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. 

What If the Institute of Medicine Wrote a Report and Nobody Followed it? - the Case of the Standards for Developing Trustworthy Guidelines

For over 20 years, clinical practice guidelines (CPGs) have been touted to improve health care quality and control costs.  Enormous numbers of guidelines have been developed, but with seemingly little impact on health outcomes.  While some of those leading health care organizations have predictably blamed individual practitioners for obstinately ignoring or challenging guidelines, there is increasing evidence that maybe the guidelines themselves are part of the problem.

 An Example of a Guideline that Apparently was Not Trusted

One example Dr Wally Smith and I have taught in our recurring mini-course on why physicians fail to follow guidelines (and otherwise appear not to practice in accord with others' wishes) is that of the guidelines on management of depression in primary care.  Most existing guidelines urge physicians to screen patients for (presumably mild-to-moderate) depression and treat them aggressively, with emphasis on the use of the newer anti-depressants.  These guidelines, in turn, were based on numerous published randomized clinical trials that showed that these drugs were safe and efficacious.  Yet multiple studies showed that physicians failed to follow these guidelines, and various attempts to improve their adherence did little.  So for years the assumption was that physicians at best experienced practical and system barriers to follow these guidelines, and at worst were ill-informed or irrational. 


However, information that came out gradually during the early part of the 21st century suggested that perhaps the problem was within the guidelines, not the health care professionals.  First, documents produced during New York Attorney General Eliot Spitzer's lawsuit against GlaxoSmithKline about the marketing of one of these drugs (Paxil, paroxetine) suggested that the company had suppressed clinical trial data that reflected poorly on the drug (See Kondro W.  Drug company experts advised staff to withold data about SSRI use in children.  Can Med Assoc J 2004; 170: 783.  Link here.)    These suspicions were later fleshed out  by consideration of documents further disclosed in litigation (e.g., see this post and its links).  Then several studies, most particularly that by Erick Turner and colleagues, showed that numerous trials of new anti-depressants had been suppressed, that is, never published (Turner et al. Selective publication of antidepressant trials and its influence on apparent efficacy. N Engl J Med 2008; 358:252-260.  Link here).  When the results of these trials were added to those that were published, the efficacy of anti-depressants was no longer so clear.  So maybe the guidelines that physicians did not follow were not trustworthy, and should not have been followed in the first place.

Would IOM Standards to Improve Guideline Trustworthiness Help?

So in 2011, the prestigious Institute of Medicine released a report on the development of  better standards to produce more trustworthy guidelines (Clinical Practice Guidelines We Can Trust.  Link here.)  We posted about that report here, but noted that it was receiving little other attention, an example of the anechoic effect. 

A few weeks ago, an article appeared documenting a study meant to assess the the trustworthiness of clinical practice guidelines published soon after the IOM report.  Its title telegraphs the results. ( Kung J, Miller RR, Mackowiak PA. Failure of clinical practice guidelines to meet Institute of Medicine standards: two more decades of little, if any progress.  Arch Intern Med 2012.  Link here.)

Methods and Results

The investigators selected a random sample of 114 individual guidelines available during June, 2011 stratified by 26 clinical topics. The versions of the guidelines used were those archived in the National Guideline Clearinghouse (NGC) maintained by the Agency for Healthcare Research and Quality (AHRQ).


The goal of the study was to "examine adherence to the IOM standards" by guidelines published after the standards were published.  Actually, the study only assessed adherence to 18 of the 25 standards espoused by the IOM (because the remaining seven were "too vague and subjective to be analyzed.")

Furthermore, the criteria used to determine if a specific guideline met each of the three items above were rather lax:

In evaluating each guideline summary, care was taken to be as liberal as possible in considering that a standard was met when the individual guideline summary provided any information pertaining to that particular standard.

Nevertheless, using these lax standards to only evaluate adherence to 18/25 guidelines, the authors found that "the overall median number of IOM standards satisfied (out of 18) was 8 (44.4%) ....  Fewer than half of the guidelines surveyed met more than 50% of the IOM standards."

An examination of the details of the study's methods reveals things are even worse than that.

Analyzing the Study's Methods to Find that Things Are Worse Than They Seem

Review of the study's methods show that they provided a very optimistic view of adherence to the IOM standards.  As noted above, the study did not look for adherence to all of the IOM standards.  Moreover, those they did consider were simplified and made less rigorous.  For example, Standard 2 from the IOM on management of conflict of interest (COI) was:

  STANDARD 2
Management of conflict of interest (COI)

2.1
Prior to selection of the Guideline Development Group (GDG), individuals being considered for membership should declare all interests and activities potentially resulting in COI with development group activity, by written disclosure to those convening the GDG.
- Disclosure should reflect all current and planned commercial (including services from which a clinician derives a substantial proportion of income), non-commercial, intellectual, institutional, and patient/public activities pertinent to the potential scope of the CPG.

2.2
Disclosure of COIs within GDG
- All COI of each GDG member should be reported and discussed by the prospective development group prior to the onset of their work.
- Each panel member should explain how their • COI could influence the CPG development process or specific recommendations.

2.3
Divestment
- Members of the GDG should divest themselves of financial investments they or their family members have in, and not participate in marketing activities or advisory boards of, entities whose interests could be affected by CPG recommendations.

2.4
Exclusions
- Whenever possible GDG members should not have COI.
- In some circumstances, a GDG may not be able to perform its work without members who have COIs, such as relevant clinical specialists who receive a substantial portion of their incomes from services pertinent to the CPG.
- Members with COIs should represent not more than a minority of the GDG.
- The chair or co-chairs should not be a person(s) with COI.
- Funders should have no role in CPG development.

However, the study boiled all this down to three items:
-  COIs stated
-  Chair has COI
-  Co-chairperson has COI

Thus the study did not address standards requiring full and complete disclosure (not just some disclosure) of all COIs; consideration of how the COIs might influence the particular guideline; divestment of specific types of conflicts of interest, that is, financial investments, and cessation of participation in marketing activities or advisor boards; minimization of conflicts of all members of the committee; and barring of participation of funders in guideline development.

Even so, the guidelines assessed did a very poor job upholding even these few liberalized standards regarding conflicts of interest.  Of the guidelines assessed, less than half, 46.8% provided ANY disclosure of conflicts of interest.  Those written by sub-specialty societies were particularly opaque in this regard.  Less than one-third, 29.3%, provided any disclosure.  Thus the majority of guidelines assessed were not at all transparent about conflicts of interest affecting the guideline development process.

Furthermore, of the 46.8% of all the guidelines which made any disclosures of conflicts of interest, 71.4% admitted their chair people HAD a conflict of interest.  Thus, only (0.468 * [1 - .714]) = 13.3% provided assurance that they fulfilled the single requirement (from standard 2.4 above) that the chair person did not have a COI.  For the guidelines written by sub-specialty societies, by a similar calculation, only 12.2% provided an assurance that the chair had no COI.  (The proportions providing assurance that the co-chair people had no COI were even lower.)  Thus the vast majority of guidelines did not clearly follow two straight-forward standards for minimizing the effects of conflict of interest, that the guideline committee chair and co-chair should not have any relevant conflicts. 

Given the miserable results concerning even minimal adherence to some of the IOM report's conflict of interest standards, it is likely that almost no published guidelines from 2011 came close to fulfilling the full set of IOM standards.  Despite the best efforts of the IOM, it appears that guideline developers have not progressed at all towards providing trustworthy guidelines. 

Summary

An editorial (Shaneyfelt T. In guidelines we cannot trust.  Arch Intern Med 2012) accompanying the article by Kung and colleagues summarized its results thus:

The same problems that have plagued guideline development continue to plague guideline development; namely, their variable and opaque development methods, their often conflicted and limited panel composition, and their lack of significant external review by stakeholders throughout the development process.   As a result, the trustworthiness of guidelines is limited.

