To quote the late 60 Minutes curmudgeon Andy Rooney, "did you ever notice" how documentary movies--we could extend this to all sorts of documentation as Lancet does it far better than any American medical journals--on anechoic topics seem to come mostly from the Brits?
A telling new example: the just-released film The Widowmaker, found both here online and in a few E and W Coast theaters. (Real world locations given at above link. Seemingly, and sadly, no red states need apply.)
Widowmaker, boasting fine production values and an 'A' team of Gillian Anderson (fittingly of X-Files fame!) and the director of the Wikileaks films, puts a crack in the anechoic wall by pitting two expensive industry-led campaigns against one another: that in favor of CAC (calcium) scores and that in favor of DES (drug eluting stents) for coronary disease..
One comes away from this film with mixed feelings. There are fine moments of mirth, such as when standard EBM quasi-nihilistic talking-head Steve Nissen says "I don't like cost," whereupon the Texas state legislator and CAC true-believer René Oliveira responds "he's an idiot." (The latter quoted in the recent, and acutely observed, NY Times review here.)
Um, boys, so many of you are heart patients--as indeed is your faithful blogger himself--but can we unpack this a bit?
OK, so should everybody in the world, or everybody with a family history, or everybody who ever smoked, get an expensive scan to stratify treatment? (See JACC's 2012 pro-versus-con assessment of this question here.)
I can't, and suspect no one totally can, answer this question. Though in 2015 I'm putting it again to some of my trusted colleagues and will add appropriate addenda in days to come via this posting and this blog.
What's interesting to me, though, is the way health subspecialty folks in the U.S. always try to over-ride common-sense approaches by appeals to (or at least, accession to) politicians who force the hand of industry. Or, perhaps, willingly and breathlessly allow their own hands to be forced by industry.
Health care experts increasingly become mere flotsam and jetsam on a sea of roiling industry-versus-industry waves. (In Texas, legislation was proposed to force payers to pay for CAC screening. And over-use of both stents and CAC scores have become huge sources of cost containment.woes.)
Increasingly, then, the problem in health care has become Spy versus Spy. Industry domination, about which my HCR fellow-bloggers have written eloquently in these pages, is so pervasive that us medical types are just collateral damange. Or, maybe a better metaphor, just injection devices for the profit motive. And media-docs, such as Richard Besser of ABC News, are happy to push the plunger just a little harder.
This film seems to favor the CAC score over the stent. Which probably has it backwards, but film-makers love conspiracies. Obviously, both technologies are over-utilized. (I say this as someone with one of the latter sitting inside his own LAD). Which is one of the many reasons why U.S. health care costs are the highest in the world while our coronary disease death rates are double those of, oh, say, Ecuador and Peru. Where, last time I checked, not so many people were getting scans to check their CAC scores.
To put it another way, the profit motive for devices and IT systems, and the over-arching technological imperatives are wonderful things. Lifestyle modification, not so much.
Every day seems to bring the latest breathlessly touted innovation in modern health care. The endless hawking of new health care wonders is beginning to inspire some skepticism, but maybe not enough.
The Promotion of Vyvanse for Binge Eating Disorder
For example, at the end of January, 2015, reports of the first ever drug therapy for binge eating disorder appeared. For example, see Jonathan Rockoff writing in the Wall Street Journal
Shire PLC’s drug Vyvanse became the first drug approved for sale in the U.S. to treat some of the estimated 2.8 million adults who have a binge-eating disorder.
Rather ominously, the article described this disorder thus,
Patients regularly eat more food than they need, often when they aren’t hungry and until they feel uncomfortably full, the FDA said. The condition can lead to weight gain, obesity and related health problems.
Furthermore, it appears to be common,
An estimated 2.8 million adults in the U.S. are binge eaters, two times more than those who have the eating disorders anorexia and bulimia combined, according to Shire.
However, now there is a pharmaceutical solution!
In two pivotal studies, binge eating episodes declined to an average of one day a week among patients taking Vyvanse capsules for 12 weeks, down from an average of five days a week, Phil Vickers, Shire’s head of research and development, said in an interview.
'The approval of Vyvanse provides physicians and patients with an effective option to help curb episodes of binge eating,' Mitchell Mathis, director of the FDA’s division of psychiatry drug products, said in a statement.
Because the disease is common, that may mean a lot of money for Shire
For Shire, the approval could eventually add 'several hundred million' dollars in sales, and help the company reach its goal of $10 billion in yearly sales by 2020, said Flemming Ornskov, the company’s chief executive. Vyvanse is the company’s top-selling drug, notching $1.1 billion of the company’s $4.3 billion in total sales during the first nine months of last year.
The only hitch is that all those long suffering victims of binge eating disorder have to be found, and presented with this wonderful new alternative:
One challenge: increasing the numbers of patients diagnosed as binge eaters. Shire estimates that just 3% of Americans with the disease have been diagnosed under the mental-disorder criteria, Dr. Ornskov said.
Brief coverage of the initial approval of Vyvanse appeared in the NY Times. Bloomberg also weighed in, adding to the urgency by underlining how seriously the FDA had handled this:
'Binge eating can cause serious health problems and difficulties with work, home and social life,' Mitchell Mathis, director of the Division of Psychiatry Products in the FDA’s Center for Drug Evaluation and Research, said in a statement.
The FDA gave Vyvanse priority review, a designation for drugs with promise to 'provide a significant improvement over available therapies,' the agency said.
Among the major media covering the rollout, only Reuters noted a potential fly in the ointment in this article,
Vyvanse is an amphetamine which, like other amphetamines, carries the potential for abuse and addiction. They also have been associated with increase blood press sure and heart rate, sudden death, stroke, heart attack, insomnia and psychiatric side effects such as hallucinations and mania.
What Really is the Clinical Evidence Supporting Vyvanse for Binge Eating Disorder?
So Vyvanse is actually lisdexamfetamine, and having been a child when the slogan "speed kills" referred to methamphetamine, not driving automobiles fast, I thought it might be worth looking into the evidence that this somewhat new amphetamine, a relative of that infamous "speed," was now deemed a wondrous treatment for eating too much.
In particular, a recent article in JAMA Psychiatry reported results of one of the two trials Shire did of Vyvanse for binge eating disorder.(1) The study by McElroy et al randomized patients with binge eating disorder to one of four groups, to receive the drug at dosages of 30, 50, or 70 mg/ day or placebo. The investigators followed patients for 11 weeks. The main outcome variable was the number of binge eating days per week reported by the patients.
