The Phall of Pharmed

The Miami Herald documented the rise and fall of a prominent medical supply company.

Before its spectacular collapse, Pharmed Group was one of the great South Florida success stories, a medical supply company created by two brothers who started with nothing and built the eighth-largest Hispanic-owned business in America. In 2003, their profit was $48 million.

What happened to this once fabulous company, where brothers Carlos and Jorge de Céspedes often showed up for work in a Ferrari, Bentley or Porsche? How could it have crumbled so quickly?

Court documents show that in its last two years, Pharmed lost a huge amount of business after a major supplier and a major customer accused the company or its executives of shady business practices in civil lawsuits.

The Herald article chronicled a striking list of allegedly "shady business practices."

Operating without a license:

In 1980, sensing an untapped market for selling medical supplies to Latin America, they started Pharmed by installing an answering machine in a small storage room in Carlos' home.

'In six months, we had sold $700,000,' Carlos told The Herald. 'We had no occupational license, nothing. I went to my accountant, and he said, `You're going to jail.' I said, 'No, that's why I came to you.'

The investigation of Bravo Export Management:

In January 1987, the feds charged Bravo with illegally selling drugs bought at a hospital discount to a California wholesaler. Bravo ordered the drugs in the names of two other Miami companies, Belo Medical Center and South Florida Health Alliance, 'an alleged hospital purchasing group,' according to the criminal indictment.

State corporation records show the South Florida Health Alliance was incorporated by the de Céspedes brothers. The indictment charges that a fraudulent invoice used in the scheme was sent to Jose M. Valdivia at Belo Medical Center. Valdivia was then Carlos' father-in-law. The address of Belo Medical Center was also the address of Pharmed Sales International at the time.

Bravo Export pleaded guilty and paid a $75,000 fine. Then the investigation stopped. In testimony before a House subcommittee in Washington in 1990, [Deputy Director of the Georgia Drugs and Narcotics Agency C. Richard 'Rick'] Allen said: 'There were close to 100 guilty pleas. But there were also 40 to 50 other cases which were pending. In many of which the subjects had expressed a willingness, or at least an interest in entering a guilty plea.'

One of the pending cases was Pharmed....

The suit by Wyeth:

In 1987, Wyeth Pharmaceuticals sued Belo Medical Center, South Florida Health Alliance and the de Céspedes brothers over allegations of improperly obtaining drug discounts. After nine years, the case was settled out of court in a confidential agreement.

The suit by Amerisource Bergen:

AmerisourceBergen, a large medical supply wholesaler, sued Pharmed. The allegation involved setting up a corporation to get price breaks. According to court records, Pharmed Vice President Rene Portela and Pharmed contract consultant Charles J. Sanchez incorporated Quality One Medical Group, which then signed papers promising its goods would go only to hospitals. Quality One set up a warehouse a couple of miles from Pharmed's Doral center.

In a deposition, Portela said Carlos de Céspedes asked them to create the corporation, which placed orders with AmerisourceBergen. When the goods were delivered to the Quality One warehouse, a Pharmed truck came 'immediately' to take them to the Pharmed warehouse, Portela stated.

AmerisourceBergen claimed it shipped goods worth $1.2 million to Quality One and didn't get paid. The company called Portela and demanded payment. 'That's when I really got scared,' Portela said. 'And then I asked them [Pharmed] what was going on.'

Court documents show Pharmed eventually paid $735,091 -- the cost of the goods if they would have gone to a hospital. Amerisource sued for the difference -- $443,624.

Pharmed's defense in court documents: Amerisource knew or should have known that Quality One planned to resell the items to Pharmed. In 2002, the case was settled out of court on undisclosed terms.

The accusations by Johnson & Johnson:

The next big blow came in January 2005, when Johnson & Johnson ended its 25-year relationship. J&J filed a demand for arbitration, accusing Pharmed of fraud and the brothers of 'unjust enrichment' in collecting $22 million in rebates to which they were not entitled.

Pharmed sued J&J for 'reprehensible, intentional, malicious' defamation. A judge sent the case to arbitration. J&J won't comment.

The investigation of Commissioner Diaz:

As Pharmed struggled, [Miami-Dade] Commissioner [Jose 'Pepe'] Diaz co-sponsored in 2006 an ordinance requiring Jackson Memorial Hospital to give preference to local suppliers. For the four previous years, he received at least $475,000 in salaries, loans and bonuses from companies controlled by the brothers.

Diaz has been under investigation by federal authorities looking into possible 'honest services fraud' in his role as a public servant because Diaz took a fishing trip to Cancun with Carlos de Céspedes and Miami developer Sergio Pino. Diaz later voted for a major Pino development plan.

Federal investigators would not comment on the status of the investigation.

The suit by HCA:

In June, HCA sued seven people, including a Pharmed assistant vice president, Erika Urquiza, 36, but not Pharmed itself or the brothers. The lawsuit alleges that Urquiza paid kickbacks to two employees of HCA's Kendall Regional Medical Center, who then ordered supplies from Pharmed that never were delivered. HCA paid Pharmed $3.5 million for the supplies, the lawsuit states.

The de Cespedes brothers commented on their roles in all this litigation thus:

We are a litigious society, but in our 27 years of operation prior to the bankruptcy, in our dealings with well over 1,000 vendors, we have been party to just a handful of civil suits, where were settled to our satisfaction.

As to the various old legal and employee disputes about which you have inquired, we would say simply that every business has its share of disputes and complications. Some of the matters you asked about had nothing to do with us or Pharmed.

We have successfully resolved matters involving us and are disappointed The Herald would dredge them up simply to portray us in an unflattering light. You do not have sufficient information to understand most of these matters, and we are not going to comment on them in deference to the others involved.

Pharmed is now bankrupt, although its name lives on. "The basketball arena at Florida International University is named for Pharmed." "The brothers promised to donate $1 million to Florida International University," however, "FIU officials say that so far, Pharmed has contributed a third of the promised amount."

Nearly all physicians swear oaths to put the care of their patients ahead of any personal interests, and to treat their patients ethically and honestly. Physicians who fail to conduct themselves ethically are liable to be sanctioned by state medical boards, however imperfect that process may be. In today's complex health care environment, physicians must work within a vast web of large organizations, which influence health care and physicians' practices in myriad ways. The vast amounts of money that flows through the health care system may provide plenty of incentives for shady business practices.

Yet although these health care organizations' operations affect patients' health and safety, they are not subject to any more ethical requirements than are trash hauling companies. Such organizations rarely have internal codes of conduct, and their leaders rarely face significant sanctions for unethical conduct.

Thus, is it any wonder that "shady business practices" are widespread in health care?

So shouldn't organizations whose operations affect peoples' lives and health be held to higher ethical standards than your local trash hauler? Inquiring minds want to know....

But until the leaders of health care organizations are subject to enforceable ethical standards, expect more "shady business practices," and, in turn, more costs, less access, and worse quality.

Do Demoralizing Pharma Personnel Practices Contribute to Unsafe Drugs?

"If I have seen further it is by standing on the shoulders of Giants."- Isaac Newton

"They could not see as far as necessary because they were standing on the shoulders of midgets." - Felix Fulmer

In "Avandia Mystery ... Elementary, My Dear Watson" I wrote that the mysterious disclosure outside GSK of an equally mysterious "leak" to GSK of a pre-publication article critical of Avandia might have been initiated by unhappy GSK employee(s).

Those who made the disclosure knew, or should have known, the devastating effects on the article reviewer, UT San Antonio researcher Dr. Steven Haffner. Honesty and fear of the imbroglio with the likes of Sen. Grassley might have played a role, but still, such a career-ending move against an ostensibly friendly scientist seems unusual.

If unhappiness was involved, why might GSK employees be unhappy?

In my post "Happy Accidents in pharma doubtful: Tax Break Used by Drug Makers Failed to Add Jobs" I wrote:

... as I understand it from former employees, during a downsizing people are required to justify their position and/or "bid on their own job" in a competitive fashion. If they fail and cannot then "find another position in the company" (after losing your own job that you may have had for years, what's the likelihood that will happen?), then it's out the door. IMO that is simply horrible management of those "precious" "human resources." What could be more humiliating than bidding on your own job?

