A Condemnation of Suppression of Medical Research... by Ben Goldacre in the New York Times

Amazingly, this topic now seems to be in the mainstream.

The Goldacre Version in the New York Times in 2013

In his op-ed, Ben Goldacre introduced it thus:

the entire evidence base for medicine has been undermined by a casual lack of transparency. Sometimes this is through a failure to report concerns raised by doctors and internal analyses, as was the case with Johnson & Johnson. More commonly, it involves the suppression of clinical trial results, especially when they show a drug is no good.

He noted that this problems was supposed to be fixed by the registration of clinical trials, and by changes in editorial policies at medical journals:

many in the industry now claim it has been fixed. But every intervention has been full of loopholes, none has been competently implemented and, lastly, with no routine public audit, flaws have taken years to emerge.

 The Food and Drug Administration Amendments Act of 2007 is the most widely cited fix. It required that new clinical trials conducted in the United States post summaries of their results at clinicaltrials.gov within a year of completion, or face a fine of $10,000 a day.  But in 2012, the British Medical Journal published the first open audit of the process, which found that four out of five trials covered by the legislation had ignored the reporting requirements. Amazingly, no fine has yet been levied. 

An earlier fake fix dates from 2005, when the International Committee of Medical Journal Editors made an announcement: their members would never again publish any clinical trial unless its existence had been declared on a publicly accessible registry before the trial began. The reasoning was simple: if everyone registered their trials at the beginning, we could easily spot which results were withheld; and since everyone wants to publish in prominent academic journals, these editors had the perfect carrot. Once again, everyone assumed the problem had been fixed. 

But four years later we discovered, in a paper from The Journal of the American Medical Association, that the editors had broken their promise: more than half of all trials published in leading journals still weren’t properly registered, and a quarter weren’t registered at all. 

Goldacre's conclusions were:

Withholding data not only misleads doctors and patients; it’s an insult to the patients who have participated in clinical trials, believing that they were helping to improve medical knowledge. 

Medicine routinely overcomes enormous technical challenges, and there is nothing complicated about the changes needed to prevent Johnson & Johnson, or Roche — or anybody — from withholding information.

Hear, hear!

Our Version, Starting in 2003

Note that 10 years ago, in 2003, in my article on American health care dysfunction that could have been only published in Europe, (Poses RM. A cautionary tale: the dysfunction of American health care. Eur J Intern Med 2003 Mar;14(2):123-130.  Link here)  I noted that an important cause of this dysfunction is that:

the scientific basis of medicine is increasingly under attack.

The integrity of medical research has been violated by the deliberate suppression of its results.

At that time, I suggested one solution would be:

Medical schools and universities must re-affirm their support of scholarly work in the spirit of free enquiry,...

Furthermore, in one of our first posts on Health Care Renewal in December, 2004, in the context of the discovery of internal company documents (in this case, from Eli Lilly) that showed that information about the adverse effects of a drug (in this case, increased aggression associated with fluoxetine, that is, Prozac), we wrote,

The increasingly complex story of suppression of SSRI research seems to be part of a growing epidemic of suppression of medical research.

Let's say it again. Withholding data from clinical research is unethical because:
1. it breaks the promise to research subjects that their voluntary participation has scientific or social value, but undisseminated research has no value; (See Emanuel EJ et al. What makes clinical research ethical? JAMA 2000; 283: 2701-2711.)
2. it impedes scientific progress;
3. it prevents patients from receiving the best possible medical care.

But until this unethical behavior starts having negative consequences for its perpetrators, the epidemic of research suppression is likely to continue. 

Note the similarity to what Goldacre published in the Times yesterday.  You heard it here first.

Summary

To date we have published 102 posts with the label "suppression of medical research."  Obviously, Ben Goldacre's NY Times op-ed shows that suppression of research still rarely leads to negative consequences for its perpetrators.  Obviously, by making drugs, devices, and other health care interventions appear safer and more effective than they really are, suppression of medical research has lead to huge revenues for health care corporations, and has made many health care executives exceedingly rich, and many of the health care professionals and academic leaders who have enabled or implemented research suppression somewhat rich.  In the face of such perverse incentives, until we end the impunity of those who suppress medical research (and by the way, those who authorize, direct, or implement all sorts of other unethical, criminal and corrupt behavior we discuss on Health Care Renewal) things will not get better.  I can only hope that having this subject appear in a New York Times op-ed may lead to some real progress.

ADDENDUM (2 February, 2013) - see also comments on 1BoringOldMan blog. 

US Senate Subcommittee Asks What the RUC is About

It has been a long time coming, but the issue of how the US Medicare and Medicaid system sets the fees it pays doctors, and hence sets the incentives on doctors that drive their health care decisions, finally got some public attention again.

 The background is complex, and may glaze the eyes of readers hoping for simple solutions to simple problems.  One wonders if the complexity was deliberately created to discourage solutions.  Yet we have created a complex, obscure, opaque health care system.  If we want to meaningfully improve it, we must address its "inside baseball" qualities.  Those already familiar with and interested in the topic, skip the following section.

Background - the Resource Based Relative Value System Update Committee (RUC)

We have frequently posted, first here in 2007, and more recently here,  here, here, and here, about the little-known group that controls how the US Medicare system pays physicians, the RBRVS Update Committee, or RUC.

Since 1991, Medicare has set physicians' payments using the Resource Based Relative Value System (RBRVS), ostensibly based on a rational formula to tie physicians' pay to the time and effort they expend, and the resources they consume on particular patient care activities. Although the RBRVS was meant to level the payment playing field for cognitive services, including primary care vs procedures, over time it has had the opposite effect, as explained by Bodenheimer et al in a 1997 article in the Annals of Internal Medicine.(1) A system that pays a lot for procedures, but much less for diagnosing illnesses, forecasting prognoses, deciding on treatment, and understanding patients' values and preferences when procedures and devices are not involved, is likely to be very expensive, but not necessarily very good for patients.

As we wrote before, to update the system, the Center for Medicare and Medicaid Services (CMS) relies almost exclusively on the advice of the RBRVS Update Committee. 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 were opaque for a long time, and the proceedings of the group are secret.  As Goodson(2) noted, RUC "meetings are closed to outside observers except by invitation of the chair." Furthermore, he stated, "proceedings are proprietary and therefore not publicly available for review."

In fact, the fog surrounding the operations of the RUC seems to have affected many who write about it. We have posted (here, here, here, and here) about how previous publications about problems with incentives provided to physicians seemed to have avoided even mentioning the RUC. Up until 2010, after the US recent attempt at health care reform, the RUC seemed to remain the great unmentionable. Even the leading US medical journal seemed reluctant to even print its name.

That changed in October, 2010.  A combined effort by the Wall Street Journal, the Center for Public Integrity, and Kaiser Health News yielded two major articles about the RUC, here in the WSJ (also with two more spin-off articles), and here from the Center for Public Integrity (also reprinted by Kaiser Health News.) The articles covered the main points about the RUC: its de facto control over how physicians are paid, its "secretive" nature (quoting the WSJ article), how it appears to favor procedures over cognitive physician services, etc.

In 2011, after the "Replace the RUC" movement generated some more interest about this secretive group, and its complicated but obscure role in the health care system, the current RUC membership was finally revealed.  It was relatively easy for me to determine that many of the members had conflicts of interest (beyond their specialty or sub-specialty identity and their role in medical societies that might have institutional conflicts of interest, and leaders with conflicts of interest).  

