Princess Health and HOW TO END AN EATING DISORDER IN 60 MINUTES. Princessiccia

Princess Health and HOW TO END AN EATING DISORDER IN 60 MINUTES. Princessiccia

Gusty 18:10 Add Comment

Princess Health and "Dreaming On" - The Illusions of the Leaders of Large Health Organizations, as Illustrated by Medtronic's Founder. Princessiccia

Princess Health and "Dreaming On" - The Illusions of the Leaders of Large Health Organizations, as Illustrated by Medtronic's Founder. Princessiccia

CEO disease deception legal settlements Medtronic mission-hostile management

Gusty 14:00 Add Comment

On Health Care Renewal, we have posted story after story about amazingly well paid leaders of big organizations presiding over amazingly bad organizational behavior (including subversion of mission, conflicts of interest, deception, fraud, kickbacks, various other crimes and outright corruption).  Yet the leaders often seem curiously disconnected from what occurs on their watches, while they are sometimes hailed as "visionaries," and at times exude messianic confidence.

Medtronic's Founder on its Sacred Mission

A recent article appearing in an unexpected place provides an example of leaders' excess confidence in their own righteousness.  In the IEEE (Institute of Electrical and Electronics Engineers) Institute was a commentary by Earl Bakken, the founder of medical device/ biotechnology giant Medtronic, modestly proclaiming the "secrets of corporate success."

Keep in mind that while Mr Bakken founded the company, at age 91, while no longer its leader, he proclaimed, " I stay involved with my company."  As such, he remains proud of its mission statement,

In 1960, when corporate mission statements were rare, I wrote one that has never changed. It remains the company�s guiding principle. There are six tenets, but the first one is the most important: To contribute to human welfare by application of biomedical engineering in the research, design, manufacture, and sale of instruments or appliances that alleviate pain, restore health, and extend life.

Starting in the 1970s, I met with all new employees, explained our history and mission, and in each of their hands I placed a medallion imprinted with the mission statement. I encouraged them to live by it�at work and at home.

Note that the official mission also includes,

To strive without reserve for the greatest possible reliability and quality in our products; to be the unsurpassed standard of comparison and to be recognized as a company of dedication, honesty, integrity, and service. [ital added]

Apparently, he believes that under the "visionary leadership" and "astute direction" of the current, this mission remains central to the organization.

At Medtronic, we live our mission. It�s the basis for how we behave in relationship to our stakeholders, each other, our communities, and the world. But it also guides our relationships with ourselves. We live the Medtronic Mission every day in truly genuine ways by serving others. I am proud to have a mission that is so deeply woven into the fabric of this company that improves millions of lives throughout the world.

Here�s to dreaming on.

Honesty? Integrity? - the Company's 10 Year Track Record 

I hate to disillusion a 91-year old, but in light of the company's last 10 year track record, as discussed on Health Care Renewal, he does appear to be in a dream world.


Medtronic has provided our blog with lots of material, including some amazing stories about conflicts of interest (starting in 2006, here, here, here, here, here, here, here, here, nad here,) and revolving doors  (here, here, here, and here). 

The company has also made a series of legal settlements of various allegations of infamous behavior, in chronological order...
 
2006

- We discussed detailed and vivid allegations that Medtronic had been paying off doctors starting in 2003.
 - Medtronic subsidiary Sofamor Danek settled for $40 million allegations that it gave kickbacks to doctors in the form of sham consulting fees and lavish trips (look here).

2007

As Bloomberg summarized in 2014,

Medtronic agreed in 2007 to pay about $130 million to settle consumer suits accusing the device maker of hiding defects in its defibrillators.

 2008

- Medtronic subsidiary Kyphon settled a suit for $75 million and signed a corporate integrity agreement for allegations that it defrauded Medicare through a scheme that lead to excessive hospitalization for patients who received the company's spine surgery device (link here)

2010

Per the Bloomberg 2014 summary again,

The company agreed to a $268 million settlement of suits in 2010 over allegations that fractured wires in another line of defibrillators caused at least 13 patient deaths.

2011

-  Medtroinic settled for $23.5 million two other federal lawsuits alleging it paid kickbacks to encourage physicians to implant its devices (look here).

2014  

In June, we discussed a settlement Medtronic made of allegations that  Medtronic gave kickbacks (that is, bribes) to doctors to get them to use its cardiac devices.

