Wall Street Journal: "ObamaCare’s Electronic-Records Debacle"

AMA healthcare IT dangers healthcare IT distraction healthcare IT risk HITECH Jeffrey A. Singer MD Wall Street Journal

Wall Street Journal: "ObamaCare’s Electronic-Records Debacle"

Unknown 2/18/2015 Komentar

This WSJ Op-Ed could have been entitled "President Sucker:  Led Down the Garden Path by The Healthcare IT Industry."

It is entitled "ObamaCare’s Electronic-Records Debacle", as below.  First, though:

On Feb. 18, 2009 the WSJ published the following Letter to the Editor authored by me (http://www.wsj.com/articles/SB123492035330205101):

Digitizing Medical Records May Help, but It's Complex

Dear WSJ:

You observe that the true political goal is socialized medicine facilitated by health care information technology. You note that the public is being deceived, as the rules behind this takeover were stealthily inserted in the stimulus bill.

I have a different view on who is deceiving whom. In fact, it is the government that has been deceived by the HIT industry and its pundits. Stated directly, the administration is deluded about the true difficulty of making large-scale health IT work. The beneficiaries will largely be the IT industry and IT management consultants.

For £12.7 billion the U.K., which already has socialized medicine, still does not have a working national HIT system, but instead has a major IT quagmire, some of it caused by U.S. HIT vendors.

HIT (with a few exceptions) is largely a disaster. I'm far more concerned about a mega-expensive IT misadventure than an IT-empowered takeover of medicine.

The stimulus bill, to its credit, recognizes the need for research on improving HIT. However this is a tool to facilitate clinical care, not a cybernetic miracle to revolutionize medicine. The government has bought the IT magic bullet exuberance hook, line and sinker.

I can only hope patients get something worthwhile for the $20 billion. 

Scot Silverstein, M.D.
Faculty
Biomedical Informatics
Drexel University Institute for Healthcare Informatics
Philadelphia

The UK's National Programme for Health IT in the NHS (NPfIT) has since died. (See my Sept. 22, 2011 post "NPfIT Programme goes PfffT" at http://hcrenewal.blogspot.com/2011/09/npfit-programme-going-pffft.html.)  Also see my Dec. 7, 2008 post "Open Letter to President Barack Obama on Healthcare Information Technology" warning of many issues at http://hcrenewal.blogspot.com/2008/12/open-letter-to-president-barack-obama.html.

Now, the WSJ, to which I and other colleagues have been speaking about the realities of healthcare information technology for years but which has seemed reluctant to publish what would amount to a stinging corporate rebuke, has published this Op-Ed by a surgeon, Jeffrey A. Singer:

http://www.wsj.com/articles/jeffrey-a-singer-obamacares-electronic-records-debacle-1424133213

ObamaCare’s Electronic-Records Debacle
The rule raises health-care costs even as it means doctors see fewer patients while providing worse care.

By Jeffrey A. Singer
Feb. 16, 2015 7:33 p.m. ET

The debate over ObamaCare has obscured another important example of government meddling in medicine. Starting this year, physicians like myself who treat Medicare patients must adopt electronic health records, known as EHRs, which are digital versions of a patient’s paper charts. If doctors do not comply, our reimbursement rates will be cut by 1%, rising to a maximum of 5% by the end of the decade.

I am an unwilling participant in this program. In my experience, EHRs harm patients more than they help.

I note that it's not just physicians who are unwilling participants in this medical experiment.  We all are - as patients - in this unregulated experiment. 

As a colleague puts it, with an addendum by me:

"Why are we implementing patient care tools that are not tested for harms, not evaluated for harms, not reported systematically for harms, while the government does not refute the statement that harms are caused by EHRs and admits the true magnitude of harms is unknown?"

The program was inspired by the record-keeping models used by integrated health systems, especially those of the nonprofit consortium Kaiser Permanente and the Department of Veterans Affairs.

Yet even in those environments, these systems cause major problems, e.g.,

http://www.modernhealthcare.com/article/20140620/NEWS/306209940
Complicated, confusing EHRs pose serious patient safety threats [at VA]

By Sabriya Rice
Posted: June 20, 2014 - 8:15 pm ET

Confusing displays, improperly configured software, upgrade glitches and systems failing to speak to one another—those are just a few electronic health record-related events that put patients in danger, according to a new study.

The more complex an EHR system, the more difficult it may be to trace problems, patient safety experts warn. Hospitals planning to add new software or make updates should be strategic about changes and proactively include ways to monitor events.

“Because EHR-related safety concerns have complex socio-technical origins, institutions with longstanding, as well as recent EHR implementations, should build a robust infrastructure to monitor and learn from them,” concluded the report published Friday in the Journal of the American Medical Informatics Association.

Researchers evaluated 100 closed safety investigations reported between August 2009 and May 2013 to the Informatics Patient Safety Office of the Veterans Health Administration.

Among the findings, 74 events resulted from unsafe technology, such as system failures, computer glitches, false alarms or “hidden dependencies,” a term for what happens when a change in one part of a system inadvertently leads to key changes in another part. Another 25 events involved unsafe use of technology such as an input error or a misinterpretation of a display.

The authors of that study admitted the data was very incomplete due to limitations of error recognition, data collection and diffusion, and other factors.

Back to the WSJ:

The federal government mandated in the 2009 stimulus bill that all medical providers that accept Medicare adopt the records by 2015. Bureaucrats and politicians argued that EHRs would facilitate “evidence-based medicine,” thereby improving the quality of care for patients.

This is the "silver bullet theory of IT-enabled transformation" at work.  Add computers and - Presto!  Better care!  After all, how hard can it be to get to the moon in a hot air balloon? 

