60% of the CEOs of America's "Great Health Systems" Have No Educational Background in Health Care

generic managers hospital systems

60% of the CEOs of America's "Great Health Systems" Have No Educational Background in Health Care

Unknown 8/01/2015 Komentar

We have noted that US health care has been taken over by generic managers.  A recent article about the CEOs of purportedly some of America's best hospitals provides some quantitative data.

A few days ago, Becker's Hospital Review published a list of the educational background of the CEOs of the "50 great health systems to know | 2015," (at least according to Becker's.  The article noted that their educational experiences took place at,

Ivy League schools, small liberal arts colleges, Big Ten universities, law schools, medical schools and more.

That is nice, but I decided to simply look at how many of the CEOs had educational backgrounds in medicine, other health care professions, public health, or the biomedical sciences.

Here is the breakdown of their most advanced degrees:

16 (32%) had medical doctorates
26 (52%) had a business administration degree, all but one at the master's level, and one a doctorate. 

The rest had various masters  and doctoral degrees in other fields. 

Note that two of the MDs also had MBAs, and one had a JD (law degree).

The business administration degrees included MBAs, but also degrees in health, hospital administration.  Of those with these degrees, one also had a bachelors degree in pharmacy, and one in biology.

One CEO was listed as attending a nursing school, but no degree or certificate from that experience was listed.

Comment

In any case, the majority, more than 60% of the CEOs of some of America's most prestigious hospitals (by at least one measure) clearly had no educational background in medicine, another health profession, public health, or biomedical science.  Again, this demonstrates that the top leaders of the top US health care organizations are more often management, rather than medicine, health professional.

This is corroborated by other observations.  In 1988, Alain Enthoven advocated in Theory and Practice of Managed Competition in Health Care Finance, a book published in the Netherlands, that to decrease health care costs it would be necessary to break up the "physicians' guild" and replace leadership by clinicians with leadership by managers (see 2006 post here). Thus from 1983 to 2000, the number of managers working in the US health care system grew 726%, while the number of physicians grew 39%, so the manager/physician ratio went from roughly one to six to one to one (see 2005 post here). As we noted here, the growth continued, so there are now 10 managers for every US physician.

Why is this a problem?   The managers who first took over health care may have had some health care background.  Now it seems that health care managers are decreasingly likely to have any health care background, and increasingly likely to be from the world of business.  Meanwhile, for a long time, business schools seem to have been teaching managers that they have a God given right to manage every organization and every aspect of society, regardless how little they know about what the particular context, business, calling, etc involves.  Presumably this is based on a faith or ideology that modern management tools are universally applicable and nigh onto supernatural in their powers.  Of course, there is not much evidence to support this, especially in health care.

We have discussed examples of bizarre proclamations by generic managers that seem to corroborate their belief in such divine powers.  Most recently, there was the multimillionaire hospital system CEO (who is on the list, and whose highest non-honorary degree is a masters in philosophy and political science) who proclaimed new artificial intelligence technology could replace doctors in short order (look here).    We have noted many cases of management of health care organizations that was ill-informed, and indifferent or even hostile to the core values of health professionals. 

I believe true health care reform would enable health care leadership by people who understand the actual care of patients, uphold health care professionals' values, and are willing to be accountable for putting patients' and the public's health first. 

But this sort of reform would challenge the interests of managers who are getting very rich off the current system.  (See some examples of grandiose executive compensation in health care here.)  So I expect lots of resistance to any proposals to push health care leaders to be more knowledgeable about health care and sympathetic to its values. 

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Entresto: Blockbuster, or Just Over Hyped? - Whatever, It Will Cost $4500 a Year

CHF clinical trials Entresto evidence-based medicine manipulating clinical research Novartis sacubitril

Entresto: Blockbuster, or Just Over Hyped? - Whatever, It Will Cost $4500 a Year

Unknown 7/30/2015 Komentar

The newest drug for congestive heart failure, Entresto, a fixed combination of valsartan and sacubitril, has just hit the market at an elevated price.  Like other drugs recently introduced as blockbusters, the high price does not seem clearly justified by clinical evidence about the drug's benefits and harms.  


Questions Raised by the One Big Published Controlled Trial

Last year, we discussed the hoopla around a study of a new drug for congestive heart failure (CHF),(1) a fixed combination of valsartan and sacubitril. Also, on the now defunct CardioExchange blog, Dr Vinay Prasad discussed the same study (look here, and scroll down.) We both concluded that the (apparently multiply flawed) design of the study left important questions unanswered.

Does Sacubitril Actually Work?

 The PARADIGM-HF study compared patients given valsartan plus sacubitril to patients given enalapril.  Valsartan, an angiotensin receptor blocker (ARB) and enalapril, an angiotensin converting enzyme inhibitor (ACEI) have both been shown separately to improve symptoms and function, decrease morbid events, and extend life for patients with systolic CHF.  However, the PARADIGM-HF study compared a high dose of valsartan, 160 mg twice a day, (plus sacubitril) to a medium dose of enalapril, 10 mg twice a day.  Apparently, no trial comparing just valsartan 160 mg to enalapril 10 mg twice a day has been done.  So it is quite possible that a high dose of valsartan is better than a medium dose of enalapril.  Thus, PARADIGM-HF could not prove that sacubitril has any benefit independent of high dose valsartan.

What are the Adverse Effects of Sacubitril (With or Without Valsartan) Likely to be in Practice?

The PARADIGM-HF design prevented any assessment of the adverse effects of sacubitril independent of those of valsartan.  Furthermore, the trial had an active run-in period which resulted in the exclusion of  patients who failed to tolerate valsartan-sacubitril in a pre-trial run-in period.  This effectively biased downward the prevalence of adverse effects due to the combination reported during the trial.  Finally, the trial, while big, was not big enough to discover rare but severe adverse effects.  Thus, one cannot easily tell how the benefits of valsartan-sacubitril compare to its harms, or how the benefits of sacubitril alone compare to its harms.

