A US Government Prosecutor Now Defends Health Care Corporations: No Different Than Being Traded from the Red Sox to the Yankees?

We have discussed a few examples of the revolving door, involving government officials who dealt with health care issues leaving to eventually take jobs for for-profit health care corporations. 

The latest, and most vivid example of the revolving door was just in an article by Duff Wilson in the New York Times:

Michael K. Loucks was arguably the nation’s most influential prosecutor of health care fraud.

He racked up numerous convictions and mega-settlements in nearly a quarter-century, using whistle-blowers and secret grand juries to pressure major pharmaceutical and health companies into ending illegal practices like kickbacks to doctors and misuse of blockbuster drugs.

Once described as a cross between a firebrand preacher and a charismatic litigator, Mr. Loucks burnished a reputation aptly captured in a Fortune magazine headline: 'Why Do Drug Companies Fear This Man? Maybe because he’s declared all-out war on cheats in the drug industry.'

But a year and a half ago, Mr. Loucks, a Republican, left the United States attorney’s office in Boston after he was passed over for the top post and President Obama appointed a Democrat. Instead, Mr. Loucks joined Skadden, Arps last July, and has startled former allies by emerging in recent months as zealous a corporate defender as he was a prosecutor, complete with proposals seeking more lenient treatment for the medical companies he once vilified.

In a six-page memo last month to clients in his portfolio, which may include some of the very same corporations he prosecuted repeatedly, Mr. Loucks bemoaned strategies he had embraced.

Note that we noted what Duff Wilson called Mr Loucks "crowning achievement" here.

This case was particularly striking because Mr Loucks was not merely involved with government health care policy.  He was prosecuting alleged wrongdoing by health care corporations while within government.  However, now he is defending the same companies whose actions he once called "evil."

This generates concern that those in government charged with keeping health care corporations honest at best regard what they are doing as simply some kind of game, and at worst, as an avenue to future more lucrative corporate positions.

This was reinforced at the conclusion of the Wilson article, in which Duff Wilson challenged Mr Loucks that his new job was considered by some to going "over to the dark side." Earlier in the piece, Mr Loucks made the usual response of an attorney defending an apparently unsavory client.

While everyone calls it ‘the other side,’ I’m doing the same thing I’ve always done, which is zealously representing my clients.

But then he added a sports analogy:

For his part, Mr. Loucks uses a baseball reference. Johnny Damon left his beloved Boston Red Sox in late 2005 to sign with 'the evil empire, the New York Yankees,' Mr. Loucks said. Both teams won World Series with help from Mr. Damon.

Asked whether the 'evil empire' analogy fit the Justice Department or Skadden, Mr. Loucks said, 'One man’s evil empire is another’s home team.'

I do live in Red Sox Nation, and some people around here do call the New York Yankees the "evil empire." I am sure nearly all of them realize that this is just sports fans' hyperbole.

So Mr Loucks, the trained lawyer and former federal prosecutor, rationalized his new, lucrative position defending the companies whose conduct he once called "evil" with a logical fallacy. As best as I can determine, that fallacy was a hasty generalization with this structure: He took a sample of a single organization called an "evil empire," (the NY Yankees). He noted correctly  that this one organization is not really an evil empire, but some peoples' baseball home team. He then made the hasty generalization that because one organization popularly called an "evil empire" is not actually evil, no entities labelled "evil empires"are any  more evil than the Yankees. 

One wonders if other government regulators regard what they do as having no greater ethical consequences as the decision to swing on a pitch down and in? 

Again, it all has the aroma of corporatism, of government and corporate leaders who see each other as insiders with common interests, and who feel more commonality with each other than with the hicks in the general population.  In that case, can we trust such government regulators to protect the interests of the people whom they are supposed to protect?

Should a "Phenomenal" $1 Million CEO be Accountable for "Errors that Caused Severe Injury or Death?"

A recent story with some local color once again illustrates the cognitive dissonance evoked by current patterns of compensation of health care leaders.

Let me start chronologically.

The Stratospheric Compensation of the CEO, and Its Justification

In 2009, the compensation given to the CEO of the Palomar Pomerado Health, a public health system in the vicinity of San Diego, California, provided some headlines. As reported then by the San Diego Times-Union,

Palomar Pomerado Health CEO Michael Covert has received a 26 percent — or $154,000 — pay raise.

The increase, approved by the hospital district’s board of directors last month, is retroactive to July 1, the beginning of the fiscal year, board Chairman Bruce Krider said.

The increase brought Covert’s pay from $582,000 a year to $736,000 a year.

Not unexpectedly, the hospital system board chair had an explanation:

Krider said Covert has done a 'phenomenal job' of improving the quality of care and charting the district’s future, but is underpaid compared with five California hospitals that generate gross revenues of $357 million to $457 million a year.

