Despite Public Protestations of of Bipartisanship, Many CEOs of the Largest US Health Care Corporations Appear Partisan, and Mainly Republican

Leaders of big health care organizations clearly are interested in influencing public policy and government regulation in ways that favor their organizations, and often indirectly themselves. On the other hand, big health care organizations have traditionally been non-partisan.  While their leaders certainly may have political views, they used to keep them very quiet.

In this sense, the leaders of big health care organizations have seemed similar to the leaders of large businesses in general.  For example, a recent New York Times article noted,

The Business Roundtable, the top lobbying organization for industry in Washington, is often characterized as a nonpartisan or bipartisan organization.

Yet,  recently, especially in the US, we have seen evidence that some health care organizations have become partisan, albeit stealthily, throwing their support behind political candidates, parties and organizations that may support their policy and regulatory goals, even while they may also support positions that go against the health care and public health mission, or even may be frankly anti-democratic.  In the US, organizations and their leaders now may support partisan aims with dark money, funds whose origin is disguised.

The recent NYT article noted above summarized some newly released research showing how corporate leaders in general have become more partisan, and more partisan in a particular sense. 

Based on Disclosed Personal Contributions, Since 2000 Most Top Corporate Executives Became Very Republican

The NYT article summarized a study of disclosed personal political contributions made by S&P 1500 executives from 2000 to 2017.

To be counted a supporter of Republicans or Democrats, executives had to direct at least two-thirds of their donations to candidates affiliated with one party.

They only released aggregate data, not data on particular industries, much less particular companies.  The main findings were:

More than a quarter of the executives studied gave enough to both parties to be classified as 'neutral.'

But,

just 18.4 percent of the executives studied were designated as Democrats. The clear majority — 57.7 percent — demonstrated their affiliation through donations to the Republican Party. Indeed, 75 percent of donations from the median chief executive were directed to Republicans.

That strongly contrasts with the notion that big business and its leaders are non-partisan, although perhaps eager to be popular with people, particularly customers and politicians, with all sorts of political affiliations.

The study disclosed no information on any particular executive or company other than Tim Cook of Apple, one of the minority of apparently studiously bipartisan corporate leaders.


However, another article from October, 2018 in MarketWatch provided some particular information on how partisan leaders of health care corporations have become.


Many CEOs of Big Health Care Corporations are Very Republican

The MarketWatch article, which reported the journalists' own study, also opened with the notion that corporate executives have been known for being non- or bi-partisan,

Company executives often steer clear of any appearance of partisanship, in large part because they don’t want to alienate customers and investors who back the other side.

Their study focused on disclosed political contributions from CEOs of S&P 500 companies, the largest publicly traded companies in the US, from 2017 through August 31, 2018, that is, those relevant to the most recent US national election, the 2018 mid-term election.

They also found that many executives were heavily partisan based on their personal political donations.

MarketWatch’s analysis found that among the CEOs who did contribute to party-affiliated committees, nearly all leaned heavily blue or red, with few donating equally to the two main parties. More than 84% of the 261 CEOs who contributed to partisan committees donated 70% or more of their money to one party or the other. And about 100 of the CEOs spent above the median amount and contributed 75% of their money to one party.

Overall,

The chief executives contributed a total of $7.4 million to Republican groups, almost triple the $2.6 million contributed to Democratic committees.

The article presented a graphic showing the CEOs who were most partisan and contributed the most money.  It included several CEOs of big health care corporations.

The article included a database of CEOs ranked by amount contributed.  The amounts and proportions spent by the health care CEOs among the top 100 spenders were:

9. Timothy Wentworth, Express Scripts Holding: total contributions: $262,594, to Democrats, $10,000; to Republicans, $244,722

10. Robert A Bradway, Amgen: $235,800; D $41,000; R $194,800

13. Kenneth C Frazier, Merck: $196,961; D $48,500; R $140,000

14. Mark J Alles, Celgene; $195,682; D $15,000; R $173,600

16 Ian C Read, Pfizer; $181,833; D $25,800; R $145,400

23. David A Ricks, Eli Lilly; $128,020; D $23,300; R $89,500

25. Leonard S Schliefer, Regeneron Pharmaceuticals; $125,000; D $120,000; R $ 0

28. Marc N Casper, Thermo Scientific; $118,100; D $2,700; R $105,400

29. Brenton L Saunders, Allergan; $115,100; D $ 0; R $105,100

32 Michael F Nieidorff, Centene; $105,994; D $60,794; R $35,200

38 Miles D White, Abbott Laboratories; $90,400; D $ 0; R $90,400

39. Kent J Thiry, DaVita; $86,500; D $ 29,300; R $42,200

57. Clifford W Illig, Cerner; $47,000; D $0; R $42,100

70. Steven H Collis, Amerisource Bergen; $39,784; D $2,800; R $28, 100

85. Dow R Wilson, Varian Medical Systems; $30,800; D $0; R $15,800

88. Giovanni Caforio MD, Bristol-Myers Squib; $30,184; D $5,000 ; R $17,300

90. John F Milligan, Gilead Sciences; $30,000; D $0; R $20,000

92. Larry J Merlo, CVS;  $28, 733; D $0; R $15,400

93. Vincent A Forlenz, Becton-Dickinson; $28,700; D $11,500; R $0

100. George S Barrett, Cardinal Health; $27,168; D $13,900; R $5,000

So, there were 19 health care corporate CEOs among the top 100 of those giving disclosed political donations for the 2018 election.  Of those, 15 gave most of their donations to Republicans, 4 to Democrats.  Furthermore, note that many of the companies represented on the list have been Health Care Renewal "frequent fliers," often discussed because of problems with leadership, governance and/or ethics.  

Discussion

While publicly often non--partisan, it appears that the top leaders of the biggest US health care corporations (and other corporations) have become increasingly partisan, and and increasingly supporters of one US political party, the Republican.  This is important since, as the NYT article noted:

The opinions held by executives have always resonated beyond their own industries, but their importance is more pronounced today. Mr. Trump, for example, has not hesitated to equate economic policy with foreign policy.

