data.

Macro International Inc, is a for-profit, apparently privately held company. (I cannot find it on the Edgar database.) It boasts that its"mission is to deliver high-quality, research-based solutions to complex problems, integrating objective information with the advisory and implementation tasks needed to improve real world performance." That wording is so full of buzz words and management/ bureaucratic-speak that I am not sure what it means. So I cannot accuse Macro International's performance of violating its own mission. But it certainly violated the values of public health and health care research.

So we have yet another example of how health care activities have been transferred from people and organizations which were supposed to be fulfilling a (in this case, public) health mission, to (in this case, for-profit) organizations which do not have an overt commitment to the mission, a governance structure designed to fulfill the mission, or effective oversight or regulation to ensure that they fulfill the mission.

So the result was mismanagement, and fabricated data. The latter had direct impact on health care research, and on individual patients.

To take back the future of health care, we will have to ensure that health care is carried out by people and organizations pledged to uphold its core values, and working transparently and accountably under explicit and enforceable codes of ethics.


1. J.D. Kleinke. Oxymorons: the myth of a US health care system, Jossey-Bass, San Francisco (2001).

2. Poses RM. A cautionary tale: the dysfunction of the American health care system. Eur J Int Med 2003; 14: 123-130.

Tuesday, July 29, 2008

On a Clinical IT Abomination and a Health IT Leadership Gap

... If there ever was a reason for physicians, other clinicians and patients to oppose the use of Electronic Medical Records forced upon them by third parties, here it is. Assuming this story is accurate, it reflects what I believe will be an increasing trend towards control of the medical profession via computer:
Association of American Physicians and Surgeons (AAPS)

August 2008 News

Innocent Caught in Dragnet

With a 19.7% increase in budget, and a 64-person increase in staff to a total of 1,495, the Office of Inspector General (OIG) is aggressively looking for fraud. The anti-fraud cash cow brings in $20 for $1 spent. To "find" fraud, the government gets creative, elevating ordinary billing disputes to fraud.

"The government overkills. It ruins their life. Doctors lose their career. They overbill Medicare, and it may have been sloppy," states attorney Patric Hooper. "But rather than pay back $100,000, they owe millions" (MCA 6/30/08).

One Pinellas County, Fla., physician was hauled off in handcuffs because of an ongoing dispute with UnitedHealth Care over E&M coding. What preceded the indictment was a refusal by the physician to use [healthcare IT] products sold by Ingenix, a United subsidiary. "It's clear from the documents that United filed the claim in retaliation," said the doctor's attorney. "I've never before encountered such a blatant attempt at coercion by a payer public or private" (ibid.).

Note that electronic medical record software, such as Amazing Charts, could make you liable for false claims, as through unintentional misuse of cut-and-paste functions or templates that automatically fill in blanks (ibid.).

Enforcement is being enhanced through use of anti-fraud "strike forces." The investigators are often retired policemen, and they do not treat physicians as "white collar" (MCA 6/30/08).

Some suggestions from Medicare Compliance Alert: Guard your NPI. Screen staff carefully, and watch out for "rogue employees" who might be identity thieves. Report business partners to the government; it can protect your own business. Have procedures in place to deal with search warrants. Be sure the information on your Medicare enrollment form is accurate; wrong information from a form filled in 20 years ago could result in a false claim (ibid.).

AAPS advice: consider opting out.

I believe a much more aggressive response is needed from the medical profession, including organized medicine, besides "opting out" of abusive third party payer arrangements.

In a former role of Manager of Medical Programs for a regional transit authority, I've seen labor unions that were representing bus drivers and janitors act far more aggressively and wisely in representing their members against management whims than organized medicine represents physicians against payer and government whims.

If organized medicine were performing its role in representing the profession aggressively, considering the evidence that paper charts can perform as well as electronic records in many circumstances and that most clinical IT benefits accrue to payers and other third parties, then major concessions would have been demanded of the primary beneficiaries for physicians to adopt electronic medical records.

"Musn't be too aggressive or appear disgruntled" is one of the reasons I've heard from academic colleagues that this does not occur. Physicians must be "gentlemen" and "team players." ("Team player" in today's context often means "co-conspirator to mediocrity" or to even worse).

I ask "why?" [should physicians avoid appearing angry]. The directness and actual aggressiveness of the labor union representatives I saw in action was quite effective in improving the conditions for their members. Interestingly, the union people were aggressive when "in role" yet polite when I encountered them in other settings, such as the daily commute to work. The public would likely respond to legions of angry doctors like few other means of communication could muster.

In a similar vein, I have heard from numerous circles that it's best to advocate for informatics leadership of Health IT (such as EMR, CPOE etc.) without demonstrating emotion or 'disgruntledness.' That raises several questions:

  • Are physicians finding themselves marginalized and at the whim of IT managers, payers and other non clinical third parties because they have been just too angry and aggressive in demanding what was best for medicine and for themselves?
  • Has there ever been any disagreement or conflict of such major proportions (and profitability) as healthcare that has been resolved purely through gentleman's dialog?
  • Finally, are there lessons to be learned from these gentlemen who "petitioned for redress of grievances in the most humble of terms", only to be answered by even worse treatment?

On leadership of Health IT efforts: the sudden push by government towards universal HIT in recent years has often puzzled me. HIT rapidly moved from "experimental" status to godsend and panacea, although ample evidence was available that this was not the case. Enterprise EHR's seem to cost as much as entire new hospital wings. Yet ONC, AHRQ and other agencies seemed to start operating from the panacea assumption, largely since the internet hype that began at the end of the last decade.

The Office of the National Coordinator for Health IT (ONC) was established in 2004 to promote electronic health records in the United States. Regarding ONC, I've recently had some conversation with persons instrumental in the evolution of VistA, the Veteran Administration's EHR, and listened to presentations on VistA at a number of conferences.

It seems VistA is a very different universe from commercial HIT, one of strong collaboration and pride and creativity. This is likely due to its unique and relatively constrained purpose (care of veterans and family) and the non-profit nature of its history. You can get a good sense of this from the new book "
Medical Informatics 20/20: Quality and Electronic Health Records through Collaboration, Open Solutions, and Innovation" (Amazon link here) written by key VistA personnel from that perspective. (Note: I use the book for teaching graduate students about the best ways to create and implement HIT and am cited in it for my views on social issues in HIT as at my website).

Commercial HIT is, on the other hand, highly corporatized, in the worst 2008 sense of the word. It is a highly competitive (need I say cutthroat) business, highly fragmented, proprietary, and anything but open. Commerical HIT is characterized by many stakeholders with widely varying agendas, forming an often dysfunctional "HIT ecosystem" (link) that largely excludes clinicians from meaningful decision making. The ecosystem is primarily centered on profit. It is an entirely different world than VistA.

In addition,
hospital IS departments are usually woefully unprepared and incapable of meeting the challenges of clinical IT. IT is not a hospital core competence. Quite frankly, many of the IT leaders I've met in hospitals have been barely competent and in some cases downright abysmal where the needs and culture of practicing clinicians -- and sick patients -- are involved.

