Thursday, August 28, 2014

The RUC. "an Independent Group of Physicians?" - But It Includes Executives and Board Members of For-Profit Health Care Corporations and Large Hospital Systems


We just discussed how a major story in Politico has once again drawn attention to the opaque RUC (Resource Based Relative Value System Update Committee) and its important role in determining what physicians are paid for different kinds of services, and hence the incentives that have helped make the US health care system so procedurally oriented.  (See the end of our last post for a summary of the complex issues that swirl around the RUC.)

The Politico article covered most of the bases, but notably omitted how the RUC may be tied to various large health care organizations, especially for-profit, and how the incentives it creates may benefit them. When the RUC membership first became public in 2011 due to efforts by Wall Street Journal reporters, I used internet searches to find that nearly half of the RUC members had conflicts of interest (look here).  Most of them were part-time paid consulting relationships, paid speaking engagements, and memberships on advisory boards involving drug, device, biotechnology and occasionally health insurance companies, or personal stock holdings in such companies.

In preparing my latest post, I found that to its credit, the AMA now makes the RUC membership more accessible (look here, free registration required.)  So I decided to check whether the current RUC roster still seems so conflicted.

As I did in 2011, I ran internet searches on all new RUC members since 2011, and updated searches on the continuing members.  Results are below.  Information new since 2011 is highlighted thus.  Note that I believe all the listed relationships are or were actual, but cannot rule out errors, especially given some RUC members have common names.  Any corrections are welcome.

The RUC Members and Their Financial Relationships

- Barbara S Levy, MD

Chair, RVS Update Committee
Federal Way, WA 2000

Consultant/Advisory Boards: Conceptus; AMS; Covidien; Halt Medical; Gynesonics; Idoman Medical (hysteroscopic surgery and sterilization, endometrial ablation, electrosurgery, vaginal hysterectomy) per UptoDate

-Margie Andreae MD
American Academy of Pediatrics
Ann Arbor, MI

Chief Medical Officer of Integrated Revenue Cycle and Billing Compliance, University of Michigan Health System, per University of Michigan Health System

- Michael D. Bishop, MD
American College of Emergency Physicians (ACEP)
Bloomington, IN 2003

- James Blankenship, MD
American College of Cardiology (ACC)
Danville, PA 2000

Lecture fees from Sanofi-Aventis per New England Journal of Medicine
Financial relationships with  The Medicines Company, Abbott Vascular, Conor Med Systems, Portola Pharmaceuticals, Schering Plough, AGA Medical, Astra Zeneca, Abiomed, Bristol Myers Squibb, Tryton Medical, Kai Pharmaceutical, Novartis (Grants or Research Support) per Society for Cardiovascular Angiography and Interventions Disclosure Summary

- Robert Dale Blasier, MD
American Academy of Orthopaedic Surgeons (AAOS)
Little Rock, AK 2008

-Albert Bothe Jr MD
CPT Editorial Board
Danville PA

Executive Vice President and Chief Medical Officer, Geisinger Health Systems, per Geisinger

- Ronald Burd, MD
American Psychiatric Association (APA)
Fargo, ND 2006

-C Scott Collins MD
American Academy of Dermatology
Rochester, MN

- Thomas P Cooper MD
American Urological Association
Everett, WA

General Partner, Aperture Venture Partners LLC, (health care focused venture capital firm) , per Aperture
Member, Board of Directors, Kindred Healthcare, per Kindred
Member, Board of Directors, Hanger Inc (orthotic and prosthetic care), per Hanger
Member, Board of Directors, IPC/ the Hospitalist Company, per IPC

-Anthony Hamm DC
Health Care Professional Advisory Committee
Goldsboro, NC

- David F. Hitzeman, DO
American Osteopathic Association (AOA)
Tulsa, OK 1996

- Charles F. Koopmann, Jr., MD
American Academy of Otolaryngology-Head and Neck Surgery (AAO-HNS)
Ann Arbor, MI 1996

- Robert Kossmann, MD
Renal Physicians Association (RPA)
Santa Fe, NM 2009

Member of Advanced Renal Technologies Advisory Board, Network 15 Medical Advisory Board, Baxter Home Dialysis Advisory Board, Fresenius Medical Advisory Board per Renal Physicians Association

- Walter Larimore, MD
American Academy of Family Physicians (AAFP)
Colorado Springs, CO 2009

-Alan E Lazaroff MD
American Geriatrics Society
Denver, CO

- J. Leonard Lichtenfeld, MD
American College of Physicians (ACP)
Atlanta, GA 1994

Member, Physician Advisory Board, Aetna per Aetna 
Deputy Chief Medical Officer, American Cancer Society, per ACS

- Scott Manaker, MD, PhD
Practice Expense Subcommittee
Philadelphia, PA 2010

Consultant to Pfizer and Johnson and Johnson. Owns stock in Neose Technologies, Pfizer, Johnson & Johnson, and Rohm and Haas per Chest

-William J Mangold Jr MD
American Medical Association
Tuscon, AZ

Vice President, Board Developer Inc (health care management consulting firm), per Board Developer
Senior Advisor, ADVI (health care management consulting firm), per ADVI
Member, Board of Directors, Sante (post-acute health care company), per Sante

-Geraldine B McGinty MD
American College of Radiology,
New York, NY

- Gregory Przybylski, MD
American Association of Neurological Surgeons (AANS)
Edison, NJ 2001

Stock Ownership: United Healthcare (300 shares); Scientific Advisory Board: United Health Group (B, Spine Advisory Board) per NASS meeting

- Marc Raphaelson, MD
American Academy of Neurology (AAN)
Leesburg, VA 2009

personal compensation for activities with Jazz Pharmaceuticals and Medtronics as a speakers bureau member or consultant per AAN

- Sandra Reed, MD
American College of Obstetricians and Gynecologists (ACOG)
Thomasville, GA 2009

GlaxoSmithKline Consulting, $1750 in 2009, $1500 in 2010 per ProPublica Dollars for Docs search through here

David H Regan MD
American Society of Clinical Oncology
Portland, OH

Payment from Cephalon in 2009 for $2200, per ProPublica search 

-Chad A Rubin MD
American College of Surgery
Columbia, SC

-Joseph R Schlecht
Pimrary Care Seat
Jenks, OK 

- Peter Smith, MD
Society of Thoracic Surgeons (STS)
Durham, NC 2006

Eli Lilly, Consulting, $1500 in 2009, $1990 in 2010 per Pro Publica Dollars for Docs search through here
Advisor or consultant to Bayer per Medscape

-Samuel D Smith MD
American Pediatric Surgical Association
Little Rock, AK

-Stanley Stead MD
American Society of Anesthesiologist
Encino, CA

J Allan Tucker MD
College of American Pathologists
Mobile, AL

- James Waldorf, MD
American Society of Plastic Surgeons (ASPS)
Jacksonville, FL 2008

- George Williams, MD
American Academy of Ophthalmology (AAO)
Royal Oak, MI 2009

Advisory Team, RetroSense Therapeutics
Shareholder and consultant for ThromboGenics Ltd. and holds intellectual property on the use of plasmin per Review of Opthamology
Alcon Laboratories, consultant, lecturer; Allergan, consultant, lecturer; Macusight, consultant, equity owner; Neurotech, consultant; Nu-Vue Technologies, equity owner, patent/ royalties; OMIC- Ophthalmic Mutual Insurance Company, employee; Optimedica, consultant, equity owner; Thrombogenics, consultant, equity owner per AAO meeting

Pfizer, “Professional Advising,” $5534 in 2009 per Pro Publica Dollars for Docs search through here
Member, Medical and Scientific Committee, Pixium Vision Inc, per Pixium 
Member, Board of Directors, Macusight Inc, per BusinessWeek.  


The membership of the RUC continues to have a considerable number of apparent financial conflicts of interest.  By my count, in 2014, nearly half, 15/31 members had such conflicts.

Again, most of the conflicts were financial ties such as part-time paid consulting relationships, paid speaking engagements, and memberships on advisory boards involving drug, device, biotechnology and occasionally health insurance companies, or personal stock holdings in such companies.  A number of members who had such ties known in 2011 have several more such ties in 2014. 

In 2014, new kinds of conflicts of interest that appear even more intense have appeared.  Several members are now known to also be members of the boards of directors of for-profit health care corporations, including biotechnology, device, health care provider, and health care management services companies. 

