Fuzzy Math Indeed: Rising Costs in Government's Digital Health Stimulus

Seen in the blog of the Huffington Post Investigative Fund:

Fuzzy Math? Rising Costs in Government's Digital Health Stimulus

Spending Could Be Double The Obama Administration's Public Estimate of $19 Billion

By Fred Schulte
Huffington Post Investigative Fund

15 Oct 2009

Creating digital medical records for every American within the next five years – a key provision of President Obama’s stimulus package -- could cost more than twice the $19.5 billion figure that has been cited by federal officials.

Federal budget documents show that actual spending for the plan, which will use stimulus money to help doctors and hospitals defray the cost of installing high-tech records systems, could hit nearly $47 billion.

The discrepancy between the Obama administration’s $19.5 billion public estimate and the entry in the budget of the U.S. Department of Health and Human Services mostly arises from the government’s calculation that it will recoup some of the cost of subsidizing digital systems through billions of dollars in reduced federal health spending. But many health analysts are highly skeptical that such savings can be accurately predicted.

It's worse. Far worse.

I believe the government is underestimating EHR costs by a factor of 5 to 10, due to implementation failure and remediation costs.

I'm a long term optimist on health IT, but a short term realist. I believe we will be having an avalanche of failed/stalled projects such as this one in years to come: "Another Major HIT Project Setback at UCSF".

The incompetence in this industry is worse than I imagined when I started writing about HIT dysfunction a decade ago. Worse are the coverups of problems that occur in implementation and in use.

At least in the U.S. military, there is transparency about health IT problems (e.g., see here). In the private sector, forget about publicity of what actually goes on in the U.S. (The U.K. has increased its own transparency to some extent.)

A spokesman for the department [U.S. Department of Health and Human Services], Nicholas Papas, said that the $47 billion figure is “undergoing revision and we anticipate it will decrease.” He said the agency expects to generate a “firmer figure” by the end of the year, but declined to say how much it would be.

Papas said there was no attempt to lowball the number for public consumption. Calculating both cost and benefits in the government’s estimate is a sound way to explain the price of the plan, he said.

Unfortunately, these calculations do not factor in the cost of dyscompetence, incompetence and failures created by lack of essential cross disciplinary expertise and talent in the HIT industry.

Many health policy experts agree that electronic health records can cut costs by reducing harmful medical errors and wasteful spending.

I would bet these "policy experts" have never tried to implement clinical IT.

The $19 billion figure has appeared in numerous news articles and been widely picked up and repeated by many bloggers covering the fast-growing health information technology industry. Earlier this month President Obama’s chief technology officer, Aneesh Chopra, mentioned the $19 billion figure twice in a live video cast from the White House.

But it’s “totally hypothetical,” said Sharona Hoffman, a professor of law and ethic at Case Western Reserve University School of Law. She said it counts on savings “with no concrete evidence they will occur.”

It's worse than "totally hypothetical." A major confounding variable is simply missing - the cost of HIT failures, false starts, delays, and remediation. More can be read about those risks here. That site has been online for a decade now, and ironically is nearly the only relevant "hit" on a search engine query on "healthcare IT failure" or similar concept.

Has anyone in government been paying attention?

A slide deck I recently presented entitled "Health IT Promises and Threats" provides a dose of reality on supposed cybernetic miracles. It is at this link (PPT).

-- SS

Data Malpractice on T-Mobile Sidekick: But Don't Worry, Your Medical Data is Safe

One of the promises made about healthcare IT is that your medical data is "safer" in electronic form than in paper form. The Hurricane Katrina example of paper records being destroyed is often used as a poster example of the dangers of paper records.

However, the risk of electronic storage of information, especially the talk of national EMR's stored on the "cloud" (an amorphous term meaning distributed storage "out there" whose physical sites and boundaries are supposedly irrelevant from the user's perspective) has also been under-reported. Excluding frequent reports of data confidentiality breaches, we also have this:

Wall Street Journal, Oct. 15, 2009
Microsoft Recovers Lost Sidekick Data
By ROGER CHENG

Microsoft Corp. said Thursday that it has been able to recover the personal customer data lost from many of T-Mobile USA's Sidekick devices.

The Redmond, Wash., software giant said that most, if not all, customer data was recovered, and that the company would begin restoring data as soon as it has validated it. The company said it will start with personal contacts, and move on to the lost calendar, notes, tasks and pictures as quickly as possible.

The fix comes as Microsoft suffers through a public backlash after mishandling the information found on the Sidekick line of messaging phones, which are popular with teenagers ... Over the weekend, T-Mobile and Microsoft initially warned that the recovery of data would be unlikely, but upgraded their prospects on Tuesday.

They got lucky.

Microsoft blamed a system failure [i.e., an IT system - ed.] for the data loss in the core database and backup system. Microsoft said it had taken steps to strengthen the stability of the Sidekick service and started a more resilient backup process. [More resilient compared to ... what? - ed.]

In IT it's always an apersonal "system failure", not "data malpractice." When medical malpractice occurs, it's the doctor's fault, even if that malpractice occurred secondary to the failure or misdesign of an EMR or other clinical IT by dyscompetent software engineers. When data malpractice occurs, the motto is "We always blame the computer." How about some names of those responsible for this debacle?

... The Sidekick service, run by Microsoft unit Danger [talk about ironic names - ed.], is supposed to be more secure in storing data because it is kept in the "cloud," which involves storing information on the Internet and not one physically vulnerable location, making the temporary loss of data striking.

"Cloud" is a new buzzword du jour to make more appealing a basically bad idea for many fields. Distributing data also distributes risk that some incompetent or careless person or person(s) will cause data corruption or loss (yes, computers are run by people, and either they're in control of their systems, or their systems are in control of them). It also puts organizations storing data on the "internet cloud" at risk of being victims of a network "rainy day" when internet connections might prove unreliable (accidents, sabotage, natural disasters all come to mind).

In healthcare, using the "cloud" for data storage seems to be a bad idea, especially in an era of $99 (retail) terabyte hard drive storage, and corresponding economies in mission critical-grade local mass storage, backup, business continuity and disaster recovery capabilities.

In summary, is electronic medical data more secure when stored electronically than on paper? Only if the underlying CIO's, information stewards, technicians and system administrators are at least as competent and careful as the trained health information management (HIM) personnel in hospital medical records departments and doctors' offices.

Time will tell if that is the case. One mistake, and thousands or millions of records can go *POOF*.

Microsoft and T-Mobile were lucky ... this time.

-- SS

10/26 addendum:

Sometimes, EHR data simply disappears too. At this link is a story of a Canadian clinic that lost two years of electronic health records:

Clinic's medical files vanish

By Ryan Cormier, Edmonton Journal

October 21, 2009

During a recent investigation into whether a patient's confidentiality had been breached at the Fairview Medical Clinic, an investigator asked for a log of who had accessed the complainant's file. When the clinic responded that it had automated his records in 2004 but only had files from 2006 on, alarm bells rang.

"That raised a lot of questions," said Leahann McElveen, an investigator with the office of the information and privacy commissioner.

The clinic had permanently lost two years worth of health files that include patient information on visits, prescriptions, lab reports, doctor's notes and other information. The loss happened when the clinic switched from one electronic medical records system to another.

"They were two similar systems intended to do the same thing," McElveen said. "However, they weren't coded the same way behind the scenes. It's not that the records fall into the wrong hands, they just don't exist anymore."

*POOF* again.

-- SS

Another Major HIT Project Setback at UCSF: Vendor, Client or Both at Fault?

In yet another example of a major health IT project setback, in August I wrote about UCSF's apparent problems with health IT implementation that I learned about through anonymous comments at the HisTALK blog. At "Lessons Unlearned: Health IT Failure, Act 2" I wrote:

I find it remarkable that this resource-wasting scenario (with possible adverse patient care repercussions) can occur:

• In a state that's in a severe economic crisis,
• At an organization that failed severely in a HIT and administrative IT merger ten years ago (in the failed, late 1990's attempted merger between UCSF and Stanford's medical centers, see the 2000 stories "UCSF/Stanford: Marriage was rough; divorce is expensive" here and "A thousand MIS personnel cannot merge two healthcare systems" here),
• With an EHR product, Centricity, that is the descendant of Logician that others have implemented successfully (including myself, speaking from experience),
• With GE, a major global high technology vendor, presiding over this new failure at a major academic medical center,
• With ample preventive material available in books, journals on the web about such failures (e.g., at the many pages and links here and here, as just a few examples).
  

I asked if vendor and hospital executives bother to read such materials.

