Vested Interests and Their Influence on Physicians- New Understanding from Cognitive and Social Psychology

Evidence-based medicine proposes patient care decisions based on the best evidence from critically reviewed clinical research, knowledge of biology and the biopsychosocial context, and patients' values and preferences.  Yet physicians often fail to make evidence-based decisions, despite many efforts to educate, or incentivize them to do so.  We used to think that the main reason was physicians' lack of knowledge and understanding of EBM, and human cognitive limitations that make such evidence-based thinking difficult.  However, now we realize that physicians are deluged by  attempts to influence their decisions so as to favor vested interests, whether or not that is good for patients.

We have discussed various kinds of deception used in marketing meant to increase physicians' prescriptions for drugs, and recommendations for devices and health care services.  Physicians have not proved to be very resistant to these methods.

Now a new article provides a different perspective on how marketers use cognitive and social psychology to manipulate physicians.(1)  Sunita Sah's and Adriane Fugh-Berman's introduction stated,

Physicians often believe that a conscious commitment to ethical behavior and professionalism will protect them from industry influence.  Despite increasing concern over the extent of physician-industry relationships, physicians usually fail to recognize the nature and impact of subconscious and unintentional biases on therapeutic decision-making. Pharmaceutical and medical device companies, however, routinely demonstrate their knowledge of social psychology processes on behavior and apply these principles to their marketing. 

The article then listed a number of findings from social (and cognitive) psychology that marketers may use to their advantage on naive physicians.

Psychological Mechanisms Promoting Acceptance of Conflicts of Interest and Dubious Marketing Ploys

First, marketers may take advantage of cognitive biases and psychological mechanisms that allow physicians to accept marketing maneuvers while denying the effect of marketing on their decision making.

Confidence and Over-Confidence

People are strongly influenced by messages delivered with confidence and do not take the trouble to ascertain the accuracy of these messages if doing so requires effort or money.

I would add that many humans, including physicians, are also over-confident in the accuracy of their own judgments.  (In 1989 we showed  that physicians often were excessively confident in their judgments of patients' outcomes, in particular, about survival of critically ill patients.)(2)

Of course, marketers often state their messages with great confidence regardless of their accuracy.

So physicians need to try to restrain their own over-confidence, and be more skeptical of the confidence of others. Maybe this would just be an exercise in simple humility.

Self-Serving (or Ego) Biases

People tend to believe that the results of their decisions, or of their groups' decisions, are better than average.  This can be called the Lake Wobegon effect (from Garrison Keilor's fictional town in which all the children are above average.)

We and others have shown that physicians may be overly optimistic about the outcomes of their own (versus others') patients, or their clinical units' (versus others') outcomes, again in the context of predicting survival of critically ill patients.(3)  We have also posted about how corporate boards of directors seem to almost always think that their hired executives are better than average, at least when determining their executive compensation.

Similarly, Sah and Fugh-Berman wrote,

Physicians believe that their own prescribing behavior is unaffected by industry influence, although they concede that other physicians are susceptible to such influence.

Furthermore,

Social psychology research confirms that people have a 'bias blind spot,' namely, they are more likely to identify the existence of cognitive and motivational biases in other than in themselves.

But, as Dana and Lowenstein wrote,

It cannot both be true that most physicians are unbiased and that most other physicians are biased.

So, to put it bluntly, physicians ought to be more humble about their own ability to resist outside influences and the resulting biases. Again, some simple humility might help.

Cognitive Dissonance

Sah and Fugh-Berman pointed out that

While articulating and believing in the importance of scientific objectivity, physicians' biases to accept industry gifts create cognitive dissonance; that is, discomfort that arises from discrepancy between conflicting beliefs, or between beliefs and behaviors.

So,

Cognitive dissonance theory specifies three methods - not mutually exclusive - by which people manage or reduce dissonance.  Changing one of the dissonant beliefs, opinions or behaviors (possibly a difficult or painful process that requires sacrificing a pleasurable behavior or treasured belief); Lowering the importance of one of the discordant factors which can be accomplished by denial - forgetting or rejecting the significance of one or more of the conflicting cognitions; and adding consonant elements that resolve or lessen the dissonance (this may involve rationalizations to buffer the dissonance between conflicting cognitions.)

Physicians may use denial and rationalization to reduce cognitive dissonance caused by their concurrent desire for relationships with marketers and others with vested interests on one hand, and their professionalism and its obligation to put patients' needs first on the other hand.  Sah and Fugh-Berman cited Chimonas and colleagues,

Denial included (a) avoiding thinking about the conflict of interest; (b) rejecting the notion that industry relationships affect physician behavior, and (c) disavowing or universalizing responsibility for problems that arose from conflicts of interest ('there's always a conflict of interest...').  Rationalizations included (a) asserting techniques that would help maintain impartiality and (b) reasoning that meetings with drug reps were educational and benefited patients.

We have discussed various public justifications for accepting conflicts of interest by physicians and other health care decision makers that employed a variety of logical fallacies along these lines.

So physicians need to re-examine their treasured beliefs and the gratification they get from relationships with industry (as opposed to those with patients, colleagues, friends and families).  They could remember the advice that no one can serve two masters.

Sense of Entitlement

Physicians' sense of entitlement, especially given the increasing stress upon them, may be used to rationalize relationships with drug, device and biotechnology companies since these corporations seem to be among their few friends (versus insurance companies, government agencies, and sometimes hospital administrations whom physicians feel may be more burdensome.).  So, in one study,

Implicitly reminding physicians of the burdens of medical training and their working conditions more than doubled reported willingness to accept gifts....

So physicians need to reconsider that to which they feel entitled.  This is the third instance in which some humility might help. 

Principles of Influence Used by Marketers

Markets seem to also be well acquainted with the six principles of influence and persuasion identified by Cialdini and colleagues.

Reciprocity

The norm of reciprocity - the obligation to help those who have helped you - is one of the guiding principles of human interaction

This is the foundation of the effect of relatively small conflicts of interest, such as giving of small gifts.

Physicians pay off industry gifts through changes in their practice

Furthermore,

Gifts associated with a subtle implicit request may be more likely to achieve compliance than gifts that call for explicit reciprocation. 

So physicians need to be wary of Greeks, or anyone else bearing gifts, even those less conspicuous than wheeled horses.

Commitment and Consistence

Consistency is highly valued in our society and associated with rationality and stability.  After committing to a decision or opinion, people justify that choice or opinion by remaining consistent with it.

So marketers try to get physicians to make small commitments to leverage larger ones.  This is

why drug reps, ask, for example, 'will you try my drug on your next five patients?'

So physicians should remember there is no virtue in commitment to erroneous beliefs.  "A foolish consistency is the hobgoblin of little minds." - Ralph Waldo Emerson

Social Proof

This is basically the deliberate deployment of the logical fallacy of the appeal to common practice.

Social proof, also referred to as social validation or conformity, is the practice of deciding what to do by looking at what others are doing.

So,

If accepting industry gifts is a cultural norm in medicine, physicians will continue to do so.  The opinions of colleagues are often used by industry representatives to sway physicians to adopt a particular therapy. 

This may be why industry works so hard to sign up health care academics.

Trainees in an institution, for example, are affected by the institution's stated policies but also - and sometimes more so - by what they see their mentors do.

So physicians, who often pride themselves on independence, need to be skeptical about the need to follow the crowd.

Liking or Rapport

The more you like someone, the more you are apt to follow their advice, even if your feelings towards them have been manipulated.

This is obviously why drug representatives, for example, are so nice to physicians.