The moon is "up" and balloons go "up", therefore, why not? All that's required are the right "processes" -- with which the Acme Hot Air Balloon Co. executives can accomplish anything -- and ignoring those pessimistic scientists, engineers and other experts who speak of vacuum of space and radiation and all those esoteric "gotchas" that are bad for business! (See my 2008 Powerpoint presentation to the IEEE Medical Technology Policy Committee on these issues entitled "To The Moon In A Hot Air Balloon: Why Is Clinical IT Difficult?" at this link.)

But for all the talk of “evidence-based medicine,” the federal government barely bothered to study electronic health records before nationalizing the program. The Department of Health and Human Services initiated a five-year pilot program in 2008 to encourage physicians in 12 cities and states to use electronic health records. One year later, the stimulus required EHRs nationwide. By moving forward without sufficient evidence, lawmakers ignored the possibility that what worked for Kaiser or the VA might not work as well for Dr. Jones.

Not only that, the government and industry are hell-bent on avoiding any meaningful quality regulation (see my April 9, 2014 post "FDA on health IT risk:  "We don't know the magnitude of the risk, and what we do know is the tip of the iceberg, but health IT is of 'sufficiently low risk' that we don't need to regulate it" (http://hcrenewal.blogspot.com/2014/04/fda-on-health-it-risk-reckless-or.html).

Even more critically, they didn't bother to seriously study harms.  Leave that to the independent ECRI Institute, whose findings were alarming (see http://hcrenewal.blogspot.com/2013/02/peering-underneath-icebergs-water-level.html).  The ECRI Institute has not followed up on this study that I am aware; being recipients of government money, as I understand it, to study the problems may have impaired their independence and softened their tone.)

Which is exactly what is happening today. Electronic health records are contributing to two major problems: lower quality of care and higher costs.

The former is evident in the attention-dividing nature of electronic health records. They force me to physically turn my attention away from patients and toward a computer screen—a shift from individual care to IT compliance. This is more than a mere nuisance; it is an impediment to providing personal medical attention.

As someone who formally entered the field in 1992 via postdoc in Medical Informatics at Yale School of Medicine, I can state emphatically that the whole concept of direct physician data entry was an experiment.  In medical informatics, we were exploring ways to avoid the known detriments of direct physician entry via creative applications of information technology.

That experiment has been a clear failure, at least as diffused into the commercial health IT sector in 2015.  However few in my field are willing to admit this due to, in large part, avoidance of dealing with the unpleasant consequences of that admission.  (One pioneer, Clement McDonald now at NIH, has admitted this.  See my Oct. 29, 2014 post "The tragedy of electronic medical records" (http://hcrenewal.blogspot.com/2014/10/the-tragedy-of-electronic-medical.html.)

Doctors now regularly field patient complaints about this unfortunate reality. The problem is so widespread that the American Medical Association—a prominent supporter of the electronic-health-record program—felt compelled to defend EHRs in a 2013 report [now supplanted - see below - ed.], implying that any negative experiences were the fault of bedside manner rather than the program.

AMA has changed its tone.

I think the author of this Op-Ed may have missed the Jan. 21, 2015 letter to HHS from multiple medical societies or submitted this Op-Ed prior to that date. 

A group of 37 medical societies led by the American Medical Association sent a letter to Health and Human Services last month saying the certification program is headed in the wrong direction, and that today's electronic records systems are cumbersome, decrease efficiency and, most importantly, can present safety problems for patients. 

I covered that Jan. 21, 2015 letter at http://hcrenewal.blogspot.com/2015/01/meaningful-use-not-so-meaningul.html. 

Apparently our poor bedside manner is a national crisis, judging by how my fellow physicians feel about the EHR program. A 2014 survey by the industry group Medical Economics discovered that 67% of doctors are “dissatisfied with [EHR] functionality.” Three of four physicians said electronic health records “do not save them time,” according to Deloitte. Doctors reported spending—or more accurately, wasting—an average of 48 minutes each day dealing with this system.

Nurses are having similar experiences.  I've written previously about substantial problems nurses at Affinity Medical Center, Ohio (http://www.affinitymedicalcenter.com/) and other organizations are having with EHRs, and how hospital executives were ignoring their complaints.  The complaints have been made openly, I believe, in large part due to the protection afforded by nurses' unions.

See for example my July 2013 post "RNs Say Sutter’s New Electronic System Causing Serious Disruptions to Safe Patient Care at East Bay Hospitals" at http://hcrenewal.blogspot.com/2013/07/rns-say-sutters-new-electronic-system.html (there are links there to still more examples), and my June 2013 post  "Affinity RNs Call for Halt to Flawed Electronic Medical Records System Scheduled to Go Live Friday" at http://hcrenewal.blogspot.com/2013/06/affinity-rns-call-for-halt-to-flawed.html, along with links therein to other similar situations.

Particularly see my July 2013 post "How's this for patient rights? Affinity Medical Center manager: file a safety complaint, and I'll plaster it to your head!" at http://hcrenewal.blogspot.com/2013/07/hows-this-for-patient-rights-affinity.html, where a judge had to intervene in a situation of apparent employee harassment for complaints about patient safety risks.  Also see my post about an open letter to the Chief Nursing Officer (CNO) dated August 15, 2013, at http://hcrenewal.blogspot.com/2013/11/another-survey-on-ehrs-affinity-medical.html.

That plays into the issue of higher costs. The Deloitte survey also found that three of four physicians think electronic health records “increase costs.” There are three reasons. First, physicians can no longer see as many patients as they once did. Doctors must then charge higher prices for the fewer patients they see. This is also true for EHRs’ high implementation costs—the second culprit. A November report from the Agency for Healthcare Research and Quality found that the average five-physician primary-care practice would spend $162,000 to implement the system, followed by $85,000 in first-year maintenance costs. Like any business, physicians pass these costs along to their customers—patients.

