The Adventures of the Purloined Bequest, the Resident Heiress, and the Hidden Hospital System

The game is afoot again.  A series of recent articles in the media described a series of cases whose mysterious interrelationships Sherlock Holmes might have appreciated.

The Purloined Bequest

A singular article in the Wall Street Journal, entitled "Judge Rules in Case of Fortune Tied to Buffett," first made this case explicit, but some background is required to understand it.

The story focused on Long Island College Hospital, in Cobble Hill, Brooklyn, New York.  [Full disclosure: this story got my attention particularly because I grew up nearby in Brooklyn, and was born at that hospital, which was also the local hospital my parents often used.]   LICH has long been the major community hospital for downtown Brooklyn.

The story appeared to begin in 2011, per the WSJ,

 In 2011, Judge [Carolyn] Demarest approved the merger of LICH and SUNY Downstate on the condition it would keep the charitable hospital going. As part of the deal, the hospital transferred properties to Downstate estimated to be worth as much as $1 billion collectively, according to a previous court order.

The merger was supposed to keep LICH in operation as a community hospital and provider of acute care to the poor.  However, things did not work out.

 This year, however, Downstate announced plans to shut the hospital, leading to protests from Brooklyn residents and local politicians.

'It is clear that the premise upon which this Court authorized the transfer of assets has been defeated,' Justice Demarest wrote in her Aug. 20 decision, adding that Downstate had breached its contractual obligations. She cited a 'legal and moral responsibility' to correct her earlier error in approving the merger.

She directed Downstate to return all assets to the hospital's previous owner, Continuum Health Partners Inc., which subsequently said it couldn't take the reins. The court is expected to review other proposals.

The judge also discovered that hospital management had been raiding an large endowment fund intended for other purposes,

A New York state judge ruled this week that a struggling Brooklyn hospital must repay tens of millions of dollars it borrowed from an endowment set up by early investors with billionaire Warren Buffett.

The ruling aims to rectify the previous use of the money by Long Island College Hospital, which is hurting financially and was scheduled to close. Mr. Buffett in July told The Wall Street Journal that his late friends, Donald and Mildred Othmer, would have felt 'betrayed' at the way the funds were spent.

Apparently,

 The Othmers, natives of Omaha, Neb., who later lived in Brooklyn, were longtime friends of Mr. Buffett's, and each invested $25,000 with the billionaire in 1961.

When they died—he in 1995 and she in 1998—they gave away a fortune estimated at $780 million, including the $135 million permanent endowment for the hospital. The Othmer wills stipulated the interest on the endowment could be used for operating expenses but the principal should be held 'in perpetuity.'

In a series of court-approved transactions that began in 2000, the hospital borrowed from the funds repeatedly to meet short-term obligations and cover debts.

The hospital argued that the money was necessary to keep the hospital afloat, which it said the Othmers would have wanted. The transfers depleted most of the endowment, a result that came to light after the Journal wrote about the situation in July.

New York Times and Brooklyn Daily Eagle articles focused on the question of whether SUNY/ Downstate intended to close the hospital so it could sell its apparently valuable real estate assets in a now fashionable neighborhood, but not on how the hospital fell into these dire straits.


There seem to be some lingering questions -

-  If the losses and borrowing began in 2000, or earlier, who was responsible for them, given the current owners have only been in place since 2011?

Note that the phrasing in the article above ("the hospital argued that the money was necessary to keep the hospital afloat") suggested that before SUNY took over, the hospital was independent.  However, the article mentioned, albeit only briefly in passing, that the hospital had a previous owner, Continuum Health Partners Inc.

-  How were the losses explained when they occurred, and what was the rationale for  borrowing from restricted endowment as a response, instead of, for example, direct efforts to minimize losses or increase capital and revenue?

Note that the article implied that when SUNY acquired LICH, it acquired some very valuable real estate.  Why did the previous management of LICH not consider selling off some of this real estate to resolve its debts?

-  Did mismanagement of the hospital lead to excess losses, and did borrowing funds from the principle of the hospital's endowment to offset these losses amounted to more mismanagement?
 

Meanwhile, a second even more bizarre story about another New York City hospital almost simultaneously got media attention.

The Resident Heiress

The case first made it into the media in 2012, when the tabloid New York Post reported,

Beth Israel Medical Center milked reclusive copper heiress Huguette Clark for more than $13 million in fees, donations and even a priceless painting during her 20-year stay as a patient — and greedy executives angled for $125 million more, her relatives allege in shocking new court filings over Clark’s estate.

The alleged shakedown was illuminated in an e-mail in which hospital board member and former CEO Dr. Robert Newman referred to Clark as 'the biggest bucks contributing potential we’ve ever had,' according to court papers.
He told a colleague her 'potential has been overwhelming[ly] unrealized.'

At one point, he suggested to Clark that she pay nearly one-third of her estimated $400 million fortune to keep the now-shuttered Beth Israel North on the Upper East Side open so she could keep living in the room she had refused to leave for 15 years despite being in good physical health, the papers allege.

But instead of addressing Clark’s crippling anxiety, hospital honchos played on her fears, engaging in 'a concentrated effort, orchestrated at the highest board and executive levels,' to get her money, court documents obtained by The Post allege.

Clark’s death last year at age 104 set off a battle over her estate. Her distant relatives claim lawyer Wallace Bock, accountant Irving Kamsler, private-duty nurse Hadassah Peri and the Beth Israel administrators manipulated the feeble Clark for her money.

The nurse, who received cash and gifts from Clark, stands to inherit nearly $34 million and Clark’s priceless doll collection in the now-disputed will. Beth Israel is to get $1 million.

The Paris-born Clark inherited her money from her father, William, a rail and mining baron and former US senator whose wealth rivaled the Rockefellers’.

She went to Beth Israel North in 1991, when she was 85, after a doctor found her emaciated and ill in one of her three sprawling Fifth Avenue apartments.

She spent the last two decades of her life in dismal hospital rooms with the shades drawn and door shut even though there was 'no medical basis for keeping her' past the first few months, documents show.

