Who Guards the Guardians? - From DeVry at a Time of Alleged Fraud to Anti-Fraud Enforcement for the Department of Education

There seems to be another fox ready to guard the already flustered educational, including medical educational hen house.

Dr Julian Schmoke to Lead Student Aid Enforcement Unit

According to Politico on August 30, 2017, the new head of enforcement for the Department of Education will be one Dr Julian Schmoke Jr,

The Trump administration has tapped a former for-profit college official to lead the Education Department unit that polices fraud in higher education.

Julian Schmoke Jr., who previously directed campus operations at West Georgia Technical College and served as a dean at DeVry University, will be the department’s new chief enforcement officer, according to an internal email obtained by POLITICO.

Schmoke will lead the Student Aid Enforcement Unit, which was established by the Obama administration to more aggressively combat fraud and deceptive practices at colleges and universities.

The unit has been without a permanent leader since the departure earlier this year of Robert Kaye, a former top consumer protection attorney at the Federal Trade Commission.

'Julian possesses over 16 years of experience in higher education leadership with extensive knowledge in the development and implementation of strategies for achieving student success, higher education policy and evaluation of academic programs,' the head of the Federal Student Aid Office A. Wayne Johnson wrote in an internal email last week.

Dr Schmoke's Work for DeVry University, and its Previous Fraud Settlements

Left unsaid by Department of Education officals was that Dr Schmoke had a significant role in DeVry University.  However, per Politico

Schmoke worked in various roles at DeVry University between October 2008 and April 2012, including as an associate program dean, according to his LinkedIn page.

DeVry’s parent company, which has since rebranded as Adtalem Global Education, last year agreed to pay $100 million to resolve allegations by the Federal Trade Commission that the for-profit college company misled students about their job and salary prospects.

The company also separately reached a settlement with the Education Department over similar allegations. Obama administration officials cited those cases against DeVry as they announced the formation of the Student Aid Unit last year.

The unit Schmoke will oversee is also responsible for processing debt relief claims filed by federal student loan borrowers who say they’ve been defrauded by their college. DeVry students had 1,872 'borrower defense to repayment' claims pending before the department, according to a July 7 letter from acting Undersecretary of Education James Manning.

A bit more about the fraud settlements made by DeVry appeared in the Atlanta Journal Constitution:

In December, the Federal Trade Commission announced a $100 million settlement with DeVry Education Group, parent of DeVry University. Under the settlement, DeVry will pay $49.4 million in cash to be distributed to qualifying students who were harmed by the deceptive ads, as well as $50.6 million in debt relief. The debt being forgiven includes the full balance owed —$30.35 million— on all private unpaid student loans that DeVry issued to undergraduates between September 2008 and September 2015, and $20.25 million in student debts for items such as tuition, books and lab fees, according to the FTC.

In 2016, we hadposted even more detail about the settlement here.

While Dr Schmoke had left DeVry by the time the settlement was made, he was there at the time DeVry was taking the actions that led to the lawsuits. Per the Wonkette blog,

Dr. Schmoke was a dean at DeVry between 2009 and 2012. During that time, the Federal Trade Commission sued the school for claiming that 90% of its graduates were employed in their field within six months of graduation. In fact, the real number dipped as low as 52%. Per WaPo,

According to the FTC lawsuit, DeVry counted graduates as working in their field when they were not, in order to boost its employment outcomes. A 2012 graduate who majored in business administration was working as a server at a restaurant, while another with a degree in technical management was working as a rural mail carrier.

Yet the creation of the unit of the Department of Education that Dr Schmoke is going to lead seems to have been inspired by the sorts of abuses that his former company, DeVry, was alleged to have committed, (see report by National Public Radio in 2016).

Discussion - In General

We could start a discussion of conflicts of interest, and even the revolving door, but,...

Thus, as an opinion piece in the Atlantic asserted, the appointment of Dr Schmoke "provoked complaints from critics who pointed out that DeVry recently settled several claims brought against it by regulators alleging it had engaged in some of the very abuses the unit is charged with eliminating."  A writer for Gizmodo put it  more bluntly,

the new student protection bureau of the federal government just hired a guy who worked at the same company whose malicious practices inspired the creation of that new student protection bureau. It’s like hiring one of Al Capone’s henchman to run the FBI!

Of course, the appointment was made by an administration headed by the man for whom Trump University was named, the same bogus university which also settled fraud allegations (see the New York Times story from November, 2016 here, and our post here).

The issue is no longer laxity or timidity in the protection of the public from fraud and deception.  The issue seems to be that the fraudsters are now to be in charge of the public's protection.  This has dire implications for the country.

Discussion - Implications for Off-Shore Medical Education

But we are focused on health care dysfunction, and this particular case also seems to have dire implications for medical eduction.

DeVry University, as we have posted, most recently here,  owns American University of the Caribbean School of Medicine, and Ross University School  of Medicine. These are off-shore medical schools that cater to US and Canadian students who wish to go back to the US and Canada to practice. However, they are located in various small Caribbean countries, and since they do not train doctors to practice in those countries, essentially operate without much regulation.

As we have said before,

Admission to US medical schools is increasingly difficult.  So many who seek medical careers may be tempted to apply to schools outside the US.  In the last 30 years, American entrepreneurs have opened offshore medical schools, mostly in the Caribbean, that cater to US students.  They teach in English, and do not require immersion in an unfamiliar culture, so may be more attractive than medical schools in other countries whose mission is to educate physicians to practice in those countries. In 2010, Eckhert documented that the number of offshore medical schools, "for-profit institutions whose purpose is to train U.S. and Canadian students who intend to return home to practice," but not to train physicians to practice in the countries in which these schools are located, was rapidly growing.(Eckhert NL.  Private schools of the Caribbean: outsourcing medical education.  Acad Med 2010; 85: 622-630.  Link here.)  By 2010, there were 33 such schools, 20 of which were new since 2000.

