Round and Round Spins the Revolving Door, Unimpeded by "Obamacare," Nor By Those Protesting "Obamacare"

On this day of government dysfunction in the US, it is time for our latest installment on the "revolving door," the interchange of insiders among government legislative offices that affect health policy and agencies that implement it, and large health care corporations and the lobbyists and attorneys who represent them.  While we have been discussing this issue since March, 2011 (look here),  it got major media attention in the form of a New York Times article two weeks ago.

We have accumulated several other relevant stories since late August, 2013, which we will group by the type of government offices and agencies affected, and within them, by the date the story first came out..

Regulatory and Law Enforcement Agencies

Health Care Antitrust Leader at the Federal Trade Commission to Arnold & Porter

 From the MainJustice.com site,

Peter J Levitas, a former senior antiturst attorney at the Federal Trade Commission, is joining Arnold & Porter LLP in Washington, D.C....

Levitas has spent the past four years as deputy director of the FTC's Bureau of Competition and oversaw investigations and litigation for mergers and conduct cases in numerous industries.  

So,

Levitas joins the firm's antitrust practice with experience3 addressing complex merger and conduct investigations, particularly in the healthcare, pharmaceutical and technology industries.

Leader of Health Care Fraud Enforcement for US Attorney New Jersey Office to Lowenstein Sandler

From the ComplianceWeek.com site,

Maureen Ruane, a former health care fraud chief at the U.S. Attorney's Office for the District of New Jersey, has rejoined the law firm Lowenstein Sandler to lead its new health care litigation, investigations and compliance practice.

The new practice will help the firm's healthcare and life science clients strengthen their regulatory and compliance programs, as well as defend corporate and individual clients who become the subjects or targets of government investigations or enforcement actions. 

Prior to rejoining Lowenstein Sandler, Ruane most recently served for more than three years as the Chief of the Health Care & Government Fraud Unit at the U.S. Attorney's Office for the District of New Jersey.

Health Policy Implementation

Counsel for Department of Health and Human Services to Sidley Austin

Per the NY Times, 

Dr. [Dora] Hughes, a former Obama administration official, has something Washington lawyers and lobbying shops covet: an insider’s understanding of the new health care law. After nearly four years as counselor to Health and Human Services Secretary Kathleen Sebelius, she left government last year to work for Sidley Austin, which represents insurers, pharmaceutical companies, device makers and others affected by the law. 

Previously,

she  began a decade ago, first as a health policy adviser to Senator Edward M. Kennedy, and later to Mr. Obama, then a senator.

Deputy Assistant Secretary of Department of Health and Human Services to Glover Park Group

Also from the NY Times,

 Elizabeth Engel, who oversaw health legislation and served as a liaison to Congress when she was a deputy assistant health secretary under Ms. Sebelius, is now advising health care clients for the Glover Park Group.

White House to Avenue Solutions

From the NY Times,

Yvette Fontenot, a mother of three who began her Washington career in 1997, analyzing Medicare for the Office of Management and Budget. Ms. Fontenot worked on the health bill as a Finance Committee aide and later moved to the White House. Four months ago she joined Avenue Solutions, a boutique lobbying shop. 

White House "Health Czar" and Deputy Chief of Staff to Consonance Capital, and CVS

While we noted this in August, 2013, the NY Times reported in September as part of its larger article, 

   Nancy-Ann DeParle, Mr. Obama’s former 'health czar' and later his deputy chief of staff, now guides health care investments as a partner in a new private equity firm, Consonance Capital, with colleagues from her pre-White House days. 

Actually, as we discussed in 2009, Ms DeParle has been oscillating back and forth through the revolving door for a while.  She  was the administrator of the Health Care Financing Administration in the Department of Health and Human Services under President Clinton from 1997-2000.  She left to become managing director of a private equity firm, CCMP Capital.  She also served on the boards of directors of Boston Scientific, Cerner, and Medco.  Then she went back to the executive branch as noted by the the Times above.

Furthermore, as reported by AP, via the Providence Journal,

Drugstore chain CVS Caremark has added to its board of directors a former top adviser to President Barack Obama on the health care overhaul.

The Woonsocket, R.I., company said Wednesday after markets closed that Nancy-Ann M. DeParle, 56, will be an independent director who serves on the board's audit committee.

