Needed: A Webcast on Disruptive and Criminal Hospital Executives

I received this, unsolicited, via email:

Webcast:  Managing Disruptive Docs in a New Era of Hospital-Physician Relations

If you haven't already purchased this live Webcast, don't miss out! Left unchecked, disruptive physicians do more than just create a negative work environment; they endanger patient care and can lead to million-dollar lawsuits and bad publicity.  Our top experts will show you early intervention techniques and a range of effective resources that can help you reduce behavioral problems, retain star physicians, create a healthier workplace and save millions in potential lawsuits.

The agenda includes:

    Defining and identifying causes of disruptive behavior
    Economic consequences of disruptive behavior
    Overcoming disruptive physician problems

This program will be guided by your questions, so register now and ask away!

Your instructors:

Alan Rosenstein, MD, MBA
Medical Director of Physician Wellness Services

David Danielson, JD, CPA
Senior Vice President, Clinical Risk Management, Sanford Health

Scott Hurst
Former Director of Physician Alignment and Recruitment, CHRISTUS Spohn Health System

Managing Disruptive Docs in a New Era of Hospital-Physician Relations is designed to help CEOs, COOs, CMOs, group practice administrators, HR leaders, and physicians learn strategies and tactics to prevent, reduce, and limit the severity of disruptive physician incidents.

"Disruptive physician" is a vague term subject to enormous abuse, leading to sham peer review among other totalitarian tactics.   It reminds me of the old Soviet Union's politics.

You have been deemed a Disruptive Physician, Comrade.  You will be given a fair trial, then shot

In particular, this label can be used to suppress clinician concerns about care quality in an era of cost cutting and care manipulation through electronic workflow control systems (e.g., EHR's CPOE, CDS etc.)

The potential of being labelled as "disruptive" may be one reason why physician outcry against the very low quality of healthcare IT systems and dangers posed by them is relatively uncommon.

Patients - you - ultimately suffer when your physicians fear being your outspoken advocates.

As the many stories of healthcare executive malfeasance and profiteering at the expense of patients on this blog indicate, what is really needed for true healthcare reform are webcasts on:

MANAGING DISRUPTIVE AND CRIMINAL HOSPITAL EXECUTIVES IN AN ERA OF RAMPANT CORPORATIZATION OF MEDICINE.

-- SS

Addendum:  here are additional resources on the “Disruptive Physician”:

Abuse of the “Disruptive Physician” Clause, http://www.jpands.org/vol9no3/huntoon.pdf

The Insulting Physician “Code of Conduct”, http://www.jpands.org/vol13no1/huntoon.pdf

In the latter article, Lawrence Huntoon MD PhD, and expert on abuses of this label, notes:

... The typical physician code of conduct is initiated by a hospital administration. Its wording is curiously similar from one hospital to the next, suggesting that a template is being circulated.

... The physician code of conduct is intentionally insulting, demeaning, and degrading to physicians, and reduces physicians to being treated like juvenile delinquents at a reform school. It assumes that all physicians, like juvenile delinquents, need to be subjected to a long list of prohibited behaviors because, in the hospital administration’s view, physicians are predisposed to such things as theft, destruction of property, and physical and sexual assault. Conspicuous by its absence is any mention of “disruptive” or “abusive” hospital administrators, or any similar code of conduct applicable to a hospital administration.

Dr. Huntoon then goes on to make a recommendation, a "hospital administration’s code of conduct":

... The term “disruptive hospital administrator” and/or “abusive hospital administrator” should be incorporated into the hospital administration’s code of conduct and should be defined as anyone in the hospital administration who, in the view of the medical staff (as determined by majority vote), interferes with the ability of physicians to provide safe and high-quality care to patients in the hospital.

His detailed criteria for “disruptive hospital administrator” in the latter article are worth reading in their entirety.

-- SS

Quantitating the Corruption of Finance Leadership (Who May Overlap with Health Care Leadership)

The bad leadership in health care that we frequently discuss now appears to exist in a context of an increasingly corrupt society.  In particular, we have discussed how the leadership of major health care organizations, such as teaching hospitals, and the universities within which medical schools operate, now frequently interlocks with the leadership of finance.  The ongoing global financial problems have been blamed on bad leadership in finance.

A Survey of Finance Leaders

Now, a survey by a law firm that supports corporate whistleblowers offers some quantitation of the corruption within finance.  The press release for the survey is here, and a summary of results is here.  The survey respondents were 250 US based, and 250 UK based "senior individuals within the financial services industry."

Key results were:

- 24% of those surveyed believed that the rules may have to be broken in order to be successful.

- 25% of UK respondents believed financial services professionals may need to engage in unethical or illegal activity to get ahead; US respondents were only slightly less inclined to engage in wrongdoing at 22%.

- 12% of total respondents believed that it was likely that staff in their company have engaged in unethical or illegal activity in order to be successful.

Perhaps exhibiting ego bias, the senior professionals thought that there competitors were even worse:

39% of total respondents believed it was likely that their competitors have engaged in illegal or unethical activity in order to be successful.

A substantial number of respondents admitted that they would be willing to engage in illegal activity were the circumstances favorable:

16% of total respondents were at least fairly likely to engage in insider trading if they could get away with it. Perhaps more troubling, only 55% of all respondents could say definitively that they would not engage in insider trading if they could make $10 million with no risk of getting arrested.

An important fraction thought that the worked within organizations that encouraged unethical and illegal behavior:

- 30% of all financial services professionals reported feeling pressure to compromise ethical standards or violate the law as a result of their compensation or bonus plan.

- In assessing other pressures that may lead to unethical or illegal conduct, 23% of all respondents also reported feeling other pressures to compromise ethical standards or violate the law.

Note that due to social desirability bias, the survey likely understates these problems.

Comment

Also note that at least so far, this survey is not much less anechoic than much of the evidence of corruption in health care that we have discussed. Although it has been briefly noted in the financial blogs and press, like Reuters, BusinessWeek, and also in the New York Daily News and Los Angeles Times, no other main-stream media has commented yet.

One post on a Forbes blog by Peter Cohan made the weary observation:

Business corruption follows a well-worn path. The boss tells you to bend the rules, and knowing that ignoring that request will cost you your job, you do what you’re told. At the end of the year you get a big bonus and promotion.

Then a disgruntled customer or employee leaks the shady activity to the press or a regulator and your company pays a fine and gets a few weeks of bad headlines. Time passes and the cycle restarts.

He concluded in part:

The conditions that make business corruption pay off have not changed despite numerous scandals — recent ones include Enron, WorldCom, Madoff, and Lehman Brothers – all of which reflect the same conditions that prompted me to write Value Leadership a decade ago: Let executives write their own report cards, base bonuses on those numbers and you will get corruption every time.

The solution is as clear to me as it is impossible to implement. First, all corporate financial reporting must be conducted by highly paid government auditors –rather than by auditing firms that are paid by the companies they audit. Second, performance-linked bonuses must be set aside in escrow accounts for a decade until it’s clear whether the true benefits of business strategies exceed their costs.

As long as there is no limit to how much money companies can put into politicians’ pockets, this fix will never be implemented. That’s because money puts big business in control of politicians who — if they were responding to the interests of the majority of Americans — would eliminate the conditions that make the benefits of business corruption exceed its costs.

But business corruption pays for those who finance Washington campaigns so the soil in which it flourishes remains fertile.

The same is likely to be true of unethical practices by and corruption of health care leadership. After all, health care leaders now mainly come from business management backgrounds, and so have been trained in the same way as financial professionals, and exposed to the same culture that they have experienced. As we have noted, the leadership of health care and finance often overlap. For example, see ours posts on the finance influence on the board of Dartmouth College; the role of the former CEO of bankrupt Lehman Brothers on the board of New York-Presbyterian hospital; the role of finance leaders who derided the Occupy Wall Street as "imbeciles," among other things on the boards of miscellaneous health care organizations; the role of finance leaders on the board of Pfizer, etc, etc, etc.