While guidelines may have seemed to be a promising method to improve health care in the early 1990s, they have failed to live up to that promise.  Shaneyfelt was not optimistic they would improve in the future:

I am not optimistic that much will improve.  No one seems interested in curtailing the out-of-control guideline industry.

On the other hand, in my humble opinion, it is not that on one is interested in better guidelines.  It would clearly be in the best interests of patients and the public, and of health care professionals who care about the quality of their practice and the outcomes of their patients to curtail that industry.  The issue is why patients', the public's, and professional's interests were ignored.

Neither Shaneyfelt nor Kung et al discussed why there has been so little attention to patients' and the public's health, and to health care professionalism in all this.  For a quick answer, we do not have to look far on Health Care Renewal. 


In fact, the IOM report on guideline development from 2011 was a serious challenge to the powers that be in health care.  In particular, it challenged the cozy relationships that had grown up among the organizations that undertook guideline development and the health care professionals on guideline panels on one hand and organizations that stand to gain were specific guidelines to favor their products, services, and agendas on the other.  The standards mandated transparency and honesty about conflicts of interest affecting guideline committees and the organizations which assembled them, and if upheld would have greatly reduced these relationships.

Now it turns out that the guideline standards have been honored mainly in the breach.  Of course, these standards, while increasing trustworthiness, would have cost a lot of medical societies considerable commercial funding, and would have cost a lot of health care professionals on guideline panels considerable personal wealth.  These standards would probably also have cost a lot of companies whose products and services were addressed by guidelines to lose revenue.  So it is not surprising that the IOM standards were ignored.  Their implementation would have cost too many people who are financially benefiting from the status quo too much money.  And these people, that is, leaders of professional societies dependent on commercial outside funding, health care professionals and academic used to financial support from commercial interests, and health care corporations are good at making sure their interests are not ignored, even if their interests conflict with those of patients, the public, and well-intentioned health care professionals.  

So, the flouting of the well reasoned IOM guideline standards adds one more reason for patients and the general public to distrust modern health care and all those who "deliver" it, even to distrust well-intentioned health care professionals who have not been able to distinguish themselves from their colleagues who are too happy to help commercial interests while taking commercial money.  If health care professionals want to regain the public's trust, they could do worse than publicly declaring their intention to show that their practice in the future will be guided by trustworthy guidelines based on clinical research evidence and knowledge of biomedical science, drawn up by health care professionals independent of commercial interests.

Why Did the Global Fund Fire its Inspector General?

The Global Fund to Fight AIDS, Tuberculosis, and Malaria continues to struggle with the issue of health care corruption, an issue we noted here and here in 2011. 

Now as a news story in Nature put it,

It has been a rough couple of years for the Global Fund to Fight AIDS, Tuberculosis and Malaria, the world’s largest funder of international health programmes. Since its creation in 2002, the organization, based in Geneva, Switzerland, has channelled US$24.7 billion to delivering disease-control measures such as drugs, diagnostics and bed nets, saving millions of lives. But the global financial crisis has hit the fund hard, and its troubles mounted in 2011 when allegations of corruption among its grant recipients tarnished its reputation and alarmed donors.

Last week, the Global Fund tried to move on, announcing a new leader and unveiling major changes to its funding programme.

The Nature news story suggested that the troubles of the Fund all seemed so unfair.  After all,

the fraud allegations, ... [were] largely rehashed audits already made public by the fund itself. A retrospective audit published in July this year suggests that the allegations may have been overblown. It found that, in a sample of grants worth $3.8 billion that were awarded from 2005 to 2012 in 27 countries, just 0.5% of grant funding was lost to outright fraud. Experts say that figure is not exceptional for funding programmes in poor nations that often struggle with corruption.

Yet the Nature story suggested that the Fund's intrepid new later "could signal a fresh start, and has been broadly welcomed," leaving the impression that all things may turn out well.

Firing the Inspector General

However, the Nature story left out one nagging detail.  At the same time the Fund board announced the appointment of Dr Mark Dybul as its new director, it also announced that it had fired the Fund's Inspector General.  A report in the Financial Times only included,

It also dismissed John Parsons, its inspector general. Some directors believed Mr Parsons had been too outspoken in conducting public audits that sparked criticism of relatively small amounts of mismanagement and corruption.

The impression left was that Mr Parson was mainly guilty of rocking the boat.

The New York Times version, which started by recounting the hiring of Dr Dybul, also made it sound that Mr Parsons was generating too much bad publicity,

The fund also dismissed its inspector general, John Parsons, on Thursday, citing unsatisfactory work.


Mr. Parsons and Dr. Kazatchkine had privately clashed. Mr. Parsons’s teams aggressively pursued theft and fraud, and found it in Mali, Mauritania and elsewhere. But the total amount stolen — $10 million to $20 million — was relatively small, and aides to Dr. Kazatchkine said the fund cut off those countries and sought to retrieve the money. The aides claimed that Mr. Parsons, who reported only to the board, went to news outlets and left the impression that the fund was covering up rampant theft.

The fuss scared off some donor countries....

The AP version also cited the Board's accusation that Mr Parson's performance was "unsatisfactory," but included,

The inspector general's office is supposed to function independently. It was created in 2005 at the urging of the fund's biggest donor, the United States, which has contributed $7.3 billion to date.


The board held a contentious closed-door session with Parsons on Wednesday then deliberated into the night after he stormed out.

The board chairman, Simon Bland, and the head of its audit committee, Graham Joscelyne, each said they were unconcerned whether U.S. lawmakers might perceive the firing as an infringement on the office. Joscelyne would not elaborate on what Parsons did wrong but cited several reviews of him that were not disclosed.

In its latest 6-month progress report, Parsons' office said it had a growing caseload of 142 active investigations, up more than 70 percent from just two years ago.

Summary and Comment

We posted about the allegations of corruption at the Global Fund here and here in 2011.  At that time the scope of the problem was  unclear.  Now, at least according to the latest news report, it still is not clear.  On one hand, maybe no more than 0.5% of the budget was compromised.  On the other hand, would that caseload of 142 active investigations reveal more? 

Even less clear is the reason that Investigator General Parsons was fired.  The Board did not clarify what about his performance was unsatisfactory.  The AP report implies that doing too little was not the issue.  Most disturbing is lack of any mention of a possible replacement.

As we mentioned previously, the authoritative 2006 Global Corruption Report from Transparency International stated that corruption is a major global health problem.  Furthermore, Transparency International's IACC (International Anti-Corruption Conference) in Brasilia just wrapped up.  It's final declaration included,

We call on leaders everywhere to embrace not only transparency in public life but a culture of transparency leading to a participatory society in which leaders are accountable.


We call on the anti-corruption movement to support and protect the activists, whistleblowers and journalists who speak out against corruption, often at great risk.

It is up to all of us in government, business and society to embrace transparency so that it ensures full participation of all people, bringing us together to send a clear message: We are watching those who act with impunity and we will not let them get away with it.

Yet, corruption as a global health problem is still mostly ignored. In particular, global health aid programs almost never include pro-active measures to address corruption. In this case, the Global Fund, the world's largest source of such aid, was initially pushed into defensively addressing corruption, but now seems not to be so transparent about the problem. In my humble opinion, unless more transparency soon becomes evident, donors may continue to find reasons not to support the fund.


So the leaders of the Global Fund might want to consider becoming more transparent, and making some assurances that they are not out to get whistleblowers, including their own internal watchdogs.  At this point a more pro-active approach might be too much to ask for. 

