Princess Health and How Can a $124.8 Million a Year CEO Make Health Care More Affordable?. Princessiccia

Princess Health and How Can a $124.8 Million a Year CEO Make Health Care More Affordable?. Princessiccia

executive compensation UnitedHealth

Gusty 12:42 Add Comment

An op-ed piece in the Providence Journal about huge pay packages for corporate CEOs mentioned the breath-taking $124.8 million total compensation of United Health Group (parent of United Healthcare) CEO William McGuire. This figure can also be found in the Forbes Special Report on CEO compensation. Here one can find that other managed care CEOs got less fabulous, but still formidable compensation, e.g., Howard Phanstiel, PacifiCare, 3.38 million; Edward Hanway, Cigna, $13.3 million; John Rowe, Aetna, $22.2 million; and Larry Glassrock, Wellpoint, $25.0 million.
McGuire's compensation was so large as to take a measurable part of this large company's net income (5%). Or to look at it from a stock-holder's (and hence, an company owner's) viewpoint, had McGuire, who is an employee, been only paid a cool million, and this money had been distributed as a dividend, it would amount to about a $0.20 per share dividend. (The current dividend is $0.03 per share.) (See company data available from Forbes as well.)
To look at it from a United employee's viewpoint, had McGuire, who is an employee, been only paid a cool million, and this money had been distributed to employees, each of the 40,000 employees could have received a bonus larger than $3000.
To look at it from the viewpoint of the health care system, the $124.8 million total compensation of a single United employee could pay the salaries of 833 general internists at current typical salaries. Or the $124.8 million could run one reasonable size community hospital for a year.
United Health Group's mission statement is "the company directs its resources into designing products, providing services and applying technologies that improve access to health and well-being services; simply the health care experience; promote quality; and make health care more affordable." (See this fact sheet.) Rather, it seems to be directing a good chunk of its resources into salaries of top management employees. How a $124.8 million CEO salary can be reconciled with a mission to "make health care more affordable" is completely beyond me.

Princess Health and How Can a $124.8 Million a Year CEO Make Health Care More Affordable?.Princessiccia

Princess Health and How Can a $124.8 Million a Year CEO Make Health Care More Affordable?.Princessiccia

executive compensation UnitedHealth

Gusty 12:42 Add Comment

An op-ed piece in the Providence Journal about huge pay packages for corporate CEOs mentioned the breath-taking $124.8 million total compensation of United Health Group (parent of United Healthcare) CEO William McGuire. This figure can also be found in the Forbes Special Report on CEO compensation. Here one can find that other managed care CEOs got less fabulous, but still formidable compensation, e.g., Howard Phanstiel, PacifiCare, 3.38 million; Edward Hanway, Cigna, $13.3 million; John Rowe, Aetna, $22.2 million; and Larry Glassrock, Wellpoint, $25.0 million.
McGuire's compensation was so large as to take a measurable part of this large company's net income (5%). Or to look at it from a stock-holder's (and hence, an company owner's) viewpoint, had McGuire, who is an employee, been only paid a cool million, and this money had been distributed as a dividend, it would amount to about a $0.20 per share dividend. (The current dividend is $0.03 per share.) (See company data available from Forbes as well.)
To look at it from a United employee's viewpoint, had McGuire, who is an employee, been only paid a cool million, and this money had been distributed to employees, each of the 40,000 employees could have received a bonus larger than $3000.
To look at it from the viewpoint of the health care system, the $124.8 million total compensation of a single United employee could pay the salaries of 833 general internists at current typical salaries. Or the $124.8 million could run one reasonable size community hospital for a year.
United Health Group's mission statement is "the company directs its resources into designing products, providing services and applying technologies that improve access to health and well-being services; simply the health care experience; promote quality; and make health care more affordable." (See this fact sheet.) Rather, it seems to be directing a good chunk of its resources into salaries of top management employees. How a $124.8 million CEO salary can be reconciled with a mission to "make health care more affordable" is completely beyond me.