Patients in all groups were binge eating during approximately 4.5 days/ week at the beginning of the study. At 11 weeks, the average number of binge eating days/ week declined in all groups, dropping 3.3 days/ week for the placebo group, 3.5 for the 30 mg group, 4.1 for the 50 mg group, and 4.1 for the 70 mg group. Thus, by this measure, the difference between patients given placebo versus patients given maximum dosage of the drug was an average decrease of 0.8 binge eating days a week. That does not seem like a very big effect size, or in other words, it seems that the drug had only a small effect on binge eating compared to placebo.
That impression was reinforced by looking at some other study outcomes. The average numbers of binge eating episodes per week at 11 weeks were 1.1 for placebo, 1.2 for the 30 mg group, 0.5 for the 50 mg group, and 0.5 for the 70 mg group. Again, patients given the maximum dose of the drug had only a slightly smaller number of binge eating episodes than those given placebo, reinforcing the impression that the drug is not very effective.
A graph of binge eating days/ week measured over time makes things clearer. It showed that all groups, including patients given placebo, markedly reduced their reported binge eating over the 11 week period. Since the study did not allow any patients to get any other treatment for binge eating other than placebo or the study drug, this again suggests that the drug was not much better than placebo. Further, the apparent reduction in binge eating by patients given placebo suggests a number of possibilities: - Just paying more attention to patients by putting them in a trial could lead to marked decreases in binge eating, or - People in binge eating trials could tend to report they are improving, whatever treatment they get, or - Binge eating may not be a stable phenomenon, and its intensity could vary over time, or - It may be difficult to make a reliable diagnosis of binge eating disorder.
In summary, at best, the trial showed that Vyvanse only caused small reductions in binge eating, and that binge eating may decrease spontaneously, or at least when patients are given more attention or scrutiny. Thus, even putting the best face on the evidence from a trial done by the maker of Vyvanse does not greatly support the benefits of this drug.
In addition, according to evidence-based medicine advocates, the benefits of a treatment must be balanced with its potential harms. In this study, about 5% of patients given any dosage of Vyvanse had to discontinue its use because of adverse effects. 3/196 patients initially randomized to Vyvanse had serious adverse effects, and one patient died, apparently of an amphetamine overdose. Oddly, the article declared that the one death, due to methamphetamine overdose, was thought by a study investigator not to be related to treatment with another amphetamine, lisdexamfetamine. That makes little sense, given that in a randomized controlled trial, the presumption is that differences in groups given different treatments were caused by these treatments.
In addition, patients given Vyvanse (lisdexamfetamine) had higher rates of various symptoms that are commonly associated with amphetamines, including insomnia, nausea, constipation or diarrhea, anxiety, feeling jittery, palpitations, and sleep disorder.
This suggests that the relatively small apparent benefits of the drug must be weighed against rates of adverse events that are not negligible, especially given the short amounts of time patients were followed. So this study did not show that the benefits of Vyvanse clearly outweigh its harms.
Finally, there were many problems with this trial that further cloud its validity, or applicability to patients (generalizability): - Patients were diagnosed using DSM-4 criteria, rather than the new DSM-5 criteria - Patients with any other psychiatric illness were excluded, limiting the applicability of its results. - Patients with an ostensibly chronic disease were only followed for 11 weeks, so the effects of this drug given for the treatment duration that might be needed to treat a chronic problem are unknown - The loss to follow-up rate, about 5% for treated patients decreases precision of the results given the relatively small effect size - The study was done at a large number of sites, initially 32, given the size of the patient population (starting at 260), and one site was dropped because of an "investigation," raising questions about the quality of the study implementation and data collection
So, in my humble opinion, even this Shire sponsored study, which was responsible for half the evidence used to support the approval of Vyvanse for binge eating disorder, provided only weak and questionable evidence that the benefits of the drug outweigh its harms in the short term, and no evidence about long-term use of the drug.
However, no media coverage so far has addressed the weakness of the clinical evidence supporting the use of Vyvanse. I have yet to see any other attempts at a rigorous, skeptical review of the clinical trial evidence supporting Vyvanse in this application. Instead, the media reporting so far seems to have accepted the word of the manufacturer's executives, who obviously have an interest in promoting the drug. (See the WSJ article above which just repeats assertions by a Shire executive.
Why So Much Enthusiasm about a Type of Drug with Such a Bleak Past?
This lack of skepticism was particularly baffling given the nature of the drug that was being promoted, and its long and unfortunate history. As I noted, the amphetamines have proved to be dangerous drugs when abused, and they are abused frequently.
The beginnings of widespread amphetamine abuse grew out of previous efforts to promote these drugs for obesity (which can be, of course, a consequence of eating too much). As documented by Cohen and colleagues(2),
The discovery of amphetamine energized the weight loss industry. Introduced as the Benzedrine inhaler in 1932 by venerable Philadelphia firm Smith, Kline, and French, the American Medical Association (AMA) soon recognized Benzedrine as a treatment of narcolepsy, postencephaletic Parkinsonism, and certain depressive psychopathic conditions. Several clinical studies first published in the late 1930s demonstrated amphetamine’s anorectic effect. The Clark & Clark Company of Camden, NJ, established in 1941, was one of the earliest manufacturers of diet pills combining amphetamine sulfate and thyroid along with phenobarbital, aloin, and atropine sulfate to counteract untoward effects.
These rainbow pills were used with great enthusiasm, however,
adverse events, including deaths, began to be reported to the FDA as early as the 1940s. In the early 1950s, additional adverse reactions including deaths prompted a detailed investigation by the agency.
By the 1960s, the problem was acute,
Efforts had been in place at least since the 1965 Drug Abuse Control Amendments to increase accountability of the use of amphetamine in medical practice. Diversion of the drug for recreational use and the concomitant public health concerns had been recognized as a serious problem by the 1950s, but prescribing amphetamine— whether alone, as part of the rainbow regime, or for indications other than weight loss—continued to rise in the 1960s. Under the Comprehensive Drug Abuse Prevention and Control Act of 1970, which established different schedules for certain drugs based on their medical value vis-á-vis their abuse potential, amphetamine was relegated to Schedule II. This status mandated even greater hurdles for the prescribing and dispensing of the drug as well as production ceilings. In the 1970s, FDA also reconsidered obesity as a safe and effective use of amphetamine and its congeners, ruling that amphetamines were effective but only safe for short-term use, which essentially 'marginalized the anorectics and contributed to the eventual decline in their use.'
That is, until they were resurrected as a treatment for attention deficit disorder in children, and then their use was extended to adult patients with so-called adult ADHD, and now to patients with binge eating disorder.
