The 2011 Best Paid US CEO's Company's Latest Legal Settlement

Yet another legal settlement illustrates the contrast between rewards given to the hired managers of large health organizations and their organizations' performance. 

The New Settlement

The legal settlement in question was simple, as reported by Reuters,

McKesson Corp, one of top U.S. drug wholesalers, has agreed to pay more than $190 million to settle claims that it had violated the federal False Claims Act by reporting inflated pricing information for many prescription drugs, causing Medicaid to overpay for them.

The settlement was announced Thursday by U.S. Attorney Paul Fishman in New Jersey.

According to the government, McKesson reported inflated pricing data to First DataBank, a publisher of drug prices that most state Medicaid programs use to set payment rates for pharmaceutical products.

The government accused McKesson of marking up prices on a variety of drugs by 25 percent between Aug. 1, 2001, and March 31, 2005.

It said McKesson's conduct had caused the United States and individual states to pay inflated reimbursements on Medicaid claims submitted between Aug. 1, 2001 and Dec. 31, 2009.

'We have no tolerance for those who take advantage of that system to bring in more business by falsely increasing reimbursements to retailers,' Fishman said in a statement.

As is typical, the company denied doing anything wrong:

McKesson was not immediately available to comment.

According to settlement papers, McKesson 'expressly denies' the government's charges, as well as those of a whistleblower, David Morgan, in a related civil lawsuit filed in New Jersey federal court. The San Francisco-based company did not admit liability or wrongdoing in agreeing to settle.

It was hardly McKesson's first ethical problem.

McKesson's Track Record

This is just the latest in a long series of legal problems for this company.

The Depression-Era Scandal

Way back in 1938, there was the McKesson & Robbins scandal, one of the major scandals of the depression era. The company had been taken over by one Philip Musica, an accused bootlegger, who committed suicide before a trial (see this post).

In this century, there were:

The Securities Fraud Case

As we posted in 2009, five former executives pleaded guilty, the former CEO and Chairman Charles McCall was convicted of fraud in 2009. The company settled investor lawsuits in 2005 for $960 million.

The First Pharmaceutical Pricing Case

As the Wall Street Journal reported in 2009,

McKesson Corp., a giant drug-wholesale and -distribution company, agreed to pay $350 million to settle cases in which it was accused of helping to increase drug prices in 2001 and 2002. The money will go to health plans that pay for drugs and consumers who paid co-pays for their medicines.

The San Francisco-based company said the settlement, which is subject to court approval, includes 'an express denial of liability of any kind' but that it decided to settle the cases to avoid the uncertainty of litigation

In addition, as we noted here, the company settled with the state of Connecticut for "illegal and deceptive" pricing practices for a mere $15 million.

These settlements appear to be precursors of the just announced one.

The Propofolol Punitive Damages

As we noted here, McKesson was one of three companies to collectively pay $162 million in punitive damages in a case involving allegations that the companies sold propofolol, an injectable anesthetic, in reusable containers that were susceptible to contamination with the hepatitis C virus.

The Best-Paid CEO in America

All these legal issues notwithstanding, late in 2011, McKesson leadership made headlines for a different reason. Based on one method of computation, the company's CEO was the best-paid of an exceedingly well-paid 2011 CEO class. An article in the Daily Beast noted:

John Hammergren, [is] the CEO of the McKesson Corp., a giant medical-supply company in California. Hammergren is the $145 million man, top dog on the latest listing of the country’s highest-paid chief executives.

The details of the compensation package included,

Yet last year McKesson contributed more than $13 million just to Hammergren’s pension, according to company documents. Among the other perks he enjoys: a chauffeur to drive his company car, free use of the corporate jet for personal travel, and an extra $17,000 a year to pay for a financial planner because handling all those hundreds of millions is no doubt complicated stuff.

Also,

Then there are the assorted perks he gets each year at an annual cost of $1 million or so. Choose the perk that makes you the most jealous. Maybe it’s this line found in McKesson’s most recent proxy statement: 'For security, protection, and privacy reasons, the Board has directed our CEO to use the corporate aircraft for both business and private travel.' Or maybe it’s the bounty that awaits Hammergren on the other side of his retirement. The company discontinued its pension program for ordinary employees in 1997 but not for top executives. If Hammergren quit tomorrow, according to company filings, he would receive a pension valued at $125 million.

The party won’t stop once the 52-year-old Hammergren retires. Among his lifetime benefits: a personal assistant and office, which the company figures will cost more than $200,000 a year, and the services of a financial counselor—a perk that will eat up $350,000 in profits, according to company estimates. The goodies keep coming even after he dies. If his wife survives him, she will continue receiving his base salary for six months and will also get $2 million in cash. That cash bonus would actually cost the company nearly twice that amount, as it's promised to cover the widow’s cost of paying taxes on that money.

And then there’s a provision so outsize it’s drawn the attention of corporate-governance watchdogs like GMI, the research group that put Hammergren in the top spot of its latest survey of CEO salaries. If Hammergren loses his job due to a change in ownership, he receives an immediate $469 million payout, GMI found—giving him perverse incentive to see it happen.

Although Mr Hammergren has not been the best paid CEO every year, the Daily Beast article showed how much he has made over the years:

Hammergren’s annual total compensation payouts, taken from the company’s public filings with the Securities and Exchange Commission: $46 million in 2011; $55 million in 2010; $37 million in 2009; another $41 million in 2008. Hammergren hadn’t founded the company. Wall Street analysts covering McKesson can tell you of the disappointments and miscues that have marked his tenure. But his haul in the 13 years he has been running McKesson? More than $500 million, according to data provided by Equilar, an executive-compensation data firm.

It then contrasted this consistent largess, spiced with the 2011 results, with the company's long-term financial performance. After the scandal that eventually resulted in crimincal convictions for some McKesson executives:

'They had to give the CEO job to somebody, and basically he was the last man standing,' said an analyst who has been covering McKesson and its competitors since the 1990s. Many in the industry had never heard of Hammergren when he took over as president and co-CEO in 1999, this analyst said, 'but I guess it’s better to be lucky than good.' Hammergren became sole CEO in 2001.

McKesson’s stock had hit a high of just under $95 a share but fell below $20 after the scandal broke. Hammergren deserves credit for stabilizing the company—some might even say he rescued McKesson—but a long-term shareholder could be forgiven for feeling that the company’s board of directors has been overly generous to its chief executive. As of Friday, the stock was trading at $78 a share—still off its 1998 high. Factoring in the regular dividends the company has paid over the years, a shareholder’s investment would be worth slightly more than it was 13 years ago.

Summary

So Mr Hammergren's corpulent compensation is vastly out of proportion not only to the company's woeful ethical performance, but also to the long-term wealth created for its owners, that is, its shareholders.

So McKesson provides just the latest example of how the top hired leaders of health care organizations seem to monumentally prosper no matter how badly their organizations fare in terms of ethical performance, good done for patients and health care, or long-term financial performance. (See recent examples here and here, and our posts on executive compensation here.)  As we quoted a McGill economics professor who was writing about the global financial collapse, "all this compensation madness is not about markets or talents or incentives, but rather about insiders hijacking established institutions for their personal benefit."

To truly reform health care, we must stop this compensation madness. We must make health care leaders accountable for their organizations' effects on patients' and the public's health, and make sure they get reasonable, not royal compensation reasonably related to their organizations' performance, including ethical performance.