We have been writing about the severe conflicts of interest presented by service on the boards of  health care corporationa.  In 2006 we first discussed a newly discovered species of conflict of interest in health care, in which leaders of medical or health care organizations were simultaneously serving on boards of directors of health care corporations.
We posited these conflicts would be particularly important because being on the board of directors entails not just a financial incentive.  It ostensibly requires board members to "demonstrate unyielding loyalty to the company's shareholders" [Per Monks RAG, Minow N. Corporate Governance, 3rd edition. Malden, MA: Blackwell Publishing, 2004. P.200.]  Of course, after the global financial collapse of 2008 made us sadder and a little wiser, we realized that many board members actually seem to have unyielding loyalty to their cronies among top management.  However, in any case, the stated or actual interests of a member of the board of a health care corporation, like a pharmaceutical company or medical device company, could be very different and at odds with the mission of an academic medical institution or a non-profit ostensibly dedicated to improving health care quality, like in this case, the RUC of the American Medical Association.

Also, one new RUC member is apparently a top executive of a health care management services company, and another new RUC member is apparently a general partner of a health care venture capital firm. Again, such leadership roles create responsibilities that could be very much at odds with a leadership role in a very influential committee run by a physicians' society.

Finally, two new members are top executives of large, although admittedly non-profit hospital systems.  One member is now known to be a full-time executive of a large, non-profit disease specific patient advocacy organization.  While hospital systems' interests may overlap those of physicians, modern  hospital systems are often run by generic managers who put revenues ahead of all else.  Furthermore, in pursuit of revenues, hospital system leaders may be very interested in increasing utilization of the most lucrative, usually high-technology and procedural services, and thus in structuring physicians' incentives accordingly.  While disease-specific patient advocacy goups' interests may also overlap those of doctors, they may tend to be more interested in their diseases than all others.

By the way, note that AMA and RUC leaders often defend the RUC as purely physician run organization, e.g., the testimony of the RUC leader, Dr Barbara Levy, at a Senate hearing, per MedPage Today in 2011, (see this post),

The RUC is an independent group of physicians from many specialties, including primary care, who use their expertise on caring for Medicare patients to provide input to CMS [the Centers for Medicare and Medicaid Services],' RUC chair Barbara Levy, MD, said in a statement. 

But now it is clear that the RUC includes corporate executives and board members, and top hospital system executives.  These people may have MDs, but their loyalties appear divided.

We have questioned the tremendously influential role the RUC plays in setting the incentives that drive the US health care system.  Now it appears that the RUC membership remains conflicted.  Almost half work part-time for drug, device, biotechnology, and health insurance companies.  Several are in the top leadership and/or governance of various health care corporations and large non-profit hospital systems.  Thus it seems that the incentives that drive are health care system are under the influence of people who may put corporate or organizational revenue ahead of patients' and the public's health.

As we wrote before, the prevalence of conflicts of interest among RUC members highlight the need for a more accountable, transparent and honest system to manage how the government pays physicians, and a need for more transparency and accountability in the relationship among the government, health care insurance, and physicians.

As a first step, I submit that all RUC members who are executives or board members of for-profit health care corporations or large hospital systems step down from the RUC, or resign these positions.

Tuesday, August 26, 2014

Now Politico Tries RUC Raking

It has been a year since we wrote about the RUC, the American Medical Association's Relative Value System Update Committee.  There is only one thing new since then.  Politico just made another attempt to shed some light on this obscure committee and its outsize effect on health care. 

To summarize the events so far, all I need to do is cut and paste from our last post on the topic, from July, 2013...

In 2007, readers of the Annals of Internal Medicine could read part of the solution to a great medical mystery.(1)  For years, health care costs in the US had been levitating faster than inflation, without producing any noticeable positive effect on patients.  Many possible reasons were proposed, but as the problem continued to worsen, none were proven.

Prices are High Because They are Fixed That Way

The article in the Annals, however, proposed one conceptually simple answer.

The prices of most physicians' services, at least most of those that involved procedures or operations for Medicare patients, were high because the US government set them that way. Although the notion that prices were high because they were fixed to be so high was simple, how the fixing was done, and how the fixing affected the rest of the health system was complex, mind numbingly complex.

Perhaps because of the complexity of its implementation, the simplicity of the concept has not seemingly reached the consciousness of most American health care professionals or policy makers, despite the publication of several scholarly articles on the subject, efforts by humble bloggers such as yours truly, a major journalistic expose in the Wall Street Journal in 2010,  another major expose in Washington Monthly in 2013, and congressional hearings in 2013.  The lack of much public discussion of this issue despite its importance and the above attempts to start discussion seemed to be a prime example of what we have called the anechoic effect, that important causes of health care dysfunction whose discussion would discomfit those who are currently personally profiting from the current system rarely produce many public echoes.  (For a review of what is known to date about how the offputtingly named Resource Based Relative Value Scale Update Committee (RUC) works, and previous attempts to makes it central role in fixing what US physicians are paid public, see the Appendix.)

Politico's Turn

Now an article by Katie Jennings in Politico brings up some of the issues about the RUC that we have dealt with again and again. These included six of seven major points discussed in the Washington Monthly article, and that have been discussed multiple times on Health Care Renewal.  I will list the seven points, with supporting quotes for the first six from the Politico article.  (Our post in 2013 on the Washington Monthly article had supporting quotes for the last point.) 

The RUC is Well Hidden

 And yet even many doctors are not aware of the hidden hand of the AMA-run committee in perpetuating this costly crisis. The panel, with very little transparency or public discussion, continues....

RUC meetings were closed, invitations had to be approved by the AMA, the charter had not been made public and there were no minutes or public documentation of what was said at the meetings. (Last year, under pressure, the RUC announced it would post meeting minutes on the AMA website.)

The RUC Fixes Prices

a secretive committee run by the American Medical Association (AMA) ..., with the assent of the government, has enormous power to determine Medicare prices by assessing the relative value of the services that physicians perform.

The Government Enables the RUC to Fix Prices

the role of the AMA’s secret committee [dates] back to 1992, when the U.S. government sought to overhaul the entire Medicare fee system and decided it didn’t have the right personnel to conduct extensive surveys of physicians. So the federal agency tasked with overseeing the program, the Centers for Medicare and Medicaid Services, enlisted the AMA and the committee it had formed to determine what’s known as the relative value of physician work, meaning the amount of time, effort and skill that goes into performing a procedure. Each procedure had a corresponding code in the AMA’s Current Procedural Terminology coding system, which the government had already adopted nearly a decade before, in 1983, as the standard for physician billing and reimbursement for Medicare.

Above all, the RUC appeared to be dictating solutions to the government. Since 1992, the RUC has submitted more than 7,000 recommendations to the Centers for Medicare and Medicaid Services. The agency has accepted 87.4 percent of the recommendations, according to a study published in Health Affairs.

The Government Fixed Prices are Endorsed by the Private Sector

Because Medicare fees are the baseline for the rest of the pricing in the health care system, this has had a broad effect,...

The Price Fixing Drives Up Costs and the Use of Services

For decades the committee has ... [set prices] done so in a way that has skewed Medicare fees in favor of expensive specialists over ordinary general practitioners like Fischer, who are the nation’s first line of defense against serious illness. Because Medicare fees are the baseline for the rest of the pricing in the health care system, this has had a broad effect, contributing to a situation where primary care doctors are in general underpaid, underappreciated — and in critically short supply as medical students flock to where the money and opportunity are.

These Incentives Cripple Primary Care

And because the 31-member committee was – and still is — made up of a majority of specialists who typically sought to maximize their own share of the pie (26 of the 31 are appointed by the major national medical associations), it was no surprise who the losers turned out to be. 'The specialists know what the game is,' said Dr. Robert Berenson of the Urban Institute in DC, who was a member of the RUC in the early 1990s. 'The [RUC’s] basic method of relying on a specialty society to give a non-biased appraisal … is fundamentally a flawed concept.' Dr. Grant Rodkey, the first chair of the committee that came to be known as the RUC, described the scene of the inaugural meeting as 'reminiscent of a group of dogs on leash eyeing a platter with a not-too-generous bone,' in a 1997 interview in the Bulletin of the American College of Surgeons.

These Incentives Benefit Big Corporations, not just Medical Specialists

This was the only issue not directly addressed in the 2014 Politico article.  (But see our 2013 post.)

What to Do and What Will Happen?

The Politico article concluded on an optimistic note, suggesting that increased transparency about what Medicare pays physicians might help.

One key moment came in a court ruling this year: For 35 years until last April, all the Medicare billing practices of physicians had been kept private by a court injunction granted to the AMA. But after an appeals court ruled that such information must be made public, the 2012 billing data was released, showing that the top 1 percent of doctors, mostly specialists, accounted for an outsized portion —14 percent — of Medicare billing.