By 2010, it was apparent that Mr Covert's compensation was even larger than it appeared above. As reported then by the San Diego Times-Union:

The top official at Palomar Pomerado Health, a public agency serving health-care needs in Poway and Escondido, receives in excess of $1 million in compensation per year.


Michael Covert, who has run the North County hospital district since 2003, receives a base salary of $736,000 a year. Retirement, bonuses and other benefits push Covert’s total pay past $1.1 million.

The compensation package is in the median range of his private and nonprofit counterparts and places Covert among the elite among public employees.

At that point, the system's board chairman gave a similar justification:

Bruce Krider, the health-care district chairman, said Covert does an excellent job managing a complex enterprise that includes two major hospitals. Covert juggles the interests of staff, physicians, patients, volunteers, board members and other stakeholders, he said.

'A million dollars sounds pretty good to anybody, but my view is, pay a lot and expect a lot,' said Krider, a management consultant who also is a former hospital executive. 'You can’t have some mediocre public servant. You need somebody that has got vision, that can see the issues that are most important and put it all together.'

Later in 2010, when it turned out that Mr Covert was the second most highly paid government official in California (and the most highly paid official was facing criminal charges), the Times-Union reported:

'We have to compete for talent with all of the for-profit and nonprofit health systems,' said Theodore Kleiter, a former hospital administrator who is now chairman of the Palomar Pomerado Health board of directors. 'If you want the top management, that’s what you have to pay.'

Kleiter said Covert is one of the nation’s leading health care administrators and noted only 3 percent of the district’s $480 million budget comes from taxpayers.

'The people in our area expect the best and we’re trying to provide that,' Kleiter said

Also, per the Los Angelest Times a few weeks later:

Officials at the hospital strongly defended his pay.

"There's this notion that because you're a public agency you should hire less-talented people than private companies, and if we followed that idea, PPH would not be where it is today," hospital spokesman Andy Hoang said. "We must compete for the best physicians, nurses and executives to provide the highest level of care. The community deserves that."

So, do we see a pattern here? According to one board chairman, Mr Covert had "vision," was doing an "excellent job," a "phenomenal job."  Furthermore, the chairman gave Mr Covert credit, apparently sole credit, for improving quality of care within the system, and noted how he was responsible apparently for all that was done by everyone who worked in or was associated with the hospital.  That board chairman was a "management consultant", and "former hospital executive."  The next chairman thought Mr Covert was "top management." and one of "the nation's health care administrators."  That chairman was "a former hospital administrator."  Finally, a paid hospital spokesman insisted Mr Covert is one of the "best executives."

Celebrity Endorsements and Fines for Medical Errors

On the other hand, once more reported by the Times-Union, some community residents, including hospital nurses, were not convinced that Mr Covert's performance was so unequivocally brilliant:

More than 200 community residents signed petitions raising questions about the salary paid to the chief executive at Palomar Pomerado Health and other business practices at the medical organization.

'Your highest priorities should be improving the health of our residents ... Out of control executive pay, costly celebrity spokespeople endorsements and out-of-district clinics (are) a waste of public funds,' the petition states.

The signatures were collected by nurses concerned about the compensation package and other issues over the past months.

By the way, concerning the issue of celebrity endorsements:

The district signed former San Diego Chargers running back LaDainian Tomlinson to a $2 million promotional contract before he signed with the New York Jets, a marketing plan that was criticized by some employees.

And this week, there was more reason to think that all is not so "phenomenal" at Palomar Pomerado.

The San Diego Union-Tribune just reported about California hospitals fined by the state for serious errors affecting patient care. 

Five San Diego County hospitals were fined a total of $300,000 for errors that caused serious injury or death to patients, state regulators announced Thursday.

The penalties were levied for leaving a retractor inside one patient and a 28-inch guide wire inside another after surgery, giving two deadly drug overdoses, and leaving a patient unattended who fell and then died from a fractured skull.

Palomar Medical Center in Escondido, Pomerado Hospital in Poway and Scripps Memorial Hospital in La Jolla were each fined $75,000, the highest fines among 12 California hospitals penalized by the state on Thursday. All three had been cited at least twice before, prompting the higher penalty.

Note that the previous citations came in 2010, the year in which Mr Covert's compensation exceeded $1 million.
Of course, medical errors are unfortunately not rare. I suspect that while we may be able to reduce them, they cannot always be avoided. I do not mean to condemn these hospitals, nor the people who work there.

In one sense, it would be silly to expect Palomar Pomerado Health to be perfect, for errors and mistakes never to be made there. It also would be silly to blame the system's CEO for everything that went wrong there.  It would be silly, except that the justifications given for the comparatively stratospheric compensation given to the CEO of this government funded health care organization implied that he was nearly perfect, and he was responsible for all the good that went on within the organization.