Traits that "Define a Great Hospital CFO" - Honesty, Integrity, Accountability not Included

A recent article in Becker's Hospital Review entitled, "6 Traits That Define a Great Hospital CFO" [Chief Financial Officer] was most remarkable for what traits were not included.

The Six Traits

Based on interviews with a managing director of health care recruiting for a large executive search firm, and an experienced CFO of large hospital system, the included traits were:
- "Conviction," including "some type of conviction and confidence that their decision-making abilities will lead the hospital to great healthcare outcomes, a healthy population and — as a result — a more financially stable organization."
- "Nimbleness and flexibility"
- "Calm demeanor"
- "Willingness to understand the clinical aspects," in particular, the ability to "at least understand the [clinical] processes from a layperson's point of view, and the most effective CFOs have great working relationships with physicians, nurses, technicians and others."
- "Ability to think long term"
- "Sense of humor"

To be fair, I am glad to see expectations that hospital leaders, even chief financial officers, know something about clinical care, and that they have some sort of commitment to it. This seems to be in contrast to our frequent posts about how the leadership of health care organizations often seems ignorant and uncaring about the health care context and health care values. (However, the phrase above about conviction was not clearly worded. In particular, it did not explicitly suggest quality clinical care ought to be a higher priority than revenue, and could have been read to mean that good care is just a means to increase revenue.)

I am also glad that the article promoted long-term thinking. It also seems to contrast with concerns (e.g., here) about how health care leadership may put short-term revenue ahead of all other goals, also called "financialization." However, again, the article did not explicitly give long-term goals a higher priority than short-term ones.

What was Missing

However, what was more striking were the dogs that did not bark. In particular, transparency, honesty and integrity or even being law-abiding were not on the list of key traits for a CFO. This is particularly noteworthy given how often we have discussed bad behavior by large health care organizations, including various kinds of deception and dishonest behavior, as well as outright crime, such as fraud, bribery or kickbacks, etc.

Also, the list of important traits did not include responsibility or accountability.   This is also noteworthy given that rarely if ever have the leaders of these organizations taken any responsibility or paid any penalty for bad behavior occurring on their watches. Although may large health care organizations have made numerous legal settlements of accusations that include fraud, kickbacks, etc, the leadership almost never admitted wrongdoing in any of them, and almost never had to accept any financial penalty form the organization. This parallels how the US legal system has rarely sought to punish any leader of a large health care organization in such cases, suggesting that health care leaders now have developed impunity.

Given that the article appeared in Becker's Hospital Review, a leading publication for hospital leaders, its apparent cynicism about what once were considered indispensable characteristics of good leadership was disturbing.  It is also disturbing that at the time this was written, the only comment on the on-line version of the article, also the only comment to note this lack, was written by your this humble scribbler.

Summary

This may test some CFOs' sense of humor, but instead let me propose my hopes for better health care leadership. To truly reform health care we should seek reasonable leadership that draws on the collective knowledge and values of health care professionals, and that shows accountability, integrity, transparency, honesty, and ethics.  Not asking our leaders to be honest, ethical and accountable just enables the current dysfunction. 

The Case of the Vanishing Graduate Medical Education Funds

While primary care falters in the US, those who teach it seem to feel increasingly poverty stricken.  Now it appears that one reason for this is an amazing example of multiple failures of transparency and accountability.  Let me work through it, begging your pardon for a little bit of "inside baseball," medical education style.  The results suggest how we desperately need some medical disciples of Sherlock Holmes.

Background

My personal experience and increasing data suggests that most medical school faculty believe that their teaching is not valued by their institutions because teaching brings in no external funds.  In 2004, Dr Catherine DeAngelis, then the editor of JAMA, wrote "few medical schools provide adequate, if any, reimbursement for teaching time."(1)  (See this 2005 post.)   This seems absurd on its face, since what are medical schools for if it is not to provide teaching. 

However, there is evidence of this mission-hostile behavior.  In 2007, we quoted from a revealing interview with Dr Lee Goldman, Executive Vice President for Health and Biomedical Sciences at Columbia University,(2) who stated that "taxpayers," faculty who "generate more [money] than they cost," are valued most, and implied that faculty who focus on teaching are regarded as "welfare recipients," who bring in less external funding, and are valued least.  In 2010, we noted the results of a large-scale survey presented by Dr Linda Pololi in which 51% of faculty felt that the administration only valued them for the money that they brought in, and half felt that their institutions did not value teaching.(3)

Yet while faculty seem to believe that educational institutions receive little if any money to pay for teaching, it is not clear why the believe something so counter intuitive, and it is less clear what money actually goes to pay for medical education.

US Government Funding for Graduate Medical Education

However, several recent publications affirm that actually a lot of money goes towards one important form of medical education, yet the specifics of the money flows are shrouded in secrecy.  In the May, 2012, SGIM Forum, Dr Mark Liebow and colleagues summarized some of what is known about federal support of graduate medical education, that is, education of interns, residents, and other house officers.(4)  There are two streams of money that flow from Medicare to US hospitals:

Direct GME (DGME) payments help hospitals pay the salaries of residents, teaching faculty, and support staff. DGME is the product of three numbers: a per resident amount that varies by hospital, adjusted annually for inflation; the number of residents in the hospital (capped for each hospital at 1997 levels); and the fraction of discharges from the hospital that are Medicare beneficiaries. The Indirect Medical Education (IME) payment is a percentage amount added on to each DRG payment. The percentage is calculated via a complex formula (the only US statute containing an exponent!), where the key factor is the ratio of interns/residents to beds (IRB ratio).

These two streams are of considerable size:

Of the $9.2 billion Medicare paid for GME in 2010, $3 billion was for DGME and $6.2 billion for IME. The money is paid to hospitals sponsoring training programs rather than to the training programs or other hospitals where training occurs. While about 1,100 hospitals receive GME payments, 66% goes to the 200 hospitals that have the largest numbers of residents.

So, the 200 largest hospitals get about $2 billion in direct GME money (and presumably about another $4 billion in indirect money). This averages then to about $10 million DGME and $20 million indirect GME per hospital.

Thus, teaching, at least the teaching of interns, residents, and other house-staff does pay, and much more than trivial amounts. (Note that these amounts are not for teaching of medical students, which ought to be supported by other funding streams.)

Why then do faculty think that teaching does not bring in any money?

The GME Money Vanishes

An article by Dr Saima I Chaudhry and colleagues in the American Journal of Medicine begins to explain, although the explanations are found between the lines.(5)

First of all, while the graduate medical education money is paid by the government to the hospitals, the government does not publish what it pays to individual hospitals:

It has been previously reported that the amount of GME funding individual hospitals receive is not publicly reported by the Centers for Medicare and Medicaid Services,....

The government also does not hold the hospitals accountable for how they spend this money, nor for the quantity or quality of education they supply in exchange for it.

Remarkably, Chaudhry et al imply that that the people who run graduate medical education teaching programs also may not know how much money their hospitals receive from the government to fund their programs. The introduction to their article noted:

It is unclear how much program directors know about the amount and flow of DME funds to their programs. Program directors' beliefs about the transparency of funding to their programs, or their desire to influence how funds are distributed to them, also are unknown.

The article reported on a survey of internal medicine residency program directors which asked about "their knowledge of D[G]ME funding for their programs, the transparency with which funds are distributed to them, and their desire to influence this disbursement." The researchers sent surveys to 372 member programs, representing 97.1% of all US internal medicine residencies. They got 268 responses, a 72.0% response rate.

The main results were that only 159/268 (59.3%) of program directors had tried to find out how much DGME money their programs received, and of those, only 84 (52.8% of those enquiring, but only 31.3% of all respondents) actually knew how much money their programs got.

