Not "the Best and the Brightest" - Drug Marketers and the Creation of "Thought Leaders"

A combined investigative reporting effort by Pro Publica, partnering with the Boston Globe, Consumers Reports, the Chicago Tribune, National Public Radio, the Public Broadcasting System on seven major pharmaceutical companies' payments to doctors who make speeches on the companies' behalf has gotten a lot of press.  It inspired several separate reviews by news organizations in Colorado, Illinois, Minnesota, Ohio,Washington, etc on local doctors who were paid to talk.  Many of my fellow health care skeptic bloggers, including the Carlat Psychiatry Blog, Hooked: Ethics,Medicine and Pharma blog, the Health Beat blog, have been all over this story.

Yet I think it is reasonable to underline three important points.

Not the Brightest

Pharmaceutical and other health care corporations are fond of saying that the doctors they hire to give talks are the "best and the brightest," thought leaders respected by other physicians.  In fact, the lead article by Pro Publica suggested that some of these supposed "best and the brightest" have dubious credentials, indeed.

Some were not board-certified, and lacked credentials suggesting great expertise:

Among the top-paid speakers, some had impressive resumes, clearly demonstrating their expertise as researchers or specialists. But others did not –contrary to the standards the companies say they follow.

Forty five who earned in excess of $100,000 did not have board certification in any specialty, suggesting they had not completed advanced training and passed a comprehensive exam. Some of those doctors and others also lacked published research, academic appointments or leadership roles in professional societies.

In summary,

Pharma companies often say their physician salesmen are chosen for their expertise. Glaxo, for example, said it selects 'highly qualified experts in their field, well-respected by their peers and, in the case of speakers, good presenters.'

ProPublica found that some top speakers are experts mainly because the companies have deemed them such. Several acknowledge that they are regularly called upon because they are willing to speak when, where and how the companies need them to.

Not the Best

Worse, some of the pharmaceutical paid speakers had records of ethical problems.

A review of physician licensing records in the 15 most-populous states and three others found sanctions against more than 250 speakers, including some of the highest paid. Their misconduct included inappropriately prescribing drugs, providing poor care or having sex with patients. Some of the doctors had even lost their licenses.


More than 40 have received FDA warnings for research misconduct, lost hospital privileges or been convicted of crimes. And at least 20 more have had two or more malpractice judgments or settlements. This accounting is by no means complete; many state regulators don’t post these actions on their web sites.

The Pro Publica story lead with three disturbing anecdotes:

The Ohio medical board concluded [1] that pain physician William D. Leak had performed 'unnecessary' nerve tests on 20 patients and subjected some to 'an excessive number of invasive procedures,' including injections of agents that destroy nerve tissue.

Yet the finding, posted on the board’s public website, didn’t prevent Eli Lilly and Co. from using him as a promotional speaker and adviser. The company has paid him $85,450 since 2009.

In 2001, the U.S. Food and Drug Administration ordered [2] Pennsylvania doctor James I. McMillen to stop 'false or misleading' promotions of the painkiller Celebrex, saying he minimized risks and touted it for unapproved uses.

Still, three other leading drug makers paid the rheumatologist $224,163 over 18 months to deliver talks to other physicians about their drugs.

And in Georgia, a state appeals court in 2004 upheld [3] a hospital’s decision to kick Dr. Donald Ray Taylor off its staff. The anesthesiologist had admitted giving young female patients rectal and vaginal exams without documenting why. He’d also been accused of exposing women’s breasts during medical procedures. When confronted by a hospital official, Taylor said, 'Maybe I am a pervert, I honestly don’t know,' according to the appellate court ruling.

Last year, Taylor was Cephalon's third-highest-paid speaker out of more than 900. He received $142,050 in 2009 and another $52,400 through June.

It also included:

The Medical Board of California filed a public accusation against psychiatrist Karin Hastik in 2008 and placed her [8] on five years’ probation in May for gross negligence in her care of a patient. A monitor must observe her practice.

Kentucky’s medical board placed Dr. Van Breeding on probation [9] from 2005 to 2008. In a stipulation filed with the board, Breeding admits unethical and unprofessional conduct. Reviewing 23 patient records, a consultant found Breeding often that gave addictive pain killers without clear justification. He also voluntarily relinquished his Florida license.

New York’s medical board put Dr. Tulio Ortega on two years’ probation [10] in 2008 after he pleaded no contest to falsifying records to show he had treated four patients when he had not. Louisiana’s medical board, acting on the New York discipline, also put him on probation [11] this year.

Yet during 2009 and 2010, Hastik made $168,658 from Lilly, Glaxo and AstraZeneca. Ortega was paid $110,928 from Lilly and AstraZeneca. Breeding took in $37,497 from four of the firms.

The Biggest Prescribers = "Thought Leaders"

An accompanying NPR story suggested that most physicians are recruited as speakers because they are big prescribers of the drugs the companies want to market, with the expectation that they will be even bigger prescribers once they start giving paid talks. Furthermore, the companies' representatives use a carefully programmed psychological strategy to allow the physicians they recruit to think they are being paid as "thought leaders" to give educational talks.

Drug companies train representatives to approach a narrow set of doctors in a very specific way, using language that deliberately fosters this idea that the doctors who speak are educators, and not just educators, but the smartest of the smart.

For example, every drug representative interviewed for this story used the exact same phrase when approaching a doctor with a pitch to become a speaker: Each doctor approached to speak was told that he was being recruited to serve as a "thought leader."

This phrase, Webb says, seems to have incredible psychological power.

'When you do say 'thought leader' I think it's a huge ego boost for the physicians,' Webb says. 'It's like a feather in their cap. They get a lot from it.'

This is because most doctors have a very specific idea in mind when you ask them what constitutes a thought leader. Most doctors, including Clawson, cite two important qualifications. 'First, the other doctors in the community respect that person's opinion,' Clawson says. 'And the other way to become a 'thought leader' is to become an academic researcher and try to push the bounds of science further, and then by definition you're a thought leader.'

But some drug representatives, like Maher, have a more cynical view of why drug companies choose the doctors they choose. It's not about how well respected the doctor is, according to Maher; it's about how many prescriptions he writes.

'I think nowadays a thought leader is defined as a physician with a large patient population who can write a lot of pharmaceutical drugs. Period,' she says.

These "thought leaders" may find it comfortable to think that they are paid as experts to give educational talks, but really, they are paid to persuade themselves to prescribe more. If audiences prescribe more, it's just a bonus.

This doesn't mean that every doctor recruited is not a high-quality doctor. Many are. But every representative NPR spoke to had a stable of stories about profoundly unimpressive doctors that they'd recruited as thought leaders essentially for the same reason that a robber robs a bank: because that's where the money is.

The fact is that the top 20 doctors in a representative's territory prescribe the vast majority of the medication. According to Webb, the top 20 percent prescribe as much as the lower 80.

So if you want to sell more of your product, and every representative is required to sell more, those are the physicians to target.

Which brings us to the hard reality about doctor speaking: Although doctors believe that they are recruited to speak in order to persuade a room of their peers to consider a drug, one of the primary targets of speaking, if not the primary target, is the speaker himself.

That's where reps look for a real increase in prescriptions — after a speech.

Here's how the money works out, at least for Webb. It's hard to know whether he's typical because there haven't been any published studies of this subject. But according to Webb, he would give a high-prescribing doctor about $1,500 to speak. And following that speech, Webb would see the speaking doctor write an additional $100,000 to $200,000 in prescriptions of his company's drug.

Webb points out that the people recruited to speak are almost always high prescribers with incredibly high patient populations. 'That much money, easily,' he says. 'So yeah, it was a good return on investment.'