Clark was 'the perfect patient' for the hospital, her relatives charge, noting, 'She required no medical care, possessed enormous wealth, paid over $800 a day for her room, and became progressively more dependent on the hospital.'

'Beth Israel had a plan to subtly, but ever so persistently, court Huguette for the purpose of garnering gifts and ultimately do a will in favor of the hospital,' court papers claim.

This case also seems to be about wealthy donors and hospital executives.  Yet what makes it most bizarre are the circumstance of Ms Clark's hospital stay.  As a former intern, resident, fellow, and teaching hospital attending, I can attest that most hospital administrators are concerned, if not obsessed, with discharging patients quickly.  Hospital stays are currently paid by most insurers according to the patients' diagnoses, but not their length of stay.  Long stays cost hospitals money.  Furthermore, unnecessarily long stays use up resources that could better serve acutely ill and injured patients.  Yet Ms Clark stayed an astounding 20 plus years, without any obvious medical rationale.  No hospital official contested the fact that Ms Clark stayed that long in the NY Post article.

Furthermore, in a 2013 New York Times article, the hospital's lawyer, defending a parallel attempt to recover the money donated to the hospital, wrote

 Beth Israel had provided Mrs. Clark with 'a well-attended home where she was able to live out her days in security, relative good health and comfort, and with the pleasures of human company.' Besides, he said, the amount of money she gave to Beth Israel was “not very large considering her vast wealth.”

Furthermore, a member of the Beth Israel fund-raising staff wrote in a memo disclosed during litigation,

 She was well enough by then to go home to her spacious apartment at Fifth Avenue and 72nd Street, overlooking Central Park, Ms. [Cynthia L] Cromer said, but 'she asked if she might stay in the hospital longer: she feels comfortable and safe, and her apartment is being renovated.'

Never mind that the fundamental mission of the hospital is to provide acute care for the sick and injured, not to provide comfortable retirement housing. But hospital managers are apparently on record acknowledging that the hospital was basically providing Ms Clark with services that are normally available in a retirement community, not services that acute care hospitals normally provide anyone   There is no evidence that the hospital ever provided similar services to any other patients. 

The obvious mystery, then, is

- why no one at the hospital, no doctor, nurse, or manager, or no visitor, regulator, accrediting agency, insurer ever questioned why the hospital was providing a long-term residence to a former patient?

No answer to the question has appeared in any coverage I have seen of this case, including a September, 2013,.NY Times followup article on the occasion of the case nearing trial. 

In the absence of a creditable explanation for this strange distortion of the hospital mission,

- is there any other conclusion than that its purpose was to extract a large amount of money from a vulnerable, rich, but no longer acutely ill former patient?

This would suggest an unusual but monumentally unethical kind of hospital mismanagement.

So we have two recent stories about major, unusual, apparently severe mismanagement by hospital executives.  These stories were reported as if they were independent.

However, buried in the original NY Post article, but unmentioned in either of the major NY Times articles, however, was a hint of how this case and that above of the purloined inheritance appeared to be linked.

The Hidden Hospital System

The NY Post article referred thus to the Beth Israel CEO who allegedly pushed Ms Clark for contributions,

 Newman, former CEO of Continuum Health Partners, Beth Israel’s parent organization, took the unusual step of offering to help Clark complete a will so 'some faceless bureaucrat of the government' wouldn’t get his hands on her estate, court papers say.

Quick Watson, did you see that?

Continuum Health Partners was the "parent organization" of Beth Israel Hospital during at least some of the time Ms Clark was in residence there.  Continuum Health Partners also was the "previous owner" of Long Island College Hospital during at least some of the time it apparently was suffering large losses and its endowment was being depleted.  So were both these stories really about the same organization, the same hospital system?

Digging a little further, per its own LinkedIn page,

 Continuum Health Partners, Inc. was formed in 1997 as a partnership of three venerable institutions — Beth Israel Medical Center, St. Luke's Hospital, and Roosevelt Hospital.

So while the hospital system did not exist when Ms Clark first entered Beth Israel Hospital, the heiress' "care" was under the control of the organization apparently from 1997 to the day she died.

Furthermore, as noted in a 2011 Chronicle of Higher Education article, available from Innovative Resources Group Inc,

 If there was a honeymoon after the merger of Long Island College Hospital, in Brooklyn, with Continuum Health Partners, in New York in 1998, few remember it. The bickering began early and dragged on for years, but divorce didn’t seem inevitable until the doctors went public.

So the hospital system called Continuum Health Partners took over Long Island College Hospital in 1998 and held it for 13 years.  Furthermore, apparently LICH was part of Continuum Health Partners during the time when its losses rose and the Othmer bequest was depleted.  For example, from the CHE article,

  Several physicians told a crowd gathered outside the hospital’s entrance in 2008 that Continuum had withheld money from the 150-year-old institution, needlessly cutting patient services and endangering the hospital’s future.

Also in 2008, the Brooklyn Heights Blog reported this response to a question about finances from the Continuum Health Partners CEO, Stanley Bazenoff,

 LICH faces an immediate fiscal crisis. Unless action is taken quickly, he said, LICH will not have cash on hand to meet payrolls and other current expenses. He ascribed LICH’s problem to three factors. First, the hospital carries a heavy debt burden–approximately $150 million in long-term bonds financed through the New York State Dormitory Authority and $25 million in short-term commercial paper–which results in annual debt service (including interest and amortization) cost of approximately $22 million. Second, LICH has an operating deficit, presently about $40 million on an annual basis,...

Denis Hamill, a columnist for the New York Daily News, made this accusation in a February, 2013, editorial:

Under Continuum, the once-profitable LICH ran up $300 million in debt from pure administrative malpractice. And then Brezenoff brokered the smelly SUNY Downstate merger, with state taxpayers absorbing the $300 million debt.

So it certainly looks like there is an argument that Continuum Health Partners, under its CEO, Stanley Bazenoff, was responsible for the manipulation of pseudo-patient and rich heiress Hughette Clark to secure a large donation, and the nearly simultaneous depletion of Long Island College Hospital's finances, including a large bequest that was supposed to be untouchable.