Physicians have been "resisting" health IT for 30+ years now. The diffusion of healthcare information technology after 30-plus years of effort and billions of dollars spent remains limited. As per the 2008 statistics in the NEJM article "Electronic Health Records in Ambulatory Care - A National Survey of Physicians", NEJM 359:50-60, just four percent of physicians in the U.S. reported having an extensive, fully functional electronic-records system, and just thirteen percent reported having a basic system. Most hospitals are also lacking the technology to any meaningful extent.

Yet those same physicians have to be restrained from using new therapeutic modalities and drugs where the benefit to patients is reasonably clear cut, even procedures and devices that are complex to perform or utilize.

Perhaps our society should take the 'resistance' to clinical IT as a phenomenon for serious consideration. One should perhaps ask themselves if they'd happily volunteer to receive a new therapy or drug that physicians have been 'resisting' for several decades.

Clinical IT is a world further characterized by issues such as these (thanks to Al Borges, MD and Health IT discussion site for some of these links):

  • "Oh no! Half of all current EMRs fail!", from 1/2007 Technology for Doctors (link to PDF)
  • "Avoiding EMR meltdown: How to get your money's worth. About a third of practices that buy electronic medical records systems stop using them within a year. A little homework can help ensure you buy one that will work for you.", from 12/2006 AMNews (link)
  • Quote: "The failure rates of EMR implementations are also consistently high at close to 50%", from Proceedings of the 11th International Symposium on Health Information Management Research – iSHIMR 2006 (link to PDF)
  • Quote: "Industry experts estimate that failure rates of Electronic Medical Record (EMR) implementations range from 50–80%.", from 7/2006 A Commonsense Approach to EMRs (link to PDF)
  • Kaiser Permanante HIT Meltdown (link)
  • UK: Milton Keyne's Care Records System caused 'near meltdown' (link)

and many others of a similar nature.

This raises several questions:

  • ONC was founded by our government. Where, exactly, was the government receiving its inputs on HIT pros and cons, drawbacks and challenges? The drawbacks have been known for a long time. Was the primary source of information from the pro-HIT optimists, opportunists and Pollyannas (per my HIT Ecosystem essay), lobbyists, and those whose experiences were largely positive in development of non commercial, large scale HIT (e.g., VA?) Could a term to describe what the administration has been told by the "HIT Ecosystem" members be this word?
  • Was ONC founded on the premise that the commercial HIT 'ecosystem' operates like the VA, i.e., a world of collaboration and creativity? Could it be seeing commercial HIT through 'rose-colored glasses?'
  • ONC seems to have focused on "technical" issues - standards, interoperability, etc. - at the expense of the social impediments and drawbacks to HIT. It seems the working assumption is that all that stands in the way of universal HIT, much like in the VA, is fine details of the technology and 'physician resistance.' Is ONC positioned to understand the commercial HIT sector and its issues, and in fact produce a candid and realistic "lessons learned" report as being called for in proposed House Energy and Commerce legislation?

These are very important questions. I do not know the answers. However, the decision makers in our government should ensure that they do.

-- SS

Friday, July 25, 2008



The case of Stanford University and Dr. Alan Schatzberg, chairman of Stanford’s department of psychiatry, continues to raise questions. You can see previous discussions here. The questions concern transparency at the academic-corporate boundary, reporting conflicts of interest to NIH, and Stanford’s “management” of a faculty member known to have a significant conflict. The conflict involves a company Dr. Schatzberg founded (Corcept Therapeutics), a drug called mifepristone that Corcept has in clinical trials for depression, and NIH-supported studies of the same drug at Stanford.

Stanford’s position is that Dr. Schatzberg “has not been involved in managing or conducting any human subjects research involving Mifepristone …” Dr. Schatzberg’s 2006 published disclaimer stated “…Dr Schatzberg played no direct role in the recruitment, assessment, or follow-up of subjects enrolled in this study. Dr Schatzberg was not directly involved in the analysis of data stemming from this research.” Stanford represented that this disclaimer applies also to earlier publications with Dr. Schatzberg as co-author.

This disclaimer is hardly credible, considering the responsibilities of NIH-funded Principal Investigators. I pointed out many of the inconsistencies before. Now there is new evidence that Dr. Schatzberg failed to maintain an arm’s-length relationship to the projects at Stanford.

In a 2008 review article, Dr. Schatzberg discussed the Stanford projects in ways that contradict the claim of an arm’s-length relationship. This article acknowledged Dr. Schatzberg’s NIH grant support at Stanford. Corcept Therapeutics was not acknowledged as a source of funding. The first concern is that, if Dr. Schatzberg’s relationship to the Stanford studies is as Stanford claimed, then he has no business publishing a NIH-supported review article that portrays his drug’s prospects in a favorable light. Hello! Is there a conflict of interest here? Review articles that assess a field and synthesize data form a crucial part of science that has to be off-limits to Dr. Schatzberg just as much as assessing patients in one of his clinical trials would be. His many favorable, even exaggerated, articles, reviews and commentaries since he founded Corcept should have come under this proscription. So much for Stanford’s “management” of the conflict. Dr. Schatzberg certainly had a role in managing the research supported by NIH at Stanford – he managed the climate of scientific opinion for his drug and he managed the tone of the NIH-supported publications from Stanford.

Second, Dr. Schatzberg made a claim of efficacy for his drug that differed from what was originally reported in an NIH-supported Stanford study. He claimed a 31% decrease of symptom ratings with a scale called the BPRS. The original report does not confirm that claim. From the published data tabulated in the report, the reduction of symptom severity was 20%. Readers can easily check that for themselves. So, in a current scientific review article Dr. Schatzberg deviated from the published record. He also inflated by half the efficacy estimate for his drug. Hello! Is there a conflict of interest here?

Third, this false claim indicates that Dr. Schatzberg performed and published his own reanalysis of the primary data from an NIH-funded Stanford study. He didn’t get the number 31% from the published article. Yet Stanford says he had no part in managing or conducting the research or in analyzing any data. So here we have an NIH-funded Principal Investigator, with a clear conflict of interest, who supposedly remains at arm’s length from the project, accessing the primary data files, running a new analysis himself, and publishing an exaggerated new efficacy result for his drug that does not match what he published previously as a co-author. That is inconsistent with Stanford’s defense of Dr. Schatzberg. Hello! Is there a conflict of interest here?

Fourth, in this review article Dr. Schatzberg presented the first data on mifepristone blood levels in a peer reviewed journal, along with an elaborate scientific argument for the importance of the blood level as a moderator of response. These blood level data came from Corcept’s clinical trials, but the target blood level stated by Dr. Schatzberg did not correspond to SEC filings and press releases from Corcept. The administrative issue here is how Stanford justifies the presentation and discussion of original scientific data by a Principal Investigator who is supposedly insulated from the scientific work of the project in order to avoid bias. Dr. Schatzberg’s discussion of the new data and his scientific arguments about blood levels form a crucial part of the scientific platform for his drug’s current prospects, and as such must be off limits, just as assessing patients in one of his clinical trials would be off limits under Stanford’s policy. Hello! Is there a conflict of interest here?