I recently became aware of several former collaborators who were GSK employees and "lost" on bidding for their own and others' jobs during downsizing, and were shown the door as a result. My interactions further reinforce my belief that such policies are poorly engineered from a social perspective; they are alienating, strategically unsound, and to be plain about it, idiotic. Many fundamental questions arise:

• Notwithstanding whether downsizing is really necessary, if downsizing is going to occur, do people made to bid on their own jobs and those of others have performance reviews on file?
• Are these reviews unsatisfactory, and if they are unsatisfactory, why not simply lay the person off?
• If they are satisfactory, does not being forced to bid on your own job send the explicit message that performance reviews mean little? Why is time wasted on reviews?
• If performance reviews are irrelevant, does that not mean bonus determination is bogus and partial?
• If employees are reviewed once a year and/or quarterly, and have been so for several years, they should be a very well known quantity to the company. How is it possible for them to be complete unknowns? If they are not complete unknowns, why are they treated as such in being made to bid for their own jobs?
• Either a company knows what its employees can do, or they don't. If they do not know what their employees can do, then what do they really know about their business, and why are the decision makers in charge in the first place?
• Why is it impossible for a company to match it needs to its assets without resorting to an idiotic process that is neither efficient nor litigation proof?
• If incumbents are made to bid on their own jobs, does the company have any idea why these people are in the jobs they hold in the first place?
• If performance reviews are satisfactory, might being forced to bid on your own job against internal competitors create intraprofessional animosities and enemies and an environment of paranoia that harm the company, both short and long term?
• Is such social instability, where people never know when they will have to bid on their own jobs, good for worker morale and for the community?
• Might it be better for morale to just have managers select people to be laid off, or have employees draw lots?
• Does GSK feel employee morale matters?

If one takes this issue to its absurdist extreme, why not force employees to bid on what homes they can own, or what education they may provide their children? -- oh, wait! An HR policy of "bidding on your own job, you lose, you're out" is effectively doing that already!

Seriously, such methods make one's colleagues even more hostile and likely to act in underhanded, territorial ways than with other more traditional HR strategies. It seems axiomatic such an approach to one's employees demonstrates a fundamental contempt for their livelihood and peace of mind.

As in the post here regarding corporate puffery and rhetoric about what a great place they are for a "career", those who believe this approach to people's livelihoods is OK are deluded, and those who oppose it but are powerless to change it or afraid to denounce it become demoralized and cynical. An environment of contempt by management towards its demoralized, cynical and deluded employees is not the best for R&D and drug safety monitoring.

(How much of a stretch of the imagination is it to imagine that such a perverse environment could foster a subtle contempt for public safety issues, if those issues could harm a drug's sales and cause yet more rounds of layoffs?)

Ultimately, the following questions need to be asked:

• Do the demoralizing effects of such human relations policies affect the company's ability to create and monitor the safety of their drugs?

• Do you, as a patient, care that your ostensibly life saving, but potentially risky drugs are created and evaluated in this type of environment?

I know I do.

-- SS

GSK, Avandia and Medical Informatics: More on Why Pharma Fails

"If I have seen further it is by standing on the shoulders of Giants."- Isaac Newton

"We would like to pick the low hanging fruit while standing on the shoulders of Giants, but we got rid of them all." - Felix Fulmer

The GSK diabetes drug Avandia and the Pfizer anti-smoking drug Chantix are new entries in a long "honor roll" of drugs from major pharmaceutical companies to come under suspicion of having an unacceptable degree of adverse drug effects (ADE’s).

The recent Avandia issues reminded me of assertions about need for more medical informatics expertise in pharma to help track drug ADE’s and improve drug safety. These recommendations come from organizations such as Gartner Group and from the prestigious Institute of Medicine of the National Academies (link).

The Avandia issue also reminded me of essays I’ve written about the lack of understanding of the formal specialty of Medical Informatics in the pharma industry e.g., "Why Pharma Fails" and "We don't need medical informatics here Part 2." I am also reminded how this problem, complicated by the conflation of IT and information science, cause the industry to suffer at both ends of the pipeline, that is, discovery and postmarketing surveillance.

The Avandia debate also reminded me of the preposterous, contrary to reason concept that in clinical information/IT initiatives there can be "too much talent" in an organization, and of ill-judged biases and stereotypes regarding Medical Informatics and MD's in the same context, especially regarding leadership roles.

Finally, in those cases and others I have written about the dangers of non-medical personnel holding leadership positions in healthcare that permit them to make decisions best left to medical or cross-disciplinary (e.g., medicine and information science) professionals, or otherwise put them outside the bounds of their competencies.

All this brought me back to GSK and, on searching my files, yet another experience I had with pharma illustrating my concern about their hiring practices. The experience may also shed some light on why pharma seems to have a problem with drug monitoring. I use this case as an example, but have had similar experiences with AstraZeneca, Wyeth, McNeil, Johnson and Johnson, Merck, and others over the past several years.

In July 2004 I received an unsolicited email about a new job opening from a prestigious British recruiting firm (“headhunter”) retained by GSK, Armstrong Craven Ltd. It referred to a cheminformatics position I'd once applied to (and never heard back about), and sought me out for a converstation about a new role: Director of Medical Informatics (text of letter here).

I set up a phone interview with the recruiter, who called me from the UK a short while later. We spoke for over an hour about the Director of Medical Informatics role. As a result of our detailed conversation, the recruiter felt I was highly qualified for the position. As a further check, he emailed me a GSK document that described the position in great detail. It included a description of the Informatics and Knowledge Management unit at GSK, and one concerning item:

Medical Informatics is a discipline that studies, invents and implements the structures and algorithms necessary to improve communication, understanding, value derivation and management of pharmaceutical scientific information. The objective is the coalescing of data, knowledge and tools necessary to apply these data and knowledge in the decision making process, at the time and place that a decisions needs to be made.

I felt this definition of medical informatics a bit dated. It was written by a pioneer who is now semi-retired, Homer Warner, MD, PhD of Univ. of Utah, who I knew from various informatics professional meetings. However, it was clear why the recruiter was interested in me.

With extensive medical informatics training and experience in both hospitals and pharma, having been Director of Scientific Information Resources and of The Merck Index at Merck Research Labs, I must have seemed to him well qualified for the job description. That JD included items such as identifying, prioritizing and partnering on projects where Medical Informatics can deliver business impact, and developing both strategic (long term) collaborations that will have a sustained impact as well as short term efforts that will impact high-priority R&D projects. The full job description can be seen here.

Finally, the job was described as reporting at a high level but not to an M.D. It reported to the Vice President of Informatics & Knowledge Management who apparently authored the description, Dr. Tomas Flores, a Ph.D. The recruiter told me he would speak with the hiring team and present my credentials to them ASAP. He fully expected at least a follow up interview.

Unfortunately, this was not to occur.

I received a call back from the recruiting firm several days later to tell me that GSK had no interest in my background, and Dr. Flores did not wish to speak to me at all. When I inquired why, I was told he was looking for someone with “an extensive CS background to write algorithms to solve business problems.”

Needless to say, I was rather disappointed by this response. The Armstrong Craven response raises a number of important questions:

• Why do we have computer-oriented VP's lacking medical credentials evaluating resumes of those who do?
• Did the lack of medical credentials and experience prevent proper understanding of critical line items on my resume?
• Why was a dated definition of "Medical Informatics" being employed in this job description for a new Director of Medical Informatics, when broader, more current definitions of the field were readily available?
• Was the Homer Warner definition itself taken far too literally regarding "algorithms?" Could Dr. Warner have meant something more than computer algorithms?
• How was the prejudicial decision that algorithms needed to be written by a Medical Informatics specialist made? Who set this as a strategic objective? Why was it done by someone with no apparent Medical Informatics credentials?
• Is the best use of a medical informatics specialist to write algorithms (i.e., do programming), or is it to create and direct the writing of algorithms, separating the high-level biomedical cognitive tasks form the lower ones (i.e., programming)? See example of this issue here.
• Was there anything in my resume with regard to my training and experience in computing and in healthcare suggesting I could not write such algorithms to solve biomedical business problems?
• Was it typical at GSK for a hiring manager to read a resume that came from its own retained recruiter and, on the basis of secondhand knowledge from the recruiter and line items on a piece of paper, make a decision not to even talk to the recommended candidate – or even meet in person, since that candidate lived perhaps fifteen miles from one of the sites the hiring manager frequented? Is this above-board, state-of-the-art talent management in an industry as critical and under such societal mistrust as pharma?
• Finally, was my resume actually read? Was this a preferential job posting? Was there a favored internal candidate? (HR departments, usually annoyed when lawsuits happen, force hiring managers to advertise new positions per company policies on same, rather than allow favoritism. However, HR cannot challenge hiring managers' stated reasons why outside candidates they might not have expected to apply might not be suitable for a role.)
• Were other potentially valuable candidates turned away on similar reasoning?

And:

• Do such decision makers also make decisions concerning who gets to bid on their own job, and ultimately, who stays and who leaves during downsizing?
• Might that be a "double whammy" adversely affecting the talent pool at both ends, creating a “brick-headed” wall at the intake end, and a “leaky membrane” at the exit end?

