"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.

Administrators at Pepper Spray U Found to Have Violated Medical Professor's Academic Freedom

There they, the management of University of California - Davis, go again.

The Wilkes and Hoffman Op-Ed Questioning A University Sponsored Aggressive Prostate Cancer Screening Program

According to the Los Angeles Times, and a post in Inside Higher Ed, the trouble began when Dr Michael Wilkes, a professor of medicine at University of California - Davis, and Jerome Hoffman, a professor of emergency medicine, wrote an op-ed in the San Francisco Chronicle in 2010 questioning the wisdom of a program run by UC-Davis promoting aggressive screening for prostate cancer with the PSA test.  They brought up problems with using PSA for screening that have been known for a while, including the poor ability of the test to detect cancer, the inability of the test or of prostate biopsy performed in response to the test to differentiate aggressive prostate cancer from cancer that will not progress, which is more common, the risks of such biopsies, and the poor effectiveness of available prostate cancer treatments, compared with the frequency with which they produce harms.  All these issues have again been brought to the fore by US Preventive Services Taskforce's latest recommendations not to screen for prostate cancer, based on similar concerns.

Not only did Wilkes and Hoffman question the basis for the university sponsored program's aggressiveness, they speculated that it might have to do with money.  The program was sponsored not only by UC-Davis but by the American Urological Association Foundation.  In fact, that foundation's current corporate sponsors include:  Astellas Pharma, Inc., Endo Pharmaceuticals, Ferring Pharmaceuticals, Intuitive Surgical, Inc., Pfizer, Inc., and Qualigen, Inc., although the op-ed did not specifically list its commercial support.

The University Slap(p?)s Back

Nonetheless, per the Inside Higher Ed post,

Michael Wilkes received an e-mail from an administrator at the University of California at Davis. Wilkes, a professor at the medical school, was told that he would no longer lead a program sequence that taught better patient care, and support for a Hungarian student exchange program he headed would be withdrawn.

Within weeks, Wilkes was told that he would be removed as director of global health for the UC Davis Health System. He also received letters from the university’s health system counsel suggesting that the university could potentially sue him for defamation over the op-ed.

Again, this occurred despite the facts that many distinguished people have questioned the wisdom of aggressive prostate cancer screening, and that this particular prostate cancer program was supported by an organization that in turn is supported by money from pharmaceutical devices and drug companies that may stand to gain from selling drugs and devices related to screening for prostate cancer, and the diagnosis and treatment of such cancer. Wilkes and Hoffman were raising valid clinical and policy concerns about the public actions of a government-supported university, in my humble opinion.

Thus the university lawyer's apparent threat of defamation suits thus appears to be a SLAPP, a threat of strategic litigation against public participation. In California, a 1993 law provides recourse for people who have been threatened with SLAPPs (look here).

The Faculty Committee Responds

Regardless, Prof Wilkes filed an internal complaint, and again, per Inside Higher Ed,

Now, a committee on academic freedom at the university that investigated allegations of intimidation and harassment against Wilkes has found them to be true. The faculty committee said in its report, a copy of which was obtained by Inside Higher Ed, that the actions of the university administrators cast doubt on its ability to be a 'truthful and accountable purveyor of knowledge and services.'

The group has asked the dean and other top officials at the university’s school of medicine to write letters of apology to the professor, admit to errors of judgment, stop proposed disciplinary actions against him and take steps to prevent future violations of academic freedom. This week, representatives of the university’s Academic Senate are expected to vote on similar resolutions against the administrators.

Now, according to the LA Times,

The next step is up to campus Executive Vice Chancellor Ralph Hexter, who in consultation with Chancellor Linda P.B. Katehi is expected to decide by fall whether to impose any discipline on the medical school executives, campus officials said.

Good luck with that.

The Context at UC-Davis

I would be surprised if any such punishment occurs. After all, UC-Davis has a record of not tolerating dissent, but tolerating administrators who suppress such dissent.  We have previously discussed:
- How the UC-Davis police infamously pepper sprayed peaceful student demonstrators, apparently at least partially in response to Chancellor Katehi's vague orders to clear the campus (see post here).
- A subsequent report blamed this incident on incompetent, or worse leadership by Katehi's administration, but so far it is not obvious that this has lead to any changes (see post here).
- How UC-Davis adminstrators tried to punish a medical student who got in a dispute with an overly officious student who apparently was "monitoring" his actions on an email list server, apparently on behalf of the administration, invoking "professionalism" as if that meant blind obedience to academic administrators (see post here).

Furthemore, Chancellor Katehi has a record of her own relationships to industry.  Here we noted that she sits on the board of a large publishing conglomerate that includes a medical education and communication company (a MECC) as a subsidy.  So I suspect she may not rush to punish subordinate executives because they suppressed criticism of the role of commercial money in medical academics.

Summary

So UC-Davis seems to be another academic medical institution run by people more interested in bringing in commercial support than the academic medical mission, including the support of free speech and academic freedom.  Its case is another example of how leadership that seems hostile to the mission in one instance is likely to be hostile to the mission in other instances.

Here I summarized what I believe to be the real threats against professionalism in the academic medical context.  As we have said again and again, true health care reform would encourage leadership who understand the mission and will put its support ahead of financial concerns and ahead of their own self-interest.

See also posts in the Health News Review blog, and the University Diaries 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.

A Conference on the Psychology of Deception and Unethical Behavior

The Deception, Incentives and Behavior Conference at the Rady School of Management, University of California - San Diego, was attended by over 100 people, including me, indicating that there is real interest in studying deception and unethical behavior in the real world. 

Several presentations had implications for health care, summarized below by theme (titles of presentations follow entries in parentheses).