Of the 92 program directors who did not even try to discover how much money their programs received, approximately 21% said that "no one would tell me," 21% said that the "information would be inaccurate," 14% said they "don't know who to ask," and 2% were "afraid to ask."

Summary

US medical school faculty, especially those in primary care, increasingly feel pressured to perform activities that they perceive brings in money from external sources. They tend to believe that their own teaching somehow does not bring in any money, and that their careers will fail if they do not put more emphasis on other activities that the institution views as more profitable.

However, literally billions of US government dollars go to support the education of house staff, including the salaries of faculty who teach interns and residents, who probably are the majority of physician faculty. Faculty probably do not know this, because the government does not publish the amounts given to individual hospitals, nor demand of the hospitals any accountability for how they spend the money they receive.

Presumably, the top executives of each hospital know how much money the government gives them. Nonetheless, the majority of physician leaders of residency programs are never told these amounts, apparently because their hospital executives kept the amounts secret. Many of those educators who have tried to find out the figures were unsuccessful. Some did not even try to find out based on beliefs that their attempts would be unsuccessful, any amounts they discovered would be inaccurate, the people who knew the amounts were hidden, or that it would be dangerous to their careers to even try.

Thus billions of dollars of money flowing from the government to fund graduate medical education seems to have vanished in an amazing example of widespread deficiencies in accountability and transparency.

There are many people who blame government for many social ills. In this case, one can blame the US Congress for not writing a law that makes the money flows transparent and hospitals accountable for providing good educational value for the money provided. One can also blame the executive branch, particularly the Center for Medicare and Medicaid Services (CMS) of the US Department of Health and Human Services (DHHS) for not making the money flows and the values received for them transparent.

There are a few people, including this author, who also blame the leadership of health care organizations for many of the problems besetting health care. In this case, one can blame top leadership, presumably CEOs and chief financial officers (CFOs) of hospitals for hiding the amounts of money they receive from Medicare to finance graduate medical education. One can also blame the physician leaders of residency programs for not insisting that they know the true sources of financial support for their programs, obtain budgets that reflect this support, and recognition that their faculty really do bring in external funds for their teaching of house staff (and are thus valuable "taxpayers" in Dr Goldman's parlance.)

It is amazing that such amounts of money have been flowing for years mostly in secret. The secrecy has fueled incorrect, and in retrospect, bizarre ideas about the funding of medical education, and the value of medical educators to their institutions. This secrecy, in turn, has helped suppress the morale of medical educators, support the control of managers of health care professionals, and distort the flow of money within academic institutions and to compensation for certain favored individuals.

Would our dysfunctional health care system not be better off if we demanded transparency and accountability from its leaders?  In particular, the US government should make payments to hospitals for graduate medical education completely transparent, and develop a system to hold these hospitals accountable for how they spend the money.  Meanwhile, top leaders of hospitals receiving this money should make the amounts transparent, first to the people who are supposed to be doing the education that the money pays for, and to the public at large.  This would allow those running the relevant educational programs to develop reasonable and realistic budgets, to treat their faculty with respect, and to demonstrate what value they provide for the money received. 
The ongoing anechoic effect, and related deception and secrecy fostered by leaders in health care are major reasons our health care system is so dysfunctional, that costs are so high, and access and quality so poor.  True health care reform would ensure health care leaders put the mission before their personal enrichment, and act ethically with accountability, transparency, and honesty. 
References
1.   DeAngelis CD. Professors not professing. JAMA 2004; 292: 1060-1.  Link here.
2.  Goldman L, Halm EA.  A view from the top: general internal medicine from the perspective of a chair and dean.  SGIM Forum, April, 2007.  Link here.
3.  Pololi L, Ash A, Krupat E.  Faculty Values in the Culture of Academic Medicine: Findings of a National Faculty Survey. Link here.
4.  Liebow M, Jaeger J, Schwartz MD. How does Medicare pay for graduate medical education? SGIM Forum, May, 2012.  Link here.
5. Chaudhry SI, Khanijo S, Halvorsen AJ, McDonald FS,Patel K. Accountability and transparency in graduate medical education expenditures. Am J Med 2012; 125: 517-522. Link here.

A Case Demonstrating Links Between Poor Governance, Conflicts of Interest, and Excess Executive Compensation at a Hospital System

The Salinas Valley Memorial Healthcare System in California first appeared on our radar in 2011 for not only giving an improbably large severance package to its CEO, but doing so two years before he actually retired.   At the time, hospital "officials" gave the usual sorts of justifications we see for huge executive compensation packages.  They suggested the CEO is brilliant, in particular, "gifted and experienced," and that to retain him they needed to pay "private sector-level benefits."  Then it turned out the system was rapidly raising the compensation of other executives while laying off employees who actually took care of patients. 

A Government Audit

Because the system, despite its title, is actually a local government agency, these controversies triggered not only outrage, but also a state audit.  The Los Angeles Times described its results. 

The audit found that the Salinas Valley Memorial Healthcare System regularly did business with firms that the board and top officials had financial stakes in — in some cases in apparent violation of state conflict-of-interest laws.

The report stated that Salinas Valley lacks sufficient safeguards against making decisions that violate conflict-of-interest laws, and that the district therefore can't guarantee 'that it's board members and executives do not experience personal financial gain from its transactions with businesses.'

The audit found 11 instances between 2006 and 2010 in which board members had reported economic ties — including stocks, salaries and other types of payments — to vendors with which the district did business.

Not all the cases represented violations of conflict-of-interest rules, state auditors said, but in two cases they found that officials may have broken the law.

One case involved former Chief Executive Samuel Downing, who had $50,000 in investments with 1st Capital Bank, an institution Salinas Valley and the executive agreed to deposit $1 million into.

In another case, the hospital made $5.6 million in disbursements to Rabobank, where a board member, Harry Wardwell, serves as a regional president and receives a salary of more than $100,000, according to his most recent statement of economic interest.

A San Jose Mercury News article listed some other problems found by the audit:

· Absence of a formal executive compensation policy despite paying its top administrators at the upper end of the industry scale. Downing received a nearly $5 million retirement payout, and other executives received generous pay topping out at $341,000 per year. The reported also cited supplemental pensions, which have been discontinued.

· Violations of state open-meeting laws as the board approved executive pay.

· Failure to ensure all employees who are required to file statements of economic interest had done so.

· Absence of a duly approved, legally binding conflict of interest code, which must be approved by the county Board of Supervisors. The report noted the hospital board instituted a properly approved code in December.

· Lack of proper documentation on the selection process for no-bid contracts, necessary to ensure the hospital gets the best value for its money. The report found only one of eight contracts reviewed during the audit included such documentation.

· Need for better oversight of hospital funding of community events, including the rationale for why and how they benefit Salinas Valley Memorial, to adhere to the ban on making gifts of public money. The report found the board delivered $54,000 to California Rodeo Salinas without any evidence it had considered how it furthered its public purposes.

Conclusions

First, this case should not be viewed as an indictment of hospitals run by local governments.  Rather than indicating that bad behavior is particularly likely at such hospitals, the fact that questionable behavior came to light at such a hospital is more likely due to better regulation of such hospitals leading to more transparency about them compared to other hospitals.  The regulations and laws governing the operations of non-profit hospitals not run by government agencies, or for-profit hospitals vary from US state to state.  To my knowledge, rarely do states strictly regulate conflicts of interest affecting, or require much transparency about governance at hospitals that are not government run.  There is a similar lack of state regulation of for-profit hospitals, and federal regulation of either non-profit or for-profit in these areas.  Thus it is extremely rare to see an audit or report about any non-governmental hospital like the one about Salinas Valley Memorial Healthcare.  Without the greater transparency produced by such investigations, there is little data about whether the practices seen at Salinas Valley are common at other hospitals, be they government run, non-profit and private, or for-profit.   