Summary

So here again we see an example of a health care leader who is nearly god-like, is responsible for all the wonderful things that his organization does, and is therefore worthy of pay sufficient to make him rich, at least according to the board of directors to whom he is supposed to report.  On the other hand, there seems to be no real evidence of the CEO's near divinity, and if he is supposed to be responsible for all the wonderful things his organization does, he also ought to be responsible for its errors and mistakes. 

In fact, comparatively high executive compensation justified by hyperbole seems more likely to indicate a board that is not sufficiently independent to exert stewardship than an executive who is truly exceptionally brilliant.  Lack of such stewardship, in turn, may lead to lack of executive accountability and hence poor rather than brilliant outcomes for the health care organization. 

So here is the latest example of CEO disease.  As it becomes more prevalent, health care leadership becomes more disconnected, unaccountable, and self-interested.  The increasing prevalence of CEO disease in health care may explain why costs keep increasing, access keeps declining, and quality and safety are stagnant.


As I have said before,.... health care organizations need leaders that uphold the core values of health care, and focus on and are accountable for the mission, not on secondary responsibilities that conflict with these values and their mission, and not on self-enrichment. Leaders ought to be rewarded reasonably, but not lavishly, for doing what ultimately improves patient care, or when applicable, good education and good research.

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


We need to launch a crash program to prevent CEO disease and cure existing cases, before it kills off our health care system.

The Stealth Marketing of Medical Devices: The Biotronik Example

We have frequently discussed the use of organized, deceptive stealth marketing campaigns to influence physicians to prescribe pharmaceuticals. Now more information is coming to light about similar campaigns to influence physicians to use particular medical devices

As reported in the New York Times, based on documents supplied apparently by a corporate whistleblower, here are some tactics used by a small German device manufacturer, Biotronik:

Seeding Trials

These are ostensibly clinical trials, but designed more to market than to discover meaningful data. We have discussed them in the context of drug marketing.

The message from cardiologists was loud and clear, according to a top executive at a heart device company. The doctors wanted implant makers to produce more clinical trials of devices to help them generate income from research fees.

To compete, 'we must be able to 'answer the bell,'' wrote Thomas V. Brown, an executive vice president at the American subsidiary of Biotronik, a small German firm that makes pacemakers and defibrillators.

Mr. Brown’s charge came in an e-mail last year to fellow Biotronik executives, one of scores of documents involving the company that offer a portrait of an implant industry where producers seek to influence the brand of device that patients receive long before a diagnosis.

The documents show, for example, that device makers recruit not only implant specialists as consultants but also general cardiologists who refer patients. Those cardiologists, called feeders in one of the documents, can benefit by enrolling the referred patients in a company-financed study that can pay a cardiologist up to $4,800 a patient.

A lawyer representing Biotronik, Christopher Myers, said Mr. Brown’s e-mail was sent around the same time that some Biotronik sales officials were asking the company to design 'unscientific studies' to compete with producers offering sham studies 'as a means of funneling money to doctors.'

Influencing Device Choice by Making Referring Doctors Consultants

The Times report stated that the company's recent increase in sales was due to

the company’s success in developing relationships with doctors who, in turn, can influence which brand of device a patient gets.

Here is an example of one type of such a relationship:

The company’s relationship with a general cardiologist in Tucson, Dr. Monty C. Morales, is the subject of several memos.

In mid-2008, Biotronik retained Dr. Morales as a consultant under an arrangement that paid him up to $2,000 a month, company records indicate. And about that same time, Dr. Morales, who does not implant devices, expressed strong opinions about the implant brand his patients should get, according to a report apparently written by a sales representative for a Biotronik distributor called Western Medical.

In that memo, Dr. Morales is described as saying that he would not refer patients to an implant specialist in his same Tucson-area practice, Dr. Darren Peress, unless Dr. Peress started implanting Biotronik devices.

'Currently, Peress does not get any of Morales’ business,' the memo stated. 'Monty will strongly support use and send Peress business if he uses Biotronik.'

Also,

Among the Tucson-area implant specialists to whom Dr. Morales apparently referred his patients was Dr. Benigno F. Decena III, the Western Medical report indicates. Internal Biotronik sales data indicates that Dr. Decena’s usage of the company’s products rose sharply in 2009.

During the 12-month period from February 2009 to January 2010, the monetary value of the Biotronik devices used by Dr. Decena reached $1.1 million, an eightfold increase from the previous 12-month period, data shows.

Influencing Device Choice by Making Device Implanters Consultants

Here is a more direct example of making physicians consultants to influence them to then themselves implant more product.