Then that year a lawsuit was filed by a number of primary care physicians that contended that the RUC was functioning illegally as a de facto US government advisory panel.  It appeared that things might change.  However, it was not to be.  A judge dismissed the lawsuit in 2012, based on his contention that the law that set up the RBRVS system prevented any challenges through the legal system to the mechanism used to set payment rates.  The ruling did not address the legality of the relationship between the RUC and the federal government.  And then everything was quiet again, until....

A Senate Committee Takes Up the RUC

Meanwhile, after the attempt at health care reform made by the Affordable Care Act (aka "Obamacare"), which aimed to increase insurance coverage, there has been growing concern that there will not be enough primary care physicians available to manage the larger insured patient population.  So, as reported by the Washington Times, a US Senate committee published a report on this issue:

The United States needs 16,000 more primary care physicians to meet its current health care needs, a problem that will only get worse if nothing is done to accommodate millions of newly-insured residents under President Obama’s health care law in the coming decade, according to a Senate report released Tuesday.

Mirable dictu, the report cited the influence of the RUC as part of the problem:

Mr Sanders said some of the blame appears to rest with a board of 31 physicians who make reimbursement recommendations to the Centers for Medicare and Medicaid Services (CMS), which private insurers frequently adopt as well.

The American Medical Association's Relative Value Scale Update Committee, or RUC, is populated by many more specialists that primary care physicians, multiple witnesses said Tuesday.

'Therefore, it should come as no surprise that it has accelerated higher payments — larger paychecks — to specialists over primary care doctors,' Mr Sanders' report said.

Senator Sanders' subcommittee then held a hearing during which the RUC came up for more criticism, as reported by MedPage Today:

Sen. Bernie Sanders (I-Vt.), chair of the Senate Health, Education, Labor and Pensions Subcommittee on Primary Health and Aging, criticized the American Medical Association's Relative Value Scale Update Committee (RUC), which develops annual recommendations on physician pay updates for Medicare.

Sanders noted that the RUC is dominated by specialists, whose opinions are accepted by Medicare more than 90% of the time.

'Specialists sitting on the committee determine reimbursement rates,' he said during the hearing on the physician shortage that is anticipated as more people become insured under the Affordable Care Act (ACA). 'We have to look at that.'

Several witnesses identified problems with the RUC:
 

Andrew Wilper, MD, acting chief of Medicine at the Department of Veterans Affairs Medical Center in Boise, Idaho, told the senators that Congress could mandate further oversight of the RUC and create greater separation between physicians and the boards that dictate their payment rates.

'At a minimum, the public deserves transparency in decision making from the RUC,' Wilper said. 'We should set a process for rate-setting that is not encumbered by conflicts of interest and is not favoring specialties. A rational observer might conclude that the federal government and AMA are plotting to bring an end to the primary care workforce in the U.S.'

Also Modern Healthcare reported (subscription required) that Dr Wilper

described the RUC as 'a secretive group of physicians that wield tremendous influence.'

Furthermore,

Uwe Reinhardt, economics professor at Princeton University, said in addition to adding primary care physicians to the RUC, the panel needs a third party to perform outside audits of the AMA panel's recommendations

However, the AMA was there to provide their usual defense of the RUC, as per Medpage Today,

'The RUC is an independent group of physicians from many specialties, including primary care, who use their expertise on caring for Medicare patients to provide input to CMS [the Centers for Medicare and Medicaid Services],' RUC chair Barbara Levy, MD, said in a statement. 'More than 300 people participate in a typical RUC meeting and information on the panel is publicly available.'

Levy noted that 'CMS recently adopted RUC recommendations for the creation of codes to recognize the value of the work, often done by primary care providers, in transitioning patients from one care setting to the next.'

The AMA also added two primary care-related seats to the RUC last February: a representative from the American Geriatrics Society and a rotating seat for a practicing primary care physician.

Note that this brief response did not add anything to the more voluminous response the AMA made in 2009 to some of my posts on the RUC, all of which were easily countered (look here).  

 After the hearing, per MedPage Today,

The problems with the RUC are 'one of the more important issues that arose out of this hearing,' Sanders told MedPage Today after it was over. 'I don't think we have the transparency we need.'

Legislation to address the RUC -- as well as other factors exacerbating the PCP shortage -- is expected to come 'quickly' said Sanders.

Comments

I salute Senator Sanders and his subcommittee for addressing the obscure and often quite anechoic topic, getting it some public attention, and at least raising the possibility of a legislative solution.

However, this is just a baby step.  The hearing and report generated minimal media coverage (I included links to the most visible above).  Given that Senator Sanders is widely regarded as well to the left of most of his legislative colleagues, the likelihood that any measure he would craft on this would be passed is minimal.

Meanwhile, questions we have raised again and again, most recently here in 2011, remain unanswered.

 - How did the government come to fix the payments physicians receive? Government price-fixing has not been popular in the US, yet this has caused no outcry.
- Why is the process by which they are fixed allowed to be so opaque and unaccountable? Why are there no public hearings on the updates, and why is there no input from practicing physicians or organizations other than those related to the RUC?
- How did the RUC become de facto in charge of this process?
- Why does the AMA [keep the membership of the RUC so opaque, and] give no input into the RUC process to its general membership?
- Why is the RUC membership so dominated by procedural specialists? Why were primary care physicians, who made up at least a sizable minority of physicians when the update process was started, not represented according to their numbers?
- Why has there been so little discussion of the RUC and its responsibility for an extremely expensive health care system dominated by high-technology, expensive, risky and invasive procedures?

Economists have beaten us over the head with idea that incentives matter.  The RUC seems to embody a corporatist approach to fixing prices for medical services to create perverse incentives for physicians to do more procedures, and do less conversing with and examining patients, examining the best clinical research evidence about their problems, and rigorously thinking about how best to help them.  More procedures at higher prices helps physicians who do procedures.  It may help even more the corporations that provide the devices and drugs whose use is necessitated by such procedures, and the hospitals who can charge a lot of money as sites for performance of procedures.  It may even help insurance companies by driving ever more money through the health care system, and thus allow rationalization for higher administrative expenses as a function of overall money flow.

Yet incentives favoring procedures over all else may lead to worse outcomes for patients, and more costs to patients and society.  If we do not figure out how to make incentives given to physicians more rational and fair, expect health care costs to continue to rise, while access and quality continue to suffer.  

ADDENDUM (1 February, 2013) - see also comments by Brian Klepper on the Care and Cost blog.

ADDENDUM (3 February, 2013) - see also comments by Austin Frakt in the Incidental Economist blog.
 

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.)

Health Care Hired Managers Not Playing by the Same Rules - the Example of Lancaster General Health

That all people in the US do not play by the same rules, and that more specifically the richest people do not play by the same rules as the somewhat or a lot less rich, became a topic of discussion after the 2008 global financial collapse/ great recession.  A powerful discussion of this theme appeared in Predator Nation, the book by Charles Ferguson that followed his award winning documentary, Inside Job:

Ponder the toxic effects of too much wealth, too much power, the new culture of American investment banking, and a life conducted within the cocoon of America's new oligarchy. [p 112]

He focused on the culture of finance, but as we have seen, this culture has overlapped the culture of health care.  Thus we have shown multiple examples of those who have become rich due to their positions in health care, almost always positions as high-ranking hired managers of health care organizations.  They get paid according to different rules than apply to other hired employees, and live by different rules than their less-favored fellow employees, again by virtue of their positions.