Insurers' diversification creating monopoly power and conflict of interest - quoted in the Washington Post

I am quoted in a Washington Post article today on potential conflicts of interest when medical payers/insurers acquire the firms that hospitals and doctors use to challenge medical payment denials:

 "Health insurers’ push to diversify raises ethical concerns"

Washington Post
Jay Hancock, Sunday, April 29

Like hospitals and doctors everywhere, Banner Health fights a daily battle to get paid by insurance companies and government agencies for the care it delivers.  So the hospital system hired a company called Executive Health Resources to fight back against the likes of Medicare and UnitedHealthcare when they deny claims or pay bills for less than what Banner thinks it is owed.

Fair enough.

But Banner executives began to worry about EHR’s independence when the firm was acquired in 2010 by UnitedHealth Group, UnitedHealthcare’s parent.

Issues can get a bit sticky under such an arrangement.

I put it this way:

Critics call United’s ownership of EHR a troubling conflict of interest that could give it confidential information about rivals as well as patients and limit EHR’s power to demand payment from its much larger corporate sister. “How is that ownership going to affect the mission of a company whose business is to extract more money from payers?” said Scot Silverstein, a physician and specialist in medical software and patient records at Drexel University. “Imagine going to a plaintiff’s lawyer to take your malpractice case and not knowing that plaintiff’s lawyer actually works for the hospital that you’re suing.”

When payers acquire those who would challenge their payment denials, I worry about the consolidation of power being too great for the public good.

As we learn, the relationship is somewhat stealthy:

... There is no mention of EHR’s ownership in the “Corporate Overview” section of its Web site or elsewhere on the site. Nor did the American Hospital Association identify EHR as a United subsidiary in September when it renewed its exclusive endorsement of EHR’s denial-fighting services. EHR pays the hospital association a fee for the endorsement. The group declined to disclose the amount. 

The plot thickens:

Claims consultants such as EHR typically gain access to millions of patient records and confidential contracts between hospitals and insurers, industry officials say. If UnitedHealthcare, United’s insurance wing, gained access to that data, it would obtain “a huge business advantage” over insurance rivals as well as the hospitals, Kofman said.

In today's healthcare business environment, "if" seems to me to be optimistic.

Hancock goes further in the article:

As insurers eager to add revenue streams convert themselves into diversified health-services companies, they often buy traditional business adversaries, including physician groups and hospital consultants such as EHR. They’re also buying technology companies and research firms that serve medical-care providers, raising questions not only about independence but about the privacy of patient information.

A Georgetown professor, formerly a state insurance superintendent, gets to the heart of the matter, using United as but one example:

“I am not convinced that, even with proper disclosure, that an entity owned by United could aggressively advocate against United’s interests,” said Mila Kofman, a Georgetown professor who was Maine’s insurance superintendent.

This factoid is eye-opening:

Appealing claims denials has become a huge, high-tech business, reflected in the more than $1 billion that United reportedly paid for EHR [Executive Health Resources].

You might think there were better things to do with $1 billion besides administrative bloat - such as taking care of patients.

We probably need new laws to catch up with the flurry of M&A's going on in healthcare between payers, the healthcare delivery sector, and the "referees" that mediate between them when disputes arise.

Read the entire article at the WaPo link above.  The examples get even more convoluted.

-- SS

Addendum:

Roy Poses notes:

This appears to be a newly recognized type of conflict of interest that contributes to the concentration of power in the US commercialized health care system.  While many people tout how our health care system is "competitive" and a "free market," it is ever more dominated by a decreasing number of enlarging organizations.  True health care reform would break up health care oligopolies.

-- SS

Using a computer called “Blue Balls” to track whether ED patients seeking care paid their bills

I could not make this up if I tried regarding hardball tactics to collect money when patients are at their most vulnerable.

From Bloomberg News:

Accretive Says It’s Working to Address Minnesota Concern

By Dan Hart and Alex Wayne - Apr 29, 2012

Accretive Health Inc. (AH), a hospital billings-collection company, said it’s working with advisers to address concerns raised by the Minnesota attorney general’s office that it puts bedside pressure on patients to pay bills.

The claims “grossly distort and mischaracterize” its revenue cycle services, the company said today in a statement. The suggestion Accretive puts bedside pressure on patients to pay their bills out of pocket are a “flagrant distortion of fact,” the company said.

... Accretive shares tumbled by the most ever on April 25, just after Minnesota Attorney General Lori Swanson issued a report alleging Accretive violated U.S. and state patient-privacy and debt-collection laws. She said patients at Fairview Health Services, a Minnesota hospital chain, were pressured for payment before they received care in some cases and that Accretive’s debt collectors didn’t properly disclose their role. Swanson filed a lawsuit on Jan. 19 against Accretive.

Chicago-based Accretive said in today’s statement it doesn’t deny access to patient care and the allegation is “flatly untrue.”

There appears to be something to the allegations, though...

 Credit Scores

[Minnesota Attorney General ] Swanson said last week employees at Fairview, a nonprofit chain of seven hospitals based in Minneapolis, were required to use a computer system derisively called “Blue Balls” to track whether patients paid their bills. The payment system began after Fairview hired Accretive in May 2010, Swanson said in her report describing the companies’ relationship.

Actions that Accretive used at Fairview included issuing emergency room employees “scripts” for conversations with patients that “can lead a patient or her family to believe the patient will not receive treatment until payment is made,”Swanson said.

Employees were instructed to ask for credit card payments, tell patients they’d wait for them to retrieve their checkbooks from their cars, or if the patients said they couldn’t pay, remind them that debt-collection activities “can affect your credit score,” according to the scripts.

Considering the setting, that sounds like a technique more suited for a movie about mid-30's Chicago then a 21st century hospital.  It seems a not so subtle form of strong-arming someone when they're down.

Accretive said late on April 27 that Fairview had canceled its contract with them, adding it didn’t know yet how the cancellation would affect its business. Accretive said it would provide an update on its May 9 quarterly financial call.

Earlier that same day, Representative Pete Stark, a California Democrat, asked U.S. health officials to investigate Accretive’s practices.

Federal law prohibits hospitals from denying emergency care to anyone, regardless of their ability to pay.

While no statement is made in this article about care denial, Federal law should prohibit strong-arm tactics and psyops at a time when patients are most vulnerable.  The unpleasantness and added stress are certainly not good for outcomes in the vulnerable.

I note a site has appeared related to this issue, at this link:  http://www.mn-healthcare.com/links

-- SS

Don't Worry, Your Records are Safe - Part IV

At past posts "Don't Worry, Your Electronic Medical Records Are Getting Safer With Every Passing Day", "Another Episode of "But Don't Worry, Your Records are Safe..." and "Still More Electronic Medical Data Chaos, Pandemonium, Bedlam, Tumult and Maelstrom: But Don't Worry, Your Data is Secure", I wrote on the issue of medical record security.

Security from prying eyes, that is.

I didn't include security of data from placement into /dev/null (that is, destruction).

There's this email, received by East coast physicians not long ago from a claims processing company (identities redacted):

Dear Provider,

As you may be aware, we experienced a significant problem with our computer system during a software maintenance function on XX/XX/2010.

In addition to the network issue, we discovered that the redundant back-up systems were not operating as reported.  ["Reported" when, and by whom, one wonders? - ed.]

We had two on-site back-up systems that were monitored daily and which were historically reported as successful.  We have since learned that these internal back-up functions were not operating as reported and the on-site back-ups were not entirely successful. [Meaning, they were not successful, period - ed.]