Physicians often feel overworked, underpaid, and unappreciated [ed note -  and their is plenty of evidence, some of which we have discussed on this blog, that this is not unreasonable.]  Drug reps dispense sympathy, flattery, food, gifts, services and income-enhancing opportunities and seek to ask nothing in return but scholarly consideration of the benefits of drugs.

So physicians need to reconsider who really are their friends, and be skeptical of "friends" with something to sell. 

Authority and Security

This is basically the deliberate deployment of the logical fallacy of the appeal to authority.  The best example is industry's efforts to recruit key opinion leaders, that is health professionals who are perceived as authority figures, but have really been hired to market.

From an industry perspective, the best KOLs radiate status and authority while successfully convincing their peers (and perhaps themselves) of their illusory independence and lack of bias.

Note that

KOL speakers not only influence audience members' prescribing behavior, but also - as predicted by cognitive dissonance theory - become more convinced themselves of the benefits of the products they endorse.

So physicians need to be skeptical of those claiming to be authorities, especially when they are connected with people who have something to sell.

Summary

We used to strongly believe (and Dr Wally Smith and I used to teach a course to the effect that) the major barrier to true evidence-based practice was the cognitive limitations that physicians share with all humans.  We thought in terms of cognitive biases and the inappropriate use of cognitive heuristics leading physicians to inaccurately judge the probabilities of diagnoses and medical outcomes, and thus make less than optimal decisions.

Now it seems apparent that the deliberate influencing of health professionals' judgments and decisions by external actors, mainly those interested in selling more products and services, but sometimes by those with ideological or political motives, is currently a much more important challenge to evidence based practice.  It looks like the influencers may be very knowledgeable about human cognitive limitations and how social psychology influences judgment and decisions, and may use this knowledge to pursue their vested interests, at the financial and physical expense of patients, and ultimately the public.

 True health care reform would encourage professional education designed to increase resistance to external influences that put self-interest ahead of patients' and the public's health, and careful regulation that would decrease some of the more dangerous practices used.  Of course, much more resistance might be achieved if physicians used a little more common sense when dealing with people who are obviously trying to sell them on goods, services, or ideas.  A good proportion of the deceptive methods discussed above could be countered by remembering the usefulness of humility, skepticism, and a few simple aphorisms.   

Again, as we have written repeatedly, not only should all conflicts of interest be disclosed for the sake of honesty, but physicians and other health professionals ought to consider repudiating most of all of them, maybe at some personal expense, but in the interest of re-establishing their commitment to putting the patient, not their own self-interest, or the vested interests of others, first.  
 

References

1.  Sah S, Fugh-Berman A. Physicians under the influence: social psychology and industry marketing strategies.  J Law Med Ethics 2013; 14:  . Link here:

2. Poses RM, Bekes C, Copare F, Scott WE.  The answer to "what are my chances, doctor?"  depends on whom is asked: prognostic disagreement and inaccuracy for critically ill patients.  Crit Care Med 1989; 17: 827-833.  Link here.

3. Poses RM,  McClish DK, Bekes C, Scott WE, Morley JN. Ego bias, reverse ego bias, and physicians' prognostic judgments for critically ill patients. Crit Care Med 1991; 19: 1533-1539.  Link here.

More Signs of Organized Resistance? - Proposed Legislation for More Hospital Leadership Accountability

This year we note the beginning of action against the power of large health care organizations lead by hired executives and cronies who seem to put their self-interest and self-enrichment ahead of patients' and the people's health.  In 2013 we noted no confidence votes by medical school faculty (here), and university faculty (here) against academic leaders perceived as putting their power and wealth ahead of core values, actions by a state governor (here) and a big city mayor (here) against local health care systems perceived as putting their executives' enrichment ahead of their services to patients, and a union labor action (here) against a health care system perceived as putting executive enrichment ahead of adequate health insurance for low level employees.  We have posted about numerous examples of hospital (and other health care organization) executives receiving compensation far out of proportion to any realistic measure of their organizations' performance or positive effects on patients' or the public's health, and seemingly skimmed off the top of these organizations' budgets.

Now Modern Healthcare has reported about a bill in the California legislature aimed at supposedly not for profit hospitals that put money ahead of patients:

Officials with the California Nurses Association say the proposed law—AB 975—is an attempt to bring more accountability to money-making hospitals that use tax exemptions to turn tidy profits and give hefty salaries to executives.

Furthermore,

 Charles Idelson, spokesman for the California Nurses Association, said many profitable tax-exempt hospitals have lost the public's trust in recent years by making profits their top mission and paying salaries that allow executives to buy yachts while 'chipping away' at less-profitable services for women, children, the poor and mentally ill.

'What this bill does is, it really is an effort to increase transparency and make hospitals more accountable to the communities that they purport to serve,' Idelson said. 'Hospitals that are meeting their charity care obligation should welcome this process and understand that it is an opportunity to rebuild some of the public trust that they have lost through their other policies and practices.'

Hospital Leaders Deploy Talking Points, Including Logical Fallacies 

Perhaps predictably, hospital executives are not so happy:

'This is less about good public policy than it is about politics,' said Michael Hunn, chief executive for southern California hospitals at Providence Health & Services, which has five hospitals in the state. 'I would hate to see a political agenda further harm those that are marginalized in society,' Hunn said. 'No matter what the legislative and political process is, we need to keep in mind the human beings that it is our responsibility to care for.'

Note that Providence Health & Services is the ostensibly non-profit Catholic hospital system accused of putting paying executives multi-million dollar compensation ahead of giving low level employees minimally adequate health insurance as we posted here.  According to the organization's latest 990 form, Mr Hunn got $1,576,978 total compensation in 2011.  So one wonders which human beings he is feeling most responsible for?  Note also that the unsubstantiated allusion to a "political agenda," appears to be an appeal to ridicule, "a fallacy in which ridicule or mockery is substituted for evidence in an 'argument.'"  We have noted before how public relations flacks working for top executives of health care organizations seem to be very good at using such logical fallacies.  The argument Mr Hunn made seems essentially identical to an argument used against a lawsuit to end the tax exemption of a huge Pennsylvania hospital system that has apparently angered the communities which it is supposed to serve while paying its executives millions (look here).

In addition, 

Jan Emerson-Shea, spokesman for the California Hospital Association, said the bill's union backers were hiding their real agenda with 'red herring' issues like highly compensated executives and the superficial dissonance of not-for-profit organizations with healthy margins.

''Not-for-profit hospital' doesn't mean that you don't make a profit--all hospitals need to make a profit to keep the doors open,' Emerson-Shea said

Of course, that last assertion is not true.  Non-profit organizations need to avoid sustaining repeated losses to keep their doors open, but do not need to make any surplus to do so.  And the issue was not whether hospitals make small surpluses, but whether they behave like for-profit corporations, especially in regard to how well they pay hired executives.  So while protesting "red herrings," one spokesperson for hospitals, presumably for hospitals' hired executives, seemed to be arguing that the only alternative to a very large surplus and a very large reserve is a deficit.  By ignoring another obvious alternative, having a small surplus and a small reserve, this argument thus is derived from the logical fallacy known as the false dilemma.  The spokesperson also seemed to be arguing that a deficit inevitably leads to bankruptcy.  Of course prolonged deficits might lead to bankruptcy, but a single deficit would not necessarily do so.  Thus we see the logical fallacy known as the slippery slope. Note further that the argument used by the California executive here was again essentially identical to an argument used against a lawsuit to end the tax exemption of a huge Pennsylvania hospital system that has apparently angered the communities which it is supposed to serve while paying its executives millions.  So it looks like once again the hired executives and their public relations operatives have their talking points in line.   (See this post, from which our argument about the logical fallacies employed first in Pennsylvania came.)