Some of these examples were of CEOs of huge, for-profit health care corporations,  However, we have increasingly seen hired managers of moderate size non-profit organizations who also appear to play by different rules than their fellow employees.

The Executives of Lancaster General Health

The latest example appeared through reporting found in LancasterOnline, the web presence of several newspapers in Lancaster, Pennsylvania, about a regional community health care system, Lancaster General Health.  The system includes one major hospital, Lancaster General, an obstetrics hospital, and a variety of satellites and out-patient facilities.    

The system was facing challenges in 2010:

In 2010, times were getting tougher for Lancaster General Health.

The mammoth [sic] health care system would notch record revenues of nearly $1 billion that year. But its annual surplus fell for the fourth straight year. Though destitute by no means, galloping expenses and uncertainty in the marketplace were hammering LGH's business model, prompting changes. Two units were closed, some positions were eliminated, and 170 employees were reassigned.

However, despite these difficulties,

Two executives — CEO Tom Beeman, who was on military leave part of the year, and Executive Vice President Jan Bergen, who helped fill in for Beeman in his absence — earned more than $1 million in total compensation; another six got at least $500,000.

And those top 21 executives collectively received more than $2 million in bonuses and incentives.

That lavish total compensation included "perks" that were likely not furnished to lesser employees, for example

The IRS form lists few explicit perks, save one: LGH paid $1,044 in social club dues for Beeman in 2010.

Said Regina Mingle, LGH's executive vice president of human resources: 'In this community, if you need to do business, you do it at the Hamilton Club or Lancaster Country Club. We decided ... we would pay those fees.'

It seems doubtful, however, that any other employees who felt that they did "business" at country clubs or similar establishments were entitled to subsidized dues.

This relatively lavish pay was part of a pattern.  Executive compensation had been increasing out of proportion to any obvious benchmark for a while.

 In fiscal year 2005-06, CEO Tom Beeman earned a comparatively modest total compensation of $646,094. By 2010, that had more than doubled, to $1.35 million. That figure included a base compensation of $606,728, along with $345,000 in bonuses and incentives and $279,511 in retirement and other deferred compensation.

Bergen, who along with Executive Vice President Marion A. McGowan took on some of Beeman's duties when he left in October 2010 for a nine-month military leave of absence, saw her compensation rise from $332,823 in 2005-06 to a total of $1.1 million in 2010. The latter figure included $425,967 in base pay, $177,752 in bonuses and incentives, $111,383 in retirement and other deferred compensation, and $320,208 in what the IRS calls 'other reportable compensation' such as employee contributions to 401(k) or 403(b) retirement plans.

The third highest-paid LGH executive in 2010 was McGowan, whose compensation package totaled $772,978, including $456,789 in base pay and $192,226 in bonuses and incentives. Fourth on the list was 

Dr. Lee M. Duke II, senior vice president and chief physician executive, whose compensation totaled $746,830, including $405,083 in base pay and $140,377 in bonuses and incentives.

Fifth was Chief Financial Officer F. Joseph Byorick Sr., whose total compensation of $652,667 included $397,160 in base pay and $140,500 in bonuses and incentives.

So note that CEO Beeman's compensation was for less than one full year's worth of work.  His annualized rate would have been even more.

A companion article noted that part of CEO Beeman's bonus for 2010 was justified by his efforts to keep in touch with the institution while he was physically not present, and was, in fact off-site for an extended period fulfilling a military reserve commitment

 In October 2010, Lancaster General Health had a problem.

Its CEO, Tom Beeman, was shipping out for a military tour of duty, to serve as deputy director of the National Intrepid Center of Excellence in Bethesda, Md. Two other administrators —  Executive Vice Presidents Jan Bergen and Marion W. McGowan — would step into Beeman's shoes while he was away.

Yet Beeman stayed involved. 'We had regular Skype [video-conferencing] calls,' said Alex Henderson, chairman of the LGH Board of Trustees.

That, LGH officials believed, merited a bonus. So Beeman got nearly $90,000 for his efforts in absentia.

Note that this verified that Beeman got more than $1 million in compensation despite not having worked a whole year, since it was necessary for two other executives to take over his work.

Furthermore, while US law does mandate employers to re-hire employees who take leaves to fulfill military reserve commitments (look here),  I suspect that very few employers pay employees anything while they are away (although reservists are certainly paid by the government for their reserve duty).  However, Beeman got a bonus merely for keeping in touch while he was away doing another job.  I further suspect it is extremely unusual to pay an employee a bonus for trying to keep in touch during his or her military service.

So the reporting on compensation given to top hired managers at Lancaster General emphasized that executive pay is set using very different rules than are used to set the pay of other employees.

The Talking Points Reappear as Justifications for Exceptional Compensation of Hired Managers

Furthermore, the justifications made for the Lancaster General top executives' large compensation packages echoed talking points used to support such largess for top hired managers in other health care settings, but did not explain why hired managers merit exceptional treatment.   We first listed the talking points here, and then provided additional examples of their use here, and here.   The talking points are:
-  we pay what everyone else pays
-  CEOs work hard and are brilliant, and so deserve high pay
-  high pay is needed to attract and retain competent, if not brilliant people.

None of the examples of these talking points we have seen so far explain why these apply to CEOs and other top hired managers, but not to other kinds of employees.  .

We Pay What Everyone Else Pays

A third article in the LancasterOnline series noted that executive compensation was based on information on what everyone else pays,

nonprofits must hire consultants to study how similarly sized nonprofits pay their executives.

LGH's consultant is a firm called Mercer, headquartered in New York City with an office in Philadelphia. Charlie Scott, of Mercer, has in recent years helped LGH determine what to pay its highest-compensated executives.

 'Our role is to be [an] independent source of market norms,' said Scott, determining 'levels of compensation available in the market for executive positions, as well as how compensation is paid.

This is an interesting variant of this talking point, because it essentially blames the reasoning on the Internal Revenue Service.  The article did not explain how Mercer determined the extent of the appropriate market, nor how it obtained a representative sample of data about that market.

CEOs Work Hard and Are Brilliant, and So Deserve High Pay

High Pay is Needed to Attract and Retain Competent, if not Brilliant People

These justifications are often combined.  In the case of Lancaster General, the examples included

At LGH, officials say the generous compensation is necessary to attract and retain the top talent. Said Lancaster attorney Alex Henderson III, chairman of the Lancaster General Health board of trustees and its compensation committee, which decides what to pay top execs: 'Demand for top-notch hospital executives has grown, and we have to respond to that.'

'We're not looking to be average.'

I seriously doubt that the hospital system is committed to "generous" pay to get "top talent" for all of its job openings.  Again, I doubt the generosity includes full pay for leaves taken for military service, or, for that matter country club dues.

Another version was offered by the chair of the system's board of trustees:

 Trustee Henderson said that as LGH's goal isn't to maximize revenue but save lives, executives can be doing a fantastic job — worthy of six-figure bonus and incentive pay — even when the system's financial performance slips.

Consider an executive who devises a way to shorten stays for patients, Henderson said: 'That's great for the patients, for insurance companies, for nurses who don't have to take care of people who don't need to be here' — but it's bad for LGH's bottom line.

Left out of the first part of the statement was how one could attribute lives saved to the work of a hired manager, especially, as in the case of CEO Beeman, a manager with no direct experience caring for patients.  Mr Beeman's official hospital bio listed this educational background,

Prior to joining Lancaster General Health, he served at Saint Thomas Health Services as its President and Chief Executive Officer, and the Senior Vice President for Hospital Operations and Executive Director of the Hospital of the University of Pennsylvania.