Here is an update in this poorly-covered mystery:

Friday, October 9, 2009
UCSF halts clinical IT installation
San Francisco Business Times - by Chris Rauber

Dr. Sam Hawgood, newly appointed dean of the University of California, San Francisco's School of Medicine, confirmed that UCSF has put the brakes on installation of a $50 million clinical IT system from General Electric [which had acquired Medicalogic's "Logician" EHR some years ago - ed.]

In late August/early September, the Business Times was unable to reach high-ranking UCSF officials to comment on anonymous reports on the respected HISTalk blog and by sources that UCSF was unhappy with early results of the electronic medical records system installation. An informed insider says GE was “way behind schedule” in writing code, and “UCSF got fed up with the endless GE delays,” and is looking to identify other vendors for a drug order entry system.

“We are taking a pause to evaluate our best options moving forward, and we will be making a decision in the next two to three months, and then moving forward aggressively,” Hawgood said. The delay will not put the IT project behind schedule, he said, because “once we make a decision regarding the vendor, we’ll be back on track for an aggressive installation.” [Unfortunately, that sounds like wishful thinking or spin to me - ed.]

UCSF has brought in consultant Kurt Salmon Associates to help it evaluate the IT project’s woes, which were said to be creating considerable frustration within UCSF Medical Center, and obviously the School of Medicine as well.

This setback is of great concern to me. I believe such scenarios could become commonplace in coming years as healthcare organizations bow to the ARRA-created pressure to computerize "or else" by 2014 - that is, suffer reimbursement penalties for not being "meaningful users" of HIT. (Whatever that somewhat presumptuous term describing a largely experimental technology will ultimately come to mean.)

I have frequently written about the HIT vendors being dominated by those with an MIS (management information systems or "business computing") background, and unshakably and arrogantly deficient in talent management where Medical Informatics expertise is concerned. GE may also suffer from domination by engineers whose primary experience is at the level of capital equipment, PACS etc., much as I wrote about competitor Philips Medical here and here.

Having once worked for a GE competitor myself, Comdisco Healthcare Group, and having asked GE representatives about what a phrase on a banner at an RSNA show stating "GE: Leader in Radiology Informatics" meant -- and getting blank stares and comments that "it has something to do with the computers connected to our xray devices" back in return-- my concern was that the problems are not just UCSF centric but vendor centric as well.

UCSF is a big, complex organization, with a lot of very smart clinicians and lots of politics, and I conjecture that GE bit off more than it could chew regarding development, customization and deployment of major health IT at such an organization. It requires far more than technical excellence.

My concern is that GE, along with many if not most of the other major health IT vendors, lack the Medical Informatics and Social Informatics talent and depth to make our ambitious national EHR plans a reality. The overselling of vaporware and "yes, we can do that, no problem" promises by sales and marketing are also a concern, as I find common in HIT where salespeople promise the world to close a deal. Then, the technical people need to play catch up to the grandiose promises made by their creative sales colleagues.

I fear in a few years we will be in the situation that the UK's National Programme for IT (NPfIT) in the NHS is in now.

If we want to avoid that fate, we as a country must:

• Increase transparency and information diffusion about HIT difficulties and failures greatly. That my website on HIT failures is still nearly unique on the Web after ten years is symptomatic of a true lack of information sharing on real world HIT problems. My monitoring of access patterns to the site as reported in this 2006 AMIA poster (PDF) strongly suggests the demand for such material far exceeds the supply. The AMIA/AHIMA book of which I am an associate editor entitled "H.I.T. or Miss: Lessons Learned from Health Information Technology Implementations" and the new journal "Applied Clinical Informatics" whose Editor-in-Chief is Dr. Chris Lehmann, informaticist at Johns Hopkins, are a start -- but just a start on candid information diffusion about applied HIT realities.

• Health IT vendors need to understand that those in MIS and engineering are, in the context of complex clinical settings where clinician-supportive HIT is to be developed and deployed, often dyscompetent (they fail to maintain acceptable standards in one or more areas of professional practice) or even incompetent (lacking the requisite cognitive and non-cognitive abilities and qualities to perform effectively in the scope of professional practice). Lacking an understanding of medical culture and the nature of medical settings is a highly compromising deficit. It leads to mission hostile HIT devices such as shown here. There needs to be much better talent management in that regard.

• Suboptimal HIT vendor performance, and defective HIT devices, should not be tolerated. Repeat purveyors of such technology should be materially sanctioned for wasting precious healthcare resources. Whether this happens primarily in the courtroom, or in the court of "consumer opinion" by HIT buyers -- based on transparent consumer reports on HIT - remains to be seen.

-- SS

Addendum: a reader familiar with the UCSF situation largely confirms my suspicions as above regarding vendor capabilities and the vendor's biting off more than it could chew, greatly delaying deliverables. They did say, however, that I was not correct (in this case) about the issue of salesperson "promise the moon" behavior, and that this was not a factor in the project stoppage.

Sham Peer Review: Could This Bad Faith Practice Contribute to the Silence About Healthcare IT Problems?

Health IT problems and failures seem to be rarely heard about in the public media, yet almost every physician and student I know, including those actively involved in HIT projects, privately tell me of many mishaps, traps and difficulties they encounter frequently. Some of these problems impact patient care, up to and including some only-by-the-grace-of-god "near misses" - and worse. They also state they do not want to be quoted publicly for fear of reprisals.

While I'd thought that part of this issue was fear of retaliation from vendors and hospital executives for contractual "defects gag clause" violations, another practice that may be uncomfortably common might also be a significant contributor to the general lack of information about bad HIT: bad faith ("sham") peer review.

Sham peer review or malicious peer review is a name given to the alleged abuse of a medical peer review process to punish a physician for personal or other non-medical reasons (Wikipedia).

This practice is really a show trial for physicians deemed by hospital management to be whistleblowers (e.g., on quality issues) or troublemakers. Sometimes it is used as a tool by competing physicians as well.

The article "Tactics Characteristic of Sham Peer Review" (PDF) by Lawrence R. Huntoon, MD PhD of the American Association of Physicians & Surgeons spells out some of the characteristics of this process:

The tactics used by hospitals and others in conducting a sham peer review are remarkably similar throughout the country. The common feature of these tactics is that they violate due process and/or fundamental fairness, and they often represent an attempt to make the incident or event "fit the crime."

Although our legal system is not perfect, it does incorporate sound principles and procedures designed to protect an accused individual's right to due process and fundamental fairness (e.g. an accused person is considered innocent until proven guilty). In evaluating the fairness of peer review, one can often find corresponding principles of due process and fundamental fairness in our legal system.

This article is worth reading in its entirety. It details tactics such as:

• Ambush Tactic and Secret Investigations - unprepared physician is surprised by what amounts to a well-organized interrogation panel

• Depriving Targeted Physician of Records Needed to Defend Himself - bureaucracy and red tape prevent a physician from mounting a timely defense.

• Considering a physician "Guilty Until Proven Innocent" - burden of proving innocence shifted to the accused physician.

• Numerator-Without-Denominator Tactic - cherry picking of cases to unfairly highlight (unavoidable) adverse outcomes.

• Misrepresenting the Standard of Care - hospital administration hires an outside expert who opines that because the targeted physician did not use the same surgical technique or medical treatment that the expert prefers, the targeted physician must be practicing beneath the standard of care.

• Trumped-Up and/or False Charges - "spin" and outright fabrications are deployed.

• The "Disruptive Physician" Label - this deserves full explanation here:

The definition of "disruptive physician" is highly subjective and subject to manipulation and abuse. Recently, the general and vague definition of "disruptive physician" has been fortified with the more specifically vague and subjective descriptions in the "Code of Conduct" as promulgated by the Joint Commission on Accreditation of Healthcare Organizations (JCAHO). Nonverbal conduct, such as facial expression and body language, can be used to label a physician "disruptive," and no evidence is required beyond how the accuser feels. [Unbelievable - Ed.]

Increasingly, the term "disruptive physician" has become synonymous with "mentally impaired" physician. A physician who is wrongfully labeled "disruptive" because he does not agree with the hospital administration's views, or complains about substandard care in the hospital, can be subjected to inpatient treatment at a facility that specializes in treating "disruptive physicians." "Treatment" at one of these facilities may include treatment with medications, which if the "dissident physician" refuses to take "voluntarily," may result in automatic termination of privileges for failure to comply with the recommended "treatment." Physicians typically emerge from one of these "treatment" facilities with psychiatric diagnoses of narcissistic personality disorder, obsessive-compulsive disorder, or both.