Also, our software vendor, [major EHR vendor], was providing two additional remote back-ups on servers located in [city, state] and [city, state]. [EHR vendor] has informed us that these remote back-ups were not initiated as represented.  [Meaning, they screwed up - ed.]  Therefore, when our computer network system malfunctioned, there was no readily available back-up data on-site or at the remote redundant back-up servers.

Please be aware that we have replaced hardware components and were able to recreate the data bases and we are billing.  However, we are still unable to access data that was stored on our servers prior to XX/XX/2010.

[EHR vendor] is diligently working to retrieve the data from the hard drives, back-up tapes, and through other means.  Please be assured that all files will be restored, if the files cannot be fully restored electronically, then they will be fully restored manually.

At [our claims processing company], we are truly saddened by the fact that we have disappointed clients and we sincerely apologize for any inconvenience experienced by you, your staff, or your patients.

We have always appreciated your loyalty as a valued client and will continue to keep you informed of the progress.

The levels of information technology and data management incompetence exhibited in this message are stunning. 

The confidence it imparts regarding the safety of our critical medical data from destruction, and its availability when truly needed, is less than stellar.

A major problem is that the health IT industry has no accountability. 

I believe the Food, Drug and Cosmetic Act needs to be amended to become the "Food, Drug, Cosmetic, and Cybernetic" Act.

-- SS

Another Legal Settlement for Tenet, Another $10 Million Plus for its CEO

Yet another large health care organization has added to its collection of legal settlements. 

Reuters briefly noted Tenet Healthcare's latest scuffle with the law:

Tenet Healthcare Corp has agreed to pay almost $43 million to settle allegations that it overbilled the federal Medicare healthcare program for treating patients at certain rehabilitation facilities, the Justice Department said on Tuesday.

The company was accused of improperly billing Medicare between May 2005 and December 2007 for treating people at inpatient rehabilitation facilities when they did not qualify for such an admission, the Justice Department said.

Tenet agreed to $42.75 million to resolve the allegations, which were made under the U.S. False Claims Act. Medicare is the federal healthcare program for the elderly.

While this story appeared briefly and without context in a few business news outlet, it really is part of a much bigger picture.

National Medical Enterprises

Published in 2006, Maggie Mahar's Money Driven Medicine was one of the important early works on health care dysfunction (see post here, the web-site of the documentary film based on it here).  One of the striking cases it discussed was that of Nartional Medical Enterprises.  NME was charged not only with run of the mill offenses like over-billing, but more exotic ones like kidnapping patients. NME eventually settled with federal authorities in 1994 for $379 million, and pleaded guilty to a variety of charges. The results were similar to many more recent cases. No one went to jail, and the CEO walked away with a golden parachute.  Despite the seriousness of the offenses, NME did not go out of business.  It simply changed its name - to Tenet Healthcare.

Legal Problems in the 21st Century

The "new" Tenet continued to have legal issues.  These included a $395 million settlement of the Redding Medical Center unnecessary heart surgery scandal in 2004 (look here), and a $21 million settlement of US government charges of kickbacks (look here), a $7 million settlement with the government of Florida of charges of fraudulent billing (look here), and a $900 million settlement of federal over-billing complaints (look here, and see our post here), all in 2006.  There was an apparent lull, and then in 2011 the company settled a class action suit brought after the deaths of 34 patients in a Tenet facility in New Orleans after Hurricane Katrina (see Bloomberg story here.)

Again, while this substantial string of settlements suggest a pattern of repeated misbehavior, as in many other legal resolutions in health care (look here), the cost of financial penalties was diffused across the organization.  No individuals seemed to suffer any negative consequences from any of these episodes.

No Consequences for Hired Managers

Instead, despite this evidence of repeated misbehavior, now extending over nearly 20 years and across two centuries, the top hired leaders of Tenet continued to flourish.  Earlier this month Becker's Hospital Review announced the compensation received by Tenet's CEO in 2011:

Total compensation for Trevor Fetter, president and CEO of Dallas-based Tenet Healthcare, dropped 12 percent from 2010 to $10.74 million in 2011, according to documents from the U.S. Securities and Exchange Commission.

Mr. Fetter's base salary in fiscal year 2011 was $1.08 million, the same as the previous two years. He received $4.88 million in stock awards, $2.67 million in non-equity incentive plan compensation and $1.93 million of accumulated benefits under his supplemental executive retirement plan. Mr. Fetter also received more than $142,000 for personal use of Tenet's aircraft.

Despite the small dip last year, Mr Fetter's total compensation has generally increased  over the years, from $6.12 million in 2003 (via the LA Times), to $9.7 million in 2008 (AP via Fox News).

Summary

One would think that Tenet's record of legal trouble would have turned it into a pariah, or led to its corporate demise.  However, like many other large health care organizations, the organization has been able to shrug off evidence of a deeply flawed culture, and within such a culture, its leaders have continued to enrich themselves with seeming impunity. 

Such cases should raise many questions - Why are repeated offenses by the same well known health care organizations barely considered news?   Why do repeat offenses not generate at least increasing financial penalties?  Why do the organizations' stake-holders, particularly as represented by their boards, not show more concern?  Why has the regulation of health care organizations devolved into Kabuki theater?

So, I once again insist, to really deter bad behavior, those who authorized, directed or implemented bad behavior must be held accountable. As long as they are not, expect the bad behavior to continue. Real health care reform needs to make health care leaders accountable, and especially accountable for the bad behavior that helped make them rich.

Allscripts shares plunge on weak outlook, board changes, unhappy customers - but mostly unhappy customers, I surmise

Glen Tullman is CEO of the health IT seller Allscripts-Misys Healthcare.  He was an advisor to the Obama campaign on health information technology issues.

My organization had to sue his company for non-working products a few years ago (link to PDF of civil complaint) .

Apparently other customers were unhappy as well.  This from Reuters:

Allscripts shares plunge on weak outlook, board changes

Fri Apr 27, 2012 9:24am EDT

(Reuters) - Allscripts Healthcare Solutions Inc's shares plunged 42 percent in premarket trade on Friday, after the company forecast weak full-year earnings, hurt by software development costs and weaker bookings.

On Thursday, the healthcare information technology provider reported a lower-than-expected quarterly profit and also announced the resignation of its CFO, three directors and board Chairman Phil Pead.

Citigroup analyst George Hill said the results were strongly disappointing and downgraded the company's stock to "neutral" from "buy."

Hill said he was most troubled by the loss of long tenured CFO Bill Davis, who had been the public face of Allscripts to investors for many years.

"We suspect CEO Glen Tullman won a power struggle at the 11th hour leading to the board departures," Hill said.

"Too few customers are buying its products, due to lack of confidence or satisfaction," Barclays Capital analyst Lawrence Marsh wrote in a note.

Allscripts shares were trading at $9.27 in premarket trade. They had closed at $16.02 Thursday on the Nasdaq.

(Reporting by Shailesh Kuber in Bangalore; Editing by Joyjeet Das)

The statement 'too few customers are buying its products, due to lack of confidence or satisfaction', speaks volumes about the state of health IT in general in 2012.

That state includes eventual regulation after an IOM report on dubious safety, mission hostile user interfaces as identified by NIST and others that will require expensive remediation (due to the industry arrogantly ignoring this crucial issue for decades), 'glitches' due to poor or non-existent validation and quality control that will increasingly result in expensive litigation when patients are harmed, likely government investigations and clawbacks due to EHR-promoted upcoding, and an increasing awareness that many of the so-called miracle 'revolutionary' gains (as opposed to facilitation of medical practice) are largely illusory industry-promoted memes not based on robust, scientifically-generated evidence.