It did not include any former positions that would have involved direct patient care. 

Health care actually does not save lives that often, but hopefully does often ameliorate disease and injury, reduce suffering and improve function.  However, the people who actually directly accomplish this are health care professionals, nurses, doctors, therapists, etc, not managers who sit in offices.  

I will merely note that Mr Henderson's second example apparently was theoretical.  There was no example given of an executive who actually did shorten length of stay.  

In a third article in the LancasterOnline series, the compensation consultant employed by Lancaster General Health reiterated the argument that one must pay top dollar for scarce managerial talent:

[Mercer consultant Charlie] Scott said that the law of supply and demand that applies 'to any type of talent pool applies to health care executives. There's normally a lack of supply of what's considered blue-chip talent ... [and] the increasing complexity of the health care industry requires an increasing level of talent and capability.'

Note that no one who defended the compensation given to CEO Beeman or other top managers provided evidence that they are "top" or "blue chip" talent, or that they, rather than the health care professionals who work at or for the system save lives.

Summary

In our last US election campaign season, a few candidates pledged to level the playing field so that rich and poor would play by the same rules.  Other candidates scoffed at the importance of the problem, or called its invocation class warfare.  Meanwhile, in health care, we just accumulate more examples that different people play by different rules.

So we have yet another particular example of how top hired managers, particularly CEOs, of even modestly sized, non-profit health care organizations get to play by different rules than those affecting other employees, and other people who work in health care.  As in previous cases, the justifications provided for these different rules were basically a repeat of poorly conceived arguments that have been cited often by defenders of executive exceptionalism. 

The "we pay what everyone else pays" is basically an appeal to common practice fallacy.  Why we have to do so is never stated.  In any case, the argument did not include why the limited selection of comparator hospitals and executives used is a representative sample of "everyone."  Furthermore, as we noted here, what evidence there is suggests that skills required to run one organization do not necessarily transfer to another, suggesting the comparison to "everyone" makes no sense.

As is usual, the "CEOs are brilliant" argument is basically an appeal to authority fallacy, and provided no evidence that the particular CEO is brilliant.  In fact, it seems that everyone who has used this talking point before claims his or her CEO is brilliant. (Look here for example.) Obviously, all CEOs cannot be above average. 

Finally, as noted here, there is no evidence that without high pay worthy leaders could not be hired or retained.

Unfortunately, the otherwise excellent articles on Lancaster General did not challenge any of the defenders of executive exceptionalism to better justify their assertions.  Nor were they asked to consider its adverse effects. 

As we have frequently said, current policies about paying hired health care managers leave the managers unaccountable for the effects of their actions on patients' and the public's health, and worse, fail to deter and may even encourage ignorance of the health care mission, frankly mission-hostile behavior, self-interest, conflicts of interest, and outright corruption.  Meanwhile, paying nearly all top managers as if they were brilliant, while setting much harsher standards for the employees who actually take care of patients, including health professionals, demoralizes those on whom patients actually depend for care.

As we have said endlessly,....   Health care organizations need leaders that uphold the core values of health care, and focus on and are accountable for the mission, not on secondary responsibilities that conflict with these values and their mission, and not on self-enrichment. Leaders ought to be rewarded reasonably, but not lavishly, for doing what ultimately improves patient care, or when applicable, good education and good research. On the other hand, those who authorize, direct and implement bad behavior ought to suffer negative consequences sufficient to deter future bad behavior.

If we do not fix the severe problems affecting the leadership and governance of health care, and do not increase accountability, integrity and transparency of health care leadership and governance, we will be as much to blame as the leaders when the system collapses.

Corporate Medicine Marches On - Putting Revenue Ahead of Patients

The ongoing transformation of physicians from independent professionals to corporate employees has attracted considerable recent media attention.

The Ranks of Corporate Physicians Grow

Several articles noted examples of the rush to corporate medicine.  In early November, Anna Wilde Matthews wrote in the Wall Street Journal about the push by for-profit health insurer/ managed care organization/ hospital chain Humana to hire more physicians to provide direct patient care. 

The insurer said Monday it is spending around $500 million in cash—or $850 million including debt—to acquire Metropolitan Health Networks Inc, a Boca Raton, Fla., company that operates health-care-provider networks serving people on Medicare, Medicaid and other plans. 

Also,

Humana also said its Concentra unit had acquired 55 primary-care practices in 2012.
Between direct employment, owning stakes in practices, or close contracting that also involves providing services to the doctors, Humana said it had close ties with around 2,300 physicians, and it planned to add 300 to 400 next year.

An article in Bloomberg in mid-November noted how several large for-profit hospital chains were seeking to hire physicians to provide direct patient care.

This year, HCA increased the number of doctors it employs through acquisitions and direct hiring by about 150 to 200 for a total of 3,200, said Samuel Hazen, president of operations for HCA, on a conference call Nov. 1 with analysts. The Nashville, Tennessee-based company plans to continue expanding the number of doctors it employs, though at a slower pace than over the past several years, he said.

Tenet spokesman Rick Black said acquiring physician practices is part of the company’s effort to 'ensure our hospitals provide the medical services needed by the communities they serve, and to foster the development of ongoing clinical initiatives that improve the quality of care that is delivered to patients and control costs.' He declined to comment on how many physicians Dallas-based Tenet has added through acquisitions.

Focusing on cardiology, the article highlighted a larger trend,

In Wisconsin, the number of heart doctors in private practice has declined to 11 percent from 62 percent of cardiologists in 2007, according to the American College of Cardiology, whose main offices are in Washington.  The trend is similar nationwide. The number of heart doctors working for U.S. hospitals has more than tripled, while the number in private practice has fallen 23 percent over five years, the ACC said. 

An article in the American Medical News provided the big picture,

Only 36% of practicing physicians will hold a practice ownership stake by the end of the 2013, down from 57% in 2000, according to Accenture’s analysis of data from the American Medical Association and MGMA-ACMPE.

These and several other articles began to describe the adverse effects of having physicians employed by corporations to take care of patients.  

Excess Costs

The Bloomberg article noted that the rush to employ physicians is

creating a new dynamic that threatens to raise the price of health care, even as the federal government and states strain to keep a lid on costs.

Under Medicare’s tangled payment system, hospitals get higher reimbursements than individual doctors for cardiology treatment, as they do for other specialty services, in some cases as much as three times more. At the same time, the added bargaining power gained by controlling more of the heart care in a geographic market has given large hospital systems added leverage in negotiating reimbursements from insurers, such as UnitedHealth Group Inc and WellPoint Inc.

'Clearly, in the short run, it raises costs,' said Paul Ginsburg, president of the Center for Studying Health System Change, a Washington-based nonprofit research group. 'We have a case where a physician becomes employed by a hospital and now a payer, like Medicare, has to start paying more.'

Specifically,

Medicare, the U.S. government’s health program for the elderly and disabled, pays a hospital $400 for an echocardiogram, $180 for a cardiac stress test and more than $25 for an electrocardiogram, according to data from the American College of Cardiology. At a private physicians office, Medicare pays $150 for an echocardiogram, about $60 for a cardiac stress test and $10 for an electrocardiogram.

