Cybernetic Opioid Pushers: EHR vendor Practice Fusion to Pay $145 Million to Resolve Criminal and Civil Investigations

Considering the devastating and deadly opioid problems in this country, this news release from DOJ describes particularly despicable behavior from an EHR vendor and pharmas.

These problems are likely more widespread, but this EHR company got caught.

The company admitted that it solicited and received kickbacks from a major opioid company in exchange for utilizing its EHR software to influence physician prescribing of opioid pain medications, via "decision support" routines specifically designed by the drug company to increase drug company profits.

The DOJ reports that in exchange for “sponsorship” payments from pharmaceutical companies, Practice Fusion allowed the companies to influence the development and implementation of the CDS (clinical decision support) alerts in ways aimed at increasing sales of the companies’ products.  Practice Fusion allegedly permitted pharmaceutical companies to participate in designing the CDS alert, including selecting the guidelines used to develop the alerts, setting the criteria that would determine when a healthcare provider received an alert, and in some cases, even drafting the language used in the alert itself.  The CDS alerts that Practice Fusion agreed to implement did not always reflect accepted medical standards.

This story could certainly help explain why I could never get involved in EHR initiatives in pharma, despite having been at Merck in a science-support capacity, but seeking EHR involvement.  I had completed a Yale Medical Informatics postdoc and then faculty period authoring EHRs domestically and for a foreign country, and then had a period as a CMIO in Delaware. Yet, my many pharma applications over many years afterwards for EHR-related positions were mostly ignored.

The reason behind that shutout could likely be that I was known as being exceptionally honest, if only in part for my candid writing on EHR problems first on AOL 1999-2004, then at Drexel University and at this blog, at a time when the pundits and hyper-enthusiasts were pushing the technology uncritically and relentlessly.

Indeed, I would never have tolerated the types of conspiracy (DOJ's word) between EHR companies and pharma that are described in this DOJ release to help push drugs, any drugs - let alone opioids.

To make matters worse, this vendor is also described as cheating on the HHS EHR "certification" process.  The company is described as concealing from the certifying entity, known as an ONC-Authorized Certification Body (ATCB), that the EHR software did not comply with all of the applicable requirements for certification.

Apparently, no defendants were jailed.

I am posting the DOJ release in its entirety.  It is quite comprehensive, and I have nothing to add.

https://www.justice.gov/opa/pr/electronic-health-records-vendor-pay-145-million-resolve-criminal-and-civil-investigations-0

Department of Justice

Office of Public Affairs

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FOR IMMEDIATE RELEASE

Monday, January 27, 2020

Electronic Health Records Vendor to Pay $145 Million to Resolve Criminal and Civil Investigations

Practice Fusion Inc. Admits to Kickback Scheme Aimed at Increasing Opioid Prescriptions

Practice Fusion Inc. (Practice Fusion), a San Francisco-based health information technology developer, will pay $145 million to resolve criminal and civil investigations relating to its electronic health records (EHR) software, the Department of Justice announced today.

As part of the criminal resolution, Practice Fusion admits that it solicited and received kickbacks from a major opioid company in exchange for utilizing its EHR software to influence physician prescribing of opioid pain medications.  Practice Fusion has executed a deferred prosecution agreement and agreed to pay over $26 million in criminal fines and forfeiture.  In separate civil settlements, Practice Fusion has agreed to pay a total of approximately $118.6 million to the federal government and states to resolve allegations that it accepted kickbacks from the opioid company and other pharmaceutical companies and also caused its users to submit false claims for federal incentive payments by misrepresenting the capabilities of its EHR software.

“Across the country, physicians rely on electronic health records software to provide vital patient data and unbiased medical information during critical encounters with patients,” said Principal Deputy Assistant Attorney General Ethan Davis of the Department of Justice’s Civil Division.  “Kickbacks from drug companies to software vendors that are designed to improperly influence the physician-patient relationship are unacceptable.  When a software vendor claims to be providing unbiased medical information – especially information relating to the prescription of opioids – we expect honesty and candor to the physicians making treatment decisions based on that information.”
The resolution announced today addresses allegations that Practice Fusion extracted unlawful kickbacks from pharmaceutical companies in exchange for implementing clinical decision support (CDS) alerts in its EHR software designed to increase prescriptions for their drug products. 

Specifically, in exchange for “sponsorship” payments from pharmaceutical companies, Practice Fusion allowed the companies to influence the development and implementation of the CDS alerts in ways aimed at increasing sales of the companies’ products.  Practice Fusion allegedly permitted pharmaceutical companies to participate in designing the CDS alert, including selecting the guidelines used to develop the alerts, setting the criteria that would determine when a healthcare provider received an alert, and in some cases, even drafting the language used in the alert itself.  The CDS alerts that Practice Fusion agreed to implement did not always reflect accepted medical standards.  In discussions with pharmaceutical companies, Practice Fusion touted the anticipated financial benefit to the pharmaceutical companies from increased sales of pharmaceutical products that would result from the CDS alerts.  Between 2014 and 2019, health care providers using Practice Fusion’s EHR software wrote numerous prescriptions after receiving CDS alerts that pharmaceutical companies participated in designing.