I'd pull out of this market - if I had any money invested in it.  I have none, and never have, because I have great lack of confidence in the industry that began when I was first exposed to it and its leaders - that being in 1992.

I note that the HITECH component of ARRA, containing incentives and penalties related to health care information technology designed to accelerate the adoption of EHR systems, was advanced largely via advice to the President on the wonders of health IT.  (I thought HITECH was a reckless, premature move destined to waste billions of dollars as did the erstwhile NPfIT in the NHS, and I still stand by that prediction.)

-- SS

4/27/12 Addendum:

EHR glitches like this and this never seem to affect patients...

-- SS

APRIL IS DISTRACTION AWARENESS MONTH!

Imagine that you are blindfolded and driving 55 miles per hour.

It will take about 4.5 seconds for you to travel the length of a football field.

4.5 seconds is the average amount of time it takes for people to look down and check their phone for a message.

Distracted driving is not just a problem with youth - it is a problem for everyone. From those who are pedestrians, not watching as they cross the street (because they are texting or have their hearing impeded by ear buds) - to drivers who just 'look down for a moment' and end up in a motor vehicle accident, distracted driver is an avoidable cause of morbidity and mortality.

If it took no attention to drive, then perhaps brushing your hair, changing the radio channel, talking on the phone and picking up a phone to text, might not be a big deal. But considering the several ton missile most cars are and the amount of erratic driving that occurs, safety means unplugging and expecting crazy driving, so that you don't end up in an accident or worse.

The national site distraction.gov has a number of powerful stats and even more powerful videos from across the country that brings home the message about distracted driving. One that I found very interesting was a young woman from NJ whose friend was killed by a distracted driver and who admitted that she needed a reminder to not be distracted (so she put a picture of her dead friend on her dashboard)

Here's one story - Ashley age 16

How can you prevent distracted driving?1. Stow your phone in an inaccessible place (purse, glove compartment.)

2. Turn your ringer off until you have arrived.

3. Consider if you are tired or having difficulty concentrating and pay extra attention while driving. (phone off, tunes off)

4. Anticipate that other drivers will be distracted. Is that driver weaving over a line while driving? Might be alcohol but more likely is texting!

5. Anticipate pedestrians texting and being unaware to sound (with ear buds) as they cross the street.

6. Anticipate bicyclists are equally distracted.

7. Help friends and family eliminate distractions. For example, have messages that signal friends and family that you have to concentrate on driving ('have to go now, traffic is tough.")

CLINICIAN NOTE: Due the prevalence of this problem, clinicians should screen all patients who come to them with injury (pedestrian, motor vehicle, etc.) and ask if they were texting or listening to music (with ear buds) when the injury happened.

In Philadelphia in 2009, a talented young school teacher was killed while running in Fairmount Park because a huge branch (30 feet) fell from a tree that was 50 feet or the equivalent to five stories.

Since she could not hear due to loud music and ear buds, she did not hear it snap and fall. The branch struck her, broke her neck and severely injured her head and limbs. 

CHECK IT OUT - HOT OFF THE PRESSES APRIL 2012!!








NO MORE PADS,

NO MORE DRIPS -  

TIPS TO ADDRESS AND HELP PREVENT

URINARY INCONTINENCE

Urinary incontinence (UI) in older women is an under addressed problem by patients and clinicians. In general, women's rates of UI are twice that of men and are a problem for 80% of institutionalized elder (e.g. living in nursing homes.) Because women don't bring it up (less than half in some studies) and clinicians don't screen, clinicians miss the more than one out of three women with this condition. A woman's lifetime risk is 30-60% This 'miss' is incredibly expensive. It is expensive in terms of quality of life (women have greater isolation, depression, anxiety, falls/fractures as well as bedsores and admission to long term care facilities) - but it is expensive in care delivery. Excluding cost of long term care facilities, some estimates are up to $20 billion dollars (about 1/3 are for absorbant products alone)

More than one in five young women have IU, for middle aged women the range is about 42-56 percent and in elderly the number is about 75%. With boomers, booming, we will see more and more of IU. Clinicians and patients alike need to be more aware and discuss this.

So, the breakdown of types of IU and urine leakage include functional (mobility or access reasons); stress (pressure overcomes pelvic muscles); urgency (bladder signals urination is needed and releases urine); mixed reasons and overflow (this occurs more in men than women but is often seen in neurological conditions or as a result of medications). Overactive bladders refers to bladder wall hyperreactivity that creates urgency (but leakage does not occur) It is also important to recognize that the urinary incontinence can be associated with rectal or fecal incontinence, so even if not identified by the patient, elements of rectal tone should be included in the evaluation.

Women at higher risk include - ethnicity being Caucasian, being postmenopausal; having multiparity; having a higher BMI, using hormonal therapy; having Diabetes/Sleep Apnea/CHF; having neurologic diseases (Parkinsons, MS) An interesting point I came upon is that women with two or more of the following (DM, HTN, Back Pain, Arthritis, COPD;  hearing/visual deficits; cognitive deficits; parkinsons) are also a higher risk.

The pelvic muscles are an amazing grouping of muscles. It is extremely rare in a human body to have a muscle group simultaneous contract and relax in a coordinated fashion. That's what the pelvic floor does. That is why you can void without deficating and deficate without voiding. It is also why the coordination can get confused - post hysterectomy or birth or trauma.

In older women - more than 50% have mixed UI. So it is important to assess if it is stress or urgency predominant in order to treat.  One item jumps out when reviewing contributing factors of incontinence and that is the functional status and the ability to void.

We have no practice standard to assess functional strength of pelvic muscles (and maybe we should!!) So if pelvic floor muscles are weak, women will have IU. How we hydrate and when we void are another important element.

Many people only urinate when they feel they can't hold any more urine and are very uncomfortable. The 'waiting until your eyes turn yellow' approach is NOT bladder healthy. 

Retraining on intake and urination is important in addressing incontinence and bladder diaries are used to guide this. Some women have to schedule getting up and voiding in their daily calendar to remind them and that is one strategy that can work. Another important piece of information about hydration is that is you are dehydrated, concentrated urine is an irritant and can contribute to the sense of urgency!

A reversible element a clinician must screen for is urinary infection (taking into consideration that asymptomatic bactiuria should not be treated.) Functional status is also important. If gait is unsteady or arthritis is severe and transfers take a long time, incontinence can results. If there are sensory deficits (vision, hearing) o if it takes far longer to get to the toilet than is planned, women can have leakage. Sometimes, soft cognitive deficits (which can be hidden) are the reason why strategies to address incontinence don't work.

Medications also play a role - these include caffeine and alcohol as well as diuretics.
As seen in the chart, multiple medications can have a urinary effect. It is reasonable to consider that if a patient has polypharmacy, she should be screened for incontinence.

CHECK IT OUT - HOT OFF THE PRESSES APRIL 2012!! Info for clinicians and consumers here: 



http://www.effectivehealthcare.ahrq.gov/ehc/products/169/1030/ui_cons_fin_to_post.pdf





Some of WellPoint's Owners (Stockholders) Allege Their Hired Executives Hid Political Contributions

We have frequently had reason to question the actions of WellPoint, the second largest for-profit health insurance company/ managed care organization in the US. 