True health care reform may require larger reform in the greater society.  In any case, we need to reform the culture of health care organizations so that leaders put patients' and the public's health first, and self-interest last.  Furthermore, health care organizations should not provide positive incentives merely for exceeding financial or volume benchmarks, and should provide strong negative incentives for unethical behavior.

"More Marketing Than Science" - An Anonymous Confession About Deceptive Marketing Published in the British Medical Journal

The British Medical Journal just published an anonymous article by a pharmaceutical company insider that explained once again how pharmaceutical companies turn research studies, apparently scholarly articles, and medical education into stealth marketing efforts.  (See Anonymous.  Post-marketing observational studies: my experience in the drug industry.  Brit Med J 2012; 344: 28.  Link here.)

We have previously discussed examples of health care corporate insiders confessing their individual efforts to turn medical research and education into marketing.  For example, peruse this.  We have also discussed how documents made public through litigation have revealed marketing plans for specific drugs that used apparently academic, educational, or scholarly publications and venues to market without revealing this transformation.  For example, see the Neurontin marketing plan (see post here), and the Lexapro marketing plan (see post here).  We have also discussed numerous examples of manipulation of particular research studies by those with vested interests, and outright suppression of studies whose results did not favor such vested interests.

Yet I suspect majorities of health care academics and professionals, health care policy makers, and the public at large do not realize, or would not admit that the evidence base for making health care decisions, and the general academic and professional discourse has been so corrupted.  So it is worthwhile to review once again how an insider summarized this corruption.

Research Studies Designed Primarily as Marketing Vehicles

In general, the anonymous author suggested that at least some studies were done for marketing, not scientific purposes:

some of the studies I worked on were not designed to determine the overall risk:benefit balance of the drug in the general population. They were designed to support and disseminate a marketing message.

Whether it was to highlight a questionable advantage over a 'me-too' competitor drug or to increase disease awareness among the medical community (particularly in so called invented diseases) and in turn increase product penetration in the market, the truth is that these studies had more marketing than science behind them.

Furthermore, the studies were supervised not by physicians or scientists, but by marketers in the marketing department,

Although the medical department developed the publication plans, designed the study, performed the statistical analysis, and wrote the final paper (which when published was passed on to marketing and sales to be used as marketing material), the marketing team responsible for that product were directly involved in all stages. They also closely supervised the content of other educational 'scientific' materials produced in the medical department and intended for potential prescribers. Instructions from marketing to the medical staff involved were clear: to ensure that the benefits of the drug were emphasised and the disadvantages were minimised where possible.

Manipulation of Research Design, Implementation, or Analysis

The author described how the marketers manipulated research studies so they would produce the results desired from a marketing perspective, regardless of their underlying truth,

Since marketing claims needed to be backed-up scientifically, we occasionally resorted to 'playing' with the data that had originally failed to show the expected result. This was done by altering the statistical method until any statistical significance was found. Such a result might not have supported the marketing claim, but it was always worth giving it a go to see what results you could produce. And it was possible because the protocols of post-marketing studies were lax, and it was not a requirement to specify any statistical methodology in detail. On the other hand, the studies were hypothesis testing (such as cohort studies, case-control studies) rather than hypothesis generating (such as case reports or adverse events reports), so playing with the data felt uncomfortable.

Other practices to ensure the marketing message was clear in the final publication included omission of negative results, usually in secondary outcome measures that had not been specified in the protocol, or inflating the importance of secondary outcome measures if they were positive when the primary measure was not.

So to summarize, the marketers would control the statistical analyses, promoting multiple analyses to attempt to come up with the "right" result that would support the marketing message (although the more kinds of analyses one tries, the more likely one is likely to come up with false results by chance alone). Presumably the marketers did not care whether or not the results were really true, which is perhaps why even they felt "uncomfortable" in some circumstances.

They would also foster the suppression of negative results, and the dredging of data for extra outcome measures when analysis showed no advantage in terms of the real primary outcomes. Suppression of negative results could be viewed as plain lying. Deliberate analysis of multiple end-points again risks identifying random error as true results.

The Role of Key Opinion Leaders

The author described how key opinion leaders, that is, health care professionals thought to be especially influential on practice or policy, were hired to become marketers presumably without revealing this intention.

Every big international observational study had a large advisory board. This was critical since the success of a newly launched drug in the market would depend on how many key opinion leaders were part of the study. Not only would they add credibility to the results, but they would also be key in influencing decision makers and other prescribers. In regional studies with thousands of patients, the study’s advisory board was formed by at least one key opinion leader from each country in that region, ensuring that areas important in terms of possible sales were covered. The contributions of the key opinion leaders to the study were always positive, but in my experience more directed towards designing new studies to answer their specific clinical questions rather than critically appraising our results and conclusions. In general, the relationship was amicable. We took them to the best hotels and restaurants during our advisory board meetings, and they appeared as authors in our research. Later, they would act as the company’s 'ambassadors,' giving conferences, teaching doctors, or talking to the media about the benefits of the drug.

Note that even the anonymous author could not bring him or herself to call the key opinion leaders salespeople, or marketers, but used the ambiguous wterm "ambassadors." Nonetheless, the role of key opinion leaders described would clearly be that of marketers or salespeople. However, it is extremely doubtful that any of these KOLs felt they had to declare that they were paid salespeople when presenting at conferences, teaching doctors, or talking about the media.

I would suggest that their actions would therefore fit Transparency International's definition of ethical corruption, "abuse of entrusted power for private gain." The KOLs are entrusted to be professional, and in many cases, scholarly. Using a professional or scholarly guise to act as a salesperson appears to be abuse of that entrusted power, in my humble opinion. In nearly every case, KOLs are paid, often handsomely, by the companies whose products they are selling. Thus, key opinion leaders acting as described by the anonymous author appear to be ethically corrupt.

Summary

The evidence of unethical marketing practices by commercial health care firms is mounting. Although I am most familiar with evidence from the US, there is mounting evidence that these practices are global, often done by companies that are not US based, and meant to influence practice and policy world-wide.

As the evidence mounts, it becomes increasingly clear that many such marketing practices are corrupt, at least in an ethical sense. Whether they may break laws in particular countries is a question for someone else.

The latest BMJ article is a reminder how skeptical the shrinking group of health care professionals who do not have conflicts of interest, are not biased in favor of particular products, and who put patients' interests first must be about ALL published research, scholarly publications, and apparently educational activities. Advocates of true evidence-based medicine must be extremely careful to try to use the least biased and manipulated parts of the evidence-base.

The mounting evidence suggests that at a minimum, all research reports, scholarly articles, media reports, conferences, and educational programs should provide full, detailed disclosure of all conflicts of interest. Perhaps having to make a declaration like "I am paid 50,000 Euros a year by the marketing department of company X to help market drug Y" before a supposedly educational talk would make some health care professionals think twice about such relationships.

However, even such detailed disclosure may not be sufficient to hamper marketing practices that now appear overtly corrupt. In my humble opinion, it is time to consider a global ban on the funding or influencing of human research by companies and other organizations which stand to gain financially according to the results of the research, or whose products and services are subject of such research. It is also time to consider a global ban on the funding or influencing of health care education by such organizations.

However, so many people are making so much money from the current practices that I doubt such proposals would get much support, or even public notice beyond this humble blog.

Dartmouth's Governance and Wall Street

While the money spent on health care in the US continues to increase, care becomes less accessible and its quality becomes more dubious.  Most public health care discourse seems at a loss to explain how we can keep spending more to get less.