Then there’s the third cause: Small private practices often find it difficult to pay such sums, so they increasingly turn to hospitals for relief. In recent years, hospitals have purchased swaths of independent and physician-owned practices, which accounted for two-thirds of medical practices a decade ago but only half today. Two studies in the Journal of the American Medical Association and one in Health Affairs published in 2014 found that, in the words of the latter, this “vertical integration” leads to “higher hospital prices and spending.”

I do not enjoy the fact that this occurred to my own personal physicians who are now employees of a hospital against which I am substitute plaintiff for my deceased mother, whose injuries were EHR-related.  See "On EHR Warnings: Sure, The Experts Think You Shouldn't Ride A Bicycle Into The Eye Of A Hurricane, But We Have Our Own Theory" at
http://hcrenewal.blogspot.com/2013/09/on-ehr-warnings-sure-experts-think-you.html, actually penned in 2011.

Proponents of electronic health records nonetheless claim that EHRs decrease record-keeping errors and increase efficiency. My own experience again indicates otherwise and is corroborated by research.

The EHR system assumes that the patient in front of me is the “average patient.” When I’m in the treatment room, I must fill out a template to demonstrate to the federal government that I made “meaningful use” of the system. This rigidity inhibits my ability to tailor my questions and treatment to my patient’s actual medical needs. It promotes tunnel vision in which physicians become so focused on complying with the EHR work sheet that they surrender a degree of critical thinking and medical investigation.

"Critical thinking always, or your patient's dead" - Victor P. Satinsky MD, heart surgery pioneer, Hahenemann Hospital.

Distractions to the doctor-patient interaction are unwelcome and damn well better have a very high payback - which the experiment with health IT is showing is simply not there at the stage of development of this commercial technology in 2015.

Not surprisingly, a recent study in Perspectives in Health Information Management found that electronic health records encourage errors that can “endanger patient safety or decrease the quality of care.” America saw a real-life example during the recent Ebola crisis, when “patient zero” in Dallas, Thomas Eric Duncan, received a delayed diagnosis due in part to problems with EHRs.

That event could have led to catastrophe, but such errors are daily occurrences in hospitals all across the country.  See the many posts on this blog of EHR risks under the index link http://hcrenewal.blogspot.com/search/label/glitch.

Congress has devoted scant attention to this issue, instead focusing on the larger ObamaCare debate. But ending the mandatory electronic-health-record program should be a plank in the Republican Party’s health-care agenda. For all the good intentions of the politicians who passed them, electronic health records have harmed my practice and my patients.

Dr. Singer practices general surgery in Phoenix and is an adjunct scholar at the Cato Institute.

I would change that to "... ending the mandatory electronic-health-record program should be a plank in the government's health-care agenda."

Finally, of the author's adjunct affiliation, it seems bad health IT affects physicians all across the political spectrum.

-- SS

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The $5.3 Million a Year Government Bureaucrat - The Top Administrator, or CEO of a "Government Entity," Charlotte-Mecklenburg Hospital Authority, "Doing Business as" Carolinas Healthcare Gets a Raise

Carolinas HealthCare Charlotte-Mecklenburg Hospital Authority executive compensation government managers' coup d'etat public hospitals

The $5.3 Million a Year Government Bureaucrat - The Top Administrator, or CEO of a "Government Entity," Charlotte-Mecklenburg Hospital Authority, "Doing Business as" Carolinas Healthcare Gets a Raise

Unknown 2/12/2015 Komentar

The pay given to top managers of health care organizations continues its seemingly inexorable rise, and the justifications for it seem to be increasingly perfunctory.  However, a closer look at individual cases can generate even more questions about how we got to this pass.  Our latest example arises from a recent news article about the compensation of top managers at Carolinas Healthcare.  

CEO Pay Levitating Since 2009

In 2011, we started following executive compensation at the hospital system now known as Carolinas Healthcare. Our posts in 2011, 2012, and 2013 all fit the same pattern.The total compensation given to its CEO, Michael C Tarwater, was
- $3.4 million in 2009
- $3.7 million in 2010
- $4.2 million in 2011
- $4.76 million in 2012
- $4.9 million in 2013 (per the Charlotte Observer)


In February, 2014, per Karen Garloch reporting in the Charlotte Observer, we have the newest figure:
- $5.3 million in 2014

The details were

the system’s CEO Michael Tarwater received $5.3 million in total compensation in 2014, an increase of 7.7 percent over the previous year.

Tarwater, 61, who has led the $8 billion nonprofit system since 2002, received a salary of $1.3 million, two bonuses totaling $3.3 million, and other compensation, including retirement and health benefits of $690,280,...

In addition, other top managers also were paid in the millions:

• Joseph Piemont, president and chief operating officer: $3,558,907, 6.3 percent increase
• Greg Gombar, chief financial officer: $2,340,613, 4.7 percent increase
• Laurence Hinsdale, executive vice president: $1,918,371, 2.2 percent decrease
• Paul Franz, executive vice president: $1,721,104, 2.9 percent decrease
• Dr. Roger Ray, chief physician executive: $1,619,584, 5 percent increase
• John Miller, chief executive officer, AnMed Health: $1,598,205, change not available
• John Knox, chief administrative officer: $1,434,112, 2.5 percent increase
• Dennis Phillips, executive vice president: $1,391,918, 3.3 percent decrease
• Debra Plousha Moore, chief human resources officer: $1,269,022, 5.2 percent increase

Not unexpectedly, those who are supposed to be exerting stewardship over Carolinas Healthcare provided just another version of the standard talking points to justify this largesse.

'Having talented leaders capable of managing one of the nation’s most comprehensive health care systems in a very complex environment allows Carolinas HealthCare System to maintain its mission and provide the best care to all of our communities,' said board Chairman Edward Brown, president of Hendrick Automotive Group.

As we have repeated far more often than I would like (most recently here)

It seems nearly every attempt made to defend the outsize compensation given hospital and health system executives involves the same arguments, thus suggesting they are talking points, possibly crafted as a public relations ploy. We first listed the talking points here, and then provided additional examples of their use. here, here here, here, here, and here, here and here. 