• Dredging Up Old Cases from the distant past to Justify Summary Suspension

• Ex-Parte Communications - although such communications taint the entire hearing process and clearly violate fundamental fairness and due process, hearing officers, hired by the hospital, often allow ex-parte communications.

• Hospital Attorney or Conflicted Attorney Used to Influence the Peer Review Process - Hospitals that employ sham peer review often will use an attorney who represents the hospital or who represents both the hospital and medical staff simultaneously (i.e. a conflicted attorney) to influence the peer review process.

• Bias - e.g., stacking the investigative committee or hearing panel with physicians who have personal animus or bias against the accused physician; allowing the prosecution much more time to review records or present the case than the targeted physician; etc.

Also see the article "Twelve Signs of Sham Peer Review" here by a healthcare law firm.

Also of interest is "Readers' Responses to the Letter by Chalifoux and the Editorial by Bond in Regard to Sham Peer Review" at http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1681969
in response to an article by Roland Chalifoux, Jr, D.O. entitled "So what is a sham peer review?", MedGenMed. 2005;7:47 available at Medscape here.

If the threat of sham peer review is being leveraged against physicians who are deemed "complainers" or "troublemakers", to the point of prosecution for facial expressions deemed "disruptive" by others, than it is understandable how physicians might be reluctant to complain about multimillion dollar HIT projects (the outcomes of which hospital executives' reputations and career advancement may depend upon) that have gone awry.

Finally, I should probably ask: does sham peer review contribute to silence about healthcare C-suite mismanagement and malfeasance in general?

-- SS

BLOGSCAN - PharmaLot is Back

PharmaLot, written by Ed Silverman, one of the best blog sources for news and views about the pharmaceutical industry and related issues, is back in operation.

Nemeroff, Seroquel, and ACCME

Nemeroff, Seroquel, and ACCME

Roy Poses has discussed the atypical antipsychotic drug Seroquel (quetiapine) several times on this site, pointing out manipulation of clinical research results to enhance the appearance of efficacy, and suppression of studies with unfavorable results. I call this augmenting the marketed profile of the drug. Daniel Carlat has commented on published Seroquel data here and ClinPsych here.

AstraZeneca, the marketer of Seroquel, has also been busy with continuing medical education (CME) programs that augment Seroquel’s profile. Last December 8, one such program went on line, aired by the provider CME Outfitters. The program’s title was “Atypical Antipsychotics in Major Depressive Disorder: When Current Treatments Are Not Enough.” The corporate logo for CME Outfitters is Education with Integrity. I will allow readers to decide if the company is meeting its mission statement in this respect.

The key opinion leader engaged by CME Outfitters to discuss Seroquel and other atypical antipsychotic drugs was Charles Nemeroff of Emory University. He was joined by 2 KOLs-in-training, whom I will not name. The corporate sponsor that paid CME Outfitters and, indirectly, these presenters was AstraZeneca. I do not need to rehearse here the ethical issues that have surrounded Dr. Nemeroff for the past several years. Suffice it to say that, as a result of those issues, Dr. Nemeroff is no longer chair of the department of psychiatry at Emory University, he is no longer editor-in-chief of the ACNP journal Neuropsychopharmacology, he was removed from involvement with ongoing federally funded research grants at Emory University, and he was put on a short leash by the Emory administration.

On December 23, 2008 I filed a formal complaint about Dr. Nemeroff’s program with ACCME. My bill of particulars was lengthy, detailed, and backed up by extensive
materials. In due course, ACCME investigated the complaint and found that the program did violate ACCME standards. With respect to content, ACCME determined that Dr. Nemeroff’s program lacked sufficient information about possible adverse effects of treatment with atypical antipsychotic drugs; and failed to emphasize sufficiently the efficacy of alternative treatments. With respect to commercial bias, ACCME determined that bias existed as a result of the absence of contrasting therapy data, and through downplaying the drawbacks related to treatment with atypical antipsychotic drugs in depressed patients.

Following these findings by ACCME, the provider was notified of the violations in early September 2009, and the program was removed from the provider’s website. The sanitized statement of violations determined by ACCME does not capture the nuances of deceit, ineptitude, and deficient educational content in Dr. Nemeroff’s program. One remarkable example was Dr. Nemeroff’s citation of data, from one of his own publications, that were previously retracted. Did he think no one would notice?

A second example involved biased presentation of the sponsor’s data for Seroquel. Two doses of Seroquel (150 mg and 300 mg) were tested. Only the results for the 300 mg dose were statistically significant. Nevertheless, in the video presentation one of the junior presenters stated very clearly that there was “significant improvement in both response and remission with both doses” of Seroquel. That is a falsification of the scientific record. That falsification does not meet ACCME requirements for fair, balanced, truthful, and honest teaching. As moderator, Dr. Nemeroff was required to correct this false statement made by his junior assistant, but Dr. Nemeroff failed to do so.

The negative findings and sanction by ACCME against Dr. Nemeroff’s program are welcome, though I have to say it took ACCME an inordinately long time to complete their work. I also presented ACCME with several follow-on questions, which the Council is now considering. These are:

• Did ACCME notify the presenters that their program violated ACCME policies? If not, why not?

• Will CME credits be clawed back from physicians and other professionals who obtained credits through the noncompliant program? If not, why not? I believe this would be an effective form of negative feedback to the provider and the presenters.

• Does ACCME have a process to require the provider and presenters to ascertain whether any patients were injured as a result of the violations that created biased and deficient information in this program? If not, why not?

• Does ACCME require the provider to notify physicians and other professionals who completed the noncompliant program that the provider was sanctioned for violation of ACCME standards? If not, why not?

• Does ACCME require the provider to furnish corrective materials to such professionals in order to remedy the bias and incompetence to which they were subjected through violation of ACCME standards, and thereby to remove potential danger to future patients? If not, why not?

• Why did ACCME allow the noncompliant program to remain available long after the complaint was filed? I suggest that ACCME needs to place a hold on programs that are subject to active complaint. Had such a policy been in effect in December 2008, the violating program would not have been re-aired by the provider in early 2009, it would not have remained on-line for 9 months, and the damage to the continuing education community would have been contained.

• Will ACCME issue a public listing of sanctions it has enforced against providers and presenters? If not, why not? State medical boards do exactly that in relation to physicians and other professionals who violate standards of practice.

• Finally, I reminded ACCME that its primary constituents are patients, physicians and other professionals, not commercial or academic CME providers. It seems to me that ACCME was altogether too laissez-faire and dilatory in the way it handled this matter. At the time of my initial complaint last December, I requested expedited review precisely because additional airings of this violating program were scheduled.

The good news is that ACCME seems to have got the message that things need to change. As one of their officers wrote to me recently, “We sincerely appreciate the time and effort you have put into participating in our complaints and inquiries process. You have raised important issues that the ACCME will review and address.” I await their next communications on the remaining questions.

As for Dr. Nemeroff, he is yesterday’s news. The adverse findings by ACCME about his program serve as a reminder to corporate sponsors and CME companies that Dr. Nemeroff is so compromised by now that he has lost effectiveness as a front man for Pharma. Indeed, he is so toxic that he now glows in the dark.

More on the Misleading Promotion of Seroquel

Previous posts (here and here) noted internal documents from AstraZeneca made public during litigation about its blockbuster atypical antipsychotic drug Seroquel (quetiapine) suggesting that the company's marketers manipulated clinical research results to make them appear more favorable to the product, and suppress studies with unfavorable results that could not be easily manipulated.

This week, Bloomberg News reported testimony from one trial about other aspects of Seroquel's marketing. The marketers' claims were at odds with the company's own research results:

AstraZeneca Plc advised its sales force to promote the antipsychotic drug Seroquel as 'weight neutral' four years after company research found 'clinically significant' weight gains in users, internal documents show.

AstraZeneca’s 'global strategy is to demonstrate to consumers that Seroquel has a weight-neutral profile,' Debbie Holdsworth, a marketing official, wrote in a 'dear colleague' letter dated May 14, 2001. The document was produced during a pretrial examination of former executive John Patterson.

'If 45 percent of patients gained significant weight in a year, how could that be weight-neutral?' patient attorney Ed Blizzard asked Patterson, citing a internal 1997 e-mail written by an AstraZeneca doctor, at a hearing in Orlando Oct. 5.

Also, evidence was presented that suggested that company marketers consciously promoted the drug for off-label indications over several years:

Patterson was asked about a 'Seroquel Strategy Summary' issued in December 2000, which described the broadening of Seroquel use 'on and off label' as a sales goal. While doctors are free to prescribe any medicine to treat a given condition, it is illegal for drug companies to promote medicines for uses not approved by the U.S. Food and Drug Administration.