This current example undercuts the assertions by Stanford and Dr. Schatzberg that his conflicts of interest have been “managed” by the University. Dr. Schatzberg may not have assessed any patients in Stanford’s trials of mifepristone, but he has had the lead role in responding to scientific critiques, where he clearly was the manager. He also has had the lead role in selling the mifepristone story to the scientific community and in shaping the tone of the NIH-supported Stanford publications that Corcept relied on to raise capital. Hello! Is there a conflict of interest here? How does Stanford justify these academic-commercial boundary violations, and why does NIH not act on the known conflicts of interest? That was Senator Grassley’s question to Dr. Zerhouni today.

Thursday, July 24, 2008

Do we really have the societal wisdom to put all healthcare data online?

The following story on IT security is simply stunning in its layers of apparent ineptitude.

I further find at this link that this system administrator was once convicted in Kansas of aggravated robbery and served time.

Yet numerous constituents of the "
Health IT Ecosystem" (a title I use to describe the complex HIT environment, link) espouse the value of national healthcare and genetics databases to be stored by commercial companies such as Google and Microsoft, and/or the Federal Government.

This raises the question: in 2008, do we really have the levels of societal wisdom necessary to put all health care data online?

-- SS

One admin's missing password leaves San Francisco in a lockdown state

By Michael Hatamoto , BetaNews
July 18, 2008, 5:00 PM

A former San Francisco city computer network administrator remains in a Bay Area jail after pleading not guilty to four charges of computer tampering. Meanwhile, the city's computer network is in limbo.

Prior to his arrest, Terry Childs, 43, of Pittsburg, California, managed to manipulate the city's computer system, creating a password that has effectively locked out all other city network administrators. As an employee in the San Francisco Department of Technology Information Services, he helped create a new network used for the San Francisco FiberWAN (wide-area network), his former defender said.

The FiberWAN network is responsible for controlling the city's e-mails, law enforcement records, payroll, and personal records. It controls 60 percent of the city's municipal data that also includes lawyer information and 311 information system.

In an interview today with the San Francisco Chronicle , Childs' attorney, Erin Crane, characterized his client as willing to cooperate, but may only turn over the password city officials need to operate their network after negotiations have concluded. Crane described Childs as more than the network's administrator -- indeed, as its architect.

Childs pleaded not guilty yesterday in San Francisco Superior Court, and is now being held in custody on $5 million bail. He will next face a bail hearing on Wednesday, July 23.

The public defender who initially defended Terry Childs, Mark Jacobs, removed himself from the case over suspected conflict of interest, after it was learned his own records were among those included in the files that Childs still holds hostage.

Specifically, Childs stopped authorized network users from accessing to parts of the network they should be authorized to use, and also enabled his own access to sections of the network to which he should have been restricted while he worked for the city, San Francisco district attorney spokespeople said.

Computer security experts have been quick to chastise the city for letting one person have access to the entire system, while recommending each person should only have access to a piece of the network. Aside from Childs, it's believed five or six people are expected to have accounts enabling universal access to everything in the network, though the identity or whereabouts of those individuals has not been made known.

In another mistake, the city apparently did not keep adequate system backups, which they could have used to restore the network and its passwords by now. Even so, it's unknown if there are any backups of the system and password, and if Childs also locked the administrator account from those backups.

There has been no data breach, no tampering with the system itself, and the only problem at the moment is that everyone is locked out, city officials confirmed.

San Francisco Mayor Gavin Newsom, city officials, and Cisco engineers are still trying to resolve network issues about five days after the initial incident. Earlier in the week, Mayor Newsom said it could take up to eight weeks to fully restore the network to working order, costing the city thousands of dollars in resources. But the eight week prediction is a worst-case scenario, in which an entirely new infrastructure would have to be built, and the current network dismantled.

During a press conference earlier in the week, Mayor Newsom described Childs as a "rogue employee" who became "a bit maniacal and full of himself."

The network restoration could happen much faster and easier with cooperation from Childs, who had said several times that he does not plan to help the city fix the network. After Childs' first court appearance, attorney Crane said this an entire issue was nothing but a misunderstanding, that the media and public had blown out of proportion.

Although the D.A. has not released the full criminal complaint against Childs, and what would have led him to do this, local Bay Area media outlets reported an alleged dispute between Childs and one of his managers. Unconfirmed reports indicate he was to be suspended on July 9 for alleged insubordination.

With little known details available out the case, the media, both professional admins and the general public have already formed their own opinion about the case, saying it's ludicrous that someone who has yet to hurt someone is being held on $5 million bail. Others, however, said effectively hijacking an entire city's computer network and holding it hostage is the wrong course of action, regardless of what grievances he has against his employers.

Even though Childs remains in police custody, he is still receiving paychecks from his $127,735 per year salary. Moving forward, the city of San Francisco hopes to work with Childs and his attorney to resolve the network issues in a timely matter, though specific talks are taking place behind closed

Attacking "Side Effects" with Logical Fallacies, Version 2

Side Effects by Alison Bass continues to generate controversy. As described by a reviewer in the New England Journal of Medicine,(1) the book
used the case of Paxil to expose the unsavory and self-serving relationships among members of the pharmaceutical industry, psychiatrists, and members of the FDA.

The reviewer concluded,
Bass's riveting and well-researched account of these disturbing ties should be widely read by members of the medical profession, many of whom continue to believe, despite all evidence to the contrary, that they are immune to the influence of drug companies.
We previously posted about how the book inspired one reviewer to unleash a series of logical fallacies in an apparent attempt to discredit Bass and Side Effects. Now a review by AJ Gelenberg has appeared in Health Affairs, the respected scholarly journal of health care and health policy research, which also employed its share of logical fallacies.(2)

Ad Hominem

One of Galenberg's main arguments was that Side Effects treated as black and white a story that is really about shades of gray. Furthermore, he alleged that "its hyperbole and 'villains-versus-heroes' style do no justice to a pressing public health issue." From there, he tried to discredit two of its "heroes."

One hero, a psychiatrist, admitted to a series of boundary violations with a patient that caused me to blanch. But no matter; he’s a good guy, and the author declares his intent to be pure. Another of her bigger-than-life heroes is Eliot Spitzer. The prepublication version of Bass’s book I read was written before Spitzer’s resignation as New York’s governor. I wonder if her heroes get redacted when their feet turn out to be made of clay.

Bass actually used a number of pages to address the allegations of malpractice made against the "hero" psychiatrist. But the psychiatrist's role in the book was the early raising of the hypothesis that selective serotonin uptake inhibitor (SSRI) anti-depressants may lead to suicidal ideation. Whether that hypothesis is true, and whether or not other people sought to manipulate or suppress evidence relevant to it were the real questions Side Effects addressed. The psychiatrist's conduct with a particular patient are irrelevant to their answers.

Similarly, although Elliot Spitzer did oversee the lawsuit against GlaxoSmithKline, the manufacturer of Paxil, his conduct years later that lead to his resignation as Governor of New York had nothing to do with this lawsuit or the issues it raised. Furthermore, Side Effects focused on how his staff investigated the relevant facts and pursued the lawsuit. Spitzer's role on the ground was minimal.