However, while this is just one case, it does allow an interesting comparison.  We have discussed the usual "talking points" proffered by management and boards to explain outsized compensation packages in health care.  They often include statements about the brilliance of the executives in question, almost never with any supporting evidence, and the need to pay "market" rates.  Although these, and other talking points may seem implausible, they are hard to challenge, because hospital and other health care organizations are usually able to conceal the processes which actually lead to compensation decisions. 

However, in this case there is documentation of problems with governance processes which may have plausibly enabled unjustified levels of compensation.  Failure to maintain processes to disclose and deal with conflicts of interest could increase the likelihood that conflicts would occur.  A board that included individuals who may have been personally profiting from their board membership might be inclined to go along to get along with the CEO.  Meeting in secret despite an open meeting law would prevent discovery of cronyism.

This case therefore suggests that governance that lacks transparency, accountability and integrity may lead to self-interested, conflicted leadership that responds to perverse incentives.  Such leadership is likely to pay more attention to its own interests than the health care mission, short-changing patients' and the public's health.

So once more with feeling.... 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.

A New Venue From a Surprising Source to Discuss "External Threats to Good Decision-Making"

A new blog, entitled the Medical Professionalism Blog, signed on last week with a post emphasizing some themes that should be familiar to Health Care Renewal readers:

There is an increasing focus on the sustainability of the U.S. health care system based on current cost trends. Predictions are for the health care system to consume 19% of the GDP by 2019. How did we get here?

Some point to the overuse and misuse of health care services, inefficiencies and lack of care coordination. Others blame the lack of clinical evidence, primary care workforce and the external threats to good decision-making, such as a toxic payment system and the influence of pharmaceutical and device companies.

While there are many different ideas about what got us here and what should be done, there is wide consensus that physicians and other stakeholders must begin to develop new more effective and efficient systems of care and make wise choices that preserve our health care system’s sustainability.

We have been underlining concerns that health care professionals' values, the mission of academic medicine, and truly evidence-based practice are under a series of threats.  (For a recent, but already out of date list of threats to the academic medical mission, see this post.)  It is nice to see that that others are now alarmed by these threats and looking for ways to counter them.

So, our new colleague in the blog-sphere raised the following questions:

* What is the appropriate role of physicians and other stakeholders in preserving these resources?

* What behaviors foster and which threaten wise choices in medical decision-making?

* How can waste be removed from the system without sacrificing quality or safety?

* What system changes are needed to achieve better health care outcomes, reduce costs and improve the patient experience?

* What effect do the nature and performance of partnerships – clinician-patient, clinician-organization and clinician-society — have on professional behaviors and resource use?

Again, the importance of threats was emphasized, and concerns about conflicts of interest affecting physicians' professionals were implied. This blog will apparently have a unique focus which I hope will complement our approach on Health Care Renewal.

What we’re hearing from folks is the need to 'show me how' to answer these questions. Through analysis of promising practices, we hope to provide examples of what works – and what doesn’t.

So we welcome The Medical Professionalism Blog to our blog-roll and look forward to some interesting content.

For a final twist, I need to note that this blog's authorship appears to be unique. The Health Care Renewal bloggers, and most of our blogging friends mostly seem to include, in no particular order: academic physicians, often tenured or retired (and thus able to speak more freely), other generally senior or retired academics, independent or retired practicing physicians, journalists, independent consultants, some whistle-blowers and others who once worked in the health care establishment, and some very anonymous bloggers in the belly of the beast.  Thus, we are generally an very independent and iconoclastic, if a somewhat rag-tag lot.

However, the chief blogger on The Medical Professionalism Blog is Daniel Wolfson, who is Executive Vice President and Chief Operating Officer of the ABIM (American Board of Internal Medicine) Foundation,  and the blog itself is a project of the foundation.  Thus, this is a blog from the heart of the medical establishment, the powers that be, etc, etc.  No other blog on our blog-roll comes from a current leader of such an organization.  (One is written by someone who was a CEO of a major academic medical center/ hospital system, but who lost his job under controversial circumstances.)

It is truly refreshing to have a voice coming from the inside, so to speak, proclaim:

The Medical Professionalism Blog was created by the ABIM Foundation to stimulate conversation and highlight best practices related to professionalism....

Furthermore,

Open for considerable debate is my belief that physicians’ engagement in quality, safety and the management of health care resources ultimately improves the care they give their patients and adds to their joy of work. I look forward to hearing your point of view, even if it’s a dissenting one.

Lately, we have not heard a lot of calls for vigorous debate and dissent from the medical establishment, the powers that be, etc, etc. In fact, the anechoic effect is how we describe how such debate and dissent has been suppressed.

So it appears the The Medical Professionalism Blog may be a real breath of fresh air. We hope it can truly inspire some discussion, especially open discussion of issues which used to be not what one was supposed to talk about in polite health care company.  This could help advance the transparency which we have long been advocating.

"You Can't Say That" - Non-Disparagement Clauses and the Anechoic Effect

Here is another example of why health care organizations' leaders are different from you and me, and why that may not be a good thing for health care.  A few days ago, the San Jose (California) Mercury News reported on the upcoming departure of a local hospital CEO:

El Camino Hospital's handsomely-paid president and CEO Kenneth Graham is out of a job, the hospital announced Thursday afternoon.

Graham's contract will end June 30 'without cause, at the request of the hospital's Board of Directors,' according to a statement released to the media.

Until then, Graham will continue to fulfill his duties as the hospital's top administrator, according to the statement. Graham has been president and CEO of the hospital for 4½ years.

The brief statement did not explain why Graham has been ousted, focusing instead on his accomplishments. Graham earns an annual base salary of $632,640.

Not only was the CEO "handsomely paid," he will be handsomely paid to depart, as reported two days later by the same newspaper:

Former El Camino Hospital president and CEO Ken Graham may be out of a job, but he won't be hurting for a paycheck anytime soon.

Fired 'without cause' by the hospital's board of directors on Wednesday, Graham is now entitled to nearly $1 million in severance pay, according to his contract, which the hospital provided to The Daily News on Friday.

Specifically, the hospital will pay Graham a lump sum of 18 months' salary when he officially steps down June 30. Based on his annual salary of $632,640, he would receive $948,960.

The reporter could not get any clearer fix on the reason for his departure:

Hospital officials Friday were tight-lipped about their decision to drop Graham. Reached by phone, board Chairman Wesley Alles would only say it was 'without cause.'

'I guess as a generic (explanation) the only thing I can say is it's without cause, that (the board wants to take) some different directions, perhaps, as a generic (explanation),' Alles said.

El Camino Hospital spokeswoman Chris Ernst said she couldn't say more than what was written in a statement released to the media Thursday, which simply stated Graham's contract was ended 'without cause, at the request of the hospital's Board of Directors.'

'I know everyone wants to know if there's something really there, but it was clearly without cause,' Ernst said. 'It's not like you can point to one particular thing and say this is why this action was taken.'

Now wasn't that informative? It appears the CEO was let go "without cause." But reporter Diana Samuels did uncover why nobody was saying anything meaningful about this lucrative departure:

The contract also includes a 'non-disparagement' clause, which says the hospital and Graham cannot make any statements about each other that could cause 'any embarrassment or humiliation or otherwise reflect negatively on the other party(ies).'

I discussed the subject of executive contracts with one of our Health Care Renewal scouts who knows about such things. For high level executives in business, seemingly tidy severance packages are the rule.  We have discussed the problem with excess executive compensation in health care here.

Furthermore, various confidentiality, non-compete, and non-disparagement clauses are often common.