Practice Fusion executed a deferred prosecution agreement with the U.S. Attorney’s Office for the District of Vermont based on its solicitation and receipt of kickbacks from a major opioid company to arrange for an increase in prescriptions of extended release opioids by healthcare providers who used Practice Fusion’s EHR software.  As detailed in the criminal Information made public today, Practice Fusion solicited a payment of nearly $1 million from the opioid company to create a CDS alert that would cause doctors to prescribe more extended release opioids.  That payment was financed by the opioid company’s marketing department, and the CDS was designed with input from the marketing department.  Practice Fusion and the opioid company entered the CDS sponsorship because they believed that the CDS would influence doctors’ prescriptions of extended release opioids.  In marketing the “pain” CDS alert, Practice Fusion touted that it would result in a favorable return on investment for the opioid company based on doctors prescribing more opioids.

“Practice Fusion’s conduct is abhorrent.  During the height of the opioid crisis, the company took a million-dollar kickback to allow an opioid company to inject itself in the sacred doctor-patient relationship so that it could peddle even more of its highly addictive and dangerous opioids,” said Christina E. Nolan, U.S. Attorney for the District of Vermont.  “The companies illegally conspired to allow the drug company to have its thumb on the scale at precisely the moment a doctor was making incredibly intimate, personal, and important decisions about a patient’s medical care, including the need for pain medication and prescription amounts.  This recovery is commensurate to the nature of Practice Fusion’s misconduct, represents the largest criminal fine in the history of this District, and requires Practice Fusion to admit to its wrongs.  It is another example of pioneering healthcare fraud enforcement by the talented Assistant U.S. Attorneys and staff of this U.S. Attorney’s Office, working with their partners in law enforcement.  We cannot — and will not — tolerate technology companies influencing patient treatment merely because a pharmaceutical company provided a kickback.”

The criminal Information charges Practice Fusion with two felony counts for violating the Anti-Kickback Statute (AKS), 42 U.S.C. § 1320a-7b(b)(1), and for conspiring with its opioid company client to violate the AKS, 18 U.S.C. § 371.  This case is the first ever criminal action against an EHR vendor and the unique Deferred Prosecution Agreement imposes stringent requirements on Practice Fusion to ensure acceptance of responsibility and transparency as to its underlying conduct, and to invest heavily in compliance overhauls and an independent oversight organization.  The Deferred Prosecution Agreement requires Practice Fusion to pay a criminal fine of $25,398,300 and forfeit criminal proceeds of nearly $1 million.  In addition, the company will cooperate in any ongoing investigations of the kickback arrangement and report any evidence of kickback violations by any other EHR vendors.  To ensure transparency and public awareness of the company’s activities while the nation continues to battle an epidemic of opioid addiction, the Deferred Prosecution Agreement requires Practice Fusion to make documents relating to its unlawful conduct available to the public through a website.  Additionally, the Deferred Prosecution Agreement mandates that Practice Fusion retain an independent oversight organization that is required to review and approve any sponsored CDS before Practice Fusion may implement the CDS, and create a comprehensive compliance program designed to ensure such abuses are not repeated.

The civil settlement with the United States resolves Practice Fusion’s civil liability arising from the submission of false claims to federal healthcare programs tainted by the kickback arrangement between Practice Fusion and the opioid company.  It also resolves allegations of kickbacks relating to thirteen other CDS arrangements where Practice Fusion agreed with pharmaceutical companies to implement CDS alerts intended to increase sales of their products.  The $118.6 million settlement amount includes approximately $113.4 million to the federal government and up to $5.2 million to states that opt to participate in separate state agreements.

“Prescription decisions should be based on accurate data regarding a patient’s medical needs, untainted by corrupt schemes and illegal kickbacks,” said U. S. Attorney David L. Anderson of the Northern District of California.  “In deciding what is best for patients, electronic health records software is an important tool for care providers.  It is critically important that technology companies do not cheat when certifying that software.”

In addition to the kickback allegations, the civil settlement with the United States resolves allegations relating to two intersecting Department of Health and Human Services (HHS) programs, one at the Office of the National Coordinator for Health Information Technology (ONC) that regulates the voluntary health IT certification program, and one at the Centers for Medicare & Medicaid Services that oversees EHR incentive programs.  Specifically, the United States alleged that Practice Fusion falsely obtained ONC certification for several versions of its EHR software by concealing from its certifying entity, known as an ONC-Authorized Certification Body, that the EHR software did not comply with all of the applicable requirements for certification.  ONC’s certification criteria were designed to promote enhanced functionality, utility, and security of health information technology, and access to patient medical information across the care continuum.  HHS implemented the certification criteria for EHR software in multiple stages, known as editions.  To be certified under the 2014 Edition certification criteria, EHR software was required to allow users to electronically create a set of standardized export summaries for all patients.  When Practice Fusion sought certification of this 2014 Edition criteria, Practice Fusion falsely represented to the certifying body that its software met this data portability requirement, when several versions of its software did not.  The civil settlement resolves allegations that, at the time these versions of Practice Fusion’s software were certified, its software was unable to permit a user to create a set of standardized export summaries.  Additionally, after obtaining certification of the 2014 Edition criteria, Practice Fusion disabled access to this feature altogether.  Instead, Practice Fusion required users to contact it separately to request export of this critical patient data.