Some of these questions can be answered by excerpts from my response to Armstrong Craven, cc’d also to the hiring manager (full text here):

Dear (recruiter),

Thanks for presenting my resume to GSK regarding a position in Medical Informatics. Your colleague explained to me yesterday that the GSK Informatics & Knowledge Management group is seeking someone with an "extensive CS background to write algorithms to solve business problems."

... by way of education ... It is my belief that a view of medical informatics professionals as "writers of algorithms to solve business problems" reflects a fundamentally narrow and mechanistic view of the field, or perhaps a mislabeling of the position as being one of Medical Informatics. The lack of a requirement for formal Medical Informatics education and training suggests the latter.

One of Medical Informatics' founders, Dr. Homer Warner, was the author many years ago of the definition adapted for the ArmstrongCraven draft brief. Homer wrote that "medical informatics is the study, invention and implementation of structures and algorithms to improve communication, understanding and management of medical information." See my website on this and other definitions of the field at http://www.ischool.drexel.edu/faculty/ssilverstein/medinformatic1/index_org.htm#definitions .

By "algorithms", however, Homer meant not computer algorithms but more broadly the development of processes, procedures, methodologies -- and software systems -- for management, process control, decision making and scientific analysis in healthcare. That is the current understanding of the field that my academic colleagues and I teach our students.

The value of the field stems not so much from writing algorithms (as in bioinformatics or computational biology), but from an integrative approach focusing on data definitional issues, language issues, human factors, organizational issues, information needs and flows, and strategies for indexing, retrieval and information dissemination. It is in the latter areas that I excel (although having done the former -- the writing of software and algorithms -- earlier in my career).

My definition of the field is that Medical Informatics is the science and art of modeling and recording real-world clinical concepts and events into computable data used to derive actionable information, based on expertise in medicine, information science, information technology, and the scholarly study of issues that impact upon the productive use of information systems by clinical personnel.

Perhaps a better definition of Medical Informatics is found in MeSH itself, written by the National Library of Medicine itself: "Medical Informatics is the field of information science concerned with the analysis and dissemination of medical data through the application of computers to various aspects of health care and medicine."

I received a thank you from Armstrong Craven for helping them understand the field better (which helps their competitive position in the headhunting domain), but did not receive a reply from the company hiring manager.

Even worse, this was not my first encounter with GSK / SKB. I had also had fruitless discussions with SKB in the 1996-8 timeframe, while I was Director of Clinical Informatics at Christiana Care. In February 2000 as well, a senior recruiter named Iain McKenzie had contacted me, interviewed me in person after a phone discussion and then enthusiastically tried to sell my background to GSK discovery scientists. He was quite puzzled that they expressed no interest.

In conclusion, one wonders if pharma really "gets it" regarding Medical Informatics. Many of my observations indicate the industry does not. That the IOM needs to call pharma's attention to a specialty field whose professional education is largely NIH-sponsored is quite revealing.

One also should wonder if it is wise to put nonmedical personnel in charge in pharma of what basically amounts to the hiring of medical/medical information professionals.

One also wonders if such hiring practices impair companies’ abilities to monitor the safety of their drugs, and if Avandia and other safety issues would have been detected earlier if, as IOM suggests, more Medical Informatics professionals were involved in roles beyond "writing computer algorithms to solve business problems."

I report, you decide.

Finally, I'm not sure I would have wanted to work for this company anyway. For some of the reasons why, see my post "How To Demoralize Pharma Workers in One Easy Lesson."

-- SS

Real Estate Deals, Conflicts of Interest, and North Shore - Long Island Jewish Health System: A "Simple Issue" Because "We Need More Space?"

Last week, an article in Newsday raised concerns about conflicts of interest affecting one of the largest US health care systems.

The Northshore - Long Island Jewish Health System claims to be the third-largest, not-for-profit secular health care system in the US. It has a $4 billion yearly operating budget, employs 37,000, and claims to be the ninth-largest employer in the New York City area.

The Newsday article recounted a large real-estate transaction between the hospital system and a company lead by a prominent member of its board of trustees.

The North Shore-Long Island Jewish Health System is paying about $300 million to lease a major facility from its own vice chairman's real estate partnership, leading some to question how Long Island's biggest nonprofit handles potential conflicts of interest on its board.

William Mack, a longtime executive committee member of the health system and one of its leading donors, is a general partner of a private-equity real estate fund that owns the former Lockheed-Martin defense plant just across the street from Long Island Jewish Medical Center in New Hyde Park. That plant and its 94 acres, then called i-park Lake Success, were bought for $20.5 million in 2000, in a deal led by Mack's son Richard. Now the Macks' partnership is leasing a third of the plant to the health system for $300 million in base rent over 25 years.

When leases at i-park came under review, Mack disclosed his role as founding senior partner of Apollo Real Estate Advisors, the fund manager behind the deal, and recused himself from the process.

Mack's dual role as one of the health system's most powerful stewards and its biggest landlord has prompted continuing concerns by some current and former health system officials about the propriety of the deal and the integrity of the health system's governance.

There were several aspects of this transaction that seemed unusual.

For one thing, the matter was never brought to North Shore-LIJ's board of trustees, though an attorney general's written opinion says state law requires nonprofits to do so for land deals. Instead, the lease was reviewed by the board's executive committee, which wasn't given copies of two reports on which its decision was based, relying instead on a short memo and one-page summary of the lease terms. North Shore has declined to release the reports, saying they contain confidential business information; it contends the attorney general's opinion doesn't apply to a nonprofit such as North Shore.

In addition, there were complexities in the relationships involved.

Mack was one of several people who had business relationships with those involved in the deal:

[North Shore board chairman from 2000 to 2004 and former Goldman Sachs vice chairman Roy] Zuckerberg, who led the health system's real estate review, has ties to Mack through an unrelated business: He sits on the executive committee of the $2.3-billion Mack-Cali Realty Corp., a real estate investment trust chaired by Mack, and owns 33,500 shares of its common stock.

Newmark & Co. (now called Newmark Knight Frank), hired to keep Apollo at arm's length as North Shore's tenant representative, has done periodic business with that company, and Brian Waterman, one of its two principals handling the i-park talks, has listed Apollo among his leading clients.

Though Mack recused himself from the matter, his son Richard, an Apollo managing partner, signed the preliminary lease term sheet for i-park in November 2004, records show.

Hospital system leaders denied that the conflict of interest was significant.

Mack said his partnership has plowed huge sums into renovating a property that had sat unsold for five years. 'I think it would have been worse of me to say, 'Don't deal with them [the health system] and meet ... the needs of the community,'' Mack said.

Former Goldman Sachs vice chairman Roy Zuckerberg, who led the real estate search as North Shore's chairman from 2000 to 2004, can't understand why anyone would give the deal a second look. 'We need more space,' he said. 'I see this as a pretty simple issue.'

The i-park site was selected by a tenant representative through an 'arm's-length' process, the health system reported in its tax returns, and the lease terms were found reasonable by an independent appraiser.

Generally, spokesman Terry Lynam said, the health system goes out of its way to avoid conflicts of interest with its board members. But the health system is governed by a board of 130 of Long Island's most prominent and wealthiest citizens. Many preside over companies that sell the kinds of goods and services a hospital might want, and North Shore will deliver about $4.6 billion in health care this year -- a budget almost as big as Nassau and Suffolk counties combined.

The health system said Zuckerberg's ties to William Mack through Mack-Cali are irrelevant. Waterman said he won 'a very good deal for the hospital.' Richard Mack said he was 'barely involved' in the lease talks, which he described as lengthy and contentious.

Mack said there was no missed business opportunity for Long Island Jewish, and he made clear he is affronted that any question might be raised about his loyalty to the health system.

On the other hand, some people raised ethical questions about the deal.

'It may not be illegal, but it smells bad,' said Pablo Eisenberg, a senior fellow at Georgetown University's Center for Public & Nonprofit Leadership.

Although federal tax law strictly bars private foundations from doing business with their insiders, public nonprofits such as hospitals face no such restrictions, said Eisenberg, who has advocated for such limits in congressional testimony. 'There was a tradition in nonprofits that board members served for nothing, and they were prohibited from self-dealing. Now ... [doing business with board members] is increasingly popular.'

Manhattan attorney William Josephson, who headed the state Charities Bureau under then-Attorney General Eliot Spitzer, said the i-park lease deserves careful review because of its size alone. But, he said, it also calls to mind the state's 2000 lawsuit that toppled Port Authority chief Robert Boyle, the chairman of a Westchester hospital board who steered a development deal to attorney Albert Pirro in exchange for a secret partnership stake.