Such offshore medical schools exist in a grey area.  The small countries or colonies in which they are located usually do not seek to regulate them, since the physicians they produce are going to practice elsewhere. There is no requirement that these offshore medical schools be accredited in the US.  Such  accreditation is currently not required for individual graduates of such schools to be admitted to US house-staff programs or for US licensure.  So perhaps it is not surprising that little is known about these schools.

How they choose students, the qualifications or even names of their faculty, their curriculum, how they supervise clinical training (which is mostly done by affiliated North American hospitals), and what happens to their graduates are obscure.  Eckhert attempted to describe what is known, but noted 'variability exists in the availability of information on faculty; where data exists, it is noted that most of the permanent on-site basic science faculty are internationally trained, many have no documented medical education experience in the United States, and it is not uncommon for them to be OMS [offshore medical school] alumni.'

Since I wrote that, several anecdotes about life as an off-shore medical student have appeared (in February, 2017, and in March, 2017, in KevinMD).  Both stressed that the modus operandi of these schools is to have relatively lax entry criteria, make a lot of money from the tuition of the students initially enrolled, and then ruthlessly weed out the weakest, who may nonetheless be left with tremendous debt.  Furthermore, the March, 2017 post noted further signs of poor quality, including "mandatory lectures are nearly pathetic. There are so many mistakes made by the inexperienced professors, and the lecture becomes confusing and muddled."  Further, students who have any "emotional distress/burnout/sickness" are left to sink or swim, as the "staff is disconnected and said either repeat the term after you seek medical attention or just quit."    

Given that there are no widely accepted ways to measure the quality of medical schools, there are thus even more reasons to worry about the quality of the education received in off-shore medical schools than in US and Canadian schools. 

Things are likely to get much worse, though, if those in charge of US government agencies that are supposed to protect the public in general, and patients' and the public's health in particular are run by people who previously were involved in predations upon the public. 

It seems silly for me to go on about true health care reform at a time when crooks can be recruited into the police department.  

DeVry Education Group, Owner of American University of the Carrbbean and Ross University Schools of Medicine, Settles Allegations of Deceptive Marketing

The parade of legal settlements made by large health care organizations just keeps stepping along.  The latest entry in it was DeVry Education Group, which owns two for-profit offshore (from the US and Canada) medical schools: American University of the Caribbean School of Medicine, and Ross University School  of Medicine.

The Case

In early 2016, we first discussed the deceptive marketing charges against DeVry University and DeVry Education Group here.  The charges have now been settled. The lede of the AP story about the settlement (via ABC News) was:

DeVry University and its parent company are paying $100 million to settle a federal lawsuit alleging the school misled students through deceptive ads.

The allegations that led to the settlement were:

The lawsuit focused on two marquee ad claims that DeVry used for years but dropped in October in a settlement with the U.S. Education Department.

Since at least 2008, the chain had advertised that 90 percent of its graduates who actively sought employment landed jobs in their field within six months of graduation.

But federal investigators found that DeVry was counting students who found jobs outside the fields they studied, and who already had jobs before they enrolled.

Included in the statistic was a graduate who studied in the health care field but found work as a restaurant server and another who worked as a car salesman, according to the FTC lawsuit.

The commission also challenged a claim that DeVry graduates earn 15 percent more than alumni at other schools a year after graduation.

So these were relatively straightforward allegations of deceptive marketing. The penalties included fines for the company as a whole.

Under the settlement, DeVry agreed to pay more than $49 million to the FTC, which says it will distribute the money to students 'harmed by DeVry's conduct.'

The chain also agreed to forgive more than $30 million in loans issued before September 2015, and $20 million in debt owed by former students.

Also,

Going forward, DeVry has promised not to misrepresent job and income prospects of potential students, and not to count jobs that students found more than six months before graduation.

That seems a bit strange, because

officials for Devry, which is based in Downers Grove, Illinois, denied all wrongdoing but said they are 'pleased this matter is reaching resolution.'

If there was no wrongdoing, why did they need to pledge no further wrongdoing? In fact, if there was no wrongdoing, why did company management agree to pay $100 million? It seems to me that if there was no good evidence supporting the charges, the company could have defended the suit for a lot less than that.

Of course, the managers knew that the settlement would be paid by other peoples' money. As is usually the case nowadays, it did not include any negative consequences for any company managers who might have enabled, authorized, directed or implemented any deceptive marketing.

The Implications

So once again we have an example of a legal settlement involving a large, US based health care related - at least in part - organization.  The settlement involved allegations of unethical behavior that likely harmed students.  Yet the amount of the settlement amounted to a slap on the wrist for a corporation with over $1.8 billion in revenue (2015-2016, per Yahoo).  Furtheremore, the nature of the settlement demonstrated the continued impunity of managers of large health care organizations, none of whom in this case had to suffer any negative consequences, yet some must have enabled, authorized, directed or implemented the deceptive marketing. 

This case also raises even more questions about the American (and to some extent Canadian) reliance on offshore, for-profit medical schools to train many of their physicians.  As we have frequently discussed, (most recently here),...