Hidden Political Contributions

The Washington Post reported yet another one,

Health insurance giant WellPoint is the latest target of an increasingly aggressive campaign to force disclosure of corporate political and lobbying expenditures, including payments to the U.S. Chamber of Commerce, which has become more active in elections over the past decade.

The WellPoint campaign, set to be formally announced Thursday by a coalition of activist investor groups, demands the resignation of two WellPoint board members, including Susan Bayh, the wife of former senator Evan Bayh (D-Ind.), for allegedly failing to oversee 'high risk political spending.'

The shareholder coalition cited WellPoint’s reluctance to answer questions about a transfer of $86 million from the health insurers trade association to the U.S. Chamber of Commerce in 2010, when the Chamber was actively opposing President Obama’s health-care overhaul. WellPoint is a member of the association, America’s Health Insurance Plans.

'This is the most egregious clandestine campaign funding we have ever seen,' said Michael Pryce-Jones of the CtW Investment Group, a labor-affiliated organization that is part of the shareholders’ coalition, referring to the payments from the trade association to the Chamber of Commerce.

However,

At WellPoint, officials dismissed the notion that the company has been secretive about its political giving. On the contrary, spokeswoman Kristin Binns said, the firm discloses a great deal on its Web site.

'WellPoint complies with all disclosure requirements under federal, state and local laws,' she said, noting that the company publishes a 'very extensive' annual report on its political contributions.

But,

That report does not include details of the sort of special payment that the shareholders coalition said WellPoint made to the health insurers association.

So, to summarize, WellPoint management is accused of spending tens of millions on political lobbying while hiding the spending from the public and from the company's nominal owners, that is, its stock-holders, by laundering it through a third party.

WellPoint's Sorry Ethical Record

This is just the latest questionable behavior by WellPoint we have discussed. Previously, we have noted incidents in which the company  ...
 

• settled a RICO (racketeer influenced corrupt organization) law-suit in California over its alleged systematic attempts to withhold payments from physicians (see 2005 post here).
• subsidiary New York Empire Blue Cross and Blue Shield misplaced a computer disc containing confidential information on 75,000 policy-holders (see 2007 story here).
• California Anthem Blue Cross subsidiary cancelled individual insurance policies after their owners made large claims (a practices sometimes called rescission).  The company was ordered to pay a million dollar fine in early 2007 for this (see post here).  A state agency charged that some of these cancellations by another WellPoint subsidiary were improper (see post here).  WellPoint was alleged to have pushed physicians to look for patients' medical problems that would allow rescission (see post here).  It turned out that California never collected the 2007 fine noted above, allegedly because the state agency feared that WellPoint had become too powerful to take on (see post here). But in 2008, WellPoint agreed to pay more fines for its rescission practices (see post here).  In 2009, WellPoint executives were defiant about their continued intention to make rescission in hearings before the US congress (see post here).
• California Blue Cross subsidiary allegedly attempted to get physicians to sign contracts whose confidentiality provisions would have prevented them from consulting lawyers about the contracts (see 2007 post here).
• formerly acclaimed CFO was fired for unclear reasons, and then allegations from numerous women of what now might be called Tiger Woods-like activities surfaced (see post here).
• announced that its investment portfolio was hardly immune from the losses prevalent in late 2008 (see post here).
• was sanctioned by the US government in early 2009 for erroneously denying coverage to senior patients who subscribed to its Medicare drug plans (see 2009 post here).
• settled charges that it had used a questionable data-base (builty by Ingenix, a subsidiary of ostensible WellPoint competitor UnitedHealth) to determine fees paid to physicians for out-of-network care (see 2009 post here). 
• violated state law more than 700 times over a three-year period by failing to pay medical claims on time and misrepresenting policy provisions to customers, according to the California health insurance commissioner (see 2010 post here).
• exposed confidential data from about 470,000 patients (see 2010 post here) and settled the resulting lawsuit in 2011 (see post here).
• fired a top executive who publicly apologized for the company's excessively high charges (see 2010 post here).
• California Anthem subsidiary was fined for systematically failing to make fair and timely payments to doctors and hospitals (see 2010 post here).

Yet despite this amazing recent record, WellPoint's top executives continue to prosper.  Earlier this month the Indianapolis Star reported that WellPoint Chair and CEO Angela,

Braly, 50, received 2011 compensation valued at $13.2 million, according to an Associated Press analysis of the Indianapolis company's annual proxy statement. That represents a 2 percent drop compared with 2010.

Braly, who has served as CEO for nearly five years, received a $1.1 million salary in 2011, a total that has stayed flat since 2008. Her compensation also included a performance-related bonus of nearly $1.9 million, stock and option awards totaling about $10 million and $216,279 in other compensation.

While her compensation dropped 2%,

WellPoint's earnings fell in the final three quarters of last year compared with 2010, capped by a 39 percent drop in the fourth quarter. In total, the insurer's earnings sank 8 percent compared with 2010.

The compensation above did not take into account that

Braly also made about $6.9 million last year mostly from previously awarded restricted stock units that had vested.

Summary

WellPoint CEO Angela Braly, like many of her fellow top hired managers of health care organizations, has become more wealthy every year despite her company's record of questionable conduct, and out of proportion to her company's financial results.

Based on illusory promises of greater efficiency that would benefit everyone, we have handed health care over to large, increasingly for-profit organizations, and we have handed control over these organizations to hired managers. We have made these managers accountable to no one, so they seem to run their organizations to benefit themselves first. Is it any surprise that organizations run to benefit top insiders do not much benefit patients' or the public's health?

Maybe the campaign by some of WellPoint's nominal owners to at least make what the company pays to influence politics transparent is a tiny first step to making the leadership of health care organizations accountable both to the organizations' owners (when they exist) and to patients and the public at large. Until they become so accountable, do not expect any improvements in health care cost, quality or access.

The Spoils of a "Scorched-Earth Defense" - Merck CEO Got $13.3 Million in 2011

Last week, Bloomberg reminded us of the legal baggage that pharmaceutical giant Merck is carrying. The company had announced yet another settlement of legal actions pertaining to its ill-starred but very profitable sales of now withdrawn Vioxx (rofecoxib) in 2011 (see post here). Now the settlement, including a guilty plea was accepted by a judge.

A unit of Merck & Co. (MRK), the second- largest U.S. drugmaker, pleaded guilty to a criminal misdemeanor charge as part of a $950 million settlement of a U.S. government probe of its illegal marketing of the painkiller Vioxx.

An official of Merck Sharp & Dohme said today that the company agreed to plead guilty to one count of misbranding Vioxx. U.S. District Judge Patti Saris in Boston accepted the plea as part of the drugmaker’s agreement to pay a $321.6 million criminal fine and $628.3 million to resolve civil claims that it sold Vioxx for unapproved uses and improperly touted its safety.

'I’m certainly going to accept this agreement because I think it’s in the public interest,' Saris said from the bench. 'I hope the size of this settlement and the fact that all these cases are being pressed by the federal and state governments -- the 44 states’ attorneys general -- will be a signal that this isn’t acceptable conduct.'

But unacceptable conduct can lead to a great deal of revenue. As Bloomberg noted,

Approved by the Food and Drug Administration in 1999, Vioxx became Merck’s third-largest-selling drug by 2003, generating $2.5 billion in annual sales. The company pulled Vioxx off the market in 2004 after a study found it posed an increased risk of heart attacks and strokes.