Princess Health and Indictments in Alleged Scheme Involving Illinois Health Facilities Planning Board. Princessiccia

Princess Health and Indictments in Alleged Scheme Involving Illinois Health Facilities Planning Board. Princessiccia

Gusty 11:47 Add Comment

The Chicago Sun-Times reports that the former head of the Illinois Health Facilities Planning Board, Stuart Levine, and two local businessmen, P. Nicholas Hurtgen, formerly of Bear Stearns, and construction executive Jacob Kiferbaum, have been indicted for "influence peddling, kickbacks, and other corrupt actions" that affected local health care organizations. In one instance, they are accused of threatening Edward Hospital in Naperville that the Board would not approve its expansion plans unless the hospital were to use their firms to construct and finance the project. The hospital refused, and its application for expansion was rejected. Another alleged scheme involved Chicago Medical School. (An article from the Sun-Times from June 30, 2004, no longer available on the web, stated that Levine and Kiferbaum were on the school's board of trustees, and that Kiferbaum's company had been involved in large school construction projects. )
Setting aside, for the moment, the question of whether these indictments will result in convictions...
We have reported quite a few stories involving alleged or proven corruption of leaders of health care organizations. Since we have no mechanism in place to comprehensively search the news media for such cases, and since many such cases may go unreported, it is likely that all we have posted amounts to the tip of the iceberg.
What little survey data we have also suggest that unethical business practices in health care may be very widespread. For example, as we have previously posted, 53.8% of the respondents to the survey done by the American College of Physician Executives felt that a health care organization in their community was involved in unethical business practices.
It thus seems reasonable to ask how much effect all the episodes of unethical behavior and corruption have had on health care costs, access and quality. But I have yet to see any serious effort made to answer this question. (If someone else has seen one, please let me know.)
It also seems reasonable to ask why there is so little response to these episodes from the medical and health care communities. For example, although the Illinois Health Facilities Planning Board story first surfaced almost a year ago, I have not been able to find any response to it from a medical or health care organization. (If someone else has seen one, again, please let me know.)

Princess Health and Indictments in Alleged Scheme Involving Illinois Health Facilities Planning Board.Princessiccia

Princess Health and Indictments in Alleged Scheme Involving Illinois Health Facilities Planning Board.Princessiccia

Gusty 11:47 Add Comment

The Chicago Sun-Times reports that the former head of the Illinois Health Facilities Planning Board, Stuart Levine, and two local businessmen, P. Nicholas Hurtgen, formerly of Bear Stearns, and construction executive Jacob Kiferbaum, have been indicted for "influence peddling, kickbacks, and other corrupt actions" that affected local health care organizations. In one instance, they are accused of threatening Edward Hospital in Naperville that the Board would not approve its expansion plans unless the hospital were to use their firms to construct and finance the project. The hospital refused, and its application for expansion was rejected. Another alleged scheme involved Chicago Medical School. (An article from the Sun-Times from June 30, 2004, no longer available on the web, stated that Levine and Kiferbaum were on the school's board of trustees, and that Kiferbaum's company had been involved in large school construction projects. )
Setting aside, for the moment, the question of whether these indictments will result in convictions...
We have reported quite a few stories involving alleged or proven corruption of leaders of health care organizations. Since we have no mechanism in place to comprehensively search the news media for such cases, and since many such cases may go unreported, it is likely that all we have posted amounts to the tip of the iceberg.
What little survey data we have also suggest that unethical business practices in health care may be very widespread. For example, as we have previously posted, 53.8% of the respondents to the survey done by the American College of Physician Executives felt that a health care organization in their community was involved in unethical business practices.
It thus seems reasonable to ask how much effect all the episodes of unethical behavior and corruption have had on health care costs, access and quality. But I have yet to see any serious effort made to answer this question. (If someone else has seen one, please let me know.)
It also seems reasonable to ask why there is so little response to these episodes from the medical and health care communities. For example, although the Illinois Health Facilities Planning Board story first surfaced almost a year ago, I have not been able to find any response to it from a medical or health care organization. (If someone else has seen one, again, please let me know.)

Princess Health and Merck Move Shows Industry Adrift on Leadership Expertise. Princessiccia

Princess Health and Merck Move Shows Industry Adrift on Leadership Expertise. Princessiccia

Gusty 07:09 Add Comment

Slowly, surely, the need for biomedical expertise in healthcare leaders is being realized, at least in the investment community. When will hospitals and managed care organizations begin to understand the same lesson?

Merck Move Shows Industry Adrift

By Melissa Davis

Senior Writer, TheStreet.com, 5/9/2005

When Merck crowned a new CEO last week, some disappointed investors saw fresh evidence of an entire industry that has yet to get its priorities straight.