 Admission to US medical schools is increasingly difficult.  So many who seek medical careers may be tempted to apply to schools outside the US.  In the last 30 years, American entrepreneurs have opened offshore medical schools, mostly in the Caribbean, that cater to US students.  They teach in English, and do not require immersion in an unfamiliar culture, so may be more attractive than medical schools in other countries whose mission is to educate physicians to practice in those countries. In 2010, Eckhert documented that the number of offshore medical schools, "for-profit institutions whose purpose is to train U.S. and Canadian students who intend to return home to practice," but not to train physicians to practice in the countries in which these schools are located, was rapidly growing.(1)  By 2010, there were 33 such schools, 20 of which were new since 2000.

Such offshore medical schools exist in a grey area.  The small countries or colonies in which they are located usually do not seek to regulate them, since the physicians they produce are going to practice elsewhere. There is no requirement that these offshore medical schools be accredited in the US.  Such  accreditation is currently not required for individual graduates of such schools to be admitted to US house-staff programs or for US licensure.  So perhaps it is not surprising that little is known about these schools.

How they choose students, the qualifications or even names of their faculty, their curriculum, how they supervise clinical training (which is mostly done by affiliated North American hospitals), and what happens to their graduates are obscure.  Eckhert attempted to describe what is known, but noted "variability exists in the availability of information on faculty; where data exists, it is noted that most of the permanent on-site basic science faculty are internationally trained, many have no documented medical education experience in the United States, and it is not uncommon for them to be OMS [offshore medical school] alumni."

Concerns about how offshore medical schools are run, and how well they educate their students can only be heightened by the settlement of the latest DeVry case.

The DeVry statement about the settlement included the assertion that "at no time has the academic quality of DeVry University education been questioned."  This is a bit disingenuous.  The case was brought by the Federal Trade Commission, which has no particular role overseeing educational quality, and was specifically about deceptive marketing.

One wonders, however, what sort of education might be provided by a large corporation whose corporate culture did not recoil from what appeared to be grossly deceptive marketing.

That statement also specifically only mentioned DeVry University, which is one of many for-profit "educational" organizations under the Devry umbrella (look here).  It said nothing about how such a corporate culture might affect educational quality at the other subsidiaries. 

It certainly did nothing to help answer questions that were previously raised about the two DeVry owned and operated for-profit medical schools.  In 2013, we posted about a Bloomberg investigative article about the two DeVry owned medical schools, at the American University of the Caribbean and Ross University.  The article focused on multiple issues:
-  high attrition rates of students compared to those in US based schools
-  inability of many students to complete clinical training in the customary two years
-  low rates of students matching to US residencies compared to US graduates
-  high costs for students, presumably a cause of their high levels of debt

Keep in mind that some of these concerns were based on statistics supplied by DeVry.  Yet now there is a new reason to be doubtful about their statistics, and any other information coming out of DeVry about its medical education offerings.  Furthermore, while Eckhert wrote in 2010 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.

So, we see another aspect of the US health care system in which money seems to trump mission, facilitated by an unseemly alliance between wealthy corporate executives and bad US government policy.  We need to 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.  We need to make health care more transparent, and shine more sunshine on the nooks and crannies, like off-shore but US corporate owned medical schools.  We need to facilitate health care leadership and governance that puts patients' and the public's health first, way ahead of the personal enrichment of the participants.

This may be a pipe dream in 2016, since the US at least just voted in what seems to be the most market fundamentalist, plutocratic administration yet.  As the AP article noted, "some for-profit colleges see President-elect Donald Trump as a champion of the private sector who could spur a rebound for the [for-profit education] industry.  In the weeks after Trump's election, sharing in DeVry's parent company surged 30 percent."
 
Thus, as long as the US continues its light touch regulation if, or even further deregulates the outsourced offshore system which now educates increasing numbers of US doctors(2), Americans who want to become doctors ought to be very skeptical about the futures they may face if they choose to go to such offshore schools.

References

1.  Eckhert NL.  Private schools of the Caribbean: outsourcing medical education.  Acad Med 2010; 85: 622-630.  Link here.
2.  Eckhert NL, van Zanten M.  U.S.-citizen international medical graduates - a boon for the workforce? N Engl J Med 2015; 372: 1686-7.  Link here.

Whom Can You Trust? - FTC Charges DeVry University, Sister School of American University of the Caribbean and Ross University Medical Schools, with Deceptive Marketing

Now there is another reason for Americans who aspire to medical careers to be concerned about applying to offshore medical schools.

Introduction

Admission to US medical schools is increasingly difficult.  So many who seek medical careers may be tempted to apply to schools outside the US.  In the last 30 years, American entrepreneurs have opened offshore medical schools, mostly in the Caribbean, that cater to US students.  They teach in English, and do not require immersion in an unfamiliar culture, so may be more attractive than medical schools in other countries whose mission is to educate physicians to practice in those countries. In 2010, Eckhert documented that the number of offshore medical schools, "for-profit institutions whose purpose is to train U.S. and Canadian students who intend to return home to practice," but not to train physicians to practice in the countries in which these schools are located, was rapidly growing.(1)  By 2010, there were 33 such schools, 20 of which were new since 2000.

Such offshore medical schools exist in a grey area.  The small countries or colonies in which they are located usually do not seek to regulate them, since the physicians they produce are going to practice elsewhere. There is no requirement that these offshore medical schools be accredited in the US.  Such  accreditation is currently not required for individual graduates of such schools to be admitted to US house-staff programs or for US licensure.  So perhaps it is not surprising that little is known about these schools.

How they choose students, the qualifications or even names of their faculty, their curriculum, how they supervise clinical training (which is mostly done by affiliated North American hospitals), and what happens to their graduates are obscure.  Eckhert attempted to describe what is known, but noted "variability exists in the availability of information on faculty; where data exists, it is noted that most of the permanent on-site basic science faculty are internationally trained, many have no documented medical education experience in the United States, and it is not uncommon for them to be OMS [offshore medical school] alumni."