They are:
- We have to pay competitive rates
- We have to pay enough to retain at least competent executives, given how hard it is to be an executive - Our executives are not merely competitive, but brilliant (and have to be to do such a difficult job).

For the most recent update on Carolinas Healthcare, the board chairman only bothered with the last point.

So far, the case of compensation of top hired managers at Carolinas Healthcare looks very similar to many other cases at other big health care systems.  But this case has a big twist.

A Public Authority Whose Mission is to Serve the Poor

In 2012, we posted, based on another article that year by the indomitable Ms Garloch, how Carolinas Healthcare really is the Charlotte-Mecklenburg Hospital Authority, a public hospital authority created by North Carolina state law to serve the poor.  But faced with declining revenues in the 1980's, hospital management decided to try to attract paying patients, which allowed the Charlotte-Mecklenburg Hospital Authority to transform into a big hospital system.  Charlotte-Mecklenburg Hospital Authority managers came up with the idea of using a snappy new name, so the public hospital authority began "doing business as" Carolinas Healthcare, never mind whether a public hospital authority should really be considered as "doing business."

Yet the organization is still a public health authority.  Its charter and governance have never been changed.  Since the 1980s, however, Charlotte-Mecklenburg Health Authority bureaucrats have represented the organization as "government entity" when that is advantageous to them, or as a "non-profit hospital system" at other times.  

For example, it still gets to raise capital through directly issuing tax exempt municipal bonds.  For example, see this MunicipalBonds.com summary of a recent bond issue.

Also, at least through 2011, it was financed directly by Mecklenburg county to serve the poor, which, again was the Charlotte-Mecklenburg Hospital Authority's original mission.  In a 2012 article in the Charlotte Observer, Karen Garloch wrote,

last June, county commissioners voted to stop paying Carolinas HealthCare $16 million a year to care for the uninsured. With a profit of $428 million in 2010 and nearly $2 billion in reserves, the system no longer needed taxpayers’ help, commissioners concluded.

County Manager Harry Jones said the subsidy was important at one time, 'but circumstances have changed.' He cited a 1994 county committee report that raised this question:

'Given the current profitability of the hospitals, is it not reasonable to suggest that the hospitals become marginally less profitable by absorbing greater indigent care costs?'

Again, in 2011, the US Department of Labor began investigating Carolinas Healthcare about its provision of health benefits to its employees via Medcost, an entity whose ownership it shared with NC Baptist Hospital.  US federal law (ERISA) in general bans companies from providing health benefits to employees via subsidiaries.  NC Baptist settled similar charges in 2013.  The investigation of Carolinas Healthcare is not complete, but ironically a point of contention is its argument that it is a "government entity," and hence the law does not apply to it.  (See this article in the Winston-Salem Journal.)

On the other hand, Charlotte-Mecklenburg Hospital Authority bureaucrats have maintained that the organization, under the new name they chose, does not have the obligations to be transparent that other public entities have.  As Ms Garloch wrote in 2012,

It’s a public organization with a private attitude – open to 'all God’s children,' as hospital officials like to say, but not as open and transparent as other government agencies.

Then,

Basic facts about the hospital system can be hard to get.

For this series, Observer reporters asked Carolinas HealthCare to disclose total administrative expenses for 2010. A corresponding figure was publicly available from Novant through audited financial statements.

Several months after the question was posed, Carolinas HealthCare spokeswoman Gail Rosenberg

responded: 'We do not have the information … on a system-wide basis.'

Mecklenburg officials have criticized the system for lack of transparency.

Last year, [County Manager Harry] Jones declared the system in breach of contract because it failed to share data about the county-owned psychiatric hospital that is managed by Carolinas HealthCare.

'As a governmental entity, (the hospital system) should be more than willing to account to the taxpayers on how they spend … its money,' Jones wrote to Michael Tarwater, the hospital system’s CEO.

In fact, the argument that Carolinas Healthcare is Charlotte-Mecklenburg Hospital Authority, and hence is as a government agency obligated to a degree of transparency was confirmed by a judge in December, 2014, as again reported by the Charlotte Observer.  A lower court had dismissed a lawsuit that contended that Carolinas Heathcare had "violated state public record laws" by keeping confidential a legal settlement it had made with the former Wachovia bank.  However, the lawyer appealed, and

Hospital lawyers had argued that the state public records law doesn’t cover settlements arising from litigation by a government agency.

But in Wednesday’s ruling, a three-judge panel of the appeals court unanimously rejected that argument. The public records act doesn’t specifically exempt such settlement documents, the court concluded.

Disproportionate Pay for Non-Profit Hospital Executives, Much Less Government Bureaucrats

Thus there is a very good argument that the CEO and other top "executives" of Carolinas Healthcare are really the top government bureaucrats at Charlotte-Mecklenburg Health Authority.  But these executives' pay seems out of line even if they were the managers of a non-profit health care system.  In particular, the rising compensation given top management does not square with top management's recent layoffs of middle management.  In 2014, the Charlotte Observer reported,

Carolinas HealthCare System has eliminated more than 100 management positions – including two jobs that paid a total of about $3 million – as part of a goal to trim $110 million in expenses from next year’s budget, hospital officials announced Tuesday.

Cutbacks are necessary, in part, because of federal and state budget cuts in Medicare and Medicaid reimbursement for seniors, low-income and disabled patients, CEO Michael Tarwater said.

Furthermore, despite the board chairman's assertion that the "executives'" pay is deserved for fulfilling the mission, officially the mission of the Charlotte-Mecklenburg Health Authority is still to serve the poor, as far as I can tell.  Yet, in recent years, there have been questions raised about how well the organization serves the poor.  In 2012, we noted that the system had become known for its aggressive attempts to get payment from indigent patients.  In 2013, we noted that the system had pursued legal action against tens of thousands of patients.