Also, the authors of the research paper summarized by the article wrote:

Especially since the Supreme Court’s decision in Citizens United, which allowed corporations to make unlimited independent political expenditures, corporate political spending can substantially affect politics and policymaking

In particular,

These executives wield enormous influence over not just policy, but the inclinations of their own employees. One of the most fascinating revelations of the study was that it also looked at the conduct of the businesses themselves, and in the process discovered that disclosures of political donations were highly correlated with the political leaning of its chief executive.

Political contributions by public companies do not have to be disclosed to shareholders, although some of companies do it. So the researchers looked instead at the which companies disclosed the donations to shareholders. Using an index developed by the Center for Political Accountability, the professors found that there was'“a statistically significant association between having a Republican C.E.O. and a lower' disclosure score.

Also, in the era of Trump, the heavily Republican partisanship of top corporate CEOs seems at variance with how their corporations' claim to be socially responsible, and

given the outspoken positions a number of executives have taken in recent years on social issues like climate change, guns and immigration policies.

Furthermore, the heavily Republican partisanship of  CEOs of big health care corporations seems at particular variance with the health care missions espoused by these corporations. 

For example, in 2018 we discussed the case of CVS, which boasts a code of ethics including respecting the covenantal relationship between pharmacists and patients, promoting "the good of every patient," acting with "honesty and integrity," and serving "individual, community and social needs." It also has a social responsibility policy including "keeping the planet in balance," and making "quality health care more affordable, more accessible and more sustainable."  However, CVS was revealed to have been contributing to a "dark money" organization called America First Policies, ostensibly a "social welfare" charity, but actually an organization devoted to promoting the Trump agenda.  While CVS said its support for AFP was related to the organization's tax reform agenda, it also promoted various policies that seemed to contradict the CVS ethics and social responsibility policies.  In addition, the relationship between CVS and AFP only came to light after some AFP leaders were found to have made racist and pro-Nazi proclamations.  Whether CVS made is making contributions to other such groups was unknown.  At the time, we speculated whether the contributions to AFP reflected the self-interest of CVS leadership.

Now we find out that CVS CEO Larry Merlo gave $15,400 to Republicans in the run-up to the 2018 election, but nothing to Democrats.  This increases suspicion that CVS corporate political action is more about its CEO's ideology than its professed mission. 

This anecdote, coupled with recent findings that big health care corporations' policies about political activities are lax at best (look here), and the evidence above, should prompt concern about the political actions of other big health care corporations, and their intent. 

Thus not only is more investigation needed, at the very least, "public" corporations ought to fully disclose all donations made to outside groups with political agendas.  This should be demanded by at least the corporations' employees and shareholders, but also by patients, health care professionals, and the public at large.

Meanwhile we are left with the suspicion that top health care corporate management is increasingly merging with the current administration in one giant corporatist entity which is not in the interests of health care, much less government by the people, of the people, and for the people.

The Transparency International 2018 Corporate Political Engagement Index- Pharma Appears All Too Comfortable with the Revolving Door and Making Opaque Political Contributions

Introduction: Big Organizations, Government Policy and Regulation, and Politics

Leaders of big health care organizations clearly are interested in influencing public policy and government regulation in ways that favor their organizations, and often indirectly themselves.  We expect such leaders and organizations to make their policy preferences known.  However, increasingly we have found that they take shadowy routes to their policy goals.

We have frequently discussed how large health care organizations may use less than transparent methods to advocate for their policy and regulatory objectives.  Their public relations departments may fund patient advocacy organizations and medical societies that support these objectives, so-called third-party strategies.  They may fund distinguished professionals and academics as key opinion leaders for the same purposes.  Often they do this in systematic ways so that there efforts amount to stealth advocacy or stealth lobbying campaigns.

Even more concerning is organizational support of the revolving door.  Top organizational leaders may move into government policy and/or regulatory positions relevant to the organizations' goals.  Government policy and regulatory leaders may know that lucrative positions in these organizations are available when they leave government.  The revolving door is certainly a serious type of conflict of interest, and some deem it corrupt.

Big health care organizations have traditionally been non-partisan.  While their leaders certainly may have political views, they used to keep them very quiet.  Recently, especially in the US, we have seen evidence that some health care organizations have become partisan, albeit stealthily, throwing their support behind political candidates, parties and organizations that may support their policy and regulatory goals, even while they may also support positions that go against the health care and public health mission, or even may be frankly anti-democratic.  In the US, organizations and their leaders now may support partisan aims with dark money, funds whose origin is disguised. 

The Transparency International 2018 Corporate Political Engagement Index

A recent report by Transparency International was made public, with little fanfare, in late 2018 that was meant to throw a little light on corporate "engagement" in politics.  It included some interesting information on a few multinartional pharmaceutical companies.

The report introduction stated:

For companies, corporate political engagement carries clear risks of bribery and corruption, conflicts of interest and reputational damage. Any interactions with the political process need careful management to avoid falling foul of anti-bribery and corruption legislation. The risks are increased by the fact that companies are vulnerable to mistakes or abuse by employees and third parties acting
on their behalf such as agents, advisers and consultant lobbyists.

Methods

The study on which the report was based concentrated on 104 large corporations that are active in the UK.  These included the following large multinational pharmaceutical companies:

- AstraZeneca
- Eisai
- GlaxoSmithKline
- Johnson & Johnson
- Novartis
- Pfizer
- Roche
- Shire

The study was based on 20 questions divided in 5 areas.

Three areas were basically about transparency of  and accountablity for political activities.  These included
- Control Environment, including having transparent policies, methods for ensuring their enforcement, and oversight of same by the board of directors
- Responsible Lobbying, including adequate policies and transparency
- Transparency in Reporting

One was about the Revolving Door, and included whether the company has a "cooling-off period" for people going through the revolving door back to the company.  However, it did not directly mention people going directly from leadership positions within the company to government.

