Six Years Later, Ranbaxy - Oops, Daiichi Sankyo - Pleads Guilty to Adulteration, Pays $500 Million

It only took until 2013, but the US Food and Drug Administration finally secured guilty pleas and fines.  The basics are in an Associated Press story (via the Washington Post):

 A subsidiary of India’s largest pharmaceutical company has agreed to pay a record $500 million in fines and penalties for selling adulterated drugs and lying to federal regulators in a case that is part of an ongoing crackdown on the quality of generic drugs flowing into the U.S.

Federal prosecutors say the guilty plea by Ranbaxy USA Inc. represents the largest financial penalty against a generic drug company for violations of the Federal Food, Drug and Cosmetic Act, which prohibits the sale of impure drugs.

Note that the company pleaded guilty to criminal charges.

 The subsidiary of Ranbaxy Laboratories Limited pleaded guilty to federal criminal charges and the company separately agreed to resolve civil claims with all 50 states and the District of Columbia. The company had earlier set aside $500 million to cover potential criminal and civil liability stemming from the Justice Department investigation.

It admitted as part of the deal that it sold adulterated batches of drugs — including an antibiotic and generic versions of medications used to treat severe acne, epilepsy and nerve pain — that were developed at two manufacturing sites in India. 

Ironies

Note that this resolution has certain ironies.

Lateness

There is a saying that justice delayed is justice denied.  Note that it took six years to obtain the guilty pleas.  As noted by the AP,

 The problems were largely revealed by a whistleblower in a federal lawsuit filed in Maryland in 2007. 

Ambiguities about Responsibility

First, note that while all the headlines are about Ranbaxy, Ranbaxy is not really an independent company.  As reported by Reuters (and only by Reuters so far as I can tell at this time),

Ranbaxy ... [is] majority-owned by Japan's Daiichi Sankyo.

Second, as per the AP, see the comment made by the Ranbaxy CEO,

'While we are disappointed by the conduct of the past that led to this investigation, we strongly believe that settling this matter now is in the best interest of all of Ranbaxy’s stakeholders; the conclusion of the DOJ investigation does not materially impact our current financial situation or performance,' Ranbaxy CEO and managing director Arun Sawhney said in a statement.

Maybe there was something lost in translation, but the CEO certainly spoke as if someone else was responsible for the "conduct of the past."  Incidentally, it does not appear that so far any journalist has even sought comment from the people really in charge, at Daiichi Sankyo.

Third, just like many other cases we have reported before, no individual, especially anyone who authorized, directed, or implemented the bad behavior, was held legally responsible.  The cost of the fines will no doubt be spread among the corporate structures involved.  Since a company pleaded guilty, no individual pays a fine, much less goes to jail.

It does appear that when the settlement was first announced in 2011, a cut in compensation for top executives of Daiichi Sankyo was announced, but the cuts were temporary, and apparently in response to the immediate financial consequences of the settlement, not any larger implications.  See Bloomberg's report:

 Chief Executive Officer Joji Nakayama and board members will receive 5 percent to 30 percent less compensation for six months in response to the cut in the earnings forecast, Daiichi Sankyo said today. The company has lost about half its market value since agreeing to buy a majority stake in Ranbaxy, India's largest drugmaker, in June 2008. 

 The Contrast with the Case of the Adulterated Heparin

Note that in this case, there have been no allegations that patients were harmed by the admitted adulteration,  Per the AP:

 It’s not known whether the problems with the drugs led to any health issues.... The government’s allegations against the company make no claims that the drugs, whose strength, purity or quality differed from the specifications, harmed anyone.

In 2008, we began blogging about how  US patients started to get sick and die after being infused with heparin, the common anti-coagulant drug. As we have discussed repeatedly  (look here, and see the summary at the end of the post), Baxter International was selling contaminated heparin under its label which was made in unregulated workshops in China, and then transmitted through a complex chain of Chinese and US companies.