The article also suggested that most of the paid "thought leaders" do not realize on a conscious level how they have been bought.

Dr. James Dickie, an endocrinologist in Westminster, Md., was very clear that his prescription-writing was unaffected by speaking. 'Absolutely not. The physicians who are in the audience may notice it if they have been educated to that drug and the benefits of that drug — they may see an increase in writing. But specifically in my own? I don't believe so.'

When NPR told Dickie about the findings learned from drug reps like Maher and Webb, he seemed genuinely surprised and disturbed and began to wonder out loud if he was, in fact, affected.

'It would really bother me,' Dickie says. 'Because I perceive myself as always prescribing in the best interest of my patient, and even unconsciously if I was unduly influenced, that would really bother me. I usually pride myself on keeping up my guard to prevent undue influence.'

But Maher says it's almost impossible for a doctor to keep up his guard. She points out that before doctors speak to their peers about a drug, they review slides provided by the company and talk to the company medical officers. And this process, she says, focuses the doctor on the most positive aspects of a drug.

'What is happening is that you are being manipulated to talk about the drug out loud,' Maher says. 'Kind of like talking themselves into knowing that what they were saying, were actually believing. And if they believed what they were saying, then they would write more drug.'

Summary

Marketers, especially but not only pharmaceutical marketers, have become very adept at using psychology to manipulate their targets, so that marketing campaigns have begun to resemble disinformation campaigns.  Pharmaceutical marketers in particular have used their ability to convince physicians that they are "thought leaders," (or "key opinion leaders") to get physicians who are already favorably inclined toward their products to prescribe even more.  It is a bonus for the companies if these physicians can also persuade other physicians to prescribe more.  The fact that these supposed "thought leaders" have become real leaders of medicine, to a great extent on the basis of marketers' decisions (also abetted in the academic setting by medical schools' and academic medical centers' love of "external funding," including the sort supplied by marketers to "thought leaders", see this post) is the perhaps unintended but unhappy consequence.  Thus the leaders of medicine and health care are more and more those doctors who are most compliant with and least questioning of pharmaceutical (and other health care) companies' marketing. 

No wonder the leadership of medicine has been so passive as health care has become more dysfunctional.

What is to be done?

-  Physicians and others who are paid to give talks by commercial firms must read the series of articles noted above. 
-  We need to be very skeptical of all "thought leaders" and "key opinion leaders," especially if it is not clear whether they were first dubbed as such by marketers rather than by their own achievements.
-  We need as rapidly as possible to mandate full disclosure of all payments by health care corporations others with vested interests in promoting products or services to physicians, academics, and others with decision making ability or influence in medicine and health care.
-  Hopefully full disclosure of the scope of the thus revealed conflicts of interest will persuade health care professionals and society that we need to eliminate such conflicts, allowing professionals to eventually return to their once respected status as those pledged to put their patients' (rather than their financial backers') interests first. 

JAMIA: Health information technology: fallacies and sober realities

A superb, well-researched, and I believe watershed position paper in JAMIA was just published. I will briefly cover its major points due to current time limitations (ironically, I have an elderly health IT-injured mother to tend to). However I did want to make readers aware of the paper.

The paper nukes the health IT industry myths, memes and cavalier business practices that I find so disappointing.

The article organizes many of the themes around HIT myths, irrational exuberances and marketing memes into one coherent position paper (unfortunately, free fulltext is not yet available online that I can locate, but if you can obtain the article, it is a must-read):

J Am Med Inform Assoc. 2010 Nov 1;17(6):617-23.

Health information technology: fallacies and sober realities (link)

Karsh BT, Weinger MB, Abbott PA, Wears RL.

Department of Industrial and Systems Engineering and Systems Engineering Initiative for Patient Safety, University of Wisconsin, Madison, Wisconsin, USA.

Abstract

Current research suggests that the rate of adoption of health information technology (HIT) is low, and that HIT may not have the touted beneficial effects on quality of care or costs. The twin issues of the failure of HIT adoption and of HIT efficacy stem primarily from a series of fallacies about HIT. [Not discussed are the origins and maintenance vectors of those fallacies, a topic for significant research itself - ed.] We discuss 12 HIT fallacies and their implications for design and implementation. These fallacies must be understood and addressed for HIT to yield better results. Foundational cognitive and human factors engineering research and development are essential to better inform HIT development, deployment, and use.

PMID: 20962121 [PubMed - in process]

The article presents a series of HIT "fallacies" akin to the logical fallacies lists often referenced at this blog including:

THE ‘RISK FREE HIT’ FALLACY
THE ‘HIT IS NOT A DEVICE’ FALLACY
THE ‘LEARNED INTERMEDIARY’ FALLACY
THE ‘BAD APPLE’ FALLACY'
THE ‘USE EQUALS SUCCESS’ FALLACY
THE ‘MESSY DESK’ FALLACY (i.e., the fallacy that medicine is neat and linear)
THE ‘FATHER KNOWS BEST’ FALLACY
THE ‘FIELD OF DREAMS’ FALLACY
THE ‘ONE SIZE FITS ALL’ FALLACY
THE ‘WE COMPUTERIZED THE PAPER, SO WE CAN GO PAPERLESS’ FALLACY

I will write more about the paper in a future posting. However, readers of this blog, where I've covered these issues, can probably ascertain the meanings of these fallacies regarding health IT without further explanation.

Addendum 10/29: This is not just a "what is wrong with health IT" paper. The paper points out that insufficient contextual research has been conducted to support effective commercial HIT design and implementation despite decades of exemplary research on these topics, and suggests a path to remediation.

At the most fundamental level, HIT must be focused on transforming care and improving patient outcomes and must be designed to support the needs of clinicians and their patients. For example:

• The needs of users and the complexities of clinical work must be analyzed first, followed by evaluation of the entire scope of potential solutions, rather than examining the current array of available products and characterizing the needs that they might meet.
• Appropriate metrics for HIT success should not be adoption or usage, but rather impact on health.
  
• The ‘comparative effectiveness’ perspective must also be applied to HIT - what is the return-on-investment of each HIT initiative compared with alternative uses of these funds?
  
• There must be substantive collaboration with those who can contribute unique and important expertise such as human factors engineers, applied psychologists, medical sociologists, communication scientists, cognitive scientists, and interaction designers.
• During HIT development, vendors and healthcare organizations must focus on more meaningful measures of design success: clinician and patient ease of learning, time to find information, time to solve relevant clinical problems, use errors, accuracy of found information, changes in task and information flow, workload, situation awareness, communication and coordination effectiveness, and patient and clinician
  satisfaction.
• We must also consider the likely undesirable consequences of current policies and regulations on HIT advancement, e.g., hold harmless clauses.
  

If you have access to JAMIA via a library, I recommend downloading the article and reading it.

What will be interesting is the healthcare IT industry and government response, and the response of those with financial interests in pushing for rapid HIT diffusion along HITECH timelines (the "Bullet train out of the station with only a quarter mile of track" fallacy...)

-- SS

10/31/10 addendum

For a pro-industry alternate view on the importance and credibility of this article, see the Review posted on the HisTALK site by its owner at Monday Morning Update 11/1/10, approximately at the halfway mark.

My major concern with the review is not just on its internal logic and anti-academic, academics-automatically-hate-business bias (having been employed in academia, the healthcare IT industry and in Big Pharma myself, I see multiple perspectives).

... The authors of this paper are academics. I like their objectivity, but I’m left with the feeling that they are disillusioned about this fact that is distasteful to them: both healthcare and healthcare IT are businesses that, rightly or wrongly, make decisions based on their own self-preservation, not high-minded academic ideals. [Such as the Hippocratic oath - ed.]