'The company has standards and procedures to ensure its sales representatives do not promote off label,' Patterson testified. Still, the goal of off-label promotion remained in strategy summaries for the years 2001 or 2002, he acknowledged.

Coupled with previous revelations (see posts noted above), it looks like the marketers were employing an integrated strategy combining a variety of deceptions, the sort of broad based stealth marketing approach we have seen employed to promote other health care products.

Such strategies undoubtedly have lead to the prescribing of expensive drugs when other treatments, or no treatment would be better, and have helped support the high prices charged for products that are not necessarily so good for the many patients who have ended up getting them. Of course, the money thus generated has let many executives of the companies that employ such marketing strategies become rich. As Bloomberg reported:

Patterson, who reported directly to AstraZeneca’s chief executive officer, was paid more than $1 million at one point during his tenure at the company. He retired April 1 as executive director of product development, and is the highest- ranking AstraZeneca executive to testify in open court in lawsuits claiming the company withheld information about the risks of Seroquel.

In my humble opinion, if we really want to reform health care in the US (and around the globe), we need to challenge how health care organizations have used their ability to sponsor medical research to manipulate its design, implementation, analysis and dissemination, and when necessary, to suppress its results to favor their vested interests. We also need to challenge systematically deceptive marketing practices designed to make products and services appear more useful than they really are, thus supporting exaggerated prices and prompting overuse. Unless we challenge these and some other causes of excess prices and excess use, attempts to provide universal health insurance and access will bankrupt us all.

(And to preempt anyone in the audience who may recoil from anything that restricts the freedom of action of health care corporations - tell me how manipulation of research, suppression of research, and deceptive marketing is necessary for innovation or for adequate revenues to support good products? I am not arguing for hamstrung companies. I am arguing for honest business practices.)

Hat tip to PharmaGossip.

Healthcare Renewal Named a Forbes "Must Read" Health Blog

Healthcare Renewal has been named a Forbes "must read" health blog, one of three under the category "physician blogs."

"These Web sites cover the many facets of health with integrity and authority--in a more useful, personal way" writes Forbes journalist and health reporter Rebecca Ruiz on Oct. 7 (link to article, page 1 and page 2).

-- SS

Pfizer (in the Guise of Pharmacia) Pfound to Violate Pfraud Law, While Pfizer CEO Made Pfederal Reserve Advisor

It was only a month ago that Pfizer Inc, the world's largest pharmaceutical company, submitted to a gargantuan $2.3 billion settlement and yet another corporate integrity agreement. As we posted here, this was the company's fourth major settlement of charges of unethical marketing behavior since 2002.

Now Pfizer is in trouble again. As reported by the AP,

A judge on Tuesday imposed $4.5 million in forfeitures on prescription drug company Pharmacia Inc.[a Pfizer Inc subsidiary] for misrepresenting prices and defrauding Wisconsin's Medicaid system.

A jury in February found that Pharmacia violated the state's Medicaid fraud law 1.44 million times over a decade. State Justice Department attorneys had demanded about $212 million in forfeitures, but Dane County Circuit Judge Richard Niess said jurors grossly overcalculated the number of violations.

After reviewing the evidence, the judge found the actual tally was 4,578.

He elected to set the forfeiture level at $1,000 per violation. The judge said he was concerned that if he ordered the maximum $68.6 million Pharmacia would pass the expense to consumers and nothing showed any of the fraudulent $7 million went directly to Pharmacia's profits.

On the other hand, the judge said, a $100 per violation forfeiture totaling $457,800 would 'not register so much as blip on Pharmacia's multibillion-dollar annual fiscal radar screen' and a higher amount would draw attention to the need to reform pharmaceutical reimbursement scales.

I must say that I do not understand the reasoning the judge used to set the penalties. If he thought that Pfizer would merely pass along a large penalty to patients, why would the company not pass along a smaller penalty to them.

In any case, this is just the latest in a long string of cases in which a health care corporation was found to have committed unethical or illegal acts, but the only the corporation itself, but not the people who actually performed, directed or authorized the acts, paid a penalty. And when the penalty is paid by the corporation, its impact can be spread over all stock-holders, all employees, and all patients, clients, or customers, thus diluting its effect, and protecting those who authorized, directed, or performed the acts in question.

I submit again that only when the people in health care leadership who perform, direct or authorize bad behavior pay penalties will bad behavior be deterred.

Note that while Pfizer may be the world's largest pharmaceutical corporation, it seems to be the corporation most often cited for, convicted of, or having to make settlements for bad behavior (see some recent examples here). (Although in the current case, you would have to read the news report very carefully to realize that Pfizer was involved. The fact that Pharmacia is a Pfizer subsidiary was only mentioned in passing.)

Nonetheless, one would think Pfizer's leadership would be ashamed, and their reputation would suffer. But no. At about the same time this latest settlement was announced, this report from Reuters appeared:

The Federal Reserve Bank of New York said on Thursday that Pfizer (PFE.N) chief executive Jeffrey Kindler and Loews Corp (L.N) chief executive James Tisch will fill the two vacancies on its board of directors.

Kindler was elected to finish a three-year term ending Dec. 31, taking the seat PepsiCo (PEP.N) chief executive Indra Nooyi resigned from in February.

Regional Federal Reserve banks' boards of directors offer recommendations on Fed policy, but have no policy-making powers. They also provide anecdotal information about the business conditions that help inform the central bank.

Regional Fed banks have three classes of directors: Class A, elected by member banks to represent banks; Class B, elected by member banks but representing the public; and Class C, which represent the public but are chosen by the Board of Governors in Washington.

Kindler and Tisch join Jeffrey Immelt, chairman and chief executive of General Electric (GE.N) as Class B directors.

I suppose Kindler could offer quite a bit of "anecdotal information" about bad behavior in the pharmaceutical industry. But it seems rather comic to think about the CEO of the world's biggest, and lately baddest pharmaceutical company as "representing the public." Rather, and more seriously, this is just the latest example of how leaders of health care organizations have joined the superclass, and how the superclass protects its own.

Health IT Vendors Trafficking in Patient Data?

Of all of the risks regarding electronic health records, the largest is perhaps to privacy and confidentiality, and other civil liberties through the ability of information technology to rapidly duplicate and disseminate massive amounts of data.

This duplication and dissemination can be performed in a controlled manner for the betterment of patient and public health, but it can also occur in a harmful manner that serves the interests of others, often without meaningful informed consent by the patients (legal jargon on typical disclosure forms that almost nobody reads or understands does not fall into what I consider "meaningful").

This can occur in, for example, the stealing of computers and computer backup disks, tape etc., which seems to be a common occurrence in the news in recent years, or through corporate processes that carry inherent risk of abuse. Here is just one recent example of both data mismanagement and theft involving not patients (by chance) but physicians themselves:

Blue Cross: Thousands of doctors' computer data stolen

Wednesday, October 07, 2009

By Bill Toland, Pittsburgh Post-Gazette

Tens of thousands of doctors under contract with Pittsburgh's Highmark Inc. are being notified that their personal information, including Social Security numbers or tax ID numbers, may have been compromised when a laptop containing sensitive data was stolen from a Blue Cross-Blue Shield Association employee.

Physicians and specialists in western and central Pennsylvania are being notified of the breach this week, according to a Highmark spokesman. Across the country, the number of affected doctors is expected to reach the hundreds of thousands once a review of the theft is complete, said national Blue Cross-Blue Shield Association spokesman Jeff Smokler. The stolen computer did not contain patient information. [Simply due to luck -ed.]

The letter sent to Highmark providers said "a BCBSA employee [transferred] provider data information onto a personal laptop, in violation of BCBSA's established data security policies.

I have recently become aware of an example of purposeful corporate healthcare data trafficking that gives me pause.

Cerner’s LifeSciences traffics in patient data taken from the EMRs its company sells to healthcare organizations. See the document below. They advertise:

Cerner LifeSciences’ data warehouses and consulting services help you manage your R&D opportunity through Cerner’s analytical solutions. Through our data mining of our vast warehouse of electronic health records (EHRs), you can accelerate development processes and reduce business risks. Each year, new compounds debut new abilities or first-in-class molecules. Far more common are new compounds that target the same receptors as compounds already in the market ... This is when Cerner LifeSciences makes it possible to analyze anonymous, HIPAA-compliant, EHR-derived data for efficacy and safety.

Cerner apparently includes contract language with their HIT customers that allows them to traffic in "de-identified" patient data for sale to drug companies and others, getting the data essentially as a "value add" (to the HIT vendor, that is) from its healthcare IT customers. (The flyer below does not indicate pricing of healthcare data, but it's likely substantial.)