In addition to failing to satisfy the data portability requirement, Practice Fusion’s software allegedly did not incorporate standardized vocabularies as required for certification.  The United States alleged that by fraudulently obtaining certification for its products, Practice Fusion knowingly caused eligible healthcare providers who used certain versions of its 2014 Edition EHR software to falsely attest to compliance with HHS requirements necessary to receive incentive payments from Medicare during the reporting periods for 2014 through 2016 and from Medicaid during the reporting periods for 2014 through 2017.

“As new technologies continue to develop and evolve, so too do new and innovative fraud schemes,” said Shimon R. Richmond, Assistant Inspector General for Investigations of the U.S. Department of Health and Human Services. “We will continue to be vigilant in detecting and investigating these schemes in order to protect the safety of patients in federal health programs and to ensure the appropriate use of electronic health records in providing their care.”

“Today's announcement shows that Practice Fusion exploited technology to profit at the expense of a vulnerable population – patients seeking medical advice," said Timothy M. Dunham, Special Agent in Charge of the FBI's Washington Field Office, Criminal Division.  "The FBI is committed to working with our partners to bring to justice the perpetrators of healthcare fraud in all its forms, especially one that fans the flames of the already rampant opioid epidemic.”

The U.S. Attorney’s Office for the District of Vermont handled the criminal investigation and resolution.  The civil investigation was jointly handled by the Civil Division’s Commercial Litigation Branch and the U.S. Attorneys’ Offices for the District of Vermont and the Northern District of California.  The investigation was supported by the HHS Office of Inspector General and multiple HHS agencies and components.  The FBI’s field office in Washington, DC, also provided significant investigative support.

Except for the conduct admitted in connection with the criminal resolution, the civil claims resolved by the settlement are allegations only, and there has been no determination of liability as to such civil claims.

Transparency International's Corruption Perceptions Index 2019: Political Corruption in the US Worsens, and Results are Largely Anechoic

Transparency International has just released its 2019 version of the Corruption Perceptions Index.  This version emphasized public sector corruption.  Once again, it appears the US has a worsening corruption problem.  Once again, the results are largely anechoic.

Summary of the 2019 CPI

Methods

Per the TI summary

The CPI scores 180 countries and territories by their perceived levels of public sector corruption, according to experts and business people.

The CPI uses a scale from 0 to 100.  100 is very clear and 0 is highly corrupt.

Results

TI provides CPI results for 180 countries.

The US had a score of 69, tied with France for 23rd best.  The score has declined since 2015 (when it was 76).

TI designated the US as a country to watch, with the following explanation:

With a score of 69, the United States drops two points since last year to earn its lowest score on the CPI in eight years. This comes at a time when Americans’ trust in government is at an historic low of 17 per cent, according to the Pew Research Center.

The US faces a wide range of challenges, from threats to its system of checks and balances, and the ever-increasing influence of special interests in government, to the use of anonymous shell companies by criminals, corrupt individuals and even terrorists, to hide illicit activities.

While President Trump campaigned on a promise of 'draining the swamp' and making government work for more than just Washington insiders and political elites, a series of scandals, resignations and allegations of unethical behaviour suggest that the 'pay-to-play' culture has only become more entrenched. In December 2019, the US House of Representatives formally impeached President Trump for abuse of power and obstruction of Congress.

The report emphasized that many countries, including the US, had increasing problems with political integrity:

This year, our research highlights the relationship between politics, money and corruption. Unregulated flows of big money in politics also make public policy vulnerable to undue influence.

Countries with stronger enforcement of campaign finance regulations have lower levels of corruption, as measured by the CPI. Countries where campaign finance regulations are comprehensive and systematically enforced have an average score of 70 on the CPI, whereas countries where such regulations either don’t exist or are poorly enforced score an average of just 34 and 35 respectively.

Sixty per cent of countries that significantly improved their CPI scores since 2012 also strengthened their enforcement of campaign finance regulations.

In addition, when policy-makers listen only to wealthy or politically connected individuals and groups, they often do so at the expense of the citizens they serve.

Countries with broader and more open consultation processes score an average of 61 on the CPI. By contrast, where there is little to no consultation, the average score is just 32.

A vast majority of countries that significantly declined their CPI scores since 2012 do not engage the most relevant political, social and business actors in political decision-making.

Countries with lower CPI scores also have a higher concentration of political power among wealthy citizens. Across the board, there is a concerning popular perception that rich people buy elections, both among some of the lowest-scoring countries on the CPI, as well as among certain higher-scoring countries, such as the United States.