White House to health care venture capital

Also from the NY Times story,

Bob Kocher, a doctor, management consultant and former member of Mr. Obama’s economics team, is a California venture capitalist, helping finance health start-ups.

Legislative Offices

Senate Finance Committee Staff, then Department of Health and Human Services Staff to Avenue Solutions

As reported by The Hill bog,

The firm Avenue Solutions, for instance, recently hired Yvette Fontenot, a former staffer for both the Senate Finance Committee, which wrote ObamaCare’s tax-related provisions, and HHS's Office of Health Reform, which is assisting the implementation.

Since her hire in April, the four-woman firm has picked up Health Care Service Corp. as a client, and Fontenot is now lobbying for the Blue Cross Blue Shield Association

Congress to Alston & Bird

In the same report,

Former Rep. Earl Pomeroy (D-N.D.) joined Alston & Bird in 2011 after dealing with healthcare and tax issues as a member of the House Ways and Means Committee.

Now Pomeroy and his one-time chief of staff, Bob Siggins, are lobbying on ObamaCare for clients such as clients such as Vision Service Plan, the National Coordinating Committee for Multiemployer Plans and Medicare — a health insurance provider.

Health Counsel for Senate Finance Committee from WellPoint, Now to Johnson & Johnson

Note that we touched on part of this story back in 2010 here.  Now from the New York Times, 

Liz Fowler, a onetime executive with WellPoint, the insurer, helped draft the legislation as the chief health counsel for the Senate Finance Committee and later joined the administration. Now she runs global health policy for Johnson & Johnson, the medical equipment and pharmaceutical giant, which strongly backed the health bill and stands to benefit from it. 

Ms. Fowler is not a registered lobbyist, but she does provide in-house advice on the bill — work that has drawn criticism from publications like the British newspaper The Guardian and the Web sites Salon and The Huffington Post, where the journalist Bill Moyers singled out Ms. Fowler, asserting that 'when push comes to shove, corporate interests will have the upper hand.'

Summary

 It's enough to make one's head spin: all that traffic through the revolving door reported just in the last five weeks.

As we have said many times before, the constant interchange of health care insiders among government offices, lobbying and legal firms, and large health care corporations certainly suggests that health care, like many other sectors, seems to be run by an amorphous group of insiders who owe allegiance neither to government nor industry.  The NY Times tried to explain this in a benign way,

Yet the progression from government to the private sector is also predictable, a window into the peculiar rhythms of life in the capital. Young aides, often fresh out of college or graduate school, acquire highly specialized knowledge but eventually settle down, build lives and long for jobs that pay more and let them see their children at night. 

While the private sector may offer good pay, is it just for these poeples' skills and expertise?  Or are these offers only for those who while in government service evinced friendship to private vested interests?  Do government workers who think longingly of higher pay and shorter hours wonder what it would take to please those that might offer such opportunities?

Yet those who work in government are supposed to be working for the people, and those who work on health care within government are supposed to be working for patients' and the public health.  If they are constantly looking over their shoulders at potential private employers who might offer big checks, who indeed are they working for?

Attempts to turn government toward private gain and away from being of the people, by the people, and for the people have no doubt been going on since the beginning of government (and since the Constitution was signed, in the case of the US).  However, true health care reform  would require curtailing the severe sorts of conflicts of interest created by the revolving door.  This might require both improving pay and working conditions for government regulators, law enforcers, and legislative staffers; and specific laws to prevent immediate transitions from being a regulator, law enforcer, or legislator to handling corporate responses to or defenses against such regulation and enforcement. 

That bit does not seem to be part of the current Affordable Care Act, yet it was hardly to enact such restrictions on conflict of interest that certain members of Congress have shut down the government.  

The Door Revolves Again: the Former White House Health Reform Czar Goes to Private Equity Firm Looking for Investments Created by Health Reform

Round and round it goes, and when it will stop, nobody knows.

Background: The Former Health Care Reform Czar's Past Career

It appears that Ms Nancy DeParle, formerly a White House Deputy Chief of Staff, and before then, from 2009 - 2011, the Director of the White House Office of Health Care Reform, has gone through the revolving door again.