Mack never concealed his role, as Boyle did, an omission that led to a civil fraud charge against the latter. But otherwise, 'the facts of this transaction raise the same issues,' Josephson said. 'Under state law, trustees owe their charities a duty of loyalty. If a trustee has a business opportunity, he must offer it to the charity and not make an extraordinary profit in the process.'

Most other current and former health system officials reached by Newsday have declined to speak about the lease deal. But four of them, asking not to be named because they did not want to damage their relationships with the health system or with Mack, expressed discomfort at Mack's being both a senior board member and major landlord, and concern about the decision-making process.

Although the conflicts of interest that most often appear in Health Care Renewal seem to involve physicians' and health care academics' financial arrangements with drug, biotechnology, and device companies, this case illustrates that all sorts of conflicts are now prevalent in health care.

This case is also a reminder of just how big not-for-profit hospitals and health care systems have become. This means that the potential for big conflicts of interest affecting their leadership is increasing.

Yet there seems to be much less disclosure and discusison of such conflicts than of conflicts involving, say, academic physicians and pharmaceutical companies.

Furthermore, these conflicts more often may involve organizational leaders who might reasonably be called members of the power elite. To me, the most striking aspect of this case was how blithely such powerful individuals on the health care system's board dismissed any concerns about conflicts of interest.

As F Scott Fitzgerald wrote, "Let me tell you about the very rich. They are different from you and me." But they now seem to be running health care organizations that are supposed to take care of you and me.

One Step in Healthcare Renewal is Academic Renewal

In this post about Duke's decent into intellectual anarchy, I made the observation that academics have significant influence on their students, and the influence affects those students when those students become our industry's and nation's leaders.

I have been reading the various debates about the actions Duke's "Group of 88" professors, who tried to take advantage of the anger created via fabricated accusations by a dancer that the Duke lacrosse team members assaulted and raped her.

One observation was striking. The "Group of 88" refer to their writings in a most peculiar way.

They called their rush-to-judgment support of campus demonstrators who had widely distributed a “wanted poster" branding the team as “rapists” the "Listening Statement." (As a former practicing occupational medicine physician, I can vouch for the degree of emotional suffering and damage the "Listening Statement" likely caused these lacrosse team students.) A later release was called the "Clarifying Statement."

One wonders why they didn't use the simpler title "Our Views on the Recent Unpleasantness" or something more apppriate to scholars? Why the faux avant-garde terminology "Listening Statement" and "Clarifying Statement?"

I am surprised they didn't add the term "Communique" to the names they did use. It occurs that such language is just the terminology that would be used by a group of self-important, pompous, wannabe-revolutionary fools who might dream of sending out "Popular Liberation Front Statements" on a clandestine Soviet crank-powered shortwave transmitter with a wire aerial strung across the jungle treetops.

This rush-to-judgement, hang-them-then-hold-a-trial attitude seems not just accepted at universities like Duke, but defended and applauded. No "Apology Statement" was ever issued, even after the students were found innocent and the prosecutor jailed. What message are the students taking away? Perhaps the message that being a pompous fool is a virtue?

Now, think about all the observations in Healthcare Renewal about corruption, conflicts of interest, etc. in the healthcare industry committed by healthcare professionals and executives. I argue that one root cause of these phenomena are the beliefs of the people behind the actions. Pompous jacka** is probably a reasonable characterization of many. Are their attitudes affected by a debased educational environment? I think that is likely.

I again state my premise: one step in healthcare renewal is academic renewal.

Finally, regarding Duke, if I were those Group of 88 faculty, I might want to transfer my assets to a trusted third party ASAP. Considering the swath of lawsuits coming down the pike, and a likely class action to follow the current civil suit initiated by a few members of the team, I might want my assets squirreled away.

I did try to contact Duke's Office of General Counsel about the mischaracterization of my writings put into print by Miriam Cooke as described in the post about Duke linked above. However, the response I received indicated they have bigger fish to fry and that my complaint was moot considering changes that will likely be coming down the pike there, after the inevitable leadership shakeup.

Maybe the Group of 88 will release an "Impoverishing Statement" when the dust settles.

-- SS

Avandia: "Why I sent it is a mystery" ... Elementary, My Dear Watson!

At "Why I Sent It Is a Mystery - More About Avandia, Conflicts of Interest, and Confused Thinking" Roy Poses documents a response from a prominent biomedical researcher, Steven Haffner of the University of Texas Health Science Center at San Antonio, as to why he rather blatantly breached scientific reviewer's code of conduct. This code of conduct is not a mystery and is quite explicit.

It is crystal clear he should not have FAXed anything or communicated about the paper he was reviewing in any way whatsover to GlaxoSmithKline (GSK):

'Why I sent it is a mystery,' Haffner told Nature . 'I don't really understand it. I wasn't feeling well. It was bad judgement.'

A mystery, indeed.

This statement is simply not credible on its face, coming from a scientist with high ability, a large number of federal grants, and who probably sits on many study sections where the rules are emphatically stated at every session - and where participants have to sign off in writing, as I do before a section.

I review papers too. Hypothetically speaking, what might motivate me, if I were not strongly ethical, to do something like this? Something else is likely going on here for someone to risk their reputation, and it is not credible to believe it is ideological or random due to having a bad hair day. If this clinical scientist was having a bad day, it was in "spin generation" upon confrontation when his effort was exposed. That response rates about a "0.2 out of 10" on the MedInformaticsMD Plausible Deniability Scale.

Let's not beat around the bush. This person could have slowed or halted publication through comments in his review. Something more was at stake. What would it plausibly take for a person to assume such risk? It would take a significant quid pro quo.

Again, hypothetically speaking, knowing how people (e.g., people I saw in my occupational medicine role in highly-unionized heavy industries) who get caught doing things that "they should not be doing" react, my concern is that this person could have been on an explicit retainer of some type (including and/or over and above the promise of speaking engagements), or could have had an explicit or implicit agreement to be rewarded financially (money, stock options, internal information related to investing, etc.) by pharma on a case-by-case basis to tip them off to negative publications before those publications appeared or had the chance to appear.

Of course, a pharma engaged in such activities would make sure their tracks were well-covered and create a situation of "plausible deniability." It would therefore be quite difficult to investigate this type of arrangement.

I emphasize that I have no knowledge of such activity, nor am I making an accusation. I'm just thinking as a Sherlock Holmes in a "mystery" novel might think, from the "means, motive, opportunity" angle.

That said, I hope this issue will be investigated. This affair raises a number of questions:

• Could there be other instances of leaks to pharmas regarding other scientific papers reviewed by this individual?
• Just how widespread is this problem?
• Could other scientists also be "leaking" and we just have not discovered it yet?
• Could pharmas have created a network of "advance scouts" in the biomedical/academic industry, i.e., people who have agreements to tip them off about negative publicity pre-publication ?
• Could such a "pre-emptive strike force" be utilized for quiet monitoring of the writings of a pharma "enemies list"?
• Could compromised reviewers be affecting or manipulating the career advancement of scientific authors behind their backs (either negatively or positively, depending on their "alignment" to the interests on pharma), e.g., via conversations with formal or informal connections, without the authors knowing about it?
  

An unscrupulous consultant advising pharma marketing and strategic planners on methods to "pave the road" in the biomedical literature would probably tell them to do something like this.

Considering what goes on in pharma and academia (such as at another southern university of high renown), such a discovery would disappoint me, but not at all surprise me.

Finally, I also am curious about the cirsumstances of GSK's disclosure of the leak, since the company knew or should have known that doing so would harm Haffner's reputation, perhaps irreparably. Theoretically, a company representative could have simply called him to ask he not do this again, and kept "old boys club" quiet about it.

Did the company try to protect him? How did the disclosure of the breach occur? Who was it disclosed to? Was disclosure out of honesty, or was it for some other reason (e.g., out of fear of the leak being divulged outside the company by someone who might have seen or handled the incoming FAX, perhaps)? Was the disclosure done by a disgruntled, i.e., mistreated employee? (see my post "How To Demoralize Pharma Workers in One Easy Lesson" for why an employee there might be "disgruntled."

From Nature:

Nancy Pekarek, a spokeswoman for GSK, says that the company did not offer any input to Haffner on the meta-analysis, and that she was not aware of anyone at GSK informing the NEJM of the confidentiality breach.

The circumstances surrounding disclosure of the breach are the biggest "mystery", in my opinion.

Addendum:

Those who might think me a flaming far leftwing totalitarian anti-pharma pajama-blogger, my "Political Compass" questionnaire results are here.

-- SS

A Truly Appalling Lawsuit Against Duke University

Most everyone is aware of the Duke lacrosse team scandal, the debacle about alleged rape by Duke lacrosse team students that led to the resignation of prosecutor Nifong for prosecutorial misconduct, exoneration of the accused, an expose of the radical agendas of a subset of Duke's faculty, and a great deal of national publicity, or, I should say, notoriety.