Thus, a single paragraph in Galentberg's Health Affairs review employed the ad hominem fallacy twice. This fallacy may be defined one "in which a claim or argument is rejected on the basis of some irrelevant fact about the author of or the person presenting the claim or argument. Typically, this fallacy involves two steps. First, an attack against the character of person making the claim, her circumstances, or her actions is made (or the character, circumstances, or actions of the person reporting the claim). Second, this attack is taken to be evidence against the claim or argument the person in question is making (or presenting)."

Guilt By Association

Later, Galenberg wrote,

I worry that Bass’s book can do harm with its broad-brush smear.


Scientologists could find support for their cruel and misinformed agenda of laying waste an area of medical care that is tragically stigmatized.

Of course, anything written by anyone could be misinterpreted by someone else, or used in conjunction with yet more logical fallacies to provide erroneous support of an unrelated position. I submit that implying that Scientologists, not a group discussed or addressed in Side Effects, would be so involved was an attempt at asserting guilt by assocation. This may be defined as one "in which a person rejects a claim simply because it is pointed out that people she dislikes accept the claim."

Slippery Slope

Galenberg's worry noted above lead to a dire warning,

Worst of all, patients and their families could turn away from needed attention and further compound the neglect of psychiatric disorders.

Galenberg did not explain how Bass' book, devoted as it was to the case of the marketing and research of single drug, could undermine all of psychiatric care. Thus, this appears to be a slippery slope, defined as a fallacy "in which a person asserts that some event must inevitably follow from another without any argument for the inevitability of the event in question."


What Galenberg's review did not do is meaningfully address the facts presented in the book, and Bass' main interpretation of them. Side Effects argued that clinical research evidence specifically about the safety of SSRIs for children and adolescents, not adults was suppressed and manipulated. In fact, there is now considerable evidence that SSRIs may have risks for children and adolescents that were not appreciated until recently, and may not be very efficacious for younger patients. For example, the systematic review by Whittington et al included published and unpublished data from randomized controlled trials of SSRIs in children and adolescents.(3) Its abstact concluded "published data suggest a favourable risk-benefit profile for some SSRIs; however addition of unpublished data indicates that risks could outweigh benefits of these drugs (except fluoxetine) to treat depression in children and young people. The systematic review of published trials by Fergusson et al concluded there was "an association between suicide attempts and the use of SSRIs."(4)

Galenberg concluded on the regretful note,

I wish that Alison Bass had been more credible and responsible in presenting this dilemma and the underlying facts.

However, Galenberg never provided evidence or clear arguments that disputed the "underlying facts." Rather, this review, like the one by Herrmann, seemed at best to show the reviewer's distaste for Side Effects, rather than the source of that emotion.

Galenberg did allude in his review to his background,

I have consulted to the pharmaceutical industry, given lectures they have funded, and taken educational and research funds from them through my university.

He did not specify the companies for which he worked, the topic or purpose of the consultations, the nature of the lectures he gave, or the research he pursued. However, a quick search revealed that one of his colleagues in such research pursuits was Dr Martin Keller, one of the "villains," to use Galenberg's term, in Bass' book. (For example, see this article by Keller et al from 2007.[5]) The disclosures in that study included,

Dr. Gelenberg is a consultant to Eli Lilly, Pfizer, Best Practice, AstraZeneca, Wyeth, Cyberonics, Novartis, Forest, and GlaxoSmithKline; has stock options with Vela Pharmaceuticals; and has received research grants (to the University of Arizona) from Novartis.

Thus, this seems to be yet another in our series of cases of confused defenses of financial entanglements among industry and academics. Such confusion seems likely to appear in arguments made by people who themselves may have relevant conflicts of interest. As Joe Collier said, " people who have conflicts of interest often find giving clear advice (or opinions) particularly difficult."(6)

I would submit that Dr Gelenberg's review perhaps unintentionally supports the argument that physicians' and academics' financial entanglements with organizations with vested interests in promoting products, services, or ideologies should not merely be disclosed and managed, but should be materially reduced, if not eliminated.


1. Friedman RA. Side effects: a prosecutor, a whistleblower, and a bestselling antidepressant on trial. N Engl J Med 2008; 358: 2852. Link

2. Gelenberg AJ. Warning: Side Effects may include distorted vision. Health Aff 2008; 27: 1193-4. Link

3. Whittington CJ, Kendall T, Fonagy P, Cottrell D, Cotgrove A, Boddington E. Selective serotonin reuptake inhibitors in childhood depression: systematic review of published version unpublished data. Lancet 2004; 363: 1341-1345.

4. Kirsch I, Deacon BJ, Medina-Huedo TB, Scoboria A, Moore TJ, Johnson BT. Initial severity and antidepressant benefits: meta-analysis of data submitted to the Food and Drug Administration. PLoS Med 5(2): e45 . Link

5. Keller MB, Trivedi MH, Thase ME, Shelton RC, Kornstein SG, Nemeroff CB, Friedman ES, Gelenberg AJ et al. The prevention of recurrent episodes of depression with venlafaxine for two years (PREVENT) study: outcomes from the 2-year and combined maintenance phase. J Clin Psychiatr 2007; 68: 1246-1256. Link

6. Collier J. The price of independence. Br Med J 2006; 332: 1447-9. Link here.

Amerigroup Settles

Another addition to the cavalcade of settlements, from the Virginian-Pilot,

Amerigroup Corp., which faced $334 million of damage awards and court-imposed penalties from a Medicaid fraud suit in Chicago, said Tuesday that it will pay the U.S. government and state of Illinois $225 million to settle the civil case.

As part of an agreement struck with federal and state agencies, the Virginia Beach-based health insurer said it also will pay $9 million in legal fees, but it will not admit any wrongdoing.

However, Amerigroup said it also will enter into a corporate-integrity agreement with the inspector general of the Department of Health and Human Services, the federal agency that provides part of the funding for state Medicaid programs.

The suit's plaintiffs - a former Amerigroup employee, the state of Illinois and the federal government - said in federal court in Chicago that Amerigroup and its Chicago-area health care plan defrauded state and federal agencies by discouraging pregnant women and individuals with special needs from enrolling.

During a trial in October 2006, the jury found in favor of the plaintiffs and awarded damages of $48 million. That was tripled to $144 million because the suit had been filed under state and federal 'whistle blower' statutes, which required that any damages be trebled. The judge also imposed $190 million of fraud-related penalties on the company.

We first posted about the jury's finding against Amerigroup here. At that time it was reported that "jurors saw a videotape in which one executive said he always sought out 'the healthies' when signing up patients for the HMO. Jurors also saw a number of e-mails in which company officials spoke positively about limiting the number of pregnant women enrolled."

A health insurer who tried to only insure "the healthies" defeats the purpose, doesn't it?

This case adds to the impression that many leaders of health care organizations put short-term financial gains ahead of honesty and patient welfare. Furthermore, what negative incentives for such practices currently exist do not seem to deter them. After all, a fine or settlement paid years later can just be written off as a cost of doing business. Furthermore, although such a payment may have a (minimal) effect on the company's bottom line, it has no real effect on the people whose decisions and actions lead to the problem.