However, whether or not these are common practices in the larger business world, these contract provisions, especially non-disparagement clauses, pose problems in health care.  As we have discussed, there are lots of good reasons that the governance and leadership of health care ought to be maximally transparent.

Just to provide one example, consider the problem of medical errors, a subject which has received unending discussion since the report by Institute of Medicine entitled "To Err is Human."  One widely espoused doctrine about medical error prevention is that such errors ought to be disclosed and discussed openly so that their root causes can be found, and methods to prevent them developed.  Now suppose, for example, that the CEO of a hospital had discovered some medical errors, but made himself unpopular by pursuing them.  Were he to have a bilateral non-disparagement clause in his contract, and were this unpopularity to cause him to lose his job, he could say nothing about these errors, possibly allowing them to recur, but more seriously.  Of course, the example could be turned on its head.  Suppose the CEO had introduced a new process that was thought to be the cause of such errors.  Were he to lose his job because of this, hospital officials could say nothing about the problem, etc, etc.  Similarly, other problems at the hospital either discovered by the CEO or possibly caused by the CEO could remain anechoic due to non-disparagement clauses in hospital executives' contracts.

Of course, in the current case, the CEO might have left due to simple personality differences, and his departure might have nothing to do with medical errors, etc, etc.

However, this case suggests that the sort of non-disparagement clauses that may appear in contracts for executives in various type of businesses have metastasized to contracts for hospital executives.  These clauses, and their cousins, confidentiality clauses and non-compete clauses, may be major reasons for the anechoic effect, and the general lack of transparency of hospital leadership and governance. 

However, up to now, such clauses seem to be, you guessed it, anechoic in discussions of health care policy and health care reform. 

Thus, one step to true health care reform would be for there to be some open discussion of the reasons we cannot openly discuss many important issues in health care, particularly the likely increasing use of contractual clauses such as non-disparagement clauses.  Likely an even more important step would be discrediting such contractual provisions that reduce transparency.

A Source of the Anechoic Effect Discovered: the Public Relations Person in the Room

A series of posts in journalism blogs last month revealed a mechanism used by health care organizational leaders to shape discussion of the issues that affect their interests, but one that is probably unfamiliar to most health care professionals and the public at large.  Let me provide the key quotes in chronological order.

First, from the Covering Health blog of the Association for Health Care Journalism (10 June, 2010):

Have you recently tried to get information from the federal government or arrange an interview with a federal official?

AHCJ’s Right-to-Know Committee is calling on journalists to report their experiences, as part of a continuing effort to pry open the doors of the federal government. We’re looking for recent anecdotes about journalists’ experiences with public information officers, especially at the Department of Health and Human Services and any of the agencies that are part of it (e.g., CDC, FDA, CMS etc.).

Please write to Felice J. Freyer, Right-to-Know Committee chair, at felice.freyer@cox.net, about problems you have encountered, including mandates to clear interviews with the press office, slow responses, refused interviews, burdensome requirements (such as written questions and answers only), extreme time limitations on interviews, PIOs listening in on your conversations, or anything else that made it hard for you to get the information and quotes that you needed in time.

The implication here, of course, is that the committee was concerned that journalists attempting to interview employees and officials of US government health agencies may encounter a variety of problems, including public information officers "listening in on your conversation."

Of course, just because the committee was concerned about a possible problem does not mean the problem exists, or is if it exists, is important.

However, a week later this post appeared in the Covering Health blog (17 June, 2010):

MedPage Today, an online breaking-news service for physicians, today instituted a rule requiring reporters to inform readers whenever a press officer has listened in on an interview.

'If a source’s comments are monitored by a press officer, then the person may not have been speaking freely,' said Peggy Peck, vice president and executive editor. 'That’s information readers should have.'

Peck instructed her staff to use phrases like 'said in a telephone interview that was monitored by a public information officer' whenever using quotes from such an interview.

Peck emphasized that a reporter’s goal should be to avoid having a press officer listening to calls or attending face-to-face interviews. 'But if that is the only way a researcher will talk, we need to let our readers know that,' said Peck’s memo to eight reporters.

Peck is a member of AHCJ’s Right-to-Know Committee, and the rule sprang from the committee’s work to end interference by public information officers in newsgathering, especially in the federal government.

'I applaud MedPage Today for taking this step and encourage reporters and editors everywhere to follow suit,' said Felice J. Freyer, chair of the Right-to-Know Committee and a member of AHCJ’s Board of Directors.

'Reporters have come to accept the presence of public relations people at interviews, but it’s really not acceptable. We all know that such eavesdropping hinders the free flow of information – and we need to let our readers know that this is happening.'

Now this is much more clear. Apparently some, maybe most of the information obtained by journalists from interviews of officials and employees of government health care agencies was monitored by public relations people, presumably to keep the interviewees "on message," and remind them not to say anything that did not fit the party line.  Furthermore, such monitoring was not often disclosed by the reports when they wrote about the interview. 

In addition, Paul Raeburn posted this on the Knight Science Journalism Tracker blog:

I’ve long been troubled by the insistence of some 'public' information officers (they are paid to work for their institutions, not the public, although the interests of the two can sometimes coincide) to listen in or sit in on interviews. Even if they don’t say a word, their presence inevitably changes the interview.

Imagine telling colleagues about the last story you wrote, and what you had to do to get it. Now imagine the same conversation with your colleagues while your editor–on whom your livelihood depends–listens in. I don’t imagine myself dissembling in either set of circumstances, but I can certainly imagine myself telling the story a little differently in each case.

The point is not that information officers are always trying to limit or shape the interview, although that clearly happens. The point is not to challenge the integrity of information officers, although, like reporters, some are better at what they do than are others. The point is that the presence of an institutional representative changes the interview. And we owe it to out readers to conduct interviews without that presence whenever possible.

Mr Raeburn seemed to make an effort to be exquisitely polite, but still managed to affirm that the public relations person in the room is a real and important phenomenon in reporting about health care.
This reinforces the notion that monitoring of interviews with journalists by public relations people is common practice, but one heretofore not discussed publicly.  It seems obvious that the point of this practice was to keep the interviewee on message, and to restrain any discussion that might not fit with the public relations persons' bosses interests.

If we did not know about the practice of keeping a public relations person in the room for interviews with people working for the government, it seems likely that we also did not know about similar practices affecting interviews with people in other kinds of health care organizations, e.g., for-profit corporations, and not-for-profit organizations.

We have frequently discussed the "anechoic effect," how important cases, stories, and data about the negative effects of concentration and abuse of power in health care, and about ill-informed, incompetent, self-interested, conflicted, or even corrupt leadership of health care organizations, and the unaccountable, unrepresentative, opaque, and often unethical governance that enables it are often just not discussed, and when discussed, produce few echoes.  Now we see another mechanism that maintains this effect.  Large health care organizations deploy substantial money and personnel to market their products and massage their messages.  These people apparently use a variety of tactics to control the flow of information to journalists.  While journalists seem to be provide much more information about the problems in health care we discuss on Health Care Renewal than professional and academic publications and meetings, we now see one more mechanism that has impeded them from doing so openly and fully.

In my humble opinion, disclosing that interviews were monitored by public relations personnel is one small, but important step in beginning free enquiry into what has gone wrong with health care.  Bravo to the people who have stood up for it. 

At UPMC: Dealings with Board Members' Firms and Executives' Relatives, a $5 Million Plus CEO, and 8 $1 Million Plus Executives

Last year we noted that the US Internal Revenue Service (IRS) required more detailed reporting starting in 2009 by US not-for-profit organizations.  Many US health insurance companies/ managed care organizations, most hospitals, nearly all medical associations, nearly all disease advocacy organizations, all health care charities, and nearly all medical schools are not-for-profit organizations.  We suggested then that this reporting might lead to more transparency about the leadership and governance of these organizations.  Some of these new 990 forms are now being publicly disclosed, with some interesting findings. 