Given this history, the rapid approval of Vyvanse by the FDA, without the benefit of an expert panel, especially given that it was for a supposedly common disorder of adults, is very curious, and worrisome. As Dr Daniel Carlat said (quoted on the WBUR CommonHealth blog),
'I’m concerned that the FDA’s approval of Vyvanse for binge eating disorder is going to worsen our problems with stimulant abuse,' Carlat says.
'Vyvanse is a derivative of Dexedrine. We’ve seen epidemics of Dexedrine abuse in the past when it was used to help people diet. I predict that the FDA has just opened the gates to another similar epidemic – after all, binge eating disorder is a subjective diagnosis that could be potentially expanded to cover many millions of people.'
Why So Much Enthusiasm about Treating Such a Doubtful Diagnosis?
As Dr Carlat noted above, it is not so obvious that binge eating disorder should be considered to be a disease. Starting with first principles, its definition is very vague and subjective. According to the Alliance for Eating Disorders, the DSM-5 criteria for it are:
Recurrent episodes of binge eating. An episode of binge eating is characterized by both of the following:
eating, in a discrete period of time (for example, within any 2-hour period), an amount of food that is definitely larger than most people would eat in a similar period of time under similar circumstances
a sense of lack of control over eating during the episode (for example, a feeling that one cannot stop eating or control what or how much one is eating)
The binge-eating episodes are associated with three (or more) of the following:
eating much more rapidly than normal
eating until feeling uncomfortably full
eating large amounts of food when not feeling physically hungry
eating alone because of feeling embarrassed by how much one is eating
feeling disgusted with oneself, depressed, or very guilty afterwards
Marked distress regarding binge eating is present.
The binge eating occurs, on average, at least once a week for three months.
The binge eating is not associated with the recurrent use of inappropriate compensatory behavior (for example, purging) and does not occur exclusively during the course Anorexia Nervosa, Bulimia Nervosa, or Avoidant/Restrictive Food Intake Disorder.
"An amount of food that is definitely larger than most people would eat in a similar period of time under similar circumstances?" In this case, how are "larger," "most people," and "similar circumstances" defined, and by whom? If I go out to eat with friends, and am the only one who has desert, or soup, for that matter, does that qualify? Similarly subjective are "a sense of lack of control," and "eating more rapidly than normal."
In fact, the DSM-5 which ordained the new binge eating disorder diagnosis has been roundly criticized for embodying "diagnostic hyperinflation," turning aspects of the human condition, symptoms, and behavioral variants into disease. Dr Allen Frances, who has been one of its prime critics, described "binge eating disorder" thus,
Excessive eating 12 times in 3 months is no longer just a manifestation of gluttony and the easy availability of really great tasting food. DSM-5 has instead turned it into a psychiatric illness called Binge Eating Disorder.
Perhaps the enthusiasm to make binge eating disorder a disease had to do more with the financial relationships among the authors of DSM-5 and pharmaceutical companies that wanted to market drugs for the problem. An article by Cosgrove and colleagues(3) noted that members of the DSM-5 work group that approved binge eating disorder as a disease included three people with financial relationships with Eli Lilly, maker of Cymbalta, three people with relationships with GlaxoSmithKline, maker of Lamictal, and one person with a relationship to Shire, maker of Vyvanse.
Yet the discussion of Vyvanse in the big media outlets did not address these past questions about the validity of the binge eating diagnosis for which it is now being promoted.
The Over-Marketing of Binge Eating Disorder to Promote Vyvanse
This week, however, at least some skepticism about other aspects of Vyvanse's promotion appeared in a major media outlet. Just a few weeks after that initial coverage, the NY Times published a somewhat more skeptical take on the promotion of Vyvanse. It noted that Shire was underwriting celebrity endorsements without disclosing its financial backing of them,
The retired tennis player Monica Seles spent this month making the rounds of television talk shows, appearing on everything from 'Good Morning America' to 'The Dr. Oz Show' to share her personal struggle with binge eating.
'It took a while until I felt comfortable talking about it,' she said in a People magazine interview, explaining that she secretly devoured food for years while she was a professional athlete. 'That’s one of the reasons I decided to do this campaign: to raise awareness that binge eating is a real medical condition.'
But that is not the only reason. Ms. Seles is a paid spokeswoman for Shire, which late last month won approval to market its top-selling drug, Vyvanse, to treat binge-eating disorder,...
Shire also was funding patient groups as part of its promotional efforts,
And patient advocacy groups — freshly infused with donations from Shire — began driving social media traffic to a company website that provides advice on how to raise the issue of binge eating with a doctor.
Furthermore, Shire has been trying to raise awareness of the new binge eating disorder diagnosis in ways that obfuscate its promotional interests,
Shire appeared to be following a familiar drug industry playbook by promoting awareness of a disorder, in this case binge eating, before more directly marketing its treatment. A company website, BingeEatingDisorder.com, makes no mention of Vyvanse but provides detailed information about how to talk about the disorder with a doctor, including a printable symptom checklist and sample opening lines to start the conversation. The site also tells patients 'don’t give up' if a doctor initially resists.
Some experts in prescription-drug abuse said the content was troubling because it appeared to coach patients about how to receive a diagnosis for a relatively uncommon condition, or shop for a new doctor if they were not successful.
Note Shire's use of undisclosed payments to celebrity spokespeople and patient advocacy groups and a disease awareness website whose connection to the company's drug was obscured suggests the operation of a stealth marketing campaign. Furthermore, the article noted that Shire has been accused of deceptive marketing in the past, and specifically for its marketing of Vyvanse and another stimulant.
In 2011, the F.D.A. cited Shire, which is based in Dublin, for misleading advertising, and last fall the company paid $56.5 million to settle federal charges that it improperly promoted Vyvanse, Adderall and other drugs. Among the allegations, which Shire denied, was that the company played down Vyvanse’s addiction potential and said it would prevent car accidents, divorce, arrests and unemployment.
The article also emphasized concerns about this new pushing of amphetamines,
With the approval of Vyvanse for binge eating, 'now we have another reason for the public to learn about the glories of amphetamine — it’s very worrisome,' said Dr. Lawrence H. Diller, a behavioral pediatrician in Walnut Creek, Calif., who has written about A.D.H.D. drugs. 'My hat’s off to Shire. They’ve done it again.'
Also,
Several drug safety and addiction experts said the approval was of particular concern because of amphetamines’ troubled history as a treatment for weight loss. Vyvanse is converted by the body into an amphetamine when it is swallowed.