Such information as is available about these schools comes from the schools themselves.


DeVry Accused of Deception


Yet now there is reason to be more suspicious about the information the schools choose to reveal.  This week, media reports documented that the US Federal Trade Commission (FTC) is suing DeVry University for allegedly "deceptive" recruiting practices.  DeVry University is a subsidiary of DeVry Education Group.  DeVry has two offshore medical schools as subsidiaries, the American University of the Caribbean School of Medicine, and Ross University School of Medicine.

Here is a summary from the Miami Herald,

On Wednesday, the Federal Trade Commission sued DeVry, which operates three Florida campuses, including one in Miramar, for 'deceptive' recruiting practices. The company is one of the nation’s largest for-profit colleges, with 50-plus U.S. campuses, and more than 41,000 students. In addition to the disputed 90 percent number [of graduates who found work in their chosen field], the FTC alleges DeVry also falsely advertised that its graduates 'earn 15% more than graduates from other colleges and universities.'

The allegations were that DeVry rigged the statistics:

The FTC suit alleges that DeVry fudged the numbers on its 90 percent job placement rate by leaving out some out students who weren’t finding jobs. This was done by classifying the students as not actively seeking employment, even though that wasn’t the case, the FTC says.

According to the FTC, DeVry also boosted its job placement numbers by counting students as placed in their field even when that clearly wasn’t accurate. Examples of DeVry’s 'in field' placements cited in the lawsuit include:

▪ A graduate from the technical management degree program working as a mail carrier.
▪ A business administration graduate working as a waiter at the Cheesecake factory.
▪ A business administration graduate working as a secretary at a prison.
▪ A technical management graduate working as a sales associate at Macy’s.

The Miami Herald reporter found at least one more example,

One former student at DeVry’s Miramar campus told the Herald that the school’s recruiter made it seem like his project management degree would lead to guaranteed employment. But after graduating in 2011, the student, who asked to be identified only by his first name, Luis, said he never got a callback from the more than 50 job postings he applied for.

Luis said he has $30,000 in student loans, and is working the same type of job he had before enrolling at DeVry, as a medical device technician.

A blog post on the Republic Report included two more examples,

graduates who majored in technical management working as unpaid volunteer positions at medical centers;

a business administration graduate with a health care management specialization working as a car salesman.

Not surprising, the corporate leadership of DeVry University denied the claims, and dismissed the evidence as "anecdotal examples that exaggerate the allegations but do not prove them."  They focused on the overall numbers, claiming that "there is no national standard for calculating employment statistics...."

 Yet they did not challenge the particular anecdoes, all of which seemed to be examples of unsuccessful placements claimed by the University to be the opposite.

Adding to Previous Concerns about DeVry Owned Offshore Medical Schools

In 2013, we posted about a Bloomberg investigative article about the two DeVry owned medical schools, at the American University of the Caribbean and Ross University.  The article focused on multiple issues:
-  high attrition rates of students compared to those in US based schools
-  inability of many students to complete clinical training in the customary two years
-  low rates of students matching to US residencies compared to US graduates
-  high costs for students, presumably a cause of their high levels of debt

Keep in mind that some of these concerns were based on statistics supplied by DeVry.  Yet now there is a new reason to be doubtful about their statistics.  Furthermore, while Eckhert wrote in 2010 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. 


Summary

Outsourcing US medical education to offshore schools that largely escape regulation in the US, and in the countries in which they are located is another outstanding example of how the US has applied hyper market based solutions to health care. While more US students are attending such schools, and often paying a high price and incurring high indebtedness for the privileges of doing so, there are many reasons to be doubtful about the quality of the education they may receive, and the likelihood of their long-term success as physicians.

Yet health care, and particularly the quality of education received by those who practice medicine in the US, could be viewed as a public good.  Dubious training of US doctors affect not only the doctors themselves, but their patients' and the public's health.  Outsourcing this education could put a lot of people at risk.

However, it does provide an attractice opportunity for the managers of the outsourced system to make money.  Per the DeVry Education Group 2015 proxy statement, CEO received $5,343,407 in total compensation that year, and owned over one million shares of stock (currently valued at just under $20 million).  Four other named officers each received at least $1 million.

So, we see another aspect of the US health care system in which money seems to trump mission, facilitated by an unseemly alliance between wealthy corporate executives and bad US government policy.  We need to 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.  We need to make health care more transparent, and shine more sunshine on the nooks and crannies, like off-shore but US corporate owned medical schools.  We need to facilitate health care leadership and governance that puts patients' and the public's health first, way ahead of the personal enrichment of the participants.  

As long as the US continues its light touch regulation of the outsourced offshore system which now educates increasing numbers of US doctors(2), Americans who want to become doctors ought to be very skeptical about the futures they may face if they choose to go to such offshore schools. 

References

 1.  Eckhert NL.  Private schools of the Caribbean: outsourcing medical education.  Acad Med 1010; 85: 622-630.  Link here.
2.  Eckhert NL, van Zanten M.  U.S.-citizen international medical graduates - a boon for the workforce? N Engl J Med 2015; 372: 1686-7.  Link here.

Quality vs Costs of US Corporate Owned but Offshore Medical Schools

Background: Off-Shore Medical Schools for US Students Owned by US Corporations

While US health care appears to be more corporate than health care in any other developed country, one part of health care that has remained a bit less corporate is medical education.  In particular, no US medical school is a for-profit venture, to my knowledge.  (This just makes US medical education a bit less corporate than the rest of health care because, as we have discussed endlessly, academic medical institutions in the country have frequent institutional conflicts of interest, and their boards of trustees, administration, and faculty have frequent individual conflicts of interest.) 