Of many possible explanations, one that has become more credible is continuing erosion of health care stewardship.  The boards of trustees of health care organizations, those charged with their stewardship, seem increasingly preoccupied with self-interest rather than the health care mission.  As more information about how such boards currently operate sneaks into public view, the problems appear more serious and salient.

New information about the governance of Dartmouth College, an issue we have followed since 2007, is illustrative.

The Case So Far

The problems at Dartmouth were notable because in many ways its governance was superior to that of many US higher educational and health care institutions.  At the time we first stumbled on these problems, Dartmouth was unusual in that nearly half of its board of trustees were elected by alumni, rather than being self-appointed.  That made its governance both more representative  and more accountable. 

In 2007, however, a dispute was ongoing about the extent that the institution's board of trustees ought to represent the alumni at large, or instead, ought to be a self-elected body not clearly accountable to anyone else.  The unelected, or "charter" board members were pushing to increases their numbers.  In 2007, what really got our attention was the stated rationale for this push towards less representative and accountable governance. Mr Charles Haldeman, then the chairman of the board of trustees, announced a smaller proportion of elected trustees would ensure that the board "has the broad range of backgrounds, skills, expertise, and fundraising capabilities needed," and that the board members would possess "even more diverse backgrounds."  However, despite his appeal to diversity, Mr Haldeman seemed most intent on reducing "divisiveness," especially dissent that challenged his own authority.  At the time, we thought his argument for more diversity to reduce dissent and increase his own authority seemed Orwellian.

Yet when we examined the backgrounds of the self-appointed trustees, we found that they exhibited little diversity. Furthermore, rather than resembling followers of Ingsoc, they resembled more the group that the radical left traditionally reviled.  Remarkably, three-quarters (6/8) were leaders of the finance sector, of what is popularly called "Wall Street." In 2007, they seemed not very diverse, but why the majority should be in the financial sector, and what implications that had, was then obscure.

After the fall of Lehman Brothers and the onset of the global financial collapse/ great recession, the implications of this Wall Street majority on the board of an institution of higher education became more troubling.  Since 2008, growing concerns about the extent that finance is driven by a "greed is good" culture increasingly suggest that domination of university, medical school, or hospital boards by leaders in the finance sector may increasingly divorce boards from the missions which they are supposed to uphold.

Yet in 2008, the unelected "charter" members of the Dartmouth board succeeded in increasing their numbers, and hence their proportion of total board seats.  The new board was no more diverse.  Of its 13 charter members, 9 were from finance, and one more was the CEO of a corporation with a major finance subsidiary.  (Look here.)  By 2009, the charter board members had succeeded in ousting a dissident alumni-elected member, labeling him a member of a "radical cabal," and rewriting a board loyalty oath apparently to discourage further dissent.  (Look here.)

All this spoke to the increasing power of the culture of finance among members of the board.  Perhaps, though, there were reasons that the financial majority on the board wanted to suppress dissent other than to make themselves more comfortable with their own dominant culture,  In 2010, as the global financial crisis continued, "Educational Endowments and the Financial Crisis: Social Costs and Systemic Risks in the Shadow Banking System," published by the Center for Social Philanthropy, Tellus Institute, focused on how prominent educational institutions, including Dartmouth College, came to invest much of their endowments in risky, illiquid "alternative" investments, the sort provided by the "shadow banking system."  (See this post.)  The report noted extensive conflicts of interest on the Dartmouth board involving trustees who were also leaders of finance.  Their firms, it turned out, were managing a substantial fraction of the money in the college's endowment.  Half of the charter trustees were also being paid to manage the finances of the institution for whose stewardship they were responsible. 

Trustees of non-profit organizations are supposed to exhibit a duty of loyalty, that is, they "must give undivided allegiance when making decisions affecting the organization."  (For a summary of their duties, look here.)   In 2010, I noted, "letting a board member's firm manage millions of dollars worth of the institution's endowment portfolio seems an obvious violation of the duty of loyalty."  So, "these sorts of conflicts of interest may be another 'missing link' explaining why the leadership and governance of health care organizations has gone so far astray."  I then posited, "as disclosure continues, maybe enough outrage will ensue so that improved leadership and governance will become possible.

The Friends of Eleazar Wheelock Charge Corruption

Now there seems to be more outrage.  Last month, the dissident Dartblog broke the story of a letter sent in February, 2012 to the New Hampshire Attorney General by an anonymous group called the "Friends of Eleazar Wheelock."  (Wheelock was the founder of the college.)  To the the letter was appended a report that included an even more extensive list of conflicts of interest affecting Dartmouth trustees, the college's Finance Committee and Investment Committees, and their friends and relatives. 

The letter also added

The mismanagement extends beyond the investments and endowment. 1) Over a period of seven years The College engaged Lehman Brothers in six 'interest rate swaps' totaling $550 million dollars. The current value of these 'swaps' is now in excess of two hundred million dollars. That is what Dartmouth owes on these bets. These losses are not reported in the College’s financial statements. 2) The College’s 'cash' was invested in six hedge funds. Up to 40% of it was lost. Again, this was not reported. This comprises grant money for research, advances to faculty, and other working capital which should have been invested in the safest of money market instruments. 3) over 50% of the endowment is invested with Trustees, Investment Committee members, or their friends.

The report summary stated,

The pattern that the Dartmouth trustees and members of the Endowment/Investment committee have engaged in for decades is clear. That pattern is that a donor/investment manager’s pledge to support Dartmouth is reciprocated with an investment of ever increasing proportions in the donor’s firm, lending the credibility of an Ivy League institution to the firm. The investment returns are of little import; most of these alum/donor/investment manager returns are average to poor.

It rhetorically asked how the college came into

the grip of a club of investment manager alums who have invested almost six hundred million dollars in their very own funds and directed over one billion dollars to their friends? And who have taken almost one hundred million dollars in fees to manage the endowment, often with poor results culminating in the twenty three per cent loss in 2008 and the worst performance of all the Ivies in 2011?

The letter charged that there has been a

quiet takeover of this great College by a cabal of external, wealthy alumni/ae of the college. They have mortgaged the College’s future through borrowing heavily in the tax exempt marketplace under NH HEFA (Health and Education Facilities Authority). They have simultaneously directed the College’s three billion dollar endowment to themselves, their firms, and their friends. They have furthered their own self-interest at the expense of the College and the Upper Valley. They have abused the non-profit status of Dartmouth College. They have enriched themselves through managing and directing Dartmouth’s three billion dollar endowment. In all cases they have taken gargantuan fund management fees through 'Private Equity', 'Venture Capital', and 'Hedge Funds' investments which they, themselves, manage and are the owners of.

Summary

A post on the American Thinker blog noted that the letter alleged "corruption." It is impossible to tell whether these expanded allegations will result in any charges, much less convictions. The state Attorney General is currently looking into this (see Reuters). Certainly, the allegations are at least of ethical corruption as it is defined by Transparency International, "abuse of entrusted power for private gain."

The revelations since 2007 (and I could argue beginning with my finding that the majority of the supposedly "diverse" charter trustees were leaders of finance) first raised questions whether Dartmouth governance's was attentive to the mission, then, whether it was conflicted, and now, whether it is corrupt.

That these questions can be credibly raised about one of our most prestigious institutions of higher education and health care demonstrates the depth of our health care crisis. It also demonstrates how the health care crisis seems inextricably linked to the financial crisis, and to a fundamental crisis about our society and its commitment to democracy and fairness.

A fair and thorough enquiry about the mess at Dartmouth, resulting in clear actions to uphold the institution's mission and ethics, and, if applicable, the law, would start us down the path of true health care reform.

However, if this just gets swept under the rug, we will not have reached the bottom of our descent.