Context

Several presentations discussed how context affects peoples' inclination to be honest or dishonest. 

Alexander Cappelan,  Norwegian School of Economics, showed evoking a market context, that is, asking people to think about buying or selling something, increased dishonesty, while a personal or intuitive context decreased dishonesty (When do people tell white lies?).

John List, University of Chicago, USA, gave the first plenary talk, suggesting that simply reminding charity fund raisers about the mission of their organization decreased their likelihood of stealing contributions.

Shahar Ayal, Interdisciplinary Center Herzliya, Israel, suggested that when people can present themselves as ethical, sometimes extremely, maybe harshly ethical in one context, they may then act unethically in another context. (Moral cleansing strategies for ethical dissonance.)

Erin Krupka, University of Michigan, suggested that the availability of voluntary regulation may increase cheating: those who do not cheat may volunteer for regulation, while those who do cheat may point to the availability of regulation. (License to cheat: voluntary regulation and ethical behavior.)

Chen-Bo Zhong, University of Toronto, Canada suggested that being able to delegate increases the likelihood of deception (Deception: an unintended consequence of delegation.)

Keith Murningham, Kellogg School of Management, suggested that priming people by asking them to perform mathematical calculations increases lying, while priming them by reminders about social awareness or family values does not. (The social and ethical consequences of a calculative mindset.)

Incentives

Several  presentations suggested various ways in which incentives may affect honesty.

David Cooper, Florida State University, USA, suggested that the need for long-term credibility may decrease lying.  (Managing credibility: an experiment in leadership and coordination.)

Jan Potters, Tilburg University, Netherlands, suggested that increasing size of incentives to advisors increases the likelihood of their dishonesty when giving advice. (Disclosing advisors' interests neither helps nor hurts.)

Anastasia Danilov, University of Cologne, Germany, suggested that people who get incentives as part of a team who identify most strongly with the team are more likely to lie.  (The dark side of team identity: expermiental evidence from financial service professionals.)

Bill Nielson, University of Tennessee, USA, suggested that people will respond to short-term incentives even at the cost of long-term outcomes. (Temptation, learning and backward induction in sequential decision tasks.)

Michael Vlassopoulos, University of Southampton, UK, suggested that people who get random bonuses, that is, whose incentives are not clearly tied to particular outcomes, are more likely to cheat employers.  (The impact of bonuses on effort provision and cheating.) 

Lisa Ordonez, University of Arizona, USA, suggested that basing incentives on achievement of short-term goals (pay for performance) increases lying about performance. (The impact of goals on ethical behavior.)

Conflicts of Interest

Two presenations discussed conflicts of interest and its effects.

Jan Potters (see above) also found that disclosure of payments to advisors did not not lead them to give more honest advice.

Miriam Mezger, University of Cologne, Germany, presented a poster that suggested that when people must make decisions based on a mixture of advice from unbiased lay-people and conflicted individuals who do not disclose their conflicts, addition of advice from unbiased experts leads to better decisions.(Can experts reduce the impact of deceptive ratings on the internet? - an experiment on product choice with recommendations by managers and experts.)

Summary

The enthusiasm and level of intellectual engagement at the meeting suggested the importance of this field.  However, it was disappointing, but not surprising that the attendance at this meeting did not suggest this topic is yet of concern in health care.  Although the opening remarks by the Dean of the Rady School included a call for participation by people from health care, and other fields such as environmental science, I may have been the only person attending with a health care affiliation. 

Health care could benefit from increased attention to deception, dishonesty and unethical conduct in the field, how it happens, and what can be done to prevent it.  However, as we have often suggested, discussion of such topics is often anechoic because its capacity to offend or threaten those who most benefit from the status quo in health care. 

It was striking that presentations suggested that many practices in our current US commercialized, business-focused health care system may be leading to increased dishonesty and other unethical behavior.  These include thinking about health care in business and quantitative contexts, not in the context of the health care mission to help patients and the public, focus and incentives based on short-term goals, often revenue, and acceptance of conflicts of interest as inevitable and necessary to increase innovation.

Of course, these particular ideas may not make many of our current health care leaders happy.

They do suggest that we could improve honesty and ethics in health care by reminding peole with decision-making authority of the centrality of the health care mission, and the need to improve patients' and the public's health, and to de-emphasize focus and incentives on short-term goals, particularly financial ones.  We also ought to try to minimize, not just tolerate and "manage" conflicts of interest.

How the Anechoic Effect May Be Generated - The Chairman of a Hospital Board Buys a Newspaper

We have often noted that stories about problems with the leadership and governance of health care tend to be anechoic. That is, they tend to get less notice and generate less discussion than their content would seem to warrant. We have postulated that this has to do with fear of offending the rich and powerful who now lead and govern health care organizations, and the benefits, which may be produced by conflicts of interest, of maintaining good relationships with the rich powerful.

Did a Newspaper Delay a Story Unfavorable to its Prospective Buyer?

A story that has been emerging in bits and pieces over the last two months shows the sort of complex machinations that may generate the anechoic effect.

In February, 2012, a New York Times story raised questions about how a bid to purchase a big city newspaper by a group of well-connected and wealthy buyers would affect news coverage.  The big city newspaper was the Philadelphia Inquirer.  The group bidding to buy it was:

made up of the area’s most powerful Democrats.

Edward G. Rendell, the former Philadelphia mayor and Pennsylvania governor leads the group, which includes George E. Norcross III, a Democratic powerbroker in South New Jersey;...

The Times suggested that the Inquirer's coverage was being influenced by the proposed buyers before they had completed the sale:

Last week, Gregory J. Osberg, chief executive and publisher of the Philadelphia Media Network, which publishes The Inquirer, The Daily News and Philly.com, summoned the news organization’s three most senior editors to his office.