It can also lead to a great deal of personal profit for those at the company tasked with defending such "unacceptable conduct," and what has now been found to be criminal behavior. Writing in Slate, Snigdha Prakash, who wrote All the Justice Money Can Buy about the legal aftermath of Vioxx, identified the current Merck CEO and board chairman as the architect of the defense of Vioxx, as

best known for his phenomenal success in defending a sordid chapter in Merck’s recent past—its years-long silence about the safety problems of the popular painkiller Vioxx.

Furthermore, she wrote,

As he showed with the Vioxx litigation, Frazier is adept at mounting a scorched-earth defense that minimizes payouts to potential plaintiffs.

Tens of thousands of former Vioxx users sued Merck after it withdrew the drug, alleging Vioxx had caused them to suffer heart attacks and strokes. Frazier, then the company’s general counsel, declared Merck had done nothing wrong and refused to settle. 'We’ll fight every case,' he declared, and hired top-flight law firms in several East Coast cities, in the South, in Chicago, and Los Angeles, as well as a prominent New York firm to coordinate the overall strategy. It took three years and $2 billion in legal expenses for Frazier’s hard-nosed tactics to pay off. Merck settled in late 2007 for a relative pittance, resolving some 50,000 Vioxx cases for just under $5 billion. It was a far cry from the $25 billion to $50 billion in liability that analysts had predicted when Merck withdrew the drug.

So it appears that Mr Frazier is now reaping his rewards. The Dow Jones News Service reported earlier in April,

Merck & Co.'s (MRK) leader received compensation valued at $13.3 million for 2011, up 41% from the year before, reflecting his ascension to the drug maker's top post and Merck's ability to exceed certain internal performance targets.

Kenneth Frazier, 57, became Merck's chief executive at the beginning of 2011 and chairman of the board in December. He was previously head of Merck's human health business.

In a proxy statement filed Thursday with the U.S. Securities and Exchange Commission, Merck said certain elements of Frazier's compensation reflected growth in Merck's sales and adjusted earnings for 2011.

In addition, Merck's board considered 'his performance, leadership, planning and oversight during a time of continued economic, regulatory and political challenges for the healthcare industry.'

Earlier this year, Frazier acknowledged that Merck had a tough 2011. The company endured setbacks including negative clinical data for a once-promising heart drug, vorapaxar. Merck's full-year stock price performance lagged behind most of its large-pharmaceutical peers.

But Merck of Whitehouse Station, N.J., continued to cut costs and was able to raise its dividend for the first time in seven years in 2011. Frazier said in January he was optimistic about 2012.

Frazier's total compensation included: $1.5 million in salary, $3.1 million in stock awards, $3 million in option awards, $3.1 million in non-equity incentive plan compensation, and $2.6 million change in pension value and non-qualified deferred compensation earnings.

So somehow a "tough 2011" for Merck's stockholders (Merck's stock price rose a mere 3.9%, from 36.29 to 37.70 through 2011) resulted in a cornucopia of riches for Mr Frazier. So rather than being rewarded for "maximizing shareholder value," (see post here) maybe Mr Frazier was rewarded for, as Ms Prakash put it, "burying monumental corporate failures at Merck."

Here is the latest version of how top health care organizational insiders manage to make even more money no matter what, in this case, no matter what happens to the fortunes of the nominal owners of the company, no matter what happens to the company's once proud reputation, and particularly no matter what happened to the patients unfortunate enough to suffer adverse effects from its drug.

We will not be able to truly reform health care, to really improve outcomes, improve access, and control costs, until we hold the leaders of health care organizations accountable.

Perednia: "Starting Over With Healthcare Reform Is, Unfortunately, a Matter of Religion"

Over at "The Road to Hellth" blog, Douglas Perednia MD has written an excellent piece entitled "Starting Over With Healthcare Reform Is, Unfortunately, a Matter of Religion."

The use of the term "religion" is not literal but figurative:

... In deciding what to do [in recent years], political leaders stopped dealing in experience, evidence and compromise, and began dealing in faith-based – almost religious – healthcare decision-making. Of course in this context we’re not talking about “faith-based” in its meaning of handed down from the one true God (or the many true Gods, depending upon your religion), but instead faith-based in the sense of having fixed and immutable beliefs about things like how to run healthcare or, indeed, the whole country.  It doesn’t matter what the available evidence shows or what human experience has been, the political religions of the left and right, Republicans and Democrats, won’t tolerate alternative facts, strategies or explanations.  Doing so would be sacrilege, remediable only by human sacrifice. 

The point of his post is that in the U.S. both political parties have abandoned all pretense of listening to science or reason and making compromises that benefit patients.  They are making all decisions on fervently-held, unshakeable ideological beliefs (and, I add in some cases, for personal gain no matter the consequences to the public).

I am reproducing the section of his essay on health IT, that illustrates his point well:

A third example is the sacrificial cult of electronic medical records.  [Sadly, that phraseology is all too apt - ed.]  Except for those who work at Departments of Medical Informatics or as physician “champions” for EMR vendors or health systems that are spending billions to implement the darned things, the vast majority of doctors and nurses will tell you that EMRs are a chainsaw to clinical productivity and the amount of time that we actually spend listening to and getting to know our patients and their problems.  Non-vendor, non-government studies that show that these systems save money or actually improve clinical results are scarcer than hen’s teeth, yet not a day goes by without having shamans in the Cult of EMR claim that we will see miraculous increases in efficiency, reductions in cost, improvements in health and a blooming of preventive medicine “any day now”.  

These claims are increasing in intensity and shamelessness.  This is at a time when it is admitted by some of the most respected scientific bodies (e.g., National Research Council, FDA, IOM, NIST) that the technology does not support clinicians' cognitive needs, is in fact disruptive and hard to use, and reports of harm are appearing.  Worse, they report - magnitudes of reported harm are unknown due to impaired information diffusion.  The impairment is both due to lack of regulation and regulatory authorities to report to (which allows opportunism), as well as due to business IT-modeled legal contracts with IP-protection and defects gag clauses.

The cult has grown so powerful that has been able to force clinics and hospitals to sacrifice themselves in the process; goaded by the awards and penalties handed out for the presence or absence of “meaningful use”.  It’s no great revelation that is a new technology is truly useful, beneficial and cost-effective, there is absolutely no reason that a government would need to mandate its use or bribe people to buy it.  Dr. Scot Silverstein at the Health Care Renewal blog has devoted his career to documenting the questionable engineering and lack of clinical awareness that goes into these systems, but you will not identify single iota of doubt in the pronouncements of the Office of the National Coordinator or the politicians who are receiving funds and advice from the “healthcare information technology” (HIT) industry.  Their minds are made up.  Don’t confuse them with the facts.

I wouldn't say I've "devoted my career" to documenting the problems only.  I've been spending considerable time now doing something about it.  This includes, in part, advising attorneys on both sides of the Bar on the problems they need to be aware of.

This knowledge will likely benefit plaintiff's lawyers and injured patients far more than the defense.  There is no defense for cybernetically harming people with poorly designed and implemented, experimental medical devices, used without patient informed consent, or for trying to conceal the malpractice via electronic legerdemain.

It is my belief that a fair share of cavalier health IT experimenters, dyscompetents and "creative medical history editors" responsible for the current shabby state (technically and ethically) of commercial HIT, a situation that could have been avoided via learning from the medical and technological past, will have a very unpleasant and costly time in the courtroom in future years. 