The Pittsburgh Tribune-Review just reported some interesting findings about financial ties between the University of Pittsburgh Medical Center (UPMC) and its board members and hired executives.

Health giant UPMC paid more than $10 million last year to companies and individuals with ties to its directors and high-ranking executives, newly released tax records show.

The payments include more than $3 million in salaries and contracts to relatives of UPMC CEO Jeffrey Romoff, who earned $5.16 million in fiscal 2009.

It was no surprise that a UPMC spokesman pooh-poohed the significance of these relationships.

'Given that UPMC is the largest employer in Pittsburgh and attracts talent from across the world, it's easy to understand why there are hundreds of employees with family members who also work at UPMC,' said spokesman Paul Wood.

'We seek to hire the best and brightest in every position, regardless of family relationships, and take appropriate steps to manage any conflicts that those relationships might entail.'

The specifics about payments to the relatives of top hired executives were:

Tax records show UPMC paid $264,274 to Rebecca Kaul, the CEO's daughter. Wood said UPMC then billed a contractor for her services. Kaul now works for UPMC as executive director of the Technology Development Center, Wood said.

UPMC paid $259,488 to Scott Gilstrap, who joined the health care giant before marrying Romoff's daughter. Gilstrap, now divorced, no longer works for UPMC, Wood said.

Wood said UPMC's contract for $2.48 million with Paradise Group, an advertising firm owned by the CEO's brother, Douglas Romoff, was not renewed after its March 2009 expiration.

'Jeffrey Romoff was not involved in any of the decisions pertaining to this contract,' Wood said.

In addition to Romoff's family connections, the tax records show UPMC paid Scott Cindrich, son of its chief counsel Robert J. Cindrich, $141,599.

Wood said the younger Cindrich joined UPMC before his father left a federal judgeship in 2004 to become UPMC's top lawyer. Robert Cindrich was paid $1.86 million.

Cindrich did not return telephone calls seeking comment.

The specifics about dealings between UPMC and its board members were:

Tax records show companies affiliated with board member Anne V. Lewis do the most business with UPMC. Oxford Development Company, where Lewis is board chair, received $4.84 million from UPMC.

Lewis is affiliated with Central Securities Services, which received $201,198 from UPMC, and Central Property Services, which received $457,051. Lewis did not return repeated telephone calls from the Tribune-Review.

According to the returns, the Downtown law firm of Pietragallo Gordon Alfano Bosick and Raspanti earned $348,616 in legal fees. William Pietragallo is a UPMC board member. The law firm paid $792,215 to UPMC for heath insurance.

Pietragallo said he filled out a conflict-of-interest form, as he has in past years.

'It reminds me of how much I pay for health insurance,' he said.

IGate Mastech, the tech company founded by UPMC board member Sunil Wadhwani, received $204,215 for computer services. JJ Gumberg and Co., affiliated with board member Ira Gumberg, was paid $103,521, tax records show. Neither Wadhwani nor Gumberg returned telephone calls.

Board member John R. McGinley Jr.'s law firm, Eckert Seamans Cherin and Mellott, was paid $804,414 for legal services, according to the returns. McGinley and board member Robert A. Paul and members of their families are affiliated with Pittsburgh Steelers Premium Tickets LP, which was paid $129,425, tax returns show.

McGinley said he believed the figures UMPC reported are correct. Paul did not return telephone calls.

Also, in a separate article, the Tribune-Review noted transactions between UPMC's insurance subsidiary and its board members' firms

Recent federal tax filings show companies associated with some UPMC board members also buy their employee health insurance through the health care giant's insurance arm.

The tax returns show that health insurance premiums paid by the companies affiliated with board members totaled about $8 million in the fiscal year ending June 30, 2009. Nine firms affiliated with board members purchased UPMC health insurance.

That figure includes nearly $1.8 million by Bank of New York Mellon. UPMC board member Stephen Elliott is affiliated with the bank.

Oxford Development paid $2.1 million in premiums. The development firm's chairman is Anne Lewis, a UPMC board member.

The law firm headed by UPMC board member William Pietragallo paid $792,215 in premiums, according to the returns. AMPCO-Pittsburgh, which is affiliated with UPMC board member Robert A. Paul, paid a little more than $1 million in premiums.

Of course, Mr Wood pooh-poohed that too:

UPMC spokesman Paul Wood said the premiums paid by the companies were at "market rates."

He also apparently stated that the hospital system follows "strict conflict-of-interest rules. Board members are barred from voting or acting on matters relating to their business interests...." 

The standard approach of most not-for-profit organizations to conflicts of interests involving their board members or executives is to have these people recuse themselves from votes or actions that directly affect their own or their families' business interests.  I submit that whether this prevents the conflict of interest from influencing decision making by the organizations is questionable.  I doubt that the board members are unaware of their fellow members' and executives' direct or familial business interests.  The fact that certain individuals need to step out of meetings when votes come up on particular contracts would be a good reminder that they or their relatives have business interests at issue at these times.  Board members tend to keep their seats for a long time, and tend to get to know their fellow members pretty well.  Even if an individual member cannot vote on a contract or action relating to his or her business interests, would it be any surprise that his or her buddies on the board might look favorably on such a contract?

Furthermore, would it really be that hard to find development companies, property management firms, advertising agencies, law firms, or information technology companies in a large metropolitan area that are not affiliated with board members or top executives and their families?  Instead, UPMC seems to have found quite a few vendors affiliated with board members which do not seem particularly specialized in their organizational attributes.  Can we be sure that they are run by the best and the brightest?

Maybe board members who are too cozy with each other, and too cozy with the hired executives they are supposed to supervise, would be distracted from the attentiveness required to their organization's mission by their buddies' businesses? 

Perhaps coziness among board members and hired executives might have something to do with the munificent compensation given to numerous hired leaders of UPMC.  A separate article in the Pittsburgh Post-Gazette stated:

Jeffrey Romoff, president and CEO of the University of Pittsburgh Medical Center, received $3.563 million in salary in 2009, a 24.4 percent decrease from his 2008 salary of $4.711 million.

However,

In addition to Mr. Romoff's $4.711 million in cash compensation in 2008, he received $428,214 in deferred compensation and $21,671 in nontaxable benefits, for a total package valued at $5.161 million.

In addition,

Other top UPMC earners include Elizabeth Concordia, executive vice president and president of the Hospital and Community Services Division, $2.139 million; Amin Kassam, the department of neurological surgery chair who resigned in July, $2.083 million; Robert Cindrich, senior vice president and chief legal officer, $1.869 million; neurosurgeon Ghassan Beijani, $1.798 million; neurosurgeon Adnan Abla, $1.620 million.

Also, Marshall Webster, executive vice president and chief medical officer, $1.514 million; Diane Holder, president and CEO of UPMC Health Plan, $1.485 million; James Luketich, co-director of surgical affairs at the University of Pittsburgh Cancer Institute, $1.442 million; Daniel Drawbaugh, senior vice president and chief information officer, $1.335 million; and David Farner, senior vice president and chief of staff in the office of the president, $1.253 million.

By my count, that was eight executives with yearly total compensation greater than $1 million (in addition to two very well paid neurosurgeons.)  These payments, which most people would say are sufficient to make their recipients rich, were handed out by a not-for-profit organization whose mission statement includes being "committed to providing premier health care services to our region and contributing to this community" at the end of a bog of business-speak.  I suspect most people would think "contributing to this community" means something in addition to contributing to the wealth of a few top executives, and contributing to the business income of board members and executives' relatives.  Again, are board members who have become cozy with each other and the executives they are supposed to supervise more likely to be distracted from their fiduciary duty to the not-for-profit organization by their buddies' friendships?