Over three hours, he told them he would be overseeing all articles related to the newspapers’ impending sale. If any articles ran without his approval, the editors would be fired, according to several editors and reporters briefed on the meeting who did not want to be identified criticizing the company’s leadership.

In a telephone interview Wednesday morning, Mr. Osberg said the meeting did not happen. But Larry Platt, editor of The Daily News and one of the editors in attendance, said that it did. Late Wednesday, Mr. Osberg acknowledged that the meeting had taken place but denied interfering in the editorial decisions, saying he only wished to be notified of further coverage. Mr. Platt declined to comment on specifics, but said, 'We fought for what we believed in,' referring to editorial independence, 'and we didn’t get all that we wanted.'

A Story About Who Benefits from How a Hospital is Lead

This is directly relevant to the anechoic effect in health care. Per the Times,

An investigation about conflicts of interest among board members of the Cooper University Hospital in nearby Camden, N.J., remains unpublished after months. Mr. Norcross serves as the hospital’s chairman.

In an e-mail Mr. Norcross, who has called The Inquirer and The Daily News in the last week to discuss other coverage, said the reporter’s research 'contained significant factual errors and incomplete data about the hospital and health care industry.'

The allegedly suppressed story finally came out in late March. In its published form it implied that Mr Norcross had an outsized influence on hospital operations, the hospital had business relationships with people who donated to political causes and organizations favored by Norcross, the hospital seemed to disproportionately benefit from government money and actions, and the hospital's board was afflicted by numerous conflicts of interest.

Norcross' Influence on Hospital Management

Per the Inquirer,

With Cooper suffering from record deficits, Norcross, then a top executive at Commerce Bank, helped bring the hospital back from the brink in 1999 when he arranged for the bank to lend it $8 million.

Since then, Norcross has put his imprint all over Cooper, from its lavish marketing, to its competitive fight to lure doctors, to its recent $450 million construction boom, to the political figures who work at Cooper and serve on its board.

Just as he was one of the first pols to spend heavily on television ads for lowly county races, Norcross was among the first to sell a hospital on TV, deploying Kelly Ripa as Cooper's pitchwoman. As it happens, she's the daughter of Joseph Ripa, the Democratic Camden County Clerk.

The milestones have been coming faster. The medical school, a must-have for any hospital with big ambitions, is finally gearing up. This year, work began on a $100 million cancer center.

The concern is that Mr Norcross was influencing operations in ways that happened to benefit his interests. Note that this contrasts with a number of cases we have discussed in which health care organizations' boards often seen too deferential to the organizations' hired leaders.


Hospital's Relationships with Political Donors

The Inquirer reported these instances,

With its heavy capital spending and big operating budget, Cooper has become an economic powerhouse. It throws off millions in fees and contracts.

Consider Cooper's heavy borrowing to pay for all that expansion. In the last decade, Cooper's bond sales have generated $5.1 million in fees to a variety of law firms, title companies, and financial advisers. On top of that, the hospital has handed out big-ticket contracts for other legal work, such as malpractice defense, its public disclosures show.

Many of those who received work via Cooper are major political donors, giving across the state to both parties. But they have been especially generous in Camden County, Norcross' home base.

During the last decade, firms involved with Cooper have given more than $1.5 million to Camden County Democrats.

As an example, lawyers at Cozen O'Connor, a Philadelphia firm that worked on four Cooper bond issues, have given Camden Democrats $115,060 since 2002. That represented more than 70 percent of its local political contributions in New Jersey. A Cozen spokeswoman said all donations reflected candidates' merits.

In interviews, Norcross conceded he had input into who was selected to work on hospital bond issues, managed by state and local authorities.

'Have I made recommendations of quality firms?' he said. 'Absolutely.'

But he insists that firms are selected solely on ability and that political donations were irrelevant.

"These people have been making major, sizable donations to the Democratic Party in this region long before any bond issue," he said.

Lawyers offer varying explanations for their giving.

Attorney Steven Weinstein, formerly with the Philadelphia firm of Blank Rome, has given steadily to South Jersey Democrats over the years, public records show. His giving hit a peak, in 2004 when he gave $30,000 to the Camden County Democratic Committee.

The following year, Blank Rome was named one of four law firms to work on a $135 million Cooper bond issue, representing the investment firm Goldman Sachs.

In the six years since, Weinstein's donations to Camden County Democrats came only to $2,850.

Weinstein said his donations had no connection to Blank Rome.

But David Lebor, another former Blank Rome partner who joined Weinstein in making Camden County donations in 2004, said the firm would sometimes request that lawyers make specific contributions. Lebor said he didn't know the firm's motives for making requests. 'I don't ask those questions,' he said.

The implication is that Mr Norcross was using his control over the hospital to fulfill his political agenda.

Favorable Relationships with Government

The Inquirer documented instances which seemed to show that the hospital seemed to be treated disproportionately well by government, for example,

Late last year, the Delaware River Port Authority, its once-vast development kitty finally running dry, approved its last round of project spending. Among the lucky few recipients: Cooper University Hospital. It got $6 million for the cancer center.

No other hospital in New Jersey or Pennsylvania has ever received DRPA assistance, the authority says.

The DRPA money was one of many ways in which Cooper has benefited from government action during the Norcross era. This year, Cooper received $52 million in state funding, more than any hospital in South Jersey - and in the top five for all 72 New Jersey hospitals.

And U.S. Rep. Rob Andrews (D., Camden) has set aside $640,000 in federal earmarks for Cooper over the last decade, the most of any hospital in his district. Another Camden hospital, Our Lady of Lourdes, received nothing.