How Would Valartan-Sacubitril Work for Patients with Common Diseases in Addition to CHF?

The study excluded patients with common conditions that may afflict CHF patients, including relatively severe coronary artery disease, severe lung disease, ulcers and liver disease.  CHF patients are often elderly and often have other diseases, but how the drug might work for them is unclear.

Other Doubts and Questions

In a recent Medscape post, Dr John Mandrola noted additional problems with the study that raise doubts about its validity.  These included its early termination, the very large number (1000) of study sites raising doubts about quality control of implementation and data collection, and the finding, not emphasized by the authors, that valsartan-sacubril caused an apparent increase in hypotension, a significant issue for CHF patients.

As far as I can tell, there have been no other big trials of sacubitril, with or without valsartan, so there are no other source of clinical research data to address these questions.  As we noted here, one of the most prominent PARADIGM-HF investigators tried to rebut Dr Prasad, but did so mainly by employing logical fallacies.

So in my humble opinion, there is only weak, ambiguous data to show valsartan-sacubitril produces benefits that outweigh its harms for congestive heart failure patients seen in usual clinical practice.

More Enthusiasm and Hype about Entresto

These questions about the one big study of valsartan-sacubitril did not deter the US Food and Drug Administration (FDA) from approving it.  As soon as it was approved, the hype machine started up in a big way.

Per the NY Times,

'This is one of those once-in-a-decade kind of breakthroughs, to get a drug that extends life so substantially,' David Epstein, the head of Novartis’s pharmaceutical division, said in an interview.

Per the Wall Street Journal,

Clyde Yancy, chief of cardiology at Chicago’s Northwestern Memorial Hospital, said that Entresto is 'one of the few times that we have identified a medication that is better than the standard. It’s clearly superior to what we have.'

Per a Medscape news post, Dr Clyde Yancy also said,

A year later, I continue to feel that this is, in fact, a reflection of a new day—for patients and for the opportunity to reenergize the community. It's also a huge endorsement for the importance of science in cardiovascular medicine.

And Dr Milton Packer (who had countered Dr Pradad's critique of PARADIGM-HF with logical fallacies, said,

I think they considered the data to be compelling and strong. And I think that when physicians look at the data, they will be convinced that this drug will become a cornerstone of treatment for heart failure.

The Medscape article did document some doubts.  Dr John G Cleland of Imperial College, London, UK allowed that the active run-in group was among "issues that have yet to be settled," Dr Marriell Jessup who had written a positive editorial in the NEJM when the trial was published(2) allowed that the lack of patients with co-morbities might be a problem.  Finally, Dr Yancy allowed that the early termination might be a problem.   Yet each focused on a single problem with the study, and none of these physicians seemed to acknowledge the totality of the study's problem.  Neither did any of them seemed to let these doubts dampen the enthusiasm, e.g., at the end of the article, quoting Dr Yancy,

Can we change the narrative?  I believe it's time to take the 'failure' out of heart failure and look at what we can do to generate success.

Note that the article disclosed Dr Cleland does research funded by Novartis, maker of Entresto, and Dr Packer is a consultant to Novartis.  Is is possible these commercial relationships tempered any concerns that might have had about the study design. 

I realize that CHF is a miserable problem for patients, and clearly leads to severe symptoms, multiple hospitalization, and sometimes early death.  So I understand why people may be enthusiastic about a new therapy for it, especially if their research or consulting is funded by the drug's manufacturer.  But is it crystal clear the latest innovation is that good?

Billions of Dollars in Play

But never mind those unanswered questions and the multiple problems with the PARADIGM-HF trial, Entresto, the trade name for valsartan-sacubitril will not be cheap.  Per the NY Times,

Novartis said Entresto would cost about $12.50 a day, or about $4,500 for a year....

Novartis wants to convince you that it's not really that expensive

Mr Epstein said the price was 'really quite reasonable,' given that some drugs for other diseases cost many times that amount and confer less benefit.

He is certainly right that some drugs are even more expensive. However, is argument is just an appeal to common practice.  Whether the prices of other drugs are justified by strong evidence about their benefits and harms may not be clear. The benefits conferred by Entresto, and the harms it may cause as we belabored above, are really not that certain either. 

In the financial news, you could almost imagine the salivation.  Per the WSJ,

Wall Street predicts Entresto will be a blockbuster, with Leerink Partners estimating that annual global sales could top $6 billion by 2024.

In Reuters,

Expectations for Entresto have been building since it won early U.S. approval and Novartis set a higher than expected price, with analysts now forecasting $4.7 billion of sales in 2020, according to Thomson Reuters Cortellis.

Chief Executive Joe Jimenez said Entresto sales would take time to ramp up but growth would accelerate in 2016. Reception to the new drug, which Novartis started shipping within 24 hours of U.S. approval this month, has been good and there was little resistance to the $12.50 daily cost.

'The average hospital stay for a heart failure patient in the United States is $11,000,' Jimenez told reporters. 'So we are not receiving pushback on the price because I think this is seen as good value.'

Compared to what? Again, it is not clear that Entresto would be better than generic enalapril dosed at 20 mg/day, which is a lot cheaper than $4,500 a year.  But could it be that visions of billions of dollars have clouded some peoples' thinking, at least people paid by or owning stock in Novartis?

Summary

We have posted frequently about the blockbuster drug Sovaldi promoted as a cure for deadly hepatitis C infections.  Yet while the evidence that Sovaldi and its competitors are really so good, really provide cures, and really will prevent many patients from dire consequences of hepatitis C is not so strong, the US price of these drugs is stratospheric.

Now we have Entresto, whose price is not so stratospheric, but still quite high, and whose benefits compared to its harms are not clearly supported by evidence from clinical research.