Summary

The public discussion about Charlotte-Mecklenburg Hospital Authority, "doing business as" Caroloinas Healthcare, has been confusing.  However, it seems clear, in my humble opinion, that it is still a public, that is government entity.

This raises huge questions.  One is why has it not been more subject to the appropriate political leadership?  In fact, Ms Garloch's 2012 article noted that

The 1943 hospital authority law intentionally kept elected officials and politics out of operations. The link is that the commissioners’ chairman must sign off on hospital board nominees.

It has been a rubber stamp.

County officials remember once in 30 years that a proposed board member was rejected. That was in 2008 when nominees included Gloria Pace King, who had been ousted as CEO of the United Way of the Central Carolinas because of public outcry over her $2 million pension package.

So it appears political leadership could have been exerted, at least to the extent of vetoing the board's proposed new candidates for board membership, but that has never been done, for unclear reasons.

Other questions are how did the bureaucrats in charge of this entity get away with massively changing the nature of its operations de facto without being subject to any political oversight, and without having to change its charter and governance to correspond to these changes?  Finally, how did its top hired bureaucrats (whether they are called managers, or executives really is immaterial) get to pay themselves at least an order of magnitude more than any government bureaucrat of whom I am aware, to pay themselves according to the current outrageous standard for executives of for-profit corporations?

I do not have the capacity to do the investigations necessary to answer these questions.  Hopefully, not only will reporters like Ms Garloch continue to dig deeper, but given this case's implications, it will become subject of more official investigations.

Meanwhile, it has become not merely a great example of how top hired management pay in health care continues to rise past any levels that can be rationally justified, but of what I once called the managers' coup d'etat.  It shows how hired bureaucrats, absent adequate supervision and accountability, have managed to transform health care organizations into instruments of their own enrichment.  To repeat,  true health care reform would put in place leadership that understands the health care context, upholds health care professionals' values, and puts patients' and the public's health ahead of extraneous, particularly short-term financial concerns. We need health care governance that holds health care leaders accountable, and ensures their transparency, integrity and honesty.

But this sort of reform would challenge the interests of managers who are getting very rich off the current system.  So I am afraid the US may end up going far down this final common pathway before enough people manifest enough strength to make real changes.   

    

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Outsize Compensation for "Teflon-Coated" Executives - After Many Lawsuits and Negative News Stories, Norton Healthcare Executives Still Get Millions

conflicts of interest cross fire executive compensation Medtronic Norton Healthcare public relations spine surgeons

Outsize Compensation for "Teflon-Coated" Executives - After Many Lawsuits and Negative News Stories, Norton Healthcare Executives Still Get Millions

Unknown 2/05/2015 Komentar

In an earlier era of chemistry, politicians who continued to acquire votes while shedding doubts, criticisms, and allegations were called "Teflon-coated."  Teflon may be outdated now, but there certainly seems to be some health care executives who have unique non-stick coatings.

The Executives' Compensation

Our latest example comes from the Louisville (KY) Courier-Journal, which just published an article about the compensation received by top executives of one of the region's major hospital systems.  The essentials were:

From 2011 to 2013, the three most recent years available, tax records show the chief executive of Norton Healthcare, Stephen A. Williams, received total compensation that averaged $3.2 million a year.

The yearly numbers were:

2013: $2,447,122
2012: $4,705,333
2011: $2,376,186

Other top executives also were paid handsomely,

The tax reports show Norton paid chief operating officer Russell Cox an average of $1.5 million annually over the three years and chief financial officer Michael Gough $1.2 million. Cox also was promised an average of $547,580 annually over those years in additional future compensation and Gough $375,567 a year.

The Usual Talking Points as Justification

The justification given for such munificent pay for top hired managers of non-profit organizations that are supposed to put patient care (and sometimes teaching and research) ahead of personal enrichment never seems to go beyond the talking points we have previously discussed.

 It seems nearly every attempt made to defend the outsize compensation given hospital and health system executives involves the same arguments, thus suggesting they are talking points, possibly crafted as a public relations ploy.   We first listed the talking points here, and then provided additional examples of their use here, here here, here, here, and here, and here. 

They are:
- We have to pay competitive rates
- We have to pay enough to retain at least competent executives, given how hard it is to be an executive
- Our executives are not merely competitive, but brilliant (and have to be to do such a difficult job).

True to form, per the Courier-Journal article,

Industry leaders — and Norton board members — say the salaries and bonuses are essential to attract and retain executives with the skills to run complex organizations as they navigate enormous reimbursement and regulatory changes. Norton operates five hospitals and has revenues of about $1.8 billion.

In an interview, Hank Robinson, Norton's finance committee chairman and former board chairman, said Williams' compensation is 'very fair, very competitive and appropriate.'

So there, in three sentences, were direct versions of the "competitive rates," and "retention" talking points, and an indirect version ("skills to run complex organizations") of the "brilliance" talking point.

Also, the Courier-Journal article included,

Norton's chief communication officer, Thomas Johnson, points out that since Williams was named CEO, the company's revenues have climbed sixfold, and its work force has tripled to more than 12,000 employees, making it the third-largest employer in the Louisville area.

That was another indirect version of the "brilliance" talking point, since Mr Johnson seemed to be arguing that the CEO was the person most personally responsible for the "company's" [not "hospital system's?" - Ed)] increased revenue, regardless of the work of the more than 12,000 other employees.  Of course, Mr Johnson doubtless reports nearly directly to the CEO.

Pointedly left out of the discussion was that Norton Healthcare's financial performance in the recent years in which the CEO had received so much money was hardly brilliant.   As apparently first reported in Modern Healthcare in August, 2014, but going back to 2012,

A multimillion-dollar installation of an electronic health-record system dragged down Norton Healthcare's financials in 2012 and 2013, but the Louisville, Ky.-based health system rebounded in the first half of this year.