The Anechoic Effect Lives

At least the 2019 CPI got some attention in 2020, as did the 2017 version (look here).  I found articles briefly summarizing the US results in a few US media outlets: Bloomberg (behind a paywall), the Associated Press (here, via the New York Times), and Forbes. There was also one op-ed, again in the WaPo.

This was some improvement from how previous relevant results from TI research were covered earlier.   There was virtually  no coverage of a 2013 survey that showed 43% of US respondents believed that US health care was corrupt.

One could argue even so that the current coverage of the 2019 report was inadequate given the importance of the topic and the apparent worsening of the US corruption problem.  This lack of coverage inspired me to write this post, in the hopes of making the issue just a little less anechoic

Discussion

We have argued again and again that health care corruption is an important reason for US (and global) health care dysfunction.  As we wrote in 2019,  Transparency International (TI) defines corruption as

Abuse of entrusted power for private gain

In 2006, TI published a report on health care corruption, which asserted that corruption is widespread throughout the world, serious, and causes severe harm to patients and society.

the scale of corruption is vast in both rich and poor countries.

Also,

Corruption might mean the difference between life and death for those in need of urgent care. It is invariably the poor in society who are affected most by corruption because they often cannot afford bribes or private health care. But corruption in the richest parts of the world also has its costs.

The report got little attention.  Health care corruption has been nearly a taboo topic in the US, anechoic, presumably because its discussion would offend the people it makes rich and powerful. As suggested by the recent Transparency International report on corruption in the pharmaceutical industry,

However, strong control over key processes combined with huge resources and big profits to be made make the pharmaceutical industry particularly vulnerable to corruption. Pharmaceutical companies have the opportunity to use their influence and resources to exploit weak governance structures and divert policy and institutions away from public health objectives and towards their own profit maximising interests.

Presumably the leaders of other kinds of corrupt organizations can do the same. 

When health care corruption is discussed in English speaking developed countries, it is almost always in terms of a problem that affects some other places, mainly  presumably benighted less developed countries.  At best, the corruption in developed countries that gets discussed is at low levels.  In the US, frequent examples are the "pill mills"  and various cheating of government and private insurance programs by practitioners and patients.  Lately these have gotten even more attention as they are decried as a cause of the narcotics (opioids) crisis (e.g., look here).  In contrast, historically the US government has been less inclined to address the activities of the leaders of the pharmaceutical companies who have pushed legal narcotics (e.g., see this post). 

However, Health Care Renewal has stressed "grand corruption," or the corruption of health care leaders.  We have noted the continuing impunity of top health care corporate managers.  Health care corporations have allegedly used kickbacks and fraud to enhance their revenue, but at best such corporations have been able to make legal settlements that result in fines that small relative to their  multi-billion revenues without admitting guilt.  Almost never are top corporate managers subject to any negative consequences.

We have been posting about this for years at Health Care Renewal, while seeing little progress on this issue.  Now the problem appears to be getting worse in the US.  We have argued that a major reason is the miasma of corruption now surrounding the top of the US government, specifically the Trump administration (see again this 2019 post).

Now the TI discussion of its 2019 Corruption Perceptions Index points to increasing problems of public sector corruption in the US. Many of the issues it cites have been discussed on Health Care Renewal, including: problems in "campaign finance regulation" and "perception that rich people buy elections" (see our discussion of dark money); and "policy-makers [who] listen only to wealthy or politically connected individuals and groups" (see our discussion of the revolving door and regulatory capture).

The op-ed by Hough in the Washington Post included this parallel discussion:

First, successful anti-corruption policy centers on transparency and accountability. Reports such as this one by the UNDP make a strong case that clear lines of accountability improve the quality of governance, and sharpen attempts to fight corruption. Openness and transparency also need to be default settings. These are both areas where the U.S. could improve. The tone set by Donald Trump, whether by refusing to publish his tax returns or personally profiting from his position as president is indicative of a much broader problem. Neither transparency nor accountability are ever absolute, but analysts find plenty of scope for the U.S. to improve.

Second, the more opaque and complex the relationship between money and power, the more difficult it is to pinpoint and counteract corrupt relationships. Again, getting this right is not an exact science — and there’s no perfect system for funding political activity. But campaign finance, along with lobbying, are what corruption scholar Michael Johnston calls influence markets — areas where the wealthy can trade money for influence on policy outcomes. In other words, the rules and regulations let rich benefactors buy themselves a hearing. Yes, there are countries in worse positions, but that doesn’t hide the fact that the U.S. is also far from a model pupil.

And third, fewer Americans now trust either the politicians that rule them or indeed the institutions that help shape public life. Successful anti-corruption is built around integrity management, which requires public servants to act in appropriate ways — but also be seen acting in such ways. The highest ethical and moral standards — and transparency about potential conflicts of interest and recognizing when personal and public interests clash — would let U.S. citizens begin to believe that a cleanup of American government was underway.