 Unfortunately, Entresto (valsartan-sacubitril) is now one of a long line of new drugs that are breathlessly hyped, often by people who should know better, despite weak evidence in their favor.  It is one of a long list of examples of drugs approved based on poorly designed studies whose design flaws seem likely to make their commercial sponsors' products look better.  As a recent post in Health Affairs by Christopher Robertson reminds us, while many industry supporter act like allowing drug and device manufacturers to support (and usually control) most of the clinical research meant to evaluate their own products in inevitable,

When one steps back from our current practices, it should appear rather odd that we rely on companies to test the safety and efficacy of their own products. It would be as if a litigant were allowed to choose and fund its own judge, or an athlete to hire her own referee.

To convince us that we live in the best of all possible worlds, however, the media is full of proclamations that we are in a new era of marvelous medical and health care "innovations" that will bring us all untold benefits.  The notion that physician-industry collaboration is necessary to continue to produce these wondrous "innovations" is a talking point used to counter those who criticize conflicts of interest affecting academic medicine (look here).   Yet the evidence supporting many game-changers and blockbusters is often weak and ambiguous.  This rarely seems to deter the drug, device and biotechnology industry from charging more and more for them.


The sober, evidence-based medicine approach is being lost in all the hoopla and hucksterism.  We are adopting treatments of unproven value, whose benefits may be much less, and harms may be much worse than we imagine, and paying unconscionsable prices for them.  The results for patients and society include our ever rising health care costs, ever challenged access, and no evidence that outcomes are better for patients.

True health care reform would encourage sober discussion of the evidence, of benefits and harms, and of fair pricing, and would challenge the hype, hucksterism, and conflicts of interest that all swirl around modern health care. 



References

1.   McMurray JJV, Packer M, Desai AS et al.  Angiotensin - neprilysin inhibition versus enalapril in heart failure.  N Engl J Med 2014; DOI: 10.1056/NEJMoa1409077  Link here.

2.  Jessup M. Neprilysin inhibition - a novel therapy for heart failure.  N Engl J Med 2014;  DOI: 10.1056/NEJMe1409898.  Link here.

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What They Really Think of Us, UK Version - Health Secretary Derides NHS Doctors for Not Working Enough on Weekends

generic managers ill-informed management NHS UK

What They Really Think of Us, UK Version - Health Secretary Derides NHS Doctors for Not Working Enough on Weekends

Unknown 7/26/2015 Komentar

A new story from the UK suggests what top leaders of health care really think about health care professionals.  I realize that I risk showing my shallow understanding of UK politics when I comment on this, but I believe that the story is straightforward enough for someone from the US to understand, and has  lessons for the US and other countries.

UK Health Secretary Says Doctors Do Not Work Enough on Weekends

The story started earlier in July, 2016, when the current UK Health Secretary within the current Conservative government told National Health System (NHS) doctors they must work seven days a week, as reported by the Guardian,

The health secretary, Jeremy Hunt, has accused the main doctors’ union of walking out of NHS consultants’ [equivalent to US attending physicians] contract talks aimed at preventing 'catastrophic consequences' for patients at weekends.

Hunt said he recognised the efforts of consultants, many of whom already work on Saturdays and Sundays, but that he would impose weekend-working contracts by September if an agreement could be reached.

Also, 

The proposed contract would have at its core the controversial weekend working provision, but would include the abolition of overtime payments that Hunt has described as extortionate.

 Under the current contract, last negotiated by Labour in 2003, consultants can opt out of non-emergency work outside the hours of 7am to 7pm Monday to Friday.

Mr Hunt implied that insufficient physician presence on weekends was leading to catastrophe.

Hunt will say: 'Around 6,000 people lose their lives every year because we do not have a proper seven-day service in hospitals. No one could possibly say that this was a system built around the needs of patients and yet when I pointed this out to the BMA they told me to ‘get real.’ I simply say to the doctors’ union that I can give them 6,000 reasons why they, not I, need to ‘get real’.'

However, UK Doctors, Including Consultants, Do a Lot of Work on Weekends

Within a few days, there was an amazing response from UK physicians showing that what the Health Secretary seemed to believe about how NHS hospitals work was, not to put too fine a point on it, wrong.

From the Guardian came a piece by an anonymous trainee physician,

Last weekend, for the first time ever, I managed to make something trend on Twitter. It wasn’t a witty comment about Andy Murray triumphing in the Davis Cup, nor was it a retweet of a picture of somebody else’s cat.

I simply told a man called Jeremy that I was at work that night.

Three days later, thousands of people were telling Jeremy that they too were at work that weekend, using the hashtag #iminworkjeremy. Day and night, Friday to Monday, a large group of people felt Jeremy simply had to know what they were up to.

Because Jeremy is fairly important in the running of the country. Well, part of the country anyway – that part where the sick can just turn up and be treated without money changing hands. The part I work in, in fact, as a junior doctor.

Jeremy is concerned about how his part of the country is being run. He is upset that the ones who keep the sick alive – the doctors – aren’t there at weekends.

It’s just a pity Jeremy is wrong.

The Jeremy in question is, of course, secretary of state for health, the Rt Hon Jeremy Hunt, who last week announced he would bring in a 24-hour health service, seven days a week. To do this, he would alter consultant contracts to stop them including an 'opt-out' from weekend working – by force, if need be. To bolster his point, he told the public that there were not many consultants in at the weekends, and also that you were more likely to die if you came to hospital at a weekend.

I am not a consultant, far from it, but I do know that if and when I become a consultant, I will work weekends and I will be in at night. I accepted this when I took the role on.

So why did I, and the rest of my campaign group, tell the nation’s health workers to tell Mr Hunt that we were indeed working over the weekend?

I think, firstly, it was in answer to the claim that consultants do not work on Saturdays and Sundays. Our campaign has demonstrated that, day and night, there are doctors of all grades at work, often working unsociable hours.

The article also pointed out that having a consultant (the equivalent in the US of attending physician) available on the weekends may not lead to true seven day service if what the consultant orders is not available on weekends.

Two days later, another junior doctor's response to Mr Hunt had gone viral, as reported by the Mirror,

In an open letter, paediatric junior doctor Benjamin Carter, said health professionals felt 'upset, demoralised and feeling entirely unappreciated' after Mr Hunt painted them as 'lazy, money-grabbing, unprofessionals' who were opposed to 24-7 healthcare.