Summary

It really is beginning to look like there is some sort of trend, albeit still small, towards organized resistance against the hired executives and cronies who have made themselves rich from large health care organizations, putting their self-interest and enrichment apparently before taking care of patients and serving the public's health.  As we have said ad infinitum....

Health care organizations need leaders that uphold the core values of health care, and focus on and are accountable for the mission, not on secondary responsibilities that conflict with these values and their mission, and not on self-enrichment. Leaders ought to be rewarded reasonably, but not lavishly, for doing what ultimately improves patient care, or when applicable, good education and good research. On the other hand, those who authorize, direct and implement bad behavior ought to suffer negative consequences sufficient to deter future bad behavior.

If we do not fix the severe problems affecting the leadership and governance of health care, and do not increase accountability, integrity and transparency of health care leadership and governance, we will be as much to blame as the leaders when the system collapses.

The Push Back Continues: the Mayor of Pittsburgh Sues UPMC Claiming it is No "Public Charity"

There is another indication that push back against the power of large health care organizations is getting more significant.

In February, 2013, we noted that the Governor of the state of Connecticut publicly criticized lavish executive compensation at a small regional hospital system, compensation partially fueled by government funded health insurance payments, and in contrast to hospitals' claims that insufficient reimbursement was driving them to poverty.   

The Suit Challenging the Charitable Status of UPMC

Now the outgoing Mayor of Pittsburgh has launched a lawsuit challenging the status of huge, nominally non-profit health system UPMC as a public charity.  A summary of the arguments comes from an article in the Pittsburgh Post-Gazette.  First, in the state of Pennsylvania, a Supreme Court description set out a test to determine if a particular organization is a public charity, the status the UPMC currently claims:

The Supreme Court's 1985 ruling involving the Hospital Utilization Project (or HUP) set out a test that requires that a purely public charity must fulfill all five of the test's points that it: advances a charitable purpose; donates or renders gratuitously a substantial portion of its services; benefits a substantial and indefinite class of persons who are legitimate subjects of charity; relieves the government of some of its burden; and operates entirely free from private profit motive.

That ruling was reaffirmed by the Supreme Court in April in a case involving an Orthodox Jewish summer camp in Pike County that was found to not deserve its property tax exemption.

The city's lawyer, E.J. Strassburger of Strassburge Mckenna Gutnick & Gefsky, argued that UPMC does not pass that test:

Mr. Strassburger wrote, first and most strongly, that 'it seems virtually certain that UPMC would fail to carry its burden of proving that it satisfies the fifth prong of the HUP test by 'operating entirely free from profit motive.''

He cited UPMC's nearly $1 billion surplus over the last two years and $3 billion in reserves as evidence of this, and that UPMC 'is carefully structuring its operations to prioritize profits-generation over charity.'

Also, 

In addition, Mr. Strassburger wrote that UPMC does not 'advance a charitable purpose' in part because UPMC 'maintains an 'open admissions policy' in name only' and it does not make all of its health care available to everyone, regardless of ability to pay.

Furthermore,

the review says UPMC fails to provide sufficient charity care, operates far-flung international operations that are losing money, and has closed operations in poor communities only to open or expand into richer ones.

But it also cites what it terms 'excessive' benefits of UPMC executives, including CEO Jeffrey Romoff's $5.9 million salary; the fact that more than 20 employees are paid more than $1 million; UPMC's corporate jet; Mr. Romoff's 'lavish'  Downtown headquarters (which it claims includes a private chef, chauffeur and private dining room).

The Post-Gazette also sought the advice of experts,

Nicholas Cafardi, dean emeritus and professor at Duquesne University's Law School, said he believes the argument that UPMC is not free from a private profit motive is the strongest one in Mr. Strassburger's review, in part because of how far-flung UPMC has become.

'The more they do that gets them away from their core purpose, the more they open themselves up to the argument that they aren't doing charity,' he said.

In addition, Mr. Cafardi said, UPMC's extensive advertising campaign --sometimes directly against rival Highmark -- makes it look like the organization is operating for profit.

'A lot of things like that make them look like they're operating for a private profit,' he said. 'You advertise because you're in competition. That's the private profit motive.'

Gary M. Grobman, former head of the nonprofit Pennsylvania Jewish Coalition and author of 'The Pennsylvania Nonprofit Handbook,' said UPMC would have a fight on its hands.

'Based on what [Mr. Strassburger] has written, which may or may not be true, it seems some staff at the hospital are paid quite well and some decisions are made based on achieving as much revenue as possible instead of providing as much charity as possible,' he said. 'And if all of that is true, they don't deserve their not-for-profit status.'

So the main issues brought up by the city are similar to issues we have raised about numerous nominally non-profit health care organizations.  We have shown that many particular organizations appear not to act like charities when they appear to put short-term revenue ahead of the organization's mission, a process sometimes called financialization, and put lavish compensation of top hired managers ahead of the organization's general financial well-being; and when their leadership appears to subvert the organization's mission.

The UPMC Response versus Anger in the Community

Of course, UPMC public relations disagreed with the premises of the lawsuit:

'We think the 13-page memo that a local law firm wrote for the City is very weak and reaches its conclusions entirely based on opinion, not fact,' UPMC spokesman Paul Wood wrote. 'Rather than responding to partisan politics and blatant union pandering by the Mayor, UPMC looks forward to demonstrating in a court of law that we meet all five prongs of the HUP test and that our hospitals easily qualify for the tax-exempt status they unquestionably deserve. Interestingly, by hiring an outside law firm the City is prepared to waste millions of dollars of taxpayer funds on an unsuccessful attempt to pursue this case.'

Note that the unsubstantiated allusions to "partisan politics" and "pandering" appear to be an appeal to ridicule, "a fallacy in which ridicule or mockery is substituted for evidence in an 'argument.'"  We have noted before how public relations flacks working for top executives of health care organizations seem to be very good at using such logical fallacies.

Mr Wood also scoffed at the naive notion that having a $1 billion surplus and $3 billion in reserves means the organization operates like a business:
 

Mr. Wood wrote that 'numerous people have tried to distort the meaning of that component to attain a political result.'

'It does not mean a nonprofit shouldn't strive to have a positive operating margin -- organizations that don't do that go out of business,' he added.

Note that Mr Wood seems to be arguing that the only alternative to a very large surplus and a very large reserve is a deficit.  By ignoring another obvious alternative, having a small surplus and a small reserve, his argument thus is derived from the logical fallacy known as the false dilemma.  He also seemed to be arguing that a deficit inevitably leads to bankruptcy.  Of course prolonged deficits might lead to bankruptcy, but a single deficit would not necessarily do so.  Thus he also employed the logical fallacy known as the slippery slope. 

On the other hand, a Post-Gazette columnist showed the depth of community concern over the role of UPMC:

Someone in power is taking official action against the biggest corporate bully in town. Can I get an Amen?

In fact, I can get many Amens, and that says a lot about the behavior of the region's dominant hospital system.

Has there ever been a 'charity' so disliked and mistrusted by the people it's supposed to serve and the people it employs? You rarely hear anyone say 'I cannot stand CARE,' or 'I despise Doctors Without Borders.' But you hear it all the time about UPMC, notwithstanding the jobs it creates, the medical innovations it advances, the life-saving care its doctors deliver and its commitment of $100 million for the Pittsburgh Promise scholarship fund. With all that to its credit it should be beloved, but the opposite is true.

Not helping matters is its corporate public relations, which is increasingly tone deaf. In an emailed response to the mayor's announcement, UPMC spokesman Paul Wood said the lawsuit 'appears to be based on the mistaken impression that a non-profit organization must conduct its affairs in a way that pleases certain labor unions, certain favored businesses, or particular political constituencies.'