Merck chose an insider without a background in medicine at a time when observers agree that the company desperately needs to focus on developing new drugs. Moreover, Merck made its selection even after its glory faded under a previous nondoctor, Ray Gilmartin.

Richard Clark, tapped last week to replace the embattled Gilmartin, is no master of drug research or even the marketing activities that, to the dismay of some, now seem to drive the industry. He has instead spent his 33 years at Merck concentrating on such areas as manufacturing and information technology.

"That was the best they could get?" asks Peter Cohan, an investment strategist who praises Merck's last physician CEO -- Roy Vagelos -- in his book The Technology Leaders. "It is hard to see how a manager lacking experience in drug development can help revive the critical pipeline of new drugs that contributed to the success of this once great company."

Further, provocative opinions in the article on the clinical trials process may shed some light on why there are few medical informatics specialists in pharmaceutical leadership roles. The field may be viewed as too critical of data manipulations:

... Public leaders have begun to question how companies manage to gain regulatory approval of drugs like Vioxx and then turn them into wildly profitable blockbusters. And they have come to recognize the industry's incredible influence -- over drug development, approval and even consumption -- in the process.

Vera Hassner Sharav, president of the Alliance for Human Research Protection, has been warning about such powers for years.

"The companies design the drug trials," Sharav says. "They select the subjects. They maintain and interpret the data. They select which parts get published. They choose who will become the reviewers in the prestigious medical journals. And they pick 'key opinion leaders,' who they pay handsomely" to promote the drugs.

"It's perfect," she concludes. "They have it made."

Read the whole thing.

-- SS

Princess Health and Merck Move Shows Industry Adrift on Leadership Expertise.Princessiccia

Princess Health and Merck Move Shows Industry Adrift on Leadership Expertise.Princessiccia

Gusty 07:09 Add Comment

Slowly, surely, the need for biomedical expertise in healthcare leaders is being realized, at least in the investment community. When will hospitals and managed care organizations begin to understand the same lesson?

Merck Move Shows Industry Adrift

By Melissa Davis

Senior Writer, TheStreet.com, 5/9/2005

When Merck crowned a new CEO last week, some disappointed investors saw fresh evidence of an entire industry that has yet to get its priorities straight.

Merck chose an insider without a background in medicine at a time when observers agree that the company desperately needs to focus on developing new drugs. Moreover, Merck made its selection even after its glory faded under a previous nondoctor, Ray Gilmartin.

Richard Clark, tapped last week to replace the embattled Gilmartin, is no master of drug research or even the marketing activities that, to the dismay of some, now seem to drive the industry. He has instead spent his 33 years at Merck concentrating on such areas as manufacturing and information technology.

"That was the best they could get?" asks Peter Cohan, an investment strategist who praises Merck's last physician CEO -- Roy Vagelos -- in his book The Technology Leaders. "It is hard to see how a manager lacking experience in drug development can help revive the critical pipeline of new drugs that contributed to the success of this once great company."

Further, provocative opinions in the article on the clinical trials process may shed some light on why there are few medical informatics specialists in pharmaceutical leadership roles. The field may be viewed as too critical of data manipulations:

... Public leaders have begun to question how companies manage to gain regulatory approval of drugs like Vioxx and then turn them into wildly profitable blockbusters. And they have come to recognize the industry's incredible influence -- over drug development, approval and even consumption -- in the process.

Vera Hassner Sharav, president of the Alliance for Human Research Protection, has been warning about such powers for years.

"The companies design the drug trials," Sharav says. "They select the subjects. They maintain and interpret the data. They select which parts get published. They choose who will become the reviewers in the prestigious medical journals. And they pick 'key opinion leaders,' who they pay handsomely" to promote the drugs.

"It's perfect," she concludes. "They have it made."

Read the whole thing.

-- SS

Princess Health and Government getting serious on EMR. Princessiccia

Princess Health and Government getting serious on EMR. Princessiccia

Gusty 07:56 Add Comment

This press release shows our government is starting to get serious about computerized patient records (I am steering away from the term "electronic medical records." My ham radio transceivers are electronic in nature; medical records don't contain vacuum tubes, transistors, resistors or capacitors as far as I know.)

Let's hope that included in the bipartisan call for addressing "systemic obstacles and misaligned incentives that have hindered health information technology adoption" are the sociotechnical (people and skills) issues that are a direct cause of healthcare IT failure.