Not surprisingly, Mr Bazenoff, described by Mr Hamill as

a ruthless powerbroker ... whose nickname at LICH is Darth Vader 

and

a quintessential member of what muckraker Jack Newfield called The Permanent Government of New York  

also seems to have gotten rich in his position as leader of Continuum Health Partners, along with his other top managers.   The blog LICH Watch found these results from the system's 2009 IRS 990 report,

here are some highlights, figures for Continuum employees who, hm, earned more than a million dollars for the year:

Chandra Sen, MD, $2,109,204
Stanley Brezenoff, $2,014,413
Kathryn C. Meyer, Esq. $1,049,807
John Collura, $1,307,556
Gail Donovan, $1,365,354

 A 2011 New York Post article stated,

 Stan Brezenoff, CEO of Continuum Health Partners, overseeing such hospitals as Beth Israel, St. Luke’s and Roosevelt, pulled in about $3.5 million. 

 So this leads to yet more mysteries, first about the individual cases when viewed as occurring within one large hospital system:

-  Why were Long Island College Hospital's finances addressed as if it were an independent entity, when it was in fact just a subsidiary of Continuum Health Partners? 

-  Why was Continuum Health Partners role in the hospital's enlarging debt and depleting endowment not discussed?

Similarly,

-  Why was the bizarre treatment of Hughette Clark attributed to "Beth Israel executives," but not Continuum Health Executives, when Beth Israel was also just a subsidiary of Continuum Health? 

Then there is the larger mystery,

-  Why have these two cases been discussed as completely independent, when they appear to be part of a pattern of conduct by Continuum Health Partners management?

Summary

While we continue to see cases, some amazingly bizarre, suggesting mismanagement and unethical management of hospitals and hospital systems, there seems to be an amazing lack of curiosity about how they occurred and what their implications may be.  This lack of curiosity is so profound that no one seems to have noticed that two vivid and strange cases getting prominent media notice in the same city and the same time involved the same large hospital system. 

Health care organizations seem to become ever larger.  Such enlarging organizations can concentrate their power, dominate their "markets," and hence increase their revenues and the compensation of their top hired managers.  Without any countervailing force, they push seemingly inexorably towards oligopoly and then monopoly.

Furthermore, the cases of the purloined bequest and the resident heiress show that ever larger organizations with ever more complex structures are ever better at hiding the accountability of their top hired managers.  We have previously noted, e.g. a case in which a subsidiary of GlaxoSmithKline pleaded guilty to crimes involving production of adulterated drugs, thus shielding GSK and its management from responsibility, how subsidiaries of large corporations may plead guilty to crimes, thus absolving their parent organizations and its managers of any blame.

In the current cases, it seems that somehow a large health care system was able to avoid accountability by letting its component hospitals appear to be independent.  Yet it is the larger system that was booking the revenue and making millionaires out of its hired managers.  This seems to show how concentration of power into ever more complex organizations can be used to enhance the anechoic effect, making mismanagement and those accountable for it ever more obscure.

As we have said until blue in our collective faces, if we do not hold the real leaders of health care accountable for their actions and the actions of their organizations on their watches, we can expect continued misbehavior, and hence continued health care dysfunction.  

It's appropriate to conclude with this, a video of Jeremy Brett in A Scandal in Bohemia, from the first season of the show as first shown on PBS.

63% of Physicians are "Very Enthusiastic" about "Limiting Corporate Influence on Physician Behavior," but Will Anyone Notice?

On Health Care Renewal, we have noted how the direct care of patients in the US is increasingly in the hands of large corporations, often for-profit.  We have noted the plight of the corporate physicians who swore oaths to put patients first, and now report to managers who put revenue first.

Health Care Renewal was hardly the first to raise these issues.  For years, the renowned editor emeritus of the New England Journal, Dr Arnold Relman, has been warning about the effects of the commercial practice of medicine, which once was illegal in most US states, and until 1980 was condemned by the American Medical Association (look here).

Yet in a world in which market fundamentalism (or economism, or neoliberalism) is increasingly dominant, there is little room for the view that turning health care into a business, and having the new health care businesses lead by people who are only interested in increasing short term revenue (financialization) and increasing their own compensation might be bad for patients' and the public's health.

However, close reading of a recent article suggests that many physicians "get" this problem, although may be reticent about protesting it.  

Summary of the JAMA Article

Tilburt et al authored an article published in July, 2013 that focused on physicians views about "controlling health care costs."(1)  They sent a survey to 3900 randomly chosen physicians less than 65 years old and in active practice.  2556 (65%) responded.

The survey included questions about who should be responsible for reducing health care costs, and about the physicians' enthusiasm for various means of cutting costs.  The results that got the most publicity were that physicians thought others (trial lawyers, health insurance companies, pharmaceutical and device manufacturers, hospitals and health care systems, patients, and government) were more responsible for controlling costs than physicians. 

Nonetheless, the physicians were relatively enthusiastic about potential cost control measures that would improve "quality and efficiency of care," for example, promoting 75% were very enthusiastic about continuity of care, 69% about promoting chronic disease care coordination, and  70% about "rooting out fraud and abuse."  They were also relatively enthused about "improving conditions for evidence-based decisions," for example, 51% were very enthusiastic about "expanding access to quality and safety data," and and 50% about "promoting head-to-head trials of competing treatments" (also known as a type of comparative effectiveness research).

Strikingly, however, 63% of physicians were "very enthusiastic" about "limiting corporate influence on physician behavior."  The article did not further explain that item.

An Almost Unnoticed Result

The article's results section noted "some or strong enthusiasm for improving conditions for evidence-based decisions," including "limiting corporate influence on physician behavior." It included no further comments on this issue.

The public discussion it generated largely ignored physicians' views on corporate influence..

An accompanying editorial by Dr Ezekiel Emanuel and Mr Andrew Steinmetz (2) called the survey's findings "discouraging" and chided physicians for not having an "all hands on deck" approach to controlling health care costs, stating they "must lead" on this issue, because they "captains of the ship."   It ignored the notion that the physicians may have  thought that their first responsibility was to "individual patients best interests," and thus controlling costs (especially costs that do not accrue directly to patients) should be a secondary concern.  It also belittled their enthusiasm about curbing "fraud and abuse," implying that it was "sufficiently vague" that it "may offer only modest improvements but certainly will not transform the health care system."   Instead, Emanuel and Steinmetz wanted physicians to support six strategies for transforming health care delivery, without citing evidence in support of these strategies.  The Emanuel and Steinmetz editorial ignored the physicians' views on corporate influence.