A major HIT vendor selling patient data to anyone who wants it. Click to enlarge. (Full copy is at this link in PDF format).

This practice raises numerous questions:

• Meaningful informed consent issues: as an example, of 1000 patients at one of the facilities using this vendor's HIT products, what percentage would be able to tell me they know their data is being trafficked to pharmaceutical companies and other organizations for profit?

• Healthcare data ownership and stewardship issues: who, exactly, extracts the data for aggregation and sale? Hospital employees properly trained and bonded (i.e., Healthcare Information Management professionals) regarding privacy of patient data? IT personnel lacking such credentials and experience? HIT vendor employees?

• De-identification issues: what processes are being used to de-identify data? Who is performing it? At some point before the data is de-identified, it is protected information in identifiable form. Is access to the data during de-identification audited in any way, and if so, by whom? If not, why not? (Also see article on re-identification below.)
  

• Legal issues: who is, by contract, liable for data breaches that occur in the transfer process?

• Fiduciary issues: as I expressed in my July 22, 2009 JAMA letter to the editor regarding "vendor hold harmless" and IT defects gag clauses, are hospital executives further violating their fiduciary responsibilities by signing HIT contracts that surrender ownership of patient data to third parties? (see my posts "JAMA letter: Health Care Information Technology, Hospital Responsibilities, and Joint Commission Standards" and "Inquiry to Joint Commission on points I raised in my JAMA letter on HIT" for more on those issues.

• Pharma integrity issues: with the many stories on this blog and others about ethically questionable pharma practices such as ghostwriting, manipulation of clinical research, suppression of research, pushing drugs on physicians and patients for unapproved off-label uses, etc., what are these organizations going to do with the data? Who will have access to it, and will their access be audited? Are they going to resell it? Might they try to re-identify data to locate individuals of interest? And so forth.
  

Serious consideration of these issues in vendor-led healthcare data trafficking becomes more imperative in the face of just how easy it is to "re-identify" data:

Ohm, Paul: "Broken Promises of Privacy: Responding to the Surprising Failure of Anonymization" (August 13, 2009). University of Colorado Law Legal Studies Research Paper No. 09-12. Available at SSRN: http://ssrn.com/abstract=1450006

Abstract:

Computer scientists have recently undermined our faith in the privacy-protecting power of anonymization, the name for techniques for protecting the privacy of individuals in large databases by deleting information like names and social security numbers. These scientists have demonstrated they can often 'reidentify' or 'deanonymize' individuals hidden in anonymized data with astonishing ease. By understanding this research, we will realize we have made a mistake, labored beneath a fundamental misunderstanding, which has assured us much less privacy than we have assumed. This mistake pervades nearly every information privacy law, regulation, and debate, yet regulators and legal scholars have paid it scant attention. We must respond to the surprising failure of anonymization, and this Article provides the tools to do so.

Further, Cerner is digging deeper into the life sciences, licensing its "Discovere" system to clinical trials vendor such as Quintiles Transnational (link to story in Bizjournals.com):

Quintiles will use Cerner’s Web-based Discovere product, whose features include the ability to integrate data from study participants and site researchers and increase data quality by reducing transcription errors, the companies said in a release. A Cerner spokeswoman said the company isn’t disclosing financial terms of the deal.

According to an entry at HISTalk, part of "Discovere" is the former First Genetic Trust technology that Cerner bought some time ago. Quintiles signed an agreement with Cerner back in 2001 and took an equity position in it. The Discovere modules include biobanking, research registries, public health investigator workflow, clinical trials management, and adverse event reporting.

Is Cerner also selling HIT-gleaned patient data to Quintiles and other CRO's (clinical research organizations)?

Other HIT vendors are sure to follow in Cerner's footsteps for competitive reasons, if not already doing so.

Another major issue:

HIT vendors like this are devoting resources to profit from medical data, diverting resources from their core business. Might health IT vendors make better use of their resources, such as improving the core products they sell to hospitals and clinicians, avoiding the "mission hostile user experience" I wrote about in this eight part series?

Might they devote resources to solving problems that are affecting entire national health IT programs, instead of peddling data from the systems they have managed to implement to third parties?

From the UK's experiences as recorded in 2007 by the former head of their National Program for HIT in the NHS (NPfIT):

Richard Granger has said he was “ashamed of the quality of some of the systems put into the NHS by Connecting for Health suppliers”, singling Cerner out for criticism (link). Going further than he before in acknowledging the extent of failings of systems provided to some parts of the NHS - such as Milton Keynes – the Connecting for Health boss, said "Sometimes we put in stuff that I'm just ashamed of. Some of the stuff that Cerner has put in recently is appalling."

As recorded in Jan. 2009 by the UK House of Commons - Public Accounts Committee :

... Termination of Fujitsu's contract has caused uncertainty among Trusts in the South and new deployments have stopped. One option: have a choice of either Lorenzo or [Cerner] Millennium. There are, however, considerable problems with existing deployments of [Cerner] Millennium and serious concerns about the prospects for future deployments of Lorenzo.

... Programme not providing value for money at present because there have been few successful deployments of the [Cerner] Millennium system and none of Lorenzo in any Acute Trust. Trusts cannot be expected to take on the burden of deploying care records systems that do not work effectively … the Department should assess the financial case for allowing Trusts to put forward applications for central funding for alternative systems compatible with the objectives of the Programme.

Most recently, in the UK Cerner's Millennium product is blamed for the jump from 1,700 to 23,000 patients whose referrals don’t meet the 18-week target from referral to treatment at Barts and the London NHS trust.

Should HIT vendors be devoting resources to data peddling, instead of focusing on their core mission to produce usable HIT that can facilitate healthcare professionals in providing care?

Finally, as an added item of interest, our current healthcare "czar", Nancy-Ann DeParle was on the board of Cerner just prior to appointment in the current administration.

All of these issues considered, while I am not implying improprieties current or future, the possible permutations of problems in the resale of clinical data by HIT vendors potentially created by careless data stewardship, profit motive, conflict of interest, malevolent motives, etc. is endless.

If there ever were a scenario for civil liberties groups to explore, it's this one.

-- SS

addendum on HIT quality and COI issues: found this at HISTalk as well:

IT outsourcing puts MU Health at risk

An associate professor of pathology at University of Missouri criticizes his employer’s decision to outsource to Cerner … A simple Internet search turns up a plethora of complaints and reports of lawsuits regarding the effectiveness of Cerner’s software and, more important, its failure to provide requested support. The pattern of receiving untested software has been a recurring problem at this institution ...

... University Hospital’s success depends largely on the effectiveness of the people in information technology. In the past on two occasions, the billing was so flawed the hospital faced serious fiscal problems. The most recent one was in 2002, when the hospital’s viability was threatened. The major issue was the inability to produce accurate and timely billings, which cost the system millions of dollars. [where have I seen that before? How about: here (Yale) and here - ed.]

... The medical school’s administrative residency program is on probation and is undergoing critical review; a major factor is that the Cerner system is so cumbersome that resident training is compromised … Three years ago, the radiology department dropped a Cerner software program because it was seriously flawed.”

... [UM President] Forsee has several business and personal ties to the company (Cerner). Forsee and Cerner CEO Neal Patterson serve together on at least two boards of trustees, and online records indicate Forsee’s son-in-law, Brandon Bell, works for Cerner.”

If this all is true, I believe the problems with HIT in general are no better now, and probably worse, than when I started writing about such issues a decade ago.

I rest my case on whether the HIT vendors should focus on solving basic quality, usability and efficacy issues before peddling data ...

-- SS

A Board of Trustees, or a Social Club for the Superclass?

We just posted about the unlikely appointment of one Mr Robert K Steel as a trustee of the Hospital for Special Surgery in New York. Mr Steel appears to have no particular expertise or experience in health care, and no special affinity for its values. On the other hand, Mr Steel was briefly the CEO of Wachovia who presided over that company's demise, despite his avowed goal of keeping it independent. Previously, he served as an Under Secretary of the Treasury during Secretary Henry Paulson's controversial bail-out of financial institutions. He also was Chairman of the Board of Trustees of Duke University during the time of the lacrosse scandal, and pledged his full support to the actions of its President (whom he had a personal role in hiring), including those that seemingly put preserving the Duke brand ahead of protecting the rights of its students.

Why would such a person be appointed to the board of a prestigious teaching hospital?

Maybe he was seen as a good fit.