Norton—like many others racing to adopt the latest health information technology—began implementing an Epic Systems Corp. EHR in 2012. Norton's five hospitals and several physician practices fully converted to the Epic system by 2013. In total, the EHR cost nearly $80 million to install, according to Norton's audited 2013 financial documents (PDF).

According to Modern Healthcare, Norton had a $13.4 million operating loss in the first half of 2013.  However, Norton CEO Williams received nearly $2.5 million in 2013. So these negative financial results in 2012 and 2013 did not apparently drag down the CEO's compensation in those years.

Compared to What?

The Courier-Journal went a bit farther in their reporting of executive compensation at Norton Healthcare than other media outlets have when reporting on the pay of other health care leaders.  In particular, reporter Andrew Wolfson delved into how Mr Williams' compensation was justified by comparing it to the compensation of other health care CEOs.

The Norton finance committee chair, Mr Robinson

said it is derived through a rigid process based on an outside consultant's survey of pay at 66 comparable hospitals nationwide. The board then sets it at the 65th percentile of that compensation, which Robinson described as standard industry practice.

Furthermore,

Norton's consultant, Integrated Healthcare Strategies, says it looks at comparable peer groups — hospital companies, some larger and some smaller — to find a benchmark for Norton's board.

They include Baptist Health of Florida, whose CEO was paid $3.2 million in 2013, and Inova Health Care Services, of Falls Church, Va., whose top executive received total compensation of $4.2 million in 2012.

'Norton tries to set salary a little bit above the middle of the market,' Integrated's Dave York said in an interview. 'They are neither a conservative nor an aggressive payer.'

That still begged the question of why the compensation was "above the middle of the market," specifically, the 65th percentile?  Presumably, the board thought that CEO Williams has been at the 65the percentile of CEO performance.  But why did they pick that figure? What evidence is there that Mr Williams was better than average?

The Courier-Journal article also questioned the choice of the group of CEOs whose pay was used for comparison,

But Paul R. Dorf, managing director at Compensation Resources Inc., a Saddle River, N.J., consulting firm, who reviewed Norton's executive pay at the newspaper's request, said 'it doesn't seem right.
They are exceptionally well compensated,' he said.

The average compensation for the top 147 nonprofit hospital CEOs in 2012 was $2.2 million in 2012, according to Modern Healthcare, an industry publication.

Williams' average compensation from 2011-13 was more than paid in 2012 to the CEOs of 20 of the 25 top grossing nonprofit hospitals in the U.S., all of which were bigger than Norton, according to Becker's Hospital Review, another industry news outlet.

Given that compensation consultants like Mr Dorf usually seem to back the status quo for executive compensation, Mr Dorf's doubts should be underlined.  The Courier-Journal's coverage did suggest that the CEO and other top executives of Norton Healthcare are paid not only much more than the typical hospital employee, and the health care professionals who make the hospital run, but more than CEOs and top executives of other hospitals.  The reasons for this unclear.

Left unanswered were further questions.   Why are so called market comparisons limited to other CEOs or top managers, and never take into account other hospital employees, especially the health care professionals who actually provide the health care?  Why is the complexity of the managers' jobs never compared to complexity of other health care jobs, like the care of complex patients with multiple diseases, or neurosurgery, for example?  How is the "brilliance" of the managers measured, and compared to the brilliance of other employees, especially health care professionals?

Shedding Doubts, Criticisms, and Allegations

A little internet searching and dot connecting, however, did suggest that there may be one argument for the "brilliance" of the Norton Healthcare leadership, but it is an argument that the hospital system's board might not have been eager to make.

It seems, at least in my humble opinion, that the leadership has been brilliant, but brilliant in fending off multiple questions that have been raised in recent years about its management of the health care system, particularly questions about the ethics and integrity of their health care system's acts and practices. 

So far I have found the following issues, in more or less chronologic order,

Top Spine Surgeons' Questionable Royalties

In 2010, the Wall Street Journal reported that spine surgeons at Norton had been collecting millions in questionable royalty payments.

Norton Hospital in Louisville, Ky., may not be a household name nationally. But five senior spine surgeons have helped put it on the map in at least one category: From 2004 to 2008, Norton performed the third-most spinal fusions on Medicare patients in the country.

The five surgeons are also among the largest recipients nationwide of payments from medical-device giant Medtronic Inc. In the first nine months of this year alone, the surgeons—Steven Glassman, Mitchell Campbell, John Johnson, John Dimar and Rolando Puno—received more than $7 million from the Fridley, Minn., company.

Furthermore, Norton surgeons' use of spinal fusion for disc problems, a procedure whose benefits do not clearly outweigh its harms, was particularly notable.

At Norton, spinal fusions on patients who only suffered from aging disks accounted for 24% of the 2,475 fusions the hospital performed for Medicare between 2004 and 2008, compared with 17% nationally. This placed it 11th in percentage terms out of 60 hospitals that performed 1,000 or more spine fusions in those years, and fourth in raw count. Norton ranked third nationally in the overall numbers of spine-fusion surgeries.

Furthermore, the WSJ reported that it had obtained documents from a lawsuit filed by whistle-blowers against Medtronic which alleged

the five surgeons at Kentucky's Norton Hospital became Medtronic's biggest spine client [sic] after they signed consulting and royalty deals in early 2001.

We posted briefly about Norton's spinal fusion enthusiasts here, and Dr Howard Brody discussed it extensively on his blog, concluding,

some of my surgeon colleagues who actually care about professionalism and ethics believe that these 'royalty and consulting' payments are a huge cesspool. It's that much harder to get to the bottom of it because the device companies have been smart about how to cover their tracks.

