To Die in Texas - Dr Mahmood's Apparently Fatal Stealth Hospital System Collapses Nearly Anechoically

I would bet that most people in the US still think our health care system is highly regulated.  Some may thus conclude that the system is basically safe, because, for example, drugs have to be proven safe and effective to be approved by the government, and hospitals must be licensed and run by competent people who are thoroughly vetted.  Of course, some people still think that the US has, or had until recently, the best health care system in the world (look here).

Furthermore, the view that less regulation is always better is no quite popular in the US and elsewhere.  For example, after the chemical spill threatened water supplies in the capitol of West Virginia, the Dallas News reviewed Texas Governor Rick Perry's consistent attacks on government regulation.   

'American business in general, and American agriculture specifically, have had enough of bureaucracy at both the federal and state levels, but especially bureaucracy out of Washington,' Perry said at a congressional hearing. 'The men and women who feed and clothe this nation are suffocating under the weight of mounting federal regulations.'

That was back in 1993, when Perry was Texas’ agriculture commissioner. Now Texas’ longest-serving governor, Perry has remained steadfast in his opposition to government regulations.

Some who take such a neoliberal stance may say the health care system is over-regulated, and thus is inefficient and not innovative, leading to our high costs and poor access.

However, an amazing case out of Governor Perry's Texas that was made public last year, and I regret I just heard about recently, suggests how little health care may be regulated, and how unregulated health care, whether or not it is efficient, may be deadly.

As reported in the Dallas News, July, 2013, in the last few years there seems to have been an epidemic of quality problems in a number of seemingly unrelated small rural Texas hospitals.  The report focused first on one hospital,

Renaissance Hospital Terrell

After for-profit hospital corporation Renaissance Healthcare declared bankruptcy in 2008 (look here), it sold its hospital in Terrell, Texas to RH Terrell Management LLC owned by one Dr Tariq Mahmood.  Almost immediately, however, there was trouble.  First Edwina Henry, the quality director, spied a doctor making questionable entries in patients' charts:

from her office, she had a clear view of doctors’ foot traffic through the medical records department.

When she saw [Dr Tariq] Mahmood jotting in patient charts, she knew he wasn’t seeing patients. Mahmood himself had not been credentialed to treat patients — a process in which management vets backgrounds and competencies of doctors. Part of Henry’s job was tracking such evaluations. She also knew it was a breach of privacy laws to review patients’ medical records.

'I immediately questioned some of the clerks and [insurance billing] coders,' she said. They were deeply concerned, saying he was altering the patients’ records to help boost reimbursements for insurance claims, Henry said.

When Ms Henry complained, things did not go well,

Henry made her confidential call to the bankruptcy court in early November 2008, alleging potential fraud and threats to patient care that were eluding government notice [Ed - note that the hospital was going through bankruptcy proceedings and had just been acquired by a new owner]. The court forwarded her complaint to the U.S. Justice Department, the Texas attorney general’s office and the state health department, officials confirmed.

Later that month, the state health department sent an inspector to the hospital. However, the visit was brief, Henry said, and the inspector didn’t interview her or seek her help in obtaining records.

Williams, the health department spokeswoman, told The News her agency’s records show the inspector was unable to substantiate violations at the time.

Henry was terminated from Renaissance as part of a 'restructuring'....

Then the hospital was cited for turning patients away from the emergency department,

At Renaissance, two women in labor, one bleeding, were refused treatment. The inspection reports don’t reveal whether the women suffered complications because of the delays.

A Renaissance employee told one of the women that if she 'could stand there and have a conversation with them then (she) wasn’t about to have a baby,' reports say.

Then there were problems with infection control,

At Renaissance, no supervision over infection control could be found. For three months in the summer of 2010, no one was in charge of tracking infectious diseases or preventing their spread.

The next year, the problem was blood transfusions

Inspectors returned to Renaissance in September 2011 to investigate a botched blood transfusion procedure. They found that a registered nurse had not supervised the patient’s care. In another case, an inspector witnessed an unsupervised vocational nurse administering blood to a patient, despite no evidence that she was competent to do so — another violation.

In 2012,

During the summer, the Texas secretary of state had revoked Renaissance’s business charter for failure to pay franchise taxes.

That office didn’t share the information with the health department; it isn’t required to do so.