My other concern is the review's taking on the JAMIA article in isolation, ignoring the increasing body of other literature up to the National Reseaarch Council (quoted at the beginning of the Karsh article) shedding doubt on HIT beneficence, effectiveness and ROI, and the statements of the Healthcare IT industry itself such as:

HIMSS's former Chairman of the Board Barry Chaiken admitting the technology remains experimental:

... We’re still learning, in healthcare, about that user interface. We’re still learning about how to put the applications together in a clinical workflow that’s going to be valuable to the patients and to the people who are providing care. Let’s be patient. Let’s give them a chance to figure out the right way to do this. Let’s give the application providers an opportunity to make this better;

and a HIMSS task force itself admitting in this 2009 PDF report that:

"Electronic medical record (EMR)!adoption rates have been slower than expected in the United States, especially in comparison to other industry sectors and other developed countries. A key reason, aside from initial costs and lost productivity during EMR implementation, is lack of efficiency and usability of EMRs currently available";

It seems that from the ethical point of view, when industry leaders themselves express doubts in their own products, the responsible position is to err on the side of caution.

-- SS

Why I find the healthcare IT industry so disappointing

At "Background On The 'Ecosystem' of Commercial Healthcare IT" I wrote:

... In reading about HIT difficulties it is important to understand the “ecosystem” of commercial health IT, that is, the identity and nature of the principal constituents and stakeholders, and their interrelationships. Familiarity with this environment is useful in order to place the social and organizational issues affecting HIT diffusion in the proper context.

By implication, I made the case that the commercial HIT ecosystem was far from healthy.

Recently at Healthcare Renewal and at another blog I visit, HISTalk, frequented largely by IT industry workers and officials, I've noted an uptick in comments from anonymous commenters that resort to ad hominem, strawman arguments, or other forms of logical fallacy in a fairly clear cut attempt not to seriously debate the issues but to de-legitimize serious arguments. I generally respond to such comments, but a few have been so debased here that I have simply deleted them.

Here is an example of a duplicitous strawman argument recently posted at the aforementioned other site with regard to my HC Renewal post "21st century EMR experiments: screwing around with people's lives in a broke city, while not having a clue what you're doing":

... Jumping to conspiracy theories about cover-ups whenever there is an IT problem acknowledged by an organization does not really help improve the state of health IT.

I find the sicknesses of the commercial health IT ecosystem very disappointing and, in fact, revolting due to the implications for patients.

Perhaps a little background as to why I feel that way is in order.

Note:

I believe my background is not too dissimilar from the background of many physicians, who have had similar experiences. The following is therefore not so much about me, but about the challenges of medical training and practice in general and the life experiences imparted:

Pre- informatics, while a resident at Abington Memorial Hospital in Pennsylvania and then as a Manager in a regional transit authority’s medical department, I handled situations such as these:

• Being admitting officer in the ED in the busiest night, ever, in the hospital’s history to that time, New Years Eve 1985-6, having to see perhaps a hundred patients and admit ~ 30. The ED staff needed to -- and did -- perform flawlessly after participating in the highly upsetting and depressing, unsuccessful resuscitation effort of a medical colleague shot in the chest in his home (link) around midnight. It was I who performed heart massage on him -- open-chest style -- with my gloved hands after the surgeons on the trauma team cracked his chest;
  

• Running three near-simultaneous cardiac arrests in the ICU’s during family visiting hours, while being trailed by a Mennonite minister-in-training as an observer. Dealing with the patients' crises and their families was not easy and in fact was extremely stressful. The minister-in-training at the end of it all after several hours stated he was amazed at how I and the intern I was overseeing kept our cool during the affair;
  

• Not telling an intern colleague on the telephone whose mother I’d just declared deceased in the MICU that she had died, because his call was coming from his father’s funeral. His father had died a few days before in the CCU right next door, previously healthy but having had an MI from the stress of his wife's condition. (The intern later thanked me for not telling him about his mother's death until after dad's funeral).

• Repairing a malfunctioning GE CT scanner's computer to get it up and running late one Sunday might ca. 1986, which permitted a life-saving CT scan of the head of an unidentified young man brought in in a delirious state. A repairman left near midnight and said it was fixed, but it was not, and service, I was told, was unavailable between midnight and 7 AM Sun-Mon. so he could not be called back. I'm not sure if this was a vendor policy or a contractual issue (either of which would reflect Titanic lifeboat-like stupidity, since people need CT scans 24x7), but due to radiology training and computer expertise I knew what the problem was and fixed it, going above and beyond the call of duty of an internal medicine resident.
  

• Dealing strongly and firmly with militant labor union leaders and drug-troubled vehicle and train operators as Mgr. of Medical Programs and drug testing in a large regional transit authority. I was very firm in my stance about keeping these operators off the street, and getting them help, to protect the public from possible catastrophe. I was threatened more than once, including being threatened with my life, by operators I had to put out of service.

• Standing up to a police officer and a FOP union official regarding what I believed was gross exaggeration of a minor injury, with no objective findings to substantiate the reported symptoms, multiple inconsistent findings on exam (indicative of 'acting'), and ongoing injury-clinic (a.k.a. fraud-factory) hot pack and massage "treatments" for more than a year, to take advantage of the injury compensation system. This type of activity was unfair to truly injured personnel, to the city that had to pay for these activities at the expense of other needed services, and to the taxpayer.
  

Experiences such as this impart a sense of the fragility of life, of responsibility, obligation, and an understanding of the need for critical thinking and serious and uncompromising attitudes where patients are concerned into physicians of good character.

(Somehow, the hospital, pharmaceutical and medical device executives written about at Healthcare Renewal seem to have missed those points in their own life experiences.)

Most serious, critical-thinking physicians thus would find irrational arguments coming from the HIT industry, marketing spin, petty character attacks on those who report on HIT difficulties, and other unpleasantries quite unserious and disappointing. I certainly do.

After all, IT industry personnel in large part went through educations far simpler than that of a physician. They generally have bachelor's or masters' degrees, have had no medical school experience, internships, residencies, postdocs, etc. They have what are essentially comfortable desk jobs, no liability for patient harm, and compared to most physicians, a cakewalk in their professional lives.

On the other hand, as a physician who had such experiences, I’m a serious professional concerned about serious issues that affect people's lives in their time of need.

I expect nothing less from others involved in aspects of healthcare that can be life or death (as my own mother recently experienced via EHR-initiated iatrogenic catastrophe).

From that perspective, I find the commercial HIT ecosystem quite disappointing indeed.

-- SS

Concerns about adoption of Electronic Health Records, as expressed at a meeting of the U.S. House of Representatives Committee on Science & Technology

Even within the Medical Informatics community, it is not common to hear major real-world issues that must be faced before national health IT can become a (safe, effective) reality presented candidly.

I therefore found this candid presentation by a fellow Medical Informaticist, Dr. Richard Gibson, refreshing. (Dr. Gibson was in Medical Informatics fellowship training at U. Utah at the same time I was in my postdoctoral fellowship at Yale.) He presented on issues related to standards for the most part, but also presented some serious caveats as I reproduce below. The caveats will sound familiar to readers of this blog.

The head of ONC, Dr. Blumenthal, was present at this meeting. I hope he will heed Dr. Gibson's words on the difficulties of health IT and cease to present clinical IT as a deterministic solution to healthcare's ills, including definitive statements on unknowns or debatable topics, and even false statements such as these (released for political reasons, of course):

In the NEJM:

The widespread use of electronic health records (EHRs) in the United States is inevitable. EHRs will improve caregivers’ decisions and patients’ outcomes [actually, may - we do not yet know - ed.] . Once patients experience the benefits of this technology, they will demand nothing less from their providers. Hundreds of thousands of physicians have already seen these benefits in their clinical practice.