Now, in Dec. 2007 several of the team members have filed a civil suit. The lawsuit filing documents are downloadable from these links (PDF files):

Part 1 (100 kb PDF)
Part 2 (1.3 Mb PDF)

I recommend downloading and perusing these in their entirely. Stunning - and frightening.

Using Adobe Acrobat, a search in them upon the term "medical" is of great concern. Named in the suit as defendants are Duke University Health Systems, a private diagnostic clinic contracted to Duke, a number of physicians and RN's, and unversity officials overseeing medical affairs.

What caught my attention were:

• A massive conspiracy to deprive three young men of their rights under the U.S. Constitution, of Stalin-police state proportions
• Sections on production of falsified medical records to support fabrications regarding sexual assault examinations
• The naming of a number of Duke medical center and medical center-associated officials including the Chancellor for Health Affairs (a physician Victor Dzau MD) as direct participants by commission and/or omission (e.g., indifference to, and failure to act against obvious impropriety)
• The collusion or tepid reactions of the most senior Duke officials right up to the Chairman of the Board of Trustees.

Overall, this story would make for the most stunning of movies of Serpico proportions - and probably will be, and should be.

If the allegations are even partially true, we have the most candid expose of the severe state of moral decay that afflicts our educational system (a system that produces our leaders of other organizations), our healthcare system, our justice system, and our culture.

More on the Duke situation can be found at this extensive, well-written fellow blogspot site, put together by one non-Duke professor named KC Johnson, Durham-in-Wonderland.

How I became aware of this is a story unto itself.

I noted the following passage in a polemical November 2007 article most ironically entitled Academic Freedom: The 'Danger' of Critical Thinking", International Studies Perspectives 8 (4), 396–400, doi:10.1111/j.1528-3585.2007.00306.x by Duke Professor of Asian and African Languages and Literature Miriam Cooke (fulltext here):

In this time of war that allows some people to lie and cheat, it is taboo for others to think critically ... It is dangerous even "to speculate about the relation between this war (in Iraq) and the geopolitical interests of Israel." These are the words of Paul Gilroy, who, at the time of speaking, was chair of African-American studies at Yale. Enraged, his colleague Scott Siluerstein compared him with Hitler and claimed that his words "illustrated the moral psychosis and perhaps psychological sadism that appears to have infected leftist academia." (Younge 2006).

This discovery led me to a literature search that led me to the Duke lawsuit documents. Cooke is profiled here.

Cooke actually misquotes a misquote by writer Gary Younge in the British newspaper The Guardian in an article "Silence in Class", April 4, 2006. In turn, Younge had misquoted an editorial authored by me that appeared in the Wall Street Journal on April 17, 2003 (see this link for my original.)

To be more precise, I should say that Younge used the "art of political war" rhetorical ploy utilized to discredit anyone who even writes about history's worst figures and any favored academic/politican/etc. in the same essay. As an act of obfuscation and diversion in the interests of ideological/political warfare, the ploy is to say the author is comparing the subject to history's worst figures, or even equating them. Cooke then parroted Younge's rhetoric.

Why the diversion and obfuscation? To obscure that I was actually pointing out that dangerous ideas -- especially crackpot conspiratorial ideas held by numerous very notorious historical figures dating back centuries -- have dangerous consequences. I was also commenting on the proven bigotry, cruelty, crassness, and insensitivity of statements made by deGenova, Baraka, Gilroy and others towards Israel, Holocaust victims and their families. (If you want a flavor of what many radical academics write, say, or think of as brilliant work, see here and here as examples.)

This ploy and lexical, semantic, contextual, and other games often seem the limit of the capability for debate of far too many of today's academics and mainstream media writers. (Where they learn these tactics, I do not know, but perhaps there is some sort of training fellowship.)

Duke Prof. Cooke didn't bother to contact me, a fellow academic, nor apparently do a simple google search or utilize the considerable informatics resources of her own university's library to find my original Wall St. Journal letter and my online response to Younge, on AOL at the time and now here. (Another possibility is that she did find them and ignored them, of course.) Cooke simply parroted Younge plus for literary effect invented my being "enraged" at my "colleague" (in fact, I rolled my eyes at Gilroy's statements, as one does towards the drivel coming from the Ivy League these days, and a simple fact check would have shown that I was not Gilroy's "colleague" and that our times at Yale did not intersect).

In summary, academic research for this tenured professor and Oxford graduate consists of parroting secondary sources such as The Guardian as fact, inventing events and relationships that did not exist, and not bothering to check primary sources either directly or indirectly, a fundamental tenet of reputable academic research. Or perhaps Cooke chose to ignore primary sources, a rather shoddy and irreputable approach to scholarly research. To Cooke, "critical thinking" apparently means "semantic legerdemain and reckless criticism of everything she does not agree with."

I subscribe to a different definition, consistent with the teachings of my early mentor Victor P Satinsky, inventor of the Satinsky clamp and many other cardiothoracic surgery tools and techniques used to this day. Dr. Satinsky ran ran rigorous programs emphasizing critical thinking, responsibility, and clear, direct language in the interests of patient care:

Critical thinking means correct thinking in the pursuit of relevant and reliable knowledge about the world. Another way to describe it is reasonable, reflective, responsible, and skillful thinking that is focused on deciding what to believe or do. A person who thinks critically can ask appropriate questions, gather relevant information, efficiently and creatively sort through this information, reason logically from this information, and come to reliable and trustworthy conclusions about the world that enable one to live and act successfully in it.

(It's not a simple matter of incompetence. "Quackademics" who do not believe in reason and logic - the tools of the "oppressors" - are largely incapable of true critical thinking. Hysterical rants, semantic trickery, obfuscation they can do. Distortions and mistruths are no problem for them, since in their minds the means justifies the ideological ends. Put plainly, they are deceptive liars. But they are not incompetent. In the Art of Political War, they are actually quite competent. It does, however, scare the daylights out of such academics when people who do think rationally have "got their number" on that particular skill. Thanks to advances in information and communication technologies, an increasing number of ordinary people are "getting their number." Of that they are truly terrified. But I digress.)

Not surprisingly, I discovered that Cooke was a member of the "Group of 88", a group of Duke professors who apparently gave the accused students a behind-closed-doors fair trial (of course, defendants' presence not required), then lined them up and had them figuratively shot with a well-publicized statement implying their guilt. From the Inside Higher Ed article linked above:

... The 88 signatories affirmed that they were “listening” to a select group of students troubled by sexism and racism at Duke. Yet 8 of the 11 quotes supplied from students to whom these professors had been talking, 8 contained no attribution — of any sort, even to the extent of claiming to come from anonymous Duke students. Nonetheless, according to the faculty members, “The disaster didn’t begin on March 13th and won’t end with what the police say or the court decides.” It’s hard to imagine that college professors could openly dismiss how the ultimate legal judgment would shape this case’s legacy. Such sentiments perhaps explain why no member of the Duke Law School faculty signed the letter.

I contacted Cooke, pointing out her errors and providing rather sarcastic commentary on how I was part of the Great Walt and Mearsheimer Cabal against academic freedom (a metaphor for another rather tenuous and tendentious piece of 'research' from yet another Ivy, Harvard). I have not received any reply. This is typical of academic tyrants, who are cowards when confronted outside of their power base. I contacted by email and phone the office of Duke President Richard H. Brodhead inquiring if Brodhead believed citing secondary sources constituted good research practice. He also has not replied.

Finally, I wonder if current Duke president Brodhead, who was an official at Yale until 2004 and implicated in this Duke lawsuit for sins of omission and commission, was involved in events covered in the previous post about an ongoing Federal investigation of Yale research grant accounting ("Lux et Veritas, or Trust But Verify? Yale discovers eDiscovery"). An interesting Powerpoint presentation on that matter is here (PPS file).

I think a comment made on the Duke-in-Wonderland site is particularly apropos:

"Another development on the local Duke scene is the “raised consciousness” of sensible alumni and institutional friends ... Any intelligent Duke alumnus of whatever age should now realize that he or she probably has more sensible and constructive ideas that many prominent Duke faculty."

This Duke disgrace is perhaps an epitaph for today's tenured, $100,000+ annually, pot-smoking, "oppressed" 1960's misfit-dominated academia.

-- SS

Addendum: there is much wisdom in this posting by KC Johnson regarding intellectual decay in academia. Many of the points raised also apply to the matters discussed on this blog. That academia sets the tone through its influence on students suggests that one path to "healthcare renewal" is via "academic renewal."