No, Mr. Wood. It's based on the correct impression that a nonprofit hospital's top priority should be the patients, not building a monopoly. And that a $10 billion system with a billion-dollar surplus and $2 billion to $3 billion in reserves should be taking care of many more indigent sick people than UPMC has been treating -- especially when it owns land that a Post-Gazette investigation valued at $1.6 billion, even as it enjoys a $20-million tax break every year, underwritten by the good citizens of Pittsburgh and Allegheny County. You can try blaming the SEIU organizing campaign or your arch-enemy, Highmark the insurer, or politics, but this is so much bigger than any of those things. And the public knows it.

Keep in mind that the current discussion of UPMC in the media focuses on very recent events.  On Health Care Renewal, we have posted frequently over the last eight years about problems with the leadership of UPMC.  We started in 2005 with their inability to prevent a fraud  perpetrated by some UPMC middle managers. In 2008, we discussed the apparent mismanagement of the highly touted UPMC liver transplant program.    Starting in 2009, and continuing through 2013, InformaticsMD chronicled how the leadership has presided over health care information technology so problematic that it has been blamed for patient deaths.  In 2009, we noted sanctions against UPMC's public relations.   In 2010, we noted conflicts of interest and apparent self-dealing and nepotism affecting the UPMC board of trustees and UPMC executives. 

Summary

For at least a generation, health care leaders and health policy makers have been pushing for consolidation of health care organizations in the name of efficiency.  We now have a health care system dominated by fewer, larger organizations, and whatever efficiencies have been produced mainly seem to have benefited organizational insiders.  Maybe now, though, some are beginning to remember that monopolists - starting at least with John D Rockefeller, I believe - have historically touted their ability to improve efficiency and rationality.  The results, however, have been higher prices and poorer results for everyone else. 

Hospitals and hospital systems have been particularly good at getting away with the efficiency argument despite the fact that health care prices in the US have been soaring ever since the "vertical integration" craze in the early 1990s.  I believe such organizations have been getting away with this nonsense because of their revered status within their communities.  Now, however, as huge hospital systems drive up prices and make their top executives rich, maybe we will remember Theodore Roosevelt's warnings about trusts and malefactors of great wealth.

There is no good evidence that large hospitals and even larger hospital systems take better care of patients, or provide better teaching and research.  Not only should we question whether huge hospital systems like UPMC are public charities, we should wonder how we ever let them get so big, and proceed to break up these new sorts of "trusts."

Doctors' Dubious Excuses for Taking Pharmaceutical Companies' Money

Pro Publica has updated their database of payments by pharmaceutical payments to physicians and organizations.  It now has data from 15 companies totaling more than $2 billion from 2009 to 2012.

To accompany Pro Publica's report, a number of news outlets wrote about payments given to local or regional doctors.  These included, in semi-random order, the Los Angeles Daily News (via the Inland Valley Daily Bulletin), the Salt Lake (City, Utah) Tribune, the San Jose (California) Mercury News, NewsChannel5 in Nashville, Tennessee, the Pasadena (California) Star-News, the Bergen and Passaic, New Jersey Record Herald via NorthJersey, the Philadelphia Inquirer, and the Columbus (Ohio) Dispatch.

The combined reports showed that many physicians, including prominent academics and community practitioners, are still getting a lot of money from pharmaceutical firms.  Since Pro Publica was only able to get data from some US drug companies, albeit those who accounted for 47 percent of US drug sales, it is likely that many more doctors than those in the data base got such payments, and the doctors in the data base may have gotten more money from companies that do not report their payments.  In addition, it is likely that many more doctors get similar payments from medical device companies, health care information technology companies, and other for-profit corporations that promote health care products and services.  

We had discussed Pro Publica's initial reporting from its database here.  While there is evidence that most payments to doctors by pharmaceutical companies are intended to promote marketing, we discussed here how some doctors rationalized their payments as fully professional and proper.

Now the updated reporting has provided many examples of - not to put too fine a point on it - physicians making dubious excuses for their acceptance of payments, often large, from pharmaceutical companies. Their themes included

It's Education, What Could Possibly Go Wrong?

From Pro Publica,

[Dr Rakesh] Jain, of Lake Jackson, Texas, has earned $582,049.  [Dr Vladimir] Maletic, of Greer, SC, made $527,850, according to Dollars for Docs.

So,

Jain said he loves teaching and delivers the same lectures about drugs and medical conditions regardless of whether a drug company is paying him.

'I am not a marketer, I am an educator,' Jain said.

Also

Maletic said he speaks about treatments for mood disorders, schizophrenia and sleep-wakefulness disorders because he believes that 'good quality education about pharmaceutical products may be beneficial to both physicians and their patients.'

The LA Times found someone with a similar opinion.

'Pharmaceutical companies used to take doctors to dinner, but that was banned years ago,' said Dr. Arthur Chanzel Jeng, an infection control specialist at UCLA-Olive View Medical Center in Sylmar.  'Now they must provide some educational content.'

Jeng was paid $80,500 by Pfizer last year for several speaking engagements. As an infection control specialist at Olive View, he and others in his field are concerned about drug resistant diseases and the limited number of antibiotics. Drug companies have little incentive to produce new antibiotics, he said, so if they do, physicians in his field want to know more about the drugs. That's why he agrees to speak.

'We (speakers) provide education when a new antibiotic does get released,' he said. 'There needs to be education among doctors on how to use this new antibiotic.'

In addition, the Salt Lake Tribune noted that 

[Dr Eliot] Brinton received two of the single largest payments in Utah, both in excess of $85,000, for promoting drugs by GlaxoSmithKline, ProPublica’s database shows. He describes the lectures as educational and based on science.

'I love the science and I love to teach. And doctors are glad to better understand the drugs and how to use them. I’m careful not to act as a cheerleader,' he said. 'If I’m a shill for the drug company I lose my integrity and integrity is really all I have to offer my patients and the drug companies.'

The physicians above all asserted that since their activities were "educational," they must be worthwhile.

Note that the ostensibly educational activities described above all appear to be "drug talks," that is talks sponsored by the drug companies, probably through speakers' bureaus, and given probably not as part of formal, accredited continuing medical education.  Since the publication of "Dr Drug Rep" in the New York Times in 2007, the public has learned that such talks mainly include content provided by the pharmaceutical companies, and are meant by the companies as marketing exercises.  From that case we also learned that physicians who deviate from the marketing message do not last long on speakers' bureaus.  (See posts here and here.) 

In addition, pharmaceutical companies often pay physicians deemed to be "key opinion leaders," whose opinions are promoted supposedly for their brilliance and erudition.  However, as noted here and here, the companies buying their services believe they have bought the services of sales people.    Evidence about key opinion leaders actually performing like marketers has come from documents revealed during litigation (e.g., see this recent example of a huge monetary settlement made of charges that GlaxoSmithKline, a major multinational drug company committed fraud among other things, and in the course of its unethical activities used key opinion leaders as marketers).   Also, see the Neurontin marketing plan (see post here), and the Lexapro marketing plan (see post here) for examples of how company keaders view key opinion leaders as marketers.

Given the volume of evidence about drug talks, speakers' bureaus, and the marketing purposes of key opinion leaders, the assertion that because they were in some sense educational, these doctors' corporate financed talks were worthwhile is at best a silly excuse.

More formally, it may arise from a logical fallacy.  The doctors appeared to be arguing that education is an unalloyed good.  However, obviously not all education is good education, or unbiased education. Specifically in this case, logic, and evidence from several cases in which pharmaceutical companies' intentions as documented in communications revealed in litigation (see examples here) suggest that these companies pay physicians for education that they believe serves marketing purposes.Thus the doctors seem to be using the composition fallacy, the logical fallacy that an entire class (in this case, all of education) can be judged by some of its members (examples of unbiased, accurate, good education.) 