A post on the In My Humble Opinion blog by Dr Jordan Grumet in turn wondered why physicians should support "Ezekiel's fantasies about healthcare [which] are unsubstantiated."  Dr Grumet decried how particularly primary care physicians have been marginalized, and suggested that if Emanuel and Steinmetz want physicians to act like the captains of the ship they perhaps should not dictate their navigation.  But Dr Grumet apparently did not notice that physicians may realize that their captaincy has been challenged by corporate influence.  .   

Media coverage in, for example, the Los Angeles Times, Fox News, and the Pioneer Press focused on the question of whether physicians were denying a responsibility to control costs, and whether that responsibility was really theirs.  It did not comment on the issue of corporate influence.

However, so far the striking result that a large, well conducted survey showed that the majority of physicians support limiting corporate influence on their behavior remains almost completely unnoticed. 

Summary

We now have some reasonably good data suggesting that the majority of physicians are very troubled by "corporate influences" on them.

It could be that they are troubled by the most direct corporate influences, the practice of medicine by physicians who are employees of corporations, often large, and for-profit.

Dr Arnold Relman reminded us that physicians used to shun the commercial practice of medicine (look here).  Yet now increasing numbers of physicians are employees of for-profit corporations.  Physicians and other health professionals who sign on as full-time employees of large corporate entities have to realize that they are now beholden to managers and executives who may be hostile to their professional values, and who are subject to perverse incentives that support such hostility, including the potential for huge executive compensation.  It is not clear why physicians seem to be willing to sign contracts that underline their new subservience to their corporate overlords, and likely trap them within confidentiality clauses that make blowing the whistle likely to lead to extreme unpleasantness.

It could also be that physicians are troubled by slightly less direct corporate influences.  We have blogged about 
- suppression and manipulation of clinical research by corporations sponsoring such research to assess their own products and services
- deceptive corporate practices like stealth marketing of stealth lobbying
-  financial arrangements among physicians (and other health professionals) and health care corporations (e.g., drug, biotechnology and device corporations) which often seem to deliberately produce conflicts of interest meant to help market products and services, particularly the use of paid "key opinion leaders" as marketers
- institutional conflicts of interest that involve academic institutions, disease advocacy organizations, and other non-profit groups in corporate marketing and public relations

 Furthermore, stories about and criticisms of these issues remain markedly muted in the media, and even more muted in medical and health care scholarship and scholarly journals.  We have attributed this anechoic effect to individual and institutional conflicts of interest, fear of offending conflicted friends, relatives, colleagues and supervisors, and fear of offending the rich and powerful.

 Despite the anechoic effect, the article by Tilburt et al suggests that physicians want to reduce corporate influence in medicine.  Yet this evidence of physicians' discomfort with corporate influences itself has been greatly muted by the anechoic effect.

While the survey results are reminiscent of opinions I have heard from many physicians, it is striking that there is no perceptible organized movement by physicians against excess corporate influence.  At best, public expression of concerns about excess corporate influence has been muted and fragmented, often relegated to blogs and sometimes derided as coming from malcontents, dissidents, disgruntled employees, and other assorted trouble-makers.  But again it looks like the majority of physicians may (often silently) agree with these "whiners and complainers." 


Physicians need to realize that they mostly agree that to fulfill their oaths to put patients first, they have to reduce the influence of rich and powerful organizations, like health care corporations, with other agendas.  Maybe once they realize this, they will be able to start doing something to reduce such influences.  Maybe once they start, they will be able to rethink the notion that direct health care should ever be provided, or that medicine ought to be practiced by for-profit corporations. I submit that we will not be able to have good quality, accessible health care at an affordable price until we restore physicians as independent, ethical health care professionals, and until we restore small, independent, community responsible, non-profit hospitals as the locus for inpatient care.


Roy M. Poses MD on Health Care Renewal


References

1.  Tilburt JC, Wynia MK, Sheeler RD et al.  Views of physicians about controlling health care costs.  JAMA 2013: 310: 380-388.  Link here.

2.  Emanuel EJ, Steinmetz A. Will physicians lead on controlling health care costs? JAMA 2013; 310: 374-375. Link here.

43% Believe that US Health Care is Corrupt, 64% that Government is Run by a Few Big Interests, Media Shrug

We have noted  (most recently here),  that health care corruption, particularly its global nature and its presence in developed countries like the US, is a taboo topic and thus remains anechoic.  

Transparency International just released its yearly massive survey on corruption worldwide.  The results are not pretty for health care and related sectors world wide and in the US.  As expected, these results appear to be causing few echoes. 

Global Results

Some useful summary statements found in the written version of the report:

Governments are not thought to be doing enough to hold the corrupt to account.  The majority of people around the world believe that their government is ineffective at fighting corruption and corruption in their country is getting worse.

The democratic pillars of societies are viewed as the most corrupt.  Around the world, political parties, the driving force of democracies, are perceived to be the most corrupt institution.

Personal connections are seen as corrupting the public administration.  People surveyed regard corruption in their country as more than just paying bribes: almost two out of three people believe that personal contacts and relationships help to get things done in the public sector in their country.

Powerful groups rather than the public good are judged to be driving government action.  More than one in two people (54 per cent) think their government is largely, or entirely run by groups acting in their own interests rather than for the benefit of the citizens. 

The survey included questions about corruption in the health care sector.  Globally, respondents perceived it was a major problem.  On average, 17% said they or their family members had to pay bribes in connection with medical and health care.  The average perception of corruption in medicine and health care across all countries was 3.2, where 1 = not at all corrupt, and 5 = extremely corrupt.  (Scores for the media were 3.1, business sector, 3.3, education system, 3.1, public officials, 3.6, political parties, 3.8, and NGOs, 2.7)

US Results

While the US did not have the worst results, our numbers were not very good (see US specific results here). More than one-third (43%) of respondents thought that US health care is corrupt.  Large numbers of people also thought that related sectors were corrupt (53% thought business in general was corrupt, 34% education, 58% the media, 55% public officials, 61% the legislature, 78% political parties.)