Doctors Pressured to Put Revenue Ahead of Patients' Welfare

A far more serious concern is that physicians who are now reporting to corporate executives will be pushed to actions that increase corporate revenue even if they put patients at risk.  The Bloomberg article noted,

While they may gain more stable incomes, doctors often have less freedom over how they care for their patients under strict hospital protocols. Some doctors are also under pressure to see more patients each day when they are employed by a hospital, ...

Two major examples of investigative journalism provided concrete examples of employed physicians enticed with incentives for making decisions that put revenue ahead of patients' interests, or threatened for doing the opposite.  An article in the New York Times provided these examples

Bonuses for Early, Possibly Premature Discharge

One Florida primary care physician said he could earn a $5,000 bonus for keeping patients in the hospital for less than three days, according to a lawsuit he filed this year. Hospitals, which are typically reimbursed a fixed amount of money for treating a specific illness, can make more money if patients stay for shorter periods of time.

Bonuses for Ordering Possibly Unnecessary Tests

Last month, the Justice Department reached a $9.3 million settlement with Freeman Health System, a hospital group in Joplin, Mo., which was rewarding doctors it employed partly based on how many tests they ordered. 

Pressure to Refer Patients Only to Other Physicians Employed by the Same Corporation
 

Other physicians say they are pushed to ignore what is best for patients by referring them to doctors working for the same hospital. Dr. Victoria Rentel, a family practice doctor near Columbus, Ohio, recalled feeling pressured when she was employed by a local hospital to send her patients to doctors there for tests and procedures.

'I routinely got reports about the money I kept in the system,' Dr. Rentel said, detailing how much revenue she was generating for the hospital through in-house referrals.

Also,

In Boise, doctors are pressured to refer only within their own system, according to St. Alphonsus in its complaint. It reported a 90 percent drop in admissions to its hospitals by physicians employed by St. Luke’s.

Incentives for Possibly Unnecessary Admissions

The Times article provided evidence that physicians were pressured to admit patients regardless of need,

Health Management Associates, a for-profit hospital chain; EmCare, a Dallas-based emergency room staffing company for hospitals; and other hospitals have disclosed that they are the subjects of federal investigations. Regulators are looking into whether the hospitals improperly pressured physicians to admit patients.
 

According to two emergency room doctors who worked at Carlisle Regional Medical Center in Pennsylvania, the message could not have been clearer: more patients needed to be admitted. 

The doctors were employed by EmCare, whose parent company was later acquired by the private equity firm Clayton, Dubilier & Rice in 2011 as part of a $3.2 billion deal. EmCare, in turn, was under contract to provide emergency room doctors for the hospital, which is owned by Health Management Associates. In interviews, doctors said that hospital administrators created targets for how many patients they should admit. More admissions translated into more dollars for the hospital. 

Dr. Jean-Paul Romes, one of the physicians, recalled getting phone calls in the middle of the night questioning why he had not admitted an older patient whose hospitalization he could easily have justified. 'The pressure to admit was so high,' he said. Dr. Romes left the hospital last year.

How Incentives for Unnecessary Admissions are Disguised

A major report on the famous muck-raking CBS television program 60 Minutes provided more detail about how Health Management Associates prettied up apparent demands to increase hospital admissions, no matter what.  The reporting was based on interviews with "more than 100 current and former employees," and featured an on air discussion with three former HMA physicians and one former HMA administrator, a video clip of a deposition by a former HMA executive vice president, and an interview with a former director of compliance with HMA.

All asserted that HMA pressured physicians to increase admissions to an arbitrary proportion of emergency department patients, at times between 16 ad 20 percent.   Several alleged that physicians who failed to meet that "benchmark" were threatened with termination of their jobs.  For example,

[Dr] Cliff Cloonan: My department chief said, we will admit 20 percent of our patients or somebody's going to get fired.

A former executive vice president of HMA contended that the admission quotas came from the very top of corporate leadership.

In August, a former executive vice president of the hospital chain - John Vollmer - testified under oath in a deposition, that HMA's aggressive admission policies came directly from the top: CEO Gary Newsome.

[John Vollmer: Mr. Newsome's thought was that an average of 16 percent was accomplishable at all hospitals or more and we should seek to do that and make that happen.]

Vollmer, who was also fired by HMA, became angry when the company lawyers challenged him.

[John Vollmer: I did my duty by informing HMA that what they are doing is wrong. You can't require them all to have 16 percent admission rates and beat up doctors and administrators and all these folks over it when you are doing it to increase your revenue for the facility.
HMA attorney: I'm going to move to strike what you just said.]

By using such a benchmark, the hospital executives seemed to be trying to maintain "plausible deniability" that they meddled in individual treatment decisions.  No one accused executives of directing the admission of a specific patient.  However, there seems to have been no way for a doctor to achieve the "benchmark" without unnecessary admissions.

[CBS Correspondent] Steve Kroft: They're saying, 'You will admit these people whether they're sick or not, whether they need to be hospitalized?'
[Dr] Scott Rankin: Correct--
[Dr] Cliff Cloonan: They never phrase it that way. They did say admit 20 percent. The reality of that is that there's only one way that that can happen. And that is if it is arbitrary. That is, if you do admit patients that don't need to be admitted.

Furthermore, the hospital corporation seemed to disguise the admission imperative as part of quality assurance.  This supposed quality assurance was administered through commercial health care information technology, "corporate wide computer software called Pro-MED which was installed in every emergency room. HMA says it was designed and approved by medical experts to improve the quality of patient care."  However,

The computer program also generated printed reports like this one evaluating each doctor's performance and productivity. On this document the doctors who hit corporate admissions goals received praise from company managers. Those who didn't knew it.

[Dr] Cliff Cloonan: The primary purpose of the scorecard was to track how you were doing in terms of revenue generation based on number of tests ordered and number of patients admitted to the hospital.
[Dr] Scott Rankin: It has nothing to do with patient safety and patient care. It has everything to do with generating revenues.

They say that when a doctor decided send to an emergency room patient home, the computer would often intervene, prompting the doctor to reconsider.

[Dr] Jeff Hamby: The minute I hit 'Home', it says, 'Qual Check.' And then it comes up with a warning, 'This patient meets criteria for admission. Do you want to override?'
[CBS Correspondent] Steve Kroft: What was the reaction from the administrators if you overrode the computer?

[Dr] Jeff Hamby: It was like being called to the principal's office.

Summary

Recent articles in the media have shown that physicians are increasingly practicing medicine as corporate employees (look here).  It is not clear how physicians in this situation can make sure they are always putting the interests of their individual patients ahead of other interests, including their corporate leaders' interests in increasing revenue and enriching themselves.  The most recent media reports discussed above add to the evidence that corporate physicians are constantly pressured to put short-term revenue generation ahead of patient welfare, and that they may specifically be pushed to admit patients unnecessarily, order unneeded laboratory tests, and discharge patients prematurely to satisfy corporate dictates.  One new wrinkle in this latest set of reports is how corporate executives may try to pretty up what they are doing by cloaking their actions within the quality assurance rubric, thus corrupting another important and well-intentioned component of health care.

The American Medical Association once declared "the practice of medicine should not be commercialized, nor treated as a commodity in trade." (Look here)  Despite such historic but now seemingly forgotten exhortations, and a complete lack of evidence of any benefits of the corporate practice of medicine to patients' or the public's health that might outweigh its obvious risks, the new movement to make every doctor a corporate employee marches on. 