From the HuffPo Investigative Fund:

“We know that every study and every professional consensus process has concluded that electronic health systems strongly and materially improve patient safety. [False- ed.] And we believe that in spreading electronic health records we are going to avoid many types of errors that currently plague the healthcare system,” Blumenthal said when unveiling new regulations in Washington on July 13.

Dr. Gibson's testimony on EHR adoption concerns was as follows:

Medical Informaticist Dr. Richard Gibson on Health IT
U.S. House of Representatives Committee on Science & Technology
Subcommittee on Technology & Innovation
Sept. 30, 2010
(Full PDF transcription here).

... CONCERNS ABOUT ADOPTION OF ELECTRONIC HEALTH RECORDS

Adoption of EHRs is a Prerequisite for Interoperability

We have an enormous effort still ahead of us. Before going on to the specific standards that are the topic of today's hearing, we need to acknowledge that the standards have relatively little application unless individual healthcare providers have electronic health records in the first place. Most of the more than 400,000 Eligible Professionals still need to acquire an electronic health record, and most of that effort will be in small physician offices. CMS has estimated the five-year cost of acquiring an electronic health record for an eligible professional to be $94,000. EHR incentive plans through Medicare and Medicaid will cover 47 to 67% of that estimated cost. As a general rule, EHRs still do not allow providers to see more patients in a day, spend more quality time with their patients, or guarantee better or more consistent health outcomes for their patients. [This raises the question of what then, exactly, do EHR's do? - ed.] In short, even with the generous EHR incentive program, there still may not be a sufficient financial rationale for individual providers or small practices to invest in electronic health records.

Implementing an EHR is Stressful for the Provider

Implementing electronic health records in small physician offices is not like purchasing a copy machine or a fax machine. In addition to the great capital expense, the EHR is markedly disruptive to both the clinical and administrative functions of the office. Every provider, medical assistant, receptionist, and billing staff member needs to change the way they do their work. Even with excellent training, it usually takes 2-12 months before providers are fully comfortable on their new tools. On a new EHR, each office visit takes longer - this means increased waiting times for patients or a fewer number of patients per day for the provider. It is not uncommon for providers on a new EHR, after a full 8-10 hour day of seeing patients, to finish their charts on the computer at home for three or four hours in the evening [potentially introducing inaccuracy into the record as a result of the long delay between visit and documentation - ed.] Even those providers who believe in the patient care benefits of an EHR are exhausted by the process in the first year. [Do exhausted clinicians make more, or less errors? - ed.]

EHRs Viewed Unfavorably by Many Providers Because of Administrative Documentation

Many providers who do not yet have EHRs in their office have commented to me how much they dislike the output received from many other physician office EHRs or from hospital EHRs. They specifically complain about how many pages these EHR reports require and how difficult it is to find the small bit of useful clinical information within. Upon investigation, most of this low-value verbosity comes from physicians documenting specific history and physical exam findings required to support their billing. Also, as medicolegal requirements ratchet up, clinicians feel a need to document with a date-time stamp every single finding and every single item of data that they have reviewed. The existing cumbersome EHR reports impair the clinical process and can put the patient at risk by making important information obscure. Clinicians criticize the EHR for this clumsy reading even though the cause lies with our current payment and administrative systems, and not the EHR itself [I would challenge this assertion; computers generate reports according to human-created scripts, and scripts could be created to generate clinically meaningful reports - ed.] , which is otherwise widely agreed to be highly legible. [An apropos term is "legible gibberish" and I recently paid almost $1000 for appx. 2,800 pages of it from an Eclipsys system, documenting two and a half weeks of care of my EHR-injured mother. The output was simply awful - ed.] Most clinicians would prefer to go back to simpler charting that more closely reflects their thought process. These EHR changes will need to await payment reform.

IT Professionals with Multiple Skills Needed for EHR Implementation

Another challenge in implementing electronic health records in small provider offices is the lack of technical expertise and support for the office. The providers are busy with a full schedule seeing patients. Medical assistants are putting patients in rooms or they are continuously on the phone with patients. Front office staff members are trying to make appointments and handle incoming calls. The billing staff is overwhelmed with insurance paperwork. Most providers and staff, especially those in small practices, don’t have time to become fluent in the use of the new system, much less become expert in training others to use the system. Typical small physician implementations start two to three months before the expected launch date of the software. All current paper-based workflows need to be examined and re-designed for the new software. This requires analysts who are not only familiar with software but familiar with the healthcare office process. [It also requires competent people with a service attitude, further limiting the pool of available personnel - ed.] Bringing the majority of the 400,000 Eligible Professionals up to speed on an EHR in the next several years will be challenged by a lack of IT implementation professionals.

EHR Technical Requirements Can Be Challenging for Smaller Practices

Small physician practices are already spending 40-60% of their net revenue on overhead. Space in small physician offices is at a premium and providing a physically locked computer space within the physician office is difficult. Physician offices do not typically have the technical expertise to manage the computers in the clinical areas as well as the office computer network and the larger computers that act as servers and tape backup for the EHR software. Hosting provider EHRs on centralized servers supporting multiple practices may address this concern, but many of the currently used office EHRs are not yet ready for this step-up in technology. Many small towns do not have local computer hardware professionals to support physician offices. The Regional Extension Centers (RECs) exist to assist physicians in this context but even with generous funding, the RECs will be challenged to meet the enormous demand in the next several years. [Considering the "wicked" nature of health IT and the organizational and social issues involved, I would say the RECs will be "overwhelmed to the point of paralysis" - ed.]

I agree with nearly all of Dr. Gibson's positions. I feel they are very helpful in terms of clarifying others' understanding of some inconvenient truths about HIT.

I am disappointed, however, that we even need such testimony before Congress to clear up misconceptions and irrational exuberance about EHR's in the year 2010, when these issues became obvious to objective and unconflicted observers many years ago.

The culture of HIT appears stagnant. Unfortunately cultural reform takes far longer than technological reform.

Yet HIT cannot reform medicine until HIT itself and our societal attitudes and approaches to it are reformed. Hopefully this speech will be a part of initiating the needed reform.

-- SS

History Repeats, and Repeats: McKesson Settles

Here a settlement, there a settlement, everywhere a settlement....  And the march continues, as reported by the New London (CT) Day,

Pharmaceutical distributor McKesson Corp. will pay Connecticut $15 million for 'illegal and deceptive practices' that inflated drug costs for both individual consumers and state-funded programs, Attorney General Richard Blumenthal announced Tuesday.

The settlement calls for $9 million to be used for reimbursing Connecticut's Medicaid program and $3 million for ConnPace, a state program that provides drug coverage for seniors. In addition, $2.3 million will be paid as a civil penalty and $700,000 will go into the state's drug-assistance program for AIDS patients.

Blumenthal had charged in a lawsuit that San Francisco-based McKesson conspired with First DataBank - which publishes average wholesale prices of drugs - to increase the amounts Connecticut paid for brand-name remedies by about 25 percent over usual wholesale costs. Previously, the prices had been 20 percent above wholesale.

McKesson used the increase to sweeten the 'spread' - the amount of profit - that could be taken by pharmacies, thereby increasing its share of the market, he said.

'McKesson manipulated the drug market - conspiring to inflate costs for hundreds of drugs and exploiting public programs that serve our most vulnerable citizens,' Blumenthal said in a statement.