In summary, there is growing evidence of a worsening corruption problem in the US.  As of today, responses to it have been ineffective.  Political corruption, especially at the top of the US government, makes addressing health care corruption increasingly difficult.

So we welcome any additional attention to health care corruption, or the larger corruption within the US government that is making health care corruption even harder to address.

But even if we can take that step, when the fish is rotting from the head, it makes little sense to try to clean up minor problems halfway towards the tail. Why would a corrupt regime led by a president who is actively benefiting from corruption act to reduce corruption? The only way we can now address health care corruption is to excise the corruption at the heart of our government.

It is now over three years since Trump was inaugurated, and there has been no real progress.  The fish is still rotting, and so is health care.  What will it take to make something happen?

Who Owns, and Who is Accountable for the New US For-Profit Medical Schools?

Mysteries still abound in the not so wonderful world of health care dysfunction, so once again, quick, the game's afoot...

The current mysteries involve beneficial ownership.  Beneficial ownership questions are important to anti-corruption campaigners.  Beneficial ownership simply refers to "anyone who enjoys the benefits of ownership of a security or property, without being on the record as being the owner." (per Wikipedia). Concealing who really owns a company enables concealing sources of funds (as in money laundering), market power (when the owner also owns competitors), and sources of political influence, and enables those benefiting from the actions of the company to escape responsibility for their consequences.

We recently discussed the mystery of the beneficial ownership of a local pharmaceutical company, an issue that became more interesting when it was revealed it was owned by the Sackler family, the owners of the now somewhat infamous Purdue Pharma.  A while back we discussed the mysteries surrounding the ownership of several offshore medical schools (look here and here).

I was recently involved in a conversation about the rise of onshore, that is US based for-profit medical schools, four of which are now known to exist.  It turns out that their ownership is also rather unclear.

That for-profit medical schools now exist in the US is not widely known.  The best, and nearly only public discussion of the topic appeared in a 2017 article in JAMA [Adashi EY, Krishna GR, Grappuso PA. For-profit medical schools - a Flexnerian legacy upended.  JAMA 2017; 317: 1209-10.  Link here.]  It listed four such schools that were operating or in development.

Rocky Vista University College of Osteopathic Medicine

Rocky Vista was the first for-profit to open.  Its President is Clinton E Adams DO.  The university website is silent on its ownership.  Some searching reveals, however, that it, along with St Georges University in Grenada, is owned by Medforth Global Healthcare Education, whose CEO is Dr Andrew Sussman, who was "most recently Executive Vice President of Clinical Services at CVS Health."

However, who owns Medforth, and hence to whom Dr Sussman reports, is unclear.  We do know that in 2014, "Canadian private equity firm Altas Partners LP and pan Asia firm Baring Private Equity Asia have acquired a substantial stake in St George’s University," per Reuters.  A reference on the financial website Mergr suggested that Atlas and Baring targeted Medforth per se.  Who, in turn, actually owns Atlas and Baring, and to whom at those firms the leadership of Medforth, and thus ultimately the leadership of Rocky Vista report, is unclear.


Ponce Health Sciences University

The President of Ponce Health Sciences University is Dr David Lenihan.  According to his welcome statement,

Ponce was acquired by University Ventures Corporation in September 2014, to operate Ponce Health Sciences University and appoints Dr. David Lenihan. Dr. David Lenihan is used to taking risks. It is evidenced by his academic training in neuroscience, chiropractic and law. Also, his foray into the administrative side of science education. Recently, the greatest risk it has taken is the acquisition and transformation, through Arist Medical Sciences University, of the Ponce Health Sciences University. As the main academic officer of Arist, Lenihan guided the process of purchase and evolution of the School, a widely recognized institution with around 40 years of training professionals of excellence in the field of health in the south of Puerto Rico.

According to Bloomberg,

Arist Medical Sciences University, Public Benefit Corporation was founded in 2014. The company's line of business includes the operation of colleges and universities.

Arist Medical Sciences University is apparently part of Arist Education System.  Its website states

Arist Education System is an investment of Bertelsmann — a global media, services and education company.

Furthermore, it claims

Bertelsmann stands for entrepreneurship and creativity. This combination promotes first-class media content and innovative service solutions that inspire customers around the world. Bertelsmann’s supply of capital will support innovative graduate and professional health and human sciences programs that are making a positive impact.

So it appears that Ponce is now owned by Bertelsmann.  What a diversified global media company is doing running a medical school is not clear.

Nor is the identity to the person at Bertelsmann to whom the leadership of Arist, including Dr Lenihan, reports.  Although the Bertelsmann website lists the company's top executives, and the top managers of the Bertlesmann Education Group, the chain of command for the US for-profit medical school is not apparent.


California Northstate University College of Medicine

According to the university website, the president is Alvin Cheung, Pharm D.  The university has a board of trustees, but does not provide their biographies or explain their role.