Or perhaps Congress might ride to the rescue,

Today ironically, the renegade primary care doctors see hope on Capitol Hill—and in the Obamacare law that so many on Capitol Hill have demonized. In April, seeking to avoid impending cuts to physician Medicare reimbursements, Congress passed the “Protecting Access to Medicare Act.” The new law expands on a provision already included in the Affordable Care Act that gives the secretary of Health and Human Services greater authority to identify and correct misvalued Current Procedural Terminology codes. Spurred by Congressman McDermott — who told me in an email that he still wants “major changes that make the RUC’s process more transparent” — Congress also commissioned a report from the Comptroller General to study the process by which the RUC provides recommendations to the government on Medicare fees.

And there is even one - one out of very many - health care insurance companies that might finally deviate from the Medicare fee schedule as influenced by the RUC,

Even some medical insurers, like CareFirst in the Washington, D.C. region, have begun to rebel against the old system and to push the savings that might come from paying primary care physicians more. As long as I can remember, family physicians and general internists have been financially at the low end of the totem pole,' even though they’re the ones who perform the critical if unglamorous work of preventing serious illnesses, former CareFirst Chairman Michael Merson told The Washington Post recently.

But there have been only tiny changes in the RUC since the Washington Monthly article last year, and actually since we first wrote about the RUC in 2007.

The AMA, of course, fails to see anything wrong with the RUC.  On the AMA Wire blog appeared an  anonymous but apparently official post that sought to refute most of the the points made in the Politico article.

Well Hidden

The title of the blog post included the phrase "and it's no secret," but as far as I can tell, the AMA post never directly addressed the secrecy issue, especially involving the secrecy of RUC proceedings, whose location on the AMA website is not obvious to me.  I must admit that the list of members of the RUC is no longer secret, but can be found here (with a log-in, but no subscription required, and minus any biographical information, or conflict of interest disclosures).

Price Fixing

The AMA blog post stated

the RUC does not control the Medicare payment system, nor does it set rates for medical services

That is true as far as it goes, but totally ignores how the RUC's determination of the relative values indirectly sets payment rates.

Government's Uncritical Acceptance of the RUC's Recommendations

The AMA blog post included,

The RUC's recommendations are thoroughly reviewed by government officials who have the final say.

That failed to acknowledge how rarely the government officials have altered the RUC's findings in the past.

Effects on Primary Care

The AMA blog post stated

The RUC values all physicians’ cognitive work and role tackling the growing number of Americans with long-term health problems that need continuous care. The committee’s work reflects the continued importance of services that all doctors—including primary care physicians—perform.

Again, this ignores the small representation of primary care physicians, and of physicians who perform only cognitive, as opposed to procedural services on the RUC, and the data, starting with the Annals of Internal Medicine article from 2007, that suggests the RUC's updates favor procedural services.

Presumably as long as the leadership of the AMA sees no problems with the RUC, not much is likely to change.    


So since 1992, the RUC has had an outsize role controlling what Medicare pays physicians, and hence physicians' pay in general.  Over this time, the playing field has become increasingly tilted in favor of procedural services and away from cognitive services, especially primary care.  The result is that the US has the most expensive health care system in the world, but hardly the best health care or health care results in the world. 

Economists have beaten us over the head with idea that incentives matter.  The RUC seems to embody a corporatist approach to fixing prices for medical services to create perverse incentives for physicians to do more procedures, and do less conversing with and examining patients, examining the best clinical research evidence about their problems, and rigorously thinking about how best to help them.  More procedures at higher prices helps physicians who do procedures.  It may help even more the corporations that provide the devices and drugs whose use is necessitated by such procedures, and the hospitals who can charge a lot of money as sites for performance of procedures.  It may even help insurance companies by driving ever more money through the health care system, and thus allow rationalization for higher administrative expenses as a function of overall money flow.

Yet incentives favoring procedures over all else may lead to worse outcomes for patients, and more costs to patients and society.  If we do not figure out how to make incentives given to physicians more rational and fair, expect health care costs to continue to rise, while access and quality continue to suffer.

Since we started writing about the RUC in 2007,  there have been some small changes in the RUC.  It has slightly more primary care representation, and its membership is no longer secret.  That is, however, about it.

As I wrote last time, hopefully the Politico article, added to all the other attempts to shine light on the RUC, will succeed in increasing awareness of the RUC and its essential role in making the US health care system increasingly unworkable.  Of course, such awareness may disturb the many people who are making so much money within the current system.  But if we do nothing about the RUC, and about the ever expanding bubble of health care costs, that bubble will surely burst, and the results for patients' and the public's health will be devastating.

ADDENDUM (28 August, 2014) - This post was re-posted on the Naked Capitalism blog, and on the NBCH Newsletter blog

APPENDIX - Background on the RUC

 We have frequently posted, first here in 2007, and more recently here,  here, here, and here, about the little-known group that controls how the US Medicare system pays physicians, the RBRVS Update Committee, or RUC.

Since 1991, Medicare has set physicians' payments using the Resource Based Relative Value System (RBRVS), ostensibly based on a rational formula to tie physicians' pay to the time and effort they expend, and the resources they consume on particular patient care activities. Although the RBRVS was meant to level the payment playing field for cognitive services, including primary care vs procedures, over time it has had the opposite effect, as explained by Bodenheimer et al in a 1997 article in the Annals of Internal Medicine.(1) A system that pays a lot for procedures, but much less for diagnosing illnesses, forecasting prognoses, deciding on treatment, and understanding patients' values and preferences when procedures and devices are not involved, is likely to be very expensive, but not necessarily very good for patients.


As we wrote before, to update the system, the Center for Medicare and Medicaid Services (CMS) relies almost exclusively on the advice of the RBRVS Update Committee. The RUC is a private committee of the AMA, touted as an "expert panel" that takes advantage of the organization's First Amendment rights to petition the government. Membership on the RUC is allotted to represent specialty societies, so that the vast majority of the members represent specialties that do procedures and focus on expensive, high-technology tests and treatments.

However, the identities of RUC members were opaque for a long time, and the proceedings of the group are secret.  As Goodson(2) noted, RUC "meetings are closed to outside observers except by invitation of the chair." Furthermore, he stated, "proceedings are proprietary and therefore not publicly available for review."

In fact, the fog surrounding the operations of the RUC seems to have affected many who write about it. We have posted (here, here, here, and here) about how previous publications about problems with incentives provided to physicians seemed to have avoided even mentioning the RUC. Up until 2010, after the US recent attempt at health care reform, the RUC seemed to remain the great unmentionable. Even the leading US medical journal seemed reluctant to even print its name.

That changed in October, 2010.  A combined effort by the Wall Street Journal, the Center for Public Integrity, and Kaiser Health News yielded two major articles about the RUC, here in the WSJ (also with two more spin-off articles), and here from the Center for Public Integrity (also reprinted by Kaiser Health News.) The articles covered the main points about the RUC: its de facto control over how physicians are paid, its "secretive" nature (quoting the WSJ article), how it appears to favor procedures over cognitive physician services, etc.

In 2011, after the "Replace the RUC" movement generated some more interest about this secretive group, and its complicated but obscure role in the health care system, the current RUC membership was finally revealed.  It was relatively easy for me to determine that many of the members had conflicts of interest (beyond their specialty or sub-specialty identity and their role in medical societies that might have institutional conflicts of interest, and leaders with conflicts of interest).  

Then that year a lawsuit was filed by a number of primary care physicians that contended that the RUC was functioning illegally as a de facto US government advisory panel.  It appeared that things might change.  However, it was not to be.  A judge dismissed the lawsuit in 2012, based on his contention that the law that set up the RBRVS system prevented any challenges through the legal system to the mechanism used to set payment rates.  The ruling did not address the legality of the relationship between the RUC and the federal government.  The eery quiet then resumed, only punctuated briefly in early 2013, when a Senate committee held hearings with no obvious effect.      

1. Bodenheimer T, Berenson RA, Rudolf P. The primary care-specialty income gap: why it matters. Ann Intern Med 2007; 146: 301-306. (Link here.)
2. Goodson JD. Unintended consequences of Resource-Based Relative Value Scale reimbursement. JAMA 2007; 298(19):2308-2310. (Link here.)