From the 1940s through the 1970s, the drugs were commonly prescribed to overweight people who then became addicted. After public outcry and tighter government controls, companies stopped selling amphetamines as obesity treatments and their use is now tightly restricted. In 2012, the F.D.A. approved Qsymia, a drug combination that treats obesity and contains the amphetamine phentermine, although unlike Vyvanse, it is classified by the federal government as having a low potential for abuse.
The F.D.A. expressly forbade Shire from promoting Vyvanse as an obesity drug, but some drug safety experts said they worried its weight-loss attributes could be attractive to people who habitually overeat. The company says about 80 percent of people with the disorder are overweight or obese. Weight loss and appetite suppression are a common side effect of amphetamines.
'There’s so many reasons to be concerned about this,' said Dr. Andrew Kolodny, the chief medical officer of Phoenix House, a drug treatment organization.
He questioned why the F.D.A. approved the new use of Vyvanse so swiftly and said that given amphetamines’ troubled past, more caution was necessary. 'We had a horrible experience with amphetamines in this country, so the fact that this would just get rushed through without even bringing it before an advisory committee is especially concerning,' he said.
However, the NY Times article still did not address the lack of good evidence that the drug provided a substantial benefit even in terms of just reducing binge eating, and questions raised whether binge eating disorder is a valid diagnosis.
Summary
Once again we see the overenthusiastic promotion of the latest wonder drug, starting with uncritical media reports that parroted drug company executives. At least this time some skepticism appeared about how an apparent stealth marketing campaign was organized, and about how the drug's riskiness was soft-pedaled.
However, so far there has been little skepticism about the efficacy of the drug. In fact, close reading of the report of one major trial showed that at best it has minimal efficacy, and even the evidence for that is weak and sketchy. Furthermore, major news media have been hesitant to cite the real questions that have been raised about the nature of the disease for which the drug was advocated.
Most concerning is that this promotion was of an amphetamine, a type of drug with a very dark past, a type of "hard drug" responsible for major abuse problems, and known to cause particularly bad side effects, a type of drug whose illicit use has been previously sparked by over-enthusiastic marketing for dubious indications.
So once again I get to say that physicians need to be much more skeptical about the new "innovations," often promoted as miracle cures, that seem to appear weekly. Attempts to educate physicians about clinical epidemiology, the principles of evidence based medicine, and just simply how to read a clinical research article with an appropriately skeptical and critical eye seem to have fallen by the wayside. Furthermore, the diminishing number of health care journalists with diminishing resources may not be able to sufficiently skeptical of the marketing and public relations hype surrounding new drugs and devices. Physicians and journalists need to have the courage to be more skeptical, and the public, who may trust journalists and physicians to cut through the bloviation, need to advocate for better training of physicians and journalists.
Finally, health care professionals and the public at large have been told to trust government regulators to only approve medicines that are safe and effective. Yet the US Food and Drug Administration increasingly seems too cowed to challenge the pharmaceutical industry, and did not seem to exert much critical thinking before approving an amphetamine for over-eating. The public and health care professionals ought to be advocating intensely for regulators that are less captured by the industry they are supposed to oversee.
As we have said until blue in the face, true health care reform would bring some skeptical thinking and regard for evidence and logic into the health policy discussion.
For our closing musical inspiration, or warning, note the chorus in "Amphetamine Annie" by Canned Heat...
"Speed Kills"
References
1. McElroy SL, Hudson JI, Mitchell JE et al. Efficacy and safety of lisdesamfetamine for treatment of adults with moderate to severe binge eating disoder: a randomized clinical trial. JAMA Psychiatry 2015; Link here. 2. Cohen PA, Goday A, Swann JP. The return of rainbow diet pills. Am J Pub Health 2012; 102: 1676-1686. Link here.
3. Cosgrove L, Krimsky S, Wheeler EE et al. Tripartite conflicts of interest and high stakes patent extensions in the DSM-5. Psychother Psychosom 2014; 83: 106-113. Link here.
A recent Wall Street Journal article that focused on a quirk in US Medicare payment rules that may be gamed by long-term hospitals also revealed the plight of physicians employed by such hospitals, and worse, the danger posed by such gaming to patients.
Discharging Patients at Particular Times Maximizes Hospital Revenue
Here is how the rule works:
Under Medicare rules, long-term acute-care hospitals like Kindred’s typically receive smaller payments for what is considered a short stay, until a patient hits a threshold. After that threshold, payment jumps to a lump sum meant to cover the full course of long-term treatment.
That leaves a narrow window of maximum profitability in caring for patients at the nation’s about 435 long-term hospitals, which specialize in treating people with serious conditions who require prolonged care.
Systemic Evidence that Discharges are More Likely to Occur at Times that Maximize Revenue
Thus the Medicare rules provides financial incentives for discharging patients at particular times during their admissions. The reporters found some systemic evidence that patients were more likely to be discharged at those times:
The Journal analysis of claims Medicare paid from 2008 through 2013 found long-term hospitals discharged 25% of patients during the three days after crossing thresholds for higher, lump-sum payments. That is five times as many patients as were released the three days before the thresholds.
The issue here is that the decision to discharge a patient from any kind of hospital should be made by health care professionals and their patients, sometimes with the input of the patients' families. The decision should depend on the patients' medical status, the availability of follow-up care, and the patients' wishes and values. Hospital managers should have no direct influence on these decisions. So why would patient discharges occur more often at the times when they are most financially advantageous for the hospitals?
An Illustrative Case
The Wall Street Journal article opened with an illustrative anecdote.
A Kindred Healthcare Inc. hospital in Houston discharged 79-year-old Ronald Beard to a nursing home after 23 days of treatment for complications of knee surgery.
The timing of his release didn’t appear to correspond with any improvement in his condition, according to family members. But it did boost how much money the hospital got.
Kindred collected $35,887.79 from the federal Medicare agency for his stay, according to a billing document, the maximum amount it could earn for treating most patients with Mr. Beard’s condition.
If he had left just one day earlier, Kindred would have received only about $20,000 under Medicare rules. If he had stayed longer than the 23 days, the hospital likely wouldn’t have received any additional Medicare money.
Furthermore,
Between mid-2011 and the end of 2013, the Kindred hospital that treated Mr. Beard discharged eight times as many Medicare patients on the day they reached their threshold as on the day before. In the days immediately after the lucrative three-day window, discharges plummeted. Kindred acquired the hospital, which has two campuses, in the summer of 2011.