One was about Political Contributions, and included whether the company bans them (perhaps the strongest question of the group.)

Each question in each area was scored from 2 for meeting expectations to 0 for failing to do so.  Scores were normalized on a scale going from 100 (best) to 0 (worst), and and summarized in "bands" from A (83.3 - 100) down to F (0 - 16.6)

Results

For the three areas regarding transparency and accountablity the results per company were:

Control Environment
 
- AstraZeneca            C
- Eisai                        C
- GlaxoSmithKline        A
- Johnson & Johnson    C
- Novartis                   F
- Pfizer                       C
- Roche                      E
- Shire                        C

Responsible Lobbying

- AstraZeneca            E
- Eisai                      F
- GlaxoSmithKline        B
- Johnson & Johnson    E
- Novartis                   E
- Pfizer                       F
- Roche                      C
- Shire                        E



Transparency in Reporting

- AstraZeneca            C
- Eisai                        C
- GlaxoSmithKline        A
- Johnson & Johnson    C
- Novartis                   C
- Pfizer                       C
- Roche                      C
- Shire                        C


For the Revolving Door

- AstraZeneca            F
- Eisai                        F
- GlaxoSmithKline        A
- Johnson & Johnson    F
- Novartis                   D
- Pfizer                       F
- Roche                      E
- Shire                        F


For Political Contributions

- AstraZeneca            F
- Eisai                        F
- GlaxoSmithKline        B
- Johnson & Johnson    C
- Novartis                   F
- Pfizer                       E
- Roche                      E
- Shire                        E

Summary and Discussion

Note that the pharmaceutical companies did not do too badly on the measures of transparency and accountablity, but except for GSK did quite badly on minimizing the revolving door, and again with the partial exception of GSK did very badly on avoiding political contributions.

This suggests that at least some big multinational pharmaceutical corporations that do business in the UK, but also in the US and many other developed countries, have worrisome attitudes towards and likely practices affecting their use of political influence.

The Revolving Door

The majority of companies did not show any real concern about the problem of the revolving door.

In the US, this problem seems to be getting worse.  In particular under the Trump regime we see more instances of the  incoming revolving door, that is, people moving directly from corporate leadership positions to government policy and regulatory positions in which they could potentially make decisions affecting the corporations from which they came.  This is potentially a more serious problem than the outgoing door, yet it was not even discussed in the TI study.

We have repeatedly said,  most recently a few days ago, ...

The revolving door is a species of conflict of interest. Worse, some experts have suggested that the revolving door is in fact corruption.  As we noted here, the experts from the distinguished European anti-corruption group U4 wrote,

The literature makes clear that the revolving door process is a source of valuable political connections for private firms. But it generates corruption risks and has strong distortionary effects on the economy, especially when this power is concentrated within a few firms.

The ongoing parade of people transiting the revolving door from industry to the Trump regime once again suggests how the revolving door may enable certain of those with private vested interests to have disproportionate influence on how the government works.  The country is increasingly being run by a cozy group of insiders with ties to both government and industry. This has been termed crony capitalism. The latest cohort of revolving door transits suggests that regulatory capture is likely to become much worse in the near future.

Corporate Partisanship, Political Contributions, and Dark Money

Given the increasing evidence that large corporations have become partisan in the US, it is particularly worrisome that at least the pharmaceutical corporations in the TI study have not taken a clear stand against making direct political contributions, or even in favor of making such contributions transparent.

Note that the TI report included the directive "do not make political contributions" among its "principles for responsible political engagement," adding:

Corporate political contributions should not be made on behalf of the company other than in exceptional  circumstances where they provide general support for a genuine democratic process, with full transparency and full explanation.

On the other hand, as we said last year,...

 Health care corporations recent and current funding of dark money groups seems to openly conflict with the corporations' promises of social responsibility.  The slanting of these efforts towards one end of the political spectrum, one party, and now the current president suggest that these corporations may have partisan agendas.

Furthermore, the increasing knowledge of these corporate actions raises a big question: cui bono? who benefits?

It is obvious why a pharmaceutical company, for example, might want to defeat legislation that would lower its prices.

It is not obvious why it would want to consistenly support actions by one party, or by people at one end of the political spectrum, even if some such people seem "pro-business."  After all, for years big corporations and their executives openly gave money to both US parties and their candidates, apparently in the belief that this would at least allow more visibility for the corporations' priorities no matter who was in power.

Now, the most obvious theory is that the new practice of secret donations only in right-wing, Republican, and/or pro-Trump directions, which must be orchestrated by top corporate management, and which are not disclosed to employees or smaller corporate shareholders, are likely made to support the top managers' self interest more than the broad priorities of the corporations and their various constituencies.

Thus not only is more investigation needed, at the very least, "public" corporations ought to fully disclose all donations made to outside groups with political agendas.  This should be demanded by at least the corporations' employees and shareholders, but also by patients, health care professionals, and the public at large.

Meanwhile we are left with the suspicion that top health care corporate management is increasingly merging with the current administration in one giant corporatist entity which is not in the interests of health care, much less government by the people, of the people, and for the people.

For Whom the Door Revolves: Founder and Director of Multiple Biotechnology Companies Became Director of the NCI and Now Nominated to be Acting Commissioner of the FDA

Dr Scott Gottlieb, the first commissioner of the US Food and Drug Administration (FDA) appointed by President Trump, has announced his plans to depart.  At the time of his nomination, Dr Gottlieb's many conflicts of interest were well known (see this NY Times article, for example), as were his exceedingly friendly views of the pharmaceutical/ biotechnology industry (see this long ago post, for example).


President Trump's regime just announced a new acting commissioner, Dr Norman ("Ned") E Sharpless, another industry fan.


Founder and Director of Several Biotechnology Companies

G1 Therapeutics

As StatNews just reported, Sharpless "founded two biotech companies."  His fans cited as proof of the "breadth of his experience,"

the $105 million that G1 Therapeutics, a company Sharpless co-founded, raised in 2017 while developing the lung and breast cancer drug trilaciclib.