We often discuss conflicts of interest on this blog.  Many of these involve financial relationships among health care professionals and academics on one hand, and pharmaceutical, biotechnology, device and other health care corporations on the other.  However, I suspect that conflicts involving leadership of hospitals and local businesses and vendors may be more common.  The latter may not always have as much influence on the quality of care, teaching and research as former group of conflicts.  However, they may have more effects on the total costs of health care, and may contribute more to the coziness, sense of entitlement, and inattention to the mission that seem to characterize much of health care leadership.  They may contribute to the perception that health care, like finance, may now be about , as Prof Mintzberg said, "All this compensation madness is not about markets or talents or incentives, but rather about insiders hijacking established institutions for their personal benefit."

The new version of the IRS forms are just beginning to become public, so we expect to see many more juicy stories about the financial and family ties of leaders of health care not-for-profit organizations.  Watch your local newspapers for details about conflicts of interest at your local health care not-for-profit organizations.

Maybe as more is revealed, the need for more transparent, accountable, and ethical governance of health care organizations will become apparent.

Who Guards the Guardians? - the Case of Boston Scientific

The fallout from the case of the faulty implantable cardiac defibrillators continues.  To summarize the story thus far,

We started posting about Boston Scientific's travails in 2005, starting with allegations that Guidant, which is now a Boston Scientific subsidiary, hid information about defects in the implantable cardiac defibrillators (ICDs) the company manufactured. As we noted in early 2005 here, Guidant executives allegedly knew that ICDs made from 2000-2002 were at risk for short-circuiting and failing, thus making them unable to deliver potentially life saving electrical shocks meant to prevent cardiac arrests, but the company only revealed the problem in 2005. By failing to notify physicians and the public, Guidant executives let expensive and profitable, but potentially useless devices to continue to be implanted, potentially increasing the risk of sudden death for the patients who received them. Then here we noted reports that Guidant continued to ship failure-prone devices even after it had designed and started to manufacture new ICDs that were supposed to be less likely to fail. By June, 2005 we posted that Guidant had recalled thousands of ICDs, including models that were previously not identified as likely to fail. Later that year, the case rated an article by Robert Steinbrook in the New England Journal of Medicine. Towards the end of 2005, we noted that Eliot Spitzer had sued Guidant for fraud.  At the end of the year, more information appeared, suggesting that Guidant knew the ICDs were flawed, but continued to sell them. Still more appeared early in 2006. Then the business media became interested in the bidding war between Johnson and Johnson and Boston Scientific for Guidant, provoking a bit more interest in the tale of the suppression of data about the flawed ICDs.

Then all was quiet until 2009, when Guidant, now a Boston Scientific subsidiary, pleaded guilty to two criminal misdemeanor charges that it failed to properly notify the FDA about problems with its ICDs (see post here). Later, the Guidant subsidiary of Boston Scientific settled charges that it gave doctors kickbacks as part of a "seeding study" to use its devices. At that time, it came to light that Boston Scientific had made another settlement, in 2007, of civil lawsuits alleging that the company hid problems with its products (see post here).

More details about this guilty plea have just been reported.  As noted by the Minneapolis Star-Tribune,

A federal judge on Monday delayed a decision on whether to accept a $296 million plea agreement between the U.S. Justice Department and Boston Scientific Corp.'s Guidant subsidiary, which was charged with concealing critical safety information involving some of its top-selling heart devices.

If approved, the criminal penalty would rank as the largest ever in medical technology for a company that violated the federal Food, Drug and Cosmetic Act. But lawyers representing victims implanted with the potentially faulty devices threw a wrench into what was expected to be a routine hearing by demanding a piece of the settlement.

It appears that this settlement would not do any specific good for patients who claim to have been harmed by being implanted with a device that the manufacturer knew at the time to be faulty.

Also, the Star-Tribune noted:

Boston Scientific bought Guidant Corp., whose cardiac rhythm division is based in Arden Hills, for $27 billion in 2006. Though troubled, the division that makes pacemakers and defibrillators reported $2.6 billion in sales last year and still employs 2,000 people locally.

Thus, the financial penalty to be paid by Boston Scientific only would amount to little over ten percent of the yearly sales generated by the division which failed to disclose the faulty devices.

Adding to the sense that Boston Scientific and its leadership will feel little pain from the "largest criminal penalty ever assessed against a medical device company" (see this AP report) was this op-ed in the Boston Globe. It summarized just how richly the former CEO of Boston Scientific, Jim Tobin, who presided over the acquisition of Guidant and thus became responsible for its ethical lapses, and the current CEO, Ray Elliott have been compensated, in contrast to this supposedly large penalty. Re Tobin:

Tobin came to Boston Scientific in 1999 with similar instructions to clean up somebody else’s mess. He had to close facilities, ward off competitors, and, yes, settle patent lawsuits even back then. His carrot: A million stock options, a big deal in those days.

Tobin did fix some problems, and he brought the company’s new drug-eluting stent to market. Boston Scientific shares climbed, and he made about $39 million on options over the years. But Tobin also collected problems, the ones now in Elliott’s lap, and Boston Scientific shares fell again.

So here’s what the board did in February last year: It awarded Tobin 2 million more stock options, just a few months before announcing his retirement.

Adjusting for a stock split, the second option grant is the same size as what he got upon arrival.

And re Elliott:

Elliott, the man named as CEO of Boston Scientific Corp. last summer, became one of the best-paid chief executives in America in 2009. Separate national surveys published in the past week by The Wall Street Journal and The New York Times, although incomplete, come up with just one or two large-company CEOs with compensation packages that could outdo Elliott’s $33.5 million payday.

And see also this Health Care Renewal post. 

TheBoston Globe editorialist asked "so what exactly was the point of the second award [to Tobin]?"  Perhaps this question should be directed to the Boston Scientific board who approved it, and also approved Elliott's outsize pay package. 

The current board includes two co-founders of the company and the current CEO, two retired politicians, a few others with whom I am not familiar, but also two academics who may be quite familiar to Health Care Renewal readers. 

Recalling that Boston Scientific tried to plead guilty to charges of "making false statements ... to the FDA," and "failing to promptly notify regulators," it is striking that both these academics have had issues with transparency and free speech.  We just posted about the repeated failure of Prof Uwe Reinhardt to acknowledge the conflict of interests generated by his numerous memberships in the boards of health care companies, including Boston Scientific, when writing about health policy issues.  We have previously posted about the the conflicts of Marye Anne Fox, the Chancellor of the University of California - San Diego and hence leader of its medical school and academic medical center.  Chancellor Fox has just been criticized by FIRE (the Foundation for Individual Rights in Education) for allowing the silencing of a student publication and television station which had published or broadcast opinions that apparently offended university leaders.

So who in this sorry tale will stand up for quality care of patients?  The US Department of Justice is to be commended for pursuing deception by a large medical device company, but apparently could not bring itself to request a punishment for unethical practices likely to even inconvenience those responsible for the bad behavior.  The previous and current company CEOs have become quite rich without having to stand up for honesty, or patient safety.  The board of directors who are supposed to take responsibility for the overall direction of the company seem to have been happy just to go along.

As I have said before, endlessly, we will not deter unethical behavior by health care organizations until the people who authorize, direct or implement bad behavior fear some meaningfully negative consequences.  Relatively small fines imposed on large corporations pain workers on the line and stockholders while sparing the richly paid top hired management and the boards that will not reign them in. 

Real health care reform needs to make health care leaders accountable, and especially accountable for the bad behavior that helped make them rich.