It's Research, What Could Possibly Go Wrong? 

Similarly, the doctors who get paid to do research say it's all about the research.  The Salt Lake Tribune reported on

CRI LifeTree Research, which has received at least $3.4 million in drug company payments since 2009, according to ProPublica. 

Co-founder Lynn Webster, an anesthesiologist, is listed as having received the single largest payment in the state: $1,687,771 from Cephalon, a big maker of pain medications. Only three other doctors in the country received more from Cephalon.

Nationally, Webster is among the top 50 for single largest payments received, behind marquee hospitals, such as the Mayo Clinic, Cleveland Clinic and Duke and Harvard Universities.

A nationally recognized expert in pain management, Webster is under investigation by the U.S. Drug Enforcement Administration, which is looking into opioid overdose deaths of patients of his former pain clinic. A Senate Committee is probing his financial ties to Big Pharma.

Webster insisted,

Research payments to him cover overhead and other costs, including his salary as a lead researcher, he said. 

'Research inevitably leads to better education, better systems and better therapies — things that are indispensable for medical advancement and quality care,' he said. 

The Pasadena Star-News provided this version,

Pasadena-based plastic surgeon John Edward Gross received more than $770,000 from Allergan, the maker of Botox and some breast implants.

In 2011-12, Allergan paid Gross to conduct research, consult, serve on health care panels and business travel.

'What I'm doing for Allergan is to advance breast surgery,' said Gross, a board certified surgeon and a former chemical engineer. 'Much of the research you do is industry-supported. They have a motivation to make better and new products.'

It is pretty amazing to see the notion that all clinical research is irreproachable in print.  We and others have documented huge numbers of cases and volumes of evidence that clinical research may be manipulated, and, if necessary, suppressed to support the commercial goals of those who make products or provide services assessed by such research.  In fact, the prestigious Institute of Medicine's report on Conflict of Interest in Medical Research, Education and Practice included the recommendation (4.1) that "individuals may not conduct research with human participants if they have significant financial interest in an existing or potential product or a company that could be affected by the outcome of research."  Given the volume of this evidence, the assertion that all pharmaceutical company clinical research should be irreproachable is just plain silly.

Again, formally the physicians' arguments, if they should be dignified with that name, seem to arise from the same logical fallacy discussed above.  The underlying argument seems similar to that made above about education: "I am doing research.  All research is good, unbiased, helpful to patients.  So what I am doing is good, unbiased, helpful research."  So it appears the composition fallacy again was in play.

It's Not Really My Money

The San Jose Mercury News provided this example,

The database links Dr. Gurkirpal Singh to more than $248,000 in Pfizer payments it lists for speaking, consulting, travel and meals since 2009. He said all the money went to Institute of Clinical Outcomes Research and Education in Palo Alto, where he is the chief scientific officer. Singh said the money paid for research.

'I receive nothing -- let me be very clear on that,' said Singh, who is an adjunct clinical professor at Stanford University.

The Columbus Dispatch added,

 Dr. Henry Nasrallah, a psychiatrist at the University of Cincinnati, netted $647,341 in speaking and consulting fees from drug companies, ranking him as Ohio’s top recipient of such payments over that four-year period. Cincinnati’s College of Medicine put that money toward his $222,232 annual salary.
'The (pharmaceutical) companies have a signed agreement with the university for my activities, not with me personally,' Nasrallah wrote in an email to The Dispatch.

'This is another reason why I maintain scientific and clinical impartiality about the various drugs I teach, because I do not have a direct personal gain,' wrote Nasrallah, a former chairman of Ohio State University’s psychiatry department.

Really, the boss doesn't care whether he brings in any money?

These doctors seem to be denying that money is fungible.  In other words, they seem to be arguing that money going to the organizations that pays them is different from money going directly to them, and that their bosses do not in fact care whether their activities bring any revenues to the organization.  This just flies in the face of common sense.

Someone Needs to Pay

NewsChannel5 was able to interview the top earner on the Pro Publica list, Dr Jon W Draud, who said among other things, 

it was only fair to accept payments for his speaking engagements because it makes up for what he would otherwise make while working at his practice.

 'It's not essential, I suppose, but I consider it a reasonable, fair compensation for being gone and traveling, and spending time away from my home and family,' Draud said.

If Dr Draud was providing education, a useful service, it seems reasonable that someone should pay for it.  However, he appears to beg the question of who should pay for it?  Underlying this question is the concern that since it was pharmaceutical companies, not students, who were paying, the education was being done primarily to benefit the former, through marketing, rather than the latter.  The apparent argument, that because it is not reasonable to get paid for services, any source of payment is acceptable, is again just plain silly. 


Who Cares About Money?

NewsChannel5 also reported that Dr Draud said

 accepting so much money did not create a conflict of interest between him and his patients. He said the information he gives out was not biased towards the drug companies.

However, the Institute of Medicine report on Conflict of Interest in Medical Research, Education and Practice defined conflict of interest as "circumstances that create a risk that professional judgments or actions regarding a primary interest will be unduly influenced by a secondary interest."  Asserting that receiving over $1 million could not create even a risk that his educational presentations were biased towards the interests of those who gave him that money seems like simple denial.  

The FDA Said it Was True

Top earner Dr Draud also said according to NewsChannel5,

 It has to be vetted by the FDA as being fair, balanced and non-biased toward the pharmaceutical company....

From the Philadelphia Inquirer, re Dr Warren S Joseph, a podiatrist who received over $650,000

Joseph acknowledged the payments in an email to Philly.com.

'All of my lectures given for the Pharma industry follow strict FDA guidelines and are consistent with the corporate integrity agreements entered into between the companies and the government,' Joseph said. 'There is full disclosure of this fact at all lectures.'

 These justifications appear to be just plain wrong.  As far as I know, the US Food and Drug Administration does not pre-approve "drug talks" given by physicians for pharmaceutical companies.

By the way, the statement by Dr Joseph approaches self parody.  As we have discussed, corporate integrity agreements are usually the products of legal settlements of charges of wrongdoing.  Drug companies do not sign such agreements because of previous good behavior.  Moreover, I have never heard of such an agreement that required pre-approval of drug talks, either. 

 Trust Me, I'm an Expert

 As reported by NorthJersey,

One of the top recipients in North Jersey was Thomas Dayspring, an internist and expert in cholesterol management, who earned just under $400,000 from Merck and GlaxoSmithKline. Dayspring said he was paid for lectures at conferences for doctors arranged by the drug companies, as well as continuing medical education programs.

'I’ve logged over 2 million miles, all over the world and in all 50 states,' said Dayspring, who served as the director of the North Jersey Institute of Menopausal Lipidology in Wayne until last summer. 'Guys like me who are nationally known attract a big audience. Not every speaker can trot out a CV like mine.'

New Jersey, you gotta love it.  The most charitable characterization of this is an appeal to authority, albeit an amazingly egotistical one. 

Summary

 Two years after Pro Publica's report, pharmaceutical companies are continuing to pay substantial sums to physicians and other health professionals, nominally for education and research.  Because these arrangements are financially beneficial to the professional recipients of the money, and likely financially beneficial via their marketing effects  to the companies that provide the money , it should be no surprise that they are continuing in the absence of any regulatory restrictions.