Thursday, August 21, 2014

Move Along, No Health Care Corruption to See Here

Health care corruption, remains a largely taboo topic, especially when it occurs in developed countries like the US.  Searching PubMed or major medical and health care journals at best will reveal a few articles on health care corruption, nearly all about corruption somewhere else than the authors' countries, usually in someplace much poorer.  While the media may publish stories about issues related to health care corruption, they are almost never so labelled.

Yet Transparency International's report on global health care corruption suggested it occurs in all countries.  A recent TI survey showed that 43% of US citizens believe the country has a health care corruption problem (look here).  

In the last few weeks, there have been two major US news stories that seem to clearly involve  allegations of health care corruption, but not in so many words.   Both were big because the indicted were sitting governors of big US states.

Governor Rick Perry (Republican - Texas) Indicted for Abuse of Power

The biggest story seems to be the indictment of Rick Perry, the Republican Governor of Texas.   Here is a summary from the Washington Post,

A grand jury indicted Texas Gov. Rick Perry (R) on two felony counts  Friday, alleging that he abused his office and used a veto threat to coerce an elected district attorney to resign.

The grand jury began considering charges against Perry earlier this year following an ethics complaint alleging that he abused his veto power when he cut funding for the state’s anti-corruption unit, which is part of the Travis County district attorney’s office.

He had called on Rosemary Lehmberg (D), the district attorney for Travis County, which includes Austin, the state capital, to step down after she was arrested in April 2013 for drunken driving. Lehmberg pleaded guilty to driving while intoxicated — an open bottle of vodka was found in her car — and was sentenced to 45 days in jail.

Perry threatened to veto $7.5 million in state funding for her office unless Lehmberg resigned. She refused, and Perry followed through on his veto threat, saying that he could not provide the money 'when the person charged with ultimate responsibility of that unit has lost the public’s confidence.'

There has been a big kerfuffle over this indictment, with the majority seeming to think it is some sort of political stunt that will have little effect on Mr Perry.  For example, the Washington Post later ran an editorial calling the indictment "wrong-headed." 

However, articles in some less prominent outlets suggested that the indictment actually raised questions about possible corruption, actually health care corruption.  For example, James Moore writing in the Huffington Post,

 Some of the media appear to have adopted the Perry narrative that he wanted to get rid of an irresponsible Travis County District Attorney Rosemary Lehmberg because she had been arrested for driving under the influence of alcohol.


The PIU had been investigating the Cancer Research and Prevention Institute (CPRIT), a $3 billion dollar taxpayer funded project that awarded research and investment grants to startups targeting cancer cures. The entire scientific review team, including Nobel Laureate scientists, resigned because they said millions were handed out through political favoritism. Investigations by Texas newspapers indicated much of the money was ending up in projects proposed by campaign donors and supporters of Governor Perry. In fact, one of the executives of CPRIT was indicted in the PIU investigation for awarding an $11 million dollar grant to a company without the proposal undergoing any type of review. 

As documented by the Cancer Letter, the scientific reviewers at CRPIT quit because of perceptions that the scientific review process was being manipulated, possibly for private gain,

The scientists submitted blistering letters explaining their decisions to leave.
'This past spring, the peer review system of CPRIT was dishonored by actions of CPRIT’s  administration when a set of grants were delayed in funding because of suspicion of favoritism,' writes Phillip Sharp, chair of the council. 'Further, a proposal based on science similar to that previously reviewed by the CPRIT council was selected for funding using other criteria. These events ultimately led to the resignation of Dr. Gilman. The same events motivate my decision to resign now.'
Both Gilman and Sharp are Nobel laureates.
The walkout—and, perhaps more so, the letters—send a powerful signal that CPRIT is now outside mainstream cancer science. The controversy—and the instance of 'favoritism' alleged by Sharp—began when the state agency funded an $18 million project spearheaded by Lynda Chin, an MD Anderson scientist and the wife of that institution’s president.

Also see stories in the Nature news blog, and in the Science news blog.  Similar connections to the Public Integrity Unit's response to the CRPIT scandal and its indictment of a CPRIT official appeared in the Texas Observer.

In addition, the New Republic published an article suggesting the involvement of Mr Perry and his administration in other cases of alleged health care corruption.  These included trying to use state government to mandate a vaccine made by a company for who his former chief of staff was a lobbyist,

His attempt to mandate that Texas girls receive a vaccine for HPV, seemingly at odds with Perry’s social conservatism, looked more explicable when one considered that his former chief of staff was lobbying for Merck, the vaccine’s manufacturer. And yes, Merck contributed $30,000 to Perry over his first decade as governor.  

Also, he put appointed to the state board of health top employees of a medical supply company owned by a big campaign contributor, and in which Mr Perry himself also invested, 

Perry expressed his gratitude to James Leininger, a staunch conservative whose last-minute loan to Perry helped him narrowly win his 1998 race for lieutenant governor and who gave him $239,000 more over the next decade, by appointing former top employees of Leininger’s hospital-bed companyin which Perry’s personal investment during the ’90s resulted in a $38,000 gainto the Texas Board of Health,...

Finally, the state Emerging Technology Fund gave considerable money to another friend  of and big campaign donor to Mr Perry,

A year earlier, the A&M system had entered into an agreement to develop vaccines with a therapeutics manufacturing firm called Introgen; this put the firm in a position to benefit from the new center. Introgen’s founder, David Nance, is a close friend of Perry’s. He contributed $100,000 to Perry over the decade, he had previously served on the advisory committee of the tech fund awarding the $50 million, and Perry’s son, Griffin, owned Introgen stock between 2001 and 2004.

Introgen had its main drug rejected by the FDA and declared bankruptcy shortly before the $50 million award, but Nance continued to do well by the state. In 2010, the tech fund awarded $4.5 million to his next venture, Convergen, even after a review panel rejected the application. The fund paid Nance’s daughter $70,000 for promotional work, and several fund employees went to work with Nance. Perry also provided $1.9 million in federal funds to a separate Nance venture, Innovate Texas, founded in 2008 as a sort of clearinghouse for Texas tech firms. The outfit paid Nance a six-figure salary. It is now defunct.

Corruption as defined by Transparency International is abuse of entrusted power for private gain.  Thus TI does not limit the term to cases involving politicians or government.  But surely the indictment of Governor Perry raises multiple questions about political and government corruption by this definition, and this corruption involving health care. The definition used by TI is ethical, not legal, and it is impossible to predict whether Governor Perry will be convicted.

Still, while Texas Governor Rick Perry's indictment was big news, and fodder for a lot of discussion about politicization of the criminal justice system, the multiple issues the case raises about possible health care corruption have been ignored by most major news outlets, and no one so far has labeled the case as having anything to do with "health care corruption," or words to that effect.

Former Governor Robert F McDonnell (Republican - Virginia) on Trial for Bribery and Corruption

Meanwhile, the press has been fascinated with testimony in the bribery and corruption trial of former Virginia Governor Robert McDonnell.  In 2013, the Washington Post published a long investigative report about how the Governor and his wife seemed to be promoting a dietary supplement called Anatabloc as an anti-inflammatory agent while accepting various favors from the CEO of the company that made it.  The background on the company is

[Johnnie R] Williams’s company, Star Scientific, was introducing a dietary supplement called Anatabloc, whose key ingredient is found in tobacco and other plants.

Anatabloc was crucial to the future of the company, which has been losing money for years. But the science behind the product — an anti-inflammatory the company hopes might be helpful to people with such ailments as Alzheimer’s and multiple sclerosis — was unproven.

The article described how Mr Williams paid $15,000 for the food at the Governor's daughter's wedding, and provided "rides on Williams' corporate jet, personal gifts for the first family...."   In fact,

 Over eight months during the 2009 gubernatorial election, Star Scientific donated more than $28,500 worth of air travel to McDonnell’s campaign. That commitment increased after McDonnell took office; Star reported donating nearly $80,000 in flights to Opportunity Virginia, the governor’s PAC.

Apparently in return,

Three days before her daughter’s June wedding, Maureen McDonnell flew to Florida, where she spoke at a seminar for scientists and investors interested in anatabine, the key chemical in Anatabloc, according to people who attended the conference.

The governor’s wife told the group that she supported the product and touted the pill, which is not regulated by the Food and Drug Administration, as a way to lower health-care costs in Virginia, the attendees said.

About three months after the wedding, the McDonnells and Star Scientific were together again, this time at the governor’s mansion for the official launch party for Anatabloc.

Although much of the interaction appeared to be between CEO Williams and Mr McDonnell's wife, the Post reported later in 2013,

A prominent political donor purchased a Rolex watch for Virginia Gov. Robert F. McDonnell, according to two people with knowledge of the gift, and the governor did not disclose it in his annual financial filings.