We raised concerns about Ms DeParle's strong ties to the commercial side of health care at the time she was put in charge of getting health care reform legislation passed (look here.)  Specifically, her background for shepherding this legislation included being on the boards of directors of three large health care corporations, Boston Scientific, a medical device company, Cerner, a vendor of health care information technology, and Medco, and pharmacy benefits company.   She had previously been on the boards of DaVita, a commercial kidney dialysis care delivery company, and Triad Hospitals, a for-profit hospital system.  At the time, I wondered whether this set of relationships with multiple  health care corporations would lead to "health care reform" that was more about the interests of big health care corporations and their top executives than about us, the people.

As it turned out, there is a case to be made that a lot of the health care reform legislation that eventually passed was in the interests of big corporations.  It enabled for-profit health care insurance companies to continue to dominate the insurance market, and created no "public option" that could have competed with them.  It fostered the development of "accountable care organizations," (ACOs), and thus fostered a wave of consolidation in the hospital market favoring ever larger hospital systems, including for-profit ones, and the rise of the corporate physician.  It pushed the use of commercial health care information technology without requiring these devices' effects on patients to be rigorously assessed, and with no obvious concerns about the risks posed by these systems.  It did nothing to stop concentration of power in health care, nothing to support small private practices, small non-profit hospitals, or non-profit health insurance.  While it required more disclosure of conflicts of interest affecting physicians, it did nothing to reduce them, or to combat deception in health care marketing and public relations, or to reduce manipulation or suppression of clinical research to serve commercial vested interests, or even to combat blatant health care corruption.

A Brief Stop at a Think Tank

At any event, Ms DeParle left the government early this year.  She did not immediately go back to the commercial world, however.  Instead, as reported by The Hill, she went to a think tank.

Nancy-Ann DeParle, a White House deputy chief of staff and the president's point person on his signature health care law, is leaving the West Wing to join the Brookings Institution. 

Brookings president Strobe Talbott announced in a post on Twitter that the longtime Obama staffer would work as a guest scholar for the think tank.

Through the Revolving Door to Private Equity

That position did not last long, however.  A few days ago, a Wall Street Journal blog announced she was moving again,

As health care-focused private equity firms navigate the nuances of the Affordable Care Act, one such shop, Consonance Capital, has decided to go straight to the source, hiring Nancy-Ann DeParle, the former director of the White House Office of Health Reform.

So now she will be with private equity, and in particular, with a private equity firm specializing in, of course, health care:

Consonance has been out targeting between $350 million and $450 million for its debut fund.

The fundraising effort appears to have gained traction in recent months. LBO Wire reported in February that the firm had raised $30.3 million for Consonance Private Equity PV LP.  According to a person familiar with the fundraising, the vehicle has gathered as much as $200 million so far from investors including Ohio Public Employees Retirement System, Travelers Insurance and LGT Group.

The fund is earmarked for buyouts and recapitalizations of health-care providers, payors, pharmaceutical and specialty distributors and device manufacturers with between $20 million and $150 million in annual revenue.

Finally, it seems Ms DeParle will be suited to this new employment opportunity since she knows so much about how the new supposed health care reform will create investment opportunities,

 Ms. DeParle said the changing regulatory environment will give rise to a host of new investment opportunities. 'There’s a lot that’s changing in health care,' said Ms. DeParle. 'There will be millions of new customers for hospitals and health care providers, much stronger demand for health care services....'

Summary

So to recapitulate, Ms DeParle came from roles as a steward of multiple large health care corporations to lead the health care reform efforts of the executive branch.  In that capacity, she helped to create and enact legislation that she would later say created many "new investment opportunities."  Now, as the legislation is going into operation, she has spun over to private equity to take advantage of these opportunities.

This seems to be a great example of why the revolving door is bad for government, health care, and the American public.  People in responsible government positions, in which they are supposed to represent all the people, may be constantly thinking about impressing those who might employ them in the private sector when they leave government service.  What better way to impress these potential employers than to take actions which may later improve these companies'  commercial prospects, whatever effect they may have on us, the people?

I am no political scientist, but in my humble opinion, there should be multi year cooling off periods before someone who worked in the commercial world can get a job in a government agency whose work has direct effect on his or her previous employer or industry sector, and before someone who worked in a government agency whose work had direct effect on a particular economic sector can accept a job for a company in that sector.  Now that would be a real reform. 