A physician who does something unethical can lose his or her license and practice. An executive of a health care company who does something unethical usually suffers no penalty. In my humble opinion, one solution would be to require state licenses for executives of insurance companies and managed care organizations, as well as other health care organizations whose actions affect the public health and safety (e.g., pharmaceutical, biotechnology and device companies; hospitals, hospital systems, and academic medical centers; medical schools; etc). Such licenses could be challenged, and could be lost, given due process, for findings of unethical conduct. That might provide sufficient negative incentives to reduce the epidemic of unethical behavior by health care organizational leaders.

Tuesday, July 22, 2008

Fines, Re-Statements, and More Fines - Just Another Week in the Managed Care Business

Several related stories about commercial managed care organizations/ health insurers surfaced recently.

First, as reported by Lisa Girion in the Los Angeles Times,

Anthem Blue Cross and Blue Shield -- two of the state's biggest health plans -- agreed Thursday to pay a total of $13 million in fines and to offer new health coverage to more than 2,200 Californians the companies dropped after they became ill.

Neither company admitted to any wrongdoing in agreeing to pay the stiffest penalties yet in efforts by state authorities to curb what they view as an abusive practice of investigating and canceling policies after policyholders run up big medical bills.
Blue Cross, a unit of Indianapolis-based
WellPoint Inc., will pay a $10-million fine to the state Department of Managed Health Care, and it will offer new coverage to 1,770 former members it canceled since 2004 -- no questions asked.

Competitor Blue Shield, a not-for-profit health plan based in San Francisco, will pay $3 million and offer new policies to 450 people whose coverage was rescinded over the last four years.

The insurers also agreed to establish a process for former members to recover medical expenses they paid out of pocket after they were dropped as well as other damages, such as homes or businesses that were lost because unpaid medical debts ruined the former members' creditworthiness.

These fines are apparently not the end of this story.

The settlement came the same day that a congressional committee held a hearing on the cancellation practices of the nation's health insurers and the day after Los Angeles City Atty. Rocky Delgadillo contended in a lawsuit that Blue Shield routinely flouted the law by conducting secret and unfair investigations into members' health histories to find a pretext for dropping them. Delgadillo filed similar suits against Blue Cross and Health Net this year.

'These settlement agreements add up to a raw deal for California consumers courtesy of the DMHC,' Delgadillo said. 'They will not make the victims of this insidious practice whole, they will not require that the companies disclose their wrongdoing, and, in my opinion, they will not adequately punish the companies for their shameful conduct.'

The settlements close the department's investigation into rescissions. But they do not directly affect Delgadillo's lawsuit, which seeks sweeping remedies and penalties in excess of $1 billion.

Nor do they end a raft of suits filed by individuals seeking financial compensation from the health plans that dropped them.

Also pending are investigations by state Insurance Commissioner Steve Poizner into the rescission practices of health plans' preferred-provider-type coverage that involve thousands more canceled policies.

Next, courtesy of the St. Petersburg (Florida) Times,

Acknowledging 'certain control deficiencies' among its former senior managers, WellCare Health Plans Inc. of Tampa is revising its financial statements from 2004 through mid 2007 to reflect accounting errors over refunds owed to Medicaid plans in Florida and Illinois.

The changes announced late Monday mean WellCare overstated its net income a total of $28-million in that time span. The company has not filed audited financial statements since mid 2007.

WellCare, which was raided by the FBI in late October, said a special internal committee found that the managed-care company had made 'accounting errors' in its compliance with requirements for Florida Medicaid and Healthy Kids programs, as well as its contract with Illinois Medicaid.

In WellCare's filing with the Securities and Exchange Commission, the company also said it found 'material weaknesses' in internal control over financial reporting.

'Specifically, we have determined that former senior management set an inappropriate tone in connection with the company's efforts to comply with the regulatory requirements' of Florida's contracts, the filing said. Two months after the federal investigation became public, WellCare ousted its top three executives: Todd Farha, chairman, chief executive and president, as well as Paul Behrens, chief financial officer, and Thaddeus Bereday, general counsel.

The company has since appointed new leadership and formed a regulatory compliance committee consisting of only independent directors. WellCare also has separated the posts of general counsel and chief compliance officer. The duties of chief financial and chief accounting officer also have been segregated.

Finally, per USA Today,

A health insurer that sells mainly to the self-employed agreed Monday to pay $20 million — one of the largest fines of its type — to settle violations found by regulators in a 36-state investigation.

The investigation, prompted by numerous complaints, found that insurer HealthMarkets failed to properly train its sales agents, who didn't always fully disclose the limits of its health policies to consumers and sometimes did not pay for medical services promptly.

HealthMarkets, owned by three private-equity firms including the Blackstone Group, has about 612,000 policyholders in 44 states through its subsidiaries: Mega Life and Health Insurance, Mid-West National Life Insurance and Chesapeake Life Insurance.

The company sells an array of plans, many of which pay only limited amounts toward medical care.

"The severity of their actions certainly warranted that level of penalty. They hurt a lot of people," says Washington Insurance Commissioner Mike Kreidler, whose state and Alaska led the investigation.

Since 2002, HealthMarkets has been fined by at least seven states and faced lawsuits from dozens of policyholders. In 2006, Massachusetts required the firm to reassess denials of policyholders' medical bills dating to January 2002. Maine earlier this year fined the company $1 million and ordered it to return $5.6 million to policyholders.

So goes another typical week in the wonderful world of the managed care business. Please note we most recently posted about WellPoint and its recissions here. We wrote about the beginning of the WellCare investigation here.

In the 1980s' managed care was advanced as a rationale and humane way to control health care costs while improving quality and access. Since then, managed care organizations and health insurers, which have often become indistinguishable, have consolidated their power. But the result has not been lower costs, better quality or better access. As politics drive increased interest in health care reform, maybe we should think about how deficiencies in the leadership of health care organizations, particularly but certainly not exclusively managed care and health insurance, have undermined their mission. Leadership that encourages retroactive cancellations of policies after their holders get sick; that set an "inappropriate tone" in compliance with government regulations; and that let policies be misrepresented and claims go unpaid must take some blame for rising costs, stagnant quality, and decreasing access. To reform health care, we must reform health care leadership.

Monday, July 21, 2008

BLOGSCAN - Who Actually Organizes Medical Conferences and Continuing Medical Education?

On the Carlat Psychiatry Blog, Dr Daniel Carlat delved more into the role of medical education and communication companies (MECCs) in medical education. He found a MECC prospectus for a psychiatry conference ostensibly presented by a very prestigious medical school. In it, the MECC solicited "independently supported symposia," and offered to prepare for such symposia "enduring materials," which appear to be polished monographs, which can be read for CME credit. The charge to the sponsor for preparing such an article was a cool $103,000. Funny, I used to think that doctors and medical academics put together medical conferences and continuing medical education. But look through the section on "partner responsibilities" in the MECC's prospectus, and see how little there is for the prestigious academic institution to do, and how much is actually done by the MECC. How naive I was.