Having been posting on this blog for nearly five years, it is interesting that viewed over time, patterns emerge suggesting that certain organizations have chronic problems with bad behavior. Last year, we noted that a former McKesson Chairman of the Board was convicted of five counts of securities fraud arising from actions occurring in the early part of the 21st century. Five former McKesson executives had already pleaded guilty to related crimes. Last year, Bloomberg called this scandal "one of the largest white-collar crimes."

This pattern may go back a lot longer that the turn of the last century.  Amazingly, the same company, McKesson, was involved in one of the biggest frauds of the great depression era. From the Wikipedia entry,

The McKesson & Robbins, Inc. scandal of 1938 was one of the major financial scandals of the 20th century. The company McKesson & Robbins, Inc. (now McKesson Corporation) had been taken over in 1925 by Phillip Musica, who had previously used Adelphia Pharmaceutical Manufacturing Company as a front for bootlegging operations. Musica, a twice-convicted felon, used assumed names to conceal his true identity in taking control of the two companies: Frank D. Costa at Adelphia Pharmaceutical and F. Donald Coster at McKesson & Robbins. Although he was successful in expanding the company’s legitimate business operations, Musica recruited three of his brothers, also working under assumed names, one outside the company and two inside it, to generate bogus sales documentation and to pay commissions to a shell distribution company under their control. Eventually, McKesson & Robbins treasurer Julian Thompson discovered the distribution company was bogus. It was eventually determined that about $20 million of the $87 million in assets on the company’s balance sheet were phony.

In December 1938, the Securities and Exchange Commission (SEC) opened an investigation and Musica was arrested. Only after he was booked, fingerprinted and released on bond did the authorities realize that 'Coster' was in reality Musica. His bond was revoked and he committed suicide before he could be rearrested.

The McKesson & Robbins scandal led to major corporate governance and auditing reforms. The SEC required that public companies have audit committees of 'outside' directors and that the appointment of auditors be approved by the shareholders. The American Institute of Accountants (now the American Institute of Certified Public Accountants) adopted audit standards requiring that auditors verify accounts receivable and inventory.

So I guess in some ways it should not be a surprise that a company involved in one of the biggest financial scandals of the depression era, and then one of the biggest white-collar crime of the early 21st century, should now be involved in a comparatively small settlement involving allegations of over-charges for drugs.

Given that in this latest case, the settlement was small, and there were no negative consequences for any individual who authorized, directed, or implemented the alleged market manipulation, it seems doubtful that it will have any lasting effect on corporate leadership of the corporate culture.

McKesson's long and chequered history suggests some sort of chronic affliction of its corporate culture.  It also suggests a rationale for requiring heath care organizations to have ongoing, active organizational ethics policies.  

Medical data breach of the week - but your EMR data is secure, trust us, we're IT experts

I have written frequently about the pipe dream of secure national electronic medical records, such as in February 2010 at my post "Networked EMR's and Healthcare Information Security: Practical When Massive IT Security Breaches Continue?", my post "Networked, Interoperable, Secure National Medical Records a Castle in the Sky?", as well as "Operation Aurora And a Widespread Reluctance to Discuss IT Flaws: Is Universal Healthcare IT Really a Good Idea in 2010?" and others.

I was also quoted on July 30, 2010, in a Philadelphia Inquirer story about the theft of a laptop computer with data on 21,000 patients from Thomas Jefferson University Hospital here, and also interviewed August 2 by local NPR station WHYY-91FM, where I stated:

"There is almost no excuse for unencrypted data to be sitting on any computer at a hospital or any organization," said Scot Silverstein, a Drexel University expert on health-information technology.

In the latest health-data-on-computer-theft-of-the-week, the Inquirer ran this story today about a local theft ten times as large as July's:

Medical-data breach said to be major

By Jane M. Von Bergen, Inquirer Staff Writer, Thu, Oct. 21, 2010

A computer flash drive containing the names, addresses, and personal health information of 280,000 people is missing - one of the largest recent security breaches of personal health data in the nation.

"We deeply regret this unfortunate incident," said Jay Feldstein, the president of the two affiliated Philadelphia companies, Keystone Mercy Health Plan and AmeriHealth Mercy Health Plan.

The breach, which involves the records of Medicaid recipients, is the first such Medicaid data breach in Pennsylvania since at least 1997, according to the state's Department of Welfare, which has oversight.

There is little more I can add to my prior postings on this issue except the words of privacy advocate, psychiatrist Dr. Deborah Peel:

The security failure, one of the several largest in nearly two years, involves nearly two-thirds of the insurers' subscribers. It became known only after The Inquirer requested information Tuesday evening. The insurers said the drive was missing from the corporate offices on Stevens Drive in Southwest Philadelphia. It noted that the same flash drive was used at community health fairs.

"That seems grossly irresponsible," said Dr. Deborah Peel, a Texas psychiatrist who heads Patient Privacy Rights, an advocacy group.

"Why would you be hauling around private patient information to a health fair," she said. "I can't imagine what they were thinking, taking this data out of a locked room at company headquarters.

"What's tragic is that this is a particularly vulnerable group of people," Peel said. "They tend to be vulnerable to identity theft, vulnerable to discrimination." Medicaid recipients are low-income people.

As to encryption (a built-in feature of the upper tier versions of Windows and of Mac OS X):

They [the companies] would not comment on the riskiness of taking the drive to health fairs, nor would they say whether the data on the drive was encrypted.

Highly likely translation: no.

The companies issued an apology:

"At Keystone Mercy Health Plan and AmeriHealth Mercy Health Plan, our number one priority is our members. Since reporting this unfortunate incident to the Department of Public Welfare, we have actively and responsibly executed a multifaceted plan to inform those affected, while also evaluating and enhancing our security measures to ensure this does not happen again."

[Did any employee have their "privileges revoked" -- the medical term of art for a physician who is 'fired' -- I wonder? - ed.]

Perhaps the executives in charge of this data, as well as the IT department, should read stories like the aforementioned July 30, 2010 story.

However, I fear there are those who are ineducable or hopelessly irresponsible when it comes to acting cautiously and responsibly regarding computer-based medical information, in the poorly bounded, complex, unpredictable world of healthcare.

That is not to even mention deliberate theft for personal gain.

This is why the dream of secure national electronic medical records seems a pipe dream for the foreseeable future.

-- SS

10/23 Addendum

in an updated story, the Inquirer reports the data was indeed unencrypted, although the companies claimed an encryption project was in progress.

"Toxic and Dangerous?" - The Watchdog vs Medtronic's Man at the VA

An odd story that appeared earlier this month linked several people we have discussed on Health Care Renewal.

On one hand, we posted about how Dr David Polly, a spine surgeon at the University of Minnesota, testified before the US Congress in support of research on treatments of bone injuries afflicting US soldiers.  He did not then reveal that he had been paid more than one million dollars for consulting by Medtronic, the manufacturer of a bone growth product used to treat such injuries, also the source of payments of his expenses for the trip to Washington.  At the time, we suggested this case was a reminder to be skeptical about academics who are really stealth health policy advocates for industry.

On the other hand, in a post about renewed payments by makers of artificial joints to orthopedic surgeons after the US government advocated a series of deferred prosecution agreements as a cure for such apparent conflicts of interest, we quoted Dr Charles Rosen, "Nothing will change until someone goes to jail. It’s a big game."

The link between them appeared in two related articles.  First, the Minneapolis Star-Tribune reported on the appointment of another Medtronic consultant to a top leadership post in the US Department of Veterans Affairs:

In a Sept. 28 letter to Veterans Affairs Secretary Eric Shinseki, Sen. Charles Grassley asks whether Dr. Stephen Ondra's 'policy advice and decisions at the VA are vulnerable to potential conflicts of financial interest' given his prior relationship with the Fridley-based medical technology giant.