Health Care Revolving Door Roundup

Increasingly, the regulatory and law enforcement functions of the US government in the health care sphere seem to be blending with the management of large health care organizations.  One mechanism for this is the "revolving door," the constant interchange of personnel between government agencies and corporate management. 


Here is a list of some of this year's interesting cases of people transiting the revolving door between US government agencies that are supposed to regulate health care organizations or enforce the relevant laws and the organizations subject to these regulations and laws.   Note that this list may not be complete.  It is difficult to keep track of these transitions. 

Leader of Health Care Fraud Section of Philadelphia US Attorney's Office to Teva Pharmaceuticals

Via MainJustice.org in March, 2013,

John Pease, who led the government and health care fraud section in the U.S. Attorney's Office in Philadelphia, has left the Justice Department for a job with a pharmaceutical company.

Pease, 45, is a new senior counsel at Teva Pharmaceuticals, where he oversees government investigations of the company for the Americas.  'I was just ready to try something different,' Pease said in an interview.

 Leader of US Department of Justice Fraud Section in Charge of Health Care Issues to Law Firm as Defender of Companies and Senior Executives

The initial notice again was via MainJustice.org in March, 2013

Sam Sheldon, the deputy chief in the Criminal Division's Fraud Section who oversaw health care fraud prosecutions, is leaving the Justice Department to join Quinn Emanuel Urquhart & Sullivan LLP.

Mr Sheldon's new job was made clear on the firm's website,

Sam Sheldon is head of the firm’s Health Care Practice Group.  He is a trial lawyer who represents companies and senior executives in litigation before the United States federal government including Department of Justice and Department of Health and Human Services, and other law enforcement and regulatory agencies.

FDA Deputy Commissioner for Global Regulatory Operations and Policy to Mylan

This story, in April, actually made it (briefly) to Reuters,

 Generic drugmaker Mylan Inc said on Tuesday it hired Deborah Autor, deputy commissioner for global regulatory operations and policy at the U.S. Food and Drug Administration, to help oversee its global regulatory strategy.

Leader of Health Care Fraud Enforcement of Philadelphia US Attorney's Office to Law Firm as Industry Defender

From Bloomberg, in August, 2013,

Marilyn May, a False Claims Act litigator at the U.S. Justice Department, joined Arnold & Porter LLP’s Washington office as litigation counsel with a focus on healthcare, pharmaceutical and medical device industry defense work. 

May was the head of healthcare fraud enforcement in the U.S. Attorney’s Office in the Eastern District of Pennsylvania. She coordinated healthcare fraud cases and investigations as well as handled False Claims Act cases involving pharmaceutical and medical device companies, hospitals, nursing homes and other healthcare providers, the firm said. 

The law firm's website states,

 Her litigation practice focuses on pharmaceutical, medical device and healthcare defense matters.

Summary

In each of these cases, a person with responsibility for regulation of and/or law enforcement for health care organizations went through the revolving door to either work for health care corporations subject to such regulation and/or law enforcement, or work for legal firms that specialize in defending such corporations and their leaders in regulatory and law enforcement actions.

As far as I know, none of these instances was the least bit illegal.  However, like previous examples of the revolving door, they raise the concern that people in government regulation or law enforcement who think that they may have future lucrative job prospects helping health care organizations attenuate regulation and law enforcement may not be the most enthusiastic, aggressive, or persistent regulators or law enforcers.  Why would one want to upset one's future employer?

While these cases of the revolving door are legal, they are clearly conflicts of interest in the sense that the prospect of such future employment likely may increase the risk of compromising a government official's devotion to serving the public and enforcing the law, if not in the legal sense.  In some particular case, the revolving door may actually lead to corruption according to the Transparency International definition, abuse of entrusted power for private gain, if not according to the legal definition.  Thus the continuing occurrence of government officials blithely transiting the revolving door no doubt was a reason that more than 40% of the public consider the US health care sector to be corrupt (see this post.)