The Board's Conflicts of Interest

The Inquirer article noted,

[Cooper Health System CEO John P] Sheridan's old law firm, Riker Danzig Scherer Hyland & Perretti L.L.P., has been a paid lobbyist for Cooper for at least a decade. More recently, the hospital put another firm on its roster.

It didn't look far to make the hire.

In 2010, Cooper added Republican lobbyist Jeff Michaels to the team. In another lobbying venture, he is the partner of [George] Norcross' brother Philip.

The hospital has paid the firm solely operated by Michaels $180,000 over the last two years.

Beyond that,

As Cooper has spent its millions, hospital insiders have frequently been on the receiving end.

From 2008 to 2010 Cooper paid more than $40 million to companies tied to the hospital's board of trustees, according to public-disclosure documents the hospital filed with the IRS.

The payments included:

$1.6 million to Norcross' Marlton insurance brokerage, Conner Strong and Buckelew.

$1.8 million to the Parker McKay law firm, where Philip Norcross is the firm's chief executive.

$4.6 million to the former Commerce Bank and its successor, TD Bank. Norcross and a former Cooper board member were top executives at Commerce.

$277,000 to Riker Danzig, where Sheridan was once a law partner.

But of the millions in payments, the largest share - $33 million - went to a joint venture between international construction giant Turner Construction and HSC Construction and Builders in Exton.

Former board member Edward Viner's son, Jim, serves as president of HSC.

Most of the money was passed through to subcontractors and the joint venture was paid $2.8 million in fees, Cooper said.

In 2008 and 2009, the last years for which regional data were available, Cooper initially reported more of what the IRS calls 'Interested Persons' transactions than any hospital in the Philadelphia area.

This again suggests that the hospital may be run such that board members' financial interests are put ahead of other concerns.

Summary

According to BoardSource, the duties of boards of trustees of non-profit organizations include:

- Duty of Care

The duty of care describes the level of competence that is expected of a board member, and is commonly expressed as the duty of "care that an ordinarily prudent person would exercise in a like position and under similar circumstances." This means that a board member owes the duty to exercise reasonable care when he or she makes a decision as a steward of the organization.

-Duty of Loyalty

The duty of loyalty is a standard of faithfulness; a board member must give undivided allegiance when making decisions affecting the organization. This means that a board member can never use information obtained as a member for personal gain, but must act in the best interests of the organization.

-Duty of Obedience

The duty of obedience requires board members to be faithful to the organization's mission. They are not permitted to act in a way that is inconsistent with the central goals of the organization. A basis for this rule lies in the public's trust that the organization will manage donated funds to fulfill the organization's mission.

The delayed Inquirer story suggests that instead, those who are supposed to steward large health care organizations may be putting their own interests, political or financial, ahead of the mission, potentially violating their duties of loyalty and obedience. This story corroborates questions we have been raising about who now are the stewards of health care organizations, and to what ends.

However, this particular story appears to have been delayed, and perhaps diluted, because of the power wielded by the sorts of people who now are supposed to be stewards of health care organizations. This shows how powerful insiders not only are distorting health care to fit their own agendas, but that they may be smothering the discussion of this vitally important issue.

We will not be able to truly reform health care until we can freely discuss what has gone wrong with it.

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.

Another Cautionary Tale about Conflicts of Interest: the CEO's Stretch Limousine, Golden Parachute, and Slush Fund

It remains fashionable in academic medicine to tolerate, if not celebrate conflicts of interest as necessary to support the "collaboration" needed for "innovation," while minimizing their risks (e.g., look here). 

Recently, another cautionary tale about how conflicts of interest signal the risk of all sorts of unpleasantness has appeared in the media.

A Sentinel Event: the First Conflicts Uncovered

In 2009, we wrote about some conflicts of interest at Wyckoff Heights Medical Center in my hometown of Brooklyn, NY.  The New York Daily News had reported that Dr. Addagada Rao, the hospital's chief of surgery was simultaneously the president and part-owner of a Caribbean medical school that funneled medical students to clerkships at Wyckoff.  The hospital's CEO, Rajiv Garg, was an investor in the same school.  At the time, I wrote,

This story illustrates another twist on conflicts of interest affecting the leaders of not-for-profit health care organizations. Many of the smaller not-for-profit hospitals, of which there are thousands in the US, may have minimal conflict of interest policies, which may be minimally enforced, without much transparency or accountability. The coziness of the leadership culture of such smaller institutions may preclude anyone within the culture from asking tough questions. The results may be total confusion as to whose interests particular leaders are serving. In particular, the interests of each hospital's patients may get lost in the shuffle. In this case, the interests of medical students may also get lost in the shuffle. Although the institutions involved may be small, and hence the conflicts may seem small in terms of their monetary value, they aggregate to contribute to the moral miasma that now is the atmosphere of health care.

You heard it here first.

The CEO's Golden Parachute

Fast forward to 2012. In January, the Daily News again reported that CEO Garg had been ousted, but that

Trustees at Wyckoff Heights Medical Center asked to consider a whopping $875,000 severance payout for its former CEO are balking at the package....

It seems that Garg's attorney claimed

They were on the verge of bankruptcy when he arrived. He reduced the debt by tens of millions of dollars.

However,

the hospital’s financial situation remains grim. According to the work group’s final report, Wyckoff’s liabilities are $91 million greater than its assets and it is saddled with $114 million in long-term debt.

So here is yet another example of a CEO personally profiting while his or her organization's finances fester.

The Chauffeured Cars, the Stretch Limousine

The the Daily News began chipping away at the other ways CEO Garg benefited from his leadership of the fiscally troubled hospital. A notable symbol of these benefits was a stretch limousine:

The ousted CEO of a debt-riddled Brooklyn hospital had his security guards ferry friends to the U.S. Open and his wife around town in a stretch limo, the Daily News has learned.