Nonetheless, there are many Americans attending for-profit medical schools owned and run by US based corporations.  It is just that these schools are not physically located in the US.  Since the number of US citizens who want to go to medical school has been greatly exceeding the capacity of US medical schools, many who want to become physicians have sought medical training in other countries.  Some go to medical schools outside of the US which are primarily operated to provide doctors to the countries in which they operate. However, the limited availability of places available in such schools for foreign students, and the difficulties of training in unfamiliar medical systems and often in unfamiliar languages limit the attractiveness of this option.

Enter American entrepreneurs into the picture, who realized they could set up schools in willing locations (often in small countries in the Caribbean) meant to educate Americans in English.  While there are plenty of reasons to be concerned about the role US based medical schools play in the dysfunction of US health care, there may even be more reasons to be concerned about for-profit, US owned, but off-shore medical schools that cater to US students.  Yet although such schools now train a large number of students, they tend to fly under the radar.

Reasons for Concern about US Corporate Owned but Off-Shore Medical Schools

In 2010, we posted about an investigative report in the St Petersburg (FL) Times that provided reasons for concern.  These included suggestions of quality problems, such as high attrition rates, high rates of failure to complete residency training and lack of quality controls over clinical education, high costs imposed on students, and the role of extremely well compensated executives with no apparent knowledge of medical education.

Now Bloomberg has published another report on for-profit, US owned Caribbean medical schools that underscores these concerns.  The report focused on schools owned by the US based, publicly traded DeVry Inc.  These include American University of the Caribbean School of Medicine, located in St Maarten, and Ross University School of Medicine, located in Dominica... 

Quality Concerns


- Attrition

 Many DeVry students quit, particularly in the first two semesters, taking their debt with them. While the average attrition rate at U.S. med schools was 3 percent for the class that began in the fall of 2008, according to the AAMC, DeVry says its rate ranges from 20 to 27 percent. 

One reason for this is that for-profit schools may take students who are less academically qualified,

 Many of those students, ..., failed to gain admission to U.S. schools, where the mean score on the Medical College Admission Test, or MCAT, was 31.2 out of a possible 45 last year. At DeVry’s schools, the average score was 25.

- Time to Completion of Training

 Of those who remained, 66 percent of AUC students and 52 percent of students at DeVry’s other Caribbean medical school, Ross University School of Medicine, finished their program -- typically two years of sciences followed by two years of clinical rotations -- on time in the academic year ended on June 30, 2012. 

- Difficulty Obtaining Residencies

The National Resident Matching Program says 94 percent of fourth-year students schooled in the U.S. landed a first-year match in 2013, while 53 percent of U.S. citizens trained internationally did.

DeVry students fare better than the average foreign-trained student. Of the 914 Ross students who applied for residency in 2013, 76 percent, or 699, earned places. Another 41 had preliminary one-year spots, which would require the students to win a second residency in order to be eligible for a medical license in 48 states.

Of the 268 AUC students who applied for residency, 212, or 79 percent, got matches, and seven more had one-year slots. The remainder of the students failed to win a residency.

- Lack of Standards


The Bloomberg article also emphasized the fact that the US owned corporate off-shore schools do not have to meet the same accreditation standards as do US based schools:

  The Accreditation Commission on Colleges of Medicine, an Ireland-based body, accredits four Caribbean medical schools, including AUC, according to its website.

High Costs

While the quality of education provided by US owned corporate off-shore medical schools may be questioned, there is no doubt about their high costs.

 First-year tuition on Dominica costs $56,475, based on the three terms Ross divides the year into. That compares with a median of $50,309 for tuition and fees at private U.S. medical schools in the 2012-to-2013 school year.

These costs are of particular concern because many students of off-shore schools amass impressive amounts of debt. 
 

DeVry, which has two for-profit medical schools in the Caribbean, is accepting hundreds of students who were rejected by U.S. medical colleges. These students amass more debt than their U.S. counterparts -- a median of $253,072 in June 2012 at AUC versus $170,000 for 2012 graduates of U.S. medical schools.

And that gap is even greater because the U.S. figure, compiled by the Association of American Medical Colleges, includes student debt incurred for undergraduate or other degrees, while the DeVry number is only federal medical school loans. 

 These high debt loads are enabled by US government loans, even though the schools are not located or accredited in the US.

And though neither AUC nor Ross, in the island nation of Dominica, is accredited by the body that approves medical programs in the U.S., students at both schools are eligible for loans issued by the U.S. Education Department.

In addition,

 Students at the four schools -- the two DeVry schools, along with St. George’s University School of Medicine and, since July, Saba University School of Medicine -- are also eligible for tuition benefits from the U.S. Department of Veterans Affairs.

Leadership 

The Bloomberg article briefly questioned the motivations of DeVry leadership, quoting David Bergeron, previously of the US Department of Education

If they have to make a choice between students and profit, they choose profit

They may do so because the off-shore medical schools bring in a lot of money

DeVry got 34 percent of its revenue in the year ended on June 30 from medical and health-care education, including a chain of U.S. nursing schools. The unit contributed $673 million of DeVry’s $1.96 billion in revenue, up more than sevenfold from $91 million in fiscal 2005.

'The diversification strategy is working,' Chief Executive Officer Daniel Hamburger said at an investor conference in Chicago in June. 'About a third now of our enrollment is in the growing field of health-care education.'