Sunday, July 20, 2008



Questions continue to buzz about Dr. Alan Schatzberg’s and Stanford’s claims that he complied with the university’s disclosure requirements. Dr. Schatzberg is chair of Stanford’s department of psychiatry and the founder of a company called Corcept Therapeutics. I have commented previously on the University’s (mis)management of Dr. Schatzberg’s conflict of interest vis a vis Corcept and his NIH funding.

The two most informative documents released by Stanford University are dated 23 May 2008 and 25 June 2008. The first is an amended response to Senator Charles Grassley. The second is a public statement concerning Sen. Grassley’s investigation of Dr. Schatzberg through the Senate Finance Committee.. The complete texts are available on-line here: (1)

and here (2)

Additional perspective is to be found in an article in the Stanford Daily here: (3)

Stanford’s policy requires that
“Disclosure of potential conflicts of interest at the time of any transaction,
such as when the faculty member receives a research grant or gift or has
intellectual property licensed, is a critical component of our conflict of
interest policy. Transactional disclosures of conflicts of interest are required
when submitting a grant, negotiating a contract, during licensing activities,
submitting protocols for human subjects research or animal research, entering
into material transfer agreements or collaboration agreements, receiving gifts
or entering into procurement activities. … Our standard for a significant
financial interest is whether the faculty member has received $10,000 or more in
income, holds $10,000 or more in equity in equity for publicly traded companies
or has any equity if the company is privately held. This ad hoc disclosure is
used to mitigate, manage or remove such specific conflicts, and, for all
research funded by NIH, as a basis for reporting to NIH. All such conflicts are
also reported in the annual disclosure, and thus are also part of the University
information on conflict of interest (emphases added) (1).
Likewise, the Stanford Daily reported that
“the University said in its letter to Grassley that it holds a “zero-dollar
threshold for disclosure.” This requires that faculty members divulge any and
all financial gains made through outside interactions that could have bearing on
what they are doing on campus.” (3)
The sale of Corcept Therapeutics stock by Dr. Schatzberg in 2005 was not reported to the University. (1) Dr. Schatzberg’s attempted sales of stock in 2002 and 2004 in connection with Corcept’s planned stock IPOs also were not reported to the University. (1) Proceeds of the 2005 sale to Dr. Schatzberg were over $109,000. Projected proceeds of the failed attempts to sell stock during the IPOs were $7-11 million. In terms of the policy described above, these must be considered “transactions” and “income” and “financial gains.” Stanford did not document compliance by Dr. Schatzberg with University policy. The stock sale is not mentioned in Dr. Schatzberg’s 2005 disclosure to the University. (1) Indeed, Stanford prevaricated on this issue by stating “…information about his stock ownership and stock sales was publicly disclosed through SEC filings and is available online through financial reporting services.” (2)

This explanation is laughable. Since when does a University rely on SEC filings and online financial reporting services to learn about the transactions and financial conflicts of its faculty members in order to discharge its fiduciary duty to disclose these transactions to NIH?

Even worse, the American Psychiatric Association has parroted Stanford’s assertion that Dr. Schatzberg made the required disclosures. In an interview with the New York Times, Dr. Nada L. Stotland, president of the psychiatric association, said the group had studied Mr. Grassley’s letter and Stanford’s response and agreed with Stanford. Dr. Schatzberg will take over as president of the association as planned, she said. The association and the University here are being disingenuous – treating an ethical issue as a technical legalism. But even on legally technical grounds their case fails. Is that the standard that Stanford and the APA wish to state for the record?

Once again, it is time for Stanford to get real about the boundary between commerce and academia. And, in view of the unjustified promotion of their commercial interest by Dr. Schatzberg and his corporate associates through academic outlets, it is time for the American Psychiatric Association to grasp the nettle and to reconsider Dr. Schatzberg’s fitness to serve as president in 2009.

Saturday, July 19, 2008

Pay-for-performance and physician professionalism

At Netroots Nation (bloggers’ conference, formerly YearlyKos) in Austin today, Lawrence Lessig addressed the crowd on problems of corruption, mostly focusing on government. Stipulating that vaccines do NOT cause autism and that they are good, he stated that National Vaccine Advisory Committee members are generally exempted from conflict of interest requirements and may make as much as $250,000 from the industry. He correlated this with a rise in parents' refusing vaccinations from 1% in 1991 to 2.5% in 2004. Whether or not money affects NVAC decisions, its presence (he insisted) erodes the basis of trust.

Pay-for-performance is the fashionable practice of the moment in bettering health care. But is it really a good idea?

It’s meant to address a real problem. Doctors and medical facilities are paid now for what they do, not for how well they do it or for how beneficial the care is. As a result, doctors and hospitals who provide only needed care or with sterling records in minimizing patient difficulties and complications are likely to find themselves in more financial difficulties than less careful and more average physicians and facilities. This problem is pressing – when good practice hurts the bottom line, it most certainly warps probity and professionalism .

The judgment of cardiac doctors, for example, has been distorted in our country by the fact that treating patients medically scarcely pays anything, while providing aggressive interventions is majorly lucrative. We are all human and more inclined to see benefit in something which benefits both us and a client.

However, the thesis that payers should instead reward good performance and pay bonuses to those who perform well, while sounding superficially fine, is actually fraught with problems. Providing doctors and hospitals substantial financial incentives to perform "according to specs" – like money provided to medical decision-makers and Congress by industry – will warp professionalism and patient trust.

  • The idea was introduced cleverly by saying Medicare and insurers should not pay for 'never events' – like amputating the wrong leg. Although I really have little or no problem with not paying for something so extreme, this was really a ‘nose under the tent’ approach. So-called 'never events' which won’t be paid for are quickly expanding to such things as post-op infections which yes, need to be minimized and reduced – but which also are sometimes going to occur.

  • Measuring outcomes is important, but tying remuneration to reported outcomes provides a built-in incentive for corruption. Hospitals are now going to be extremely concerned to diagnose as many conditions as possible in incoming patients lest they be penalized should something adverse occur later – and this will not likely always be objective. They also have incentives to reject less easy patients, when they can.

  • A complicated pay-for-performance remuneration system provides the need for physicians to take time and attention learning it and to "gaming the system." This is not the best use of physician time.

  • Pay-for-performance provides de facto disincentives to attending to needed care that does not generate bonuses. If a physician is rewarded for discussing obesity with patients, his attention may be to that rather than to noticing another problem that might be more important to his patient.

  • Physicians are concerned – and rightly – that pay-for-performance will hurt doctors who are willing to work with non-compliant patients – often among those who most need medical care. My niece in California (a leading pay-for-performance state at this time) already last year got a not-very-nice form letter from her doctor firing her and all other patients who were not up-to-date on mammograms and Pap smears.

  • Pay-for-performance is insulting to physicians. It assumes that they are only motivated to provide good medical care when money carrots are waved in front of them. The truth is, if we remove some of the agonies of medical practice – including fiendishly complicated paperwork and supervision systems – doctors generally very much want to provide excellent medical care and will generally take pains to do so if job conditions permit.