Mr. Beard, a retired drilling-equipment salesman, was discharged from Kindred’s facility on Nov. 12, 2011. His family says his condition had deteriorated at the hospital and they wish he had been released sooner.
Mr. Beard was admitted to Kindred Hospital Town and Country in Houston in late October 2011 after surgeons found the site of an earlier knee surgery had become infected with drug-resistant bacteria called MRSA. He was sent to the Kindred facility that Oct. 20 for a course of antibiotics, according to the records and Ms. Beard.
On his fourth day at the Kindred hospital, nurses administered the drug Remeron to treat sleeplessness. Mr. Beard’s wife says he had an allergy to that drug—documented at the time on a wristband provided by another hospital—and he went into a coma for a time.
'I wished then that I could take him somewhere else,' says Ms. Beard, now 77 years old.
Over the next two weeks, Mr. Beard’s condition deteriorated as he received treatments from a dozen doctors. A Medicare document provided by his wife shows he received an hour and a half of 'critical care' services on Nov. 9, three days before Kindred discharged him.
When he left the facility in a transport van on Nov. 12, bound for a nursing home, he complained of nausea, his wife says. The van driver called for an ambulance from a gas station. The ambulance took him to the emergency room at a general hospital in Katy, Texas.
Ms. Beard says doctors determined that, aside from low blood pressure, he was stable. She drove him to the nursing facility herself, but because Kindred’s discharge papers had been left behind in the van, the nursing facility declined to accept him. He wound up back at the Katy hospital to begin an additional three-day hospitalization, where doctors performed tests to monitor an existing heart condition, the billing documents show.
Ms. Beard says she doesn’t regret that her husband left Kindred’s hospital when he did, despite the chaos of those days. 'I think if he had stayed at Kindred, he would have laid there and died,' she says.
Note that Mr Beard was apparently discharged during the window of maximum revenue for the hospital, but there was no obvious medical reason for his discharge on that particular day.
Evidence that Hospital Managers Pressure Health Care Professionals to Discharge Patients at Times that Maximize Revenue
The WSJ statistical analysis suggested that Kindred and other for-profit long-term hospital corporations are particularly prone to discharge patients at times that maximize revenue.
For-profit companies such as Kindred and Select were more likely to discharge patients during the most-lucrative window than nonprofit competitors, the Journal’s analysis shows. Nonprofits discharged 16% of people during the window, compared with 27% at for-profits.
The WSJ also found evidence that managers at two for-profit long-term hospital systems pushed health care professionals to discharge patients at the most profitable times.
Former long-term-hospital executives say they sometimes called the threshold the 'normal low' or 'five-sixth date,' referring to the Medicare formula. The Journal interviewed 16 people who have worked at facilities operated by Kindred or rival for-profit system Select Medical Corp. in 10 states, including former hospital administrators, doctors and case managers who oversaw discharges. Those two publicly traded companies billed Medicare for 42% of all long-term-hospital claims it processed during the period the Journal studied.
The former administrators say their corporate bosses exerted pressure to discharge as often as possible during the most lucrative days, rewarding managers who succeeded and questioning those who didn't.
'You’d hear from the powers that be if your hospital was not…hitting a pretty high percentage of your patients for Medicare' soon after the payment threshold, says Karen Shammas, who was chief executive of a Kindred hospital in Peoria, Ariz., until late 2013, when she retired.
Ms. Shammas, like some other long-term-hospital administrators who were interviewed, described meetings in which hospital staffers would discuss plans for each patient at the facility—armed with printouts from a computer tracking system that included, for each patient, the date at which reimbursement would shift to a higher, lump-sum payout.
Ms. Shammas says she never kept patients hospitalized for financial reasons if they were medically ready to leave.
Kindred declined to comment in detail on discharge patterns or corporate policies.
Former executives at both Kindred and Select say doctors, pressured by hospital administrators, sometimes ordered extra care or services intended in part to retain patients until they reached their thresholds, or discharged those who were costing the hospitals money regardless of whether their medical conditions had improved.
Former executives at hospitals run by each chain say their bonuses depended in part on maintaining a high share of patients discharged at or near the threshold dates to meet earnings goals.
In some cases, their bosses gave them specific targets for discharge rates during the most lucrative days, the former hospital executives say. When they missed their targets, some of the executives say, their bosses asked for explanations as to why individual patients weren’t released during the target window. \ Select said in a written statement that its long-term hospitals discharge patients 'based on their medical condition and not on the Medicare reimbursement system' and 'do not manipulate discharge timing based on financial considerations.' The company said bonuses are based on 'overall financial performance,' among other factors, and not the share of patients discharged near the threshold.
Select’s corporate managers were 'very intense about managing that length of stay really effectively to maximize the profit potential for any particular patient, says Robert Marquardt, former CEO of a Select hospital in Fort Wayne, Ind.
If a patient was two days from the threshold, 'you were incentivized to see if you couldn’t find a reason to keep them for two more days,' says Mr. Marquardt, who left the company in December to work as a consultant.
Mr. Marquardt says he didn’t believe the efforts caused harm. 'You might play the game a bit, but you would never put a patient at risk,' he says.
Select said while it monitors discharge dates and other metrics and seeks to understand deviations from norms, it doesn’t set discharge targets. It said efforts to prolong a patient’s stay or discharge a patient early would be a violation of Select’s policies.'
So the WSJ article presented statistical analysis that patients are more likely to be discharged on the days that are most advantageous from the standpoint of hospital revenue than on other days. The WSJ article also presented narratives by several people that suggest that top managers gave incentives to lower level managers to maximize the number of discharge on the most financially advantageous days, and that managers tried to directly influence physicians, presumably those employed by the hospital systems, to discharge patients on the most financially advantageous days.
The Private Gain of Mangers of Long-Term Corporate Hospital Systems
I do not know a way to determine how much money Kindred and Select may have made from the practice of timing long-term hospital discharges for maximum revenue, but there is certainly evidence that the top managers of these corporations do very well.
Based on the most recent available (2014) proxy statement from Kindred, its CEO, Paul J Diaz, received $4,303,072 in 2013, and all listed managers received more than $1 million that year. Based on the most recent available (2014) proxy statement from Select Medical Holdings Inc, its CEO, Robert A. Ortenzio, received $3,557,860 in 2013, and its executive chairman, Rocco A Ortenzio, received $2,701,916 in 2013, and all listed managers more than $1.5 million that year
Revenue Maximization as "Corruption"
The WSJ reporters interpreted their findings as "a sign that financial incentives in the Medicare system may shape patient care." It thus implied that a reasonable policy response to this problem would be to change the Medicare rules for paying for long-term care. However, left unwritten was that only in a health care system in which managers feel that short-term revenue may trump the best interests of patients, and in which managers are empowered to influence, if not override physicians' decision-making would such financial incentives have any major effect.