ADDENDUM (2 June, 2012) - Note that Dartmouth's most recent President, Jim Yong Kim, who was appointed by and served under the Trustees in question above, is now President of the World Bank (see this LA Times article.)

See also comments in the University Diaries blog.

Conflicts of Interest or Bribes? - Biomet, Smith & Nephew Settle

More justifications of physicians' and other health care professionals' financial arrangements with industry have been appearing in the media and the medical literature (for recent examples, look here and here). Most commonly, the relationships they defended could be characterized as health care professionals consulting or sitting on advisory boards for industry, or receiving royalties from industry for their intellectual property.

In the last two months, two device manufacturers, Biomet and Smith & Nephew, accepted penalties for less defensible financial relationships with physicians. They entered into deferred prosecution agreement and settled charges that they bribed doctors employed by foreign governments. Some of these relationships, especially those involving Biomet, would have been prospectively indistinguishable from the sorts of conflicts of interest that have been so fervently defended.

Background

Starting in 2007, we posted (here, here, here, here and here) about the payments, often huge, that five manufacturers of prosthetic joints, Biomet, DePuy Orthopaedics,a unit of Johnson & Johnson, Stryker Orthopedics,a unit of Stryker Inc, Zimmer Holdings, and Smith & Nephew, revealed they made to orthopedic surgeons and various academic and other organizations in the US. All companies except Stryker were charged with "criminal conspiracy to violate anti-kickback laws," and all were subject to deferred prosecution agreements.  (Stryker entered into a voluntary compliance agreement.)  According to a US Department of Justice news release, the agreements required:

• A federal monitor will be in place at each company to review compliance with the DPAs and NPA and all new and existing consulting relationships with the companies;
• Each company is required to conduct a needs assessment to determine the reasonable needs for educational consulting services, and new product-development consultants.
• All new consulting agreements shall require physicians to disclose their financial engagements with any company to their patients and require the companies to disclose the name of each consultant and what they have been paid on the company website.

These agreements ended in 2009.

The Latest Settlements

As we noted, in 2011, Johnson and Johnson admitted its subsidiaries, including DePuy, had been bribing doctors in Europe through 2007, and agreed to yet another deferred prosecution agreement.

Smith & Nephew

Last month, Bloomberg reported:

Smith & Nephew Plc, Europe’s biggest maker of artificial hips and knees, agreed to pay $22.2 million to settle allegations by the U.S. Justice Department and Securities and Exchange Commission that it engaged in a scheme to pay bribes in Greece.

Smith & Nephew admitted in filings today in federal court in Washington that two of its units were involved in a scheme for more than a decade to make 'illicit payments' to doctors employed by government hospitals or agencies in Greece in violation of the Foreign Corrupt Practices Act.

The London-based company, which entered into a deferred prosecution agreement with the U.S., agreed to pay a $16.8 million fine to settle the criminal allegations and another $5.4 million to settle a civil suit filed by the SEC.

The colorful specifics were:

Smith & Nephew admitted that from 1997 until June 2008, its U.S. and German units bribed public doctors in Greece to win business. The bribes were paid through a person described in court documents as a 'Greek distributor.' This person used shell companies that masked bribes as 'marketing services,' according to the statement of facts filed in the criminal case.

The document cites a March 2002 e-mail from the Greek distributor to a Smith & Nephew vice president in Memphis, Tennessee, complaining that the 'marketing services' payments weren’t enough, noting that competitors were paying 30 percent to 40 percent more.

'I absolutely need this fund to promote my sales with surgeons,' the distributor said in the e-mail, according to prosecutors.

Reforming a corrupt and dysfunctional public health system was one of the conditions of Greece’s acceptance of a European Union and International Monetary Fund bailout package in 2010. Doctors also supplement their income with payments from patients, called 'fakelaki,' small envelopes with cash for prompt treatment.

In the SEC complaint, the payments made to the physicians were described as "commissions."
Note that the company made the usual sort of statement,

'We have what I believe to be a world-class compliance program, having enhanced it significantly since this investigation began in 2007,' Olivier Bohuon, Smith & Nephew’s chief executive officer, said in a statement. 'These legacy issues do not reflect Smith & Nephew today.'

He did not mention why the payments were continuing at a time when the company was already supposedly operating under the previous deferred prosecution agreement that arose out of the charges in the US discussed above.

Biomet

This week, the Indianapolis Star reported,

To sell its products abroad, medical device maker Biomet at times bribed doctors with cash, travel and meals, the federal government says.

The Warsaw, Ind.-based company agreed Monday to pay nearly $23 million to settle allegations that its payments to doctors violated the federal Foreign Corrupt Practices Act. The Securities and Exchange Commission alleges that Biomet, acting through four subsidiaries and its distributors, paid bribes from 2000 to 2008 to doctors in Argentina, Brazil and China in order to win business.

The settlement includes a $17.3 million criminal fine and $5.6 million to the SEC, the government and company said in separate news releases.

The details were,

he SEC accused Biomet of writing phony invoices to cover kickbacks as high as 20 percent of sales to push its products.

In other instances, Biomet provided doctors with money and travel in exchange for implanting artificial joints and other Biomet products in their patients, says the SEC complaint, which was filed in federal court in Washington. In China, Biomet vendors gave doctors cash upon completion of surgeries using Biomet implants, the lawsuit says.

'I've got to send him to Switzerland to visit his daughter,' a Biomet distributor wrote in a 2001 email to the company, describing a trip given as a reward to a Chinese doctor who implanted 10 Biomet hips and knees a month in patients.

The SEC said Biomet's compliance and internal audit functions failed to stop the practices even after determining they were illegal.

Note how Biomet accounted for the payments,

The payments were falsely recorded on company books as 'commissions,' 'royalties' and 'scientific incentives,' the Justice Department said.

Furthermore, the Fort Wayne Journal-Gazette added,

With the settlement announced Monday, the Justice Department found that Biomet and its subsidiaries covered up bribery payments by officially recording them as 'consulting fees' or 'commissions.'

Note that Biomet's official response was similar to Smith & Nephew's, as reported in another article from the Fort Wayne Journal-Gazette,

Jeffrey Binder, Biomet’s president and CEO, didn’t address the company’s guilt or innocence in a written statement released Monday.

Biomet has 'significantly enhanced' its procedures worldwide in recent years to ensure employees’ conduct is legal and ethical, he said.

'Moving forward, we intend to continue to adhere to our enhanced global compliance procedures, and to promote the company’s commitment to the highest ethical standards in all the markets that we serve,' Binder said.

Again, he did not explain why this time the enhanced compliance procedures are likely to work, given that the questionable conduct was still going on after the company had already entered into the 2007 deferred prosecution agreement.

Summary

Some Apparent Conflicts of Interest are Actually Bribes

In these cases, two medical device corporations paid doctors in several countries for implanting their products into patients. The resulting legal proceedings allow us to characterize these actions as bribes. Clearly both the companies' and the physicians' actions were unethical, since they lead to decisions that put the enrichment of the decision makers and those bribing them ahead of the patients' interests.

Some of the most common financial arrangements between health care professionals and industry that are thought of as conflicts of interest are paid consulting and payment of royalties for intellectual property. As we have discussed, e.g. here, conflicts of interest in medicine and health care are generally thought to raise the likelihood of corruption, but not necessarily to indicate corruption in specific instances. In the cases above, bribes were sometimes called "consulting payments or royalties." This suggests that some consulting payments and royalties which may commonly be thought of as conflicts of interest are outright bribes, that is, outright health care corruption.

Those who fervently defend conflicts of interest as inevitable, and necessary for collaboration and hence innovation (e.g., look here), often minimize the adverse effects of these conflicts (e.g., look here). In fact, any putative benefits of such conflicts ought to be contrasted with their possible harms. These cases make it clear that these harms include outright corruption which may be disguised as mere conflicts of interest.