I don’t know what the answer is in the context of our present system. We do need a better payment system than the existing one. But pay-for-performance – I think – is another bad set of problems on the way, and an invitation to corruption.

Friday, July 18, 2008

Attacking "Side Effects" with Logical Fallacies

Concerns about manipulation and suppression of the clinical research literature are gaining more traction. Recently, Alison Bass published Side Effects, a book that explored one of the more vivid cases. As described by a reviewer in the New England Journal of Medicine,(1)

She has used the case of Paxil to expose the unsavory and self-serving relationships among members of the pharmaceutical industry, psychiatrists, and members of the FDA.
The reviewer concluded,
Bass's riveting and well-researched account of these disturbing ties should be widely read by members of the medical profession, many of whom continue to believe, despite all evidence to the contrary, that they are immune to the influence of drug companies.

So it should be no surprise that Side Effects has inspired criticism from those less skeptical about such relationships. The most prominent whack was taken at it by Mark Herrmann's review in the Wall Street Journal, which deployed an interesting variety of logical fallacies to defend the pharmaceutical industry from Ms Bass' critique. Allow me to walk through them.

Appeal to Popularity

The nature of this article becomes apparent early. It started with the premise, not defended with evidence, that selective serotonin reuptake inhibitor (SSRI) anti-depressants are an unqualified social good,
Prozac improved the nation's mood when it came on the market in 1987. Earlier antidepressants had caused many side effects and were potentially lethal in overdose. Prozac appeared to be both a godsend and a blockbuster. It was effective, easy to administer and less likely to be used by depressed patients as a means to commit suicide.

This sets up the implication that any book daring to criticize such a beneficial product ought to get little credence. Thus Herrmann appears to be using an appeal to popularity, a logical fallacy defined as "a claim is accepted as being true simply because most people are favorably inclined towards the claim. More formally, the fact that most people have favorable emotions associated with the claim is substituted in place of actual evidence for the claim."

Straw Man

Next, he noted one of the earliest criticisms of SSRIs.

Soon enough a Harvard professor, Martin Teicher, published reports of six patients who developed suicidal thinking while taking Prozac, and the Church of Scientology campaigned against it.

In 1991, the Food and Drug Administration convened a committee of experts to study the matter. As it turned out, Mr. Teicher's six patients had been deeply depressed for years, medicated with multiple drugs and in several cases had attempted suicide before they first ingested Prozac. The Scientologists rested their arguments on anecdotes, not data. The committee concluded that Prozac did not trigger suicides in adults.

This is the only time that Mr Herrmann dealt with clinical evidence in his review. Note that he started with the most preliminary evidence about harms of SSRIs that were not immediately apparent after they were first marketed. At most, Teicher's anecdotes raised the hypothesis that SSRIs may be more hazardous than they originally appeared. They were hardly definitive evidence, just a clue that more evidence needed to be sought.

Mr Herrmann sought to refute this very preliminary evidence,

A pooled analysis of nearly 100,000 patients, conducted by the FDA in 2006, showed no increased suicidality for adults ages 25 to 64.
That is the last Mr Herrmann has to say about any evidence from clinical research pertaining to the efficacy and safety of SSRIs.

What he left out, however, was that Side Effects argued that clinical research evidence specifically about the safety of SSRIs for children and adolescents, not adults was suppressed and manipulated. In fact, there is now considerable evidence that SSRIs may have risks for children and adolescents that were not appreciated until recently, and may not be very efficacious for younger patients. For example, the systematic review by Whittington et al included published and unpublished data from randomized controlled trials of SSRIs in children and adolescents.(2) Its abstact concluded "published data suggest a favourable risk-benefit profile for some SSRIs; however addition of unpublished data indicates that risks could outweigh benefits of these drugs (except fluoxetine) to treat depression in children and young people. The systematic review of published trials by Fergusson et al concluded there was "an association between suicide attempts and the use of SSRIs."(3)

Thus, Mr Herrmann was setting up a straw man, defined thus, "the Straw Man fallacy is committed when a person simply ignores a person's actual position and substitutes a distorted, exaggerated or misrepresented version of that position. "

(Parenthetically, there is also controversy about the efficacy of these drugs in the treatment of adults, although this was not the focus of Ms Bass' book. See for example the meta-analysis by Kirsch et al using published and unpublished data which suggested that the drugs improve depression only slightly compared to placebo, and then only for the most depressed patients.[4])

Guilt by Association

Additionally, by grouping Dr Teicher's observations with the Scientologists' objections, Mr Herrmann seemed to be deploying guilt by association, defined as "a fallacy in which a person rejects a claim simply because it is pointed out that people she dislikes accept the claim."

Appeal to Ridicule

Ms Bass used Dr Teicher's early observations of patients given Prozac only to set the stage for her main argument. Her crucial points were that people working on behalf of GlaxoSmithKline and its predecessors suppressed and manipulated data from clinical research on Paxil (paroxetine) to make the drug appear more efficacious and less hazardous, and thus sell more of it. As my brief summary of recent published systematic reviews above implies, when some of the suppressed studies were unearthed and their data considered in addition to the published studies, SSRIs appear less efficacious and more hazardous than was previously thought.

Mr Herrmann then sought to trivialize the importance of the data suppressed as merely "inconvenient information," and to minimize GlaxoSmithKline's efforts to suppress it,

The suppressed data that Bass was addressing, particularly about rates of suicidality in children and adolescents taking Paxil, was considerably more than "inconvenient." The use of this term appears to be little more than sarcasm. Thus, Herrmann seemed to be making an appeal to ridicule, defined as "the Appeal to Ridicule is a fallacy in which ridicule or mockery is substituted for evidence in an "argument."

Red Herring

Then he asserted,
In the event, GlaxoSmithKline settled out of court and, as soon as the matter of transparency was raised, published online all of the studies of Paxil that had been submitted to the FDA, including those that showed no significant difference between the effects of Paxil and a placebo.
The implication that GSK jumped to respond immediately after the question of "transparency" was raised does not fit the facts. The GSK registry noted by Herrmann's review contains unpublished trials of paroxetine dating back at least to 1988. Questions about suicide risk due to SSRIs, specifically Prozac, were raised by Teicher in 1990. GSK published the registry as part of the settlement of a lawsuit, and then only reluctantly. Bass documented how GSK attorneys opposed a fully transparent registry as part of a settlement in 2004. Herrmann's facile language provided no facts to counter the assertion that GSK did all it possibly could to delay release of data from clinical trials that was unfavorable to its product. His argument thus appears to be a red herring, defined as " a fallacy in which an irrelevant topic is presented in order to divert attention from the original issue."

Another Straw Man

Next, Mr Herrmann then asserted that Bass was hostile to all drug company sponsored research,
For Ms. Bass the judgment of researchers, together with their data and claims, are untrustworthy if they have received money from drug companies to finance clinical trials. She is particularly hard on a professor of psychiatry from Brown University who has defended Paxil.
Actually, Bass' criticisms were far more focused. She made detailed allegations that the "professor of psychiatry" manipulated data in a particular, key trial of paroxetine in children and adolescents. She charged that after the drug failed to produce significant improvements in the pre-selected main outcome measures, the study investigators post-hoc looked for other measures until they found some by which the drug appeared efficacious. Furthermore, she charged that the investigators dropped trial patients who exhibited suicidal ideation without recording these adverse effects. (See our recent post discussing an article published after Side Effects was written that corroborates these allegations.[5]) Thus, Herrmann's appeared to raise another straw man argument.