The $6,500 luxury watch was provided by wealthy businessman Jonnie R. Williams Sr., the people said. He is the chief executive of dietary supplement manufacturer Star Scientific

 Also, now that the trial is ongoing, there was sworn testimony that Governor McDonnell seemed to be helping to market Anatabloc, as per Reuters,

Virginia Governor Robert McDonnell gave a personal pitch to a state healthcare official for the dietary supplement at the heart of the former governor’s trial on corruption and bribery charges, the official testified on Monday.

Sara Wilson, director of the Virginia Department of Human Resource Management, said McDonnell pulled out a bottle of the product, Anatabloc, at a meeting she and her boss had with him in March 2012 to discuss healthcare.

McDonnell, a Republican, 'said how much it had helped him and his wife,' Wilson said under prosecution questioning on the 11th day of the federal trial.

There was also testimony that Mrs McDonnell tried to market the supplement to 2012 Republican presidential candidate Mitt Romney, as stated in a Washington Post article,

 After Virginia Gov. Robert F. McDonnell (R) endorsed Mitt Romney for president in 2012, McDonnell’s wife sought out the candidate to promote the dietary supplement now at the heart of the former first couple’s corruption trial, a onetime aide testified Monday.
Maureen McDonnell and then-Star Scientific chief executive Jonnie R. Williams Sr. showed up together at a news media session in South Carolina hoping to pitch Anatabloc to the prominent Republican, said Phil Cox, Robert McDonnell’s chief political adviser at the time.

Cox, also executive director of the Republican Governors Association, said that he put a stop to that plan but that Maureen McDonnell went on to talk up the supplement to Romney’s wife on a campaign bus. He said she told Ann Romney that the anti-­inflammatory supplement, Anatabloc, could 'potentially cure MS.'

Now this case is clearly all about allegations of health care corruption.  The allegations are that the CEO of a health supplement company provided extensive favors to a politician and his wife, who then made several attempts to market one of his products as treating and possibly curing disease.  Yet while these allegations are pretty clear, no one so far has called this a case of possible health care corruption.

By the way, in the last few weeks I also found relatively obscure mentions of two other cases involving allegations of health care corruption.  One was a case in which an Ohio Indiana state representative took actions on behalf of a health care real estate investment trust that he, his family members own in part, and whose board includes one major political donor (see the AP story via the Providence Journal).  The other was a case in which the West Virginia Attorney General had inherited a case from the former office holder involving a drug and medical supply company for which his wife is a lobbyist (see the Charleston Gazette story). 


As we have said before, when health care corruption is actually discussed in polite circles, including the scholarly literature about medicine and health care, the discussion usually refers to corruption elsewhere.  In particular, in developed countries, discussion of health care corruption usually focuses on less developed countries. 

Now we see that when the issue clearly is the possibility of health care corruption, even the news media will avoid using such a term.  Articles may describe what amount to health care corruption.  They may refer to it as corruption.  But they will not pair that term with health care (or medicine, or anything similar).  The subject of health care corruption remains taboo.  As long as we do not discuss it, some can preserve the illusion that it does not exist.  Thus the anechoic effect continues.

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

ADDENDUM (24 August, 2014) - the state legislator referred to above in the story about the health care REIT was actually from Indiana, not Ohio.  This was corrected above. 

ADDENDUM (24 August, 2014) - this post was re-posted on the Naked Capitalism blog.  Thanks to a comment on that to alert me to the error noted above.

Tuesday, August 19, 2014

Yet another health IT "glitch", that warm, fuzzy euphemism for life-threatening malfunctions: Internet outage left doctors without records for hours

Up to 112,000, in fact.

Nobody seemed to be listening when I and other "Health IT iconoclasts" warned years ago of issues like this regarding the blind-faith abandonment of paper and lack of truly robust local computing redundancy. When you're a patient, especially one in extremis, you do NOT want this to happen:

Internet outage left doctors without records for hours
Huffington Post

For several hours last week, doctors at PIM Associates, a primary care practice in Philadelphia, couldn’t see patients' lab results or what medications they were taking.

Those digital records are stored in the cloud by a company called Practice Fusion, which makes software to help doctors track patients.

But Practice Fusion's service was disrupted over two days last week because its data center provider suffered an outage. That prevented many of the 112,000 health care providers who rely on the company's software from accessing patient records.

“If you’re in an office that's completely electronic and the system goes down, you're flying blind,” Kelly Gallagher, a medical assistant at PIM Associates, told HuffPost. “It could be potentially dangerous.”

Potentially?  I'd say dangerous, period.

The episode offered an example of the potential drawbacks of electronic health records. It also highlighted how technology glitches can have serious human consequences. In this case, some out-of-date Internet equipment created confusion for many doctors.

Injured or dead patients really don't care.   They just want their records available.  Paper seems not to suffer mass outages...

... the ability to view electronic health records online depends on the reliability of technology companies -- which can experience glitches and outages. Last August, an electronic health record system made by Epic Systems went dark for a day, preventing nurses and staff at clinics in Northern California from accessing patient information. Last March, an outage involving a digital health record system in Boulder, Colorado, made by Meditech prevented some people from scheduling surgeries, getting test results or making appointments, according to the Boulder Daily Camera.

I covered those stories on this blog, and many others accessible under the query link

Health care providers face similar risks as other industries that store data in the cloud, but the stakes for doctors are often higher. One New York doctor who uses Practice Fusion's software said the outage could have been "a disaster if you’re dealing with life and death situations."

 I think the stakes are the highest for the patients.

The doctor requested that his name not be used because he said he worried that Practice Fusion might further disrupt his service. “My whole practice is in their hands,” he added.

Physicians are now beholden to and supplicated to IT companies.   That is not a pleasant thought.

Practice Fusion said the outage affected about one-third of its users, but didn't compromise data security. The outage "was out of our and our data center partner’s control," a company spokesperson told HuffPost.

"We worked closely with our partner to minimize the outage’s impact to our broader user base,” the spokesperson said. “We are monitoring the situation closely with our data center partner to address any other issues that may arise.”

I urge anyone reading this, if they know of injuries that resulted, to contact me.  I will pass the information along to plaintiff trial lawyers.

Practice Fusion attributed the outage to what experts are calling a rare Internet "brownout." Internet traffic is carried by a series of routers and switches, but the Web is now becoming too big and complicated for some of the old equipment. Last week, for the first time, the number of pathways for carrying Internet traffic crossed the critical threshold of 512,000. Many old Internet routers and switches can’t remember that many pathways, creating disruptions or outages across some parts of the Internet where that equipment needs to be replaced.

Again, injured and dead patients don't care, some of whom were in extremis when these outages occurred.  In medicine, there is no room for miscalculation and excuses.  My message to IT companies is if you can't provide reliable service, for whatever reason, then get the hell out of the medical clinic.

... Jim Cowie, chief scientist at Dyn, a company that tracks network management, said such disruptions will only continue in the coming months as the Internet keeps growing and its aging equipment is not replaced.

“We’re going to see more of these small, localized outages wherever there are vulnerable pieces of equipment,” Cowie said.

Well, then, perhaps paper is needed.

... In a blog post, the company recommended that affected customers print out any patient records they need. 

They agree.

For doctors, some of whom have complained about converting to electronic records, the Internet outage last week gave them justification for still keeping old-fashioned paper records.

“Sobering not to have had access to my practice for the last two days. Thank god for paper charts,” Meenakshi Budhraja, a gastroenterologist in Little Rock, Arkansas, tweeted.

Health IT extremists who believe in the abolishment of paper need to heed case examples like this.

But they won't, and that's almost guaranteed, at least until a cybernetic Libby Zion case occurs.

-- SS

Merging Finance and Health Care Leadership - Robert Rubin Proteges Running DHHS, Spouse of Hedge Fund Magnate Running the FDA

Hidden between the lines of some not very prominent news stories were reminders of how close health care and financial leadership have become in these times of continuing economic unrest after the global financial collapse/ great recession.

After the events of 2008, it became more apparent that the dysfunction in academics and health care  paralleled that seen in finance.  One reason may have been the overlapping leadership of finance and health care.  For example, in 2008 we first posted about how Robert Rubin, who was then a Fellow of the Harvard Corporation, the top group responsible for the governance of that great academic and medical institution, bore responsibility for the global financial collapse/ great recession.  Mr Rubin as Treasury Secretary was a proponent of financial deregulation in the Clinton administration.  Later, he became a top leader of Citigroup, whose near collapse helped usher in the crisis of 2008 (look at our 2008 post here and our 2010 post here.  Rubin just stepped down from his Harvard position this year,)  Since 2008 we found many other links among the leadership of Wall Street and of academic medicine and of big health care corporations.  These links, if anything, seem to be getting stronger. 