The WSJ article did include an expert's opinion that it was unethical, or worse, for hospital managers to pressure physicians to discharge patients at times that maximized revenue, rather than times that were optimal for the patients' medical care and well being.
The pattern of discharging patients at the most lucrative juncture is 'troubling and disturbing,' says Tom Finucane, a doctor and professor at Johns Hopkins University School of Medicine, after learning of the Journal’s findings. 'The health-care system should serve the patients and try to improve their health, and any step away from that is a corruption.'
Dr. Finucane and other medical experts say longer-than-necessary hospital stays increase risks for medical errors, infection and unnecessary care. Discharges that come too early can mean patients don’t get care they need.
Recall that the Transparency International (ethical, not necessarily legal) definition of corruption is abuse of entrusted power for private gain. Physicians are entrusted to make decisions on behalf of their individual patients, so as best to improve their patients' health and health care outcomes. Hospitals are entrusted to provide the settings in which physicians can act in the best interests of their patients. So it seems clear that pressuring physicians to discharge patients so as to maximize hospital revenue regardless of the effect of such discharges on patients is corruption in this sense, health care corruption.
Note that health care corruption has generally been a taboo topic, especially when the corruption occurs in developed countries. It is notable that the WSJ article made that topic slightly less anechoic.
Furthermore, framing this problem as health care corruption that endangers patients suggests that the issue goes far beyond a Medicare policy that is easy to game, and that another policy response, such as an investigation to see if such actions were legal, might be more to the point than adjusting the Medicare payment formula.
Beyond that, there are lessons for doctors and more globally for policy makers. We have previously discussed the plight of the corporate physician, caught between his or her oath to put care of individual patients above all other concerns, and effective subservience to managers who may well put short-term corporate revenue, and growing their own incomes, ahead of all other concerns, including patients' and the public's health. Health care professionals should not hold any illusions that they can take jobs with corporate health care providers and uphold their own values.
Furthermore, the plight of the physicians, and more importantly, the patients at corporate long-term hospitals raises a bigger policy question. In my humble opinion, is it now time to end our badly conceived experiment with gilded age health care. In the US, we have decided that the "free market" can solve all of our health care problems, disregarding the near impossibility of maintaining a real free market in health care. Instead, we now have health care dominated by poorly regulated large corporations in an era when top managers believe they have a mandate to do anything to improve short-term revenue, and often conveniently increase their own wealth. It appears to be time to bring back the old laws against the corporate practice of health care, and consider whether we should allow hospitals and other health care organizations that provide direct patient care to be for-profit enterprises.
Meanwhile, patients and health care professionals, you should realize that you approach corporate hospitals and other corporate health care providers at your own risk.
Here is the background. Mercy Health, formerly Catholic Health Partners, claims to be the largest health system in Ohio, and one of the largest in the US (look here). It's mission is:
to extend the healing ministry of Jesus by improving the health of our communities with emphasis on people who are poor and underserved. In all that we do, we strive to demonstrate our core values of compassion, excellence, human dignity, justice, sacredness of life and service.
our commitments to the Catholic Church, its ethical and religious directives and our Mission are unwavering. Our name change reinforces our fidelity to our powerful message – of compassionate, quality healthcare – bringing God’s mercy to the poor and under-served. As Pope Francis shares 'the Lord’s most powerful message (is) mercy.'
However, as reported in Becker's Hospital Review in 2011, Mr Connelly's total compensation in 2009 was $1,570,451. In a December, 2012 Journal-News article, the update was
Michael Connelly, president and chief executive officer of Cincinnati-based Catholic Health Partners, received total compensation last year of $2.2 million for his position over a $3.6 billion organization with more than 32,500 employees. James May, president and chief executive of Mercy Health, a division of Catholic Health, received total compensation in 2011 of $1.2 million.
Mr Connelly Sues for Defamation
This now is relevant to a story reported briefly in Cincinnatti.com,
Michael Connelly, president and CEO of Mercy Healthy, has filed a lawsuit against Service Employees International Union No. 1199 alleging invasion of privacy and defamation.
The reason? A van displaying a large image of Connelly featuring the words 'GREED! GREED! GREED!' and his personal telephone number was circling his Hyde Park neighborhood Monday.
The billboard on wheels featured the following text: 'Mercy Health CEO Michael Connelly is getting rich off the sick, disabled and indigent!'
The article included a picture of the van, emblazoned with a picture of Mr Connelly labeled "Mercy Health - $2,000,000 - CEO." Further text included the assertion that "Mr Connelly is getting rich off the sick, disabled and indigent."
However,
''This is personal and not a 'labor dispute,'' stated the lawsuit filed by Connelly Wednesday in the Hamilton County Court of Common Pleas. The lawsuit has been filed against the union and its president, Becky Williams.
'Defendants acted with malice in the way they structured and published their radio ad and the mobile billboard by accusing Connelly of disregarding the medical needs of Mercy Health's most vulnerable and sympathetic patients in a way to excite and offend public sensibilities to achieve maximum destruction of Connelly's personal and professional reputation,' according to court documents.
Actually, as reported by the Cincinnati Business Courier, the van that so offended Mr Connelly "listed his work phone number," not his personal phone number A brief look on Google revealed that it is the main number of the hospital system, not his personal line. That article also included,
But Anthony Caldwell, spokesperson for the union, said the radio ad and billboard are actually bringing the truth to the public.
'I don't see why they see this as defamation … we are merely representing the opinion of the workers and of the union,' he said. 'The issue, I believe, is that they are not used to being held accountable by people in the community. Sometimes the truth is hard to handle.'
Comment
This little contretemps certainly was the product of a labor dispute, and I do not want to take a side in that dispute. There are some things to be learned from the kerfuffle, however.
First, the huge disconnect between the pay now frequently given to top hired managers of non-profit hospitals and hospital systems and the stated mission and/or track records of these organizations is now less anechoic. It is becoming a topic of public discussion, and becoming relevant to such things as labor negotiations.
The obvious non sequitur in this case is a hospital system ostensibly devoted to needs of the poor and under-served but that pays enough to make its CEO a millionaire many times over. At best this appears unseemly, and certainly seems specifically worthy of public discussion.