2015

In April, 2015 we discussed three settlements made by Medtronic:
- Its subsidiary EV3 settled old allegations that it coached hospitals how to overbill the US government for procedures using its products
- The company settled allegations it gave kickbacks to physicians to induce them to use its neuromodulation devices.
- The company settled allegations it lied to the US military about US origins of its devices.

(And by the way, we will not belabor the contrast between the statement's committment to "recognize the personal worth of employees," and the gargantuan payments made to certain employees, that is, the top managers, all who got over $3.5 million in 2014, and the "visionary" CEO, who got over $12 million, look here. )

Summary

Someone needs to wake up Mr Bakken.  He may still believe in the mission statement, and wish that it is central to his company.  However, the track record seems to suggest that the mission statement has been honored often in the breach.

Perhaps the problem is that Mr Bakken is really much more detached from the company he founded than he now admits.  However, I worry that this immensely positive spin suggests that he, like many other health care oragnizational leaders, live in some sort of bubble into which no negative karma is allowed to penetrate.  Thus convinced of their own innate goodness, they can provide no check on continuing manifestations of corporate greed, most likely with the solace of the own fortunes they build up. 

IMHO, we need to break up these huge health care organizations which have become so big that those who run them cannot be in touch with what really goes on.  We need to reestablish the accountablity of leaders, and no longer allow them to get credit for all the good that happens, and dodge responsibility for all the bad.  True health care reform would entirely transform health care leadership, so that it can become well-informed, supportive of the mission, unconflicted, less self-interested, honest, and certainly law abiding. 

Princess Health and Remember Run and BOW3.Princessiccia

Princess Health and Remember Run and BOW3.Princessiccia

Gusty 14:04 Add Comment

Despite being a mere one week removed from Road2Hope, and many runners already settling into their offseason recovery mode, the team still had a large contingent tackling the 2015 WRS RememberRun which also acted as the final stage of the BOW 3.  We had a number of surprise results, including OA wins in both the 5K and 11K for men, an OA win for women in the 11K, and OA wins in the BOW III for men and women.  Here are our full results:

5K- Individual
Team Rankings

Coach Sean won in 16:49.

Lucas Shwed had a strong first 5K of his life, running 19:32, placing 2nd on our team and 8th OA and 2nd in his AG.

Martin was in next for the team with a very strong 19:39, good for 11th OA and 4th in his AG.

Gillian was in 4th for the team, 3rd OA for females and 1st in AG with a solid 19:57 finish.

Evin came in 5th out of H+Pers with a great first 5K ever of 19:50 chip time!

Brian ran another good 5K, finishing in 22:38.

Ed had a very strong race, finishing in 24:12 and 7th in his AG.

Mike Hewitson continues to come back from injury with success as he ran a great 24:41.

Candice won her AG yet again with an excellent 25:11 finish time.

Cari managed to take the final stage in the #CariVsLaura challenge, coming in just over 26 minutes and a mere 10seconds ahead of Laura who ran 26:16!

Maria Dyce had a great return from injury, finishing just over 30 minutes.

Jen Merrett ran an excellent new PB of 30:55!

5K- Team
Full Results
H+P's team was able to take the win with the top 5 runners averaging 19:14.  The team consisted of: Sean, Lucas, Martin, Gillian and Evin.

Battle of Waterloo III
Full Results
Remember Run was the 3rd and final of 3 5K Stages in the BOW III.  Here's how H+P did:

Coach Sean won in 49:57.

Martin Chmiel had an amazing performance, finishing just off the podium in 4th place with a time of 58:18.

Gillian Willard was one of only 5 runners to break 1 hour of the event, winning OA for females with a time of 58:41.

Brian managed a very solid 1:09, making him the 4th H+Per in the top 10.

Ed came in 11th OA but won his AG with a great 1:12 OA time.

Candice was in just behind Ed with a time of 1:15, also winning her AG!

Cari came in next for the team with a time of 1:17, placing her 4th in her AG and less than 1 minute ahead of her frenemy- Laura Hewitson.  Laura was right behind with a solid 1:18:15.

New H+P member- Jon Krys was in next for the team with a solid 1:19:13 placing second in his AG.

11K
Rankings

Coach Dyce showed his recovery from STWM went well, pulling off the OA win with a time of

40:50.

Nick ran a strong 41:28 just one week removed from his half marathon PB, placing 2nd OA in 41:23.

Eric Hunsberger was next for the team, running exactly 4:00mins/K, finishing 6th OA and 2nd in his AG with a time of 44:00.

Andrea Sweny continues to put in an amazing year, winning the 11K in 46:21!