Apparently, his work in industry has made Dr Sharpless rich

According to public records, founding these companies may have paid off.  Sharpless reported selling more than 400,000 shares of G1 Therapeutics in October 2017 - which, at the time, were worth more than $9 million.

So far, I have seen no other recent reporting that goes into any detail about Dr Sharpless' connections to the pharmaceutical and biotechnology industry.  Nor did I see much reporting about these relationships from the time Dr Sharpless was appointed to head the National Cancer Institute in October, 2017, again by the Trump regime.

A little digging provided a bit more detail about his relationship to G1 Therapeutics.Crunchbase revealed that Dr Sharpless was a Co-Founder of G1 Therapeutics, a member of its Scientific Advisory Board, and a member of its board of directors.  A  press release from the UNC Lineberger Comprehensive Cancer Center did gush a bit about his ability to raise capital for G1 Therapeutics in May, 2017, a few months before he was appointed to head the NCI.

G1 Therapeutics, Inc., a clinical-stage oncology company in Research Triangle Park with ties to the University of North Carolina Lineberger Comprehensive Cancer Center, has raised approximately $108.6 million in an initial public offering of its stock. The company began trading on the NASDAQ Global Market under the ticker symbol 'GTHX' on May 17.

Furthermore,

Founded in 2008 with support from KickStart Venture Services, a UNC-Chapel Hill program that works to turn University research into new companies, G1 is developing novel therapeutics based on discoveries made by UNC Lineberger Director Norman E. Sharpless, MD, and Kwok-Kin Wong, MD, PhD, then at Dana-Farber Cancer Institute and now at the Perlmutter Cancer Center, NYU Langone Medical Center. The early research that led to the formation of G1 was supported by the University Cancer Research Fund.

'Congratulations to Dr. Sharpless and the entire G1 Therapeutics team for achieving this major milestone, making an impressive market debut and accelerating important advances in cancer therapies,' said Judith Cone, Vice Chancellor for Innovation, Entrepreneurship and Economic Development at UNC-Chapel Hill.

It was an advance in raising capital, although the eventual clinical value of the venture may not yet be clear.  Trilaciclib is apparently still under development and has not been yet subject to big randomized clinical trials.

Sapere Bio


StatNews also reported,

The second company that Sharpless-directed science helped spawn is Sapere Bio, also based in North Carolina

which is

developing a diagnostic text to measure a patient's 'molecular age.'

whatever that may be, and whatever use it may turn out to have, or not.


There is not much more information about Dr Sharpless' relationship with Sapere Bio.  In February, 2019, the WRAL Tech Wire stated,

Physician Norman 'Ned' Sharpless and Natalia Mitin, Ph.D., founded Sapere Bio in 2013. It was originally called HealthSpan Diagnostics, a reference to the period in your life when you’re healthy. The company grew out of the research of Sharpless, who at the time was director of the Lineberger Cancer Center at the University of North Carolina at Chapel Hill.

Apparently, by the time this article was written, he was "no longer involved" with the company.


Consulting and Other Financial Relationships

Further web searching revealed that Dr Sharpless had to disclose other financial relationships with health care corporations in the past.  In 2017, he was one of multiple authors on a paper in The Oncologist (Patel NM et al. Enhancing next-generation sequencing-guided cancer care through cognitive computing. Oncologist 2017; 22: 1-7.)

Norman E. Sharpless: G1 Therapeutics, Unity Biotechnology, HealthSpan Diagnostics (C/A, IP,SAB, OI), Pfizer (H)

Where

(C/A) Consulting/advisory relationship; (RF) Research funding; (E) Employment; (ET) Expert testimony; (H) Honoraria received; (OI) Ownership interests; (IP) Intellectual property rights/ inventor/patent holder; (SAB) Scientific advisory board

The ProPublica Trump Town database also stated that Dr Sharpless was a former consultant to Unity Biotechnology and that

Compensation to be an advisor to Unity is solely through an option to purchase up to 50,000 shares of their stock. Roughly half of these options are unvested.

I cannot find anything more about Dr Sharpless' relationship to Unity Biotechnology, which is apparently yet another start-up biotechnology corporation with drugs in the development pipeline.
 
Again, it appears that Dr Sharpless may have ended these relationships when he became NCI director.  A disclosure in December, 2018, for a talk he gave at the American Society of Hematology included

Sharpless: Pfizer(relationship ended): Honoraria; G1 Therapeutics (relationship ended): Membership on an entity's Board of Directors or advisory committees; G1 Therapeutics (divested): Equity Ownership; Healthspan Diagnostics (relationship ended): Membership on an entity's Board of Directors or advisory committees; Healthspan Diagnostics (divested): Equity Ownership; Unity Biotechnology (divested): Equity Ownership; Unity Biotechnology (relationship ended): Membership on an entity's Board of Directors or advisory committees; Unity Biotechnology (relinquished)

Summary

Dr Norman "Ned" E Sharpless is clearly an experienced academic physician, and hence is a welcome contrast with the many ill-informed ideologues lacking any experience or expertise in biomedical research, medicine, health care or public health recently appointed to important US government health care related positions (for the most recent example, look here).

However, while he held a major academic leadership position, Dr Sharpless had multiple important conflicts of interest, including founding and serving on the boards of directors of several for-profit biotechnology companies, as well as having other financial relationships with health care corporations.  He apparently had already become rich via these relationships before he became director of the US National Cancer Institute (NCI), although he apparently ended the relationships when he assumed the directorship.  As the head of the NCI, he was in a position to have some influence over US health care research policy affecting the pharmaceutical and biotechnology industry.  Hence his appointment to that position was an example of the revolving door.

Now about one and one-half year later, his position as acting commissioner of the FDA will give him much more influence over pharma and biotech.  This appointment is an even more strking example of the revolving door.