In September, state health regulators notified Renaissance that they were proposing a $35,050 fine for 13 violations, including the nursing supervision failures, dating as far back as 2010.

Williams, the health department spokeswoman, could not explain why the fine process took nearly two years since the first violation. 

Finally, in 2013, patients started to die,

In January of this year, when state inspectors returned to Renaissance, they found nursing supervision failures yet again.

This time, the failures had led to three deaths: All ER patients. All with severe breathing difficulties. All receiving little to no intervention as their conditions worsened.

In particular,

[Eve] McCallum sought her own care after complaining of shortness of breath during a family dinner.

McCallum had chronic obstructive pulmonary disease. When she was admitted, nurses were ordered to monitor her vital signs and oxygen levels. Her breathing soon improved, said her niece, Lou Ann Sims.

'We were fully expecting to pick her up the next morning,' Sims said.

Instead, they watched helplessly as her condition deteriorated. On Christmas Day, a physician explained to McCallum’s family that she had to be transferred to the intensive care unit.

Later, Sims witnessed a scene she can’t let go of: Her aunt lay connected to a ventilator while a nurse stood smoking a cigarette just outside the door. The nurse had propped open the door with an IV pole.

The family immediately sought to have McCallum transferred to another hospital. But hospital officials told them 'this would be a lateral move and was not allowed,' according to a transcript of an interview the family later conducted with state officials.

McCallum died two days later.

Inspectors wrote that a licensed vocational nurse had been left in charge of her treatment, without a registered nurse’s oversight. There was no evidence an RN had assessed her condition on admission or was watching over her in the ICU.

They could find no doctor orders to place her on oxygen, no order for medications administered to her, 'nor evidence of communication with the M.D.'

Suspecting more than just care breakdowns at Renaissance, McCallum’s family reported her death to the Texas attorney general’s fraud-control unit.

So partially in response to this egregious case,

By February, the state health department had moved to revoke Renaissance’s operating license, and CMS had ordered its federal funding terminated — only the ninth time nationally in the last three years CMS had taken such a step.

Even those steps could not shut down the hospital, but city officials took that last step due to the failure to pay taxes.

Other Hospitals

Dallas News reporter Miles Moffeit found several other cases of severe problems at small hospitals owned by Dr Mahmood, with at least one patient death apparently resulting, .


Shelby Regional Medical Center

This hospital was owned by Tenet Healthcare, but was sold to another of Dr Mahmood's companies, Shelby Medical Holdings, in 2007 (look here). 

In 2009, this hospital was also cited for providing insufficient treatment in the emergency department.

In 2012, things were really falling apart,

In October 2012, inspectors were at Shelby chronicling dirty, clogged air-conditioners and failures to prevent ceiling plaster 'from falling into the patient food service line and contaminating food.' Those problems put patients’ safety in 'immediate jeopardy,' they wrote.

As inspectors roamed Shelby’s halls in December, the power suddenly went out in four buildings, though not in the main hospital facility itself. The electric bill hadn’t been paid. They found other debts stacking up, too — as much as $190,442 owed to as many as 79 service providers.

Signs of neglect were everywhere. Only three of 20 patient rooms inspected were 'fully functional for patient care,' they wrote. They found holes in walls, dirty and tattered curtains, and patients complaining of heat pouring from the faulty A/C system.

Finally, in 2013, another patient died,

On Wednesday, CMS cut off federal funding to ... Shelby Regional Medical Center in Center in East Texas after regulators said a patient rushed there by ambulance never received treatment from a doctor.

The ER physician wouldn’t leave his 'sleep room,' the inspection report said, resulting in the patient’s death. Regulators also cited the hospital for failing to vet backgrounds of doctors and nurses.

Apparently soon thereafter Dr Mahmood shut the hospital down due to "legal issues that ... [he] is facing," per the Shelby Light and Champion.


Lake Whitney Medical Center

Dr Mahmood apparently purchased this hospital from a struggling local hospital authority in 2007.  

In 2009, it was cited for inadequate care in the emergency department,

At Lake Whitney, a nurse acknowledged to inspectors that she had shredded records of a patient who was denied care following a fall, according to a report. The 'patient wasn’t going to pay anyway,' the nurse was quoted as saying in the document.