For comparison, the proportions of people who thought the health care sector is corrupt were 24% in Canada, 28% in France, 48% in Germany, 47% in Japan, and 19% in the United Kingdom

Also, more than half (60%) of respondents said corruption in the US has increased over the last 2 years, almost two-thirds (64%) thought that the US government is run by a few big interests. 

Thus, this survey confirmed that health care corruption is a global problem, and that a large proportion of people in the US believe it is a major problem here. 

The Media Shrug


This would seem to be major news.  However, so far the Transparency International survey results have received little  media attention in the US.  Moreover, what attention they have received in the US makes corruption appear to be some other countries' problem.  .

Most of the US media reports avoided mentioning any results that relate directly to the country.  In particular, the New York Times, the Wall Street Journal, Fox News, CNN, NBC, and Reuters coverage said nothing about the US.  Businessweek provided reports from Malaysia and Russia that focused on those countries' results.  A brief report in the Los Angeles Times only noted a single US statistic, about the bribery rate, one area in which the US had relatively favorable results.  Only a lonely Forbes blogger alluded to the US results in slightly more detail,  (and then went on to summarize those from Brazil, Russia, India, and Mexico in detail).

In contrast, media reports from some other countries, like India, Ghana, and Israel, noted their own countries' poor results.

Summary

So once again we see how anechoic are the notions that health care corruption is a severe global problem, and that it affects all countries, including the most supposedly developed.  Of course, the unwillingness to discuss global health care corruption, health care corruption in the US, and the relationship of health care corruption in the US to corruption in other sectors may arise from the fear, as stated by one person interviewed in Charles Ferguson's documentary Inside Job, that discussion could lead to investigation, and investigation could "find the culprits".

On Health Care Renewal, we try to discuss global health care corruption,.  We were first inspired by the 2006 publication of Transparency International's Global Corruption Report which focused on health care, and documented how health care corruption is global, severe, and not restricted to the poorest countries  (see post here).

This blog focuses on the US, and we  now have in our archives some amazing stories that document various forms of health care corruption in the US, including numerous allegations of misbehavior by large health care organizations ending in legal settlements, and examples of outright fraud, bribery, kickbacks and other crimes. On the other hand, we have demonstrated again and again that bad  and corrupt behavior by large health care organizations is a taboo topic.  For example, we could find  very few significant efforts to discuss, teach about, or research ways to fight corruption, or to promote accountability, integrity, transparency, honesty and ethics by academic health care institutions. (See this post for how difficult it was to find academic institutions' initiatives to resist conflicts of interest.) One can count the conferences, meetings, symposia, and courses on such topics on one's fingers. When I last looked, I could count only a single course on fighting corruption at any US medical or public health school (at Boston University, by Prof Taryn Vian).

Of course, if we really want to reform health care, in the little time we may have before our health care bubble bursts, we will need to take strong action against health care corruption.  Such action will really disturb the insiders within large health care organizations who have gotten rich from their organizations' misbehavior, and thus taking such action will require some courage.

ADDENDUM (16 July, 2013) - See comments by Dr Howard Brody on the Hooked: Ethics, Medicine and Pharma blog.

Another Attempt to Show the RUC Behind the Curtain

In 2007, readers of the Annals of Internal Medicine could read part of the solution to a great medical mystery.(1)  For years, health care costs in the US had been levitating faster than inflation, without producing any noticeable positive effect on patients.  Many possible reasons were proposed, but as the problem continued to worsen, none were proven.

Prices are High Because They are Fixed That Way

The article in the Annals, however, proposed one conceptually simple answer.

The prices of most physicians' services, at least most of those that involved procedures or operations for Medicare patients, were high because the US government set them that way. Although the notion that prices were high because they were fixed to be so high was simple, how the fixing was done, and how the fixing affected the rest of the health system was complex, mind numbingly complex.

Perhaps because of the complexity of its implementation, the simplicity of the concept has not seemingly reached the consciousness of most American health care professionals or policy makers, despite the publication of several scholarly articles on the subject,.efforts by humble bloggers such as yours truly, a major journalistic expose, and recent congressional hearings.  The lack of discussion of this issue seemed to be a prime example of what we have called the anechoic effect, that important causes of health care dysfunction whose discussion would discomfit those who are currently personally profiting from the current system rarely produce many public echoes.  (For a review of what is known to date about how the offputtingly named Resource Based Relative Value Scale Update Committee (RUC) works, and previous attempts to makes it central role in fixing what US physicians are paid public, see the Appendix.)

The Washington Monthly Pulls Back the Curtain

Now another attempt to pull back the curtain that hides the RUC was just made by the Washington Monthly.  A long, detailed, well-written article by Haley Sweetland Edwards went through the major points, and included some new discoveries.  She asserted:

The RUC is Well Hidden

[The RUC is] probably one of the most powerful committees in America that you’ve never heard of.

The RUC Fixes Prices

when a roomful of professionals from the same trade meet behind closed doors to agree on how much their services should be worth. It’s called price-fixing. 

The Government Enables the RUC to Fix Prices

 this kind of 'price-fixing' is not only perfectly legal, it’s sanctioned by the U.S. government. At the end of each of these meetings, RUC members vote anonymously on a list of 'recommended values,' which are then sent to the Centers for Medicare and Medicaid Services (CMS), the federal agency that runs those programs. For the last twenty-two years, the CMS has accepted about 90 percent of the RUC’s recommended values—essentially transferring the committee’s decisions directly into law.

The Government Fixed Prices are Endorsed by the Private Sector

 private insurance companies also use Medicare’s fee schedule as a baseline for negotiating prices with hospitals and other providers. 

The Price Fixing Drives Up Costs and the Use of Services

 So if the RUC inflates the base price Medicare pays for a specific procedure, that inflationary effect ripples up through the health care industry as a whole.