The AP article stated,

 The case comes as federal regulators and prosecutors focus attention on the quality of ingredients of generics and other drugs manufactured overseas, said Allan Coukell, an expert on drug safety at The Pew Charitable Trusts. He said the 2008 deaths linked to tainted batches of the blood-thinner heparin that were imported from China served as a 'wake up call' about just how much of the nation’s drug supply comes from overseas.

So perhaps this wake up call helped propel the current case against Ranbaxy, that is, Daiichi Sankyo.  However, since 2008, if there has been a criminal investigation of the tainted heparin, which appears to have been much more consequential, sometimes fatally so, to patients, the results have not been made public.  A cynic might note that the contaminated heparin was sold by a US based manufacturer of branded pharmaceuticals, not a foreign based manufacturer of generic drugs.

Summary

The most fundamental obligation of a drug company is to produce pure, unadulterated drugs.  The first attempts to regulate the drug industry in the US were meant to ensure that these companies fulfilled this obligation.  Yet now there is increasing evidence that the contemporary pharmaceutical industry has trouble with this most basic responsibility. 

As we discussed here, the managers of pharmaceutical companies have been swept up in a dominant business management fad, outsourcing, as a means to cut costs to the bone.  (It seems that most health care managers are also caught up in the larger rage for financialization, to emphasize short term revenue over all other concerns, including patients' and the public's health.)  As the New York Times reported  re the Ranbaxy case,

Others say the company’s problems highlight how little oversight federal drug safety officials have of overseas plants. Studies that have shown the F.D.A. inspects foreign generic manufacturing plants about once every seven to 13 years, compared with once every two years for domestic manufacturers. A law passed last year will eventually require the F.D.A. to apply the same standards when inspecting all manufacturing plants, regardless of location. But some worry that federal budget cuts are slowing the adoption of that law. 

'They just happened to stumble across the Ranbaxy problem at those two plants in India,' said Joe Graedon, a pharmacologist who runs a consumer Web site, the People’s Pharmacy, which has raised questions about the safety of generic drugs. 'Ranbaxy was the biggest and one of the best in India. What about all the smaller ones? What does that say about them?'

Again, all pharmaceutical companies, not just generic drug manufacturers, have seen fit to outsource much, if not most of their production.

In our rush to market fundamentalism, we seem to have deregulated, at least de facto, most aspects of health care.  We now cannot trust the drugs we take to have been made by the companies whose labels they bear, or to be pure.  We now cannot trust that regulators will find that out, or having found that out, will do anything about it in a timely manner. 

To repeatedly reiterate, as long as the leaders of health care organizations are not held accountable for the results of their decisions on health care quality, cost, and access (even in such extreme quality violations as those resulting in multiple patient deaths), we can expect continuing decisions that sacrifice quality, increase costs, and worsen access, but that are in the self-interest of the people making them.

To really reform health care, we must hold health care organizations and their leaders accountable (and not blame all the problems on doctors, other health care professionals, patients, and society at large).

- Roy M. Poses MD for Health Care Renewal 


Appendix - Heparin Case Summary

- We have posted several times, recently here about the tragic case of suddenly allergenic heparin. Although heparin, an intravenous biologic anti-coagulant, has been in use for over 70 years, serious allergic reactions to it had heretofore been rare. Starting late in 2007, hundreds of such reactions, and 21 deaths were reported in the US after intravenous heparin infusions.All the heparin related to these events in the US was made by Baxter International.

- We then learned that although the heparin carried the Baxter label, it was not really made by Baxter. The company had outsourced production of the active ingredient to a long, and ultimately mysterious supply chain. Baxter got the active ingredient from a US company, Scientific Protein Laboratories LLC, which in turn obtained it from a factory in China operated by Changzhou SPL, which in turn was owned by Scientific Protein Laboratories and by Changzhou Techpool Pharmaceutical Co. Changzhou SPL, in turn, got it from several consolidators or wholesalers, who in turn got it from numerous small, unidentified "workshops," which seemed to produce the product in often primitive and unsanitary conditions. None of the stops in the Chinese supply chain had apparently been inspected by the US Food and Drug Administration nor its Chinese counterpart. (See posts here and here.)