What is saddest about the latest reporting is the silliness of the excuses made by the conflicted physicians.  Professionals with four years of education post-college, and multiple years of experience, and who are often respected as academics or practitioners ought to be able to reason and argue better than they did in the examples above.  Of course, people who make a lot of money often come to believe they really deserve it.  And conflicts of interest produce conflicted thinking.  As Joe Collier wrote in the BMJ, " people who have conflicts of interest often find giving clear advice (or opinions) particularly difficult." (Look here.)

The IOM  report  on conflicts of interest suggested full disclosure of all payments that could be considered conflicts of interest, banning clinical research by conflicted individuals, prohibiting academic physicians from giving "drug talks" whose content was provided by industry, and developing methods to fund continuing medical education independent from industry.  This report, and its recommendations have gotten scant attention, maybe because they would threaten a status quo that enriches conflicted health professionals and the companies that create these conflicts.  However, in my humble opinion, implementing all the report's recommendations would only be a beginning down the road of restoring the integrity of clinical care, teaching, and research.  

EHRs and "Meaningful Use": Begging the Question in the New England Journal of Medicine

I used to have great respect for the New England Journal of Medicine.

No more.

That respect was reduced significantly in 2010 when I saw the following passage (as I wrote in my July 2010 post "Science or Politics? The New England Journal and The 'Meaningful Use Regulation for Electronic Health Records"):

... In the NEJM article "The 'Meaningful Use' Regulation for Electronic Health Records", David Blumenthal, M.D., M.P.P. (ONC Chair) and Marilyn Tavenner, R.N., M.H.A. (10.1056/NEJMp1006114, July 13, 2010) available at this link, the opening statement is (emphases mine):

The widespread use of electronic health records (EHRs) in the United States is inevitable. EHRs will improve caregivers’ decisions and patients’ outcomes. Once patients experience the benefits of this technology, they will demand nothing less from their providers. Hundreds of thousands of physicians have already seen these benefits in their clinical practice.

I think it fair to say those are grandiose statements and predictions presented with a tone of utmost certainty in one of the world's most respected scientific medical journals.

Even though it is a "perspectives" article, I once long ago learned that in writing in esteemed scientific journals of worldwide impact, statements of certainty were at best avoided, or if made should be exceptionally well referenced. I note the lack of footnotes showing the source(s) of these statements.

I also note the lack of mention of literature refuting or potentially refuting these statements of certainty. I can think of more than a few examples of the latter just off the top of my head [ref. 1-15 below, certainly not a comprehensive list but merely skimming the surface].

... So, did the NEJM publish fact, or political platitude?

Can someone provide a list of peer reviewed, rigorous studies that back the assertions of certainty in 10.1056/NEJMp1006114, and override the body of literature that could cast doubt on these assertions of certainty?

The negative if not bitter reader comments to yesterday's New York Times article on the health IT lobby (link) certainly cast some doubt.

My respect has dropped several more notches in 2013.

The NEJM has served as a PR journal for health IT once again.

In a correspondence piece "Early Results of the Meaningful Use Program for Electronic Health Records", N Engl J Med 2013; 368:779-780,  February 21, 2013 by Adam Wright, Ph.D., Stanislav Henkin, B.A., Joshua Feblowitz, M.S., Allison B. McCoy, Ph.D., David W. Bates, M.D. and Dean F. Sittig, Ph.D., the following statement is published (emphases mine):

... The downstream effects of meaningful use on quality, safety, and efficiency are not yet known, and further increases in EHR adoption, functionality for clinical decision support systems, and research are needed to ensure the effectiveness of the meaningful use program

I note that Begging the Question is a fallacy in which the premises include the claim that the conclusion is true or (directly or indirectly) assume that the conclusion is true.

Further, I made the following points in my Jan. 2010 post "Meaningfully Experimental Protocols and Interfaces to Nowhere? Nagging Questions On Healthcare IT Remain":

... there is a major problem with the term "meaningful use" itself:

This [term "meaningful use"] is an example of putting the cart before the horse, and is a semantically-based, self contained logical fallacy of sorts. If a health IT system is harmful, the term "meaningful use" is itself Orwellian. If we don't know if HIT is beneficial, or have doubts, then such as term presupposes that health IT is inherently beneficial. A better term would have been "good faith use" - use based on the faith or hope that health IT will have an overall positive effect. The term "meaningful use" jumps the gun and is more a political slogan than a "meaningful term."

I go further. Use of a term that a priori assumes some outcome reflects the antithesis of science. The term "meaningful use" in the domain of technology implies that those following the recipe for use of some technology, as well as their subjects, will experience meaningful outcomes. A parallel is in the logical fallacy of begging the question or circular argument, where the conclusion of an argument is among its premises.

In this current NEJM passage, the "question" of MU effectiveness is shamelessly begged like a hungry puppy begging for a Snausage doggie snack.

"Ensure the effectiveness?"  The inherent assumption is that MU (developed by consensus committee without supporting rigorous evidence of effectiveness), whose 'downstream effects' are admittedly unknown, WILL be effective - if only we spend MORE billions of dollars on the technology.

At best, the appropriate statement to have been made is this:

... The downstream effects of meaningful use on quality, safety, and efficiency are not yet known, and further increases in EHR adoption, functionality for clinical decision support systems, and research are needed to determine if meaningful use will have any positive impact on healthcare quality, safety and efficiency."

From a physician commenter overseas who excels in demolishing health IT propaganda: 

Seriously, did they proof read the last paragraph? How did the NEJM editors let that get printed? 

Given the recent food scandal in the UK, it is like the PM saying we are not quite sure that there's horsemeat in the Burgers and Lasagna so we are going to need to import a lot more of this muck from France, Poland & Romania before drawing any conclusions...

Shame on the New England Journal.  My respect for them is even lower than after the 2010 health IT advert as above.  This current letter's conclusion is a high school-level faux pas and, in my opinion, should not have been published in its present form.

-- SS

Addendum:  Let's see if they publish my Letter to the Editor on this matter, submitted today.

Second addendum:  a reader opined that MU could have a negative impact on quality, safety and efficiency (cf. yesterday's NYT article and reader comments, link).  While less likely, we just don't know.

Addendum Mar. 18, 2013. 

I received this today from the NEJM:

Your letter referring to the Wright article of 21-Feb-2013  has been received.  Because of the limited availability of space, we can publish only a fraction of the letters we receive.  Although we will not be able to print yours, we have forwarded a copy to the authors in case they wish to reply directly to you.

 
This is why I blog.

-- SS

Non-Profit Hospital Executive Salaries Continue to Defy Gravity and Logic

The old saying is that nothing is certain except death and taxes.  In health care, the other near certainty seems to be that compensation for health care leaders is big and always getting bigger. 

Over the past few weeks several reports about the compensation of top executives of US non-profit hospitals and hospital systems have appeared.  So it is time to do our latest round-up of incessantly buoyant hospital executive compensation, and argumentative hot air that seems to fuel it.  I will first summarize the latest cases in alphabetical order by state, and then examine some common justifications for the seemingly anti gravitational nature of executive compensation in this part of health care.

Arizona

On AZCentral.com was an article about the CEO of a single relatively small public hospital system:

The leaders of Maricopa County’s public health-care system agreed to raise chief executive Betsey Bayless’ pay by 33 percent, bringing her salary to $500,000.

That may not seem like a lot of money as executive compensation goes, but consider the context:

The Maricopa Integrated Health System is a public hospital system that provides care for the Valley’s poor and uninsured. It is funded by federal and state health-care dollars and a special county levy paid by all county property-tax payers.

MIHS budgeted $3.5 million for market adjustments and merit raises for its employees in fiscal 2013. Bayless’ salary increase alone will consume one-quarter of the $500,000 the board had allocated this fiscal year to bring all employees’ pay in line with similar positions elsewhere.