The website provides no information about the ownership of the university, although a 2016 Sacramento Bee article stated "Backers raised more than $50 million to fund the school." I can find business listings for a California Northstate University LLC, eg here, stating it is a privately held business, but containing no information about ownership or if the business leadership is the same as the listed medical school leadership. Thus the ownership of California Northstate University LLC, and thus presumably of the medical school, is entirely opaque.


Burrell College of Osteopathic Medicine

The President is John Hummer MHA.  There is a board of trustees, chaired by Robert V Wingo, with biographies provided but whose role is not explained.

An article in the Las Cruces Sun-News from 2016 called it "a first-of-its-kind, privately funded U.S. medical school."  An Albuquerque Journal article from 2015 stated.

Burrell is entirely financed by private investors, led by Santa Fe businessman Dan Burrell in partnership with the Rice Management Co., which oversees Rice University’s $5.6 billion endowment fund. Although most public attention has centered on Burrell, a well-known real estate mogul, Rice Management is actually the majority investor in the project, estimated to cost a total of $105 million,

Other investors were not named.  Thus only some of the investors in, presumably therefore the owners of Burrell are known.  The rest are anonymous.

Discussion

The ownership of three of the four new US for-profit medical schools is unclear.  One is a private LLC whose ownership is entirely opaque.  One is partially owned by two private equity firms, whose investors are anonymous.  It may also have other, again anonymous owners.  One is owned by a group of investors, some local, some named, and some anonymous.

Anti-corruption campaigners have pushed to reveal the beneficial ownership of all corporate entities.  Transparency International's report on the problem of anonymous beneficial ownership (look here) states:

In the vast majority of countries, it remains legal for companies to hide the identity of their beneficial owners. Embezzlers use anonymously owned companies to move, launder and spend tainted money in the global financial system without being detected. Documents in the Panama Papers, for example, show how kleptocrats and their families used anonymous companies to secretly control state assets and purchase global real estate. Criminals including terrorists, human traffickers, sanctions-busters, drug dealers and tax evaders also use anonymous companies for the same reasons.

Thus anonymous ownership of any US medical school is highly troubling.  Physicians swear oaths to practice with honesty and integrity.  The institutions they train in should be above suspicion of wrong doing and corruption.  Hence medical schools should avoid practices associated with money laundering, fraud, and corruption.

Medical students, faculty, patients and accrediting boards should not trust medical schools who keep their ownership secret.

The people accountable for all four new for-profit medical schools' conduct and operations are likewise unclear. While the schools' hired managers cannot escape responsibility, it is the owners who are ultimately accountable.  But since some of the owners of three of the four new for-profit US medical schools are anonymous, some of the people actually accountable for those schools are also anonymous.


Maybe Sherlock Holmes could help...

but in his absence, medical students, faculty, patients and accrediting boards should not trust medical schools who keep the identity of those accountable for them secret.

Finally, a note about the one school which is apparently now a subsidiary of a publicly held German-based corporation.  Ultimately, the board of directors and top management of that corporation should be held accountable for that school.  However, even in this case, it would inspire more confidence of the exact lines of reporting from medical school to corporate leadership were more clear.

As Adashi et al noted, "the very notion of a for-profit medical school, anathema to generations of medical educators, is still the subject of mixed reviews."  The authors were optimistic that the higher standards for medical schools put in since the Flexner report led to the abolition of proprietary medical schools, and perhaps the supposed greater transparency of the modern era would make it possible for the new proprietary medical schools to educate students well.

However, the current for-profit schools' opacity should lead to great skepticism.  Flexner wrote:

[I]t is universally conceded that medical education cannot be conducted on proper lines at a profit, - or even at cost

His words may very well still be right.

Finally, what we now know about the new for-profit US medical schools suggests we must reexamine our fascination for "market based" approaches to health care, when almost nothing about any part of health care resembles, or could resemble a free market (see this post).  We need to make health care more transparent, and shine more sunshine on the nooks and crannies, like for-profit, anonymously owned US medical schools. 

ADDENDUM (14 January, 2020) - This post was re-posted on the Naked Capitalism blog here.

The Risks of Attending an Offshore Medical School: Students at Offshore Medical Schools Killed or Injured by Gas Explosions

US and Canadian medical education has a peculiar gray zone.  A substantial proportion of US and at least some Canadian doctors have received their medical degrees from offshore medical schools.  These are medical schools located in other countries, mainly the Caribbean, that exist only to train students for North American practice.  They are often owned by for-profit US or Canadian based companies, have little accountability to their host countries' governments, or to the US or Canada, and have generally flown under the radar despite being an important component of North American medical eduction..

Many questions have been raised by the quality of training received by students at such offshore schools.  We have recently discovered new risks to offshore medical students, in particular, that of dangerous living conditions.  We were alerted to two cases since 2018.


Gas Explosion Injured Two Medical University of the Americas (MUA) Students, Both Fatally, on Nevis in 2018

As reported by WINN FM on November 15, 2018

At around 8:00 pm on October 3, an explosion rocked the medical university and sent two American students to the hospital with severe burns across their bodies. The two students were subsequently flown to the United States for treatment.