This adds strength to arguments that conflicts of interest ought to be minimized or eliminated, not tolerated and "managed."

Current Measures to Enforce Laws Against Bribes and Kickbacks are More Theatre than Deterrent

The current cases are just the latest members in the march of legal settlements. We have noted that misbehavior in large health care organizations rarely leads to any negative consequences for the people who authorized, directed or implemented the offending actions. Instead, the penalties are, at most, fines paid by the organizations, not the people involved, and variants of deferred prosecution and/or corporate integrity agreements. We and others have previously argued without negative consequences affecting the people who authorize, direct or implement unethical actions, such actions will continue.

The current cases corroborate this. Corporations that had already paid fines and accepted deferred prosecution agreements for bribes to physicians continued to bribe other physicians. The failure of the offending corporations to admit any wrongdoing, or the need for specific changes of behavior in the future, suggests that the current fines and deferred prosecution agreements will not be any more effective than the previous ones. The current fashion of punishing behavior within health care organization with fines and agreements to behave better in the future appears to be more law enforcement theatre than serious deterrent.  

As we have said before, true health care reform would make leaders of health care organization accountable for their organizations' bad behavior.

Courses and Conferences on Health Care Ethics, Corruption, Marketing

Two courses and two conferences of interest to Health Care Renewal readers are coming soon.

Short Course: Why Do Physicians Not Make Rational, Evidence Based Decisions?


A full-day course at the 14th Biennial European Meeting of the Society for Medical Decision Making on Sunday, 10 June, 2012 in Oslo, Norway. Taught by bloggers Dr Roy Poses and Dr Wally Smith, the course will address both the effects of cognitive psychological limitations and of external influences by vested interests leading to less than optimal decisions.

A full description of the course is here.
 
Online Course: Corruption in the Health Sector

A 30 hour online course given by the U4 Anti-Corruption Resource Center, offered in collaboration with the Boston University School of Public Health.  The course is "on causes and consequences of corruption in the health sector; vulnerabilities in drug supply systems, informal payments, and strategies to minimise the problems." 

A full description is here. 

Conference: Deception, Incentives and Behavior

A two-day conference given by the Rady School of Management, University of California - San Diego, on 20-21 April, 2012 in San Diego, California, USA.  This will be a multidisciplinary meeting to facilitate "research of deception and related unethical behavior in the fields of economics and psychology/judgment and decision making (JDM)."

The conference web-site is here. 

Conference: Third Annual PharmedOut Conference on How Patient Harms May Result from Industry Promotion

A two-day conference given by PharmedOut at Georgetown University in Washington, DC on
14-15 June, 2012.  The conference will focus on the how industry promotion may lead to under-use, over-use, or mis-use of drugs and devices.

The conference web-site is here.

Two Steps Back: International Council on Human Rights Policy Closes, Dutch Healthy Skepticism Ends Domestic Focus

We have noted the paucity of organized efforts to combat health care corruption and related phenomena.  What efforts exist tend to focus on corruption elsewhere, as if no one is willing to admit it can occur in their back yard.  Now one organization that has made some efforts in this sphere is closing, and another will explicitly focus its efforts on problems elsewhere.

International Council on Human Rights Policy Closes

The ICHRP was located in Geneva.  It had a wide focus, but was willing to consider how corruption could affect human rights.  Its publication, Corruption and Human Rights: Making the Connection, explicitly noted the threat of corruption to the right to health.  (Note that in international policy, this right is not considered to be to unlimited health care, but to "attainment of the highest available standard of physical and mental health.")  It went on to list a variety of ways in which government corruption, or corruption of health care leaders or organizations outside of government could harm health.  (Full disclosure: I participated in a meeting the IHCRP convened to review a draft of this publication.)

Now, as announced in the IHCRP blog, the IHCRP will close at the end of this month:

The decision to close was taken by the Executive Board primarily due to continued financial difficulties, largely a result of the difficult funding climate, especially for human rights and even more so for human rights policy research. It is especially regrettable because for more than a decade the ICHRP stimulated co-operation and exchange across the non-governmental, governmental and inter-governmental sectors, and strove to mediate between competing perspectives.

Healthy Skepticism in the Netherland to Only Focus on Problems "Abroad"

Today I got a press release (as of 21 February available here) from the Dutch Institute for Rational Use of Medicine (IVM), that stated:

The Dutch Institute for Rational Use of Medicine (IVM) is changing the course of its renowned Healthy Skepticism programme, which has critically monitored the pharmaceutical industry’s impact on the use of medication over the past ten years. Healthy Skepticism will be shifting attention away from its activities in the Netherlands, choosing to focus instead on supporting initiatives abroad.

The immediate reason seemed to be lack of funding, like the reason advanced for the closing of the ICHRP:

The change is prompted by the fact that the Dutch Ministry of Health, Welfare and Sport has eliminated funding for the programme....

The announcement first suggested that the change of focus came about because the initiative had attained its original goals:

another factor is the radical change that has occurred in the pharmaceutical industry’s attitude and conduct over the past decade.

Commenting on the change, IVM director Ruud Coolen van Brakel stated: 'Although there are still some problem areas, overall the industry has become more mature and more responsible’.

However, later in the announcement the implication was stronger that this lack of funding may have resulted from how the program challenged the powers that be, perhaps those who were personally profiting the most from the status quo:

The impact of Healthy Skepticism’s initiatives has not been unequivocally positive. IVM met with considerable resistance, which at times even became personal, and, because of its critical attitude, often became the target of aggressive attacks that also compromised its funders, the Ministry of Health, Education and Sport and the Healthcare Inspectorate.

Summary

We noted most recently (here, December, 2011) most of the organizations one might have expected would have provided some response to health care corruption instead have largely treated it as at best a nuisance. Specifically, there is almost no teaching or research on corruption in health care academics (including medical and public health schools, and programs in health care research and policy.)  There is almost no mention of corruption by health care professional associations.  There are almost no initiatives to fight corruption on the part of health care charities and donors.  There is almost no interest in corruption among patient advocacy organizations.  (See previous discussion here.)

Furthermore, I also postulated that at least in the US context, this lack of interest in corruption may partially be explained by these organizations' institutional conflicts of interest and the individual conflicts of interest affecting their leaders. It may be further explained by the exposure of some leaders to the irresponsible, if not amoral culture that now currently pervades finance, which may have in turn been one cause of the great recession, or global financial collapse.

The ICHRP and the Dutch Healthy Skepticism program seemed to be happy exceptions.  However, both of them depended on outside government or non-profit organizations for funding.  In both cases, these outside funders seem to have lost enthusiasm, maybe for reasons discussed above.

At least the ICHRP archives remain available, and Dutch Healthy Skepticism may be able to make some useful contribution outside the Netherlands.

There is increasing evidence that health care corruption may end up killing people.   I still hope that the courage of those who have tried to increase awareness of health care corruption, the conflicts of interest that can increase its likelihood, and surrounding phenomena, will not be in vain.  I still hope that some academic health care institutions, professional societies, health care charities and donors, and patient advocacy groups will gain enough fortitude to stand up for accountability, integrity, transparency, and honesty in health care.

"Corruption Kills," So Why Is Health Care Corruption Ignored?

An article published last month by PLoS One(1) emphasizes the stark contrast between the likely impact on health of corruption, including health care corruption, and the attention paid to it. 