It seems clear that this revenue stream is greatly dependent on US government money
 

DeVry acquired AUC in 2011 for $235 million, attracted partly by the school’s eligibility for federal loans, says Harold Shapiro, DeVry’s chairman and a former president of Princeton University.
 
'Access to federal student loans is very important for a lot of DeVry programs, including that one,' says Shapiro, 78, an economist by training, who plans to retire from DeVry in November after 12 years on the board and five years as chairman. 'Obviously, it’s part of what makes it work.'

A Quick and Dirty Look at Costs vs Value

As I noted earlier, little seems to be written about the commercial nature of the US owned, but off-shore medical schools that purportedly educate a growing number of US citizens.  I thought I would try to add a little to the Bloomberg article by trying to see if I could find any other obvious way to contrast the quality of the Caribbean based schools with their high costs.

As noted above, the tuition at one DeVry medical school was more than 10 percent higher than the median for US schools.

For comparison, I thought I would make some sort of quick assessment of the faculty of one DeVry school, Ross University School of Medicine.  That turned out to be easier than I thought it would be.

My first stop was the web-page that conveniently lists all of the school's faculty and administration.  I assumed that this would be cumbersome to use.  After all, a typical US medical school has a huge faculty, divided among pre-clinical departments (anatomy, physiology, biochemistry, etc), and clinical departments (usually one for each important specialty and or sub-specialty).  I thought I would start with the Ross department of internal medicine (since my background is in internal medicine).  Imagine my surprise when I discovered that Ross does not have individual departments for clinical disciplines, but simply one Department of Clinical Medicine.

Imagine my further surprise when I reviewed its membership.  The web-page lists all of 31 people in this department.  The list, with a summary of the individuals' positions at the school, and previous training appears below in the appendix.

The qualifications of this small number of clinical faculty were mixed at best.

- Note that of the 31, 8 are not actually faculty, but staff (color coded pink)

- Of the 23 actual faculty, only 5 seem to have received their medical degree and residency training in the US (color coded blue).  In addition, one received US residency training after medical school in South Africa.  (This is relevant because this school caters to US students, emphatically not students from Dominica.)

- Of the remaining 18 faculty, for 10 no background information was supplied (color coded green).

While the number of clinical faculty was small, keep in mind that Ross University School of Medicine is very large:

Ross typically enrolls 900 to 950 students per academic year, who start in either January, May or September.

 That’s about seven times the average of 139 for the 2013 graduating class of U.S. med schools, according to figures from the AAMC. 

Yet a typical American school has orders of magnitude more faculty for almost one order of magnitude less students.  For example, my own medical school, Alpert Medical School of Brown University, has 457 students in four classes, and has 180 campus-based and 652 hospital-based faculty.  Its Department of Internal Medicine, just one of many clinical departments, is much larger than Ross University's single Department of Clinical Medicine.

While the argument could be made that Ross only provides the first two years of medical education at its Dominica campus, and farms out the rest to a variety of hospitals in the US, keep in mind that the second year of a typical medical school curriculum is clinical topics and taught by faculty in clinical departments, often hospital based.  

So what in the world is the rationale for charging a higher tuition rate than a typical US based medical school, when the school only has to support a tiny faculty whose qualifications do not seem sufficient to demand a high price?

Summary

Based on admittedly limited information mainly from media sources, we find that US corporate owned but off-shore based medical schools make large amounts of revenue, charge their large student bodies big amounts for tuition, yet provide proportionately minuscule numbers of not clearly all well-qualified faculty, producing high attrition and residency completion rates.  Yet these schools' revenue streams are derived mainly from US government loans, made even if many students will not eventually obtain medical qualification and work as physicians. 

This seems like a great deal for the corporate executives and perhaps stockholders, but a poor deal for the students and the US tax-payers who support them.

We see another aspect of the US health care system in which money seems to trump mission, facilitated by an unseemly alliance between wealthy corporate executives and bad US government policy.  We need to 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 off-shore but US corporate owned medical schools.  We need to facilitate health care leadership and governance that puts patients' and the public's health first, way ahead of the personal enrichment of the participants.  

Appendix

 "Faculty" Listing for Ross University School of Medicine Department of Clinical Medicine

 Jane Bateson - "Data Analyst & Research Associate"

Anne M Beaudoin - "Operations Specialist"

Liris Benjamin - "Associate Professor," "Doctorate in Physiology from the University of West Indies"

Lisa Buckley - "Simulaton Cordinator"

Yasmin Burnett -"Associate Professor" [no further details listed]

Diana Callender - "Professor and Chair" "graduate of the University of the West Indies where she completed her MBBS and

Residency in Clinical Hematology."

Terri Carlson- "Associate Professor," "Creighton University Medical School in Omaha, Nebraska and completed residency

training in Family Practice at University of California, San Francisco in 2001."

John Charyk - "Assistant Professor," "medical school at Georgetown University in Washington DC. In 1981 he completed his

family medicine residency program at the University of Colorado in Denver."