Rajiv Garg, the disgraced honcho of Wyckoff Heights Medical Center, also enjoyed his own commutes in the hospital-issued ride — a sleek, black $33,000 Lincoln Royale.

Garg rolled in style,

The beleaguered hospital bought the fancy car — equipped with a mini-bar, four champagne flutes and a fridge for chilling Dom Pérignon — last summer for Garg It also owned two other cars for his use, sources said.

Several times a week, the limo was dispatched to take Garg’s wife from her job near the hospital to the couple’s midtown apartment, said an employee.

Sometimes, it picked her up and then swung by the hospital to get Garg and whisk them to dinner before dropping them home, sources said. Two or three times a month, the limo picked her up at home and took her shopping.

'I haven’t had a raise in seven years,' said the employee. 'They always tell us they don’t have any money. They spent it on cars.'

The limo has comfy leather seats with room to spare for six passengers and a stereo system capable of drowning out highway noise when Garg and his wife were driven in it to Washington.

More Conflicts of Interest Discovered

Then the Daily News started to reveal conflicts of interest beyond the ones we discussed in 2009:

Then-trustee Frank Chiarello was in a partnership that loaned money to hospital entities, according to a list of board members’ conflicts the Daily News eyeballed. The $2.5 million loan had an 18% interest rate, sources said, costing the hospital hundreds of thousands of dollars.

Chiarello, a real estate exec, resigned from the board last week.

Another trustee who quit the board last week, attorney John Rucigay, serves as a lawyer for other trustees, owns real estate with other trustees, and rents space to the Polish and Slavic Federal Credit Union — whose head of operations is yet another Wyckoff trustee, Agnieszka Poslednik.

Additional trustees on the conflicts list first reported by Crain’s New York Business, include Andrew Boiselle, whose Cebco Check Cashing Corp. does check-cashing business with hospital employees, and attorney Fred Haller, who provides legal services to Wyckoff employees about issues not related to the hospital.

Slush Funds and Bribes

Last week, the Daily News reported about findings by a judge that the CEO kept slush funds used to pay bribes:

Wyckoff Heights Medical Center kept a secret bank account that a former CEO used to bribe a disgraced state assemblyman, an upstate judge said in a court decision.

Orange County Supreme Court Judge Elaine Slobod’s decisionk brought to light new details about the Bushwick hospital’s alleged dealings with Tony Seminerio (D-Far Rockaway), who died in a North Carolina prison last year.

The bank account used for the Stockholm St. hospital’s payoffs to the corrupt pol belonged to 397 Himrod Corporation.

Former Wyckoff board chairman Emil Rucigay originally set up the company to buy real estate for the hospital to turn into a parking lot, the judge’s order said.

The bank account was kept active — though the corporation was dissolved in 2001. The bank account still had approximately $130,000 in it in 2008.

“[Wyckoff’s] CEO was using monies in the Himrod account to bribe Seminerio,” Slobad wrote in her decision last week, referring to Dominick Gio, who was the hospital’s head honcho at the time.

Gio refused to talk a reporter last week. Wcykoff’s interim CEO Ramon Rodriguez also declined to comment.

Money from the Himrod account was used to make payments totaling $15,000 to Seminerio, other court filings charge.

A Lexus, a Bentley, Oh My

Then the story really hit the big time when the New York Times picked it up yesterday. That report added some colorful details about how magnificently the CEO traveled:

In August 2009, Mr. Garg said, he fell asleep at the wheel and crashed his Lexus into a truck. He then lost his license. Asked why in the interview, he said he was not certain, though he offered several explanations, including unpaid tickets and previous accidents.

He then used the hospital’s cars — a Lincoln Town Car and a Cadillac Escalade — for himself and his family around the clock. They were driven by two security guards on overtime, a hospital official said.

He parked his other car, the $160,000 Bentley, at Wyckoff and had the hospital put the vehicle on its own insurance policy.

The limo only came later,

Mr. Garg said in the interview that he suspected that the drivers of the Town Car and the Escalade were eavesdropping on his conversations. So he had the hospital purchase a used stretch limousine for about $33,000.

Yet More Conflicts of Interest Discovered

The Times story also found more conflicts of interest. Some involved CEO Garg:

Mr. Garg introduced hospital officials to Skyscape, a provider of mobile medical references, in which he had a financial interest. Wyckoff signed a contract with the company worth at least $38,700, hospital records show, though the deal eventually fell through.

Others involved hospital trustees. This example might have affected patient care at the hospital:

Dr. Theophine Abakporo arrived at Wyckoff in 1996 from Harlem Hospital to work in emergency medicine. Originally from Nigeria, he said he found his way to the top blocked by what he believed was a clique of doctors at Wyckoff.

In 2009, according to data provided by MapLight.org, Dr. Abakporo, an American citizen, began donating money to the campaign of Representative Edolphus Towns, the Democrat who represents a nearby area. Mr. Towns, a longtime board member of Wyckoff, had by then been replaced by his chief of staff, Albert Wiltshire, on the board.

Dr. Abakporo gave $1,000 to the Towns campaign, then $750, according to election records.

With Mr. Wiltshire’s support, Dr. Abakporo became chairman of emergency medical services.

This example might also have affected patient care:

With his solicitous manner and tailored sport jackets, Gary Goffner, a pharmacist who serves on Wyckoff’s board, has long endeared himself to customers and doctors alike.

He inherited his pharmacy, Kraupner, from his father, a prominent Bushwick landlord as well as a pharmacist, who died recently. It is an old-fashioned store, crammed with supplies, the opposite of an orderly Rite Aid.