The Methodologic Details

The authors performed an ecological, country-level analysis to assess the association of perceived national corruption level (measured by Transparency International's Corruption Perceptions Index [CPI] using 2008 data) and national mortality rates for children under five years old, controlling for the best known measurable predictors of such mortality.   Their final model included the following other predictors: GDP per capita, people with access to improved water source, people with access to improved sanitation, percentage of rural population, literacy rate, dependency ratio, population density, total health expenditure per capita, health expenditure as percentage of GDP, DTP vaccine coverage, measles vaccine coverage, food supply, presence of equatorial, arid, warm temperate and snow climate on national territory, civil liberties, political rights, national battle-related deaths.  The final model had a pseudo R squared = 0.89, and the addition of CPI to the model increased it by 1.61%.

The Results and Implications

The results were that corruption explained approximately 1.61% of the variance of country-level child mortality.  This suggested the hypothesis that:

roughly 1.6% of world deaths in children could be explained by corruption meaning that, of the annual 8.795 million children deaths, more than 140000 annual children deaths could be indirectly attributed to corruption.

The authors emphasized that this was only a hypothesis, and that ecological models are prone to bias. In particular, I would point out that such models can omit variables that are associated with the included variables, but are better predictors, or even true causes of the outcome. Nonetheless, as the authors pointed out, "all the data used in this analysis is the only available to study the problem at this scale."

Another problem is that the analysis could not distinguish the effects of health care corruption from those of other kinds of corruption. In the introduction, the authors emphasized what has been written about the importance of health care corruption as having "pejorative health consequences." However, general corruption could also affect health. The authors gave the example of how corruption could affect access to uncontaminated water.

Nonetheless, the analysis appears highly plausible, and may be the best possible given the available data. It suggests, as the authors noted, that corruption could causes deaths "that largely exceeds the conspicuous pooled total of cholera, rabies, Ebola, and combat-related deaths."

This suggests the big paradox. As the authors put it,

because the equation corruption = deaths is seldom explicit, corruption only seems like a nuisance.

As we have said, most recently here, most of the organizations one might have expected would have provided some response to health care corruption instead have largely treated it as at best a nuisance. Specifically, there is almost no teaching or research on corruption in health care academics (including medical and public health schools, and programs in health care research and policy.)  There is almost no mention of corruption by health care professional associations.  There are almost no initiatives to fight corruption on the part of health care charities and donors.  There is almost no interest in corruption among patient advocacy organizations.  (See previous discussion here.)

Because there is so little interest in and attention to corruption, and particularly health care corruption, there has been little research on it, and therefore the best available estimate of the effect of corruption on health may now be the study by Hanf et al. 

I also postulated that at least in the US context, this lack of interest in corruption may partially be explained by these organizations' institutional conflicts of interest and the individual conflicts of interest affecting their leaders.  It may be further explained by the exposure of some leaders to the irresponsible, if not amoral culture that now currently pervades finance, which may have in turn been one cause of the great recession, or global financial collapse. 

Hanf and collaborators concluded,

The global response to child deaths must involve a necessary increase in funds available to 1) develop water and sanitation access and 2) purchase new methods for prevention, management, and treatment of major diseases killing children around the globe (principally pneumonia, diarrhoea and malaria). However, without paying attention to the anti-corruption mechanisms needed to ensure their proper use, it will also provide further opportunity for corruption. In practice, donors and governments still treat health, water/sanitation access and corruption as separate rather than integral components of the same strategy. To address these obstacles, designing dedicated indicators at micro and macro levels which monitor efficiently corruption impacts on health and heath related services, is urgently needed. Policies and interventions supported by governments and donors must integrate initiatives that recognise how health and corruption are inter-related.

I wonder if the realization that corruption, including health care corruption may be leading to the deaths of children will be enough for academic health care institutions, professional societies, health care charities and donors, and patient advocacy groups to develop "initiatives that recognise how health and corruption are inter-related"?

Reference

1.  Hanf M, Van-Melle A, Fraisse F et al. Corruption kills: estimating the global impact of corruption on children deaths.  PLos ONE 2011; 6: e26990. doi:10.1371/journal.pone.0026990.  Link here.

Will the Citigroup Ruling Challenge Health Care Leaders' Impunity?

A federal judge's refusal to approve yet another cozy settlement that was supposed to resolve allegations of wrong-doing by a giant corporation has left the financial world atwitter.  It may be that this ruling will also affect the coziness between giant health care corporations and government regulators. 

Summary of the Citigroup Case

We first discussed this case twp weeks ago here.  Here is a summary of the government's (in this case, the Securities and Exchange Commision's) original allegations from the New York Times.

According to the Securities and Exchange Commission, Citigroup stuffed a $1 billion mortgage fund that it sold to investors in 2007 with securities that it believed would fail so that it could bet against its customers and profit when values declined. The fraud, the agency said, was in Citigroup’s falsely telling investors that an independent party was choosing the portfolio’s investments. Citigroup made $160 million from the deal and investors lost $700 million.

The Problems with the Proposed Settlement
Judge Jed Rakoff refused to approve the settlement because of a series of problems, listed below as summarized by the Schumpeter columnist in the Economist.

Mr Rakoff faulted the SEC for prosecuting Citigroup for negligence when a fraud prosecution was warranted; for failing to provide the court with 'any proven or admitted facts upon which to exercise even a modest degree of independent judgment'; for erroneously contending that 'public interest…is not part of [the] applicable standard of judicial review'; and for wrongly arguing that 'if the public interest must be taken into account, the SEC is the sole determiner'.

Furthermore,

Mr Rakoff also attacked a second condition of the settlement. Citigroup had agreed to operate under a court injunction if it ever violated the deal, which could lead to contempt charges. Whatever threat this carried, Mr Rackoff wrote, it was mitigated because Citigroup, as other financial firms, had been cited similarly over the past decade—and never faced any consequences.

The Parallels with Legal Settlements Made by Health Care Organizations

Several of the features of the settlement that the Judge found so objectionable are commonly also features of the settlements we have seen involving health care organizations. Government regulators often seem to make much milder charges that were warranted by the apparent facts. They make the organizations party to corporate integrity or deferred prosecution agreements, even though sometimes the same corporations were already subject to such agreements when they appeared to misbehave again. The agreements often allow the organizations to neither admit to or deny any charges, leaving the facts of the case forever in doubt.

Matt Taibi in the Rolling Stone provided some pithy comments on these commonly seen features of legal settlements.

By accepting hundred-million-dollar fines without a full public venting of the facts, the SEC is leveling seemingly significant punishments without telling the public what the defendant is being punished for. This has essentially created a parallel or secret criminal justice system, in which both crime and punishment are adjudicated behind closed doors.

This system allows for ugly consequences in both directions. Imagine if normal criminal defendants were treated this way. Say a prosecutor and street criminal come into a judge’s chamber and explain they’ve cooked up a deal, that the criminal doesn’t have to admit to anything or plead to any crime, but has to spend 18 months in house arrest nonetheless.

What sane judge would sign off on a deal like that without knowing exactly what the facts are? Did the criminal shoot up a nightclub and paralyze someone, or did he just sell a dimebag on the street? Is 18 months a tough sentence or a slap on the wrist? And how is it legally possible for someone to deserve an 18-month sentence without being guilty of anything?

Such deals are logical and legal absurdities, but judges have been signing off on settlements like this with Wall Street defendants for years.

As we have said numerous times before, (starting here in 2008) the current manner of regulation, in which organizations pay fines (and sometimes submit to corporate integrity or deferred prosecution agreements), rarely admit any guilt, but in which individuals who directed, authorized or implemented the alleged misbehavior almost never suffer any negative consequences, fails to deter future bad behavior. We have noted that the costs of the settlements are paid by the organization as a whole, and thus simply regarded as costs of doing business by executives. The leaders' impunity will allow the bad behavior to be repeated again and again.

Here is how Taibbi and Rakoff put it:

these crappy settlements have evolved into a kind of cheap payoff system, in which crimes may be committed over and over again, and the SEC’s only role is to take a bribe each time the offenders slip up and get caught.