Phillip E. Cooles - "Professor," "BSc at King's College, London, then a medical degree at St George's Hospital medical

school, and then a residency in internal medicine in Aberdeen, completing the MRCP"

Lauri Costello - "Assistant Professor," "UC Davis for medical school then further north to Spokane Washington for her

residency at Family Medicine Spokane,"

Hedda Dyer - "Associate Professor," "University of Edinburgh Medical School with a bachelor of Medicine and Surgery (MB

CHB). She is a Member of the Royal College of Surgeons of Edinburgh, Scotland (MRCS Ed)"

Sean Fitzgerald - "Assistant Professor" [no further details]

Lyudmyla Golub - "Associate Professor," "Doctor of Medicine degree in 1983 from Vinnitsa National Medical University,

Ukraine. She completed an Internship in Surgery at Vinnitsa Teaching Hospital #3, Ukraine"

Lata Gowda - "Harvey Facilitator"

Aimee Hougaboom - "Simulation Coordinator"

David Johnson * - "IME Facilitator"

Sybille Koenig - "Coordinator, Standardized Patients Program"

Jaya Kolli - "Professor," "undergraduate degree at the Guntur Medical College, Andhra University, India. He went on to the

Government General Hospital/Guntur Medical College, Nagarjuna University, in Guntur, India and completed a residency in

Internal Medicine"

Kamalendu Malaker * - "Visiting Faculty" [no further details]

Ganendra Mallik - "Associate Professor" [no further details]

Sanghita Mallik - "Assistant Professor" [no further details]

Robert Nasiiro - "Professor" [no further details]

Worrel Sanford * - "adjunct Assistant Professor" [no further details]

Robert Sasso - "Professor" [no further details]

Harold Schiff - "Associate Professor," "board certified neurologist, trained at Boston City Hospital, Boston University and

has a fellowship in Behavioral Neurology, Higher Cognitive Function and Geriatric Neurology. He graduated from the

University of the Witwatersrand, Johannesburg South Africa"

Nancy Selfridge - "Associate Professor" "medical training and MD degree from Southern Illinois University School of

Medicine"

Rose-Claire St. Hilaire * - "IME Instructor" [no further details]

Lynn Sweeney - "Assistant Professor,"graduated from the University Of Tennessee School Of Medicine in 1987. She completed

residency in emergency medicine at the University of Arkansas for Medical Sciences"

Valarie Thomas - "Assistant Professor," "D.V.M. degree from the Universidad Agraria de La Habana in Havana Cuba"

Nash Uebelhart - "Assistant Professor," [no further details]

Miscilda Vital-Harrigan - "Assistant Professor," [no further details]

To Whom Does a Leading "Off-Shore" Medical School Owe its Allegiance?

We have noted how existing US medical schools seem unwilling to invest or reward teaching (see post here.)   It is no secret in academic medicine that for years, US medical schools have been unable to train enough students to meet the country's current demand for doctors.

Brain Drain
Hence, a significant proportion of physicians practicing in the US were trained by medical schools in other countries.  One well-known adverse consequence of our disinclination to put sufficient resources into medical education is "brain drain," the migration of physicians from countries with severe physician shortages and major unmet health care needs to the US.  (For more discussion of this issue, see our 2005 post here, and also Mullan F. The metrics of the physician brain drain. N Engl J Med 2005; 353: 1810-1818. Link here.)

At the end of 2009, the St Petersburg (Florida) Times published an investigative report which showed some further adverse effects of the US disinclination to support medical education sufficient to meet the country's needs. 

Ross University and Its Problems

The report profiled the problems at one important "off-shore" medical school.

Ross University School of Medicine may be the biggest medical school you've never heard of.

For decades, the school on the Caribbean island of Dominica has been accepting U.S. students whose poor test scores make it impossible for them to get into medical schools in the States.

And though Ross is 1,500 miles from the mainland, U.S. residents who attend the school, and about two dozen other offshore medical schools, qualify for federal student loans.

That has meant more than $150 million a year in government-guaranteed aid for Ross, which has about 3,500 students, double the biggest U.S. medical school.

Ross and other foreign medical schools say they're responding to U.S. demand for new doctors as the population ages.

And there's no question that these schools have produced thousands of practicing physicians. There are more than 80 Ross graduates in the Tampa Bay area alone.

But federal regulators are taking a closer look at evidence suggesting taxpayers and students may be getting shortchanged by foreign medical schools.

• At Ross, fewer than one-third of the students finish in four years, compared to nearly 100 percent at U.S. medical schools. [And as reported later in the article, the six-year graduation rate is only 66% - editor]

• Since Ross, like other Caribbean medical schools, doesn't have a teaching hospital, it pays hospitals stateside for students' clinical training, with wide variations in quality.

• Students of foreign medical schools like Ross graduate with higher average debt, $235,000 compared to the average $158,000 owed by graduates of U.S. medical schools, according to an August report to Congress by regulators.

• About 20 percent of Ross graduates fail to land a residency, the key to a license to practice in the United States. If they cannot pay their student debts, taxpayers are left holding the bag.

The article concludes with:

In a report to Congress in August, the group that accredits offshore medical colleges recommended that the schools raise standards and improve reporting on everything from test scores to graduation rates to total cost.

[Michael] Rendon, the former Ross registrar, said he agrees with the need to stiffen entrance requirements.

'We want doctors but we can't give that kind of money to everyone who's chasing a dream of being an M.D.,' he said. 'We need to be a little bit more discriminating about who those tax dollars go to.'

Based on what I wrote above, these criticisms do seem very "US centric." It seems obvious that a school based in the tiny Commonwealth of Dominica, with a population of little more than 72,000, and an estimated gross domestic product of $726 million in 2008, (according to the CIA factbook), might have trouble meeting US standards.  But instead of trying to do so, wouldn't it be better if the school could concentrate on training physicians to practice in the Caribbean region?

But wait, it is not so simple... 

Who  Really Owns Ross University?

It is true that the missions of most of the medical schools outside of the US which make substantial contributions to the US physician workforce are mainly to train physicians to practice within their countries.  But that description hardly applies to Ross University.  Per the St Petersburg Times,

Robert Ross, a commodities trader in New York, opened his medical school in 1978 in a motel in Dominica's capital at the suggestion of an employee whose son couldn't get into medical training in the States. By 2000, Ross had sold majority interest in both the medical school and an affiliated veterinary school in St. Kitts to a group of New York investors. Three years later, both schools were acquired by DeVry, [Inc] for $310 million.