Both examples seem to have so far gotten lost in the continuing chaos generated by the Trump regime.

Yet, as we have said until blue in the face, and most recently less than a month ago...

The revolving door is a species of conflict of interest. Worse, some experts have suggested that the revolving door is in fact corruption.  As we noted here, the experts from the distinguished European anti-corruption group U4 wrote,

The literature makes clear that the revolving door process is a source of valuable political connections for private firms. But it generates corruption risks and has strong distortionary effects on the economy, especially when this power is concentrated within a few firms.

The ongoing parade of people transiting the revolving door from industry to the Trump regime once again suggests how the revolving door may enable certain of those with private vested interests to have disproportionate influence on how the government works.  The country is increasingly being run by a cozy group of insiders with ties to both government and industry. This has been termed crony capitalism. The latest cohort of revolving door transits suggests that regulatory capture is likely to become much worse in the near future.

Remember to ask: cui bono? Who benefits? The net results are that big health care corporations increasingly control the governmental regulatory and policy apparatus.  This will doubtless first benefit the top leadership and owners/ stockholders (when applicable) of these organizations, who are sometimes the same people, due to detriment of patients' and the public's health, the pocketbooks of tax-payers, and the values and ideals of health care professionals.  

 The continuing egregiousness of the revolving door in health care shows how health care leadership can play mutually beneficial games, regardless of the their effects on patients' and the public's health.  Once again, true health care reform would cut the ties between government and corporate leaders and their cronies that have lead to government of, for and by corporate executives rather than the people at large.

Another Missing Link Discovered: 1969 IRS Rule Change Allowed US Hospitals to Discriminate Among Patients Based on Ability to Pay

Prelude: the Suits in the Elevator

Another long night on call of my interniship was over.  Having managed to wolf down breakfast and brush my teeth, disheveled and in unwashed scrubs I stumbled into the elevator on my way to the wards.  In it were some of well-groomed people in nice suits.  They looked at me with wrinkled noses, oozing disdain.  I wondered who they were: pharmaceutical representatives?  Somewhat troubled, I disembarked the elevator and went to work, just another house-staff cog in the teaching hospital patient care machine.  The suits went up to the management floor.  Later I would learn they were top hospital executives....

Introduction: the Rise of Health Care Dysfunction

Despite some protestations to the contrary (e.g., here), the US health care system has been plagued by dysfunction.  According to a recent Commonwealth Fund study, the US was ranked 11 out of 11 in health care quality, but 1 out of 11 in costs.  Traditionally, health care reform has targeted ongoing problems in the cost, accessibility and quality of health care, but reform efforts have yielded little improvement.  (For example, recently the Accessible Care Act seems to have improved access, but hardly addressed cost or quality.)

In the early 2000s, before we started Health Care Renewal,  we encountered lots of disgruntled health care professionals who thought that health care was going off the rails, but had no idea what to do about it.  Some crude qualitative interviews, and a lot of delving into news stories about health care dysfunction suggested a number of factors that seemed to enable increasing dysfunction, but were not much discussed.  They included threats to the integrity of the clinical data base, including manipulation and suppression of clinical research; deceptive marketing; distortion of health care regulation and policy making; bad leadership and governance; concentration of power, abandonment of health care as a calling, perverse incentives putting money ahead of patient care, teaching, and research; the cult of leadership; managerialism; impunity enabling corruption; and taboos preventing honest discussion. (Look here for details.)

As a medical student, I was idealistic, thinking it was all about taking care of patients in a humane way, based on science. Was I just completely naive?  Others, however, have described health care in the US from the end of World War II into the 1960s as underfunded, but earnest in pursuit of the mission.  It was also a very human affair, not based in large organizations and big business.  Physicians practiced as individuals or in small groups.  Hospitals were local, community-based charitable organizations or teaching hospitals tied to single medical schools.  Insurance was largely provided by regional non-profit organizations or the government. 

We seem to have stumbled down a dark path since those days. Now everything revolves around huge hospital systems and for-profit corporations.  Physicians are now largely corporate employees.  It is all about money.  And we have the most most expensive health care system in world.  How did we get from there to here?

Early on, many of the people we met seemed to insist that it was all inevitable.  Some changes admittedly were not too hard to explain.  For example, after government started providing insurance to the elderly and poor, and research spending ramped up, costs rose, and in the Nixon administration the government outsourced cost control to commercial managed care.  By the 1980s, as Ludmerer wrote in Time to Heal (p 365), under pressure from managed care:

The field of hospital administration became more tightly affiliated with programs of business administration, and hospital administrators increasingly held M.B.A. degrees.  The new hospital administrators assuemed business titles (president or chief executive officer rather than superintendent or director), demanded and received corporate levels of compensation, and retained hordes of management consultants....

Now I could recognize those suits in the elevator.

However, the roots of the huge changes that happened in the US from the end of World War II to now were frequently unexplained.  Why could not business oriented management still put patients first? Why were the new managers so ill-informed, ignorant of or even hostile to the health care mission, self-interested, conflicted or even corrupt? Why did regulation of health care seem so big, yet so ineffectual?  Why were the prices of some goods and services so far beyond any value that they could have provided?  Etc, etc, etc.

Since the early 2000s, we have learned more about the historyof health care dysfunction, and also stumbled upon some missing links that added to the explanation. 

For example, we have discussed:
- how market fundamentalist lawyers challenged the power of medical associations to enforce medical ethics, allowing the commercialization of medical practice (look here)
- how government failure to enforce the responsible corporate officer doctrine allowed the impunity of health care corporate management (look here)
- how an obscure AMA committee (Resource Based Relative Value Scale Update Committee, or RUC) took control of the government process for setting physician payments, hugely favoring payments for procedures and invasive treatments.

This week, we found another missing link.