The hospital board has 42 members in addition to its CEO ex-officio. Of these, 13 are physicians, and 29 are "civilians." Of the latter 29, 23 by my count have major relationships, and frequently have current or past leadership roles in financial companies, some of which were recipients of recent Treasury Department bail-outs. Thus, a majority of all board members come from finance. In addition, 7 of the 13 physician board members have financial relationships with health care corporations that might be construed as conflicts of interest. The details are below:

Non-Physician Board Members

Atiim "Tiki" Barber (sports broadcaster)
James M Benson - retired chairman of John Hancock Life Insurance; retired Chairman, President and CEO of New England Financial and of GenAmerica Financial Corporation
Peter L Briger Jr - Principal and Co-Chairman, Fortress Investment Group
Michael C Brooks - Partner, Venrock
Charles P Coleman III - Tiger Global Management
Leslie Cornfeld (deputy US Attorney)
Cynthia Foster Curry (spouse of owner of Toyota dealer)
Barrie M Damson - President and Chair, Damson Financial Resources Inc
James G Dinan - Chairman and CEO, York Capital Management
Winfield P Jones (attorney)
Monica Keany - managing director, Morgan Stanely
David H Koch - executive vice president and member, board of directors, Koch Industries (a conglomerate that provides "commodity and financial trading services" among other products and services)
Lara R Lerner - spouse of Randolph Lerner, former CEO of MBNA, which he sold to Bank of America, now has family holdings (>$1 billion in 2008) of Bank of America stock
Marylin B Levitt - spouse of Arthur Levitt Jr, former chair of the SEC, now advisor to AIG and the Carlyle Group
Alan S MacDonald - chief client officer, Citigroup
David M Madden - founder and principal of Narrow River Management (investment management company that focuses on pharmaceutical companies)
Richard L Menschel - senior director, Goldman Sachs (in 2002)
Dean R O'Hare - retired CEO of Chubb Corporation, director of DFA Capital Management
Aldo Papone - retired chairman of American Express Travel Related Services
Gordon Pattee - President, MAP Capital Corp
Charlton Reynders Jr - Chairman and CEO, Reynders Gray Co
Susan W Rose (philanthropist)
William R Salomon - honorary chairman, Citigroup
Jonathan Sobel - Global Head of Risk Management, Investment Management Division, Goldman Sachs
Robert K Steel - retired CEO, Wachovia (see above)
Daniel G Tully - founding partner and managing director, Altaris (investment company focused on "healthcare industry")
Mrs Douglas A Warner III - spouse of former chairman of JP Morgan Chase, current director of General Electric (which has both health care and finance divisions)
Kendrick R Wilson III - former executive, Goldman Sachs
Ellen M Wright (occupation not clear)

Physician Board Members

Mathias P Bostrom MD - consultant for Smith & Nephew
Richard A Brand MD -
Charles N Cornell MD - royalties from Exactech
Melvin J Glimcher MD -
Steven R Goldring MD - member, board of directors, Telik
David L Helfet MD - member of advisory boards, OHK Medical Devices Inc, Healthpoint Capital, Orthobond Corp
Carl F Nathan MD -
Stephen A Paget MD - consultant to Medarex, Crescendo Bioscience
Scott Rodeo MD
Thomas P Sculco MD - royalties from Exactech
Russell F Warren MD - chairman of the board, Highlands Acquisition Corp, chairman of the scientific advisory board, chief scientific officer, principal member of the investment committee, Ivy Capital Partners, board of directors, Orthonet, royalties from Biomet, member of scientific advisory board, Cayenne Medical, member of scientific board of advisors, HealthPoint Capital, royalties from Smith & Nephew
Torsten N Wiesel MD -
Philip D Wilson Jr MD -

Summary

As we have written previously, boards of trustees of not-for-profit health care organizations are supposed to supervise the management of these organizations, making sure it is prudent, and upholds the organizations' missions. Boards have duties to exercise reasonable care, avoid conflicts of interest, and again, uphold their organizations' missions. Thus, ideally, boards should be composed of people most likely to fulfill these duties.

In the real world, current board members usually have sole authority to appoint new board members. Thus it may be all too tempting to make fit with the current board members the main criterion for appointment of new board members. We have posted about university and hospital boards which have pluralities or majorities of members from the finance sector. Such remarkable homogeneity suggests that they picked new board members because of their similarity to current board members. (For example, see posts about the boards of Dartmouth, Harvard, and Yeshiva Universities, and of Partners Healthcare.)

Thus, the boards of prestigious not-for-profit health care organizations may come to resemble social clubs for the superclass more than collections of passionate defenders of the progress of health care.

It is hard to imagine how boards packed with finance industry executives would be the best upholders of academic and health care values, especially after the shortcomings of many finance industry leaders became so obvious in the global financial meltdown/ great recession.

If health care is to become more affordable, more accessible, of greater quality, and less demoralizing for health care professionals, health care organizations need leaders known for their devotion to putting patients first rather than their devotion to socializing with their cronies.

A Trustee of What "Caliber" for the Hospital for Special Surgery

The Hospital for Special Surgery in New York, a prestigious institution focused on orthopedics and rheumatology, closely affiliated with Weill Cornell Medical College, just announced its newest trustee, whose qualifications for the position turn out to be just a wee bit curious. Here they are as described by the press release:

He is a former CEO of Wachovia

Hospital for Special Surgery announced today that Robert K. Steel, former President and Chief Executive Officer of Wachovia Corporation, has been named a member of the hospital's Board of Trustees.

Steel facilitated Wachovia's merger with Wells Fargo to create the second-largest retail brokerage in the country.

Before then, he served in the Treasury Department

Prior to running Wachovia, Steel served in the U.S. Treasury Department as Under Secretary for Domestic Finance, a Senate-confirmed position. In that role, he was the principal adviser to Secretary Henry Paulson on matters of domestic finance and led the department's activities regarding the domestic financial system, fiscal policy and operations, and governmental assets and liabilities.

Steel brings a wealth of experience to the Hospital for Special Surgery Board. He regularly testified before House and Senate Committees on matters such as reform at Fannie Mae and Freddie Mac, foreclosure prevention, and the rescue of Bear Stearns.

Before then, he was a leader at Goldman Sachs

Steel spent almost 30 years at Goldman Sachs, rising to vice chair of the firm.

He was also chairman of the board of Duke University

In 2009, Steel completed his term as chair of the board of Duke University.

The other members of the Hospital for Special Surgery board were delighted by Steel's qualifications:

'All on the Board of Trustees are delighted to have someone of the caliber of Robert Steel join us to help guide the future of our institution as a leader in orthopedics, rheumatology and their related disciplines,' said Aldo Papone, Co-Chair of the Board of Trustees at the Hospital for Special Surgery.

Hospital Board Co-Chair Dean R. O'Hare added, 'As patients continue to seek the Hospital for Special Surgery's world class services in record numbers, we are very pleased Robert Steel is here to support this institution and the superb team of people who work here.'

Setting aside the obvious issues that Mr Steel seems to have no particular knowledge of or training in medicine or health, and nothing in the press release suggests he has particular devotion to the values of health care, what do his cited qualifications really mean? Let's go through them in the order they were mentioned above.

Former CEO of Wachovia

In fact, Steel became CEO of Wachovia in July, 2008, only to soon preside over the company's failure and its hurried merger with Wells Fargo. As reported by the New York Times, by September, 2008, Steel had to give up any hopes of keeping Wachovia independent,

As concern spread Friday that more banks might run into trouble even with a $700 billion rescue for the financial system, Wachovia, one of those hardest hit by the housing crisis, became the latest to reach for a lifeline.

Weighed down by a huge portfolio of troubled mortgage loans, the nation’s fourth-largest bank by assets entered into preliminary deal talks with Citigroup, and extended feelers to Wells Fargo and Banco Santander of Spain....

In July, the bank hired Robert K. Steel, 56, a former vice chairman at Goldman Sachs, from the Treasury Department, where he worked with Treasury Secretary Henry M. Paulson Jr., trying to resolve the mortgage market crisis. Mr. Steel vowed to keep Wachovia independent and sought to raise $5 billion in capital over the next year by selling noncore assets.

The deal with Citigroup fell through, and Wachovia was taken over by Wells Fargo on January 1, 2009. So although Wachovia's portfolio of doubtful mortgages was not the fault of Robert K Steel, he did not succeed in his vow of independence proved to be hollow.

Furthermore, questions were raised about Mr Steel's overly optimistic predictions about Wachovia's financial conditions just before the company had to enter into merger talks. As reported by the New York Times on September 30, 2008:

'Jim, we have a great future as an independent company,' Robert K. Steel, Wachovia's chief executive, told James Cramer on CNBC's 'Mad Money.' 'We're also focused on very exciting prospects when we get things right going forward. I didn't have time today to talk about the good things going on at Wachovia.'