On Wednesday (Nov 14) Acting Commissioner of Police, Hilroy Brandy disclosed that a faulty knob on the stove caused the explosion. He said one of the injured females was the actual occupant of the apartment and a female friend had come over to study. One of them lit a cigarette which ignited the gas.

That explosion eventually proved fatal to one medical student, as reported again by WINN FM on November 21, 2018:

One of the students who sustained major burns in an explosion and fire on Nevis in October has succumbed to her injuries.

28-year-old Nada Magdy Khalil of East Brunswick, New Jersey was one of two female students of the Medical University of the Americas (MUA) in Nevis inside the apartment when it exploded on Oct 3.

WINN FM confirmed that Khalil died on Sunday, November 18 in Florida where she had been receiving treatment.

The other student was very severely injured

The other victim is 31-year-old Gayane Borisovna Balasanyan from San Francisco; she is still hospitalized in Miami, Florida with burns across 90% of her body.

According to her GoFundMe page, Ms Balasanyan died in January, 2019.


There is no other publicly available  information on this explosion. Importantly, there has never been a public response from MUA, or its owners:

Since the explosion, the medical university has not issued a statement on the matter.

Gas Explosion Severely Injured Two Saba University School of Medicine (SUSOM) Students in 2019

There was an unnervingly similar case one year later, as reported by Saba News on October 15, 2019:

Saba’s emergency services were rushed to a dormitory building on Thais Hill Road in The Bottom around 7:30am Saturday, for a gas explosion that left one man severely burned.

A loud crack was heard throughout The Bottom that morning and a large plume of white smoke was seen coming out of the building and drifting into the sky. Several village residents also reported feeling the explosion’s aftershocks, which prompted them to call the Caribbean Netherlands Police Force KPCN and the Saba Fire Department.

Police, firefighters and the Ambulance Department were then dispatched to the building.

The dormitory is a privately-owned building that mainly houses students of Saba University School of Medicine (SUSOM).

Again, two students were injured:

One student was severely burned in the incident and was taken to A.M. Edwards Medical Center for treatment. He was later flown to Miami, Florida, for further medical attention.

A second victim was treated for smoke inhalation and was admitted at A.M. Edwards Medical Center for observation. She was released several hours later.

There is a GoFundMe page which is apparently for the student most seriously burned in this explosion.  It was created 3 days after the explosion, but I could find no other followup information on the explosion or the student.  Again, I could find no public response from SUSOM.

Who Should be Accountable?

These cases have been uncannily anechoic.  While the students injured were from the US, their fate has received no coverage in the US media.  Nor have the cases received recognition in the US health care literature, particularly the medical education literature.

The silence from the medical schools involved is quite unsettling.  That immediately leads to an obvious question.  Just who at these schools might be responsible for their students' physical safety?  Who currently runs and is accountable for both Caribbean schools is not glaringly obvious.

The website for the Medical University of the Americas lists an Executive Dean, but no President or CEO, or Board of Directors.  Its Wikipedia page states:

Medical University of the Americas (MUA) is a for-profit medical school in Saint James Windward Parish, Saint Kitts and Nevis.

Buried in the MUA 2018 catalog, however, is this statement:

Medical University of the Americas is a foreign profit corporation owned by R3 Education Inc. which is registered with the Florida Department of State, Division of Corporations to do business in Florida as Medical University of the Americas.

Saba University School of Medicine has a President, Dr Joseph Chu, according to its website. Its Wikipedia page does not state whether it is non-profit or for-profit.  However, like that  of MUA, the SUSOM 2018 catalog states

Saba University School of Medicine is a foreign profit corporation owned by R3 Education Inc.  which is registered with the Florida Department of State, Division of Corporations to do business in Florida as Saba University School of Medicine.

R3 Education Inc turns out to have a remarkable history, which we  discussed back in 2013.   To summarize what we found then...

The couple who founded two Caribbean medical schools which catered almost entirely to US and Canadian students ran into significant legal trouble.  Founder David Leon Fredrick and his wife, Dr Patricia Lynn Hough were indicted for tax evasion for failing to report income from the two medical schools they allegedly owned, and later sold.

The schools were Saba University School of Medicine, on Saba, and the Medical University of the Americas, on Nevis.  The initial legal proceedings revealed that while Saba University School of Medicine was apparently first set up by a non-profit foundation (or NGO) run by the couple, somehow it became for-profit owned by Mr Fredrick and Dr Hough, and Saba and the Medical University of the Americas were subsequently sold to a private equity group, Equinox Capital.  R3 Education Inc, owned by Equinox Capital, appears to have been given responsibility for running the schools, along with St Matthew University.

Before jury selection started, Mr Fredrick disappeared.  Dr Hough was eventually convicted of defrauding the US Internal Revenue Service, and income tax evasion, after trial testimony to the effect that the couple concealed money in a Swiss bank, got $36 million from the sale of the schools, and bought an airplane, two houses, and a condominium.