More Red Herrings

Mr Herrmann wound up his review with a tin of red herrings. For example, he asked,
And why shouldn't companies seek advice from the best scientific minds and pay them for their efforts?

However, Bass' book discussed relationships among drug companies that went far beyond paying people to give "advice." Although spokespeople for the pharmaceutical industry have claimed that the companies' relationships with physicians and academics amount to nothing more than consulting the best and brightest for guidance, there is evidence that industry recruits "key opinion leaders," (KOLs) a title given by Ms Bass to the "professor" above, to help market the companies' products, and that KOLs early recruitment may be based on their existing sympathy to the companies and their marketing objectives. (See this post and related article by Moynihan.[6])

Herrmann's last point was that Bass
said not a word about how society suffers when the FDA approves new drugs too slowly, depriving patients of life-improving and life-saving medicine
However, the book hardly advocated a general slowdown of drug approval. In fact, as the New England Journal of Medicine reviewer pointed out, her point was more not to slow down drug approval, but to speed up recognition "the FDA knew of the risks all along but procrastinated" in warning of them.


Herrman concluded with the opinion that

"Side Effects" belongs to a genre of investigative journalism that involves talking to plaintiffs, their lawyers and their expert witnesses, taking their stories as gospel and denigrating the opposing view because corporate money (apparently less pure than money from the plaintiffs' side) supposedly has a corrupting effect.

"Side Effects" is lively and well-written, but readers should be warned that they may have an adverse reaction: a deep disquiet that only half the story has been told.

Maybe Mr Herrmann would benefit from the use of a mirror. His supposed review seems mainly an uncritical defense of actions that seemed more related to one pharmaceutical company's pursuit of profits than the promotion of science or the benefit of patients. At the end of his review, the Wall Street Journal noted "Mr Herrmann is a lawyer in Chicago whose firm has defended drug manufacturers in product liability cases." Thus, his review may be likened to a legal brief on behalf of a client whose conduct may be hard to defend.


1. Friedman RA. Side effects: a prosecutor, a whistleblower, and a bestselling antidepressant on trial. N Engl J Med 2008; 358: 2852. Link

2. Whittington CJ, Kendall T, Fonagy P, Cottrell D, Cotgrove A, Boddington E. Selective serotonin reuptake inhibitors in childhood depression: systematic review of published version unpublished data. Lancet 2004; 363: 1341-1345.

3. Fergusson D, Doucette S, Glass KC, Shapiro S, Healy D, Hebert P, Hutton B. Association between suicide attempts and selective serotonin reuptake inhibitors: systematic review of randomised controlled trials. Brit Med J 2005; 330: 396. Link

4. Kirsch I, Deacon BJ, Medina-Huedo TB, Scoboria A, Moore TJ, Johnson BT. Initial severity and antidepressant benefits: meta-analysis of data submitted to the Food and Drug Administration. PLoS Med 5(2): e45 . Link

5. Jureidini JN, McHenry LB, Mansfield PR. Clinical trials and drug promotion: selective reporting of study 329. Int J Risk Safety Med 2008; 20: 73-81. Link

6. Moynihan R. Key opinion leaders: independent experts or drug representatives in disguise? Brit Med J 2008; 336: 1402-3. Link

Thursday, July 17, 2008

A Town Meeting About Tobacco-Funded Research in Academic Medicine

We have posted about the controversies arising from recently revealed research agreements between Richmond, Virginia based Virginia Commonwealth University (VCU) and tobacco company Philip Morris. These were first publicly discussed in May in a New York Times article. As we posted here, the main issues were that the research agreements themselves were secret; the agreements apparently gave Philip Morris control over all publications arising from the research, since they defined all products of the work as proprietary information belonging to Philip Morris; and that research for hire on behalf of a tobacco company, given that tobacco products have known severe health risks and no health benefits, seems to go against the mission of a medical school and academic medical center. We also noted that the university administration's apparent lack of qualms about its relationship with Philip Morris might have been related to its president's role as a leader of a tobacco company. (He sits on the board of Universal Corp, a tobacco buyer, processor, and distributor.) Finally, we just observed how little attention this subject has gotten in Richmond's major news outlet.

VCU just held a "town meeting" that allowed faculty and students to comment on or question this recent unpleasantness. The meeting was covered by, the Associated Press, and, to its credit, the Richmond Times-Dispatch. According to the latter,

Francis Macrina, vice president of research at Virginia Commonwealth University and chairman of a task force on corporate-sponsored research, told a gathering tonight that the university made a mistake in its deal with cigarette giant Philip Morris.

Macrina said a confidentiality clause in the deal appeared to offer secrecy to the company.

'It won't happen again,' he said during the town-hall meeting at the Kontos Building on the university's MCV campus. 'We will not enter into any agreements that support secrecy.'

An estimated 75 attended the meeting, and about 20 spoke, many declining to give their names.

'Transparency at VCU is pathetic,' said one speaker who did not identify herself.

Another speaker, a faculty member in the pharmaceutical sciences, defended corporate research in general.

'I've never had a situation in which I felt my integrity was endangered,' he said.

Some wondered how a confidentiality agreement could be reached with a corporation without halting the publication of research information.

'That's a good question,' [Associate Dean of the School of Social Work Kia] Bentley said. The task force will address that, she said.

First, for what my opinions may be worth, I commend VCU for setting up this meeting, and setting up a task force to consider issues raised by the Philip Morris contracts. Second, I commend the Richmond Times-Dispatch and other media for covering it.

But I do wonder about how, at least according to the media reports, this meeting seemed to skirt some some of the issues involved. First, Vice President Macrina seemed not to be acknowledging just how comprehensive the secrecy provisions of the contract were. According to the original NY Times article,
The contract bars professors from publishing the results of their studies, or even talking about them, without Philip Morris’s permission. If 'a third party,' including news organizations, asks about the agreement, university officials have to decline to comment and tell the company.
Second, at least the Richmond Times-Dispatch coverage seemed to soft-pedal Philip Morris' control over publication of research results. Again, according to the NY Times,

Philip Morris alone decides whether the researchers can publish because the contract defines 'without limitation all work product or other material created by V.C.U.' as proprietary information belonging to the company.

Finally, it is not clear whether the issue of the VCU President's simultaneous responsibilities to the share-holders of a tobacco company was even mentioned.

Perhaps these are quibbles, given that this university was at least willing to have a public discussion of this problem. Many of the issues involving mismanagement by and conflicts of interest affecting leadership of academic medicine that we have mentioned on Health Care Renewal have never been discussed in anything like a town meeting at the relevant institutions.

So I hope that VCU is making some progress towards making its clinical and health related research transparent in all respects, its design, implementation, analysis, reporting, and who funds it and under what agreements. It would be nice if some other academic medical institutions also could show some progress.