From the Department of Health and Human Services to Citigroup and then back to the Department of HHS

A tiny, four sentence Reuters story noted an apparently routine appointment to upper management at the US Department of Health and Human Services.  The first three sentences were:

U.S. Health Secretary Sylvia Burwell named Citigroup Inc executive Kevin Thurm as senior counselor of the U.S. Department of Health and Human Services (HHS), which is implementing the controversial U.S. Affordable Care Act.

Thurm has served in a number of roles at Citi since joining the bank in 2001, including senior adviser for compliance and regulatory affairs and deputy general counsel.

Before joining Citi, Thurm, a former Rhodes scholar, was the deputy secretary of the U.S. Department of Health and Human Services.

Why is that significant?  First, the near bankruptcy of the huge, badly led Citigroup was widely acknowledged to be a cause of the global financial collapse.  A 2011 New Yorker article on the role of the revolving door between Washington and Wall Street ("Revolver," by Gabriel Sherman) summarized the plight of Citigroup and the role of Robert Rubin in it,

Citigroup was the most high-profile of Wall Street’s basket cases, the definitionally too-big-to-fail institution. With massive exposure to the housing crash and abysmal risk management, the firm cratered, surviving as a virtual ward of the state after the government injected billions and took a 36 percent ownership position. Along with AIG and Fannie and Freddie, Citi came to be seen as a pariah institution, felled by management dysfunction and heedless greed in pursuit of profits. Complicating matters for Citi, the wounded bank found itself tangled in the populist vortex that swirled in the crash’s wake. On the left, there were calls that Citi should be outright nationalized, stripped down, and sold off for parts. Pandit was called before irate congressional-committee members to answer for Citi’s sins, an ignominious inquisition captured on live television. In January 2009, under pressure, Citi canceled an order for a new $50 million corporate jet.

There was plenty of blame to go around at Citi. Chuck Prince, a lawyer by training who succeeded Citi’s outsize former CEO Sandy Weill, had little grasp of the complex mortgage securities Citi’s traders were gambling on. As late as the summer of 2007, when the housing market was in free fall, Prince infamously told the Financial Times that 'as long as the music is playing, you’ve got to get up and dance.'

Bob Rubin himself pushed the bank to take on more risk in order to increase its profitability, a move that Citi’s dismal risk management was ill-equipped to handle. Pandit, whom Rubin had helped to recruit in 2007 just as the economy began to unravel, was tasked with cleaning up the mess when he became CEO in December of that year, and his early tenure had a deer-in-headlights character. Eventually, he realized that the asset class Citi lacked most was human capital, of the blue-chip variety.  

The article also summarized Rubin's role in the fervor of deregulation in service of market triumphalism that lead to the financial collapse,

In tapping Rubin to run Treasury, Clinton was sanctioning a revolution in the Democratic Party, one that fundamentally redefined the party’s relationship with Wall Street. Rubin, along with Alan Greenspan and Larry Summers, believed in an enlightened capitalism, which would spread prosperity widely. This enchantment with the beneficence of markets became the dominant view in Democratic Washington, hard to argue with when the economy was booming, as it was in the second half of the nineties. Rubin recognized that derivatives posed a risk but effectively blocked efforts to regulate them and pushed for the repeal of the Glass-Steagall Act, the Depression-era legislation that prevented commercial banks from merging with investment and insurance firms (the new law essentially legalized the $70 billion merger in 1998 of Citicorp and Travelers Group that created Citigroup).

Circling back to recent events, Once he got to Citigroup, Rubin assembled a team, partially from his old associates in the Clinton administration,

He also recruited several former Clinton aides to Citi, including former Health and Human Services deputy secretary Kevin Thurm....

So Kevin Thurm became something of a Robert Rubin protege at Citigroup. In fact, he rose to an important leadership position at the same time Citigroup was getting ready to become a "basket case," in part apparently because of the advice of Robert Rubin.  According to a 2013 version of Mr Thurm's official Citigroup bio,

Kevin L. Thurm is Senior Advisor for Compliance and Regulatory Affairs at Citigroup.

Previously, Thurm served as the Chief Compliance Officer of Citi. In that role, Thurm led Global Compliance which protects Citi by helping the Firm comply with applicable laws, regulations, and other standards of conduct, and is responsible for identifying, evaluating, mitigating and reporting on compliance and reputational risks and driving a strong culture of compliance and control. Since joining Citi in 2001, Thurm has also served as Deputy General Counsel of Citi, where he led the Corporate Legal group, overseeing a number of Company-wide Legal functions and providing support on day to day matters, including issues involving the Board, senior executives, and regulators; Chief  Administrative Officer of Consumer Banking North America, where he helped lead the business group and was responsible for a variety of functions including Community Relations, Compliance, Legal and Public Affairs; Director for Administration in the Corporate Center; Chief of Staff to the President and Chief Operating Officer of Citigroup; and as the Director of Consumer Planning in the Global  Consumer Group.

To recap, Mr Kevin Thurm was a top compliance executive of Citigroup while the company was imploding, and being a protege of Robert Rubin, an architect of the financial deregulation that led to the global financial collapse, and a leader of Citigroup responsible for the risky behavior of that company that led to its near collapse, which was another precipitant of the global financial collapse or great recession.  It is not obvious that these are great qualifications to be Senior Counselor at DHHS.

Moreover, Mr Thurm's responsibilities at DHHS would not be limited to compliance or financial leadership.  According to the official DHHS press release announcing his appointment,

As a Senior Counselor, Thurm will work closely with the Department’s senior staff on a wide range of cross-cutting strategic initiatives, key policy challenges, and engagement with external partners.

Yet, there is nothing in Mr Thurm's public record to indicate that he has any actual experience in health care, medicine, public health, or biologic science.  So it is not obvious why he should be entrusted with leading "cross-cutting strategic initiatives, [and] key policy challenges."

On the other hand, Mr Thurm might be simpatico with the new Secretary of DHHS, Ms Sylvia Burwell.  According to a Washington Post article at the time of the hearings about her nomination,

despite her Washington experience, ... is not well known in health-policy circles, and, during her confirmation hearings, she gave little concrete sense of the direction in which she will take the complex department she will inherit.
This seems to be a polite way to see she also has no actual experience in health care, medicine, public health, or biologic science.   Her official biography lists no such experience.  However, she was also a Robert Rubin associate, and perhaps protege, during the Clinton administration,

During the Clinton administration, Burwell held several economic roles — as staff director of the White House National Economic Council, as chief of staff under then-Treasury Secretary Robert Rubin,...

To summarize so far, the new Secretary of the Department of Health and Human Services, and now her new Senior Counselor, were both closely associated with Robert Rubin, who seems to bear major responsibility for the global financial collapse, and the new Senior Counselor worked with Rubin at Citigroup, whose near bankruptcy helped accelerate that collapse.  On the other hand, neither of these leaders has any experience in health care, public health, medicine, or biological science. 

Hedge Funds, Tax Avoidance, and the US Food and Drug Administration

This story is even less obvious.  A July, 2014, report in Bloomberg recounted plans for a Senate hearing on tax avoidance by huge, lucrative hedge funds.  The basics were,

A Renaissance Technologies LLC hedge fund’s investors probably avoided more than $6 billion in U.S. income taxes over 14 years through transactions with Barclays Plc and Deutsche Bank AG, a Senate committee said.

The hedge fund used contracts with the banks to establish the 'fiction' that it wasn’t the owner of thousands of stocks traded each day, said Senator Carl Levin, a Michigan Democrat and chairman of the Permanent Subcommittee on Investigations. The maneuver sought to transform profits from rapid trading into long-term capital gains taxed at a lower rate, he said.

An accompanying Bloomberg/ Businessweek story described testimony at a Senate hearing by the Renaissance co-Chief Executive Officer Peter F Brown,

Renaissance was founded by the mathematician James H. Simons, whose fortune is now estimated by Bloomberg Billionaires Index at about $15.5 billion.

Brown became co-CEO with Robert L. Mercer in 2010 after Simons retired and became non-executive chairman. Before joining the firm in 1993, he was a language-recognition specialist at International Business Machines Corp.