Also,

He said: 'Please allow me to paint a picture for you, as I am sure you are aware by now due to the #‎IminworkJeremy movement, a great many doctors work weekends. I for one tend to work 1 in every 3.

'This includes juniors and consultants, my consultants in particular have a rota for who is covering the weekends day and night because we need that expertise. When on call for that weekend, my consultants do ward rounds, they see sick children, they are present for the emergencies that their wealth of experience and knowledge helps resolve.

'They do not opt out, they do not complain, and they certainly do not go straight back to the golf course. They might not always be on site for the whole 72 hour weekend, but they are never more than a phonecall away.

'I look up to my consultants as pillars of excellence and professionalism. For you to say that we as a group operate with a lack of vocation and professionalism is not only false, it is gravely insulting.'

Dr Carter posted his letter to Facebook, where it has been shared more than 5,000 times in just a few hours.

In addition,

In a moving section, he explained that much of the anger aimed among doctors is because they have to deal with life and death on a daily basis, for a relatively modest wage.

He said: 'Already our pay is comparable to a high street manager [equivalent to a manager of a shop on Main St in the US], and that it pails in comparison to a city [equivalent in the US to Wall Street] worker and that neither of those professions require their workers to deal with life and death daily, to endure aggression from those we are trying to help and to be reduced to tears that result from exhaustion and the sheer emotional burden of our daily work.

'I invite you to come to my place of work and be there holding a dying child's hand and then tell me afterwards that I don't have a sense of vocation.'

A day later, a UK consultant calculated just how "extortionate" his overtime payments were, per the Independent,

A consultant angered by Health Secretary Jeremy Hunt's claims that a 'Monday to Friday' culture exists within the NHS has published an honest account of exactly how much he earns on call and at weekends.

Karan Kapoor posted the no holds barred letter to his Facebook page, describing what he takes home as a newly-appointed NHS ENT (Ear, Nose and Throat) consultant when working outside his usual hours.

His on-call supplement per month, he reveals, pays just £313.54 [currently = $532.49] - the equivalent of £2.61 [currently = $4.05] per hour and significantly less than the minimum wage. 

He concluded,

'I am genuinely offended that you have openly questioned my professionalism and vocation or that of my colleagues,' Mr Kapoor writes.

'I am no different to the thousands of Consultants, Junior Doctors, Nurses, Physios, Pharmacists, Secretaries, Speech Therapists, etc.

'We don't go on strike, we don't hold the country to ransom, we don't compromise patient care because we were meant to go home 2 hours ago, instead we go above and beyond, understanding the true meaning of professionalism and being exemplar to any health service in the world.

'Without this silent and diligent commitment, the NHS would have crumbled many years ago.'

The story also noted the groundswell of anger inspired by Mr Hunt's implication that today's NHS doctors do not work on weekends,

Last week a petition to call a debate on a vote of no confidence in the Health Secretary hit 100,000 - the required number of signatures to be considered for debate in Parliament - in less than 24 hours.

The petition, which was started by Dr Ash Sadighi, argues that Mr Hunt has 'alienated the entire workforce of the NHS' with his plans 'to impose a harsh contract and conditions on first consultants and soon the rest of the NHS staff.'

Finally, the Independent documented another online outburst generated by a consultant surgeon posting a picture of "himself moping a hospital floor" on Facebook.

What Generic Managers Really Think of Health Professionals

We have frequently discussed how US health care has been taken over by generic managers.  In 1988, Alain Enthoven advocated in Theory and Practice of Managed Competition in Health Care Finance, a book published in the Netherlands, that to decrease health care costs it would be necessary to break up the "physicians' guild" and replace leadership by clinicians with leadership by managers (see 2006 post here). Thus from 1983 to 2000, the number of managers working in the US health care system grew 726%, while the number of physicians grew 39%, so the manager/physician ratio went from roughly one to six to one to one (see 2005 post here). As we noted here, the growth continued, so there are now 10 managers for every US physician.

The managers who first took over health care may have had some health care background.  Now it seems that health care managers are decreasingly likely to have any health care background, and increasingly likely to be from the world of finance.  Meanwhile, for a long time, business schools seem to have been teaching managers that they have a God given right to manage every organization and every aspect of society, regardless how little they know about what the particular context, business, calling, etc involves.  Presumably this is based on a faith or ideology that modern management tools are universally applicable and nigh onto supernatural in their powers.  Of course, there is not much evidence to support this, especially in health care.

I have every reason to believe the idea that "professional" managers and business people should be in charge of all parts of society and all economic sectors has spread well outside the US.  UK Health Secretary Jeremy Hunt seems to be an example.  His background, according to the Gov.UK website, is that "Before his election as an MP, Jeremy ran his own educational publishing business, Hotcourses."  A Financial Times article noted that in 2014, he still had a major financial interest in the company,

Jeremy Hunt, the health secretary, has suffered a setback in his attempt to sell his education listings business after private equity group Inflexion pulled out of a proposed £35m deal.

Hotcourses, which claims to be the world’s largest database of educational courses, was set up by Mr Hunt and his business partner, Mike Elms, in 1996, before he entered parliament.

The article noted further, ironically in regard to the Mr Hunt's recent controversy,

The deal was an awkward reminder for the coalition of the large personal wealth of many cabinet ministers at a time when Labour has criticised the government for being 'out of touch' with ordinary voters.

As far as I could tell, before his political  career, Mr Hunt was a businessman with no experience or expertise in health care or biomedical science. And as of May, 2015, according to the the ThisIsMoney.uk website, Actually, he still seemed to be a businessman.  Mr Hunt still owned nearly half of the company, and was still receiving large dividend payments from it.

Nonetheless, Mr Hunt is now in charge of the whole of the British NHS.  However, his recent public pronouncement that NHS doctors do not work on weekends, and that is why the health service does not provide adequate services on weekends, reveals that he seems not to be very familiar with the organization he is supposed to be leading.  Again, we have seen many examples of leaders of big US health care organizations who seem ill-informed about their organizations, and sometimes hostile to their organization's health care mission.