These Incentives Cripple Primary Care

 These manipulated prices are also a major reason why specialists are in oversupply in many parts of the country, while a worsening shortage of primary care providers threatens the whole health care delivery system. 

These Incentives Benefit Big Corporations, not just Medical Specialists

 the incentives are perfectly aligned: ordering that extra test means more money for a doctor’s practice or hospital, more money for the labs, and often more money for the device makers and drug companies, too. (Oh, and, by the way, the device makers and drug companies are, not incidentally, major funders of the medical specialty societies whose members vote on the RUC.)

[Art by Monte Wolverton for the Washington Monthly article]

What to Do and What Will Happen?

We previously wrote,

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

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

Ms Edwards ended her article with two specific suggestions:

take the process away from the control of the AMA and put it in the hands of a well-resourced group of experts under the auspices of the federal government. This might take the form of a panel of doctors employed by the government, or of an advisory committee of representatives of different medical societies but with greater representation of primary care doctors.

Or

 get Medicare out of the business of funding fee-for-service medicine. 

I can only hope that the latest Washington Monthly article, which was accompanied by an editorial and a short first-hand account of how difficult is the lot of the modern primary care physician, will succeed in increasing awareness of the RUC and its essential role in making the US health care system increasingly unworkable.  Of course, such awareness may disturb the many people who are making so much money within the current system.  But if we do nothing about the RUC, and about the ever expanding bubble of health care costs, that bubble will surely burst, and the results for patients' and the public's health will be devastating.

APPENDIX - Background on the RUC

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

Since 1991, Medicare has set physicians' payments using the Resource Based Relative Value System (RBRVS), ostensibly based on a rational formula to tie physicians' pay to the time and effort they expend, and the resources they consume on particular patient care activities. Although the RBRVS was meant to level the payment playing field for cognitive services, including primary care vs procedures, over time it has had the opposite effect, as explained by Bodenheimer et al in a 1997 article in the Annals of Internal Medicine.(1) A system that pays a lot for procedures, but much less for diagnosing illnesses, forecasting prognoses, deciding on treatment, and understanding patients' values and preferences when procedures and devices are not involved, is likely to be very expensive, but not necessarily very good for patients.
 
As we wrote before, to update the system, the Center for Medicare and Medicaid Services (CMS) relies almost exclusively on the advice of the RBRVS Update Committee. The RUC is a private committee of the AMA, touted as an "expert panel" that takes advantage of the organization's First Amendment rights to petition the government. Membership on the RUC is allotted to represent specialty societies, so that the vast majority of the members represent specialties that do procedures and focus on expensive, high-technology tests and treatments.
 
However, the identities of RUC members were opaque for a long time, and the proceedings of the group are secret.  As Goodson(2) noted, RUC "meetings are closed to outside observers except by invitation of the chair." Furthermore, he stated, "proceedings are proprietary and therefore not publicly available for review."
 
In fact, the fog surrounding the operations of the RUC seems to have affected many who write about it. We have posted (here, here, here, and here) about how previous publications about problems with incentives provided to physicians seemed to have avoided even mentioning the RUC. Up until 2010, after the US recent attempt at health care reform, the RUC seemed to remain the great unmentionable. Even the leading US medical journal seemed reluctant to even print its name.
 
That changed in October, 2010.  A combined effort by the Wall Street Journal, the Center for Public Integrity, and Kaiser Health News yielded two major articles about the RUC, here in the WSJ (also with two more spin-off articles), and here from the Center for Public Integrity (also reprinted by Kaiser Health News.) The articles covered the main points about the RUC: its de facto control over how physicians are paid, its "secretive" nature (quoting the WSJ article), how it appears to favor procedures over cognitive physician services, etc.
 
In 2011, after the "Replace the RUC" movement generated some more interest about this secretive group, and its complicated but obscure role in the health care system, the current RUC membership was finally revealed.  It was relatively easy for me to determine that many of the members had conflicts of interest (beyond their specialty or sub-specialty identity and their role in medical societies that might have institutional conflicts of interest, and leaders with conflicts of interest).  
 
Then that year a lawsuit was filed by a number of primary care physicians that contended that the RUC was functioning illegally as a de facto US government advisory panel.  It appeared that things might change.  However, it was not to be.  A judge dismissed the lawsuit in 2012, based on his contention that the law that set up the RBRVS system prevented any challenges through the legal system to the mechanism used to set payment rates.  The ruling did not address the legality of the relationship between the RUC and the federal government.  The eery quiet then resumed, only punctuated briefly in early 2013, when a Senate committee held hearings with no obvious effect.      

ADDENDUM (15 July, 2013) - see also comments by Dr Howard Brody on the Hooked: Ethics, Medicine and Pharma blog.  

ADDENDUM (18 July, 2013) - see also comments by Yves Smith on the Naked Capitalism blog.

References
1. Bodenheimer T, Berenson RA, Rudolf P. The primary care-specialty income gap: why it matters. Ann Intern Med 2007; 146: 301-306. (Link here.)
2. Goodson JD. Unintended consequences of Resource-Based Relative Value Scale reimbursement. JAMA 2007; 298(19):2308-2310. (Link here.)

A Call to Restore the Integrity of Clinical Research - but Will Anyone Heed it?

Concerns about suppression and manipulation of clinical research to serve vested interests have finally gotten a little more mainstream.

Background: Suppression and Manipulation of Clinical Research

For a long time, we have decried and discussed examples of manipulation of clinical research done to increase the likelihood that its results would please vested interests, often drug, device or other corporations that sponsored the research and often exerted considerable control over its design, implementation, analysis, and dissemination.  We have also decried and discussed examples of suppression of research whose results offended such vested interest, sometimes done when manipulation did not succeed in producing such pleasing results.


I wrote about suppression of research in my 2003 paper on health care dysfunction,(1)

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

That assertion was based on several important, although understandably largely anechoic cases.

I first wrote about systematic attempts to manipulate clinical research in 2005, based on Richard Smith's PLoS Medicine commentary which listed specific tactics that vested interests could use to make it more likely that research studies would provide them with favorable results.

Although striking cases of manipulation and suppression appeared more frequently starting in the 1990s, in the last few years it has become more apparent that these are widespread problems.