Ondra and Medtronic mutually severed their financial relationship in July 2008. But just prior to that, Medtronic paid him $3.6 million in royalties related to spine-surgery instruments, according to financial disclosure forms he submitted to the VA.

It appears that Medtronic lobbied hard for the appointment of its former consultant:

While noting that Ondra is not a Medtronic employee, Grassley characterized the surgeon's relationship with the company as 'unambiguous and substantial.' Further, Grassley notes that Ondra 'was able to penetrate the political establishment at its highest level to obtain a senior position at the VA' because of his previous ties to the company.

The details are:

Ondra's candidacy for his current post was supported by Medtronic Chief Executive William Hawkins III, who wrote a letter of recommendation to Secretary of Defense Robert Gates on his behalf. This was at the suggestion of Dr. S. Ward Casscells III, who was then assistant secretary of defense for health affairs, according to a series of internal e-mails obtained by the Star Tribune.

'I have known Dr. Casscells for many years and was comfortable in approaching him on this topic,' Hawkins wrote in a Jan. 16, 2009 e-mail to the then-head of Medtronic's $3.5 billion spine device business, Steve La Neve. (La Neve left that position earlier this year in a corporate reorganization.)

La Neve replied a day later that Ondra wanted to meet with him or with Hawkins before a reference letter was sent, 'so that it can capture his work on appropriate industry-physician relationships and transparency.'

(It is not clear whether the last sentence above is meant to be an ironic pun about regulatory capture.)

A post on Pharmalot explains what Dr Ondra's first priority was once he got his government job:

Within a few days, however, Ondra objected to the proposed nomination of another spine surgeon, Charles Rosen, as US Surgeon General. Why? As founder of the Association of Medical Ethics, Rosen publicly questioned consulting ties between doctors and device makers and, for his trouble, allegedly suffered retaliation by members of the American Academy of Orthopaedic Surgeons (see this). In a January 21, 2009 email exchange with Davd Polly, a University of Minnesota professor who was another Medtronic consultant, Ondra acknowledged never having heard of Rosen, but reacts viscerally to a recent story in The Orange County Register that details Rosen’s self-appointed role as a watchdog.

'Since this individual is toxic and dangerous I would leave nothing to chance,' he responds to Polly, who had forwarded the newspaper story to Ondra. Polly, by the way, is a nationally known spine surgeon who came under congressional scrutiny for his work several years ago for the device maker, something that Rosen had criticized (look here). 'This moment in history is too important to our country to let such a disreputable and dangerous person continue his self-promotion crusade,' Ondra continues. 'I would encourage you and any other physicians and citizens to weigh in on this to HHS and public health.'

Got that?  Medtronic pays Dr Ondra millions.  Medtronic pushes for Dr Ondra's appointment to a top VA leadership position.  Once in that position, Dr Ondra confers with another million dollar Medtronic consultant, and then works to block the appointment as Surgeon General of a known foe of the cozy web of conflicts of interest that afflicts medicine.  Thus do conflicts of interest work to promote the capture of government by special interests. 

The Pharmalot post concluded with this opinion:

'It’s obvious that Dr. Ondra benefited from his relationship with Medtronic. And since he worked to kill off the nomination of Chuck Rosen, Medtronic’s main critic, I can see how Medtronic benefited from Dr. Ondra,' says Paul Thacker, a former Grassley staff investigator and US Army specialist. 'What I don’t understand is how I and other veterans have benefited from all this back-door dealing. What’s in it for us?'

That is a good question. It appears that nothing was in it for veterans, or the US public. But everything was in it for Medtronic and the doctors it pays so well.  I would submit that it is the readiness of big health care corporations to create conflicts of interest that seduce physicians to put their loyalties to their corporate sponsors ahead of the public interest that is toxic and dangerous.

This convoluted story suggests the urgent need for full disclosure of all relationships between physicians and others who make decisions and wield influence in health care on one hand, and health care organizations on the other hand.  If physicians want their health policy efforts to be met with anything other than guffaws and cynical eye rolls, they need to seriously consider swearing off the sorts of cushy corporate relationships that Dr Ondra and Dr Polly embraced.

Medical center has more than 6000 "issues" with Cerner CPOE system in four months - has patient harm resulted?

As I have written at Healthcare Renewal before, computerized physician order entry systems (CPOE's) are known to present risks to patients through induction of medical errors.

This technology is held out to be ready for national diffusion, right up to the POTUS. Per ONC director Blumenthal in the July 13, 2010 NEJM:

The widespread use of electronic health records (EHRs) in the United States is inevitable. EHRs will improve caregivers’ decisions and patients’ outcomes. Once patients experience the benefits of this technology, they will demand nothing less from their providers. Hundreds of thousands of physicians have already seen these benefits in their clinical practice.

Vendors deny major problems with their CPOE and other health IT products.

The true story is a bit more complex.

Fortunately, there are some medical centers who are open and honest about HIT problems. These medical centers seem a rarity. However, those that do share are actually conducting themselves in an honorable and mission-true manner, per Joint Commission Safety Standards, the ethics of the medical profession, and the expectations of the public. They should be commended.

One such example is Munson Medical Center in Michigan.

From the October 2010 "News for Physicians affiliated with Munson Medical Center" newsletter, a large medical center in Northern Michigan, about more than six thousand "issues" with their Cerner CPOE:

POE Program Continues to be Improved, Enhanced

The Provider Order Entry (POE) program continues to be improved. Since implementation in June [four months ago - ed.], more than 6,000 issues have been reported. Issues are defined as an aspect of the program not working as intended [does that include medication and treatment errors and 'near-misses'? - ed.], process issues [can these 'issues' kill? - ed.], education needs, or PowerPlan [Cerner - ed.] change requests.

About 600 of these remain open. Issues are prioritized by the POE Team and addressed according to existing standards.

One wonders how many of those 6,000, and how many of the 600 remaining "issues" fall into categories of "likely to cause patient harm in short term if uncorrected" or "may cause in patient harm in medium or long term."

I note that Cerner CPOE is not a new product, nor are similar products from other vendors also afflicted with long lists of "issues." That there could be more than 6,000 "issues" at a new site suggests deep rooted, severe problems with CPOE specifically and health IT design and implementation processes in general.

Did patient harm result here or at other CPOE sites (using products of any vendor, not just this one) that had hundreds or thousands of "issues"? We may never know.

That national rollout is mandated as if this technology were proven, safe, and plug and play is a scandal of UK NPfIT-like proportions.

-- SS

21st century EMR experiments: screwing around with people's lives in a broke city, while not having a clue what you're doing

I was astounded to read the following passage in an interview of the current chief medical information officer at Detroit Medical Center ("DMC") Detroit, MI:

DMC tried CPOE in 2003 and said it would regroup and try it again. What lessons were learned from that first attempt?

In 2003 we did try at one hospital — a more community-based hospital — on two units. We did it on our rehab unit, the psych unit. I think the first lesson we learned there was that it was really just designed as, or worked out as, an IT project. I mean, it was really IT-led and there wasn’t clinical involvement from the get-go.

There wasn’t really a leadership pattern that had physician and nursing components to it. There wasn’t a design phase that included a lot of clinicians. There wasn’t leadership buy-in from the hospital. We took the product from the vendor and implemented what they gave us. It was really doomed to fail from the start. [Doomed, that is, due to inexcusable health IT illiteracy for the year 2003 - ed.]