However, we have not often heard a generic manager simultaneously publicly express so much hostility to health professionals  and so little knowledge about what those professionals actually do.  I suspect that is merely because many US managers are reined in better by their public relations departments and legal counsel. 

We are well into our global experiment involving handing control of virtually everything to managers, administrators, executives, and business people.  I submit it is not going well, and maybe leading us to some ultimate ruination.

As we have said again, again, again... It is way past time for health care professionals to take back health care from generic managers.  True health care reform would restore leadership by people who understand the health care context, uphold health professionals' values, are willing to be held accountable, and put patients' and the public's health ahead of self-interest. 

In the UK, doctors finally seem to be rising in protest against a particularly ill-informed businessman who is currently their boss.  It is past due for US doctors to hold to account similarly ill-informed, and sometimes also mission-hostile generic managers to whom they report.

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Turn, Turn, Turn - from Columbia/ HCA Executive, to Virginia Secretary of Health and Human Resources, to Director of the Center for Medicare and Medicaid Services (CMS), to America's Healt Insurance Plans (AHIP)

AHIP Centers for Medicare and Medicaid Services CMS HCA Medicare revolving doors

Turn, Turn, Turn - from Columbia/ HCA Executive, to Virginia Secretary of Health and Human Resources, to Director of the Center for Medicare and Medicaid Services (CMS), to America's Healt Insurance Plans (AHIP)

Unknown 7/17/2015 Komentar

Marilyn Tavenner's career continues to revolve, er, evolve.

Columbia/ HCA

Marilyn Tavenner worked for Columbia / HCA, now HCA, although details of her job there are sketchy.  Apparently she worked there for a long time, according to a 2015 article in the Nashville Business Journal,

Tavenner work [sic] in a variety of roles for Nashville-based HCA Holdings Inc for 25 years.

She worked long enough to earn a fairly generous pension.  As a 2012 a Washington Times article stated,

In a recent filing with the U.S. Office of Government Ethics, she reported that through a supplemental executive retirement plan at HCA, 'I will continue to receive $162,524 for life.'

There are only sketchy accounts available about what she did at HCA.  The same Washington Times article noted she left in 2006, and

'Ms. Tavenner was a senior executive at HCA who retired from the company over six years ago,' said HCA spokesman Ed Fishbough.

The only description I could find of her duties there was in a Forbes blog post by Bruce Jepsen in 2015,

Tavenner, ... had experience working for investor-owned hospitals and with insurers when she was at HCA....

What does seem certain is that her career at Columbia / HCA overlapped that of CEO Rick Scott, and included some of the time when the company performed actions that led to some serious charges.  In a 2011 Boston Globe blog post, Suzanne Gordon wrote,

While Tavenner worked for HCA, the company was busily enhancing its profit margin by defrauding the Medicare, Medicaid, and TRICARE systems. Terry Leap’s new book, '"Phantom Billing, Fake Prescriptions, and the High Cost of Medicine: Health Care Fraud and What To Do About It,' details HCA’s sorry history. In 2000, for example, HCA paid fines of $840 million for improperly billing the government and in 2003 HCA had to fork over another $631 million.

We discussed the billion dollar plus Columbia / HCA fraud case, which did involve corporate guilty pleas, but like most other legal settlements between the government and big health care organizations, no consequences for any individuals who authorized, planned, or implemented the bad behavior.  There were many allegations that then Columbia / HCA Rick Scott, who is now the Republican Governor of the great state of Florida, created a business culture that enabled the fraud, and even knew about it, but he was never charged with a crime.

Ms Tavenner's role in Columbia / HCA when this was happening was never clear.


Virginia Department of Health and Human Resources

After her work at Columbia / HCA, Ms Tavenner became Secretary of Health and Human Resources for the great state of Virginia.  I could find little news coverage of her time there, much less any suggestion that her previous role with Columbia / HCA might have been viewed as a problem. 

Center for Medicare and Medicaid Services (CMS)

In 2010, Ms Tavenner went to work for the US Department of Health and Human Services.  In 2011, Ms Tavenner became acting administrator of CMS.


The only concerns raised about Ms Tavenner's former work with Columbia / HCA at the time she was appointed to run CMS came from the Boston Globe blog post noted above.

Although Tavenner may not have been personally involved in these scandals, it hardly seems wise to put her in charge of the government system her company helped defraud.

Nonetheless she got the position.  In 2014, a Wall Street Journal article from 2014 suggested Ms Tavenner remained cozy with here former boss, former Columbia / HCA CEO,  and now Florida Governor Rick Scott.  It recounted that a CMS contractor had been investigating a Florida nursing home chain,

Medicare investigators began looking into Florida skilled-nursing facilities in 2011 and found what they considered suspicious billing patterns at 33 homes. CMS contractor SafeGuard Services LLC was concerned about how often Florida nursing facilities were charging for the costliest physical and occupational-therapy services, according to documents. About a quarter of the 33 facilities were paid at least 20% more a day than their local rivals, a Journal analysis of Medicare data found.

Three of the 33 are owned by Plaza Health Network. Plaza Chief Executive William Zubkoff previously ran a hospital that was barred in 2006 from billing Medicare and other federal health-care programs following fraud allegations.

But then,

Some of the nursing homes contacted the Florida Health Care Association, a trade group. It asked lawmakers and Florida Governor Rick Scott, a Republican, for assistance, according to the group’s director and emails.

Gov. Scott contacted Ms. Tavenner, according to a person familiar with the investigation. The two had once worked together at hospital operator HCA Holdings Inc., where both had been executives. The governor’s office connected CMS to the Florida Health Care Association. The trade group put an owner of two of the nursing homes, William Kelsey, on the phone with Ms. Tavenner.

Mr. Kelsey told her the prepayment reviews were 'creating a real hardship on the business, staff and residents,' he recalled recently.