In 2010, there was evidence of major infrastructure problems,

At Lake Whitney, patients were served food on rusty 'over-the-bed tables that were a source of possible infections for open wounds.' Bulging ceiling tiles exposed pipes. Pavement outside a main hospital door was 'cracked and unlevel,' putting patients at risk of injury.

As Dr Mahmood's legal troubles mounted, the hospital was sold to Frontier Hospitals Inc (look here).


Cozby-Germany Hospital 

I have been unable to discover when Dr Mahmood purchased this hospital. 

In 2010, it became apparent that the hospital was not properly licensed,

'The administrator reported the new owner had not notified (CMS) … and has not applied for hospital licensure with the state licensing agency,' a report said. [The owner] ... also was found to have appointed his own employees to the hospital’s governing board of directors, instead of independent outsiders.

And there were more severe problems with credentialing,

At Cozby-Germany hospital, hospital inspectors discovered that the chief of staff and another doctor had expired medical licenses. There were no 'functional' nurse and doctor credentialing processes, and clinical policies had not been updated since 2008, they said. The hospital pledged reforms.

But in May 2011, records show, Cozby hired one of Texas’ most notorious doctors, Rolando Arafiles.

At the time, Arafiles had been placed on probation by the medical board for allegations of harming nine patients, overbilling and improper coding at a Winkler, Texas, facility, according the board. He also was disciplined for intimidating the Winkler nurses who blew the whistle on his practices.

In November, Arafiles would be convicted of two felonies linked to the retaliation and would surrender his license.

In 2013, two local doctors purchased the hospital.

The Vanishing Owner

What made this series of cases all the more amazing is that it was really one interlinked case.  All these hospitals, plus a few more, had the same owner.  Yet no one, especially  no one in state or federal government knew that until 2013 when the facts were uncovered by Mr Moffeit.

[Dr Tariq] Mahmood, a Pakistan-trained doctor, obtained his Texas medical license in 1978. Since 2008, he has practiced medicine only at his Central Texas Hospital in Cameron, south of Waco, records with the Texas Medical Board show. Older documentation is not available.

Over the last two decades, he has purchased at least six hospital companies and two home-health care agencies, according to filings with the Texas secretary of state. He also has invested his money outside health care, acquiring the historic Hotel Lawrence in downtown Dallas, property records show.

In addition to Renaissance, Shelby and Central Texas Hospital, Mahmood owns the Lake Whitney Medical Center in Whitney and Cozby-Germany Hospital in Grand Saline. He sold Community General Hospital in Dilley around the time of his arrest in April.

The hospitals have no common corporate identity and little or no website presence, making it difficult for anyone to know they are owned by Mahmood or are part of a chain.

However, much bout Dr Mahmood was mysterious, and the deliberate cultivation of mystery might have slowed the response to this case.

Mahmood is rarely seen in the communities where his hospitals are located, say business associates and city officials. Sometimes they catch a glimpse of him passing by in a chauffeur-driven car.

'He’s almost impossible to track down' to discuss business matters, said Tom Elliott, a director for a nonprofit company that owns the hospital building in Grand Saline. 'He lets his people do the talking.'

Mahmood is a mystery to many of his own employees. He works almost entirely behind the scenes, they say, focusing largely on the business side of his operations. He often is traveling or spending time at his 10,000-square-foot gated estate in Cedar Hill, they say.

'We see him maybe once a year,' said one of his hospital physicians. 'The employees say he doesn’t like confrontation. I say he just doesn’t like to communicate. He seems to live in a different world.'

Aftermath

 At some point, the shadowy Dr Mahmood may have to answer for all this, at least to some extent,

In April, federal authorities charged the 62-year-old Cedar Hill resident with defrauding Medicare and Medicaid programs through $1.1 million in false billings.

Mahmood is accused of directing employees at his Central Texas Hospital in Cameron to alter underlying information in insurance claims from his other hospitals. 'In many cases,' the indictment alleges, these were 'for patients he had never seen.' Mahmood pleaded not guilty, and his attorney said he denies all charges. He has declined repeated interview requests from The Dallas Morning News. 

Note, however, that these are charges of financial fraud.  They do not obviously have to do with poor quality care, risks to patients' safety, or the deaths of at least three patients as discussed above.