"Why I Sent It Is a Mystery" - More About Avandia, Conflicts of Interest, and Confused Thinking

We have posted frequently about the controversy about rosiglitazone (Avandia, by GlaxoSmithKline). Some of the distressing aspects of the case were various efforts made to keep information and opinions unfavorable to Avandia away from physicians, patients, and the public, including efforts involving obfuscation, deception, and intimidation. (For example, see this post about the "spinning" of Avandia and the ridiculing of Avandia critics, and this post about attempts to silence an early Avandia critic.)

So it is ironic that the latest Avandia controversy is about the premature release of a manuscript submitted for publication.

Recall how the story began, with the publication in the New England Journal of Medicine by Nissen and Wolski of a meta-analysis focused on cardiac adverse effects of rosiglitazone (Avandia, by GlaxoSmithKline) (see post here). The main achievement of the Nissen and Wolski meta-analysis [Nissen SE, Wolski K. Effects of rosiglitazone on the risk of myocardial infarction and death from cardiovascular causes. N Engl J Med 2007; 356, online here] was to be the first published article to combine data from all relevant clinical trials of rosiglitazone completed to date. Although two major trials of Avandia had been published, its manufacturer, GlaxoSmithKline, had performed many other smaller trials of the drug, most of which have not been published to date. They did eventually appear on a web-site run by GSK. However, this web-site was relatively obscure, and it was not created voluntarily, but in response to a settlement of legal action that alleged GSK had suppressed clinical research about its antidepresant paroxetine (Paxil). (See Steinbrook R. Registration of clinical trials - voluntary of mandatory. N Engl J Med 2004; 351: 1820-1822, link here and our post here). Nissen and Wolski found it, compiled the results of trials on Avandia, and combined their results with those of the few published trials in their meta-analysis.

Now it turns out one of the NEJM peer reviewers of the Nissen and Wolski manuscript leaked it to GSK well before the manuscript was published. From the News section of Nature,

17 days earlier [before the article was published], the reviewer, diabetes researcher Steven Haffner of the University of Texas Health Science Center at San Antonio, had faxed his copy of the article to Alexander Cobitz, a GSK employee whom Haffner knew from working on an earlier clinical trial of the drug.

This was a serious breach of the reviewers' code of conduct. Having reviewed many articles for many medical journals, (but not the NEJM), I can say with conviction that reviewers are forbidden from releasing unpublished manuscripts to anyone, with only one major exception. Reviewers can seek reviewing help from a colleague, as long as this is disclosed to the journal, and the colleague does not further release the manuscript.

As pointed out by an article by Stephanie Saul in the New York Times,

Under The New England Journal’s rules, reviewers are prohibited from disclosing an article’s contents before publication, as a way of protecting the exclusivity of the journal’s material and protecting the intellectual property of scientists who submit articles.

Besides violating The New England Journal’s rules, disclosing a pending article would also be considered a breach of professional ethics, according to Dr. Jerry Avorn, a professor of medicine at Harvard Medical School. Dr. Avorn said that he was not familiar with the specific allegations against Dr. Haffner.

So why did Dr Haffner do it? His explanation of why he sent the manuscript was at best incoherent.

'Why I sent it is a mystery,' Haffner told Nature . 'I don't really understand it. I wasn't feeling well. It was bad judgement.' Haffner says that Cobitz did not ask to see the draft and was 'probably a bystander'.

According to a report in theHeart.org, a GSK spokesperson rationalized Haffner's conduct thus,

Haffner, who consulted for GSK on Avandia, had concerns and questions regarding the methodology of the analysis and sent the article to GSK for advice from company statisticians.

This begs the question of why he did not simply note in his review his lack of expertise on the relevant statistical issues, or seek help from a statistician at the University of Texas.

So perhaps we should seek other explanations. Dr Haffner, it turned out, had a number of financial ties to GSK. As reported in Nature.

Haffner had earlier served on the steering committee of a GSK-sponsored clinical trial of Avandia. He says that he has given many talks for the company, although he declined to say how much he had earned from them. 'I've got a considerable amount of money. I didn't do it to raise my income or anything like that,' he says.

Furthermore, in the NY Times article,

Dr. Haffner, who had been involved in a clinical study that found Avandia worked better at controlling blood sugar than two other treatments, was quoted last year in the online medical publication TheHeart.org criticizing the publication of Dr. Nissen’s study and of editorials that supported it in two other journals.

'The three major medical journals are becoming more like British tabloid newspapers. All they lack is a bare-chested woman on Page 3,' Dr. Haffner was quoted as saying.

In fact, Dr Haffner was one of the co-investigators for the ADOPT study, which compared rosiglitazone to metformin or glyburide, and was sponsored by GSK. [Kahn SE, Haffner SM, Heise MA et al. Glycemic durability of rosiglitazone, metformin, or glyburide monotherapy. N Engl J Med 2006; 355: 2427-43. See link here.] In that article, Haffner disclosed,

Dr. Haffner reports receiving consulting fees from AstraZeneca and Takeda; consulting fees and grant support from Novartis and Pfizer; grant support and consulting and lecture fees from GlaxoSmithKline; consulting and lecture fees from Merck; and lecture fees from Sanofi-Aventis.

Furthermore, an article in the Philadelphia Inquirer noted,

Haffner is a national expert in diabetes. His university Web site calls him 'one of the highest-funded investigators, in terms of [National Institutes of Health] funding, in Health Science Center history.'

And we know that in this age of "greed is good" as the reigning philosophy in medical schools and academic medical centers, the biggest "tax-payers" like Haffner can do no wrong in the eyes of the administrators of these institutions.

So the Avandia story gets more complex, involving more people with more conflicts of interest, and not only suppression of research, but the breach of confidentiality of an unpublished manuscript submitted for publication.

Dr Haffner's nearly nonsensical explanation of why we went running to his fax machine to send the confidential manuscript to his part-time GSK employers is another reminder of the confused reasoning often displayed by people with conflicts of interest, even full professors of medicine who are supposed to be national authorities. As noted before, "people who have conflicts of interest often find giving clear advice (or opinions) particularly difficult." Apparently becoming a consultant for a pharmaceutical company makes one susceptible to faxing confidential manuscripts in a fugue state, something like the sleep-driving pheonomenon reportedly caused by sleep medications like Ambien.

This latest development in the Avandia case is yet another argument that physicians should not only not accept pens, coffee mugs, and free pizzas from companies trying to sell their medical and health care products and services, but that academic physicians should shun all financial ties to these companies. (A physician who wants to work for a pharmaceutical, biotechnology, or device company should do so full-time, or not at all, in my humble opinion.)

Otherwise, prepare to appear on the national news blinking like a deer in the headlights, saying "Why I did it is a mystery."

ADDENDUM (31 January, 2008) - See also this post on the Clinical Psychology and Psychiatry Blog.

No quick fixes in medicine - whoda thunk it?

To many non-medical people, it really appears they believe the "fixes" to medicine are simple, deterministic (i.e., computerization as a panacea), and that many of the problems are generally a result of bad behavior by clinicians. The significant brouhaha about handwashing is such an issue:

Cleaner but not safer hands?
A study found that even when use of a gel rose at a hospital, infection rates were unchanged.

By Timberly Ross , Associated Press, Wed, Jan. 30, 2008

OMAHA, Neb. - Doctors and nurses on the go often skip soap and water in favor of an alcohol-based hand gel, thinking the quick-acting goo will kill bacteria on their hands and curb the spread of infection. Turns out that's not enough.

Workers nearly doubled their use of the alcohol-based gel at a hospital here. Their hands were cleaner - but the rate of patient infections was virtually unchanged.

The doctor who studied the problem pointed to many villains: rings and fingernails too long and hard to clean, poor handling of catheters, unsanitized treatment areas.

"There are many factors that influence the development of hospital-acquired infections," said Mark Rupp, an infectious-disease specialist at the University of Nebraska Medical Center who led the study at the adjoining Nebraska Medical Center. "It would be naive to think that a single, simple intervention would fix this problem."

His research appears in the January issue of Infection Control and Hospital Epidemiology.

The spread of infection-causing germs in hospitals is a huge problem, accounting for an estimated 1.7 million infections and nearly 100,000 deaths each year, according to the Centers for Disease Control and Prevention. These include drug-resistant staph,urinary-tract infections, and ventilator-associated pneumonia.

Mike Bell, who deals with infection control at the U.S. Ceners for Disease Control and Prevention, said that while he did not agree that hand gels did little to reduce infection, Rupp was right to say they were just one part of the solution.

"If they don't do everything else right, having clean hands is not enough," he said.

Unfortunately, "doing everything else right" calls for keeping a hospital, medical equipment, etc. scrupulously clean. That requires significant resources - meaning, chemicals, people, and labor. The current precarious financial condition of many hospitals would seem to preclude that. The financial problems arise from a number of actors including mismanagement, too much management, and declining reimbursement from payors.