The need for such discussion appears all the more acute because of current concerns about health care costs and access, and reasonable questions about how much the public money that provides a great deal of hospital revenue (e.g., in the US through Medicare and Medicaid programs) ought to go to make top managers rich. Trying to impede such discussion by bringing litigation against those who participate in it in some states might be regarded as a SLAPP, strategic litigation against public participation. (Ohio, however, is not one of the states with specific laws meant to discourage SLAPPs.)
Second, this incident demonstrates at a minimum the overdeveloped sense of entitlement of hired managers who are able to amass such fortunes. It is understandable that Mr Connelly was annoyed by the attention his inflated pay was receiving. However, he chose not to merely verbally express his argument with the sponsors of the "greed" van. Instead, he chose to use his organization's resources to launch a defamation lawsuit. In Ohio, as in many states, to defend against defamation one must simply prove the truth of the matter (look here). The text on the van announced he was a $2,000,000 CEO." In fact, in 2011, according to public records, his total compensation exceeded $2 million. The text also stated he is getting rich off the sick, disabled, and indigent. Earning more than $1 million a year seems to fit the common definition of getting rich. By definition, the hospital's patients include the sick and disabled. The hospital's stated mission is to serve the poor. Whether or not by taking such a salary he demonstrated greediness is a matter of opinion, but it does not seem unreasonable to characterized someone getting over $2 million a year supposedly to serve the poor and under-served as "greedy." There might be worse adjectives one could use to describe these circumstances. Furthermore, how Mr Connelly's privacy was invaded by publicizing the main phone number of his organization escapes me. Thus the claims that Mr Connelly's organization is making on his behalf seem a bit fabulous, and possibly frivolous.
Mr Connelly runs a 501(c)3 organization whose tax returns, which include his total compensation, are by law public. If he is afraid that thus revealing his total compensation makes him subject to ridicule, maybe he should consider asking for his compensation to be reduced.
As we have noted many times before, top leaders of big health care organizations are now often paid enough to make them instant multimillionaires. Their supporters, often cronies, other managers of other big organizations, or their paid employees or vendors, often trumpet the same tired talking points to try to justify this pay (look here). One frequently used talking point is that to be the CEO one must be "brilliant." It may be that many of those leaders are starting to believe their own public relations, and really think they are so brilliant as to be worth millions of dollars, and so worthy that no plebeian ought to question them.
Are such entitled people the right people to run health care organizations, particularly those claiming to be in virtuous service to the poor and under-served?
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.
People with power are very reluctant to give it up. While all of us recognize the problem, those with the power to change it like things the way they are.
So if challenged a little, they may sue the challengers. If challenged a lot, who knows what might happen.
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.
To the tune of "Dirty Laundry," by Don Henley, some more of health care's dirty laundry... We have frequently discussed the seemingly unstoppable rise of compensation given to top hired managers of health care organizations. Their compensation seems to rise regardless of the financial status of their organizations, much less how well their organizations are caring for patients or otherwise fulfilling the mission. Top hired managers of other organizations, particularly big for-profit corporations, have seen similar enhancements of their personal wealth, leading to the charge that they are acting as "value extractors," rather than responsible leaders.
Justifications for this rise are superficial, often limited to talking points we have repeatedly discussed, (first here, with additional examples of their use here, herehere,here, here,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).
The notion that top hired managers are entitled to rich compensation no matter what now seems to have metastasized to medium-sized and even small US non-profit hospitals and other health care provider organizations. Three relevant examples have appeared so far in February, 2015, listed in alphabetical order by state.
Georgia - West Georgia Health
West Georgia Health is a health system that includes a single hospital, West Georgia Medical Center, in LaGrange, Georgia, a town with a population of approximately 30,000 located southwest of Atlanta.This story comes courtesy of the LaGrange (GA) News. Here are the essentials regarding compensation given the CEO.
About a month ago, someone at WGMC went into the doctors’ and surgeons’ lounges and anonymously posted pages of the hospital’s publicly available 2012 IRS 990 form, according to a confidential source who is a local doctor.
On the surface, they appear condemning. The pages showed compensation for CEO Fulks and other top hospital management. By the numbers, Fulks was compensated $1,989,538 during fiscal year 2012. On top of that, the hospital also paid $90,867 in travel expenses for Fulks and his wife, Cindy. It didn’t stop there: they also paid his monthly dues at a country club, according to the 990s obtained by the Daily News.
In years prior, Fulks was compensated $469,785 with $88,637 in travel expenses and $470,814 with $86,210 in travel for 2011 and 2010, respectively.
In 2012, Fulks’ base salary was $375,812, but with the $1.6 million “payout” and other compensation, such as nontaxable benefits and deferred compensation, the hospital actually gave Fulks more than $2 million in compensation.
In contrast, the News reported that the health system has been running deficits, decreasing services, and laying off employees.
Between the years of 2010 and 2013, West Georgia Medical Center on Vernon Road listed revenue deficits each year — sometimes as high as nearly $6.2 million dollars as in 2013, according to publicly available IRS filings by WGMC.
A round of layoffs in August of 2014 and the sale of its dialysis center in 2012 wasn’t enough to turn the tide, and hospital officials have said publicly they’ve hired a firm to shop around for what they’re calling a 'strategic partner' for a potential merger.
Seeking an explanation of a million dollar plus payout to the CEO when the system was running deficits, reducing services and laying off employees, Reporter Tyler Jones was able to do what reporters in larger markets rarely can do, get a response from the CEO himself,
'It’s … 10 years worth of funding 457(f) retirement plan vested for me during that year and I took it and paid the taxes on it and continued with investments,' he said.
When asked if it was appropriate for him to take such a large lump sum of money when the hospital was doing so poorly financially, Fulks balked.
'I don’t determine what my income is,' he said. 'There is a process that involves bringing in an outside consultant who does surveys and can report what the compensation is for higher compensated executives compared to the region.'
'Part of the answer to your question is that money was accumulated over a 10-year period, which included up and down periods in terms of financial performance. It was already funded. It’s not like they took it out of operations, it had been written through the books already. So, it was part of my employment contact arrangement with the board.'
The CEO did not explain, however, why his retirement benefits were so high relative to his base salary (apparently averaging $160,000/ year, at least 40% of base salary), and how they compared to the benefits given other employees. Note that he did invoke, however, one of the talking points commonly used to justify large payments to hired management even by financially stressed organizations. This was the "we have to pay competitive rates" argument.
In summary, despite financial stress causing recurring deficits, and leading to layoffs, service reductions and merger discussions, the CEO of a single hospital health system in a small town in Georgia recently had a base salary exceeding $300,000, got retirement benefits at least worth about 40% of his salary, and extra perks such as country club dues.