This case was so bad that even the current Governor of Texas, Rick Perry, a politician known for taking a small government, minimal regulation stance, at least said he was going to take some action, as reported again in the Dallas News,

The governor’s office has ordered a 'deep and comprehensive look' at health care facilities owned by Dr. Tariq Mahmood, whose chain of rural Texas hospitals avoided serious regulatory action despite years of endangering patients.

The inspector general for the state Health and Human Services Commission and one of the agencies it oversees, the state health department, will conduct separate investigations, officials said Friday.

And in February, 2014, the Dallas News reported that the chief financial officer of the Dr Mahmood's stealth hospital chain was also in hot water,

The top administrator of a chain of hospitals that collapsed under the ownership of a North Texas physician faces charges that he defrauded the federal government of nearly $800,000 in stimulus funds.

Joe White of Cameron rose from maintenance man to head administrator and chief financial officer over hospitals once owned by Dr. Tariq Mahmood. Now he joins Mahmood in facing the possibility of prison time.

Like Mahmood, who pleaded not guilty, White is accused of identify theft and bilking the federal government of health care dollars. White has yet to enter a plea.

Note that the CFO and apparently COO was not even a professional generic manager.  He was a former maintenance man  and operator of a Radio Shack store.. 

Dr Mahmood has not yet come to trial.  Many questions about the case remain unanswered:
 -  Did Mahmood the only person besides his CFO cum maintenance man in charge of all this, or did he have other backers,  cronies, associates?
-  What happened to the rigorous state investigation promised by Rick Perry?
-  Given that what went on harmed patients, and hence was not just financial manipulation, are there any civil lawsuits pending?  Are there any other criminal investigations?\

Furthermore, despite its egregious nature, this case was amazingly anechoic  The only national recognition I could find was in Paul Levy's Not Running a Hospital blog.  Seven months later, I could find nothing in the national media, nothing in medical and health care literature.  Despite the amazingly poor quality of care in evidence, despite the fact that patients died, I could find no cries of outrage from those who proclaim to support quality health care or patient safety. 


Summary

Dr Mahmood and his chief operating and financial officer collectively displayed leadership that was ill-informed (the COO/ CFO was a former maintenance man), incompetent (see the egregious health quality problems listed above), self-interested (note the size of Dr Mahmood's mansion versus how little was obviously spent on his hospitals), opaque and dishonest (note how Dr Mahmood's ownership of the hospitals was obscured), and allegedly criminal.  This leadership persisted over at least eight years until it culminated in cases of apparently needless patient deaths.  

The amazing case of the stealth for-profit hospital system run by Dr Mahmood, and how its combined problems failed for so long to get systemic regulatory notice hardly suggest that our health care system is heavily regulated, or that current regulation can be relied upon to reassure patients that all is well and that the system is safe.

In fact, in the case of Dr Mahmood, government regulators did not seem to even want to know too much about hospital ownership,

Top health regulators weren’t even aware Mahmood owned several hospitals until The News sought information about them earlier this year. Regulatory agencies aren’t set up to track problem hospital owners or hold them accountable. Nor do they look for patterns of care breakdowns inside hospital chains.

'We just don’t have that authority,' said David Wright, deputy regional administrator for CMS. The federal agency oversees the state health department’s inspections of federally funded hospitals. 'We can only address problems in stand-alone facilities.'

Furthermore, it appears that modern regulators have decided to become hospital managers' and owners' best friends,

The process allows hospitals to avoid sanctions if they cooperate. Hospitals submit “corrective action plans” to remedy failures. It can take months for state regulators to bring penalties such as fines against a facility. In the case of Renaissance, it took years.

'We want to do what’s in the best interest of the patients, and our regulatory philosophy is to get hospitals into compliance,' said Carrie Williams, spokeswoman for the Texas Department of State Health Services. 'We’re not in the business of shutting down hospitals. We will give them some leeway and work with them.'

Of course, this minimalist, light touch regulatory methodology may have made some sense in an earlier era when nearly all hospitals were small community not-for-profit organizations, non-profit academic institutions, or were run by local governments.  It seems quaint, and hopelessly out of date in an era when most hospitals are part of ever larger systems, now often owned for-profit corporations, and when hospital system CEOs who are professional, and thus generic managers, not health care professionals, in an era of financialization and "maximizing shareholder value," that is, making short-term revenue the most important outcome.