A false hope of some resistance to it was just raised by that same American Medical Association in its new "AMA Principles for Physician Employment," but this only provided the ambiguous advice,

A physician’s paramount responsibility is to his or her patients. Additionally, given that an employed physician occupies a position of significant trust, he or she owes a duty of loyalty to his or her employer. This divided loyalty can create conflicts of interest, such as financial incentives to over- or under-treat patients, which employed physicians should strive to recognize and address.

How physicians could strive to recognize and address the inherent strong conflict of interest remains a mystery. 

Worse, while the principles recognized that physicians may be asked to sign "agreements or understandings (explicit or implicit) restricting, discouraging, or encouraging particular treatment or referral options," but rather than condemning such restraints on physicians' autonomy to give patients the best possible care, the principles only suggested that they "are disclosed to patients."

Furthermore, while the AMA response has been weak-kneed at best, I am not aware of any stronger responses from any other professional societies, or from state licensing boards, physician accrediting organizations, or any other organizations that are supposed to be concerned about patient's and the public's health, or about physicians' professionalism.

As I have said before, we need to challenge the notion that direct health care should ever be provided, or that medicine ought to be practiced by for-profit corporations. I submit that we will not be able to have good quality, accessible health care at an affordable price until we restore physicians as independent, ethical health care professionals, and until we restore small, independent, community responsible, non-profit hospitals as the locus for inpatient care.

More Reasons to Doubt How CEOs are Chosen and Paid

Health Care Renewal is about problems with the leadership and governance of health care organizations.  Since the global financial collapse/ great recession began in 2008, it became evident that the problems we saw affecting health care leadership were similar to problems affecting other large organizations, notably financial firms.  Recently, I spotted a series of articles that raise more questions about how business leaders, and by extension, leaders of health care organizations are chosen and paid.

Doubts about Generic Managers

We have often questioned the wisdom of having health care organizations lead by people with little if any direct health care experience, little knowledge of health care on the ground, and little commitment to health care's core values.  We have called such leaders generic managers.

A New York Times article by Gretchen Morgenson from September, 2012, cited new academic work that questioned the abilities of generic managers.  The source article was Elson CM, Ferrere CK.  Executive superstars, peer groups, and overcompensation - cause, effect and solution.  Ms Morgenson summarized,

Mr. Elson and Mr. Ferrere conclude, contrary to the prevailing line, that chief executives can’t readily transfer their skills from one company to another.

Furthermore, Ms Morgenson interviewed Mr Elson, who said,

But we found that C.E.O. skills are very firm-specific. C.E.O.’s don’t move very often, but when they do, they’re flops.

Also,

But there is little evidence, according to Mr. Elson and Mr. Ferrere, that a hot market exists for interchangeable chief executives. First, they note numerous academic studies indicating that C.E.O.’s selected from within a company perform better than outsiders, especially in the creation of long-term shareholder value.

'There is no conclusive empirical evidence that outside succession leads to more favorable corporate performance, or even that good performance at one company can accurately predict success at another,' the authors conclude. 'In short, executive skills cannot pass the most basic test of generality: transferability.'

To be sure, this flies in the face of the widely held view that skilled managers have become generalists and are therefore far more interchangeable than in previous years. Proponents of this thesis argue that top managers today can accumulate a broad knowledge of economics, finance and management science, giving them the ability to manage any type of company effectively. Technological advancements also give chief executives access to untold amounts of data about a particular company that in previous times would have taken years to amass and synthesize, this view holds.

But the data on actual C.E.O. moves raises questions about just how portable C.E.O. skills really are. The Delaware paper cites several studies indicating that relatively few chief executives land new top jobs elsewhere. One study, a 2011 analysis of roughly 1,800 C.E.O. successions from 1993 to 2005, found that less than 2 percent had been public-company chief executives before their new jobs.

This data and these observations seem to broadly apply to business executives, but there is no reason to think they do not apply to executives of health care corporations.  Furthermore, given that on its face, health care is less like making automobiles than, say, the restaurant business is, there is no reason to think doubts this raises about the abilities of generic managers should not be even bigger in health care, and should apply not just to for-profit, but to not for profit corporations.  Yet the trend in health care seems to increasingly favor generic managers of not just for-profit health care corporations, but also hospitals and hospital systems, non-profit health insurers and managed care organizations, health care charities, disease advocacy groups, and even medical associations, medical schools, and their parent universities.  

Doubts about Executive Compensation

Peer-Group Benchmarking

We have often posted about amazingly generous compensation given to top leaders of health care organizations.  Health care corporate CEOs can make tens of millions of dollars, occasionally even more.  While CEOs of not for profit health care organizations make less, they still now can makes millions of dollars.  Ms Morgenson called the usual justification for these huge amounts of compensation the "pay-'em-or-lose-'em" myth.

Corporations are forever defending big executive paydays. If we don’t pay up, the argument goes, our sharpest minds will jump to our rivals.

This notion, or myth, depends on the argument that generic managers are the best managers, which appears to be largely unsubstantiated, as we noted above.

 In other words, the argument that C.E.O.’s will leave if they aren’t compensated well, perhaps even lavishly, is bogus. Using the peer-group benchmark only pushes pay up and up. 

Furthermore,

Importantly, the study disputes the notion that executive pay today is a result of an efficient bidding process for finding and retaining a scarce and valuable commodity: managerial talent. 'In essence, this process creates a model of a competitive market for executives where it otherwise does not exist,' the authors wrote. 'Through the operation of a market, it is argued, wages are bid up to an executive’s outside opportunities.'

Instead, as noted above, since the skills needed to run one sort of company or organization may not readily transfer to other companies and organizations, even seemingly similar ones, such a market does not exist. 
 
 Incentives Based on Short-Term Financial Results

We have also previously discussed (look here) how contemporary economic dogma suggest that the only measure of success of a for-profit corporation is "shareholder value," which has come to mean the stock price over the short term.  There is reason to think that this focus on short-term economic performance has also become the major measure of success of health care organizations.  Another word for this phenomenon is "financialization."  

An op-ed in the UK Independent questions this focus because of its economic effects.  Anthony Hilton wrote about the views of Andrew Smithers,

His starting point was that the economy was floundering because of inadequate demand. Personal spending is flat for obvious reasons but the real culprit is the companies who are hoarding cash and refusing to invest.

Others have noticed the cash hoarding but explain it away by saying we live in uncertain times and companies will start investing again once they become more confident about the economic outlook. Smithers disagrees fundamentally with this. He says companies are not investing because executives are bonused to deliver short-term profits. Costly spending on investment projects is therefore anathema to them. Investment may deliver long-term prosperity but by that time they will have left the company. It also depresses short-term profits while they are still there.

We have in the last two decades, under the mantra of shareholder value and aligning the interests of management with shareholders, created a new breed of management incentivised to believe that what is good for them is good for the business. They dislike investment because it reduces their bonuses .

They don't invest surplus cash. They hoard it or they use it to buy back their own company's shares.

When the majority of the managements in publicly quoted companies start behaving this way, as they now do, we have a serious problem. They are sitting on cash which is the equivalent of six per cent of GDP. This deadweight of unused resources prevents lift-off and threatens to leave the economy forever trapped in the mire.

Smithers says this behaviour by management is a structural change — meaning it is something which won't go away. It makes this down- turn different from all that have gone before.

There is no reason to think that health care corporations are not hoarding money in the sense described above.  If so, they may be failing to invest in drugs or devices that would have helped patients in the future.