Vicki came in 5th for H+P, winning her AG in 51:18.

Heidi had another great results, completing the 11K in 1:01:39 and placing 2nd in her AG.

The Heijs were in next for the team, running and finishing together in 1:22 as they start their build for 2016.

11K- Team
Results

While there were no other teams in the event, our top 5 (consisting of 1st OA- Greg, 2nd OA- Nick, 6th OA- Eric, 1st OA female- Andrea and AG winner Vicki) had a great average pace of 44:52.

That's it for the 2015 Remember Run.  Did we miss your result?  Let us know!

#cantowontstop

Princess Health and 2015 Hamilton Road2Hope.Princessiccia

Princess Health and 2015 Hamilton Road2Hope.Princessiccia

Gusty 13:28 Add Comment

One of our final big goals for the 2015 season was the Hamilton Road2Hope marathon and half marathon.  While the temperature was perfect, winds were very challenging, especially at the top of the escarpment.  The team powered through and still produced a collection of solid performances.

Full Marathon:

Our rankings

The winds were brutal for these guys, forcing some of our runners to fall of their pace and drop out.  There were 5 H+Pers who fought hard and finished with great results:

Just two weeks removed from his PB at STWM, RunnerRob ran very strong 2:38:18, good for 2nd OA and his second fastest marathon to date.

Luke, on little pure marathon training relied on his massive IM base to carry him to a very successful 3:06:38.

In her fist marathon ever, Emily Hunter ran an outstanding 3:21:04.

Howie and Manny treated this as a fun run, coming in with finishing times of 4:21 and 4:52 respectively






Half Marathon
Our Rankings

With a recent course change, this route was measured by officials to be 21.34 in the week following

the race.  While it's something that rarely happens at a race of this size, we sill had a great time and some solid results:

Coach Sean finished 7th OA with a time of 1:17:21.

Nick Burt, despite the extra distance ran an outstanding half marathon PB of 1:22:13.

Kailey Haddock had a strong run, and like Nick was able to finish with a strong 1:30:47 PB.

Holger ran his usual consistent pace, coming in with a 1:30:50 final time.

Gillian came in just behind Holger, running 1:31:23.

Dave was the 1:40 pace bunny for the race, and ran the perfect pace to finish the job, coming in just over 1:41 (which would have been 1:40 at 21.1).

Dragan was in next just behind Dave with his second best half ever: 1:44.



10K
Team Rankings

Schuyler Schmidt had an outstanding last-minute race, finishing in 42:35 and second OA!

Danny Nakluski continues to improve, running a very strong 46:06 for a new PB.

Kirstin Marks posted yet another PB, coming in just behind Dan with a time of 46:38!

Onward to RememberRun!

#cantwontstop

Princess Health and What They Really Think of Us (Swiss Version) - Novartis CEO Would Not Commit to Changing Company Behavior After Latest of Multiple Legal Settlements. Princessiccia

Princess Health and What They Really Think of Us (Swiss Version) - Novartis CEO Would Not Commit to Changing Company Behavior After Latest of Multiple Legal Settlements. Princessiccia

corporate integrity agreement deception Express Scripts impunity kickbacks legal settlements Novartis Switzerland what they really think of us

Gusty 08:50 Add Comment

The huge corporations which now dominate global health care are creating amazing records of repeated ethical misadventures.  We last discussed multinational Swiss based pharmaceutical manufacturer Novartis' escapades in early 2014.   Since then, the legal settlements and other legal findings just keep on coming, capped with a big one in late October, 2015.

We will summarize them in chronological order.


Japanese Health, Labor and Welfare Ministry Found that Novartis Concealed Serious Adverse Effects

In August, 2014, per the Japan Times, but apparently not reported widely outside of that country.

Novartis Pharma K.K. said it has failed to report at least 2,579 cases of serious side effects to the health ministry, including one that was fatal, related to its drugs for leukemia and other diseases, although employees were aware of the problems.

Of the total, 1,313 cases were related to Glivec and 514 to Tasigna, both drugs for leukemia treatment. Another 261 cases involved Afinitor, a cancer drug, the Japanese unit Swiss drug giant Novartis AG said Friday.

The findings were reported to the Health, Labor and Welfare Ministry the same day.

The marketing staff at Novartis Pharma recognized the side effects but failed to report them to the division in charge, breaking the drug firm�s internal rules, Novartis Pharma said. They were not fully aware of the importance of the problem and higher-ranking officials failed to supervise them properly, it said.