On Aug. 22, 2012, Ms. Tavenner ordered the agency’s antifraud officials to release payments for the 33 homes, including the two operated by Mr. Kelsey, according to emails.

A CMS spokesman said Ms. Tavenner got involved to ensure the agency was 'preserving access and quality of care.' The spokesman said Ms. Tavenner 'often discusses issues and concerns with elected officials…including Gov. Scott.'

Of course, Ms Tavenner had a previous relationship with Governor Scott due to their shared time at Columbia / HCA which probably was not like her relationships with other elected officials.  In any case, I could find no real echoes from this story, but Ms Tavenner resigned from CMS in 2015, not completely covered in glory.  A Bloomberg account of her resignation included,

 Marilyn Tavenner, the U.S. official who directed the stumbling roll-out of Obamacare as well as its recovery in recent months, will resign as head of the Centers for Medicare and Medicaid Services.

Tavenner said in an e-mail to staff that she’ll step down at the end of next month. She didn’t give her reasons for leaving.

The article suggested that she had her troubles in her role as head of CMS,

 As head of the agency, Tavenner was arguably the person most responsible for construction of healthcare.gov, the federal health insurance website that collapsed when it opened for business in October 2013. A UnitedHealth Group unit -- then run by Slavitt -- was hired to lead repairs.

In November of last year, Tavenner also acknowledged that her agency had made a mistake in its calculation of the number of people enrolled under Obamacare for 2014. About 393,000 individuals with both health and dental coverage were 'inadvertently counted twice,' she said in a letter to Representative Darrell Issa, a California Republican whose committee discovered the error.

'Tavenner had to go,' Issa said in a statement today. 'She presided over HHS as it deceptively padded the Obamacare enrollment numbers.'

On the other hand, Forbes blogger Jepsen did suggest that some in industry thought better of her than did Representative Issa.

 Tavenner, who had experience working for investor-owned hospitals and with insurers when she was at HCA, was seen as friendly to the health insurance industry and medical care providers. She had respect among lobbies and among both Democrats and Republicans on Capitol Hill....

The for-profit health insurance industry seemed to particularly like here,

'Marilyn leaves behind a legacy of leadership at a time of unprecedented change in our health care system,' said Karen Ignagni, chief executive of America’s Health Insurance Plans, the health insurance lobby....  'She was a thoughtful strategist and balanced manager who time and time again rolled up her sleeves to work with all stakeholders on solutions to advance patient care.'

One wonders whether some stakeholders, like AHIP, thought that she was treating them particularly well.  What the average Medicare patient or health care professional thought of her was not explored.


America's Health Insurance Plans (AHIP) (and LifePoint)

This suspicion was bolstered when Ms Tavenner, despite the negative opinions of people, even Republican people like Representative Issa, was named to be Ms Ignangni's successor.   That was announced just yesterday, July 15, 2015.  In Modern Healthcare we saw,

Marilyn Tavenner, the former head of the CMS who stepped down just six months ago, will now lead the country's dominant health insurance lobbying group.

The board of America's Health Insurance Plans on Wednesday named Tavenner as the group's next president and CEO. She replaces Karen Ignagni, who served as AHIP's top lobbyist for 22 years....

This job transition was covered in media outlets, but so far, only Modern Healthcare raised any doubts,

Her decision to head to AHIP raises uncomfortable questions about the dynamics between Washington politics and business. Tavenner will now be representing and lobbying on behalf of some of the country's largest health insurers—the same companies who are regulated by the CMS and are devoting more of their business to Medicare and Medicaid in the form of privatized managed care.

For her role in these dynamics, she likely will be well paid,

Tavenner is primed for a big pay raise as the top leader of AHIP. Ignagni made more than $2 million as AHIP's CEO in 2013. Tavenner made $165,300 last year, according to government records. She is also expected to make more than $300,000 in cash and stock as a board member of LifePoint Health, a for-profit hospital chain based in Brentwood, Tenn. Tavenner joined LifePoint's board in April.

Conclusions

So now Marilyn Tavenner shows she is securely within that club of insiders that run health care in the US.  Some celebrate the US health care "free market," in which one might expect for-profit insurers will fight with provider organizations, like for-profit hospital chains, over payment policies, overseen by government's impartial regulators.  Yet it appears that many of these organizations' leaders come out of the same pool of insider managers, and that individuals can lead or govern organizations that are supposed to be negotiating at arm's length.  For example, note that now Ms Tavenner is leading a for-profit insurance lobbbying group while governing a for-profit hospital chain.

One might think that such arrangements might not be good for the organizations that are supposed to be at arm's length.  One might think such arrangements might be worse for patients, health care professionals and the public at large.  If the large organizations that are supposed to be competing and negotiating in the market are led out of a single cozy in group, maybe instead of competing and negotiating they will mainly be about benefiting their leaders.

As we wrote before,...

 the constant interchange of health care insiders among government, large health care corporations, and the lobbying and legal firms which represent them certainly suggests that health care, like many other sectors, seems to be run by an amorphous group of insiders who owe allegiance neither to government nor industry.

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

Attempts to turn government toward private gain and away from being of the people, by the people, and for the people have no doubt been going on since the beginning of government (and since the Constitution was signed, in the case of the US).  However, true health care reform  would require curtailing the severe sorts of conflicts of interest created by the revolving door.

Real heath care reform would require  multiyear cooling off periods before someone who worked in the commercial world can get a job in a government whose work has direct effect on his or her previous employer or industry sector, and before someone who worked in government whose work had direct effect on a particular economic sector can accept a job for a company in that sector.

But real reform might spoil the party for those who transit the revolving door, so don't expect such reform to come easily.... 

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Who Benefits? - Rising Generic Drug Prices and the Case of Mylan's Conflicted Property Purchases

boards of directors conflicts of interest executive compensation mission-hostile management Mylan perverse incentives

Who Benefits? - Rising Generic Drug Prices and the Case of Mylan's Conflicted Property Purchases

Unknown 7/09/2015 Komentar

Rising Generic Drug Prices

Health care costs in the US continue their seemingly inexorable rise.  Even the parts of health care that used to seem reasonably priced now are affected.  As Ed Silverman discussed on PharmaLot

prices for many generic drugs have been climbing, prompting concerns that a low-cost staple of the U.S. health care system might soon strain budgets.