-- SS

Forbes: Obamacare Billionaire: What One Entrepreneur's Rise Says About The Future Of Medicine

An article in Forbes appeared today (4/18/12) entitled "Obamacare Billionaire: What One Entrepreneur's Rise Says About The Future Of Medicine" by Matthew Herper.

The article is largely a hagiography of Cerner founder Neal Patterson:

North Kansas City is an unlikely place to launch a revolution in American health care. Yet here, amid the dilapidated grain elevators, fast food joints and vast green plains, the dream of using computers to keep you alive at a reasonable cost is battling onward. In a bunkerlike building built to withstand a direct hit by a category five tornado, 22,000 servers handle 150 million health care transactions a day, roughly one-third of the patient data for the entire U.S. Records of your blood pressure, cholesterol, lab test results, that gallbladder surgery last year—and how much you paid for it—may sit there right now. Armed guards stand watch.

This is a data center at the headquarters of Cerner, the world’s largest stand-alone maker of health IT systems—and company number 1,621 on FORBES’ Global 2000 list—where the blood-and-guts realities of medicine meet the ­sterile speed and exactitude of the computer revolution.

Omitted are some pertinent negative accounts, such as Cerner's role in the failed £12.7bn ($20bn U.S.) National Programme for IT in the NHS (NPfIT), as described here and here.

Patterson is quoted with the standard industry bellicose grandiosity and hysterics about computers "revolutionizing" (as opposed to facilitating) medicine:

... In 1999 a report from the prestigious Institute of Medicine gave Patterson hope that the rest of medicine was ready to follow in Mayo’s footsteps. Titled “To Err Is Human,” the report detailed how between 44,000 and 98,000 people die every year in hospitals from preventable mistakes, like getting the wrong medicine or the wrong dose of the right one. The ­report specifically prescribed better computer systems as a way to prevent these deadly mistakes. Patterson cites that study as the moment when health IT entered the mainstream. But it was still slow going, and that drove him nuts. His customers at that time were more worried about the Y2K bug than they were about revolutionizing health care.

I first heard him and other HIT CEO's uttering the "revolution" line at a Microsoft Healthcare Users Group meeting ca. 1997 and attended largely by IT technicians. I was probably the only Medical Informatics-trained professional in attendance, and perhaps the only physician there.

When I then asked those in the room how many had healthcare experience or had even read the Merck Manual, few hands went up. The CEO's could not then satisfactorily explain how medicine would be "revolutionized" by such a crowd. (One of those CEO's, of erstwhile HIT vendor HBOC, was later found to be seriously cooking the books after acquisition by McKesson. See "Former McKesson HBOC Chairman Convicted of Securities Fraud; Defrauded Investors Lost in Excess of $8 Billion" at FBI.gov. Some revolution...)

Unfortunately, most medical errors have little to do with documentation, either paper or electronic, as I wrote in Dec. 2010 at "Is Healthcare IT a Solution to the Wrong Problem?". The latter, however, has introduced many new errors modes and other social-technical problems, permitted massive security breaches (it's very hard to haul away 10,000 paper charts without being noticed) and opportunities for medical records evidence spoliation simply not possible with paper.

There are a few Ddulite-ish quotes from Eric Topol and David Bates in an article with a clear tone of exalting health IT.

I am quoted in the Forbes article in about the only comment critical of health IT, and the only comment concerning the ethics of human subjects experimentation conducted with this technology, as it exists in 2012:

... the Hippocratic oath says nothing about breaking eggs to make omelets. “We’re kind of headed in the wrong direction,” says Scot Silverstein, a health IT expert at Drexel University who believes that the current systems are too prone to randomly losing data [I had cited this study - ed.] and complicating doctors’ lives.

While the "breaking eggs to make omelets" metaphor was not mine, it reminded me that I just carried out my final earthly duty for my mother, injured in mid 2010 by a health IT-related error and deceased since June 2011. I filed her final IRS tax return yesterday, the due date.

I just hope my mother is enjoying her omelet in the Pearly Gates Diner. Scrambled eggs were about all she could eat well after the health IT accident.

As a result of that experience, my new business card (phone # redacted):

(Click to enlarge)

I no longer merely write about health IT risks. I find past involvement with attorneys early in my medical career, as Manager of Medical Programs and Medical Review Officer (drug testing officer) for one of the largest public transit authorities in the United States, quite helpful in this new role.

The "eggs that get broken", as in a well known old nursery rhyme from the early 1800's, cannot be reassembled. Those injured or killed in the unregulated, thoughtless, cavalier journey to some mystical medical cybernetic utopia deserve justice, and the eggheads responsible for their harms have earned the privilege of explaining themselves in the courtroom and being properly penalized where appropriate.

The future of medicine - if it is to not become a nightmare ignoring the lessons of history, repeating the mistakes of the past - belongs to those willing to take an ethical stand in defense of medicine's core values, and in defense of patients.

-- SS

How the Anechoic Effect May Be Generated - The Chairman of a Hospital Board Buys a Newspaper

We have often noted that stories about problems with the leadership and governance of health care tend to be anechoic. That is, they tend to get less notice and generate less discussion than their content would seem to warrant. We have postulated that this has to do with fear of offending the rich and powerful who now lead and govern health care organizations, and the benefits, which may be produced by conflicts of interest, of maintaining good relationships with the rich powerful.

Did a Newspaper Delay a Story Unfavorable to its Prospective Buyer?

A story that has been emerging in bits and pieces over the last two months shows the sort of complex machinations that may generate the anechoic effect.

In February, 2012, a New York Times story raised questions about how a bid to purchase a big city newspaper by a group of well-connected and wealthy buyers would affect news coverage.  The big city newspaper was the Philadelphia Inquirer.  The group bidding to buy it was:

made up of the area’s most powerful Democrats.

Edward G. Rendell, the former Philadelphia mayor and Pennsylvania governor leads the group, which includes George E. Norcross III, a Democratic powerbroker in South New Jersey;...

The Times suggested that the Inquirer's coverage was being influenced by the proposed buyers before they had completed the sale:

Last week, Gregory J. Osberg, chief executive and publisher of the Philadelphia Media Network, which publishes The Inquirer, The Daily News and Philly.com, summoned the news organization’s three most senior editors to his office.

Over three hours, he told them he would be overseeing all articles related to the newspapers’ impending sale. If any articles ran without his approval, the editors would be fired, according to several editors and reporters briefed on the meeting who did not want to be identified criticizing the company’s leadership.

In a telephone interview Wednesday morning, Mr. Osberg said the meeting did not happen. But Larry Platt, editor of The Daily News and one of the editors in attendance, said that it did. Late Wednesday, Mr. Osberg acknowledged that the meeting had taken place but denied interfering in the editorial decisions, saying he only wished to be notified of further coverage. Mr. Platt declined to comment on specifics, but said, 'We fought for what we believed in,' referring to editorial independence, 'and we didn’t get all that we wanted.'

A Story About Who Benefits from How a Hospital is Lead

This is directly relevant to the anechoic effect in health care. Per the Times,

An investigation about conflicts of interest among board members of the Cooper University Hospital in nearby Camden, N.J., remains unpublished after months. Mr. Norcross serves as the hospital’s chairman.

In an e-mail Mr. Norcross, who has called The Inquirer and The Daily News in the last week to discuss other coverage, said the reporter’s research 'contained significant factual errors and incomplete data about the hospital and health care industry.'