- We found out that the Baxter International labelled heparin was contaminated with over-sulfated chondroitin sulfate, a substance not found in nature, but which mimics heparin according to the simple laboratory tests used in the Chinese facilities to check incoming heparin. (See post here.) Further testing revealed that the contamination seemed to have taken place in China prior to the provision of the heparin to Changzhou SPL. (See post here.) It is not clear whether Baxter International or Scientific Protein Laboratories had inspected most of the steps in the supply chain, or even knew what went on there.

- The Baxter and Scientific Protein Laboratories CEOs did not seem aware of where they got the heparin on which the Baxter International label was eventually affixed. But one report in the New York Times alleged that Scientific Protein Laboratories would not pay enough for heparin to satisfy any sources other than the small "workshops."

- Leaders of all organizations involved, Baxter International, Scientific Protein Laboratories, Changzhou SPL, the Chinese government, and the US Food and Drug Administration, and the US Congress assigned blame to each other, but none took individual or organizational responsibility. (See post here.)  Note that SPL was recently bought out and taken private, making its current leadership even less transparent (see post here).  A 2010 inspection of an SPL facility by the FDA revealed ongoing manufacturing problems (see post here).

- Researchers (who turned out to have financial ties to a company which is developing an anti-coagulant drug that could compete with the heparin made by Baxter International) investigated the biological mechanisms by which the contamination of the heparin lead to adverse effects, but no one investigated further how the contamination occurred, or who was responsible. (See post here.)

- Hundreds of lawsuits against Baxter have now been filed, so far without resolution. (See post here.)  Efforts to make documents to be used in these cases public so far have not succeeded (see post here).

- A government report which attracted little attention warned of the dangers of pharmaceutical ingredients made in China and subject to virtually no oversight. (See post here.)

-  Despite requests from the US, the Chinese government did not investigate the production of the heparin that lead to the deaths (see post here.)

-  In February, 2011, a congressional investigation of the case was announced, but results are so far unavailable (see post here.)

-  In June, 2011, a jury returned the first verdict in a civil case about the contaminated heparin, awarding money from Baxter International and Scientific Protein Laboratories to the estate of a man who apparently died due to tainted heparin (see post here).

-  If there was a criminal investigation of the case, its results have not yet appeared. 

Amgen CEOs Prosper Despite (or Because of) Continuing Ethical Questions

This is becoming a familiar narrative on Health Care Renewal: top health care leaders continue to enrich themselves while their organizations' behavior continues to raise ethical questions.

For our latest example we return to the ongoing adventures of biotechnology giant Amgen.

CEOs Get Richer

An AP story (via the LA Times) documented the continuing enrichment of its current CEO:

Amgen Inc's new chief executive, Robert A. Bradway, received total compensation of $13.6 million in 2012, more than his predecessor, according to an analysis of a company regulatory filing.

Bradway, who was promoted from chief operating officer to chief executive May 23, saw his compensation nearly double from $7.1 million in 2011.

Last year Bradway, 50, was paid a salary of $1.26 million and received stock awards worth $8.57 million, incentive payments of $3.32 million and miscellaneous compensation totaling $420,059. That included nearly $314,000 in retirement plan contributions, $65,000 for personal use of company aircraft, more than $20,000 for his personal expenses and those of guests during business travel, and $15,000 for financial planning services.

The former CEO also did very well in his final year in office.

Former CEO Kevin W. Sharer, who stepped down from his seat on Amgen's board when he retired Dec. 31, received compensation totaling $9.13 million last year.

Sharer was paid a 2012 salary of $1.81 million and received stock awards worth $3.66 million, incentive payments of $2.31 million and miscellaneous compensation totaling $1.36 million. That included $801,000 in retirement plan contributions, nearly $262,000 for personal use of company aircraft, more than $38,000 for his personal expenses and those of guests during business travel, $15,000 for financial planning services and more than $255,000 for secretarial, information technology and travel support. Much of that support runs through 2017.