That interview wasn't last month or last year -- it took place, amazingly, two weeks ago. Wachovia's shares closed at $10.71 that day. On Monday, Citigroup bought the company for $1 a share.

What was Mr. Steel thinking? Did he think he could 'spin' his way to survival?

On Mr. Cramer's show Monday night, he spent an entire segment apologizing to his viewers about having Mr. Steel on the program and for his own bullish call on Wachovia's stock. 'I screwed up,' he said, referring at one point to Mr. Steel as a friend for 25 years. 'I believed in the guy. Did he take advantage of me? Perhaps yes.'

Early this year, the Wall Street Journal reported that these remarks lead to an investigation by the US Securities and Exchange Commission (SEC):

The Securities and Exchange Commission is investigating remarks that former Wachovia Corp. Chief Executive Robert K. Steel made about the future of the bank the day before it started talks about a potential merger....

Among the issues under scrutiny is whether Mr. Steel, 57 years old, misled investors when he appeared on CNBC's 'Mad Money' program on Monday, Sept. 15.

The next day, Sept. 16, Wachovia's board met by telephone to discuss strategic options for the company, including raising money, selling core businesses and merging with another company, according to an SEC filing.

On Sept. 17, Mr. Steel called Morgan Stanley CEO John Mack to discuss a potential merger, according to people familiar with the matter.

By the week of Sept. 22, under pressure from regulators and with customers starting to withdraw deposits, Mr. Steel was immersed in merger negotiations with Citigroup Inc. and Wells Fargo & Co. executives, according to regulatory filings and people familiar with the matter.

After initially agreeing to sell its banking operations to Citigroup, Wachovia on Oct. 3 agreed to sell the full company to Wells Fargo.

So although Mr Steel could not be blamed for the unfortunate financial position of Wachovia on the day he took over as CEO, he failed in his goal of keeping the company independent, and questions have been raised as to whether his overly optimistic comments just before merger negotiations began misled investors. Thus, his brief performance as leader of Wachovia does not seem something to boast about as a qualification to be a trustee of the Hospital for Special Surgery.

Under Secretary of the Treasury For Finance

Mr Steel was appointed to his post at the Treasury Department by Henry Paulson. Mr Steel seemed to have a major role in the Paulson Treasury Department's response to the global financial meltdown of 2008. Criticism of Paulson and his department's response to the crisis is so well-known that we need not repeat it here. In response to the discussion in the news release above about Steel's testimony before congress, it is worth quoting a New York Times article about a hearing that took place after the bail out of Bear Stearns, but before the crisis became full-blown.

'How do we guard against a future Bear Stearns,' asked Senator Charles E. Schumer. 'Was someone asleep at the switch?'

Later,

Did Henry M. Paulson Jr., the Treasury secretary, mandate a rock-bottom price for Bear?

'What did you know and when did you know it,' [Senator Christopher] ... Dodd asked, his voice loud as he pressed Mr. Bernanke, Mr. Steel and Mr. Geithner for an answer.

Mr. Steel and Mr. Geithner were artful and vague in their responses....

And just a few days ago, a story emerged that Paulson's plans to force a merger of Wachovia and Goldman Sachs failed because of the multiple conflicts of interest involved, including those affecting Mr Steel (as per Bloomberg News):

Paulson, the CEO at Goldman Sachs until mid-2006, contacted current CEO Lloyd Blankfein and an unidentified Wachovia director, urging them to consider a combination, Sorkin reported. Goldman Sachs co-President Gary Cohn and Wachovia CEO Robert Steel -- a former vice chairman at the New York investment bank and an undersecretary to Paulson at Treasury -- thought they were near completion of a transaction after Fed Governor Kevin Warsh said the central bank would consider a merger, according to the excerpt.

Billionaire investor Warren Buffett, chairman of Omaha, Nebraska-based Berkshire Hathaway Inc., was contacted about investing in the combined companies, Sorkin reported. Buffett told a Goldman Sachs banker the merger would never happen because of the investment bank’s ties to officials at the Treasury and Wachovia, Sorkin reported.

So it is not obvious that Mr Steel's work at the Treasury Department covered him in glory, or constituted a particular qualification to lead the Hospital for Special Surgery.

Chairman of the Board of Duke University

Mr Steel's time in the leadership of Duke coincided with one of the major scandals to afflict higher education in the 21st century, usually called the Duke Lacrosse Scandal. Very briefly, several Duke University students who were also on the university's lacrosse team were charged with raping an exotic dancer. After they were charged, the university leadership seemed to judge that the players were guilty before the trial, and that the whole lacrosse team had to bear some sort of collective guilt. Eventually, the charges were dismissed for lack of evidence, and the prosecutor who pursued them so avidly was disgraced.

It turns out that Mr Steel had a role in this scandal too.

According to a New Yorker article, Mr Steel took a leadership role in the hiring of Due President Richard H Brodhead:

The man charged with bringing Brodhead to Duke was Robert K. Steel, a trustee and chairman of the search committee....

After the lacrosse players were accused of rape, a bizarre email led Brodhead to abandon a measured approach:

Brodhead, who had been trying to maintain a balance between avoiding prejudgment and satisfying the mounting pressure for action, was outraged. He said he found the message 'sickening and repulsive,' and he acted immediately. He suspended McFadyen [the student who wrote the email]. Coach Pressler was informed that he had until the end of the day to leave the campus, where he had coached for sixteen years. Brodhead also announced a series of committees that would investigate the team, the administration’s handling of the matter, and the Duke culture itself. In a letter to the Duke community, he wrote that the lacrosse episode 'has brought to glaring visibility underlying issues that have been of concern on this campus and in this town for some time.' The letter went on:

They include concerns of women about sexual coercion and assault. They include concerns about the culture of certain student groups that regularly abuse alcohol and the attitudes these groups promote. They include concerns about the survival of the legacy of racism, the most hateful feature American history has produced.
Compounding and intensifying these issues of race and gender, they include concerns about the deep structures of inequality in our society—inequalities of wealth, privilege, and opportunity (including educational opportunity), and the attitudes of superiority those inequalities breed. And they include concerns that, whether they intend to or not, universities like Duke participate in this inequality and supply a home for a culture of privilege.

This quote in retropsect is beyond ironic given that there was never good evidence to support the charges against the lacrosse players.

Brodhead cancelled the lacrosse team's season, but it turned out his reasoning, and that of Mr Steel who seemed to have a major role in the decision, was based mainly on the perceived need to preserve the "Duke brand":

When Brodhead cancelled the season, he had said that the moment was too serious to be playing games. What he meant, in part, was that Duke could not be seen to be playing games. From the start, Brodhead had been forced to navigate among several potentially hazardous interests—lacrosse parents who felt angry and abandoned by the school, dismayed alumni and donors, the agitated citizens of Durham, the clamoring press—while protecting what is known in the Allen Building as 'the Duke brand.' On that fitful weekend in late March when the TV satellite trucks hit campus, the lacrosse team could be seen practicing for the Georgetown game, a scene that became an endless video loop suggesting institutional indifference. 'We had to stop those pictures,' Bob Steel says. 'It doesn’t mean that it’s fair, but we had to stop it. It doesn’t necessarily mean I think it was right—it just had to be done.'

Clearly, according to Mr Steel and his protege, President Brodhead, preserving the Duke brand was more important than the fair treatment of its students.

In 2007, as per this Fox News report, the North Carolina Attorney General dispelled the accusations against the lacrosse players.

[Attorney General Roy] Cooper said Wednesday that not only was there insufficient evidence proving the three assaulted an exotic dancer at an off-campus lacrosse player in March 2006, but there was 'no credible evidence that an attack occurred at that house on that night.' He even proclaimed the players 'innocent.'

'The result of our review and investigation shows clearly that there is insufficient evidence to proceed on any of the charges,' Cooper said. 'Today we are filing notices of dismissal for all charges.'

He added: 'We believe these cases were a result of a tragic rush to accuse and failure to verify serious allegations. Based on these significant inconsistencies of evidence and the various accounts given by the accusing witness, we believe these three individuals are innocent of these charges.'