An Obscure IRS Rule that Allowed Hospitals to Discriminate Among Patients According to Ability to Pay

On March 5, StatNews published a commentary by Patrick Masseo entitled "IRS Rule Changes Helped Create a Payment-Focused Hospital System."  It noted

Often overlooked are small regulatory changes, such as adjustments to Internal Revenue Service codes over the past 70 years, that have allowed hospital care to evolve from a charitable mission into a profit-driven industry.

The historical background is

In 1956, as hospitals were evolving into centers for medical interventions, the Internal Revenue Service issued Revenue Ruling 56-185, which applied solely to hospitals. This ruling was the first to allow hospitals to qualify for federal tax exemptions if they fulfilled qualifications related to providing health care. That represented a deviation from the previous requirement of affiliation with a religious institution or fulfilling another charitable purpose.

Revenue Ruling 56-185 established four criteria that a hospital must fulfill to qualify for 501(c)(3) tax-exempt status:

- be organized as a nonprofit charitable organization for the purpose of operating a hospital for the care of the sick

- be operated to the extent of its financial ability for those not able to pay for the services rendered and not exclusively for those who are able and expected to pay

- not restrict the use of its facilities to a particular group of physicians and surgeons, such as a medical partnership or association

- net earnings must not benefit directly or indirectly any private stakeholder or individual

Through criteria 2 of Revenue Ruling 56-185, the IRS — not the legislative, executive, or judicial branches of government — mandated that tax-exempt hospitals must provide care to patients who were unable to pay without an expectation of payment.

 However, for reasons that remain unclear,

  

In 1969, the IRS issued Revenue Ruling 69-545, which updated the federal tax exemption requirements for hospitals. This ambiguous ruling, written as a case example rather than a defined list, included a subtle change of language that permitted tax-exempt hospitals to restrict access to care depending on a person’s ability to pay. For many individuals, that meant their health insurance status. According to Revenue Ruling 69-545, a hospital that operates as described as follows (emphasis added) would qualify:

The hospital operates a full time emergency room and no one requiring emergency care is denied treatment. The hospital otherwise ordinarily limits admissions to those who can pay the cost of their hospitalization, either themselves, or through private health insurance, or with the aid of public programs such as Medicare. Patients who cannot meet the financial requirements for admission are ordinarily referred to another hospital in the community that does serve indigent patients.

This language is a subtle yet monumental contradiction of the IRS’s original 1956 guidance, which stated that a 501(c)(3) hospital 'must not, however, refuse to accept patients in need of hospital care who cannot pay for services.'

Revenue Ruling 69-545 was neither an act of Congress nor a flashy executive order, yet it laid the foundation for the U.S. health care system to become driven by payment, a privilege of the rich and a necessity continually out of reach for the poor.

There was almost no public discussion of its change and its implications

The year after this ruling appeared, The Tax Lawyer, a publication of the American Bar Association, described the 1969 rule change as 'representing a shift by the [Internal Revenue] Service from requiring the admission of a substantial number of charitable cases in order to qualify for exempt status.'

A 1971 paper written by Marilyn G. Rose for the Catholic University Law Review correctly forecast the implications of this new ruling. 'Most importantly, this tax policy [Revenue Ruling 69-545] operates as unwise health policy by perpetuating and enlarging the gulf between the health care available to the rich and that available to the poor,' Rose wrote.

Beyond those publications, I found little evidence of journalistic coverage of the 1969 rule change. Only a handful of academic papers on it were published between the 1970s and the 1990s.

New IRS rulings have not substantially changed the effects of the 1969 ruling.  Since 1969, but especially in the last 30 years, we have seen increasing evidence of hospital leaders' hostility to the traditional mission that put patient care ahead of all else, including revenue generation.  Instead, even in non-profit institutions, leaders have appeared to adopt the shareholder value dogma propogated by business schools, putting revenue ahead of all else (look here).  Of course, as revenue goes up, hospital management has been able to command even greater compensation.  When revenue generation is the main goal, perverse incentives drive ignorance, conflicts of interest, even crime and corruption.

And yet it took 50 years to discover this missing link.

And it raises further questions.  Who was responsible for the 1969 regulatory change?  What was the motivation for it?  Why did it attract so little attention at the time?  Why did nobody really notice it for 50 years?
 
Discussion

Those who are ignorant of history... are unlikely to be able to fully challenge its effects.

As we learn more about the hidden history that explains where we are today, a bigger meta-question is why there has been so little curiosity about the roots of our current health care (and broader political economic) dysfunction, at least until now.

When people do not look to answer questions, it  may be that they fear what they will find.  

While we try to push for all the reforms that are so badly neeed, we are handicapped by our ignorance about how our current troubles came to be.  We must vigorously seek reform while simultaneously vigorously investigating why the world went wrong. 

Don't Know Much About Health Care and Public Health: Politicans' and Pundits' Unjustified Statements About Causation, Benefits and Risks

A major focus of Health Care Renewal has been problems in leadership and governance of health care organizations, which we believe became major causes of health care dysfunction. We have discussed how leadership is often ill-informed.  More and more people leading non-profit, for-profit and government health care organizations have had no training or experience in actually caring for patients, or in biomedical, clinical or public health research. Instead, people trained in business management have largely supplanted health care professionals as leaders of health care organizations.  This is part of a societal wave of "managerialism."  Most organizations are now run by such generic managers, rather than people familiar with the particulars of the organizations' work.  Obviously health care and health policy decisions made by ill-informed people are likely to have detrimental effects on patients' and the public's health.

Through 2016, our examples of ill-informed leadership in health care tended to be executives of hospital systems (e..g.,in 2014, here, on the mishandling of a patient with Ebola in a hospital system led by generic managers; and in 2013, here, on a luxurious hospital led by a former hotel executive).  Others were top executives of pharmaceutical corporations (e.g., in 2011, here, on previous Pfizer CEOs).

However, since 2016, when we all seem to have stumbled into an alternative universe, most of the examples we have found of ill-informed health care leadership have come from politicians, government officials, and pundits.  Cases have lately been coming thick and fast, so here is our latest round-up, in chronological order by date of publication.