Yet while there have been continuing questions raised about the actions of Medtronic vis a vis its medical "consultants" since then, it seems that no one has so far thought to question the role of Norton Healthcare, especially given that the hospital system doubtless collected millions for the performance of these procedures in its operating rooms.    

University of Louisville Litigation Claims Contract Violations, Debts Owed by Norton Healthcare

Apparently since at least 2013, Norton Healthcare has been involved in litigation with the University of Louisville over Kosair Children's Hospital, which is run by Norton on land owned by the University.  As summarized in Louisville Business First in October, 2013,

Norton Healthcare Inc. has filed a complaint in Franklin Circuit Court that seeks to establish that the University of Louisville has no legal right to evict the organization from Kosair Children’s Hospital.

Louisville-based Norton owns and operates Kosair Children’s Hospital on land it leases from the state.

U of L executive vice president of health affairs David Dunn issued this response late Friday to Norton's claim:

'It’s unfortunate that Norton filed a lawsuit instead of meeting to negotiate a long-term agreement for the care of children at Kosair Children’s Hospital. The University of Louisville’s repeated attempts to meet and negotiate have been rejected again and again by Norton’s CEO, who told us today that he will neither meet nor negotiate while their lawsuit is pending.'

'This is a disturbing trend in dealing with Norton as we try to resolve these complicated matters in a way that best meets the needs of Kosair Children’s Hospital, the patients we serve and U of L’s Department of Pediatrics. It is our hope that, later today, Norton will take a deep breath, accept our invitation to meet, and we all can focus on securing a long-term agreement to best serve the children of our community.'

Furthermore, the University of Louisville also demanded

that the hospital company rectify alleged violations  of a land lease and other agreements

In addition,

other claims in U of L's letter was that Norton owes U of L millions of dollars related to the Kosair agreements.

The dispute apparently also involves the University of Kentucky and the KentuckyOne hospital system. Some of the other relevant issues were summarized on the Kentucky Health Policy Institute website here.  It seems that patient care and medical education have become caught in the cross-fire between these powerful organizations. It is not obvious that Norton Healthcare is more or less responsible for this state of affairs than the other large organizations involved. However, neither is it obvious that Norton has taken the high ground regarding this matter.

Kosair Charities Sues Norton Healthcare for Misusing Charitable Funds

In mid-2014, another litigation front opened against Norton Healthcare.  As reported then by the Louisville Courier-Journal,

Kosair Charities, which has given more than $6 million annually to Kosair Children's Hospital, is accusing parent company Norton Healthcare of misusing some of that money to enhance its bottom line and 'line the pockets' of its executives.

In a lawsuit filed Thursday in Jefferson County Circuit Court, the charity says Norton has refused to provide an accounting of how Kosair's donations are spent.

'We have an obligation to the kids and our donors to make sure the money is being used to help children,' said Randy Coe, president of Kosair Charities, which is the hospital's largest donor. 'We don't want our money to go into the Norton pot.'

Note that the source of generous executive compensation at Norton Healthcare is a direct point of contention in this legal matter.


This lawsuit stems from the previously cooperative relationship between Kosair and Norton,

 At one time, Kosair Charities and Norton each operated their own pediatric hospitals — Kosair Crippled Children's Hospital and Norton Children's Hospital.

But in 1982, Kosair agreed to close its hospital on Eastern Parkway and to help pay for a new one downtown that was named Kosair Children's Hospital.

Kosair Charities said that, in an agreement struck that year, Norton agreed to keep separate accounts for the children's hospital in exchange for millions of dollars of contributions. Kosair says that arrangement was continued when the agreement was renewed in 2006.

In fact, the charges brought in this lawsuit about Norton executive compensation led the Courier-Journal to publish the 2015 article about the hospital system's executive compensation. Also, in 2014, Norton further belayed this previous spirit of cooperation by counter-suing Kosair, again as dutifully reported by the Courier-Journal. These lawsuits have not been resolved.


Patient Lawsuit Claiming "Unfair, False, Misleading or Deceptive Acts or Practices" by Norton

Also first reported in August, 2014, by the Courier-Journal, was a lawsuit by a patient who claimed that  in the emergency department of a Norton hospital,

he was seen only by a nurse practitioner who failed to diagnose that he was suffering from an acute and potentially fatal version of diverticulitis, an inflammation of the intestinal lining — and sent him home with a prescription for oral antibiotics. Two days later, he began vomiting and was rushed back to the hospital, where he underwent emergency surgery for a perforated bowel and was fitted with a colostomy bag.

However, that hospital had been advertising

 You don't just deserve emergency care. You deserve remarkable care.

This lawsuit, which alleges that Norton Healthcare violated a law prohibiting "unfair, false, misleading or deceptive acts or practices" by advertising "remarkable care," but delivering much less,  has not been resolved, either.

Summary

The 2015 report about executive compensation at Norton Healthcare raise the same points that many, many stories about executive compensation in health care have raised before.  Top managers/ administrators/ bureaucrats/ executives in health care seem to be paid ever increasing amounts, even as other employees, including health care professionals, work harder, burn out more frequently, and may be laid off.  These executives' payments rise faster than inflation, and are seemingly unrelated to the financial performance of the the relevant health care organizations, much less the health care quality provided, or the positive effects on patients' or the public's health

Yet the defenders of excess compensation seem to get away with repeatedly reciting the same tired talking points, without clear logic, and certain without evidence.

In the current case, however, one talking point, the argument that the pay was justified by the executives' hard work and "brilliance" may be justified, albeit in a somewhat twisted way.  Executives at Norton Healthcare have been fending off questions about the ethics and integrity of their system raised by a barrage of news stories and claims, including many for which litigation is in progress, claiming the hospital system engaged in a variety of allegedly deceptive or dishonest practices.  One might think that the doubts raised by these claims might have threatened the compensation of the executives on whose watch they occurred.  Instead, perhaps they got even more pay for being "brilliant," not so much brilliant at providing excellent health care, but brilliant at keeping all these doubts at bay for so long, without so far actually disproving any of them. 