The Times recently detailed in an article how four implant specialists in Las Vegas sharply increased their use of Biotronik devices in mid-2008, about the same time they became consultants. Those doctors said that it was the quality of Biotronik’s devices, not the payments they had received, that had influenced their choice of implants. Whatever the reason, Biotronik’s revenues apparently skyrocketed. By early 2010, the cumulative monetary value of company devices used by those four physicians alone reached about $16 million, internal Biotronik sales data indicates. [Note: see our post by Cetona on this here.]

The documents point to similar outcomes elsewhere.

An implant specialist in Fullerton, Calif., Duane E. Bridges, became a consultant to Biotronik in mid-2008, company records indicate. The monetary volume of company products used by Dr. Bridges from early 2008 to early 2009 reached about $360,000, then jumped to $1.6 million over the next 12-month period, a greater than fourfold rise, the company data indicates.

Dr. Bridges did not respond to comment; also a lawyer, Anthony Willoughby, who said he represented Dr. Bridges could not be reached for comment.

Another implant specialist who became a company consultant in mid-2008, Dr. Michael Brodsky of Irvine, Calif., increased the dollar value of Biotronik devices he used over those two periods, Biotronik data indicate. The value of company products used by another specialist who became a Biotronik consultant in mid-2008, Dr. Prash Jayaraj of Burbank, Calif., also doubled, company data indicate.

Cultivating Nepotism

Finally, here is the use of influence via creating family members' conflicts of interests.

a widely used industry practice: the hiring by a device maker of a doctor’s spouse or other relative. For example, in plotting strategies to gain sales at one California hospital, Biotronik officials suggested that an implant specialist, whose son and wife both worked for a competitor, might be wooed if Biotronik offered him concessions 'such as studies or even the hiring of his son,' according to an internal company report.

Another company document discussed how the revenues of a sales official sharply dropped after his father, an implant specialist, died unexpectedly in an airplane crash

Summary

Thus, the set of documents the Times obtained suggested that one small device company used a set of tactics to increase sales by influencing doctors to use its products.  The tactics employed included seeding trials, hiring referring doctors as consultants to influence proceduralists to whom they referred to use the company's products, hiring proceduralists directly as consultants to influence them to use the products, and hiring relatives of doctors to influence them to use the products or persuade others to use the products.

There is every reason to suspect that such systematic stealth marketing campaigns are prevalent throughout commercialized health care. We have mainly discussed them in terms of the promotion of pharmaceuticals. The examples above suggest they may be used as often to promote medical devices. There is every reason to think they may also be used to promote other health care goods or services.

This latest set of examples brings up two important points.

Physicians, other health care professionals, and health care academics are frequently employed as consultants. These relationships seemed to be looked up on with much favor not only by those directly involved, but also by the supervisors of those involved who are academic or hospital/ health system employees. Even people who find fault with certain kinds of conflicts of interest affecting health care professionals seem less concerned about consulting relationships  For example, the often cited article by Brennan et al which called for more stringent academic policies on conflicts of interest, including banning small gifts from industry, would allow consulting as long as it were governed by a contract with "specific deliverables," (See our post here.)

Yet we have seen repeated examples of consultancies which seem more designed to market products than actually provide specific consulting advice. We also recently have seen how consulting relationships can cloak third-party strategies used in stealth advocacy campaigns (see post here). So all this would suggest that one should be very skeptical about any consulting relationships by health care professionals or academics unless the reason for and nature of the consulting is very clear, and very clearly not related to marketing or public relations.

Finally, note that many apologists for conflicts of interest affecting health care professionals and academics argue that these relationships are inevitable byproducts of the collaboration with industry needed to drive innovation (e.g., see this post.) We have argued that collaboration does not require industry to pay its professional or academic collaborators. The example above shows how conflicts of interest may be created deliberately by commercial firms for marketing purposes. Such relationships do not appear to be "collaboration" necessary for "innovation."

Health care professionals and educators should think again about whether accepting gifts or money from organizations which sell health care products or services is worth the doubts that such incentives create.  Even if the relationship was not designed to promote a product or service, the desire for continued payments and gifts can influence professional decisions or academic opinions.  Worse, the increasing evidence about the prevalence of stealth marketing and advocacy suggests that any gift or payment not clearly in reciprocity for a very well defined technical service is likely to be a deliberate part of such a campaign.  Is the money really worth the doubts about professionalism and trustworthiness it may create? 

BLOGSCAN - Another Health Care Foundation Loses Its Way

From Gary Schwitzer's HealthNewsReview blog, an aggregation of stories that shows how the famous Susan G Komen For the Cure foundation has lost its way.  Not only is this organization using its financial resources to launch legal challenges to other charities that dare to use the phrase "for the cure," but it now has joined a corporate partnership to sell perfume.   It seems that no matter how well-intentioned a health care organization is, infuse it with enough money and fame, and watch things unravel.  Health care charities now seem to be no more resistant to mission amnesia than are academic medical institutions.