It is also a half-mile walk from Wyckoff, a disadvantage Mr. Goffner overcame through a contract that gave him exclusive access to Wyckoff patients as they were being discharged, and allowed him to keep an employee at the hospital to promote his business.

In summary, the Times found,

According to internal hospital documents, 13 of the hospital’s 22 board members declared at least one conflict of interest.

Summary

So, from a single story about conflicts of interest affecting the CEO and a medical leader at the hospital, we have gone to stories about widespread conflicts of interest affecting the hospital's board and leadership, about lavish payments and benefits to the CEO while the hospital's finances suffered, and allegations (by a judge) of bribes and slush funds. 

Recall that the Institute of Medicine's report on conflicts of interest in medicine and health care defined conflicts of interest as “circumstances that create a risk that professional judgments or actions regarding a primary interest will be unduly influenced by a secondary interest.” While no particular conflict of interest is guaranteed to cause someone to abuse entrusted power, conflicts of interest create the risk of such abuse. The case of the leadership and governance of Wyckoff Heights Medical Center shows how such risks may manifest.

Yet we have noted again and again how leaders of supposedly mission-oriented non-profit medical organizations seem to be ignoring these risks while pursuing ever more money from health care corporations. We noted how the Chancellor of the University of California-San Francisco "has no qualms" about faculty's financial relationships with industry. Just this week at Brown University, my alma mater, while discussing a new conflicts of interest policy, we heard,

'People do have conflicts of interest, and it’s not the end of the world,' said Janet Blume, associate dean of the faculty.

Conflicts of interest may not lead to the apocalypse. However, they certainly may lead to all sorts of unpleasantness. As Joe Collier stated, “people who have conflicts of interest often find giving clear advice (or opinions) particularly difficult." Conflicts of interest clearly lead to conflicted, and confused thinking, and such thinking may lead to bad decisions, and hence bad outcomes for patients' and the public's health. Worse, as the IOM asserted, conflicts of interest are a risk factor for outright corruption.

True health care reform might start with a reasoned discussion, based as much as possible on evidence, about the risks as well as the supposed benefits of conflicts of interest affecting those who make decisions about individual patients' health care, and about public health and health care policy.

Logical Fallacies in Defense of the European Society of Cardiology's Lenient Approach to Conflicts of Interest

The European Society of Cardiology just published its recommendations for interactions between medical societies and industry.(1)   The report emphasized the supposed benefits of industry relationships and funding, and suggested few restrictions on current practices.  Like other defenses of leniency towards conflicts of interest, its arguments seemed to rest on a series of logical fallacies.  

Wonderful "Innovations ... Through Productive Collaboration" - Appeal to Belief and the Fallacy of Division

The report made several arguments about the benefits of professional - industrial interaction.  These included:

In recent decades, cardiology has been a fast-moving medical speciality. Many advances have come from basic and clinical research conducted by universities and by pharmaceutical and medical device companies. Innovations have been realized in part through productive collaborations between clinicians, academia, and industry. Such links are essential and need to be encouraged and supported by appropriate investment if medical progress is to be sustained.

The notion that interactions between physicians and industry is a source, perhaps the most important source of wonderful "innovations" is often used to justify the sorts of interactions, involving payments by industry to academia and physicians, that are now prevalent. In this report, this first appears as an assertion without any evidence to justify it.

Later, the report noted:

The Association of American Medical Colleges has stated that there are benefits from effective partnerships between industry and academic medical centres.

This statement came with a citation, to a 2008 report entitled "Industry Funding of Medical Education."(2) This AAMC report, in turn, contained many similar assertions, e.g.,

An effective and principled partnership between academic medical centers and various health industries is critical in order to realize fully the benefits of biomedical research and ensure continued advances in the prevention, diagnosis, and treatment of disease.

However, the AAMC report also failed to cite any evidence in support of these assertions.

There are two major problems with these assertions, which form the foundations of both reports. The first is they do not seem to have a clear evidence base.

While the notion that current research efforts marked by substantial interaction between physicians, academia and industry are producing wonderful innovations is appealing, what evidence there is suggests that clinically important innovation is rare. For example, I quote a 2009 review of global drug discovery by Light(3) on whether new drugs represent advances over older treatments:

the best evidence of clinical quality comes from systematic efforts to assess therapeutic advantage and adverse effects compared with existing drugs. A detailed analysis of therapeutic quality in new drugs over the past twenty years found that 14 percent of all new chemical entities are either therapeutic breakthroughs or substantially superior to existing medications. Likewise, a comprehensive review of all new drugs approved between 1989 and 2000 in the United States concluded that 14.8 percent were new chemical entities that provided significant clinical improvement, and a Canadian review board concluded that 10.7 percent of new chemical entities in 2000–2004 did so.

Thus while many new drugs are introduced, only a few introduced recently were chemically unique or had effects different than older treatments.  I would argue that most of these will prove not to be truly clinically innovative, in that good clinical research will not show that they produce substantial improvements in clinical outcomes without major adverse effects for a good number of patients with not uncommon problems.  (It is not hard to think of really important innovations developed before the era of major industry-academic-physician interactions: antisepsis for surgery, anesthesia for surgery, antibiotics, hormone replacement therapy with insulin, thyroid hormone, etc, smallpox vaccination, polio vaccination, etc, etc)  However, it is actually very hard to think of more than a handful of new drugs or devices discovered in the last 20 years which were that hugely innovative.  (The closest might be multi anti-viral drugs used to treat HIV, and Gleevec for chronic myelogenous leukemia.)  If there has been very little really important innovation in the last 20 plus year era of enhanced industry-academic-physician interactions, these collaborations could not have produced tremendous innovation. 