After their exoneration, Mr Steel sent out a message affirming his support of President Brodhead's decisions (presumably including suspending the lacrosse season to preserve the Duke brand, firing the lacrosse coach for no obvious reason, and launching an unwarranted witch-hunt against erroneous attitudes toward sexual assault, and race and gender.) Per the Durham-in-Wonderland blog (written by Prof KC Johnson, who also wrote the book about the Duke lacrosse scandal), here is what Steel wrote:

Throughout the past year President Richard Brodhead consulted regularly with the trustees and has had our continuing support. He made considered and thoughtful decisions in a volatile and uncertain situation. Each step of the way, the board agreed with the principles that he established and the actions he took.

Finally, Steel is now a defendent in a law-suit in the aftermath of of this case, per the AP:

Three unindicted Duke University lacrosse players have amended their civil lawsuit against the school and the city of Durham stemming from false rape accusations two years ago.

The Herald-Sun of Durham reported Wednesday the players allege that Duke trustees chairman Robert Steel controlled the school's response and that the school was most interested in protecting its image.

So Mr Steel's handling of the Duke lacrosse scandal during his time as chairman of the board of that university also did not exactly cover him in glory, or provide an obvious qualification for him to be a trustee of the Hospital for Special Surgery.

Summary

So Mr Steel
-as CEO of Wachovia failed to keep the company independent, and is under investigation of charges that he misled stock-holders;
- as Under Secretary of the Treasury was involved in what many believe was a bungled strategy to combat the global financial meltdown mainly by handing billions of dollars to the misguided Masters of the Universe who brought the meltdown upon us; and
- as Chairman of the Board of Duke University seemed to put an ultimately unsuccesful attempt to defend the Duke brand ahead of the rights of its students, and is now the defendent of at least one related lawsuit.

It is too soon to tell whether the SEC investigation of the lawsuit will be decided for or against Mr Steel. However, it seems utterly bizarre that the board of the Hospital for Special Surgery would regard Mr Steel's track record as indicative of the "caliber" needed to lead one of the country's premier hospitals.

How Mr Steel inspires such praise brings to mind some findings of pollster Frank Luntz that appeared in the Los Angeles Times:

Today, Americans are boiling mad, and the elites from Washington to Wall Street to West Hollywood don't get it. It can best be summarized by 12 short words bellowed by Howard Beale, the deranged TV anchor in the movie 'Network': 'I'm as mad as hell, and I'm not going to take this anymore.'

Americans in the unhappy majority are struggling to keep their jobs as million-dollar bonuses are being awarded at companies their tax dollars bailed out.

The core American complaint about politics is that wrongdoing isn't punished, other than at the next election. From scandalous personal behavior to bailouts of everyone and everything except the hardworking middle class, Washington is seen as the source for America's mistakes. Enforcing rules and letting failures fail would stop the excesses today and prevent the mistakes of tomorrow.

Such accountability in business would likewise prevent executives at imploding companies from walking away with millions while their employees get skunked.

For business and political elites, the message should be clear: Restore trust.

Mr Steel's unlikely career trajectory shows how once someone becomes a member of the superclass, the new power elite that spans business, government, and academics, that person is likely to continue to wield power no matter how poor his or her track-record, to the detriment of nearly everyone else.

The Role of the RUC in Medicare's Price-Fixing and Rationing Remains Anechoic

An important part of the noisy and contentious debate about health care reform in the US centers on the role of the government as a provider of health insurance. Some on the left want a government "single-payer" plan to be the only health insurance available. Some left of center want a government "public option" health insurance plan to be available, particularly to those who have trouble obtaining commercial insurance. Some on the right want none of it, and sometimes note that the existing government single-payer plan for the elderly and disabled, Medicare, has important faults that would only become more significant if the plan is extended or duplicated. Yet even critics of Medicare on the right do not seem to want to talk about what may be its worst fault.

The latest example, an op-ed piece by Dr Scott Gottlieb, appeared in the Wall Street Journal yesterday. Dr Gottlieb's main point was that health care rationing by either government or private insurers is inevitable, but that "government does it in far more byzantine and arbitrary ways." In particular,

Consider the $450 billion Medicare program. It provides a model for—indeed its bureaucracy could well end up running—the 'public option' health plan that Mr. Obama wants to offer all Americans under the age of 65. In recent years, Medicare's staff has been aggressively restricting coverage for costly treatments.

This often means limiting access to the costliest technologies. To do this Medicare relies on its rationing and pricing systems.

Gottlieb then cited several examples, "tortured decisions concerning the use of implantable defibrillators," and "the travails of the pharmaceutical company Spracor and its drug Xopenex, an innovative respiratory medicine that competes with the chemically distinct and much cheaper generic albuterol."

Finally Gottlieb decried Medicare's decision making processes applied to costly technologies as "impenetrable." His summation was

There's nothing inherently wrong with a program like Medicare seeking value for taxpayers. But it shouldn't make up the rules as it goes.

Let me first say that I actually agree with Dr Gottlieb's main points. Any government or private health insurance plan ought to seek value for its money. However, how it does so ought to be rational, based on understanding of medicine and the clinical context, and transparent and accountable to the patients on whose behalf such plans pay. "Covert rationing" (as has been well discussed in the Covert Rationing Blog) raises worries that decisions are being made just to save money, not to improve value, and even that decisions are being made without informed consideration of the clinical context, or based on the self-interest of the decision makers, or even that decisions may result from bribery and corruption.

But if Dr Gottlieb is so concerned about Medicare rationing care as a result of opaque and unaccountable decision making, why is he not more concerned about how Medicare controls the prices of physicians' services than about its decisions about a few expensive, high-tech and infrequently used treatments?

We have written again and again about how Medicare has allowed decisions about what physicians are paid for providing various services to be made de facto by an opaque private committee run by the American Medical Association. This decision-making process has lead to relatively generous payments for procedures, versus miserly payments for "cognitive services," (that is, "evaluation and management services," or for physicians interviewing, examining, and counseling patients, making diagnoses, predicting prognoses, and making decisions about treatment.) The resulting perverse incentives are a major reason that primary care has become increasingly unavailable, and for our expensive patterns of care dominated by high-technology and invasive procedures. More detail quoted from a previous post appears below.

As we have discussed, the US Medicare system determines what it pays physicians using the Resource Based Relative Value System (RBRVS). This system determines the pay for every kind of medical encounter according to a complex formula that is supposed to account for physicians' time and effort, physicians' practice expense, and the cost of malpractice insurance. The components of physicians' effort assessed are, in turn, technical skill and physical effort; the required mental effort and judgment; and stress due to the potential risk to the patient.

To keep the system, which was started in 1990, current, requires addition of new kinds of encounters, which means encounters involving new kinds of procedures, and updating of the estimates of various components, including physicians' time and effort. To do so, the Center for Medicare and Medicaid Services (CMS) relies almost exclusively on the advice of the RBRVS Update Committee (RUC). The RUC is a private committee of the AMA, touted as an "expert panel" that takes advantage of the organization's First Amendment rights to petition the government. Membership on the RUC is allotted to represent specialty societies, so that the vast majority of the members represent specialties that do procedures and focus on expensive, high-technology tests and treatments. However, the identities of RUC members are secret, as are the proceedings of the group.

This opaque and unaccountable process has resulted in increases outstripping inflation in fees paid for procedures, while fees paid for 'cognitive" medicine,' i.e., for primary care, and for services that involve diagnosis, management of acute and chronic disease, counseling, coordination of care, etc, but not procedures, have lagged inflation. The effects of the RUC have been amplified by the unexplained tendency of commercial managed care and health insurance to track the RBRVS system when making their own payments to physicians.For further details about the RUC, see these posts on Health Care Renewal (here, here, here, here, and here) and important articles by Bodenheimer et al,(1) and Goodson.(2) By the way, why the US Center for Medicare and Medicaid Services (CMS) relies de facto exclusively on the RUC to control the RBRVS system, and why the AMA made the RUC into a secret organization apparently beholden only to the organization's proceduralist members are unanswered questions.

Our most recent posts about the RUC are here, here, and here. Other bloggers, notably including Dr Robert Centor on DB's Medical Rants, have criticized the RUC. The Society of General Internal Medicine seems to be the only medical society that has criticized the RUC (see this post). Yet even ostensibly conservative and libertarian pundits who decry price-fixing and rationing by Medicare have ignored this vivid and important example of opaque and unaccountable price-fixing and rationing. And ostensibly liberal proponents of public options and single-payer systems have not explained how they would make their rationing more rational, transparent, and accountable, or how simply insuring more patients under Medicare-like programs would not result in even higher costs, poorer access, and worse quality.

The lack of discussion of the RUC remains one of the more striking examples of the anechoic effect. Failing to address why our costs are so high, are access is so poor, and our quality is so challenged will make it likely that any supposed reform effort will only make these problems worse.

References

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