A Call to Restore Integrity

This week, the British Medical Journal published a special article calling for restoration of suppressed or manipulated clinical trials(2), accompanied by an editorial entitled, "restoring the integrity of the clinical trial evidence base."(3)

The article used slightly different terminology than we do, replacing suppression with invisibility, and manipulation with distortion, thus,

Two basic problems of representation are driving growing concerns about relying on published research to reflect the truth. The first is no representation (invisibility), which occurs when a trial remains unpublished years after completion. The second is distorted representation (distortion), which occurs when publications in medical journals present a biased or misleading description of the design, conduct, or results of a trial.

The article boldly asserted

Both go against the fundamental scientific and ethical responsibility that all research on humans be used to advance knowledge and are symptomatic of a general culture of data secrecy. The end result is that the healthcare, biomedical research, and policy communities may, despite best intentions and best practices, end up drawing scientifically invalid conclusions based on only those parts of the evidence base they can see.

The editorial went further, asserting that

This crisis of hidden or misreported information from clinical trials—and the resulting distortion of the clinical evidence base—is widely recognized and commonly decried. It is one of the leading scientific problems of our time, but few solutions have been put forward.

Furthermore, it concluded with a warning about the immorality of continuing on the current course,

The results of clinical trials are a public, not a private, good. The public interest requires that we have a complete view of previously conducted trials and a mechanism to correct the record for inaccurately or unreported trials. If we do not act on this opportunity to refurbish and restore abandoned trials, the medical research community will be failing its moral pact with research participants, patients, and the public. It is time to move from whether to how, and from words to action.

Thus the notion that suppression and manipulation of clinical research is a systemic, severe problem that confounds health professionals and hurts patients is no longer a concern of only a few fringe dissidents, but a matter for discussion in the foremost mainstream medical journals.

Will Anyone Heed the Call?

Furthermore, this dire problem formulation suggests the need for a strong solution, as proposed by the article, and seconded by the editorial.  Using the term "abandoned trials" for " unpublished trials for which sponsors are no longer actively working to publish or published trials that are documented as misreported but for which authors do not correct the record using established means such as a correction or retraction (which is an abandonment of responsibility)," Doshi and colleagues wrote,

We call on institutions that funded and investigators who conducted abandoned trials to publish (in the case of unpublished trials) or formally correct or republish (in the case of misreported trials) their studies within the next year.

Starting in 2005, we have repeatedly called for protection of " researchers' rights to speak truth to power," but then noted that "right now, it is more often power that speaks to truth."  The question is whether without some bigger allies, individual clinical researchers will stand up on their own to restore the integrity of clinical research.

The big reason to worry is that most of these researchers work within a context which strongly favors vested interests, rather than scientific truth, or the rights of research subjects.  The researchers who would be most likely to be able to heed the call by Doshi et al are those within academic medicine. Yet clinical research in the academic medical world now functions within a strong and deep web of individual and institutional conflicts of interests, subjects that we also have written about incessantly.

There is evidence suggesting that the majority of medical faculty,(4) and the majority of their academic departmental leaders(5) have important financial ties to the health care corporations most likely to have reason to want to suppress or manipulate research.  Furthermore, most academic medical institutions have stated their interest in increasing "collaboration" with industry, usually giving the rationale that this will lead to "innovations" that will bring better tests or treatment to patients. (See posts here,  here and here for some examples.)  Such collaboration also tends to bring a lot of money to institutional budgets.  Further collaboration with industry is likely favored by academic leaders' own financial ties to the same sorts of corporations discussed above.  Thus it should be no surprise that a study by Mello et al in 2005 suggested that most of the managers of academic medical institutions who control research contracts are willing to give significant control of of research design, implementation, analysis, and dissemination to the sponsors, not the researchers.  (See this post.) (6)


Thus, a researcher who volunteers to restore suppressed or manipulated clinical studies might become suddenly very unpopular with his or her colleagues or supervisors, and perhaps with people who are already paying him or her.

So as long as health care professionals, policy makers, and the public at large are willing to go along with the notion that academic medical institutions' "collaboration" with "industry" is absolutely necessary to foster "innovation" and hence medical progress, it is very unlikely that academic medical researchers will be willing to help restore the integrity of clinical research.  In fact, while we continue on our present course, the integrity of clinical research will probably get even worse.
 
Since questioning the integrity of contemporary clinical research might make those with vested interests who have been willing to suppress or manipulate research very uncomfortable, perhaps it should be no surprise that the paired articles in the British Medical Journal have been relatively anechoic.  For example, while one might think the publication of these simultaneous articles might get at least a little coverage in the "main-stream media," I can find not a single mention of them there.  (So far, only the Chronicle of Higher Education, MedScape the Science Insider blog and The Scientist blog have provided news coverage.)


So I hope the brave people who wrote the article and editorial are also willing to join us in decrying the web of individual and institutional conflicts of interest that have entangled health care professionals and academic medicine.  Individuals and institutions who make medical or health care decisions, or who are involved in medical and health care education and research should reveal all their conflicts of interest, at least in the interests of honesty.  Furthermore, in the interest of patients' and the public's health, clinical research meant to assess medical tests, treatments, and programs should be done completely independently from the corporations that sell them.  


References

1.  Poses RM.  A cautionary tale: the dysfunction of American health care.  Eur J Int Med 2003; 14: 123-130.  Link here..
2.  Doshi P, Dickersin K, Healy D et al.  Restoring invisible and abandoned trials: a call for people to publish the findings.  Br Med J 2003;  BMJ 2013; 346 doi: http://dx.doi.org/10.1136/bmj.f2865  Link here.
3.  Loder E, Godlee F, Barbour V et al.  Restoring the integrity of the clinical trial evidence base.  Br Med J 2003;  BMJ 2013; 346 doi: http://dx.doi.org/10.1136/bmj.f3601  Link here.
4. Campbell EG, Gruen RL, Mountford J et al.  A national survey of physician–industry relationships. N Engl J Med 2007; 356:1742-1750. Link here.
5. Campbell EG, Weissman JS, Ehringhaus S et al. Institutional academic-industry relationships. JAMA 2007; 298: 1779-1786.  Link here.
6.  Mello MM, Clarridge BR, Studdert DM. Academic medical centers' standards for clinical-trial agreements with industry. N Engl J Med 2005; 352:2202-2210. Link here.