So the report's arguments rests on an assertion that is not clearly justified, and which appears to be at best a huge exaggeration. Resting an argument on a belief that is not further supported by evidence amounts to a obvious logical fallacy.  It is an appeal to belief.

Furthermore, while both reports emphasize physician-industry collaboration or interaction, there are many ways interaction or collaboration can occur without involving substantial payments by the latter to the former. It is possible for two people or organizations to work together without one paying the other.  Yet both reports use the broad assertions about interaction and collaboration to justify interactions and collaborations in which industry makes substantial payments to physicians or academic institutions. This appears to be an example of the fallacy of division, that is, an unjustified assertion that "what is true of a whole must also be true of its constituents."

CME Would Wither if Financing Were Reduced, and Industry is the Only Possible Source of Such Money - A Slippery Slope and a False Dilemma

The ESC report made the argument that without industry funding, CME would wither. For example,

Should Europe choose to follow the strategy proposed in the USA, severing links between industry and medical societies, CME could be severely compromised. Relying completely on public funding is not a viable option for Europe at the moment. The removal of industry support for medical associations would be followed by increased fees and reduced attendance at congresses especially by clinical trainees and young fellows. It is the view of the ESC that in the absence of alternative funding, or until alternative funding is identified, maintaining links with industry is appropriate....

The argument is that CME would fail if financial support for it would be reduced, and that industry is the only possible source of financial support at the current level. The notion that CME must inevitably fail if financing of it were reduced is a slippery slope fallacy, that is, a statement that a inevitably causes b when such inevitability is not proven. Why could not adequate CME be done at a lower cost, even if the result were less luxurious? Furthermore, the notion that industry is the only source of funding is a false dilemma fallacy. In fact, there are other possibly sources of funding. Given that physicians are among the world's best paid professionals, why could they not pay for their own CME?

"Conflicts of Interest are Unavoidable and ... They Cannot Be Abolished" - False Dilemma

The third major argument on which the report bases its recommendations is encapsulated above, and was buttressed by:

The risk of bias in medical education is not restricted to activities that are supported by industry. It can affect any type of scientific communication, even an educational meeting organized independently by a university or medical association.

Underlying these assertions seem to be extremely broad definitions of bias and conflicts of interest, coupled with unwillingness to see a distinction between trivial and serious varieties of each. This again appears to be a false dilemma. The distinctions should be between no conflicts, trivial conflicts, and serious conflicts, not between no conflicts and any conflicts, even if trivial.  This also could be called an example of how "the perfect is the enemy of the good."  Even if perfectly preventing all conflicts of interest is impossible, does this imply that preventing serious conflicts of interest is not worthwhile.   

Summary

We have noted that logical fallacies are increasingly deployed to defend the status quo in health care, and particularly to defend the interests of those who are profiting the most from the current dysfunctional system.  We have noted that several defenses of the conflicts of interest generated by financial relationships between physicians and medical academics on one hand and commercial health care firms on the other, were based on logical fallacies.  (See examples here, here,  here, and here.)  I have yet to see a coherent, logical, fact-based argument that the benefits for patients' and the public's health of physicians and medical academics working part-time as consultants, advisers, speakers, and directors of health care corporations outweigh the obvious risks of biasing medical decision making, education and research in favor of vested interests.

So we add to our ongoing series how, based on a series of logical fallacies, the European Society of Cardiology provided a series of recommendations that allowed nearly any kind of relationship among CME speakers and selection committees and industry, as long as the relationships were disclosed.  The only relationships banned were those "which would represent a significant conflict of interest" for the Chairperson of a Congress Programme Committee.  Similarly, the only stipulations for the society's cardiology journals were that interests affecting editors and editorial board members must be declared, and board members and reviewers should decline reviews of manuscripts "relating to topics, drugs, or devices, in which they have significant commercial of academic interests."  The rules for guideline committees were somewhat more rigorous, but "receipt of consultancy fees or fees for lecturing would not debar an individual from being a member of a committee but must be fully disclosed."

It is discouraging that the web of conflicts of interest that currently enmeshes much of academic medicine and many medical professionals is so heavily defended.  It is more discouraging that its defenders include so many prominent academics and practicing physicians.  It is more discouraging that so many well trained people resort to logical fallacies to make their arguments, and do so in prestigious scholarly journals.

Our continuing series about how logical fallacies are used to support the status quo and the powers that be in health care suggests, if nothing else, that health care professional education ought to include courses in logic.

Finally,  in 2011, I noted, "I have also yet to see an argument in favor of conflicts of interest made by anyone who does not have such conflicts."At least, however, up to that point I had not noted any such arguments made by people who had much power to enforce their views, as opposed to the ability to just express them.  Last month, however, I discussed how the leader of one of the most acclaimed US medical schools made an argument in support of conflicts of interest based on logical fallacies,  Now we have just seen such arguments made by the leaders of European cardiology.  The new paper suggested that disclosure is the best way to manage conflicts of interest.  True to this belief, the paper included a disclosure section that took up an entire journal page.

It seems likely that number and magnitude of ongoing commercial interests so disclosed may have influenced the content of the position paper.  Yet while it may be unsurprising, it is most disappointing that conflicts of interest are now being uncritically and illogically publicly defended by people in positions to exert so much influence on health care.

The noted cognitive psychologists George Loewenstein, Sunita Sah, and Daylian Cain just asserted in JAMA(4):

Conflicts of interest, including fee-for-service arrangements, are at the heart of the astronomical increases in health care costs in the United States, and transparency is not substitute for more substantive reform.