Generic drugs, like practically every other part of US health care, have become big business.  As a Forbes article pointed out, the industry is becoming more consolidated, and more likely to suffer from manufacturing and regulatory issues.  However, there may be other reasons for increasing generic drug costs.

Case: Mylan Purchased Properties Developed by its Own Board Vice Chair

A recent Wall Street Journal scoop on the big generic pharmaceutical company Mylan suggested that maybe such companies are now suffering from the same leadership and governance ills we have been finding throughout US - and indeed global - health care.  Furthermore, to understand the impacts of such health care dysfunction, one must consider the incentives that underlie them, that is, who benefits?

The story concentrated on some dodgy deals involving the company and firms linked to the Vice Chairman of its board of directors.  The first part of the story was:

Generic-drug maker Mylan NV moved into new headquarters in December 2013 after buying vacant land in an office park near Pittsburgh and erecting a five-story building for about 700 employees.

The company hasn’t publicly disclosed that the office park’s main developer is Rodney Piatt, Mylan’s vice chairman, lead independent director and compensation-committee chief. The new headquarters was a big boost for the mixed-use real-estate development, called Southpointe II, where all the land has been sold and some of the last buildings are now rising.

Securities regulators require public companies to tell shareholders about any significant transactions with directors, executives or other 'related persons.' Members of boardroom compensation committees have special duties under securities and tax laws to avoid dealings that compromise their independence.

Mylan, now fighting a three-way takeover battle in the pharmaceutical industry, says there was no need to disclose Mr. Piatt’s connection to the $60 million real-estate project because he and the company avoided any direct dealings with each other.

The day before Mylan announced plans to build the new headquarters, a company managed and partly owned by Mr. Piatt sold a 7-acre site for $1 to an entity owned by a business partner in Southpointe II, according to property records reviewed by The Wall Street Journal. The partner’s firm sold the same land to Mylan for $2.9 million later the same day.

Also,

Real-estate records show a similar transaction in May. Mylan paid $9.2 million to buy an adjacent 11 acres from Mr. Miller, whose firm previously bought the land for $10 from a company partly owned by Mr. Piatt.

'Mr. Piatt was not a party to either transaction' involving Mylan and 'had no direct or indirect material interest in the transactions,' says a Mylan spokeswoman.

She adds that Mr. Piatt didn’t make a profit on either sale to Mylan because Mr. Miller separately arranged to buy out Mr. Piatt at cost and then sold the land directly to Mylan. Mr. Piatt didn’t return calls seeking comment.

Note however that

Securities rules require disclosure of any transaction of more than $120,000 where a related person will have a direct or indirect material interest, regardless of whether the person makes a profit.

In the case of compensation-committee members, related-party transactions can jeopardize the independence required of them under tax and securities rules. That can threaten the tax-favored status of some executive-pay programs and require executives to disgorge some of their gains on stock sales.

Some securities-law and corporate-governance experts say Mylan should have been more transparent about the real-estate transactions or handled them differently.

'The optics are terrible,' says Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware and a director at HealthSouth Corp. and Bob Evans Farms Inc. 'Pittsburgh is a big town with no shortage of real estate. Either they could have gone somewhere else, or [Mr. Piatt] could have relinquished the directorship and eliminated the conflict.'

Just to emphasize the questions about Mr Piatt's independence,

The new headquarters is named the Robert J. Coury Global Center, after Mylan’s executive chairman. Mr. Coury, 54, was chief executive from 2002 to 2012.

A few months after the project’s approval by local officials, Mr. Piatt signed a pension amendment that increased the value of Mr. Coury’s promised benefits by 40%. His overall pension of $48.8 million is 11th-largest among executives at U.S. publicly traded companies, according to Standard & Poor’s ExecuComp.

Further muddying the waters,

During construction, Mylan hired project-management firm RIZ Consulting & Management Inc. to oversee the general contractor and architect. RIZ has the same business address and phone number as Mr. Piatt’s real-estate company, and he is listed as the contact person for RIZ in the local chamber of commerce’s membership directory.

RIZ’s president also is a top executive at Mr. Piatt’s company, and some employees of Mr. Piatt’s company worked for RIZ on the project, according to state records, construction documents and the minutes of permit meetings. RIZ’s president didn’t return calls seeking comment.

'They set it up that way because [Mr. Piatt] sits on the board of Mylan,' says Jeff Yates, a project manager with PJ Dick Inc., the general contractor for the Mylan headquarters project. 'It was kind of a conflict of interest, [so] RIZ was a separate company set up to be the owner’s rep.'

We often discuss how health care is tangled in a vast web of conflicts of interest.  The kinds of apparent conflicts of interest in play in this case are somewhat different from those we frequently discuss, but still seem part of this web.

In the last few days, other Pittsburgh newspapers have jumped into the fray, and found their own experts to question these deals.  Per the Post-Gazette,

'It doesn’t pass the smell test'” said Mel Fugate, a management professor at Southern Methodist University.  Mr. Fugate said that while the SEC places legal requirements on which transactions must be disclosed, the legal obligations are 'the lowest hurdle of them all.'

'This smells bad … even if they can prove legally there are no conflicts' he said.

Again, as noted above the law in certain instances may define conflicts of interest more narrowly than ethical definitions.  For example, the Institute of Medicine defined conflicts of interest in medicine: occurring "when an individual or institution has a secondary interest that creates a risk of undue influence on decisions or actions affecting a primary interest."

The Tribune weighed in,

'The whole thing stinks,' said Douglas Branson, a University of Pittsburgh law professor and an expert in corporate governance. 

Board members'have to serve the best interest of the corporation,' he said. 'You can't be both a seller and buyer — that's the classic definition of conflict of interest.