A Legal Settlement of One Aspect of the Fall of AHERF, Only 15 Years Later

It only took 15 years, but litigation related to one of the most important, but obscure cases of bad health care leadership and governance from the 1990s was finally settled.   

Background

The Allegheny Health Education and Research Foundation (AHERF) was a large integrated health care system formed out of multiple mergers.  AHERF went bankrupt in 1998, leading to massive layoffs, hospital closures, and the near dissolution of a medical school (which ended up taken over by Drexel University).  We last discussed the case in 2012 here.. A summary of other important points about it is appended below. 

As we noted in 2008, although the AHERF bankruptcy appears to be the largest failure of a not-for-profit health care corporation in US history, its story has produced remarkably few echoes for doctors, other health care professionals, health care researchers, and health policy makers. I often use the fall of AHERF as an example in talks, at least the few talks I am allowed to give on such unpleasant subjects. Rarely have more than a few people in the audience heard of AHERF prior to my discussion of it.

I only could locate one article in a medical or health care journal that discussed the case in detail, but was written too early to address it very completely [Burns LR, Cacciamani J, Clement J, Aquino W. The fall of the house of AHERF: the Allegheny bankruptcy. Health Aff (Millwood) 2000; 19: 7-41.]  I doubt the case is used for teaching in most medical or public health schools, although it.was a formative influence on my 2003 article on health care dysfunction [Poses RM. A cautionary tale: the dysfunction of American health care. Eur J Int Med 2003; 14: 123-130] and on this Health Care Renewal blog.  (A book about the case, Merger Games, by Judith Swazey, was published in 2012, and is available here as  a set of PDF files from Project Muse for those with the proper password, but it has not yet had much of an impact, and I confess I have not yet read it.)  The lack of discussion of such a significant case is a prime example of the anechoic effect. 

One Legal Settlement, 15 Years Later, for a Secret Amount

But a brief echo of the case did appear in a brief article in the Pittsburgh Tribune Review published in April, 2013:

Lawyers would not say Tuesday how much money an accounting firm will pay to settle a 13-year-old lawsuit claiming it helped destroy one of the state's largest health care systems. 

'It will result in a very significant recovery,' James Jones, one of the lawyers representing the unsecured creditor of the Allegheny Health Education and Research Foundation, said during a settlement hearing in Pittsburgh federal court.

The creditors in 2000 sued Coopers & Lybrand LLP, the predecessor of PricewaterhouseCoopers LLP, claiming that if auditors in 1996 and 1997 had informed AHERF's board about the foundation's true financial condition, it would have acted to avoid a bankruptcy that resulted in huge losses. The foundation's assets included the Allegheny General Hospital system.

It seems only fitting, given how anechoic this case has been, that much about this settlement remains obscure,

U.S. District Judge David Cercone, in a joint session with U.S. Bankruptcy Judge Judith Fitzgerald, approved the settlement with PricewaterhouseCoopers. 

The company disputes the method the committee used to calculate losses and denies liability in the settlement.

Joseph McDonough, a lawyer for PricewaterhouseCoopers, agreed the settlement amount is significant. He and Jones declined comment.

Jones said during the hearing that a trial could have lasted 40 days. Preparation for the case generated more than 200 depositions, 19 expert opinions and more than a million documents, he said.

The committee sent more than 3,500 notices to creditors about the proposed settlement, and none objected, he said.

Both sides agreed to keep the amount secret, and they discussed with Fitzgerald how to avoid releasing the amount in filings for related bankruptcy action.

Maybe if the case had somehow generated more echoes, health care professionals and policy makers, and patients and the public at large might have learned some of its lessons.  The story of AHERF is not merely that of an unlucky bankruptcy. It shows what can go wrong when health care is taken over by generic managers who adapt the latest management fads, and health care decision making is ruled by marketing, public relations and propaganda instead of evidence and logic, and allows power to be concentrated in organizations run by imperial CEOs.  .

 

We did not get a chance to learn this history, so we seem bound to repeat it.  

Appendix

Some important points about AHERF not found above (see also this narrative, starting on page 5):

• AHERF, one of the largest health care systems of its day, was built by the poster-boy for health care imperial CEOs, Sherif Abdelhak.
• Abdelhak, who started as food services purchasing manager at Allegeheny General Hospital, was repeatedly hailed as a "visionary" (in the March, 1997, ACP Observer) a "genius," and the like. His plans to create a huge integrated health care system were part of the wave of the future. Abdelhak was even invited to give the prestigious John D Cooper lecture at the annual meeting of the American Association of Medical Colleges (AAMC), which was published in Academic Medicine [Abdelhak SS. How one academic health center is successfully facing the future. Acad Med 1996; 71: 329-336.] He proclaimed that "we will need to create new forms of organization that are more flexible, more adaptive, and more agile than ever before." And he announced that "my aim as chief executive has been to unleash the creativity and productive potential of every individual and to provide an environment that encourages teamwork"
• While Abdelhak was making these grandiose promises, he paid himself and his associates very well. For example, he received $1.2 million in the mid-1990s, more than three times the average then for a hospital system CEO. He lived in a hospital supplied mansion worth almost $900,000 in 1989. Five of AHERF's top executives were in the top 10 best paid hospital executives in Philadelphia.
• Although Abdelhak talked of teamwork, he warned the combined faculty of the new Allegheny University of the Health Sciences (AUHS): "Don’t cross me or you will live to regret it."
• As AHERF was hemorrhaging money, Abdelhak continued to pay himself and his cronies lavishly.
• After the AHERF bankruptcy, which was at the time the second largest bankruptcy recorded in the US, Abdelhak was charged with numerous felonies involving receiving charitable assets. In a plea bargain, he pleaded no contest to misusing charitable funds, a misdemeanor, and was sentenced to more than 11 months in county prison.

Posted by Roy M. Poses MD to the Health Care Renewal blog