As we have said before, in US health care, the top managers/ administrators/ bureaucrats/ executives - whatever they should be called - continue to prosper ever more mightily as the people who actually take care of patients seem to work harder and harder for less and less. This is the health care version of the rising income inequality that the US public is starting to notice.

Thus, like hired managers in the larger economy, non-profit hospital managers have become "value extractors."  The opportunity to extract value has become a major driver of managerial decision making.  And this decision making is probably the major reason our health care system is so expensive and inaccessible, and why it provides such mediocre care for so much money. 


One wonders how long the people who actually do the work in health care will suffer the value extraction to continue?

So to repeat, true health care reform would put in place leadership that understands the health care context, upholds health care professionals' values, and puts patients' and the public's health ahead of extraneous, particularly short-term financial concerns. We need health care governance that holds health care leaders accountable, and ensures their transparency, integrity and honesty.

But this sort of reform would challenge the interests of managers who are getting very rich off the current system.  So I am afraid the US may end up going far down this final common pathway before enough people manifest enough strength to make real changes. 

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ONC on healthcare IT and patient rights: These systems "have to be rolled out to know where the problems lie"

Andrew Gettinger MD healthcare IT defects Healthcare IT experiment healthcare IT safety human experimentation ONC patient rights

ONC on healthcare IT and patient rights: These systems "have to be rolled out to know where the problems lie"

Unknown 2/03/2015 Komentar

An anonymous commenter to my blog post about the USA Today article on bad health IT (http://hcrenewal.blogspot.com/2015/02/former-onc-director-david-blumenthal.html) noted this, that I myself missed:

Anonymous said...

Gettinger's comment is stunning, especially coming from a director of safety and quality for HHS' Office of the National Commissioner for Health Information Technology:

 "You don't just plunk down EHRs and everyone's happy. You use an incremental kind of approach (and) that takes time, that takes energy and that takes effort," he says, adding that they have to be rolled out to know where the problems lie.

February 1, 2015 at 9:17:00 PM EST

(Writing of ONC's Acting Director Andrew Gettinger MD, Office of Clinical Quality and Safety, http://www.healthit.gov/newsroom/andrew-gettinger-md.)

If quoted accurately, that's likely the end of the line for me regarding ONC and any concerns about patients' rights.  Patients are to be used as live subjects to debug software.

That is advocating human subjects experimentation without informed consent with a technology known to cause increased risk, harm and death, and there's nothing to debate there.  This statement would be perhaps appropriate for someone writing about animal experimentation. 

My own mother's dead, in fact, from that type of attitude.

Gettinger's statement will serve as the cover slide to my upcoming legal presentations to American Association for Justice state chapters and at the AAJ national meeting later this year, as well as to the Association of Health Care Journalists (AHCJ), to which I've been invited to speak.

-- SS

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Former ONC Director David Blumenthal (Inadvertently?) Honest About EHRs in USA Today Story

David Blumenthal healthcare IT difficulties healthcare IT dissatisfaction

Former ONC Director David Blumenthal (Inadvertently?) Honest About EHRs in USA Today Story

Unknown 2/02/2015 Komentar

USA Today has published a story on health IT difficulties.  Read it in its entirety; it is fairly balanced, though mild, e.g., it omits mention of the ECRI Deep Dive study on patient harms (http://hcrenewal.blogspot.com/2013/02/peering-underneath-icebergs-water-level.html) and other actual reports of patient harm.  (I was one of many who spoke to the reporters about this story.) 

Feds move into digital medicine, face doctor backlash
Laura Ungar and Jayne O'Donnell, USA TODAY
Feb. 1, 2015  
http://www.usatoday.com/story/news/nation/2015/02/01/backlash-against-electronic-medical-records/21693669/

I am only going to make one point about it, that being the candor (in a manner I'm reasonably certain was not intended) of former ONC Director Dr. David Blumenthal:

... David Blumenthal, national coordinator for health information technology for President Obama from 2009 to 2011, says, "the threat of penalties is the only incentive (doctors) have to make it [the adoption of healthcare IT] happen."

I don't think the candor was meant in the way I am about to interpret it, but I agree with his assessment.

The threat of Medicare penalties is indeed "the only incentive" (doctors) have to make "it" happen, because the technology is not helping them, and is making their work harder and more risk- and liability-prone.  But don't take that from just me:

... A group of 37 medical societies led by the American Medical Association sent a letter to Health and Human Services last month saying the certification program is headed in the wrong direction, and that today's electronic records systems are cumbersome, decrease efficiency and, most importantly, can present safety problems for patients. 

I covered that Jan. 21, 2015 letter at http://hcrenewal.blogspot.com/2015/01/meaningful-use-not-so-meaningul.html. 

(One can only imagine the level and duration of physician complaints it took for those 37 medical societies led by the American Medical Association to have crafted the letter to HHS/ONC, available at http://mb.cision.com/Public/373/9710840/9053557230dbb768.pdf.)

Also, as stated by the American Medical Association's president-elect to USA Today:

"Physicians passionately despise their electronic health records," says Lexington, Ky., emergency physician Steven Stack, the American Medical Association's president-elect. "We use technology quickly when it works … Electronic health records don't work right now."

"Passionately despise" is not exactly a ringing endorsement.

So, in effect,  the "stick" of financial penalties is indeed the "only incentive" doctors and nurses have right now for broad adoption, because the "carrot" is moldy and rotten - and despised with a passion.

A much better incentive - in fact, the only legitimate incentive for widespread adoption - is safe, sound, efficacious products, reasonably regulated, with defects and problems reasonably reported and acted upon ... in other words, with the products subject to the same scrutiny as IT in other mission and life-critical sectors.

Thanks for 'fessing up, Dr. Blumenthal.

-- SS

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