You would think they could both afford financial planning on their own.

Legal Settlements Pile Up

Keep in mind that as we discussed in late 2012 and early 2013, Amgen pleaded guilty to a charge of misbranding for promoting its epoetin drug Aranesp for unapproved indications, and settled allegations of giving kickbacks to physicians to increase the drug's use, among other charges, for a total of $762 million.

Furthermore, soon after the CEOs' compensation was announced, tiny articles in local media announced two more settlements by Amgen.

A small AP story (again via the LA Times) noted another settlement regarding allegations of unethical promotion of Aranesp:

The US Department of Justice said Tuesday that biotech drug maker Amgen Inc. will pay $24.9 million to resolve claims it paid kickbacks to increase sales of its anemia drug Aranesp.

The Justice Department said Amgen paid kickbacks to Omnicare Inc. and PharMerica Corp., which sell drugs to long-term care providers such as nursing homes and hospitals, and Kindred Healthcare Inc., which runs long-term acute-care hospitals and nursing and rehabilitation centers.

Amgen wanted the companies to switch Medicare and Medicaid beneficiaries to Aranesp from competing drugs and tried to get consultant pharmacists and nursing home staffers to encourage the use of Aranesp in patients who didn't have anemia associated with kidney failure, the Justice Department said.

The Thousand Oaks company made payments based on the sales volume or market share of Aranesp, the agency said.

Then a few days ago, a story in the San Fernando Valley Business Journal described yet another Amgen settlement:
 

Thousand Oaks biotech Amgen Inc. has reached an $11 million settlement with 36 states over charges it inflated pricing data and caused Medicaid to overpay for six of its drugs, the New York State Attorney General said Monday.

The charges allege Amgen inflated cost benchmarks for drugs used to treat kidney disease and cancer patients. The drugs involved were Aranesp, Enbrel, Epogen, Neulasta, Neupogen and Sensipar. Those benchmarks are used to set pharmacy reimbursement rates for drugs dispensed to state Medicaid beneficiaries.

Keep in mind that all these recent settlements involved allegations of efforts made to oversell Aranesp.  As we noted previously, this drug carries a "black box" warning about serious and potentially fatal side effects.  The official Aranesp label states (in a black box warning, in capital letters):

 ESAs INCREASE THE RISK OF DEATH, MYOCARDIAL INFARCTION, STROKE, VENOUS THROMBOEMBOLISM, THROMBOSIS OF VASCULAR ACCESS AND TUMOR PROGRESSION OR RECURRENCE

So the overselling of Aranesp not only appeared unethical, it seemed to put short term revenue ahead of patient safety, and could conceivably have lead to patients dying so that the company could make more money.   

Summary

So while the evidence mounts that health care organizations, and in this case, Amgen, continue to aggressively pursue short-term revenue even is their means of doing so endangers patients.  However, legal efforts to challenge such reckless practices continue to fail to impose any negative consequences on those who personally profited from this behavior, and particularly those corporate executives who authorized and directed the bad behavior.  Moreover, while such evidence mounts, the top leaders of these organizations continue to pile up riches.  It seems that CEOs of health care organizations continue to prosper despite, or perhaps because of their organizations' continuing unethical and dangerous behavior.

As we have said far too many times, 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. Real health care reform needs to make health care leaders accountable, and especially accountable for the bad behavior that helped make them rich.

Deadly Over-Doses and Private Equity - the Case of Bain Capital's Methadone Clinics

Some reporting by Bloomberg provides more evidence about what happens when direct care of the most vulnerable patients is commercialized.  The vulnerable patients in this case were narcotic addicts.