It would seem current leadership of healthcare organizations by cost-cutting, profit-motivated management, as well as the for-profit desires for payers, cannot compete with several billion years of microbial evolution.

-- SS

"Bungled," Not "Brilliant" Results of UnitedHealth Takeover of Pacificare

We had posted often (see these posts here, here, and here from 2006 with links backward) about the hugely lavish compensation afforded to the Dr William McGuire, former CEO of UnitedHealth Group, one of the largest US insurers/ managed care organizations, and how this remuneration stood in stark contrast to the stated mission of UnitedHealth Group:

UnitedHealth Group is a diversified health and well-being company dedicated to making the health care system work better. The company directs its resources into designing products, providing services and applying technologies that:
- Improve access to health and well-being services;
- Simplify the health care experience;
- Promote quality; and,
- Make health care more affordable.

Most recently, controversy has swirled over the timing of huge stock option grants given to Dr McGuire (see post here), leading to his resignation in October, 2006 (see post here). More recently, McGuire agreed to pay back some of those options, although that would reportedly leave him with more than $800 million worth of options (see post here).

Once again, it seems that in retrospect, Dr McGuire's conduct stood in sharp contrast to the lofty sentiments expressed in UnitedHealth's mission statement. It also stood in stark contrast to the lavish praise once heaped upon him. A 2006 Pulitzer Prize winning article in the Wall Street Journal quoted UnitedHealth director and Dean of the Columbia University School of Nursing Mary Mundinger,

We're so lucky to have Bill. He's brilliant.

This week, there appeared in the press another reminder how brilliant the leadership of UnitedHealth wasn't. Lisa Girion reported in the Los Angeles Times,

California regulators are expected to announce today that they are seeking as much as $1.33 billion in penalties from Cypress-based PacifiCare as a result of widespread problems stemming from its takeover two years ago by healthcare giant UnitedHealth Group Inc.

In an investigation prompted by widespread complaints, the state Department of Insurance uncovered 133,000 alleged violations of state laws and regulations regarding payments for medical care. Each violation carries a maximum penalty of $10,000 for a possible total of $1.33 billion.

Separately, the state Department of Managed Health Care alleged that 30% of the medical claims it reviewed were improperly denied. That agency is seeking an additional $3.5 million in fines.

'These were very serious violations,' said Cindy Ehnes, executive director of the Department of Managed Health Care. 'The most fundamental promise of insurance is that they will pay when you are sick, and they will pay those physicians and hospitals in a fair manner.'

Insurance Commissioner Steve Poizner expressed frustration at efforts to get the company to make changes.

'After years of broken promises to California regulators, it became crystal clear that PacifiCare simply could not or would not fix the meltdown in its claims-paying process,' he said. 'We're going to put an end to that. If PacifiCare can't understand the ABCs of basic claims payment, maybe it will understand the dollars and cents of regulatory action.'

The problems stem from the $9.2-billion purchase of PacifiCare by Minneapolis-based UnitedHealth in January 2006. The deal added more than 3 million Californians to UnitedHealth, which now has about 27 million enrollees nationwide.

The company's regional executives acknowledged that the merger was bungled in many ways. In a meeting with Times reporters and editors Monday, David Hansen, UnitedHealth's regional chief executive, apologized for the problems that the transition caused physicians, hospitals and patients.

Brilliant, eh? In response to this latest debacle, California Insurance Commissioner Steve Poizner said (per another article by Lisa Girion in the LA Times),

Their [the insurance companies' and managed care organizations'] business is to colelct preimiums and pay claims for legitimate healthcare expenses. We're talking about basic issues here. This is fundamental to their business.

So if they do not adequately take care of their members and pay claims fairly, Poizner said he will

come down on them like a ton of bricks

It's nice to see regulators in one state trying to make sure that health care insurers and managed care companies live up to their basic obligations to those from whom they take money. It would be nice to see other state regulators do the same, and then to see state and federal regulators who are supposed to keep the economic playing fields level consider whether other health care organizations are living up to their basic obligations.

Clearly, this story is also a reminder that people would get better, cheaper, more accessible health care if health care organizations were run by leaders who put the health of those they supposedly serve ahead of their urges to become filthy rich. The current perverse incentive structure in the US (and elsewhere), though, seems to reward leaders for something else, like the faux brilliance of the previous UnitedHealth CEO.

Spinal Fusion and COI

Today's (20 January 2008) New York Times has a useful piece about the Conflict of Interest between device companies and surgeons.
Seems that, in the clinically still-murky field of spinal surgery, an awful lot of doctors are implanting devices made by companies in whom their financial interests, now disclosed, were there from the get-go.
What's most disturbing about this saga, though, is the notion that "in the case of the Prodisc clinical trial, as with any clinical research, the doctors were supposed to be acting not as advocates for the product but as objective scientists studying whether the disk was safe and effective."
How is it possible to do both? What are they thinking?
Oh, that's right. They're thinking, I can do well and do good.
But Richard Deyo, MD, of Oregon Health Sciences University, quoted in the Times piece, perhaps says it best:
“The surgeons themselves are guilty of being insufficiently critical of products and techniques they are developing....” More people are interested in getting on the gravy train than on stopping the gravy train.”
Guess the Pogo Effect is now the norm.

More Managed Care Management Mumbo Jumbo

A number of news items about managed care organizations/ health insurers published last week make for an interesting juxtaposition.

Innovative Physician Reimbursement?

First were articles about managed care proposals for innovative physician reimbursement. First, from the Boston Globe, an article about a proposal to resurrect capitation.

Massachusetts' dominant health insurer is proposing to overhaul the way it pays doctors and hospitals, in what company officials said is an attempt to slow runaway healthcare costs and improve the quality of care.

Blue Cross and Blue Shield of Massachusetts wants to stop paying doctors and hospitals for each patient visit or treatment, a common arrangement that most experts agree has led to unnecessary, inefficient, and fragmented care that is sometimes harmful to patients.

Instead, they want to pay doctors and hospitals a flat sum per patient each year, adjusted for age and sickness, plus a significant bonus if the providers improve care, Blue Cross officials said. In most cases, the payment would cover all services from primary care doctors, specialists, counselors, and hospitals - forcing them to work together closely.

Hmmm, that sounds like "capitation," paying physicians or hospitals fixed sums per patient covered. That idea died out in the 1990s. Its main drawback was that it effectively transferred risk from the insurer to the physician or hospital. The latter were at risk for bankrupting losses if their patient populations turned out to be unusually expensive. The risk was greatest, per the laws of probability and statistics, for the doctors and hospitals with the smallest patient populations. Thus the problem with capitation is that it provides a perverse incentive to avoid sick or complicated patients. This suggests it will not improve quality or access.

Would this new version of capitation address this problem? Not obviously. The quote above suggests some adjustment for "sickness," but how whether that would be adequate to avoid perverse incentives is unclear. Also,

The Blue Cross plan has some similarities to the 'capitation' payment system behind those problems, which was widely used in the 1990s but was vehemently rejected by many doctors and patients. Blue Cross says its plan includes safeguards to avoid the undertreatment, underpayment, and strict controls on patient choices that doomed capitation.

'We have no interest in returning to the heyday of managed care or denying care,' [executive vice president for healthcare services at Blue Cross Andrew] Dreyfus said. He said several mechanisms would prevent patients from being denied appropriate care, including public scrutiny of doctors' performance and Blue Cross's commitment to cut off any caregiver providing substandard service.

That isn't very reassuring. The problem is not only that doctors might deny patients adequate care, but that doctors may avoid having sick or complex patients on their panels.

The next brilliant idea was described by the Wall Street Journal.

Health plans are drawing scrutiny for offering financial incentives to entice doctors to prescribe cheaper generic medicines, including paying doctors $100 each time they switch a patient from a brand-name drug.

The incentive program that has drawn the most scrutiny is one initiated last year by Blue Care Network, a health-maintenance organization owned by Blue Cross Blue Shield of Michigan. Under the three-month program, called Blue Reward$, primary-care physicians were asked to consider switching patients from a brand-name drug and received $100 for each plan member who filled a generic cholesterol-lowering statin prescription. To assist doctors, the HMO mailed them a list of Blue Care Network patients who were taking Lipitor and Lescol, two brand-name statins.

This seems to come from the two wrongs make a right school of thought. We, and many others have criticized pharmaceutical, biotechnology, and device companies for gifts and payments to doctors that may influence their decision making in ways that do not necessarily help their patients. Now managed care organizations and health insurers are doing the same, this time to directly influence physicians to prescribe more generic drugs. Of course, there are many patients now taking expensive brand-name drugs who could do just as well taking generics. However, there are many other patients for whom the brand-name drugs may provide the best benefit/ harm ratio. Paying doctors to prescribe generics, regardless of whether his or her patients may experience benefit or harm from this decision, is also a perverse incentive likely to lead to bad decisions harmful for some patients.