This is striking for a number of reasons, least of which is the tone in which the failure is presented, a tone that suggests this failure and its "lessons" were banal in character and something that "just happens." It's as if by 2003 there was no other way to have done due diligence and learned these lessons, other than by actual experimentation on hospital floors with live patients and busy clinicians.

If this story had appeared about a health IT project in, say, 1983 or 1993, it would have been less remarkable. By 2003, however, the literature on how do do health IT "right" (and on how not to do it, including all the faults mentioned about DMC's efforts), was quite voluminous.

The medical informatics literature from AMIA and IMIA, textbooks such as Lorenzi and Riley's "Organizational Aspects of Health Informatics: Managing Technological Change" (ed. 1 - 1995), sites such as my own on HIT failures (freely available and one of the first hits one received via google on searches on "Healthcare IT failure" and similar concepts even then), and other resources could have prevented the CPOE failure - if someone at DMC or their consultants had had the meta-knowledge to know of their existence or the managerial savvy to ask, and the initiative to actually read the materials and heed the advice of experts.

Instead, this sounds like a classic example of hospital mismanagement, via not knowing what you don't know, and not caring.

What is described is a failure due to HIT naivete and managerial dyscompetence (or incompetence) around technology management that should not have existed in hospitals in an American city in 2003. One should wonder what other mishaps occured in other domains of medical technology under this type of "leadership."

Clinical personnel and patients are the potential victims - not laboratory rats. The story is certainly remarkable in terms of risk presented by this experiment on live patients, and again for its banal tone regarding that crucial issue. It is well known that poorly done CPOE is associated with medication errors, not a happy event on a psychiatry unit or PM&R/rehab unit (where elderly frail patients often abound).

The story is also remarkable due to the waste of money it represents in a city not exactly rolling in money, looking somewhat like Dresden after the WW2 firebombing and with wide sections of former residential land designated for demolition and "return to nature."

Instead of spending money on "let's try to figure out CPOE today, all by ourselves!" health IT experiments, perhaps the money could have been used for better care of Detroit's poor.

The "lessons learned" in 2003 could and should have been learned for free and without risk to patients - in a public library.

I ask:

• Did patients get injured in this debacle? If they did, are the records sealed? We may never know.

• Has DMC truly learned the lessons of 2003 fully, or do similar problems continue?

• Were the executives responsible for this failure held accountable in any meaningful fashion?
  

Finally - and this is my major point - how many organizations in 2010 and beyond are similarly stuck in the stone age regarding how to "do health IT well"?

I believe the answer is "far too many."

-- SS

More on Hospital Market Dominance, Enabled by Secret Pricing

This week two more articles appeared describing how large hospital systems use market dominance to charge more.  Naturally, both were in news publications, not scholarly health services research journals.

San Francisco

Kaiser Health News (via the Contra Costa [CA] Times) discussed hospital market dominance in the San Francisco area.  The article documented how particular systems can command higher prices. Consider the example of John Muir Health vs San Ramon Medical Center:

Often, a hospital's dominance in an area helps determine how much it can charge, experts say. Consider John Muir Health, a two-hospital nonprofit system in the East Bay. With campuses in Concord and Walnut Creek, John Muir has the biggest footprint in the local hospital market, accounting for 54 percent of all the acute care inpatient stays in 2009, more than any other hospital group, according to state data.

The hospital with the weakest market penetration is San Ramon Medical Center, a Tenet-owned, for-profit hospital, with 10 percent of the acute care inpatients.

The least the insurer Aetna paid John Muir for an outpatient colonoscopy was $3,185, according to Aetna's website, which tracks two years of payments. Aetna paid $1,483 to San Ramon Regional Medical Center for the same service. The least Aetna paid John Muir for an uncomplicated birth was $7,722, while its lowest price for a birth at San Ramon was $5,278.

Yet on broad quality measures, John Muir's hospitals generally score no better than San Ramon's, according to the California Hospitals and Reporting Taskforce, a nonprofit that produces hospital report cards published at Calhospitalcompare.org.

San Ramon ranks equal to John Muir's Walnut Creek campus in most major measures, including mortality rates in the intensive care units, overall patient satisfaction and maternity care. John Muir's Concord campus ranks below San Ramon on several measures, including mortality rate and patient experience, though John Muir was rated better in avoiding complications for patients on ventilators.

Then there is Sutter Health:

[Stanford University associate vice president for Benefits Les] Schlaegel says so many employees like to see doctors at the Palo Alto Medical Foundation, a doctors' organization affiliated with Sutter with a clinic near the Stanford campus, that the university feels obliged to keep offering insurance networks that include Sutter.

'Sutter basically has a stranglehold on Northern California,' says Schlaegel. 'They are strategically situated, both for hospitals and medical groups. They know purchasers need them. When you are strategically located, you can say 'this is our price and you can pay it.''

Secret Pricing
The ability of dominant hospitals to charge higher prices is facilitated by secrecy in which hospital pricing is cloaked

The hospitals haven't made it easy for consumers to comparison shop. State law requires hospitals to reveal their charges for specific services. But those charges don't reflect the lower negotiated rates insurers actually pay - rates hospitals usually insist be kept secret. The California Hospital Association has opposed legislation to ban such 'gag clauses'; the most recent of these bills died in the state Assembly in August.

Hospitals have also resisted a four-year campaign by the Pacific Business Group on Health, an employer coalition, and CalPERS to create a 'hospital value initiative' that would allow hospital comparison based on cost and quality of care.

Summary

In many cases, hospitals are able to keep raising prices beyond inflation because their sizes or reputations give them clout in negotiating rates with insurers, researchers say. Yet high prices don't always equate with superior care.

Quality measures for some of the Bay Area's most prestigious hospitals, including Stanford and John Muir, show that in some instances, less expensive competitors perform as well or better in their basic responsibilities, such as avoiding infections and high death rates for patients in intensive care.

'Some hospitals are able to charge higher prices than the market normally would bear, even without providing higher quality,' says Dr. R. Adams Dudley, a professor of medicine and health policy at the University of California, San Francisco. 'That means they're getting those higher prices without really offering more to patients or the rest of society.'

New York City


Meanwhile, a long feature story in New York magazine about the demise of St Vincent's hospital (see our post here) also discussed the market power of its competitors as one factor in its decline:

The city’s largest and most powerful hospitals, which are crucial to an insurer’s customers, exert their leverage to secure deals that are believed to pay well above the average margin; smaller hospitals, which are often located in low-income neighborhoods, have little choice but to accept the dismal rates dictated by insurers if they want to remain in the insurers’ plans. 'When the big players take their cut, there are only scraps left for everyone else,' says the CEO of an outer-borough hospital. “'United HealthCare couldn’t care less about having my hospital in their network. They tell me to take it or leave it.

Secret Prices

Like in California, market dominance is enabled by secret pricing:

the rates negotiated between hospitals and insurance providers are withheld from public scrutiny—even state health and insurance regulators are denied the information

Free Markets?