Kentucky Governor Matt Bevins (R) Stated that Television Shows About Zombies Cause Mass Shootings

In November, 2018, the Washington Post reported,

Kentucky Gov. Matt Bevin (R) has been forthright about what he believes are the root causes of mass shootings. A few months ago, he blamed gun violence on children’s access to smartphones, video games and psychotropic drugs.

Most recently, he blamed society’s obsession with a specific genre of violent entertainment.

'Seriously, what’s the most important topic that seems to be in every cable television network for example? Television shows are all about what? Zombies,' he said in an interview Tuesday with conservative Kentucky radio host Leland Conway.

Mass shootings point to deep cultural problems, Bevin said, particularly in a society that consumes daily doses of violence through the media. He acknowledged tying zombie shows to gun violence might be perceived as 'trite and simplistic.' But, he argued, American culture is 'inundated by the worst things that celebrate death,' including the forms of entertainment young people consume.

Needless to say, he cited no evidence, and I am aware of no good evidence that television shows about zombies cause people to stage mass shootings.

Governor Bevin, according to Wikipedia, had a career in finance and business management, and has no background in health care or public health.

Tennessee Republican Representative Elect Dr Mark E Green Stated Concern that Autism is Caused by Vaccine Preservatives

In December, 2018, the Tennessean reported,

'Let me say this about autism,' Green said. 'I have committed to people in my community, up in Montgomery County, to stand on the CDC’s desk and get the real data on vaccines. Because there is some concern that the rise in autism is the result of the preservatives that are in our vaccines.'

'As a physician, I can make that argument and I can look at it academically and make the argument against the CDC, if they really want to engage me on it,' Green said.

While it is very hard to disprove the hypothesis that vaccines or their preservatives cause autism, the CDC and the American Academy of Pediatrics have stated that there is no good evidence that they cause it.  Interestingly, the Tennessee Department of Public Health quickly made a similar statement to refute Representative Green's concern (look here).

Rep Green is definitely a physician, apparently in emergency medicine.  Whether he has had any training in evidence-based health care is unknown.

Kentucky Governor Matt Bevin (R) Implied that Exposure to Severe Cold Weather is Harmless

On January 29, 2019, the Louisville Courier-Journal reported,

Gov. Matt Bevin prodded Kentucky school districts to toughen up in the face of dangerously frigid winds that are blowing through the region.

Speaking on 840 WHAS radio Tuesday, host Terry Meiners reminded Bevin that he would be up late tonight with his children because of classes being canceled on Wednesday.

'Now we cancel school for cold, I mean —  Bevin said.

'It's deep freeze; this is serious business,' Meiners responded.

'Come on, now,' Bevin said. 'There's no ice going with it or any snow. What happens to America. We're getting soft, Terry, we're getting soft.'

The upcoming weather forecasts for that time were:

Arctic air from the polar vortex has gripped the country, causing several school districts in the Louisville area — including Jefferson County Public Schools and Catholic schools — to be closed Wednesday as temperatures are expected to dip to a low of 5 degrees.

With the wind chill on Wednesday morning, forecasters say that it could feel as cold as minus 10 or 20 degrees in parts of Louisville.

Note that school children may have to be exposed to such conditions for considerable time when they are walking to or waiting at school bus stops.  The hazards for frostbite and hypothermia increase as wind chill gets worse.  Wind chill near minus 25 degrees (F) can cause frostbite in 30 minutes per the National Weather Service (look here).

We discussed Gov Bevin's lack of health care and public health background above.

Arizona State Legislators Considering Declaring Pornography a Public Health Crisis

According to the Arizona Republic, on February 7, 2019,

Citing concerns about the proliferation of erotic images online and their 'toxic' effect on behavior, Arizona lawmakers are pushing to declare pornography a public health crisis.

State Rep. Michelle Udall, R-Mesa, introduced a measure that declares the crisis and states porn 'perpetuates a sexually toxic environment that damages all areas of our society.'

'Like the tobacco industry, the pornography industry has created a public health crisis,' Udall told lawmakers.

There is no good evidence that pornography is a serious public health problem.  As the Republic noted,

There are numerous conflicting studies about the affects of pornography viewership. Some studies document negative affects on relationships and addictive behavior.

But other researchers say there isn't evidence to show porn is addictive in the same way as alcohol or tobacco, though the perception of addiction can lead to psychological distress.

In some countries, instances of sexual assault declined after porn was legalized, leading some to hypothesize that it provides a safe outlet for sexual expression.

Note that a number of other state legislators have made similar claims, as we discussed here.

Fox News Pundit Pete Hegseth Stated that "Germs are Not a Real Thing," and that Handwashing is Unnecessary

On February 11, 2019, per the Miami Herald, Mr Hegseth stated,

'As I told you my 2019 resolution is to say things on air that I say off air ... I don’t think I’ve washed my hands for 10 years,' Hegseth said, inexplicably.

Then,

'Really, I don’t really wash my hands ever,' Hegseth continued.

'I inoculate myself. Germs are not a real thing. I can’t see them. Therefore they’re not real,' Hegseth insisted.

'So you’re becoming immune to all the bacteria,' Bila replied.

'Exactly,' said Hegseth. 'I can’t get sick.'

If germs are not real, how can one be immune to them? Setting aside this apparent self-contradiction, the germ theory of disease was considered already well established by the early 20th century.

Hegseth is a Fox News pundit with no background in health care or public health, according to Wikipedia.

Darla Shine, Wife of White House Communications Director, Stated that Having Measles Prevents Cancer

On February 15, 2019, the Washington Post reported,

Darla Shine, the outspoken wife of White House communications director Bill Shine, has been tweeting about childhood diseases, claiming that illnesses such as measles, mumps and chickenpox 'keep you healthy & fight cancer.'