The allegedly suppressed story finally came out in late March. In its published form it implied that Mr Norcross had an outsized influence on hospital operations, the hospital had business relationships with people who donated to political causes and organizations favored by Norcross, the hospital seemed to disproportionately benefit from government money and actions, and the hospital's board was afflicted by numerous conflicts of interest.

Norcross' Influence on Hospital Management

Per the Inquirer,

With Cooper suffering from record deficits, Norcross, then a top executive at Commerce Bank, helped bring the hospital back from the brink in 1999 when he arranged for the bank to lend it $8 million.

Since then, Norcross has put his imprint all over Cooper, from its lavish marketing, to its competitive fight to lure doctors, to its recent $450 million construction boom, to the political figures who work at Cooper and serve on its board.

Just as he was one of the first pols to spend heavily on television ads for lowly county races, Norcross was among the first to sell a hospital on TV, deploying Kelly Ripa as Cooper's pitchwoman. As it happens, she's the daughter of Joseph Ripa, the Democratic Camden County Clerk.

The milestones have been coming faster. The medical school, a must-have for any hospital with big ambitions, is finally gearing up. This year, work began on a $100 million cancer center.

The concern is that Mr Norcross was influencing operations in ways that happened to benefit his interests. Note that this contrasts with a number of cases we have discussed in which health care organizations' boards often seen too deferential to the organizations' hired leaders.


Hospital's Relationships with Political Donors

The Inquirer reported these instances,

With its heavy capital spending and big operating budget, Cooper has become an economic powerhouse. It throws off millions in fees and contracts.

Consider Cooper's heavy borrowing to pay for all that expansion. In the last decade, Cooper's bond sales have generated $5.1 million in fees to a variety of law firms, title companies, and financial advisers. On top of that, the hospital has handed out big-ticket contracts for other legal work, such as malpractice defense, its public disclosures show.

Many of those who received work via Cooper are major political donors, giving across the state to both parties. But they have been especially generous in Camden County, Norcross' home base.

During the last decade, firms involved with Cooper have given more than $1.5 million to Camden County Democrats.

As an example, lawyers at Cozen O'Connor, a Philadelphia firm that worked on four Cooper bond issues, have given Camden Democrats $115,060 since 2002. That represented more than 70 percent of its local political contributions in New Jersey. A Cozen spokeswoman said all donations reflected candidates' merits.

In interviews, Norcross conceded he had input into who was selected to work on hospital bond issues, managed by state and local authorities.

'Have I made recommendations of quality firms?' he said. 'Absolutely.'

But he insists that firms are selected solely on ability and that political donations were irrelevant.

"These people have been making major, sizable donations to the Democratic Party in this region long before any bond issue," he said.

Lawyers offer varying explanations for their giving.

Attorney Steven Weinstein, formerly with the Philadelphia firm of Blank Rome, has given steadily to South Jersey Democrats over the years, public records show. His giving hit a peak, in 2004 when he gave $30,000 to the Camden County Democratic Committee.

The following year, Blank Rome was named one of four law firms to work on a $135 million Cooper bond issue, representing the investment firm Goldman Sachs.

In the six years since, Weinstein's donations to Camden County Democrats came only to $2,850.

Weinstein said his donations had no connection to Blank Rome.

But David Lebor, another former Blank Rome partner who joined Weinstein in making Camden County donations in 2004, said the firm would sometimes request that lawyers make specific contributions. Lebor said he didn't know the firm's motives for making requests. 'I don't ask those questions,' he said.

The implication is that Mr Norcross was using his control over the hospital to fulfill his political agenda.

Favorable Relationships with Government

The Inquirer documented instances which seemed to show that the hospital seemed to be treated disproportionately well by government, for example,

Late last year, the Delaware River Port Authority, its once-vast development kitty finally running dry, approved its last round of project spending. Among the lucky few recipients: Cooper University Hospital. It got $6 million for the cancer center.

No other hospital in New Jersey or Pennsylvania has ever received DRPA assistance, the authority says.

The DRPA money was one of many ways in which Cooper has benefited from government action during the Norcross era. This year, Cooper received $52 million in state funding, more than any hospital in South Jersey - and in the top five for all 72 New Jersey hospitals.

And U.S. Rep. Rob Andrews (D., Camden) has set aside $640,000 in federal earmarks for Cooper over the last decade, the most of any hospital in his district. Another Camden hospital, Our Lady of Lourdes, received nothing.

The Board's Conflicts of Interest

The Inquirer article noted,

[Cooper Health System CEO John P] Sheridan's old law firm, Riker Danzig Scherer Hyland & Perretti L.L.P., has been a paid lobbyist for Cooper for at least a decade. More recently, the hospital put another firm on its roster.

It didn't look far to make the hire.

In 2010, Cooper added Republican lobbyist Jeff Michaels to the team. In another lobbying venture, he is the partner of [George] Norcross' brother Philip.

The hospital has paid the firm solely operated by Michaels $180,000 over the last two years.

Beyond that,

As Cooper has spent its millions, hospital insiders have frequently been on the receiving end.

From 2008 to 2010 Cooper paid more than $40 million to companies tied to the hospital's board of trustees, according to public-disclosure documents the hospital filed with the IRS.

The payments included:

$1.6 million to Norcross' Marlton insurance brokerage, Conner Strong and Buckelew.

$1.8 million to the Parker McKay law firm, where Philip Norcross is the firm's chief executive.

$4.6 million to the former Commerce Bank and its successor, TD Bank. Norcross and a former Cooper board member were top executives at Commerce.

$277,000 to Riker Danzig, where Sheridan was once a law partner.

But of the millions in payments, the largest share - $33 million - went to a joint venture between international construction giant Turner Construction and HSC Construction and Builders in Exton.

Former board member Edward Viner's son, Jim, serves as president of HSC.

Most of the money was passed through to subcontractors and the joint venture was paid $2.8 million in fees, Cooper said.

In 2008 and 2009, the last years for which regional data were available, Cooper initially reported more of what the IRS calls 'Interested Persons' transactions than any hospital in the Philadelphia area.

This again suggests that the hospital may be run such that board members' financial interests are put ahead of other concerns.

Summary

According to BoardSource, the duties of boards of trustees of non-profit organizations include:

- Duty of Care

The duty of care describes the level of competence that is expected of a board member, and is commonly expressed as the duty of "care that an ordinarily prudent person would exercise in a like position and under similar circumstances." This means that a board member owes the duty to exercise reasonable care when he or she makes a decision as a steward of the organization.

-Duty of Loyalty

The duty of loyalty is a standard of faithfulness; a board member must give undivided allegiance when making decisions affecting the organization. This means that a board member can never use information obtained as a member for personal gain, but must act in the best interests of the organization.

-Duty of Obedience

The duty of obedience requires board members to be faithful to the organization's mission. They are not permitted to act in a way that is inconsistent with the central goals of the organization. A basis for this rule lies in the public's trust that the organization will manage donated funds to fulfill the organization's mission.

The delayed Inquirer story suggests that instead, those who are supposed to steward large health care organizations may be putting their own interests, political or financial, ahead of the mission, potentially violating their duties of loyalty and obedience. This story corroborates questions we have been raising about who now are the stewards of health care organizations, and to what ends.

However, this particular story appears to have been delayed, and perhaps diluted, because of the power wielded by the sorts of people who now are supposed to be stewards of health care organizations. This shows how powerful insiders not only are distorting health care to fit their own agendas, but that they may be smothering the discussion of this vitally important issue.

We will not be able to truly reform health care until we can freely discuss what has gone wrong with it.