In February, per the PharmaLot blog, the Ministry decided to suspend the company for 15 days, after having issued a business improvement order to it.  More details of Novartis' problems in Japan can be found in the Japan Times.  I cannot find anything to suggest any one in a position of leadership at Novartis faced any negative consequences as a result, however.

Note that by allegedly hiding adverse effects of its drugs, it is possible that the company's alleged actions led doctors and patients to believe the drugs were safer than they really are, possibly leading to overuse of the drugs and resulting in even more adverse effects.  I did not see a discussion of possible patient harm in the discussion of this case.


Novartis Executive Pleads Guilty to Bribing Polish Official

In October, 2014, per a short Reuters (UK) article, and apparently not mentioned elsewhere,

An executive at a pharmaceutical company in Poland who pleaded guilty in a bribery case involving improper payment, works for Novartis, the Swiss drugmaker said on Thursday.

Poland's anti-corruption bureau said on Tuesday two women had appeared in court in a case in which a health fund official was given a tourist trip worth more than $1,000 (620.67 pounds) in exchange for backing the sale of a particular drug.

Both defendants pleaded guilty....

The drug involved was not clear, and the company suggested this was an individual act ("the enquiry relates to an individual and the company is not part of the enquiry.")  Why an individual would do something like this if not to advance her career is not clear, however.  I cannot find any followup coverage of this, nor anything to suggest the supervisors of the executives involved faced any negative consequences.

Again, by bribing an official to promote a particular drug, this case could have led to overuse of the drug, and potentially to patient harm from the drug's adverse effects. 

Novartis Subsidiary Sandoz Settles Allegations that it Misrepresented Pricing Data to US Medicaid

In March, 2015, per the PharmaLot blog,

In what the federal government says is the largest such settlement ever reached, Sandoz has agreed to pay $12.64 million to resolve allegations that it misrepresented pricing data on medicines that were provided to the Centers for Medicare & Medicaid Services.

Sandoz, which is owned by Novartis and markets hundreds of generic drugs in the U.S., allegedly misrepresented the average sales price data to Medicare between January 2010 and March 2012, according to a statement from the Office of the Inspector General of the U.S. Department of Health & Human Services.

A Novartis spokeswoman writes that the drug maker did not admit to any liability or wrongdoing. 'Sandoz continues to be committed to providing high-quality, affordable medicines to U.S. patients and conducting business with customers and the government with integrity.' As part of the settlement, Sandoz agreed to provide certification that it established a government pricing compliance program.

As the OIG explains, Medicare uses the pricing data to set payments for most drugs covered under Medicare Part B....

Again, no one who authorized, directed or implemented any price misrepresentation faced any negative consequences.  Futhermore, as often occurs in US cases, the company did not admit any wrongdoing, and provided the usual public relations boilerplate about upholding the highest principles, the allegations leading to the settlement notwithstanding.

Express Scripts Settles Allegations that it Accepted Kickbacks from Novartis

In May, 2015, also per the PharmaLot blog,

Express Scripts  has agreed to pay $60 million to resolve allegations by U.S. authorities that a business unit participated in a kickback scheme with Novartis that caused federal health care programs to pay for a medicine based on false claims, according to court documents and a regulatory filing.

The U.S. Department of Justice alleged that Novartis offered patient referrals to Accredo Health Group, which is a specialty pharmacy run by Express Scripts, in exchange for bolstering refills of Exjade, a drug used for reducing excess iron in patients who undergo blood transfusions....

Apparently other lawsuits involving allegations of Novartis payments to other pharmacies are pending. Note that the events alleged in some of these proceedings may have occurred while Novartis was already subject to a so-called corporate integrity agreement,

a key issue to watch is the extent to which a so-called Corporate Integrity Agreement that Novartis signed in 2010 factors into the proceedings. These agreements typically run for five years and require a company to establish an internal compliance program and report violations.

At the time that Preet Bharara, the U.S. Attorney in New York, announced the lawsuits against Novartis two years ago, he called the drug maker a 'repeat offender,' and the lawsuits noted that the violations alleged in the litigation took place before and after the CIA was signed.

Note that the settlement was with Express Scripts, although it involved allegations of misbehavior by Novartis.  Note also that this settlement throws into doubt one mechanism now widely used by law enforcement in the US to settle cases involving big corporations, the corporate integrity agreement or defererred prosecution agreement.  These are agreements made by corporations not to behave badly again.  Yet this case may yet demonstrate that these agreements do not deter future bad behavior.