By way of introduction, one method of treating narcotic addiction is the use of methadone.  Methadone is a narcotic that may block the "high" produced by other narcotics and thus may lead to the abuse of these drugs.  Because methadone is long-acting and can be given orally in liquid form, methadone clinics traditionally provided patients one dose a day which they swallowed on the spot.  The methadone would presumably block their craving for other narcotics for that day, and the method of administration would prevent diversion of the drug.  Methadone clinics became more prevalent starting in the 1960s, and like most "health care provider organizations," as we now call them, were then largely non-profit.

On a personal note, in the 1980s, I was the internal medicine physician for a non-profit hospital based methadone clinic designed for patients who had become addicted to prescription narcotics.  It was a challenging task, but the challenges seemed manageable.  That was then.

Nowadays, methadone clinics are more likely to be for-profit.  In this brave new world of for-profit "health care delivery," there may be problems unlike those seen "back in the day."   For example, Bloomberg just reported on a case with a distinctly colorful title

Dead Man Spurs Methadone Probe at Bain’s CRC Clinic in Baltimore 

Maryland state regulators are investigating an addiction-treatment clinic owned by Bain Capital Partners LLC after the methadone-related death of a Baltimore man. 

The probe is focused on the Pine Heights Treatment Center in Baltimore, one of dozens of clinics operated by Bain’s CRC Health Corp., the largest methadone-treatment provider in the U.S. It was triggered by a complaint from the public, said Dori Henry, a spokeswoman for the state Alcohol and Drug Abuse Administration. She declined to comment on the investigation’s details.

The complaint alleges that Warren Lumpkin, 34, a forklift operator, died on Jan. 4 after ingesting methadone that was given to him by a CRC patient, according to a copy obtained by Bloomberg News. An autopsy found that 'methadone intoxication' contributed to his death, records show.

Lumpkin’s ex-wife, Sabrina M. Lumpkin, who filed the complaint, said in it that he wasn’t a patient at the CRC clinic. He had a friend who was, and that friend gave half a dose of methadone from the clinic to Lumpkin, according to the complaint. 

Note that "back in the day," such an event would have been nearly impossible.  As noted above, patients were given a cup of liquid containing their daily methadone dose, and drank it under observation.   Practically, they could not "cheek" or otherwise divert the drug.  Of course, that approach required personnel to observe each patient each day.  Paying those personnel made the operation more expensive.  "Back in the day," though, non-profit hospitals and clinics were willing to provide the service in the interest of making sure the patients, and only the patients got the prescribed treatment.

Things may be different when methadone clinics are run for a profit.  A Bloomberg investigative report published in February looked into the operations of the company that owned the clinic in Maryland.  That too had a provocative title and started with a similarly disconcerting case.

Drug Users Turn Death Dealers as Methadone From Bain Hits Street 

 After Jennifer Vanlieu turned to methadone treatment to beat an addiction to heroin and pain pills, she morphed from drug user to convicted drug dealer.
 
Vanlieu said she got a carryout methadone dose at a clinic operated by CRC Health Corp. in Richmond, Indiana, in March, 2010, and then gave about 15 milligrams to her friend Carissa Plemons. Plemons died hours later, after ingesting a lethal mix of methadone and other drugs, according to police reports.

Take-home methadone -- doses patients carry out instead of taking at clinics -- enabled the abuse, said Vanlieu, 26, who was sentenced to six years in prison for dealing the drug to Plemons. While she didn’t sell it to her friend, she said in an interview that other clinic patients often resold their take- homes. CRC is owned by Boston-based Bain Capital Partners LLC and is the largest U.S. provider of methadone treatment.

'Some would sell it in the parking lot,' she said. 

As in the first case, unlike the process "back in the day," now patients, who are almost all presumably narcotic addicts, may be given multiple doses of liquid methadone to take home.  They are no longer required to take a daily dose of methadone under observation.  As the case above illustrates, it is all too easy to divert take home doses of methadone.  While methadone can be used to block the effects of other narcotics, it can also be abused.  Obviously, as in the cases above, abused methadone can cause a lethal overdose. 