So here we see serious allegations of conflicts of interest affecting the Vice Chair of the Mylan board, and perhaps affecting another board member and former CEO.  These conflicts suggest that company operations could have been manipulated for these individuals' benefits.

Other Questions about Mylan's Leadership and Governance

Yet these are not the only examples of questions about Mylans' leadership and governance, questions which suggest that managers and board members may have been putting personal gain ahead of the larger interests of the corporation, its shareholders, and the patients who take its drugs


A Pittsburgh Business Journal article noted the "allegations of impropriety" raised by the current case, but also hinted at larger problems with the leadership and governance of Mylan.


Current CEO's Invalid MBA

Per the Pittsburgh Business Journal

Mylan (Nasdaq: MYL) has had ethics questions in the past. An MBA awarded to CEO Heather Bresch was withdrawn in 2008 following an investigation that found she didn’t complete the necessary course credits.

However, that finding did not apparently affect her ongoing career trajectory at Mylan

Former CEO's Use of Company Jet to Help Son's Rock Music Career

The Pittsburgh Business Journal also stated,

And in 2012, the Wall Street Journal found that [former CEO] Coury transported his son to rock concerts on the corporate jet, which was allowed as part of his employee benefits package.

That WSJ article emphasized,

 Nina Devlin, a spokeswoman for Pittsburgh-based Mylan, said Mr. Coury's employment contracts have allowed outside personal activities, 'including those related to his son Tino's career.' She said Mr. Coury isn't required to use the corporate jets but his employment contracts for the past decade have allowed personal use by him and his family.

Thus these contracts apparently allowed valuable Mylan resources to be expended in support of the former CEO's son's career, even though Tino did not apparently have any direct role in the company. Note that these revelations also apparently did not affect Mr Coury's career trajectory with the company, nor did those below.

Transactions Between Former CEO's Brothers and Mylan

That same WSJ article also found,

 This wasn't the only business relationship between the elder Mr. Coury and his brothers. Coury Investment Advisors, a company in which two of his brothers, Gregg and Paul, are principals, has served as a broker for Mylan's employee-benefit plans. Various insurers paid them $597,000 in the past three years for Mylan-related business, according to U.S. Labor Department filings.

That appeared to be another conflict of interest, benefiting different members of the former CEO's family.

However, that is still not the whole story.  A quick look through our magic files, and Google, revealed some other pieces.

Mylan Settled Allegations of Inflated Pricing

In 2010, we briefly posted about a settlement by Mylan of charges it falsely inflated prices for several drugs.
As is usual in such settlements, none of the people who authorized, directed or implemented the actions leading to this settlement apparently suffered any negative consequences, including the top managers on whose watch they occurred. 

Mylan Fired Executive Allegedly for Filing Whistleblower Lawsuit Against Another Company

In June, 2014, the Pittsburgh Tribune reported,

 When Mylan Inc. learned that its vice president of marketing had filed a whistleblower lawsuit against his previous employer, it fired him, the man alleged in a federal lawsuit filed Tuesday.

Note that the lawsuit was against Cephalon, not Mylan.  Rocking the boat, or blowing the whistle apparently are not rewarded at Mylan.

Current CEO Named US Patriot of the Year, then Moved Mylan to Netherlands

In 2014, some wondered how Heather Bresch, still the Mylan CEO, could have claimed to be ultra-patriotic while she was planning to move her company out of the US.  In 2011, Esquire listed Ms Bresch in an article on "Americans of the Year: Patriots." They were apparently particularly impressed that she had called for more inspections on foreign drug companies whose products are imported into the US. However, in 2014, per Ron Fournier in the National Journal.

This story is about a gilded class of people and corporations enriched by the new American economy while the rest of its citizens pay the tab. The protagonists could be any number of institutional elites, but this column happens to be about a Democratic senator from West Virginia, Joe Manchin, and his daughter, Heather Bresch, the chief executive of Mylan, a giant maker of generic drugs based outside Pittsburgh.

Her company's profits come largely from Medicaid and Medicare, which means her nest is feathered by U.S. taxpayers. On Monday, Bresch announced that Mylan will renounce its United States citizenship and instead become incorporated in the Netherlands – leaving this country, in part, to pay less in taxes.

This is the sort of story that makes blood boil in populists – voters from the Elizabeth Warren wing of the Democratic Party to libertarians who follow Rand Paul and including tea party conservatives. These disillusioned souls, growing in numbers, hate hypocrites who condemn the U.S. political system while gaming it.

Later, Ms Bresch's father, Senator Manchin, said what his daughter did should be illegal, again per another Ron Fournier article in the National Journal, whose title says it all:

Senator Manchin: What My Daugher Did Should be Illegal

Nonetheless, late in 2014, Bloomberg reported that not only would Mylan go ahead with the inversion, but it would pay the excess taxes personally incurred by its own executives due the transaction.  Such taxes were meant as a negative incentive to discourage such maneuvers.  Even so, top managers seemed to be able to pay themselves to avoid the effect of these incentives, and of course any resulting personal financial losses.


Summary

 The latest story about Mylan seemed to show a leading board member financially benefiting from transactions between the company over which he was supposed to exercise stewardship and his own company.  Other stories showed Mylan executives seeming to gain outsized benefits for themselves or their family members from Mylan beyond conventional salaries and corporate benefits packages. Of course, since Mylan is not just any company, but a very large generic drug company, putting top hired managers and boards of directors first may mean putting patients second.  The cost of these managers' and boards' interests may be at the expense of patients, and the public at large.

Thus perverse incentives enable mission-hostile management and ultimately health care dysfunction.

So once again, when considering how US, and global health care has become so dysfunctional, it makes sense to think about who is benefiting from the current dysfunction.  It very often is organizational insiders, particularly top hired managers, and sometimes those who are supposed to keep an eye on them. 

 Thus, like hired managers in the larger economy, health care 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?
As we have said far too many times - without much impact so far, unfortunately - 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 said in a 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.

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