Again, so far, this settlement did not involve any negative consequences for who may have authorized, directed or implemented the bad behavior either at Express Scripts or Novartis.

Novartis Settles US Allegations of Kickbacks to Enhance Sales of Multiple Drugs

In late October, 2015, a larger settlement, at least in monetary terms, of related issues was announced, per Reuters,

Novartis agreed in principle to pay $390 million to settle U.S. allegations that it used kickbacks to speciality pharmacies to push sales of some drugs, the Swiss company said on Tuesday, hitting third-quarter earnings.

Since this case involved hundreds of millions dollars, it got a bit more coverage than the others.  For example, Bloomberg provided some more specifics,

The payment covers all claims related to the medicines Myfortic, Exjade, Tasigna, Gleevec and TOBI, the company said. The U.S. had sought as much as $3.3 billion from Novartis for Exjade and Myfortic claims, claiming it had referred patients to specialty pharmacies and paid kickbacks in the form of rebates to get those pharmacies to recommend the drugs to patients and to increase sales.

It is customary in such settlements for them to allow the accused corporation to avoid any admission of guilt, often with some statement that the corporation neither confirms or denies the allegations.  In this latest cast, however, while the company issued the usual "neither confirm nor deny" statement, the Novartis CEO appeared to want to deny the allegations despite his willingness to pay so many millions to get them behind him, as per Reuters,

Chief Executive Joe Jimenez told reporters Novartis had made the disputed payments to ensure patients took their drugs, including treatments to prevent rejection of transplanted organs, but U.S. government attorneys disagreed.

'It's something we just believe we want to put behind us,' Jimenez said. Novartis said it neither admitted nor denied liability as part of the settlement.

How the payments or rebates to the pharmacies had anything to do with improving patient adherence is not clear.  Mr Jiminez's expertise in improving patient adherence is similarly not clear.  Per his official company biograpphy, his education was limited to business school, and before becoming a Novartis executive, he ran the Heinz company, makers of the famous ketchup (look here and here).  

Note that if, despite the protestations of the CEO to the contrary, the effect of the company's alleged actions was to over-promote use of the drugs, the results could have been excess adverse effects for patients. 

Furthermore, and despite this possibility, per the Wall Street Journal, the CEO also seemed unwilling to agree that the company would change any of its practices beyond paying the money,

Chief Executive Joe Jimenez said the rebates were designed to induce specialty pharmacies to ensure that patients completed a course of medicine. He added that Novartis still used this 'quite common' practice at specialty pharmacies in the U.S.

'We continue to maintain that specialty pharmacies must continue to play a role in ensuring patient adherence,' he said. 'How that is going to play out as to whether we change our behavior or not remains to be seen.'

This suggests that CEO Jiminez really thinks that the company should pay the money and then continue doing what it pleases, based on the rationale that the payments to or discounts given pharmacies were meant to improve patient adherence, not oversell the drugs.  This may reflect what he really thinks of what his company ought to be doing for, or to us, that is to or for the patients who take the drugs it manufactures. 

 Nonetheless, a public relations release tried to make those comments inoperative.

Some media coverage did not accurately reflect our position and the seriousness of the Company's commitment to working with the government to ensure our behaviors and interactions with specialty pharmacies meet the highest ethical standards. As such, we want to emphasize the following points:

Novartis will make detailed admissions of fact concerning the Government�s allegations as part of the final settlement.

Any reports suggesting that we are not addressing the Government�s concerns or the particular issues on which the litigation focused was not intended by the Company.

We remain committed to working with the government on corporate integrity obligations, including those relating to specialty pharmacies, and conducting our business in an ethical manner that is fully compliant with the law.

We await the statement of facts.  Maybe this statement will prove true, but given that the original statement came from the CEO, to whom the PR people who wrote the satement report, perhaps CEO and former purveyor of ketchup Jiminez meant what he said.  As noted in the Modern Healthcare blog,

Patrick Burns, co-director of the Taxpayers Against Fraud Education Fund, a not-for-profit funded by whistle-blowers and law firms that represent them, said he remains skeptical of the company's intentions.

Burns said Jimenez's original statements smack of disrespect for the U.S. Justice Department and the U.S. attorney general.

'It's a level of arrogance and ignorance which is jaw-dropping,' Burns said. 'You have the CEO coming out and brazenly saying we will not even change our practice. I think this really is the time for the attorney general to show her teeth.'

We also await any such dental findings. 