Because of the limited reporting required of large health care non-profit organizations in the US, it may be very hard to tell if they are similarly hoarding money, but if they are, the effects again might be to fail to provide patients long-term benefits they might otherwise have enjoyed.

The Ultimately Self-Destructive Outcome

Meanwhile, writing in the New York Times, Chrystia Freeland, the author of Plutocrats: the Rise of the New Global Super-Rich and the Fall of Everyone Else, explained why picking the wrong leaders  and paying them too much may be bad for everyone.  We have noted that an increasing fraction of the wealthiest one percent of the US are current and former corporate executives.  Ms Freeland wrote how domination by an increasingly wealthy and powerful elite usually dooms the countries they dominate.

what separates successful states from failed ones is whether their governing institutions are inclusive or extractive. Extractive states are controlled by ruling elites whose objective is to extract as much wealth as they can from the rest of society.

So

it is the danger America faces today, as the 1 percent pulls away from everyone else and pursues an economic, political and social agenda that will increase that gap even further — ultimately destroying the open system that made America rich and allowed its 1 percent to thrive in the first place.  

Furthermore,

It is no accident that in America today the gap between the very rich and everyone else is wider than at any time since the Gilded Age. Now, as then, the titans are seeking an even greater political voice to match their economic power. Now, as then, the inevitable danger is that they will confuse their own self-interest with the common good. The irony of the political rise of the plutocrats is that, like Venice’s oligarchs, they threaten the system that created them.

So it is not merely that overcompensating generic executives has likely been one of the major reasons our health care is so expensive, inaccessible, and mediocre.  The larger problem of overpaying under skilled executives threatens to destroy our whole society.  How cheerful

Summary

The way forward seems clear.  It is just blocked by the interests of the rich and powerful elite which our current foolish policies have created.

In a health care context, leaders of organizations should only be those with clear knowledge of, experience in, and commitment to the values of health care.  Their compensation should be reasonable, and based on their ability to uphold these values first, with financial goals clearly second, and short-term financial goals probably not at all.  Pay should not be bench-marked to compensation of leaders of other organizations, especially not of vastly different kinds of organizations.

Whether there is any chance of such changes happening while corporate boards of directors, and non-profit boards of trustees are dominated by executives of other organizations is doubtful.  Thus we also need to change the governance of for-profit health care corporations to clearly reflect the long-term interests of the stockholders, who will only prosper if in the long run their companies provide products and services that help patients at a fair price and with minimal risks.   Thus we further need to need to change the governance of health care non-profits to reflect the needs of patients, their communities and other key constituencies.  That should keep us all busy for a while. 
 

The Rise of the Corporate Physician, and the "Metastasis of Big Corporations"

Public discussion has raised more questions over the last few months about physicians taking care of patients as corporate employees. 

More Physician Practices Taken over by Large Corporations

This year, more stories have appeared about large corporations taking over physician practices.  In February, there was an account of efforts by competing nominally non-profit health insurance company Highmark and nominally non-profit hospital system UPMC in Pittsburgh in a "race to gobble up private physician practices," per the Pittsburgh Tribune-Review.  In March, the Washington Post featured a first-person account of what it is like for a physician in a private practice to try to hold out against the trend towards corporate practice.  In May, the Los Angeles Times noted how for-profit dialysis provider Da Vita purchased a large, but already for-profit operator of physician groups.  In October, Reuters reported how the recently announced acquisition by giant for-profit insurance company UnitedHealth of the biggest Brazilian for-profit managed care company will result in UnitedHealth owning an operating a Brazilian network of hospitals and clinics.

Concerns about Concentration of Market Power and Prices

In an increasingly financialized country, the media has featured concerns that the trend towards corporate physician practice might result in increasing market power for a few large corporations, and hence increased prices.  For example, in August, Anna Wilde Matthews reporting for the Wall Street Journal, noted

 Hospitals say the acquisitions will make health care more efficient. But the phenomenon, in some cases, also is having another effect: higher prices. 

As physicians are subsumed into hospital systems, they can get paid for services at the systems' rates, which are typically more generous than what insurers pay independent doctors. What's more, some services that physicians previously performed at independent facilities, such as imaging scans, may start to be billed as hospital outpatient procedures, sometimes more than doubling the cost.
 
The result is that the same service, even sometimes provided in the same location, can cost more once a practice signs on with a hospital.

Major health insurers say a growing number of rate increases are tied to physician-practice acquisitions. 

As Ms Matthews also reported for the Wall Street Journal, state regulators are beginning to worry about acquisitions of doctors' practices by hospital systems may drive up prices.

California's attorney general has launched a broad investigation into whether growing consolidation among hospitals and doctor groups is pushing up the price of medical care, reflecting increasing scrutiny by antitrust regulators of medical-provider deals.

Concerns about Care Quality

Concerns about whether physicians who must practice under the command of corporate executives will be able to put patient care ahead of corporate interests are also appearing, but not yet as prominently.

For example, Steve Twedt, writing for the Pittsburg Post-Gazette in September, looked into whether the multiple practice acquisitions by the area's two biggest ostensibly non-profit health care corporations might affect patient care.  He first noted "competition between Highmark and UPMC for doctors, and health care overhaul that is steering doctors into larger systems...."  Then he suggested that this has lead to marked discontinuities in patient care when physicians switch employment,

Out of the blue, people will learn their doctor has left a practice with little or no explanation, and without a forwarding address. When a physician effectively disappears, the cause usually is tied to the physician's employment contract, says a local health care attorney.

These cases of apparently vanishing physicians may be due to the contracting practices of physician employers, particularly large health care corporations.  The lawyer Mr Twedt interviewed explained,

most physician contracts now contain clauses that prohibit doctors from soliciting patients if they leave a practice.

While it's not always clear what constitutes 'solicitation,' it generally means departing physicians cannot contact their patients to invite or entice patients to follow them to their new location. They also cannot take their patient list with them, since that is property of the practice.

'I would imagine the doctor wouldn't contact them because he can't, or he doesn't have their address,' said Mr. Cassidy.

Contracts also often require that doctors cannot practice medicine within 10 miles of the previous practice office, and sometimes the required distance is even greater. Nor can they give out information about the practice they're leaving. Violating these contract terms could mean a financial penalty, such as loss of severance pay.

Finally, and most troubling, cardiologist blogger Dr Melissa Walton-Shirley recounted in some much more colorful language some consequences of cardiology practices which were acquired by large hospital systems.  She noted...

 

Referral Decisions Influenced by Management Edicts, but Maybe Not Patients' Needs

 

Physicians may be

sweating bullets over whether they are going to hit their benchmarks to retain their salaries. My anxious friends are now calling me for more referrals and more practice support.  They take any transfer I give them....

They may

 morph from human flesh into a Rubik's cube of relative value units (RVUs), the formula through which all future salaries and bonuses are calculated.

Resulting Loss of Continuity

Independent cardiologists opened office doors to find their patients who were anticipating decisions on timing of defibrillators, caths, or medical therapy had undergone testing at other facilities. Those tests were interpreted by cardiologists who were in no way connected to their care, their referrals to unfamiliar testing venues now incentivized by hidden contractual microformulas. They were evaluated far away from the familiar eye of their long-time cardiologists.

Summary

Back in the day, most physicians who took direct care of patients did so out of practices they or other physicians ran and owned.  The majority of physicians who took care of physicians as employees worked for the military or the Veterans Administration, or took care of patients only part-time as faculty of medical schools.  In a country increasingly prodded by market fundamentalism, the last few years has seen a major change in health care:  more and more physicians are taking care of patients as employees of large corporations, more often for-profit.