If you never have to worry about serious punishments, or court findings of criminal guilt (which would leave you exposed to crippling lawsuits), then there’s simply no incentive to stop committing fraud. These SEC settlements simply become part of the cost of doing business, as Rakoff notes:

As for common experience, a consent judgment that does not involve any admissions and that results in only very modest penalties is just as frequently viewed, particularly in the business community, as a cost of doing business imposed by having to maintain a working relationship with a regulatory agency, rather than as any indication of where the real truth lies. This, indeed, is Citigroup's position in this very case.

That line, 'a cost of doing business imposed by having to maintain a working relationship with a regulatory agency,' is one of the more brutally damning things you’ll ever see a judge write. Rakoff is essentially saying that these fines are payoffs to keep the SEC off the banks’ backs. They’re like the pad that numbers-runners or drug dealers pay to urban precinct-houses every month to keep cops from making real arrests. That's what he means when he refers to 'maintaning a working relationship.' It's heavy stuff.

What the Judge appears to be saying is that the whole system stinks of regulatory capture, and that the settlements paid by the organizations are the moral equivalent of bribes paid to government officials. That is indeed "heavy stuff."

Now that Occupy Wall Street has made it socially acceptable to discuss the economic dysfunction that lead to the great recession or global financial collapse, I can only hope that this discussion will lead to a parallel discussion about health care dysfunction. It certainly seems that the regulatory capture that seems to be part of the dismantling of regulation of finance is similar to regulatory capture affecting health care. But I await someone beyond us few lonely bloggers to take up this topic.

I might as well end with this sentiment from 2009 regarding another case over which Judge Rakoff presided:
Again, in my humble opinion, until the people responsible for the bad behavior experience negative consequences from that behavior, they will continue to perform, direct, and condone bad behavior. We will not achieve real health care reform in the US until we effectively deter unethical, self-serving behavior by leaders of health care organizations.

Will the Freeze of the Global Fund Finally Put Health Care Corruption on the Agenda?

In February, 2011, we posted about problems with corruption affecting the Global Fund to Fight AIDS, Tuberculosis and Malaria. At the time, the Fund promised to better detect fraud and corruption affecting its grants programs. We later posted about how after an internal debate, the Fund promised to make more information public about any losses to fraud and corruption.

Now it has made more such information public, but it also appears that further problems with corruption have lead to the freezing of the Fund.

The New Findings of Corruption

First, as reported by Bloomberg on 1 November,

A $22 billion disease-fighting fund backed by Microsoft Corp. (MSFT) founder Bill Gates found that money intended for people with life-threatening illnesses was used for home renovations in India and diverted to a person linked with money laundering and so-called blood diamonds in Nigeria.

The Global Fund to Fight AIDS, Tuberculosis and Malaria is seeking to recover as much as $19.2 million from grants in eight countries, the Geneva-based organization said in a set of reports today. As much as $1.3 million was misused by the head of a non-governmental AIDS organization in India to buy a car and renovate his apartment, one report said. In Nigeria, money was siphoned to a person arrested in 2003 for money-laundering and smuggling diamonds that are mined and sold to support war.

This amount was in addition to previous amounts disclosed before:

The organization said last year it was seeking the recovery of $44.2 million in four nations for 'grave misuse of funds.'

It is not clear how much money the Fund has lost to corruption in total. According to an AP report, via CBS News,

Earlier probes by the fund's internal watchdog, the inspector general's office, had detected about $53 million in losses, according to fund documents, some unpublished, provided by senior officials.

The fund's board chairman Simon Bland told The Associated Press it has now reviewed about one-seventh of $14 billion in grants disbursed.

Whether similar amounts of corruption affected the other six sevenths of grants is unclear.

The Freeze on Grants

This week, several reports that the Fund would stop funding new grants appeared in the media. As reported by BusinessWeek,

The world’s biggest disease-fighting fund canceled its next round of grants as the global financial crisis crimps donations and threatens its ability to curb the spread of the world’s deadliest infections.

The Global Fund to Fight AIDS, Tuberculosis and Malaria, which has spent or committed to spending $22 billion since 2002 on preventing and treating disease, will only have enough money to pay for essential services for existing programs through the end of 2013, the Geneva-based fund said in a statement today. It will not make new grants until 2014,...

The reason for this freeze on grant making was,

The fund faces 'accelerating deterioration' in its finances for the next three years because of economic distress in donor nations, combined with corruption in some of the poor countries it helps,...

A NY Times article implied that one reason for the financial shortfall was that some donor nations withheld money due to their concerns about corruption:

Several countries, including Djibouti, Mali, Mauritania and Zambia, lost their grants or had new safeguards put in place after officials were accused of stealing. The Global Fund’s own inspector general exposed the fraud and earlier this month was trying to recover about $20 million that had been stolen; that amount is less than 1 percent of the $13 billion that has been disbursed.

There have been reports of friction between Dr. Kazatchkine and the inspector general, John Parsons. They each report separately to the board.

Some major donors, including Germany and Sweden, expressed their dismay by freezing their donations.

Also, CBS News reported,

Germany, the European Commission and Denmark withheld hundreds of millions of euros in funding pending reviews of the fund's internal controls. Germany — the fund's fourth-largest donor- has since restored its funding.

Summary and Comment
In summary, the uncovering of specific instances of corruption that wasted the assets of the Global Fund, and the concerns of international donors about the effects of corruption on the Fund have been some of the causes of a freeze in funding that will preclude new initiatives at least until 2014. This is a dramatic illustration of how corruption can undermine health care.

We wondered previously whether the realization that corruption was subverting the Fund's activities would lead the Fund to actively address corruption.  In fact, the Fund seems to have investigated previous corruption affecting its work more aggressively than have many other health care organizations.  However, the Fund did not appear to have instituted any initiatives to prevent, forestall, or challenge corruption.  In that, it is typical of nearly every health care organization in the world.

Transparency International defines corruption as "abuse of entrusted power for private gain."  By that definition, many of the cases discussed on Health Care Renewal are about corruption.  For example, if a pharmaceutical company pays physicians as part of a deceptive marketing campaign that exaggerates the benefits or minimizes the harms of a drug, and that campaign increases sales and hence executive compensation, one could argue that the case involves corruption of both of physicians and of company management.  We have discussed many such cases on Health Care Renewal.  One striking example was the stealth marketing campaign for Neurontin as described in posts here, here, here and here.

Thus, there are many examples of corruption affecting health care professionals and academics, and all sorts of health care organizations, hospitals, health care insurers, pharmaceutical and device companies, health care information technology companies, medical education and communication companies, contract research organizations, etc, etc, etc  In 2006, Transparency International's Global Corruption Report asserted in its executive summary, " the scale of corruption is vast in both rich and poor countries."  As we summarized here, the report discussed the scale and diversity of health care corruption, and the severity of its adverse effects.

However, at least for a generation, there has been almost no opposition to such corruption.  In fact, as we have noted, health care corruption, and the problems and leadership and governance that lead to it, have been nearly anechoic.  Specifically, there is almost no teaching or research on corruption in health care academics (including medical and public health schools, and programs in health care research and policy.)  There is almost no mention of corruption by health care professional associations.  There are almost no initiatives to fight corruption on the part of health care charities and donors.  There is almost no interest in corruption among patient advocacy organizations.  (See previous discussion here.)