According to the Daily Beast, she also tweeted:

Here is a study from Scientists at Mayo Clinic who were interviewed by CNN and they say they have clinical studies that #Measles Virus kills #Cancer

However, the Washington Post article noted,

Len Lichtenfeld, interim medical director of the American Cancer Society, told The Washington Post on Thursday there is no evidence that contracting measles makes a person healthier later in life or helps prevent cancer.

In addition, Lichtenfeld said, 'It’s easy to forget the disease burden that came with measles when we were young.'

'It is a real illness with real consequences,' he said. 'Fortunately, for most people, those consequences were not serious, but it is an infection, and it can cause life-threatening events. It can cause pneumonia, and it can cause meningitis. Fortunately, those complications are rare but do occur — and children did die as a result of measles infections.'

And, as the Daily Beast noted, the study to which Ms Shine referred used a modified measles virus that was engineered to reduce its disase causing ability, and so the study was not likely applicable to the native version of the virus.

It is hard to find biographical information on Darla Shine, but there are some reports that she was a television producer, and no indication she has a health care or public health background.  (I included her in this post because I thought her position put her in a position to be a pundit, but one could debate that.)

Texas State Representative Bill Zedler (R) Implied that Antibiotics are an Effective Treatment for Measles, and Hence Measle Vaccination is Unneeded

On February 26, 2019, the Texas Observer reported,

Texas state Representative Bill Zedler doesn’t understand the fuss over the resurgence of infectious diseases. 'When I grew up, I had a lot of these illnesses,' he said, listing measles, mumps and chickenpox.

Then,

'They want to say people are dying of measles. Yeah, in third-world countries they’re dying of measles,' Zedler said, shaking his head. 'Today, with antibiotics and that kind of stuff, they’re not dying in America.' Zedler says he’s adamantly in favor of 'freedom of conscience' and against mandatory vaccination. 'This is not the Soviet Union, you know.'

Measles is caused by a virus, not a bacteria.  Antibiotics have no effect on it.  People rarely die of measles in America, mainly because until recently, due to vaccination, very few people were afflicted with measles anymore.

According to Wikipedia, Zedler's highest degree is an MBA, although according to his state legislative webpage, he worked as a manager for various health care related businesses, and currently serves on the Public Health Committee.

Arizona State Representative Kelly Townshend (R) Asserted Vaccines Cause Many Serious Adverse Effects, Based on a Single Personal Anecdote

On March 1, 2019, the Washington Post reported,

Republican State Rep. Kelly Townsend, a five-term state representative who is no stranger to making controversial and befuddling statements on social media, took to Facebook on Thursday to bemoan that Arizona was 'prepared to give up our liberty, the very sovereignty of our body, because of measles.'

Why? Because doing so would be “Communist.”

'I read yesterday that the idea is being floated that if not enough people get vaccinated, then we are going to force them to,' Townsend wrote on Thursday morning. 'The idea that we force someone to give up their liberty for the sake of the collective is not based on American values but rather, Communist.'

Ah, those Communists are at it again.

Why did Rep Townsend feel so strongly about vaccines?  She actually "acknowledges the voluminous studies supporting the need for and safety of vaccines," however

Townsend says her opposition is rooted in her experience. The legislator’s 22-year-old daughter has significant medical problems that she blames on a vaccine she received when she was 10 months old. She says no scientific evidence will convince her otherwise.

'My entire life has been a struggle, and it’s been nothing compared to my daughter’s struggle, and it’s been due to the shots she got at 10 months old,' she said. 'You can have 10 years’ worth of daily articles saying vaccines do no harm and I won’t believe it because it happened to us.'

As we noted above, there is good evidence that measles causes important morbidity to a significant number of people afflicted, and that the vaccine is effective in preventing measles.  While no vaccine is perfectly safe, there is no good evidence that the measles vaccine is particularly dangerous.

Rep Townsend's case is apparently built upon a single anecdote, that her child got some unspecified disease soon after a vaccination.  This is a classic case of anecdotal reasoning, and is logically fallacious.  She appears unaware that two events happening in sequence can often be unrelated.  Suppose her daughter ate chocolate ice cream before she got sick.  Would Rep Townsend be pushing to outlaw chocolate ice cream?

Oddly enough, Rep Townsend reportedly has a masters degree in infant-family practice from Arizona State, which was designed to prepare her "to work in prevention and intervention programs, serving families with infants, toddlers and preschool-age children."


Summary

We are seeing increasing numbers of cases of spectacularly ill-informed statements made by people in positions to influence political decisions affecting health care and public health.

It would be too much to expect that health care policy debates would be rigorously evidence-based.  It does seem to me that in the past political leaders at least made some attempt to consult with health care professionals or academics before taking on complex health care issues.  However, lately they seem to be happy to loudly express views devoid of fact justification or sometimes rationality.

We have proposed that ill-informed leadership of health care organizations is often the result of "managerialism."  We have discussed this doctrine, promoted in business schools that people trained in management should lead every type of human organization and endeavor.  Management by people from the disciplines most relevant to the mission and nature of particular organizations should be eschewed.  So managers, not physicians or other health care professionals, should lead health care organizations.  Following that theme, managers, or those like them, rather than health care professionals and health policy experts should lead health policy. 

However, the increasing numbers of spectacularly ignorant utterances made by political figures and newly appointed leaders of government health care organiations cry out for other explanations.  One may be the increasing influence of propaganda and disinformation in the health care space.  Another may be a trend toward anti-intellectualism or what has recently been termed "The Death of Expertise" (see this New York Times review of a book with that title.)  And the extreme relativism of post-modernism, which we also discussed in the context of the current debate on health care reform, could be another.

Facts, however, are stubborn things. Physiologic processes, and pathogenic organisms do not listen to assertions about the existence of "alternative facts."  Evidence is evidence, no matter whether it offends politicians, religious leaders, or corporate executives.  Basing legislation and political decision-making on the sorts of alternative thinking displayed in the cases above could lead in real life to adverse consequences for the sick, injured and vulnerable.  True health care reform requires clear thinking and the input of people who actually know something about health care.