True health care reform would require curtailing the severe sorts of conflicts of interest created by the revolving door.  This might require both improving pay and working conditions for government regulators and law enforcers, and specific laws to prevent immediate transitions from being a regulator/ law enforcer to handling corporate responses to or defenses of such regulation and enforcement.

Of course, I can already hear the protests of those people who decry paying more for government or increasing government regulation.  I can at least hope that the protests are not from those who personally profit from the current seemingly corrupt system.  

Another Revolving Door Variant: From Academia with Millions in Medtronic Royalties, to the White House, to the Health Care Service Corp

The revolving door spins, and where it will stop, nobody knows...

In October, 2010, we noted questions about how Dr Stephen Ondra got to be a Senior Policy Adviser for the US Department of Veterans Affairs. A veteran who was a neurosurgery professor at Northwestern University, Dr Ondra had received millions of dollars in royalties from device manufacturer Medtronic, whose CEO supported his appointment to the government position  (see this post).  As soon as he was appointed, he publicly opposed a nominee for US Surgeon General who had been critical of the medical device industry, and its financial ties to doctors.

After going to Washington, Dr Ondra apparently also served in the Executive Office of the President, in the White House, but returned to Northwestern University in 2012.  However, he did not stay there for long.

This month, a post on Forbes indicated he is moving on again, and back to the corporate side of health care.

the nation’s fourth-largest health insurance company is naming a key former health advisor to President Obama as its top doctor.

Dr. Stephen Ondra, will become senior vice president and chief medical officer at Health Care Service Corp., the Chicago-based parent company of Blue Cross plans in Illinois, Texas, Oklahoma and New Mexico. The plan has more than 13 million health plan members and is looking to grow even more, announcing last year a proposed partnership with the Blue Cross plan in Montana.

Health Care Service Corp is a mutual insurance company, that is, a company owned by its policy-holders rather than stock holders.  However, that does apparently not make it any more ascetic than a typical for-profit insurance company, at least in terms of generosity towards its top hired executives.  As Crain's Chicago Business reported in 2012,

New federal regulations intended to force health insurers to spend less on administration didn't keep the parent of Blue Cross & Blue Shield of Illinois from paying CEO Patricia Hemingway Hall more than $12.9 million in 2011, a 61 percent raise.

The Health Care Service Corp. chief executive's total compensation last year dwarfed the $8 million she received in 2010, according to a filing with the Illinois Department of Insurance. The 2011 increase was fueled by an $11.8 million bonus, which was 69 percent above her 2010 bonus of $7 million.

Ms. Hall wasn't alone in getting a big raise at Health Care Service, whose insurance business booked net income of more than $1 billion in 2011, for the second straight year.

The 10 highest-paid executives at the Chicago-based mutual company — which operates Blue Cross plans in Illinois and three other states — earned a collective $41.7 million, 65 percent more than the $25.3 million they were paid in 2010.

 If Dr Ondra's new position puts him among the latter group of executives, he too stands to make millions a year. 

So to recap Dr Ondra's career so far, in 2010 he was a medical school professor who had earned millions in royalties from Medtronic.  He then went to top leadership positions in the US Veterans Department and Executive Office of the President.  He returned briefly to Northwestern University, only to leave again for a top executive position in for-profit insurance company Health Care Service Corp, where he is likely to make millions more.

Thus Dr Ondra is our latest interesting example of the "revolving door" phenomenon in health care.  He started as an erstwhile academic physician but with a very major financial relationship with a medical device company.  He then went through the door the first time into the US government, and then a second time from the government to a for-profit insurance company, with just a brief stop-over in academia.

By the way, it appears that all of this is quite legal.  It does again raise questions about whether health care leaders in government with previous relationships with industry might still feel undue sympathy to the interests of industry, as might government leaders who can expect future jobs in industry.

Moreover, this case, like previous cases we have discussed,  indicates how leadership in academic health care, corporate health care, and the government tend to blend together.  Leaders of one type of organization have more and more in common with leaders of the other types of organizations than they do with their lesser ranked colleagues, and certainly than with other health care constituencies.  So the more the revolving door revolves, the more we wonder about the corporatism of health care, about how health care seems to be increasingly run by an amorphous group of academic/ corporate/ government leaders whose loyalties may be more to each other than to academic and professional values, patients' and the public's health, and government of, by and for the people.