Mr Brown testified that the company was not so much trying to avoid taxes by the complex strategy but simply to make even more money.    But, per the New York Times, Senator Levin

focused on the lucrative nature of the transactions, most of which took place using Renaissance employees’ money. Between 1999 and 2010, the fund used basket options to produce profits of more than $30 billion, Mr. Levin said. Barclays and Deutsche Bank together made more than $1 billion in revenue.

Mr Brown's firm seems, unlike Citigroup, to have a record of financial success, and no one is accusing Mr Brown or his firm of being responsible for the global financial collapse.  However, Mr Brown is certainly a very rich Wall Street insider.  Also, as we noted in 2009, his firm clearly has had major involvement in health care investments.   And the current hearings emphasize concerns that his firm has been executing questionable tax avoidance strategies.

Mr Brown has one other very major tie to health care.  As  noted in 2009 on Health Care Renewal, but apparently only parenthetically by one recent news article, (again from Bloomberg, written before the Senate hearing),

Brown lives in Washington with his wife, Margaret Hamburg, the commissioner of the U.S. Food and Drug Administration. She was appointed by President Barack Obama in 2009.

In 2009, we noted that as a condition of Dr Hamburg's leadership of the US FDA, her husband, Mr Brown, would have to divest his shares of four Renaissance funds.  However, it is obvious that he remained at and became the co-CEO of Renaissance since. 

While the current leader of the FDA clearly has medical and health care experience, she is also steeped in the culture of finance and Wall Street.


Thus we have two recent stories of how top health care leadership positions in the US government are held by people with strong ties to the world of finance, but not always with any direct health care or public health experience.  Why was the wife of a hedge fund magnate the best person to run the FDA?  Why was a person not known in "health policy [or health care] circles" the best person to run the Department of Health and Human Services?  Why was a Robert Rubin protege from Citigroup the best person to be a Senior Counselor at DHHS?  Presumably there were many plausible candidates for these government positions.  Why was it not possible to find people to fill them who were not tied to Wall Street?  Why was it not possible to find people with profound understanding of and sympathy for the values of health care and public health to fill all of them?   

The leadership of health care and finance continue to merge.  This seems to be one broad explanation for why both fields continue to be notably dysfunctional.  While Wall Street has spread around plenty of money to influence public opinion and political leaders, many still remember how its foolish and greedy leadership nearly caused another great depression.  It is likely that the influence of Wall Street culture on the leadership of health care organizations, be they governmental, academic, other non-profit, or commercial, has fostered the continuing financialization of health care, with its focus on "shareholder value," that is, putting short-term revenue ahead of patients' and the public's health.

I strongly believe health care would be better served by leadership that puts patients' and the public's health first.  Occasionally people with such values may come from a finance or economics background.  However, in an era where many people continue to believe "greed is good," we at least ought to confirm that health care leaders really are about health care first, and money a distant second.

ADDENDUM (20 August, 2014) - This was re-posted on the Naked Capitalism blog.

Monday, August 18, 2014

Don't worry, your information's safe. Community Health Systems says data stolen in cyber attack: just a mere 4.5 million people affected this time.

I have often written about my observations of the generally unimpressive qualifications and capabilities of IT personnel, up to and including the CIO's, in healthcare settings (e.g., baccalaureate-level education in a doctoral and post-doctoral setting, usually no clinical or biomedical experience, no computer science background, no medical informatics background, and sometimes not even a formal management information systems education) compared to other sectors such as pharma and academia.  I've written about this as an impediment to health IT progress and to healthcare IT safety.

Now, I increasingly believe the healthcare IT backwater is becoming a downright societal threat, for another reason.  Yet another in my "don't worry, your information's safe" series (

Community Health Systems says data stolen in cyber attack
Published August 18, 2014

U.S. hospital operator Community Health Systems Inc said on Monday personal data, including patient names and addresses, of about 4.5 million people were stolen by hackers from its computer network, likely in April and June.

The company said the data, considered protected under the Health Insurance Portability and Accountability Act, included patient names, addresses, birth dates, telephone numbers and Social Security numbers. It did not include patient credit card or medical information, Community Health Systems said in a regulatory filing.

It said the security breach had affected about 4.5 million people who were referred for or received services from doctors affiliated with the hospital group in the last five years.

If you're a department store, or a McDonald's, such breaches might be more understandable.  When you're a life-critical industry such as healthcare, and under HIPAA regulations regarding privacy and confidentiality, these incidents are increasingly unforgivable.

The FBI warned healthcare providers in April that their cybersecurity systems were lax compared to other sectors, making them vulnerable to hackers looking for details that could be used to access bank accounts or obtain prescriptions, Reuters previously reported.

Again, inexcusable.  Health IT amateurs (and, of course, the Management Recruiting Firms that hospital retain to find them, who are equally clueless about what it takes to be a health IT expert) don't just endanger your health; they endanger your economic well being, even when you're not ill.
The company said it and its security contractor, FireEye Inc unit Mandiant, believed the attackers originated from China. They did not provide further information about why they believed this was the case. They said they used malware and other technology to copy and transfer this data and information from its system.

Just great.

Community Health, which is one of the largest hospital operators in the country with 206 hospitals in 29 states, said it was working with federal law enforcement authorities in connection with their investigation into the attack. It said federal authorities said these attacks are typically aimed at gathering intellectual property, such as medical device and equipment development data.

Oh. that's reassuring - our data's being stolen by honest thieves who would never, EVER think of selling the data to dishonest thieves who steal people's identities, and then money...

It said that prior to filing the regulatory document, it had eradicated the malware from its systems and finalized the implementation of remediation efforts. It is notifying patients and regulatory agencies as required by law, it said.

It also said it is insured against such losses and does not at this time expect a material adverse effect on financial results.

Oh, that's very nice.  Millions of people potentially put at risk, but insurance will cover for incompetence.

Perhaps the insurers should more critically evaluate the quality of work of the people they're insuring.

-- SS

Wednesday, August 13, 2014

Desperate, Vulnerable Research Subjects, Cost-Cutting Contract Research Organizations and Threats to the Integrity of Clinical Research

Introduction - Clinical Research Done by Contract Research Organizations

Dr Carl Elliott seems to be one of the few people willing to investigate how modern medical research may threaten vulnerable research subjects.  His book, White Coat, Black Hat, opened with a chapter on vulnerable "guinea pigs," people willing to be clinical research subjects for money.  Such people may be desperate for money, and further may be homeless, and have psychiatric problems, including psychosis or drug or alcohol problems.  Dr Elliott just wrote another important article on the plight of vulnerable research subjects. As Dr Elliott wrote,

Most people think of pharmaceutical research as a highly technical activity that takes place in world-class medical centers. The reality is somewhat different.

This is apparent in a grainy video that I watched a few years ago. It had apparently been recorded on a cell phone, and the camerawork started off wobbly. A tanned man wearing sunglasses and a necklace appeared and was introduced as Dr. Johnny Edrozo, a psychiatric researcher. His shirt was unbuttoned partway down his chest. 'The latest stimulant coming out of the market is Vyvanse, which is a Dexedrine preparation,' Edrozo told the interviewer, pausing occasionally to chew gum. For reasons that were not explained, the interview took place in a parked car.

This was my introduction to South Coast Clinical Trials, a chain of private research sites in Southern California that specializes in testing psychiatric drugs. Pharmaceutical companies now typically outsource clinical studies to contract research organizations like South Coast, which run trials faster and at lower cost than universities do. Their job is simply to follow the instructions of their sponsors.

This formula is working: The contract research industry has grown steadily since the early 1990s and may now generate over $100 billion in annual income, according to the Tufts Center for the Study of Drug Development. At the top of the heap are corporations like Quintiles, which has 28,000 employees and operates in about 100 countries. At the other end are private physicians and small companies like South Coast, which are often based in strip malls or suburban office parks.
We first wrote about contract research organizations in 2005 based on a Bloomberg report that noted research conducted in a crumbling physical plant, on poor, often drug-addicted patients who "barely read" informed consent documents, bad record keeping, supervision by poorly trained or unlicensed clinicians.  It appears the problems have only gotten worse.

Vulnerable, Desperate Research Subjects

Dr Elliott made it clear that many of the research subjects enrolled by companies like South Coast are vulnerable. He noted that the companies purposefully recruit subjects from rooming houses and homeless shelters. Here is a description of the sorts of pitches they use.

'I was tired, I was hungry, and half an hour earlier the police had treated us like crap,' Burns said. 'And this woman is saying, ‘Imagine, in 40 days you’ll have $4,000!The recruiter made testing drugs sound like a vacation in a five-star hotel, Burns said. 'It’s like a resort selling time shares. They talk about all the benefits first, and it sounds great, but then you start to ask: What do I have to do?' 

