Where There's Smoke? ... A University President Who Simultaneously Lead a Failed Financial Company and a Tobacco Company Which Apologized for International Bribery

A long time ago, in 2006, we first blogged about a "new species of conflict of interest" which we thought might prove to be even more important than those afflicting health care that were then starting to be discussed.  This involved health care organizational leaders who were simultaneously members of the boards of directors of for-profit health care corporations.  We posited these conflicts would be particularly important because being on the board of directors entails not just a financial incentive.  It ostensibly requires board members to "demonstrate unyielding loyalty to the company's shareholders" [Per Monks RAG, Minow N. Corporate Governance, 3rd edition. Malden, MA: Blackwell Publishing, 2004. P.200.]   Thus, for example, the conflict posed by the president of a university, to whom a medical school and academic medical center report, who also is the director of a pharmaceutical company, would be extreme.

Since then, we noted yet another variant on this theme, university presidents who were supposedly the top leaders of failed financial firms, and then who did various dances to try to avoid accountability for these firms' fates.  That theme recently made it to the big time, a front page article on the Sunday Business section of the New York Times.

The most extreme version was the case of that of Eugene Trani, the former President of Virginia Commonwealth University ( full disclosure: I spent 7 years on the faculty of its medical school, and am still an adjunct faculty member).  Trani turned out to be on the board of a tobacco company, and soon after this was revealed, retired from the presidency (see most recent blog post here).

Now a Washington Post blogger has yet another twist on this case:

Eugene P. Trani left the presidency of Virginia Commonwealth University in 2009 after improving the school and expanding its presence in downtown Richmond. But Trani was also a director of LandAmerica Financial Group, a Richmond-area title insurer that went belly-up in 2008, taking with it millions in investors' money.

Today, Trani is on the board of Richmond-based Universal Corporation, a global tobacco marketer. Universal's subsidiaries have just agreed to pay $8.98 million in a tobacco bribery scandal that stretches from Brazil to Thailand to Africa. The firm has issued a public apology. Trani received $159,032 in total compensation for his board service.

So Trani was not only on the board of directors of a tobacco company, he was on the board of directors of a tobacco company that was forced to settle charges of international bribery and issue apologies for same, and just to ice the cake, was on the board of a failed financial company whose failure affected residents of the locality which his university served.

As the saying goes, "the fish rots from the head down."  How can academic leaders expect integrity from their faculty when they willingly take on such grotesque conflicts?  Leaders who thus try to serve two, or many masters are likely to run health care organizations that do not serve their primary constituents, patients who expect good care, learners who expect honest, competent teaching, and the public who expects important, unbiased research, well.  If we really want to reform health care, we need leaders who put the mission, not their own pocketbooks, prestige, and cronies, first.

"Smoke Detector" - Medical Center Leader (and Former Biotech CEO) Outed as Tobacco Investor

Last year we posted about the seemingly incongruous choice of a wealthy biotechnology executive with little academic or practice experience to run the prestigious University of California - San Francisco, a health oriented university housing a respected medical school.  We wondered whether her corporate background would make it difficult to uphold the university's academic and patient care missions.

In line with our concerns, Duff Wilson, writing in the New York Times, reported:

When Dr. Susan Desmond-Hellmann was named chancellor of the University of California, San Francisco, last summer, she took over a medical institution focused on world health generally and tobacco control in particular.

But she forgot one thing in adjusting to her new role: personal stock holdings listed last year in the range of $100,000 to $1 million in Altria, owner of Philip Morris USA, the maker of Marlboro cigarettes. Altria has been blamed for thousands of deaths and repeatedly criticized by the Center for Tobacco Control Research and Education at the university.

Last week, a day after The New York Times inquired about the Altria stock, Dr. Desmond-Hellmann and her husband, also a doctor, ordered it to be immediately sold and imposed 'values screening' on their personal investments.

Experts on tobacco control were aghast:

Dr. Stanton A. Glantz, director of the university’s tobacco control center, said he was unaware of Dr. Desmond-Hellmann’s Altria stock, which was contained in a university filing but not made public until now, after a public records request by a former student who passed it on to The Times.

“I do find that kind of shocking, but at least she got rid of it,” Dr. Glantz said on Monday, adding that Dr. Desmond-Hellmann had been very supportive of the center.

Dr. Kenneth E. Warner, dean of the school of public health at the University of Michigan and a national antitobacco leader, said, “I find it frankly a bit appalling that the chancellor of a major medical center would have held such stock. It strikes me as unthinking, frankly.”

We should give Dr Desmond-Hellmann credit for selling her Altria stock as soon as its connotations were made plain to her. (And at least she was not on the board of a tobacco company, to our knowledge, as was one former president of a university and large health sciences center.)

However, this little incident underlines the clash between the culture that dominates large health care corporations and the mission of medical schools and academic medical centers. In the last 30 years, academic medicine has rushed to embrace the reigning corporate culture, not to mention corporate money. I submit that this embrace has been at the peril of the fundamental academic and patient care missions.

Academic medical leaders need to promote better patient care, and honest, responsible teaching and research. To do so, they may have to give up some of the glitz, glamor, and cash proffered by industry. If they do not make this sacrifice, they risk losing the trust of an increasingly skeptical, if not cynical public.