Secret prices determined by market power hardly sound like characteristics of a free market. Yet in New York, at least, they seem partially to be the result of the free market ideology of previous political leaders:

Then George Pataki took office in 1995, determined to allow hospitals to test their mettle in the free market by negotiating their own terms with insurers. It turned out to be an exercise in shock-therapy capitalism. Inexperienced at the bargaining table, hospitals engaged in intramural rivalry with each other, cutting unfavorable deals with insurers in order to hold on to patients in the short term. With their already thin margins pared down further by deregulation, many hospitals soon built up paralyzing debt loads. Even the largest and seemingly least vulnerable facilities decided that their best hope for survival was to get bigger. A flurry of mergers and buyouts ensued, and by the end of the nineties, the hospital system began to assume its current bewildering patchwork of partnerships and affiliations. Columbia Presbyterian and New York Hospital, both attached to elite medical schools, joined forces. NYU and Mount Sinai forged a deal (it later came undone). On the eastern edge of the city, North Shore hospitals merged with nearby Long Island Jewish, staking out an enormous swath of the hospital market on Long Island, Queens, and Staten Island. Beth Israel and St. Luke’s–Roosevelt, debt-ridden and left on the sidelines by the major academic hospitals, decided to try making a go of it together. It was unclear if bigger was actually better—for patients or the bottom line—but size seemed to offer hospitals a buffer against collapse.

By 2005, less than a decade into its dalliance with free enterprise, the city’s hospital system had taken on something of a post-Soviet tinge, with winners ruling the roost like oligarchs and losers reduced to a state of grim dependency. A pecking order emerged, with elite academic centers at the top, well-regarded independent hospitals like Lenox Hill in the middle, and community hospitals on the bottom.

Summary

We have previously written (for example, here and here) about how increasing market dominance by large, sometimes strategically located, and sometimes politically well-connected (e.g., see here) hospital systems run by conflicted leaders. This seems like another unintended consequence of the "free markets solve all problems" ideology, possibly fueled by conflicts of interest that has done so badly in our financial arena (see here). What some of these free market enthusiasts seem to forget, their forgetfulness perhaps fueled by payments received from the large corporations that have profited from this movement, are that true free markets are hard to maintain. This is particularly so in health care, in which knowledge is asymetric, outcomes are uncertain, and sick and anxious patients have trouble making cool, rational choices (as per Arrow, see this post.)

But if the free market enthusiasts really believe in free markets, why have they not been out campaigning to prevent the "unfree" characteristics, like secret pricing, of current health care markets?  Of course, ending secret pricing might compromise the ability of their financial sponsors to keep earning their millions

Last Week's Scandals

The march of settlements and other unfavorable legal results for health care organizations continued last week, in alphabetical order

CVS Settles for $77.6 Million for Violating the Controlled Substances Act

As reported by Bloomberg,

CVS Caremark Corp. agreed to pay $77.6 million to settle claims that some of its stores in California and Nevada allowed criminals to buy cold medications that were used to make methamphetamine.

The pharmacy chain will pay a $75 million fine, the largest civil penalty ever paid under the Controlled Substances Act, and forfeit $2.6 million in profits from the illegal sales, the U.S. Attorney’s Office in Los Angeles said today in a statement.

Between September 2007 and November 2008, CVS failed to ensure that stores in Southern California complied with laws limiting sales of over-the-counter drugs made with pseudoephedrine, which allowed methamphetamine traffickers to buy large amounts of the drugs, according to the statement. CVS changed its sales practices only after it became aware of the investigation, prosecutors said.

What was unusual about this case is that the company's CEO actually seemed to acknowledge that it did something wrong, and vowed change:

'While this lapse occurred in 2007 and 2008 and has been addressed, it was an unacceptable breach of the company’s policies and was totally inconsistent with our values,' CVS Chief Executive Officer Thomas Ryan said in a statement. 'We have strengthened our internal controls and compliance measures and made substantial investments to improve our handling and monitoring of PSE.'

Amazing, a CEO acknowledging that his corporation's values include complying with the law... [sarcasm off]
Note that we most recently posted about a settlement by CVS, one by CVS Caremark for improperly charging a public entity, in September, 2010, here.

Johnson & Johnson Found Liable for $257.7 Million for Fraud

As reported by Bloomberg,

Johnson & Johnson lost a $257.7 million jury verdict in Louisiana for making misleading claims about the safety of the company’s Risperdal antipsychotic drug.

J&J officials defrauded the state’s Medicaid system by wrongfully touting Risperdal as superior to competing antipsychotic drugs and minimizing its links to diabetes, said jurors in state court in Opelousas, Louisiana.

Specifically,

The jury found 35,542 violations of the state’s Medical Assistance Programs Integrity Law and imposed a penalty of $7,250 for each. The total $257.7 million verdict is the fifth- largest in the U.S. so far in 2010, according to data compiled by Bloomberg.

'You can’t come into Louisiana and disseminate false and misleading information,' Patrick Morrow, who represented the state, said after the verdict in a phone interview. 'I’m sure this matter will be in the appellate courts for years to come. This is the first step.'

The state’s case centered on drug safety claims that J&J and Ortho-McNeil Janssen made in November 2003 correspondence to 700,000 doctors. In those letters, J&J touted Risperdal as safer than competing antipsychotics such as Indianapolis-based Eli Lilly & Co.’s Zyprexa and London-based AstraZeneca Plc’s Seroquel. Risperdal global sales peaked at $4.5 billion in 2007, declining after the company lost patent protection.

The U.S. Food and Drug Administration responded with a warning letter saying J&J made false and misleading claims that minimized the potentially fatal risks of diabetes and overstated the drug’s superiority to rival medicines.

Lawyers for the state asked jurors to hold J&J liable for the 7,604 letters it sent to Louisiana doctors and regulators making those claims along with more than 27,542 sales calls in the state made by the drugmaker’s representatives in 2003 and 2004.

Note that we last discussed problems at Johnson and Johnson, those being manufacturing issues leading to contaminated drugs, in September, 2010, here.

Medtronic Settles for $268 Million for Personal Injuries

As reported by the Minneapolis Star Tribune,

Medtronic Inc. has agreed to pay $268 million to settle thousands of lawsuits that patients filed after a 2007 recall of a faulty heart defibrillator wire that caused at least 13 deaths.

The settlement announced Thursday covers some 8,100 personal injury lawsuits in both federal and state courts over Medtronic's popular Sprint Fidelis lead, which was implanted in some 235,000 people when the company recalled the device after a small number fractured. The malfunction could cause the defibrillator to stop working or to inappropriately shock patients -- a frightening and uncomfortable experience, but usually not life-threatening.

The cases had been lingering in a kind of legal limbo that began with a 2008 U.S. Supreme Court decision involving another Medtronic case that prevented many patients with faulty medical devices from filing suit against the makers of those products.

Rather than wait for a definitive resolution to various legal appeals, the Fridley-based medical technology giant agreed to end the three-year legal battle with a settlement.

Note that we last discussed Medtronic's payments to physicians, in June, 2010, here.

Summary

Ho-hum, another week, another set of settlements, convictions, and/or verdicts unfavorable to large, important health care organizations. Although all the actions above would result in seemingly large payments by the companies involved, all of the payments were trivial in size compared to the companies' revenues. Note that in none of the cases above did any individual pay any penalty. In only one of the cases did a corporate leader acknowledge that bad things were done, but should be done no more.

As we have noted infinitum, penalties that only appear to be (relatively small) costs of doing business are unlikely to deter future bad behavior. Until the people who actually authorized, directed and implemented the bad behavior have to suffer some negative consequences, expect the bad behavior to continue.  Note that each of the companies discussed above have had their previous ethical lapses discussed in previous Health Care Renewal posts.

The continuing march of settlements, and sometimes criminal convictions involving major health care organizations should be regarded merely as providing a floor to estimates of the extent of bad behavior by large health care organizations. Bad behavior may not be reported, or lead to legal action, and legal action may not lead to settlements or convictions. However, it is amazing how many organizations that were once regarded as exemplary have had to settle, or plead guilty, or been convicted.

When it comes to health care's leadership, society seems to have acceded to defining deviancy down. Until we start holding health care leaders to high standards, expect their organizations not to uphold high standards.