Such concerns were raised in the WSJ article.

But the more aggressive approaches, such as cash rewards for each patient switched from a given list of drugs, are coming under fire for injecting financial incentives into what some patient advocates and legislators say should be a purely medical decision. Medical societies are also concerned that such rewards may put doctors in the ethically questionable position of taking a payment that patients know nothing about.
'I'm all for saving health-care dollars, but my concern is if there's a direct financial incentive for a physician to prescribe a certain generic drug, we cannot really trust that decision,' says Peter Koutoujian, house chairman of the Massachusetts legislature's Joint Committee on Public Health. He introduced a bill in the committee last month to ban drug-switching incentive payments to doctors.

It's interesting that both these innovations hinged on physicians' reimbursement, yet did not clearly address what seems to be the biggest distortion of such reimbursement, the imbalance favoring procedures over cognitive care, propagated by the Medicare reimbursement system influenced by the secretive RBRVS Update Committee (RUC). (See related posts here, here, and here.) Also, these innovations represent yet another example of managed care organizations/ health insurers avoiding addressing the prices of drugs and devices directly.

The Corporate Culture of Managed Care

Hints about why managed care organizations' and health insurers' leadership may favor perverse incentives and avoid confronting the more difficult problems comes from some more of last week's articles.

First, again in the Boston Globe, was an article about the leadership of the same Blue Cross and Blue Shield of Massachusetts that advocated a new version of capitation above.

Attorney General Martha Coakley is investigating the $16.4 million payment Blue Cross and Blue Shield of Massachusetts made to William C. Van Faasen, the insurer's former chairman and chief executive, who retired Jan. 1, according to a Blue Cross-Blue Shield director and others with direct knowledge of the probe.
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Coakley is also examining the new management structure at Blue Cross-Blue Shield under which Cleve L. Killingsworth holds the positions of chairman and chief executive.

The size of the payment is considered extraordinary by some because as a nonprofit, Blue Cross-Blue Shield is expected to use surpluses to support its healthcare mission.
Commenting on public charities in general, Harry Pierre, a spokesman for the attorney general, said, 'A public charity must use all of its funds to advance the charitable purpose for which it was established.'

Van Faasen earned nearly $3 million in salary and bonus in 2006, according to a recent filing made with Coakley's office, which oversees the state's charities and nonprofits. That included $500,000 in base pay and $2.46 million in bonus based on results, according to the company's filing.

Some healthcare industry officials said they are troubled that Blue Cross-Blue Shield chose to let one person hold the titles of chief executive and chairman.

'This is a terrible design and it's just a bad idea,' said Nancy M. Kane, professor of management at the Harvard School of Public Health. 'It makes accountability of the organization to the community, represented by the board, a farce.'

Linda Crompton, chief executive of BoardSource, a Washington, D.C., organization that advises nonprofits on corporate governance, said the insurer's structure 'raises all kinds of issues about independence.'

'Having one person fill both positions is a very poor practice, and it's something we counsel against,' said Crompton.

A not-for-profit health care insurer which sees fit to make its executives rich, and set up a governance structure which renders accountability a "farce" is probably not going to be terribly hostile to perverse incentives for physicians.

In addition, last week featured several more stories about the corporate culture of managed care organizations/ health insurers.

From the AP, via the Indianapolis Star, was this story about the formerly "most admired executive" of WellPoint, a for-profit insurance company which runs multiple Blue Cross plans. Its California operation has under fire for allegations that it cancelled coverage of individuals after they developed expensive medical problems (see post here). The executive clearly seemed to have too much money to burn.

David Colby was one of corporate America's most admired executives before he was fired abruptly last spring for what was vaguely described at the time as misconduct of a "nonbusiness nature." Now details about his personal life are spilling out, and it's clear he was more than just Wall Street's darling.

Details in a motion filed Jan. 15 in Ventura (Calif.) Superior Court depict the former chief financial officer of health insurance giant WellPoint as a corporate Casanova -- a world-class, love-'em-and-leave-'em sort of guy who romanced dozens of women around the country simultaneously, made them extravagant promises and then went back on his word.

Colby helped put together the $16.4 billion deal that created Indianapolis-based WellPoint in 2004. He was named best CFO in managed care for four years in a row by Institutional Investor magazine.

After the company passed him over for CEO last February, it gave Colby thousands of stock options to stick around. But three months later, to Wall Street's surprise, he was out. All WellPoint has ever said is that he was ousted over a nonbusiness violation of the company code of conduct.

By all accounts, the 54-year-old Colby charmed attractive women by showering them with compliments and gifts.

DiCarlo and the other women suing him tell similar stories of aggressive courtship, big promises and broken hearts.

They say that Colby was carrying on with more than 30 women in the last half of 2007 alone....

Colby would supplement such declarations with gifts such as jewelry or trips, the women say.

Meanwhile, the Tampa Tribune reported,

In the wake of federal and state investigations into the company and a stock market free-fall, WellCare Health Plans chief executive Todd Farha and two other executives resigned Friday.

Farha, 39, announced his departure three months after federal agents stormed the company's Henderson Road headquarters Oct. 24. Agents removed documents and computer drives, but the U.S. attorney based in Tampa has not revealed the target of the investigation. The state attorney general's office also is investigating WellCare.

The New York Times added,

WellCare manages benefits for 160,000 elderly customers under Medicare plans and for 1.2 million low-income recipients of Medicaid benefits. The company, based in Tampa, Fla., is being investigated by federal and Florida authorities over possible overpayments, according to court records.

In October, 200 investigators conducted an all-day raid of the company’s headquarters. Several agents interrupted a quarterly board meeting and held directors there for hours of interviews, according to The St. Petersburg Times. They left the campus with a rented truck filled with seized documents.

Two days after the raid, Connecticut officials said they were reviewing whether WellCare hid the extent of its profit on a health insurance contract with the state Medicaid program. The Securities and Exchange Commission is also investigating.

The company has said it is conducting an internal inquiry and is defending itself against a lawsuit filed by a former employee who said WellCare defrauded the government.

Wellcare, by the way, was one of the companies which used to run the the state of Connecticut's Medicaid program, but was ousted from that role after it refused to tell the state about how it reimbursed physicians (see previous post).

To recapitulate, it seems that far too often, managed care organizations and health insurers, whether for-profit or not-for-profit, seem to be not very accountable to the people they insure, much less the physicians they purport to reimburse. Such lack of accountability may foster a corporate culture that puts enriching top managers ahead of providing accessible, quality health care at the most reasonable cost. Although these organizations' leadership may claim to innovate, it is unlikely that their innovation will do much good as long as the leaders remain representative of and accountable mainly to themselves. However, although we talk about it endlessly on Health Care Renewal, opaque, unrepresentative, unaccountable, and/or unethical governance remains off most peoples' and most policy-makers' radar as causing health care to be expensive, inaccessible, and mediocre.

ADDENDUM (28 January, 2008) - see also this comment on paying physicians to prescribe generic drugs on the Clinical Psychology and Psychiatry Blog.

BLOGSCAN - An "Infomercial" for Avandia and Zyprexa?

On the Hooked: Ethics, Medicine and Pharma blog, Dr Howard Brody critiqued a newspaper op-ed that ostensibly decried excessive litigation in health care, but also seemed unduly concerned with defending Avandia and Zyprexa, two drugs that did turn out to have more adverse effects than expected.

BLOGSCAN - CME Talks by "Hired Gun, MD"

On the Carlat Psychiatry Blog, Dr Daniel Carlat recounted the career of a "hired gun, MD" who earned an estimated $3 million total from honoraria giving pharma sponsored talks. Is this any way to provide continuing medical education? Would you trust a talk given by such a hired gun? Would you recognize a CME talk given by such a hired gun?

BLOGSCAN - "Lessons from Vytorin"

On Gooznews, Merrill Goozner posits the "lessons from Vytorin," principally, that clinical trials should not be run by pharmaceutical companies, but rather by an independent agency, a la the NIH.

A generation ago, the drug industry accounted for about a third of clinical trials, while academic medical centers, using largely government funds, accounted for two-thirds of the tests. Today, that ratio is reversed. One estimate I’ve seen suggested industry spends over $20 billion a year on clinical trials, well over half of its collective research and development budget.

The time has come to ask whether our privatized system of clinical trial research is serving the nation’s health. The fact that a drug like Zetia can be approved and sold to millions of people for nearly a decade without any evidence that it actually saves lives is absurd.