Idaho - St Luke's Health System, Saint Alphonsus Health System
Boise, Idaho is a city with a population over 200,000. The Idaho Statesman recent published a story about executive compensation at Idaho hospital systems. Key points about compensation were:
The latest tax filings by St. Luke's Health System, Saint Alphonsus Health System and their hospitals show that pay boosts at the top exceeded overall raises the systems reported for employees, and for Idaho workers.
Total compensation - including salary, bonuses, retirement and other pay - rose an average of 14 percent for the six CEOs. St. Luke's Health System CEO David Pate again led the pack. His total compensation rose 19 percent to $1.2 million, mainly because of other compensation, including retirement pay.
The second-highest paid CEO was Sally Jeffcoat, of St Alphonsus Health System, who received $849,880. The highest paid executive who was not a CEO was Gary Fletcher, Chief Operating Officer of St Lukes, who received $1.08 million.
However, neither St Lukes nor St Alphonsus has been doing particularly well financially as of late.
St. Luke’s Regional Medical Center lost almost $6 million in fiscal 2013 — a drastic change from recent years. St. Luke’s local operations had reported net income of $39 million to $58 million since fiscal year 2010.
The St. Luke’s cancer center, Mountain States Tumor Institute, also lost money in fiscal 2013 for the first time in at least five years. Expenses overran revenues by $10 million.
Also,
Net revenues at Saint Alphonsus Medical Center-Nampa also declined in fiscal year 2013, though the hospital did not lose money. The decline was due to fewer emergency visits and inpatient admissions at the Nampa hospital, said Saint Alphonsus Health System CFO Blaine Petersen.
Furthermore, note that the St Luke's mentioned above is the same St Luke's that recently was found by a court to have violated antitrust laws in the course of its takeover of physicians' practices, and that ruling was just affirmed by an appeals court (see this post, and this Associated Press story via MagicValley.com) Also note that St. Luke's strenuously tried to keep details of the litigation out of the public eye, including details suggesting that the main goal of St Luke's actions was increased revenue, not better patient care.
The Idaho Statesman article included only this brief justification of rising executive compensation in the face of declining revenues,
Hospital officials say the raises were deserved.
'There are people here working really hard, and I think we have a lot to be proud of,' said Jeff Taylor, St. Luke's chief financial officer. 'Our board is actively involved in setting (executive) compensation, and we are transparent about it.'
Note that this is a brief version of the "brilliance" talking point, and the person making it presumably reports directly to the CEO who received so much. Given the results of the antitrust case noted above, I wonder specifically what he was proud of?
Vermont - Health Care and Rehabilitation Services of Southeastern Vermont
HCRS is one of five 'designated agencies' in the state that provides mental health services to people in crisis, school-based mental health services, and programs such as the Kindle Farm, a private school for troubled boys in Newfane and Townshend, and the Hilltop Recovery Residence in Westminster.
The issue was again a lump-sum retirement payment given a former CEO
A $650,000 compensation package for the retired CEO of Health Care and Rehabilitation Services of Southeastern Vermont has raised eyebrows from Montpelier to Springfield.
Judith Hayward left HCRS after 17 years as CEO on July 1, 2014, with a $650,000 cash golden parachute that HCRS officials said compensated her for the organization’s lack of a pension plan.
Hayward oversaw an agency with a $41 million budget with 600 employees, with offices in Springfield, Brattleboro and White River Junction. She was paid $162,000 annually.
The details of the special retirement package were,
The HCRS board approved a $450,000 compensation package, in addition to Hayward’s $162,000 annual salary in June 2010, he said. But when the agency’s auditors said the finance package had been poorly designed, forcing Hayward to pay a higher rate of taxes on the deferred compensation, the board added another $200,000 to the package for a total of $650,000
He said the most recent filing showed Hayward was paid a total of $497,000 in 2012.
The contrast between the payment and the current financial status of the organization was:
The package comes as its hundreds of employees didn’t receive a wage increase in 2014, and the state faces an anticipated $100 million funding shortfall.
According to HCRS tax forms, in 2012, the first year of the extra payments to Hayward, the agency had a revenue shortfall of $102,000, while in 2013, it had a surplus of $99,000 on a budget of $41 million.
An article from the Brattleboro (VT) Reformer, via the Valley News, contains the justification for the payout,
'Everyone on the board thought she did a tremendous job. She brought the organization out of bankruptcy, developed new programs and everyone who had contact with her, including people from the state, thought she did a magnificent job,' said J. Allen Dougherty, former HCRS Chairman of the Board of Trustees who signed off on the package. 'She never had a retirement package and the board thought this was a way we could make it up to her.'
Again, this was a version of the "brilliance" talking point.
A blog post in the Nonprofit Quarterly downplayed the amount of the payout as excusable, given the CEO's long tenure. However, it also acknowledged that the amount may have seemed excessive to other employees,
[Current CEO] Karabakakis said staff have been 'disappointed, angry and outraged.'
'Some people may see it as excessive,” he said. “If we’re going to provide a deferred compensation package, it’s important that we look at the industry standard, and make sure that we do have a culture of openness and transparency.'
But the staff were unlikely to have been solely concerned about transparency. The other thing a board needs to ensure is that fair retirement benefits extend to all workers. The notion of caring only about the old age comfort of top employees is, naturally, abhorrent and insulting to many others. It’s no surprise, and in times where income inequality begs for our attention, our organizations should try not to mimic the bad policies of the larger economy.
Summary
Here were more instances of generous compensation given to CEOs and other top executives of small to medium sized non-profit hospitals and health care provider organizations. In all cases, the pay seemed disproportionate given the financial situations of the organization, the pay and benefits given to other employees, or the services provided to patients. In all cases, justifications provided were perfunctory, and were at best based on talking points used before to justify executive pay, but without supporting evidence or logic.
In a 2014 interview, corporate governance experts Robert Monks and Nell Minow, Monks said,
Chief executive officers' pay is both the symptom and the disease.
Also,
CEO pay is the thermometer. If you have a situation in which, essentially, people pay themselves without reference to history or the value added or to any objective criteria, you have corroboration of... We haven't fundamentally made progress about management being accountable.
The symptom and the disease have metastasized to health care, from huge for-profit corporations now also to even small non-profit hospitals. Thus, like hired managers in the larger economy, even managers of small non-profit hospitals 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.
As Robert Monks also said in the 2014 interview,
People with power are very reluctant to give it up. While all of us recognize the problem, those with the power to change it like things the way they are.
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.