Left mysterious at that time were Mr Fredrick's whereabouts, where the money that the couple received from the sale of the medical schools went, and how a school that began as a non-profit organization run by the couple became a for-profit corporation owned by them.  The case should have lead to some concerns about the leadership and governance of the off-shore medical schools that now train increasing numbers of would be US and Canadian physicians.

In 2014 we provided something of an update. Mr Fredrick and Ms Hough made more than $35 million from the sale of the schools.  Ms Hough eventually went to prison.  Mr Fredrick's whereabouts remained unknown.  My internet searching in 2019 failed to produce any new information about him.


Now in 2019 we do not know much more about who is really accountable for MUA and SUSOM.  According to the Bloomberg corporate information website,

R3 Education Inc. operates as a holding company that acquires and manages for-profit educational institutions such as Saba University School of Medicine, the Medical University of the Americas, and St. Matthew's University. The company was incorporated in 2007 and is based in Devens, Massachusetts.

According to his LinkedIn Profile, the CEO and Chairman of R3 Education is Steven Rodger, of Greenwich, CT. For 23 years he has also been Managing Partner, Equinox Capital.

The Equinox Capital website make it clear that it still owns three Caribbean medical schools:

Saba University: Since its founding in 1993, more than 1,500 physicians have earned their M.D. at Saba University (www.saba.edu). Saba University School of Medicine has been accredited by the Accreditation Commission on Colleges of Medicine (ACCM) and its program has received approvals from licensing boards in New York, California and Florida. The campus is on Saba, which is located very near St. Maarten.

Medical University of the Americas: Since its founding 1998, Medical University of the Americas (www.mua.edu) has awarded approximately 500 M.D.’s. The MUA program is accredited by the Accreditation Commission on Colleges of Medicine (ACCM) and its program has received approvals from the licensing board in New York. MUA is located on Nevis, near St. Kitts.

St. Matthew’s University (www.stmatthews.edu) offers both a medical and a veterinary program. Since 1997, almost 1,500 students have obtained their M.D. and D.V.M. degrees from St. Matthews. The program is accredited by the Accreditation Commission on Colleges of Medicine (ACCM). St. Matthews is located in the Cayman Islands.

Who are the leaders of MUA and SUSOM who are accountable for what happens to their students, including their physical safety?  What allegiance do they owe their for-profit, private equity owners?  Who is responsible for the governance of the schools?  What responsibility does the private equity firm that owns the schools bear? All these questions remain unanswered.

The Perils of Offshore Medical Schools

US and Canadian medical students are promised a lot on the flashy websites (eg for MUA and SUSOM) for offshore medical schools. They may depend more on their medical schools for basics like housing than would students at American and Canadian schools. Yet they end up in physical environments with which they may be unfamiliar, and which may expose them to unexpected perils.

We should not forget that the US invasion of Grenada in 1983 was rationalized by the physical risks to US medical students at St George's University School of Medicine. The school was then a private for-profit owned by its founder Dr Charles R Modica and partners (but now partially owned by a private equity firm, Atlas Partners, per their news release.)   As the New York Times reported at the time, some students

told of bullets crashing through their dormitory rooms, of fears of being taken hostage, of a week of campus confinement under the Government's 'shoot to kill' curfew, of soldiers pointing guns at them

In particular,

Many of the students said that supplies of food and water began running low Tuesday after a weeklong curfew had been imposed by Grenada's military leaders following the slaying of Prime Minister Maurice Bishop on Oct. 19. Under the terms of the curfew, people on the street were to be shot on sight, the students said.

'I saw soldiers with guns during the curfew,' said Miss Nelson, 'and while none of them ever threatened me, several of my friends told me guns had been aimed at them, and they were terrified.'

[US Department of Defense image, Grenada invasion, 1983, via WikiMedia]


In the 21st century, the risks may be of gas explosions in accommodations more basic. and risky than students may have expected.    Yet who is ultimately accountable for disclosing and mitigating the risks?  In the case of MUA and SUSOM I cannot tell.

For would-be medical students trying to cope with the vagaries of medical school admissions in the US and Canada, the apparently easier accessibility of off-shore medical schools may be attractive.  Yet such accessibility may come with costs, and risks.  Until more is known about the risks, caveat emptor.


While Eckhert wrote in 2010(1) that the increasing presence of offshore medical graduates in the US "obligates U.S. medicine to take a closer look at these educational programs," no such scrutiny has occurred since then.  While offshore medical schools account for the training of an increasing proportion of US (and presumably Canadian) physicians, we know next to nothing about their leadership and governance.  This seems to be just another part of the decreasing accountability of the leadership of US health care, and the increasing opacity of the governance and stewardship of US health care organizations.  True US health care reform would make leadership transparent and accountable.

 Reference

1.  Eckhert NL.  Private schools of the Caribbean: outsourcing medical education.  Acad Med 2010; 85: 622-630.  Link here.