 I should add, though, that the recent push towards corporate practice was not just due to market fundamentalism, but also seems to in part be due to provisions of the recent attempt at US health care reform, the Affordable Care Act, which called for care by large organizations called accountable care organizations (ACOs).   However, like some other major changes in health care in the US over the last few years pushed by the increasing dominance of large corporations, this one happened without any rigorous assessments of whether the benefits for individual patients or public health would outweigh the harms, and justify the costs. 

Justified by the realization, now mostly forgotten, that health care is nothing like an ideal free market (look here), direct health care used to be almost entirely provided by health care professionals, often working in small, non-profit community hospital settings.  In fact, the American Medical Association used to condemn the corporate practice of medicine.  In addition, the corporate practice of medicine used to be illegal in many US states (look here).

We have changed all that, without too much thought, and without any rigorous assessment.  Now it seems increasingly likely that these changes are just increasing health care costs, and probably will cause worsening patient care and will worsen patients' and the public's health. 

As Dr Melissa Walton-Shirley wrote more vividly,

Monopolies never meant to be planted in gardens so small grew like bull thistles, literally overtaking all the good things that small community medicine had to offer. They are now barely recognizable small towns with the crabgrasslike metastasis of big corporations....

Will there be time to rethink this headlong rush before our health care options are restricted to that provided by one of a few huge corporations?  

True health care reform would reverse the trend to organize health care within ever larger, more bureaucratic, more monolithic, more dominant organizations.  Such reform is unlikely to happen until we see the nadir produced by the current bandwagon. 

BLOGSCAN - Why Not Just Pay Physicians By the Hour?

We have frequently discussed how perverse incentives are spread around health care.  In the US, the physicians are paid according to a system that provides strong incentives for doing procedures, (see our posts about how the RUC has encouraged this bias towards procedures.)   Since physicians are the most influential "deciders" about the care of individual patients, these incentives encourage overtesting and overtreatment with the highest technology, driving up costs and subjecting patients to increased risks of adverse events.  The recent health care reform law, however, essentially encouraged a version of capitated payment, which might very well provide incentives for undertreatment and undertesting.  For years, Dr Robert Centor has argued logically and forcefully for paying physicians for the time they spend on behalf of payments, very analogous to how lawyers and many other professionals are paid.  This might provide much more neutral, less perverse incentives than would existing or other proposed physician payment schemes.  Dr Centor argued again for this seemingly reasonable and logical idea on his DB's Medical Rants blog.  The big question is why this idea has been so anechoic?

Parallels Between the Anechoic Effect in Finance and in Health Care: Predator Nation by Charles Ferguson

What has gone wrong with health care now seems to be the same as what has gone wrong with finance, and society at large.  This was not always obvious to those of us toiling in medicine, probably because we were so focused on medicine that we paid too little attention to the larger world around us.  The people I interviewed in preparation for writing A Cautionary Tale, [Poses MD. A cautionary tale: the dysfunction of American health care.  Eur J Int Med 2003; 14: 123-130.  Link here.] identified broad issues that helped characterize American health care dysfunction.  Neither they nor I, however, initially thought that these problems were tied to the broader society.  In fact, I often wondered back then why health care, and it seemed particularly academic medicine, was so uniquely cursed.

Now it seems obvious in retrospect that health care, finance, politics, and society are circling the same drain.  Now there has been enough time since the beginning of the great recession/ global financial collapse for some people to describe the larger problems.

The Anechoic Effect

We have frequently discussed what we called the "anechoic effect" in health care.  In short, this meant that discussing the big problems in health care, particularly those involving leadership and governance, was simply not done, particularly by the academics who could have addressed the problem.  Lots of examples of the anechoic effect are here.  We have postulated that this has to do with fear of offending the rich and powerful who now lead and govern health care organizations, and the benefits, which may be produced by conflicts of interest, of maintaining good relationships with these rich and powerful.

Charles Ferguson in Predator Nation on the Anechoic Effect

Meanwhile, the anechoic effect was a big reason that finance became such a big mess.  Charles Ferguson, as we have previously discussed, has been one of the most insightful commentators on the great recession/ global financial collapse, starting with his Academy Award winning documentary Inside Job.



This year he published Predator Nation (Ferguson C. Predator Nation: Corporate Criminals, Political Corruption, and the Hijacking of America. New York: Crown Business, 2012.) a more complete account of our financial disaster.  It has a section on what we on Health Care Renewal would call the anechoic effect, and how it is driven by perverse incentives (pp 81-82) :

You see a horrific train wreck in the making, with all your coworkers contributing to it. But they are all making a fortune, and their manager - who is your boss too - is making even more money by keeping it going. Quite obviously, they're going to keep doing it whether you participate or not; so even if you refuse to participate, the firm will be dead anyway. You can try to stop it by going over your boss's head to the CEO; but your boss won't like that at all, and he and the entire department will tell the CEO whatever they need to tell him in order to keep it going. And if - speaking purely hypothetically - your CEO is an oblivious, selfish, obnoxious egomaniac nearing retirement age, heavily focused on his golf game and art collection, with a few hundred million in cash already stashed away, scheduled to rake in another $50 million this year, whose contract guarantees him another $100 million if he loses his job - well, then he probably won't be very sympathetic to you either. You could try going to the board of directors, but even if you could reach them, it will turn out that they are old pals of the CEO, often stunningly clueless, picked largely so that they won't rock the boat.

So if you try to stop the party, you'll probably get marginalized or fired, as happened to a number of serious, ethical people who tried to warn their management and curtail unethical and illegal conduct in Merrill Lynch, Lehman, Citigroup, AIG and elsewhere. So you'd gain nothing by acting ethically - quite the contrary, you'd ostracize yourself and lose your chance to build (or rather, transfer to yourself) some real personal wealth - possibly once-in-a-lifetime opportunity.

Summary: the Application to Health Care, and What Must be Done to Change Things

So consider how much of this might apply to a) serious, ethical employees of large health care corporations, and b) health care professionals who are employees of large health care non-profits, and/or have major financial relationships (conflicts of interest) with large health care corporations. 

Regarding the latter, think of the health care professionals who worked at the Allegheny Health Education and Research Foundation (AHEF) back in the 1990s, and who were told by their multi-millionaire CEO,  "Don’t cross me or you will live to regret it."  How inclined would they have been to blow the whistle on his supposedly "visionary" leadership?  On Health Care Renewal, we have posted lots of relevant newer examples of bad behavior by wealthy leaders of drug, device, biotechnology, health care information technology, and health insurance companies.  We have also posted lots of relevant newer examples of bad behavior within hospital systems and academic medical centers.  Yet most of these generated little resistance from within the organizations at the time they were occurring, and those who did try to blow the whistle often did not fare very well. 

The biggest issue is clearly that if you are in a system which may hugely award clueless, or bad behavior (i.e., that has perverse incentives), then those who might protest will be effectively silenced by those who are profiting from the status quo.

Combating this would require serious outside regulation to discourage perverse incentives and conflicts of interest, serious law enforcement to prosecute any resulting fraud, bribery, etc, and serious protection of whistleblowers, just for a start. All are currently lacking in finance, and in health care. But if we do not put such measures in place, the downward spirals in health care and finance will just continue.

Do not expect to see much discussion of these issues in health care or finance in the current political debate, unless those currently outside of the debate break the anechoic effect and inject them into the debate.