Why do they all ignore such a huge problem?  Most likely it is because of institutional and individual conflicts of interests.  Most of the these organizations are substantially funded by health care corporations, including corporations most involved in corruption, (and parenthetically, by financial firms whose corruption was likely a major cause of the global financial collapse / great recession, the other ostensible cause of the freeze of Global Fund grants.)  Many prominent health professionals and academics, and health care organizational leaders themselves have individual financial relationships with such companies.  For example, a majority of US medical school department chairs have significant financial relationships with health care corporations (see post here).  We have shown how top medical school leaders may simultaneously serve on the boards of directors of health care corporations (see post here).  People who are personally profiting from relationships with health care corporations are unlikely to question such relationships.  The leaders of organizations which depend on funding from such corporations are unlikely to question whether conflicts of interest might lead to corruption.  People whose colleagues, friends, family members, or supervisors are personally benefiting from conflicts of interest may hesitate to challenge such relationships.

So will the freeze of new grants at the Global Fund at least get health care corruption on the agenda?  One can only hope.  I personally hope that there are enough honest and unconflicted people remaining who will raise their voices above a murmur, even if that might discomfit those around them.

Of course, one reason we started Health Care Renewal was to make these issues less anechoic. So hear we go again.


PS - If anyone in our vast audience does know about any additional anti-corruption or conflict of interest, or pro-accountability, integrity, transparency, honesty and ethics initiatives, courses, meetings relevant to health care, please let me know and I will do my best to disseminate the information.

"Running Away from the Problem" of Health Care Corruption

Despite its likely importance, the very concept of health care corruption remains highly anechoic. 

Last week's Lancet, however, actually mentioned it, albeit indirectly and ironically.(1)  The context was Richard Horton's discussion of a press conference on the final report of the UN Secretary-General's Commission on Information and Accountability for Women's and Children's Health. It appears that accountability, which we consistently advocate, was central to the report:

The big conclusion is that a huge accountability gap exists - we have incredibly weak mechanisms to make sure that the billions spent on women's and children's health are delivering the results we expect.

The report listed "ten commandments of women's and children's health, [which] aim to fill that accountability gap."

While the press conference went on, something unusual happened, as Richard Horton discussed somewhat ironically:

In truth, meetings such as these may not always produce the most exciting moments in the history of health (but this one did). Yet they can produce episodes of raw undiplomatic honesty which make the long waits and dull protocol worthwhile. [Secretary General of the International Telecommunication Union Hamadoun] Toure has a reputation for being blunt and outspoken. He surpassed himself last week. At the end of the first day, he suddenly began a riff of denunciation that left us all speechless. 'There is more corruption in the G8 countries than in the whole of Africa,' he declared with conviction. 'We are just running away from the problem.'

There you have it, one of the few mentions of health care corruption in the medical and health care literature, and one of the very few mentions of health care corruption afflicting developed, not just developing countries.

Interestingly, Horton then documented an immediate attempt by some very important people in global health care to paper over the unpleasantness raised by Toure's honest assessment:

President [Jakaya] Kidwete [of Tanzania] and Margaret Chan, WHO's Director-General, did well to pull their colleague back from the brink of professional suicide. 'This is a partnership effort,' affirmed Kikwete. He wanted no one think the generosity of international donors did not count. 'They are critical for development,' he said. Dr Chan stepped in to assert that 'development money works.'

So there you have it again. Stating that health care corruption is an important problem in developed countries is "professional suicide," even for the Secretary General of the International Telecommunications Union.

Yet Dr Horton, was willing to go a little further, maybe risking his own "professional suicide,"

The President and DG are right. But Toure had a point too. And most of us in the room knew it.

We have noted before that health care corruption is the great unmentionable.  The corruption that is mentioned is that afflicting developing countries.  Hardly anyone seems willing to say that health care corruption is just as big a problem in developed countries, including those that provide most of the funding for health care development in the developing countries.  As we see above, we now have an acknowledgement in one of the most influential medical journals that mentioning health care corruption in the developed world is "professional suicide." 

That is the anechoic effect writ large.  Left unsaid is why this is so.  Presumably, the reason is that corruption is wide-spread.  The corrupt have made a lot of money and become very powerful.  So it is very unwise to offend them.  That, of course, just lets corruption flourish, and so health care gets increasingly expensive, inaccessible, and bad for patients and the public.

If we really want to improve health care in our own countries, and to improve global health, we will all have to be as brave as Mr Toure.

See below for a repeat of our previous summary of the issue of health care corruption.

+++

Many people more distinguished than yours truly have been warning about health care corruption for years. In particular, in 2006, Transparency International's Global Corruption Report asserted in its executive summary, "the scale of corruption is vast in both rich and poor countries." It also noted how diverse is health care corruption:

In the health sphere corruption encompasses bribery of regulators and medical professionals, manipulation of information on drug trials, the diversion of medicines and supplies, corruption in procurement, and overbilling of insurance companies. It is not limited to abuse by public officials, because society frequently entrusts private actors in health care with important public roles. When hospital administrators, insurers, physicians or pharmaceutical company executives dishonestly enrich themselves, they are not formally abusing a public office, but they are abusing entrusted power and stealing precious resources needed to improve health.

It further stated how serious the consequences of corruption may be:

Corruption deprives people of access to health care and can lead to the wrong treatments being administered. Corruption in the pharmaceutical chain can prove deadly....


The poor are disproportionately affected by corruption in the health sector, as they are less able to afford small bribes for health services that are supposed to be free, or to pay for private alternatives where corruption has depleted public health services.


Corruption affects health policy and spending priorities.

On this blog, our limited resources make us focus mainly on the US, and sometimes other English-speaking countries. Yet we now have in our archives some amazing stories that document various forms of corruption, including numerous allegations of corporate misbehavior ending in legal settlements, and examples of outright fraud, bribery, kickbacks and other crimes. Also, as we have noted before, the US Institute of Medicine has defined conflicts of interest

Conflicts of interest are defined as circumstances that create a risk that professional judgments or actions regarding a primary interest will be unduly influenced by a secondary interest.

Given that Transparency International's definition of corruption is

abuse of entrusted power for private gain

One can easily argue that in health care, conflicts of interest defined as above create risks of abuse of power by health care professionals influenced by the private gains provided by their secondary interests. On Health Care Renewal, we have provided a massive set of examples of individual and institutional conflicts of interest. There is evidence that about two-thirds of medical academics(2) and academic leaders(3) have significant conflicts of interest. The huge prevalence of conflicts suggests the enormous risk of major corruption.


So what we all should be shocked, shocked about is how little has been done to fight health care corruption, whether in Mozambique or the US.


However, one can find very few significant efforts to discuss, teach about, or research ways to fight corruption, or to promote accountability, integrity, transparency, honesty and ethics by academic health care institutions. (See this post for how difficult it was to find academic institutions' initiatives to resist conflicts of interest.) One can count the conferences, meetings, symposia, and courses on such topics on one's fingers. When I last looked, I could count only a single course on fighting corruption at any US medical or public health school (at Boston University, by Prof Taryn Vian).


Given the scope of corruption, we should be shocked, shocked at how anechoic it is, and how our respected health care institutions, particularly academic institutions and health care charities have ignored the problem.


Given the scope of corruption, we should be shocked, shocked at how anechoic it is, and how our respected health care institutions, particularly academic institutions and health care charities have ignored the problem.


Of course, one reason we started Health Care Renewal was to make these issues less anechoic. So hear we go again.


PS - If anyone in our vast audience does know about any additional anti-corruption or conflict of interest, or pro-accountability, integrity, transparency, honesty and ethics initiatives, courses, meetings relevant to health care, please let me know and I will do my best to disseminate the information.


References


1.  Horton R. Offline: ten commandments, G8 corruption, and OBL. Lancet 2011; 377: 1638.  Link here.
2. Campbell EG, Gruen RL, Mountford J et al. A national survey of physician–industry relationships. N Engl J Med 2007; 356:1742-1750. Link here.
3. Campbell EG, Weissman JS, Ehringhaus S et al. Institutional academic-industry relationships. JAMA 2007; 298: 1779-1786. Link here.