Summary

This set of misadventures are just the latest in a long series by Novartis.  In March, 2014, we noted:
- Italian authorities had fined Novartis and Roche for colluding to promote the use of an expensive opthamologic treatment
- the NY Times published interviews with physicians ostensibly showing how Novartis turned them into marketers for the drug Starlix
- Japanese investigators charged Novartis with manipulating clinical research
- Indian regulators canceled a Novartis import license, charging the company with fraud.

Also,  in 2013, Novartis was fined for anti-competitive practices in its marketing of Fentanyl by the European Commission (look here), and in 2011 its Sandoz subsidiary settled allegations of misreporting prices in the US for $150 million (look here)   Other Novartis misadventures from 2010 and earlier appear here.  So Novartis has quite an impressive, if not infamous record of ethical failures.

Nonetheless, the march of its legal cases continues.  Furthermore, after the latest case, the Novartis CEO suggested that he saw no clear need for the company to change its ways, even though his PR people later tried to recast his statements.

So we see that the big health care organizations which now dominate health care globally continue to misbehave, and current legal efforts centering on settlements and fines seem to do nothing to deter continued misbehavior.  Maybe it is time to end the impunity of the corporate managers who have become rich while such behavior continues on their watch.  Modern Healthcare quoted Mr Burns as saying

the financial penalty in this case didn't seem to be enough to fix the problem. He believes the government needs to begin excluding executives such as Jimenez from federal healthcare programs in order to better get its message across that such behavior won't be tolerated.

In the new PharmaLot blog, Ed Silverman was hopeful that things may really be getting ready to change. He first noted, as we have done many times previously,

Over the years, a parade of drug companies has reached settlements, mostly for paying physicians to favor their medicines or illegally marketing products. Rarely, though, do executives suffer any consequences.

Also,

Mostly, the federal government resorts to large fines, even though countless people may have been prescribed medicines unnecessarily � at great expense and sometimes great harm. And drug makers simply treat these penalties as a cost of doing business. The failure to come down harder is sadly reminiscent of the recent financial crisis in which most heads of the biggest banks escaped unscathed.

Lately, however, there are signs the government might be changing its approach toward recalcitrant executives, and such a move is long overdue. After all, if individuals are not held accountable, the senior officials who run these companies have little incentive to play by the rules.

One can only hope, I suppose.  But to conclude as I have so many times before....

There seems to be increasing recognition that the continuing rise in US health care costs is unsustainable, and that these costs are not buying us good health care.  There are calls to avoid unnecessary, and sometimes harmful care.  Yet there is a persistent disconnect between how continuing dishonest behavior by health care organizations, impunity of their leaders, and lack of accountability by their board members fuel rising costs, shrinking access, and bad outcomes for patients.

To truly reform health care, we will have to at least recognize the causes of the current dysfunction.  Recognizing how health care dysfunction is created by unaccountable, dishonest leadership should lead to true reform that would promote well-informed, honest, accountable leadership that puts patients' and the public's health ahead of personal gain.  

Princess Health and Food Reward Friday. Princessiccia

Princess Health and Food Reward Friday. Princessiccia

Food reward Fridays

Gusty 09:11 Add Comment

This week's lucky "winner"... the Reese's PBC Burger!!

Image credit: The Works

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Princess Health and The Corporate Physicians' Dilemma - Three Hospital Systems Settle Cases Alleging Pressure on Employed Physicians to Refer Patients Within the System. Princessiccia

Princess Health and The Corporate Physicians' Dilemma - Three Hospital Systems Settle Cases Alleging Pressure on Employed Physicians to Refer Patients Within the System. Princessiccia

Adventist Health System Broward Health corporate physician crime Stark Law Tuomey Healthcare System

Gusty 14:14 Add Comment

Physicians are sworn to provide the best possible care to each individual patient.  Yet in the US, physicians increasingly practice as employees of large organizations, sometime for-profit corporations.  Physicians may be in a bind when their bosses pressure them to make patient level decisions so as to increase revenue, regardless of their effects on the patients.

In particular, physicians' oaths may suggest that patients who require referrals for consultation, diagnosis or treatment should go to the professionals and facilities best suited to their particular problems.  However, physicians bosses may want physicians to refer patients within their organizations.

Three recent cases illustrate this sort of bind for corporate physicians.  All cases involved large monetary settlements by hospital systems of allegations that they paid physicians incentives to refer patients within the system, apparently without regard to patients' needs.  They are discussed in roughly   chronological order of media coverage.

Broward Health  (North Broward Hospital District)

The reports of the settlement appeared in mid-September, 2015.