My support of this initiative will include pointing out that one poorly-addressed but critically important benefit of widespread computerized patient records will be better real-time societal health surveillance, for example, detecting harmful pharmaceuticals via improved postmarketing surveillance before things get out of hand. Better health surveillance is also more than just a handy capability to have in times of potential bioterrorism or other epidemics.

CAUCUS CO-CHAIRS TO INTRODUCE MAJOR HEALTH I.T.
LEGISLATION
Your Action Needed to Support Legislation to Bring Health Care
into the Information Age

On Wednesday, May 11, 21st Century Health Care Caucus co-chairmen Rep. Tim Murphy (R-PA) and Rep. Patrick Kennedy (D-RI) will introduce legislation to dramatically increase the use of information technology to improve the quality, safety, efficiency, and coordination of health care. They need your help to pass this bill this year.

Health IT offers the promise of better health outcomes for patients, by catching conflicting prescriptions, providing reminders to improve timely prevention and other recommended care, and better public health monitoring. It can streamline doctors' practices by easing compliance with reporting requirements, simplifying billing and eligibility checks, and providing more patient information at the point of care. It can eliminate wasteful duplication of testing and provide new research capabilities. But despite the promise, health care has been slow to move into the information age due to a number of systemic obstacles.

The 21st Century Health Information Act will be the first bipartisan bill to address the systemic obstacles and misaligned incentives that have hindered health information technology adoption. It is of pragmatic scope in these tight budgetary times but maximizes limited federal dollars to bring about real systems change. It appeals across the political spectrum, from Newt Gingrich to Hillary Clinton.

There is enormous interest in health IT in Washington, but until now there has not been anything around which support could coalesce. With the introduction of the 21st Century Health Information Act, meaningful action on health IT is possible this year, but it will take concerted effort.

What You Can Do:
1. Send a Letter of Support. The cosponsors are trying to get as many letters of support from organizations across the health care spectrum, including patients, physicians, hospitals, other providers, health plans, employers, vendors, and others. You can email letters to michael.zamore@mail.house.gov (Kennedy) and michael.baxter@mail.house.gov (Murphy).

2. Issue a Press Release. Help get word out about the bill and the importance of health IT by issuing a press release on May 11. By applauding introduction of the bill and explaining how health IT will impact your organization or your organization's role in rolling out health IT, you can amplify the importance of this legislation while potentially working your organization into media coverage of the bill introduction.

3. Call or Email Members of Congress. Immediately after introduction, we will begin seeking cosponsors to demonstrate that this is legislation with broad, bipartisan support. Phone calls and emails to Members of Congress and their health staffers encouraging cosponsorship of the 21st Century Health Information Act are critical. There can never be too many phone calls or emails.

4. Write a Letter to the Editor or an Op-Ed. By following up May 11 with a letter to the editor or op-ed to your local newspaper about the importance of health IT and the 21st Century Health Information Act, you can help create an echo effect that amplifies the message and helps build support.

Thank you for your efforts to make health care ever better, safer, and more efficient. We look forward to passing the 21st Century Health Information Act with your help.

Addendum - I sent this letter to the congressmen:

Dear Congressman Murphy and Congressman Kennedy,

I sincerely applaud The 21st Century Health Information Act that you are co-chairing.

As a Medical Informatics (clinical IT) specialist who has designed and implemented clinical IT in hospitals domestically and in overseas settings, I can assure you this initiative will have a return on investment in future years in greatly improved quality of care, increased efficiency, reduced waste, and reduced costs.

I have promoted this issue since the mid 1990's and have written extensively on systemic obstacles and misaligned incentives that have hindered health information technology adoption ("sociotechnologic issues"), e.g., at my website "Sociotechnologic Issues in Clinical Computing: Common Examples of Healthcare IT Failure" at http://home.aol.com/medinformaticsmd/failurecases.htm .

In addition, as Merck's former Director of Scientific Information Resources, I would also like to point out that a national computerized patient records infrastructure will enable large-scale health surveillance. This capability will enable much more rapid post-marketing surveillance of new drugs, helping avoid debacles such as the VIOXX and Phen-fen accidents, as well as earlier detection of natural or man-made (i.e., bioterrorism) epidemics.

If I can assist this initiative in any way, please let me know.

-- SS