Wide Use of Take-Home Methadone

The Bloomberg report found multiple instances in which CRC Health clinics handed out multiple take-home methadone doses apparently without proper consideration of the risk or supervision of the patients.

 In states where CRC has had its highest patient counts -- Indiana, West Virginia, California and Oregon -- available data and interviews show the company tries to provide take-home packages, which range from one dose to as many as 30, more often than other clinics.

In addition, 

The Richmond, Indiana, clinic gave take-home methadone to a patient who flunked a drug test, a January 2012 audit found. The company’s Williamson, West Virginia, clinic didn’t immediately revoke take-homes from a patient who had two positive drug tests in 2010, records show. In 2011, inspectors found no evidence that a physician at CRC’s clinic in Renton, Washington, used 'good clinical, judgment' in giving patients carryout doses.

A CRC center in Chattanooga, Tennessee, failed to supervise take-home doses properly in a case 'clearly indicative of drug diversion,' state authorities found in June 2011. The company’s clinics in Claymont, Delaware, and Coatesville, Pennsylvania, were faulted in May 2012 and October 2010, respectively, for giving carry-outs to patients who missed required counseling, records show.

As for the spot-checks Herschman described -- they hardly ever happened at CRC’s clinic in Goldsboro, North Carolina, said Liaudaitis, the former counselor. 

Furthermore,

In Indiana, CRC’s five clinics served 69 percent of methadone patients in 2011, while distributing 96 percent of the take-homes tracked by state records. Patients of CRC’s dozen California clinics received carryout packages of as many as 30 doses at a rate twice that of all others. In Virginia, 74 percent of patients at CRC’s three clinics got at least one take-home dose a week in August 2012, while 47 percent of patients at all other clinics did, state records show. 

The Business Model Behind Take-Home Methadone

So why would a methadone clinic hand multiple doses of an abusable narcotic to narcotic abusers?  The Bloomberg article went on to document some possible reasons which ultimately have to do with the business model of for-profit methadone clinics.

First of all, providing multiple doses of methadone requires less time from clinic personnel, which is handy when the clinics may be under-staffed by over-worked poorly paid personnel.  

'That was the culture -- keep the census up,' said Mike Liaudaitis, who worked as a counselor at CRC’s clinic in Goldsboro, North Carolina, from mid-2009 until early 2011. He recalls being swamped with a 64-person caseload that exceeded the state’s limit of 50. 

Also,

'Clearly the company is saving money if they’re distributing multiple take-home doses at one time,' said West Virginia Delegate Don Perdue, a Democrat who has pursued stricter oversight of for-profit clinics. 'They don’t have to have as many staff handing out the merchandise.'

In particular,

the Goldsboro clinic -- like others described by regulators and former CRC employees in Indiana and West Virginia -- was frequently understaffed, Liaudaitis said.

Since Jan. 1, 2009, CRC’s clinics haven’t met staffing standards more than 50 times, regulatory records from 15 states show. Clinics were cited 80 times for failing to document that they gave patients enough counseling. In response, the company agreed to hire more, recruit more aggressively and increase supervision. Competition for qualified workers is intense, CRC said in its 2011 annual report.

CRC didn’t pay well enough to attract or keep experienced counselors, said Malaysia Williams, who worked at its clinic in Huntington, West Virginia, from June 2009 through March 2010. 'Nobody stayed there,' she said. 'It paid poorly.'

Williams got $13 an hour, she said -- about the same amount other former counselors reported. That’s roughly $27,000 a year. 

There is evidence that under-staffing, under-payment of personnel, and the wide use of take-home methadone lead to big increases in short-term revenue for CRC Health, the for-profit corporation running the clinics.

 Until recently, there was little difference between the operations of for-profit and non-profit methadone clinics, said Thomas D’Aunno, a professor of health policy and management at Columbia University who has tracked the treatment centers for years. That changed in 2011 survey data, which showed 'significant differences,' he said: For-profit clinics had fewer staffers than public clinics.