Ross is the only offshore medical school owned by a publicly traded corporation, which must disclose more financial data than privately owned schools.

Last year, DeVry, better known for its tech training schools, reported $165.7 million in net income after taxes. But the company also reported an additional $140 million in tax-free income from the Ross operations.

"Ross University" describes itself as:

Ross University is one of the largest and most successful medical educators in the world – and remains one of the great secrets in medical education.

Since opening in 1978, Ross has been committed to our students with a rigorous curricula that mirrors the education of its U.S. peers.

I see nothing obvious on the "Ross University" web-site that mentions DeVry Inc. 
But "Ross University" and "Ross University School of Medicine" are really just operating subsidiaries of DeVry Inc, which does describe itself as:

one of the largest publicly held, international, higher educational organizations in North America, is the parent organization for DeVry University, Ross University,....

This raises questions whether the US students who apply to the medical school know they will be taught by a for-profit US corporation?


Who Leads Ross University?
 
Note that the CEO of DeVry Inc, and his lieutenants most responsible for medical education at Ross University do not seem to have the sort of qualifications you would expect from those in charge of a "unviversity" and a medical school.  Per the DeVry Inc., web-site:

Daniel Hamburger:

Daniel Hamburger is President and Chief Executive Officer of DeVry Inc.

Hamburger joined DeVry in 2002 as Executive Vice President, responsible for DeVry’s online operations and Becker Professional Review. He was named President and Chief Operating Officer in 2004, and Chief Executive Officer in 2006.

Prior to DeVry, Hamburger served as Chairman and Chief Executive Officer of Indeliq (pronounced 'in-DELL-ik'), now owned by Accenture Learning. In addition, his previous experience includes serving as Division President of WW Grainger's Internet Commerce group, growing revenues from $10 million to over $100 million in one year. Previously, Hamburger started the Internet Services Group for RR Donnelley’s Metromail division, and was responsible for its venture capital investments. He also served as a consultant with Bain & Company in London, Warsaw and Boston.

Hamburger graduated in 1986 from the University of Michigan with bachelor's and master's degrees in Industrial Engineering. In 1990, he earned an MBA from Harvard Business School.

Dr Thomas C Shepherd:

Dr. Thomas C. Shepherd has been the president of Ross University since 2004. In this position, Dr. Shepherd is responsible for the operations of the School of Medicine, located in Dominica,....

Prior to joining Ross University, Dr. Shepherd was the president of Bastyr University, a Washington-based university with multiple offerings in healthcare education. Prior to Bastyr he co-founded Royale Healthcare, Inc., a hospital management company in North Carolina, to provide hospitals and health systems throughout the United States with management and consulting services. He has served in senior management roles for a variety of [for-profit] hospitals and healthcare systems, including Hallmark Healthcare (now Community Health Systems), American Healthcorp, Inc., and HCA.

Dr. Shepherd received a bachelor of science degree in business administration cum laude from Fairleigh Dickinson University in 1972, a master’s degree in hospital administration from George Washington University in 1975, and a doctor of health administration from the Medical University of South Carolina in 1999.

William Hughson:

William Hughson is President of the Medical and Healthcare group at DeVry Inc.

Hughson joined DeVry from DaVita Inc., a leading provider of dialysis services in the United States. At DaVita, he managed a wide number of business units including co-founding DaVita at Home, and founding DaVita Rx. Prior to that, he headed Ultra Lucca from 1997-1999, which under his guidance, rebranded itself A.G. Ferrari Foods and more than doubled in size. Previously, Hughson was president and chief financial officer of Noah’s New York Bagels, which he helped to grow from one to 39 stores. Hughson began his career in the Capital Markets Division of Morgan Stanley in 1986 and subsequently worked at Bain & Company in 1990.

He received his bachelor’s degree in English from Williams College and graduated from the Stanford Graduate School of Business with a master’s in business administration.

For their pains, Mr Hamburger had amassed 548,666 shares of DeVry stock, worth $30,966,709, at today's price of $56.44/share, and received $3,454,711 in total compensation in fiscal 2009, while Mr Shepherd had amassed 74,950 shares, worth $4,230,179,  and received $714,688, according to the 2009 DeVry Inc proxy statement.

Yet none of the three top leaders of DeVry Inc with responsibilities for the Ross University medical school subsidiary are physicians, have any obvious direct clinical or biomedical scientific experience, or have any educational expertise or experience.

Conclusions

So here we have a new kind of example of what laissez faire unregulated capitalism has wrought for US health care.  The medical school in tiny, impoverished Dominica exists only to train physicians for the US not for Dominica, or the Caribbean area.  Nonetheless, the school does not do a great job: one-third of its students do not graduate even in six years, and one-fifth of those graduates never even start a residency.  Yet the students pay more than $30,000 a year in tuition, and graduate with an average debt much higher than US trained medical students.   In fact, the school is actually a subsidiary of a large, US for-profit corporation, although it is not clear if this is made obvious, or even revealed to prospective students.  The leaders to whom the school report to seem to have no expertise or background in clinical medicine, biomedical science.   Yet they are handsomely rewarded for their lack of relevant expertise and experience, and apparently for the poor performance of their graduates.

There is something really perverse about a nation that spends $2.3 trillion a year on health care, yet does not spend enough on medical education to educate the physicians it needs, while drawing physicians from unregulated, for-profit schools located in less developed countries, but owned by US corporations.