True health care reform requires such substantive reform of the financial arrangements among corporations that sell health care services or products and health care professionals, others who make decisions about patients' or the public's health, and academic health care institutions. To decide how to accomplish such reform, we need a better discussion informed by logic and evidence, sans logical fallacies. Those who lead health care ought to be able to participate in this discussion under these conditions.

References
1. ESC Board. Relations between professional medical associations and the health-care industry, concerning scientific communication and continuing medical education. Eur Heart J 2012; 33: 666-674. Link here.
2. Association of Americian Medical Colleges. Industry Funding of Medical Education. Washington, DC: AAMC, 2008. Link here.
3. Light DW. Global drug discovery: Europe is ahead. Health Aff 2009; 28: w969-w977. Link here.
4. Loewenstein G, Sah S, Cain DM. The unintended consequences of conflict of interest disclosure. JAMA 2012; 307: 669-670. Link here.

A Case Demonstrating Links Between Poor Governance, Conflicts of Interest, and Excess Executive Compensation at a Hospital System

The Salinas Valley Memorial Healthcare System in California first appeared on our radar in 2011 for not only giving an improbably large severance package to its CEO, but doing so two years before he actually retired.   At the time, hospital "officials" gave the usual sorts of justifications we see for huge executive compensation packages.  They suggested the CEO is brilliant, in particular, "gifted and experienced," and that to retain him they needed to pay "private sector-level benefits."  Then it turned out the system was rapidly raising the compensation of other executives while laying off employees who actually took care of patients. 

A Government Audit

Because the system, despite its title, is actually a local government agency, these controversies triggered not only outrage, but also a state audit.  The Los Angeles Times described its results. 

The audit found that the Salinas Valley Memorial Healthcare System regularly did business with firms that the board and top officials had financial stakes in — in some cases in apparent violation of state conflict-of-interest laws.

The report stated that Salinas Valley lacks sufficient safeguards against making decisions that violate conflict-of-interest laws, and that the district therefore can't guarantee 'that it's board members and executives do not experience personal financial gain from its transactions with businesses.'

The audit found 11 instances between 2006 and 2010 in which board members had reported economic ties — including stocks, salaries and other types of payments — to vendors with which the district did business.

Not all the cases represented violations of conflict-of-interest rules, state auditors said, but in two cases they found that officials may have broken the law.

One case involved former Chief Executive Samuel Downing, who had $50,000 in investments with 1st Capital Bank, an institution Salinas Valley and the executive agreed to deposit $1 million into.

In another case, the hospital made $5.6 million in disbursements to Rabobank, where a board member, Harry Wardwell, serves as a regional president and receives a salary of more than $100,000, according to his most recent statement of economic interest.

A San Jose Mercury News article listed some other problems found by the audit:

· Absence of a formal executive compensation policy despite paying its top administrators at the upper end of the industry scale. Downing received a nearly $5 million retirement payout, and other executives received generous pay topping out at $341,000 per year. The reported also cited supplemental pensions, which have been discontinued.

· Violations of state open-meeting laws as the board approved executive pay.

· Failure to ensure all employees who are required to file statements of economic interest had done so.

· Absence of a duly approved, legally binding conflict of interest code, which must be approved by the county Board of Supervisors. The report noted the hospital board instituted a properly approved code in December.

· Lack of proper documentation on the selection process for no-bid contracts, necessary to ensure the hospital gets the best value for its money. The report found only one of eight contracts reviewed during the audit included such documentation.

· Need for better oversight of hospital funding of community events, including the rationale for why and how they benefit Salinas Valley Memorial, to adhere to the ban on making gifts of public money. The report found the board delivered $54,000 to California Rodeo Salinas without any evidence it had considered how it furthered its public purposes.

Conclusions

First, this case should not be viewed as an indictment of hospitals run by local governments.  Rather than indicating that bad behavior is particularly likely at such hospitals, the fact that questionable behavior came to light at such a hospital is more likely due to better regulation of such hospitals leading to more transparency about them compared to other hospitals.  The regulations and laws governing the operations of non-profit hospitals not run by government agencies, or for-profit hospitals vary from US state to state.  To my knowledge, rarely do states strictly regulate conflicts of interest affecting, or require much transparency about governance at hospitals that are not government run.  There is a similar lack of state regulation of for-profit hospitals, and federal regulation of either non-profit or for-profit in these areas.  Thus it is extremely rare to see an audit or report about any non-governmental hospital like the one about Salinas Valley Memorial Healthcare.  Without the greater transparency produced by such investigations, there is little data about whether the practices seen at Salinas Valley are common at other hospitals, be they government run, non-profit and private, or for-profit.   

However, while this is just one case, it does allow an interesting comparison.  We have discussed the usual "talking points" proffered by management and boards to explain outsized compensation packages in health care.  They often include statements about the brilliance of the executives in question, almost never with any supporting evidence, and the need to pay "market" rates.  Although these, and other talking points may seem implausible, they are hard to challenge, because hospital and other health care organizations are usually able to conceal the processes which actually lead to compensation decisions. 

However, in this case there is documentation of problems with governance processes which may have plausibly enabled unjustified levels of compensation.  Failure to maintain processes to disclose and deal with conflicts of interest could increase the likelihood that conflicts would occur.  A board that included individuals who may have been personally profiting from their board membership might be inclined to go along to get along with the CEO.  Meeting in secret despite an open meeting law would prevent discovery of cronyism.

This case therefore suggests that governance that lacks transparency, accountability and integrity may lead to self-interested, conflicted leadership that responds to perverse incentives.  Such leadership is likely to pay more attention to its own interests than the health care mission, short-changing patients' and the public's health.

So once more with feeling.... 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. On the other hand, those who authorize, direct and implement bad behavior ought to suffer negative consequences sufficient to deter future bad behavior.

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.