The Actual Settlement

According to the Miami, FL, Sun-Sentinel,

Broward Health, the taxpayer-financed system of hospitals and health care facilities, will pay $69.5 million to settle federal charges that it made illegal payments to staff physicians, using a secret compensation system that rewarded doctors for patient referrals and penalized them for accepting charity cases.

In addition, according to the Miami Herald,

Broward Health Chief Executive Dr. Nabil El Sanadi signed a 46-page Corporate Integrity Agreement with the Department of Health and Human Services (HHS) that requires the district to establish a compliance program. Among other things, the agreement imposes new duties on both commissioners and staff to monitor, report and certify that its financial arrangements with physicians and vendors meet federal requirements.

Note, however, that the Adventist system admitted only to "oversights."

Physicians' Incentives

According to the Sun-Sentinel, the filing by whistle-blower Dr Michael Reilly stated,

the hospital district maintained secret compensation records called Contribution Margin Reports for cardiologists, oncologists and orthopedic surgeons, who collected salaries of $1 million and higher. These records rewarded physicians for referrals to hospital services, such as radiology and physical therapy, and penalized them for taking on low-paying charity cases. Tying compensation to referrals could raise medical costs by generating unnecessary work and could compromise patient care, the lawsuit stated.

In one case, the lawsuit stated, orthopedic surgeons expressed concern about the quality of the hospital district's radiology and MRI services and tried to refer patients to outside providers. But they were pressured by the district's financial officials to keep the referrals within the district.

'Broward Health's scheme to overcompensate physicians in exchange for referrals over the last eight years has been a deliberate strategic plan to boost hospital admissions and outpatient visits for all paying patients, including patients with Medicare and Medicaid coverage,' the lawsuit states. 'Broward Health's financial strategists have personally profited from bonus payments based in part on hospital revenues.'

Furthermore, according to a later Sun-Sentinel article,

The title of medical director brought salary increases to several cardiologists at Broward Health, topping off pay packages that often went north of $1 million.

But according to a whistleblower's lawsuit that led to a $69.5 million settlement with the federal government this week, these doctors did little work for their extra compensation from the tax-supported hospital system.

The medical directors' contracts provided hourly compensation for work done in that position and required them to submit time records. One physician counted his personal exercise routine as his medical director's time, according to the lawsuit. Another double-dipped by counting time spent performing medical procedures that would have been performed anyway. Such 'medical director' jobs, the lawsuit said, were 'largely sham arrangements designed to boost physician compensation with little or no substantive work required in return.'

 Failure of Oversight

Also according to the Sun-Sentinel,

Reilly said he first learned of the compensation agreements when he considered taking a job with the district. When his lawyer saw the proposed contract, he told him to tear it up and stay away from such compensation schemes.

He said he brought up the issue in two public meetings and in a private conversation with the district's then-CEO, and was brushed off. He blamed 'the ignorance that made them interpret the law to fit their financial interests and the arrogance to think they could get away with it.'

Adventist Health System

This case came to light a few days later, as reported by the Orlando Sentinel, and was conceptually similar,

The Actual Settlement

In what's considered one of the largest health-care-fraud settlements involving physician referrals to hospitals, Adventist Health System is paying the U.S. government and four states, including Florida, a $118.7 million settlement.

A large portion of the settlement amount � $47 million � is based on allegations involving Florida Hospital Medical Group, which is owned by Adventist, and nearly three dozen Florida Hospitals in the state. That includes the Florida Hospitals in Orlando, Altamonte, Apopka, Celebration, east Orlando, Kissimmee and Winter Park.

Physicians' Incentives

Again from the Orlando Sentinel,

The complaints allege that Adventist initiated a corporate policy that directed its hospitals to purchase physician practices and group practices or employ physicians in their surrounding areas in order to control all patient referrals in those locations.

'To convince doctors to sell their practices to Adventist hospitals or to become hospital employees, Adventist hospitals allegedly provided excessive compensation, perks and benefits to the physicians,' according to the Phillips & Cohen complaint. 'The hospitals were willing to pay doctors more compensation than considered fair market value and absorb persistent losses in those deals because of the revenue the doctors' stream of referrals generated for Adventist from government healthcare programs and elsewhere.'

The complaint listed a number of ways Adventist allegedly rewarded doctors, including leasing a BMW and a Mustang for a surgeon; a $366,000 base salary for a family physician because of his high level of referrals for X-rays and blood tests; and a bonus of $368,000 for a dermatologist who worked only three days a week.