The health-care system’s rank-and-file employees have received annual merit-based salary increases of no more than 2.9 percent since fiscal 2008.

Nonetheless, the CEO did not exactly feel rich:

Bayless said she did not request the raise and was not expecting it. She said she believes MIHS employees will understand that her salary has been comparatively low and that her replacement likely will be brought in at an even higher salary.

She justified her pay by comparing it to what she thought the market would bear.

'Any salary information will show you that my salary is always the lowest of any (hospital) CEO currently in the entire state, even the little-bitty hospitals,' Bayless said. 'On any measure, 375 (thousand dollars) is below market. So, do I feel undercompensated? I don’t know. But on any measure, it always comes in below market.'

Members of the hospital system's board also justified the pay on the grounds that it was at the market rate:

[Board Members Mary] Harden and [Terence] McMahon said they voted for the pay raise because a national search firm hired to find Bayless’ replacement set $500,000 as a minimum competitive salary for qualified candidates.

Another board member also noted how hard CEO Bayless works:

'The lady works 70-plus hours a week. She’s on call 24/7. So, I think the job warrants it. She works very, very hard,'  Dewane said.

I am sure health care professionals who also work long hours, and are frequently on call, but unlike managers, have to make decisions with real life and death consequences would understand, or not.


California

In California a report focused in contrast on the bigger hospitals and hospital systems.  California Healthcare News reported on the best compensated hospital executives in the state.  In general,

More than one in five non-profit hospital chief executive officers in California received compensation totaling $1 million or more in 2010, according to a new pay survey by Payers & Providers.

Altogether, 32 CEOs of the 154 surveyed received pay packages that ventured into the seven figures. That compares to 19 CEOs who received seven-figure pay packages in the only prior survey Payers & Providers conducted. That survey was published in June 2010, and relied primarily on data from 2007 and 2008.  

Some specifics about the best paid executives:

Kaiser Permanente's George Halvorson is the most highly-compensated hospital system executive in California, receiving $7.74 million in 2010. That included more than $6 million in additional compensation. Halvorson is retiring as Kaiser's CEO in June.

Thomas Priselac, the chief executive officer of Cedars-Sinai Medical Center in Los Angeles, was the highest-paid standalone hospital CEO, earning $2.77 million in 2010. That included additional compensation of $1.6 million.

The article provided the justification for Priselac's seven-figure compensation:

According to an email response from Cedars-Sinai spokesperson Duke Helfand, Priselac's compensation 'reflects the top-tier clinical, research and educational performance the medical center consistently has delivered in his 19 years of leadership.'

He did not offer how this performance was measured, how it compared to that of any other hospital, or whether anyone other than the CEO might have been responsible for that performance.

The survey results included the best compensated CEO of a health-district

Michael Covert,  the CEO of the two hospital Palomar-Pomerado Health system in San Diego County, was the highest-paid district hospital CEO, earning $1.09 million in 2010. He was among two district hospital CEOs to earn seven-figure compensation.

The survey results also included the best compensated CEO for academic medical centers run by the (state supported) University of California:

David T. Feinberg, M.D., is by far the highest-paid CEO among those who oversee the five research hospitals operated by the University of California. Feinberg, who runs Ronald Reagan UCLA Medical Center, earned $1.33 million in 2010 – the only seven-figure pay package among that cohort of CEOs, and nearly $450,000 more than the second-highest earner in that group, Mark Laret of UC San Francisco Medical Center.

Connecticut

Becker's Hospital Review provided information on the highest paid Connecticut hospital CEOs:

Here are the nine CEOs who earned at least $1 million in 2011.

•    Clarence Silvia, The Hospital of Central Connecticut: $2.76 million
•    Marna Borgstrom, Yale-New Haven Hospital: $2.59 million
•    Brian Grissler, Stamford Hospital: $2.24 million
•    Elliot Joseph, Hartford Hospital: $1.74 million
(*CEO is now Jeff Flaks)
•    Frank Corvino, Greenwich Hospital: $1.71 million
•    Susan Davis, RN, Saint Vincent's Medical Center: $1.48 million
•    Chris Dadlez, Saint Francis Hospital and Medical Center: $1.42 million
•    John Murphy, MD, Danbury Hospital: $1.08 million
•    Christopher O'Connor, Hospital of Saint Raphael: $1.04 million

 The report did not provide any justification for the pay levels, and I could find no further news coverage that was relevant.

Massachusetts

The Fitchburg (MA) Sentinel and Enterprise seemed to be the only media outlet which  noted the compensation of hospital executives reported to the state attorney general.  It listed compensation of some regional hospital leaders,

Patrick Muldoon, president and CEO of HealthAlliance Hospital, a member of the UMass Memorial Health Care system, received a compensation package of $653,868 in 2010, the most recent year for which compensation data is publicly available.

The HealthAlliance system includes a 135-bed community hospital with services on two campuses in Leominster and Fitchburg.

Over that same period, Daniel P. Moen, former president and CEO of the 153-bed Heywood Hospital in Gardner, received a compensation package of $386,126.

Christine Schuster, CEO of Emerson Hospital in Concord, earned a total compensation package of $669,844. Emerson has 179 beds.

Lahey Clinic chief executive Howard Grant, who oversees a facility with 317 beds, was paid a total compensation package of $768,568 in 2010.

The article did not note the justification for the pay of any of these CEOs.  I was unable to find any other recent reporting that took advantage of the data supplied to the state Attorney General.

New York

SUNY - Downstate Medical Center

The New York Daily News reported on compensation given to executives at one state supported university medical center:

15 SUNY Downstate Medical Center bigs are raking in $200,000-plus salaries even as plans move forward to shut down its Long Island College Hospital campus.

Downstate president Dr. John Williams who’s leading the drive to close the Cobble Hill hospital gets the fattest pay of all.

He’s paid $650,000 a year salary and gets an annual housing allowance of up to $80,000 and the use of a car.

It listed the following compensation information for other executives:

Other big hospital administrators’ salaries, 2011
* $552,556.33 — Debra Carey, vice president
* $357,379.26 - Grace Wong, vice president
* $334,072.19 — Ivan Lisnitzer, vice president
* $312,182.24 — Paul Davis, assistant vice president
* $286,954.51 Renee Poncet, vice president

This should be viewed in the context of the medical center's current dire straits:

SUNY Downstate — which has a hospital and medical school in East Flatbush — is in such bad financial shape it could go broke by March, SUNY chairman Carl McCall has said.

Of course, despite these financial threats, a "spokesman" defended these payments again as market-based:

[Robert] Bellafioire defended the brigade of big salaries — though the controller’s audit suggested Downstate should consider cutting the number of high-paid administrators.

'We have to offer competitive compensation, particularly when we’re up against any number of the country’s best hospitals and medical schools just across the bridge and in the metropolitan area,' Bellafiore said.

Rural Hospitals in Upstate New York

On the other hand, the Plattsburgh (NY) Press-Republican reported on the compensation given to hospital executives in rural northern New York state.  These included Alice Hyde Medical Center:

John Johnson, president and chief executive officer, was paid $339,539 in 2010. He retired in the fall of 2012.

He was replaced by Douglas DiVello, who is paid $246,682 in salary and benefits.

Then there was CVPH Medical Center in Plattsburgh

Hospital President Stephens Mundy has been at CVPH for 10 years and was paid $749,563 in salary, bonuses and other compensation in 2010.

His base salary for 2013 is $478,421,...

In addition, there was Elizabethtown Community:

Rodney Boula, president and chief executive officer at ECH, was paid $229,902 in 2010.

Note that later the article explained that this hospital has no more than 25 beds.