Dr Elliott emphasized that such research studies can endanger subjects, but that poor, homeless, drug or alcohol addicted, or psychotic people offered thousands of dollars for participation are not likely to worry about the danger. He also suggested that monitoring and protection of such subjects may not be the most intense.

Obviously, this may be very bad for such research subjects. This is why it has long been considered unethical to recruit such vulnerable subjects in such dubious circumstances. But in this day and age of "greed is good," it may be all to easy to dismiss the risks as contingent on life styles that were already full of "bad choices."

Threats to the Validity of Clinical Research

Recruiting vulnerable patients, especially the poor, homeless, drug or alcohol addicted, or psychotic, into clinical research has dangers for patients not in those trials, and for health care professionals.

Remember that the principles of evidence-based medicine suggest that health care professionals should base decisions for patients on the best clinical research evidence. The quality of these decisions determine the quality of patient care and strongly affect patient outcomes. .

Yet if an increasing proportion of clinical research is being done on vulnerable, that is poor, homeless, drug or alcohol addicted or psychotic people, the validity of that research may be badly compromised.

Consider this narrative from Dr Elliott's article,

I walked round the corner to a shelter, where I talked to an elderly white man. 'I’d say the majority of guys here take advantage of that,' he told me, 'because they get a lot of money and they’re broke as hell.'

So, for example, to qualify for a study of drug addiction treatment,

I mentioned a recruitment flyer I’d seen outside the shelter asking for subjects with 'cocaine dependency.' George nodded. He told me that a lot of people start taking drugs just so they can qualify for those studies.

'You take that s*** two days before to get it into your blood.' He mentioned that he had recently screened for a trial at a research site running addiction studies. 'There were people in the waiting room high as a kite,' he said. 'They were incoherent.'


The main ethical issues here, of course, are the competence and judgment of the prospective subjects. 'When you say ‘money,’ everything else goes out the window,' said Hanif Jackson, a former program supervisor at the Ridge Avenue shelter in Philadelphia, which recently closed down. I heard the same thing from Harvey Bass, a chaplain who has worked at the Sunday Breakfast Rescue Mission shelter for 15 years. He said drug study recruiters often park outside the shelter and approach residents on the sidewalk. Although Bass didn’t think it was his place to warn residents away from the studies, it was clear that he was not exactly a fan. 'These guys have no job, no home, and a habit, he said. 'You have people at their lowest state, and they’ll say yes to anything.' 

As someone who has reviewed innumerable reports of clinical trials and other clinical research studies for journal clubs, journals, and grant review committees, I know that on paper clinical research studies have elaborate and specific criteria to include and exclude patients, and require patients to undergo detailed study protocols. However, can one really expect patients who are so desperate for money that "they'll say yes to anything" to admit to conditions which would exclude them from a trial? Can one really expect that they will faithfully adhere to research protocols that might require, for example, complete abstinence from alcohol? Can one really expect accurate answers on surveys meant to define their clinical outcomes?  There are numerous threats to the validity of trails conducted on poor, vulnerable, often psychotic or drug or alcohol addicted patients.

Cost-Cutting CROs and Shoddy Research

However, it is unlikely that contract research organizations who recruit such patients and run such studies are really up to implementing these complex, detailed, exacting protocols. Consider this narrative by Dr Elliott,

I visited a research unit at Lourdes Medical Center of Burlington County in Willingboro, New Jersey. The unit was operated by CRI Worldwide, the same company that Burns told me he had spoken with. (The company is now known as CRI Lifetree.) Its focus was on inpatient Phase I trials, which often involve gradually increasing the dose of a drug until subjects begin to feel toxic side effects. Some Phase I studies also require painful or unpleasant invasive procedures. For these reasons, the payment to subjects in Phase I trials is usually much higher than it would be for an outpatient study.

My first thought about the CRI unit: Its appearance did not exactly suggest clinical excellence. Most of the furniture looked as if it had been rescued from a Salvation Army store. Homemade notices with titles such as 'Smoke breaks' and 'Money requests' hung on the walls. No studies seemed to be going on, but a few people were wandering around or watching television, presumably waiting to be screened or assessed.. 

It was in this unit that a patient named Walter Jorden died. Dr Elliott narrated the events that took place before his death. Note that,

according to Jeffrey Fierstein, a cardiologist retained as an expert witness by Jorden’s family, the physicians involved deviated from expected standards of care by not more seriously considering the possibility that Jorden was having a heart attack. In Fierstein’s opinion, they not only ignored classic signs of a heart attack, but also neglected to perform an EKG and missed the opportunity to give Jorden the clot-busting drugs that might have saved his life. As Fierstein points out, 'My understanding is that it [the emergency department] was around the corner; it was right there.'

In addition, a companion article by Peter Aldhous  suggested that CROs and the drug, device and biotechnology companies that employ them are willing to allow physicians with questionable backgrounds to run clinical research. He found that a not insignificant minority of physicians listed as in charge of trials in a US Food and Drug Administration (FDA) database had records of dubious conduct, including various sanctions by state medical boards. He focused on one physician who had run trials since the 1980s, starting with Lovelace Scientific Resources. His record included one-year probation for drug issues, a diagnostic omission described by the medical board as "grossly negligent," then a three-year probation for that and other clinical care problems, then a license suspension, then finally license cancellation. Throughout all the years involved he continued to run clinical trials. In general, Mr Aldhous wrote,

My trawl netted dozens of doctors selected to work on clinical trials over the past five years who had previously been censured by state medical boards. Thousands of doctors are hired each year to test experimental drugs, making this a small minority. But most doctors have clean records, so companies should have few problems finding recruits without red flags against their name. 

His conclusion was,

After spending months in the world of clinical trials, I’m left with an impression of a system that has evolved beyond the FDA’s ability to manage it. I’ve also been struck by the profound disconnect between the disciplinary system that governs everyday medicine, and the separate regulations meant to protect clinical trial volunteers.

Speed and efficiency seem to be what matters to industry, and at times these factors appear to trump concerns about the doctors who run trials. 'The whole thing is profit driven,' says Michael Carome at Public Citizen, a consumer advocacy organization in Washington, D.C. 'You can see where corners might be cut, looking the other way when there might be concerns about an investigator.'

Some experts argue that the FDA’s entire rulebook for clinical trials, with its talk of things like 'institutional' review boards, reflects the academic past of clinical research—not today’s industrial juggernaut of for-profit clinical trials firms and for-hire review boards, which oversee a workforce of doctors drawn from regular medical practice. 'They are regulations for a world that doesn’t exist anymore,' says Elizabeth Woeckner, president of Citizens for Responsible Care and Research, which campaigns for the safety of medical research volunteers.
Again, this is similar to results of previous journalistic investigations of contract research organizations (some examples are here), going back to the Bloomberg article we discussed in 2005, and what Dr Elliott wrote in White Coat, Black Hat.  Thus we need to be extremely skeptical of the validity of clinical research implemented by contract research organizations, especially when the research subjects are vulnerable. 

Summary - Another Set of Threats to the Integrity of the Clinical Research Base

So given the push to do research rapidly at the lowest cost, the lack of supervision and regulation by the FDA, the hiring of physicians with problematic backgrounds, the willingness to take vulnerable patients desperately motivated by money, can we trust that the nice, clean, detailed descriptions of clinical trials implemented by contract research organizations presented in research articles and trial registries have anything to do with the reality of what went on? If not, what then should we make of the validity of the results of such trials?

This is compounded by our inability to tell who actually implemented any given trial.  While articles in most major clinical journals will list what companies sponsored trials, and whether the official paper authors had financial relationships with these companies, the articles do not describe who actually implemented the trials, or disclose whether contract research organizations were involved.

So the first obvious reform would be to require trial reports to disclose involvement of contract research organizations, and perhaps to list the personnel who actually were most responsible for implementing studies in addition to listed authors.

We already have discussed repeatedly how clinical research sponsored by organizations with interests in the outcomes favoring their products and service may be manipulated, and may be suppressed if even such manipulation fails to produce desired results.  We usually have assumed, however, that the published trial reports are generally accurate in their descriptions of trial implementation.  If they are not accurate, particularly because vulnerable subjects may say or do anything to stay in trials that pay them, and sometimes because of poorly qualified or impaired physicians running trials, this adds another layer of questions about the validity of commercially sponsored research.  This is yet another reason to ask whether we need to take research on human subjects meant to evaluate commercial products or services out of the hands of the companies that make those products and provide those services.