 To conceal this and avoid refunding payments, the health system then falsely said that the services identified in its annual cost reports were in compliance with the federal law, the lawsuits allege.

Failure of Oversight

Sherry Dorsey, who joined Adventist in 2012, was a corporate vice president whose responsibilities included oversight of physician compensation, and she found widespread problems with how the nonprofit health system compensated doctors who referred patients to Adventist hospitals, according to a statement by Marlan Wilbanks of Wilbanks & Gouinlock in Atlanta who represented Dorsey.

She complained to top health-system officials 'to no avail,' said Wilbanks.

More details  about the goings on at the local Adventist owned Park Ridge Hospital were reported by the Asheville (NC) Citizen-Times,

Hospital executives knew about serious billing and miscoding problems on Medicare and Medicaid cases, as well as overcompensation of doctors, and one executive even expressed concerns about possible jail time, terming as 'insane' the amount of money Park Ridge would owe the federal government if overbilling came to light.

Tuomey Healthcare System

This case has been in the works for years, but an apparently final outcome was announced in October, 2015.

The Actual Settlement

 As reported by the Charleston (SC) Regional Business Journal,

The Justice Department said it has resolved a $237 million judgment against Sumter-based Tuomey Healthcare System for illegally billing the Medicare program for services referred by physicians with whom the hospital had improper financial relationships.

Under the terms of the agreement, the United States will receive $72.4 million....

Unlike the other two cases, this one involved a jury finding of guilt,

On May 8, 2013, after a month-long trial, a South Carolina jury determined that the [hospital's contracts with physicians]  ... violated the Stark Law. The jury also concluded that between 2005 and 2009 Tuomey had submitted 21,730 false claims to Medicare with a total value of $39,313,065.

On Oct. 2, 2013, the district court trebled the actual damages and assessed an additional civil penalty under the False Claims Act in favor of the United States for a total of $237 million.

The United States Court of Appeals for the Fourth Circuit affirmed the judgment on July 2.

Having to pay the $237 million fine would force it to file for bankruptcy, Tuomey officials said.

The Physicians' Incentives

 The case arose from a lawsuit filed on Oct. 4, 2005, by Michael K. Drakeford, an orthopedic surgeon who was offered, but refused to sign, one of the illegal contracts.

So,

 The government argued that Tuomey, fearing that it could lose lucrative outpatient procedure referrals to a new freestanding surgery center, entered into contracts with 19 specialist physicians that required the physicians to refer their outpatient procedures to Tuomey and, in exchange, paid them compensation that far exceeded fair market value and included part of the money Tuomey received from Medicare for the referred procedures.

Failure of Oversight

The government argued that Tuomey ignored and suppressed warnings from one of its attorneys that the physician contracts were 'risky' and raised 'red flags.'

Summary

In the US, physicians increasingly practice medicine as employees, often of large organizations, rather than as individual professionals or within professional groups.  Such employed practitioners must answer to leaders who are now usually generic managers rather than health care professionals.

In three recent legal cases, there was evidence that a hospital system provided financial incentives for employed physicians to refer patients within the system, apparently without regard to the appropriateness of such referrals to individual patients.  In several cases, hospital management ignored physicians' protests, or lawyers' or even their own middle managements' warnings.  In one case, hospital middle managers seemed to acknowledge the problematic nature of physician's incentives, but seemed powerless to protest to higher managers.   In one case, there was a jury finding of violation of US law.

These three cases, all announced within a few weeks, suggest that US hospital system management may frequently push employed physicians to keep referrals within the system , regardless of  individual patients' conditions or needs.  The reason may be to increase system revenue, and sometimes to increase the managers' own compensation.

This is another reason to think that the corporate practice of medicine, which was once banned in the US, is an increasing threat to physicians' values and an increasing cause of health care dysfunction.

Dr Arnold Relman reminded us that physicians used to shun the commercial practice of medicine (look here).  Physicians and other health professionals who sign on as full-time employees of large corporate entities have to realize that they are now beholden to managers and executives who may be hostile to their professional values, and who are subject to perverse incentives that support such hostility, including the potential for huge executive compensation. 

Neoliberals promised us that treating health care like a business, and an unregulated one at that, would lead to a new golden age.  The age has been golden, but mainly for the top managers of corporate medicine. 

The recent flurry of cases alleging that corporate physicians may be pushed by management into inappropriate referrals to make more money for their employees is another reason to rethink whether corporate practice of medicine should again be banned