However, the reporter was unable to find out the compensation of the CEO of the Adirondack Medical Center in Saranac Lake:

Chandler Ralph, president and chief executive officer for 16 years, is not employed by the hospital or its umbrella organization, Adirondack Health.

She is paid through a contract with a management company, Health Tech Management Services, said Joe Riccio, AMC communications director.

Her salary is a confidential employment contract, 'just like any other vendor that does business' with the hospital, he said.

Because of that, her salary was not available through IRS records. The Press-Republican pressed Ralph to release her salary, noting that it was publishing the pay of all other area hospital CEOs, but she refused, citing confidentiality.

Parenthetically, this seems to be an unusual case of the actual outsourcing of top leadership.

This compensation information again should be considered in the context.  These are all relatively small hospitals in a rural area with low costs of living.  In addition, these hospitals were facing substantial financial challenges:

Numerous jobs were cut in 2012 at the area’s five hospitals, some the first substantial layoffs in decades. One hospital recorded an operating deficit, and at some, programs and services were reduced.

Adirondack Health, parent company of Adirondack Medical Center in Saranac Lake, and CVPH Medical Center in Plattsburgh, each laid off 17 employees last fall and eliminated vacant positions.

Alice Hyde Medical Center in Malone let 12 people go in September and had closed down more than a dozen vacancies.

Nonetheless, the justifications for these compensation levels included the usual suspects.In an introductory discussion not specific to any hospital, we find:

'The responsibilities of a CEO have exploded in the last four years,' said William Van Slyke of the Healthcare Association of New York State, an organization that represents hospitals and health-care systems across the state.

Similarly,

'Being a hospital CEO, you are ‘all in,’ all the time, every hour. It’s a tremendous responsibility.'

 
This is the familiar argument about how hard seemingly all hospital CEOs work.  As noted above, it is particularly incongruous in a health care setting in which numerous health professionals are also "all in," and these professionals bear the responsibility of making decisions and taking actions that can directly affect patients' health, safety, and even survival.

 Following this were the equally familiar arguments that the compensation of CEOs is determined by the market, and so to retain CEOs one must pay at this market rate:

'Being a hospital CEO, especially in the state of New York, is complex and demanding job. There is an extraordinarily limited pool of candidates, and that increases their value.'

'I can’t speak for the hospitals in your area,' he told the Press-Republican, 'but a qualified and successful CEO can go anywhere in the country and make equal or higher salaries.'

The Press Republican also elicited very similar articles justifying pay for individual hospital CEOs, for example, regarding the CEO of the Alice Hyde Medical Center, here is the "compensation is determined by the market" argument from "Dean Johnston, president of the Board of Trustees, and member of the hospital's Compensation Committee"

'It’s important that the salary is competitive with other institutions because it’s difficult to attract professional leaders who will improve the quality of care.'

And from the same person, here is the "CEOs work very hard" argument

 'It’s difficult being CEO,' Johnston continued, 'because you’re the head of a complex and multi-faceted institution.'

Very similar arguments were made to justify the compensation of the CEO of CVPH Medical Center. 

The Usual Talking Points and Logical Fallacies

So, to summarize, hospital executive compensation, at least such compensation that gets noted in the media, seemingly never has been better.  CEOs at even the smallest, most rural, non-profit community hospitals can make well into the six figures.  CEOs at public hospitals can make over half a million dollars.  CEOs at larger hospitals, even those that are state supported, can make even more, up to millions a year for CEOs of moderate to large non-profit hospital systems.  Even hospitals that are facing financial challenges, or that are laying off employees still pay substantial amounts.

In previous posts, we noted that whenever anyone bothers to try to justify extravagant executive compensation at hospitals, and for that matter, other health care organizations throughout the US, they seem to repeat the same set of talking points.    We first listed the talking points here, and then provided additional examples of their use here, here and here.   The talking points are:
-  we pay what everyone else pays
-  CEOs work hard and are brilliant, and so deserve high pay
-  high pay is needed to attract and retain competent, if not brilliant people.

None of the examples of these talking points we have seen so far explain why these apply to CEOs and other top hired managers, but not to other kinds of employees. 

So it should be no surprise that the justifications for the largesse to hospital executives found in the cases above follow the talking points yet again.

We Pay What Everyone Else Pays

 Another way to put this is that some market determines CEO pay.  We saw versions of this to support the compensation of the CEOs of Maricopa Integrated Health System in Arizona, and SUNY - Downstate Medical Center and Alice Hyde Medical Center in New York.

Note that almost never is this argument supported by data about whether comparisons were actually made to a representative peer group.  In any case, as we asserted before, this justification may be a logical fallacy, an appeal to common practice.

CEOs Work Hard and Are Brilliant

 This is an especially frequently used talking point.  I have yet to see an instance in which any hospital official would omit a CEO was anything other than supremely diligent and totally brilliant.  We saw versions of this to support the compensation of the CEOs of Maricopa (AZ), Cedars-Sinai Medical Center in California, the Alice Hyde Medical Center and CVPH Medical Center in New York, and generically to support all New York State hospital CEOs.

As we noted above, this justification is almost never accompanied by any evidence that CEOs work harder or are more brilliant than the numerous health care professionals who actually make it possible for the hospital to operate.  I would guess it would be very hard to show that CEOs work longer hours, are under more stress, make more consequential decisions, are smarter or better trained than typical doctors, nurses and other health care professionals.  This justification thus appears to be another kind of logical fallacy, an appeal to authority.

High Pay is Needed for Retention

 We saw versions of this to support the CEOs of Maricopa, SUNY - Downstate, Alice Hyde, CVPH, and generically again to support all NY hospital CEOs. 

 

Note that this justification is also almost never supported by any evidence.  As we noted here, while this argument, probably like the others, comes from the generic business management literature, there is little data in the larger business world to show that CEOs are very mobile, or likely to succeed when transplanted to a new environment.  In fact, a recent report looking at the mobility of CEOs worldwide called this a "self-serving myth."  (See this summary for a link to it.)

 

It is too bad that no one ever seems to get the opportunity to challenge these talking points when they are offered as justifications for outlandish executive compensation. 

Read more here: http://www.charlotteobserver.com/2013/02/06/3835851/charlotte-hospital-pay.html#storylink=cpy

Read more here: http://www.charlotteobserver.com/2013/02/06/3835851/charlotte-hospital-pay.html#storylink=cpy

Summary

As we have shown again and again, the pay of top health care leaders seems to endlessly increase, without clear justification, regardless of the vicissitudes affecting the organizations they lead, their employees, their patients and society.  This suggests that health care organizations, like many other organizations, seem to be run primarily for the benefit of their executives and their cronies, regardless of what happens to anyone else.  

As we have frequently said, current policies about paying hired health care managers leave the managers unaccountable for the effects of their actions on patients' and the public's health, and worse, fail to deter and may even encourage ignorance of the health care mission, frankly mission-hostile behavior, self-interest, conflicts of interest, and outright corruption.  Meanwhile, paying nearly all top managers as if they were brilliant, while setting much harsher standards for the employees who actually take care of patients, including health professionals, demoralizes those on whom patients actually depend for care.

As we have said endlessly,....   Health care organizations need leaders that uphold the core values of health care, and focus on and are accountable for the mission, not on secondary responsibilities that conflict with these values and their mission, and not on self-enrichment. Leaders ought to be rewarded reasonably, but not lavishly, for doing what ultimately improves patient care, or when applicable, good education and good research. On the other hand, those who authorize, direct and implement bad behavior ought to suffer negative consequences sufficient to deter future bad behavior.

If we do not fix the severe problems affecting the leadership and governance of health care, and do not increase accountability, integrity and transparency of health care leadership and governance, we will be as much to blame as the leaders when the system collapses.