As Williams struggled to catch up in Huntington, the clinic pushed its revenue up almost 8 percent to $5 million in 2010 -- while expenses increased less than 1 percent to $2.6 million, according to state regulatory documents. 

Private Equity's Take Over of Methadone Clinics

The potential for big revenues has drawn private equity into the world of methadone maintenance for the treatment of narcotic addiction.

 Nurtured by government spending, methadone clinics spread nationwide in the 1960s and ’70s until strapped state and local governments began decreasing their outlays. By 2010, for-profit providers controlled 52.8 percent of the 1,200 U.S. clinics.

Over the past seven years, private equity firms have invested more than $2.2 billion in substance-abuse treatment and behavioral health companies in 62 deals, according to PitchBook Data Inc., a Seattle-based research firm.

Addiction-treatment companies are 'some of the most sought-after -- and valuable -- acquisition candidates in health care,' partly because of profit margins that can top 20 percent, according to the Braff Group, a Pittsburgh-based mergers and acquisitions advisory firm.

 As it turns out, CRC Health was acquired by one of the more notable private equity firms.

Bain Capital, the private equity firm co-founded by former Republican presidential candidate Mitt Romney, paid $723 million for CRC in 2006, corporate filings show. Romney, who left Bain in 1999, had no input in its investments or management of companies after that, he has said.

Still, Romney reported last year that he owned more than $1 million worth of a Bain fund that holds most of CRC’s shares. He reported receiving between $100,000 and $1 million in dividends, interest and capital gains from that holding, as well as income from two other Bain funds with interests in CRC, according to the financial disclosure he filed with the U.S. Office of Government Ethics in June. Bain executives declined to comment, said Alex Stanton, a spokesman. Representatives for Romney didn’t respond to requests for comment.

 CRC has reported paying Bain about $15.4 million in management fees along with $7.2 million in fees related to the merger since 2006. The company’s revenue more than doubled to $446 million in 2011 from $209 million in 2005. Methadone clinics generated more than a quarter of the 2011 revenue, $123 million.

Note that last year, when Mr Romney was running for the US Presidency, and hence his ties to Bain Capital were particularly newsworthy, several investigative reports about care at Bain owned health care provider organizations were published.  We posted about issues at another CRC Health operation, Aspen, which operates in -patient treatment centers for psychiatric patients.  Investigative reporting about that part of CRC Health also suggested that the company was putting short-term revenue ahead of patient welfare.  We also posted about issues at HCA, a for-profit hospital chain partially owned by Bain, which again suggested revenue came before patients. 

In one sense, this should be no surprise, since the business model for private equity is all about extracting the most money in the shortest time for acquired corporations.  (Look here for more details.)

Summary

We now have more evidence that patients "cared for" directly by for-profit corporations, especially those owned by private equity firms, do not do well.  Meanwhile, the top executives of these firms do exceedingly well.

We have noted how health care organizations have increasingly been "financialized," lead by executives who put short-term revenue generation ahead of all other goals, including good patient care. Furthermore, hospitals are increasingly likely to be formally for-profit, and hence likely to be lead by such executives. Worse, hospitals are increasingly likely to be owned by private equity firms, further increasing the emphasis on short-term money making. Even worse, physicians are now more frequently employed by such organizations, which may pressure them to do what it takes to increase revenue, no matter what the effect on patients' and the public's health.

The probably effects on the quality of care, access, and costs are obvious.

In my humble opinion, before the health care bubble bursts, we need to challenge the notion that direct health care should ever be provided, or that medicine ought to be practiced by for-profit corporations. Before market fundamentalism became so prominent, many states prohibited the corporate practice of medicine, and the American Medical Association forbade the commercialization of medicine.

 It is time to heed that wisdom. I submit that we will not be able to have good quality, accessible health care at an affordable price until we restore physicians as independent, ethical health care professionals, and until we restore small, independent, community responsible, non-profit hospitals as the locus for inpatient care.

 True health care reform will require an end to market fundamentalism in health care.