Instead, the current minimalist regulatory system seems insufficient to prevent patients from dying of poor care allowed by poor leadership of health care organizations.  Much of the content of this blog has been about bad health care leadership, i.e., leadership that is ill-informed, incompetent, unsympathetic or hostile to health care professionals' values, self-interested, conflicted, dishonest, or even corrupt.  In my humble opinion, health care regulation ought to be sufficient to promote competent, caring, unconflicted, honest leadership that is accountable for putting patients' interests ahead of self-interest.  Regulation needs to be more intense, and much smarter, geared to the reality of a health care system that is now largely for-profit in an era when management dogma puts revenue ahead of all other concerns.

Maybe the deaths of some patients in Dr Mahmood's Texas hospital will finally let the air out of the mindlessly anti-regulatory bubble, and start some discussion of intelligent regulation to improve patient safety.

However, that cannot happen if this case remains anechoic.  I regret it took me so long to find it, but now I have done my part to start some echoes.  But where are the media, where are the journal editors, and where are those who so loudly proclaim their interest in patient safety and health care quality?

In particular, there are several prominent organizations that claim to promote health care quality and patient safety.  These organizations make these claims-

Joint Commission

 For more than 60 years, The Joint Commission has been a champion of patient safety by helping health care organizations to improve the quality and safety of the care they provide.

Leapfrog Group

 The Leapfrog Group is a voluntary program aimed at mobilizing employer purchasing power to alert America’s health industry that big leaps in health care safety, quality and customer value will be recognized and rewarded.

National Quality Forum

 Transforming our healthcare system to be safe, equitable, and of the highest value will take time and the work of many, but the potential rewards are great. The National Quality Forum (NQF) is a nonprofit, nonpartisan, public service organization committed to this transformation.

Robert Wood Johnson Foundation

Our efforts focus on improving both the health of everyone in America and their health care—how it's delivered, how it's paid for, and how well it does for patients and their families.

These  organizations should the ones to start the conversation about improving rather than forever shrinking regulation.   I have not heard anything from them about the deadly hospitals of Dr Mahmood.  Are they listening now?  Will we ever hear from them?  Time will tell.... 

 Note: the entire Dallas News series on the Mahmood hospitals can be found here. 

More Pharmaceutical Misadventures - Actelion Damages Upheld, Genzyme (Sanofi Subsidiary) Settled, Merck Fined

The march of legal settlements by large health care organizations goes on, albeit with ever more quiet footsteps as the number of journalists available to amplify their sounds declines.  Last week we noted the shutdown of PharmaLot, a journalistic blog edited by Ed Silverman that was one of the few that reported fearlessly on the pharmaceutical industry, warts and all.

So we dedicate this round up of legal settlements by pharmaceutical companies announced last month, December, 2013, to Ed Silverman, who reported on two of the cases below, and whose reports have been silenced by the shutdown of the PharmaLot web-site by its corporate owner.

In alphabetical order by name of the pharmaceutical company,

Actelion $40.7 Million Damages for Keeping Possibly Competitive Drug Off the Market Upheld

This story was reported by Ed Silverman on Pharmalot, and by the San Francisco Chronicle.  The basics, according to the latter article, were:

A state appeals court has upheld $407 million in damages against the Swiss biotechnology giant Actelion and its executives for buying a Bay Area company and using it to thwart another firm's plans to market a competing hypertension drug in the United States.

The drug, Fasudil, is manufactured by Ashai Kasei Pharma Corp of  Japan for treatment of pulmonary arterial hypertension, an often fatal disease of the lung arteries. In June 2006, Asahi signed a licensing agreement with the South San Francisco biotech firm CoTherix, which agreed to develop oral and inhaled versions of Fasudil and seek regulatory approval in the U.S. and Europe.

Less than five months later, Actelion bought CoTherix, paying a premium price of more than $400 million, and announced soon afterward that it was dropping plans to develop Fasudil. Actelion's own drug, Tracleer, dominates the U.S. market for treatment of the same disease and generates more than $1 billion in revenue a year.

Note that the federal appeals court judge, Terence Bruiniers, found that the actions by Actelion were not only anti-competitive, but may have harmed patients,

'By impeding the development of Fasudil, Actelion not only sabotaged a competitive and foreseeably profitable commercial venture, but prevented a drug with the potential for alleviating the suffering of patients with life-threatening and debilitating diseases from reaching the market,' Bruiniers wrote.

Further note that in this civil lawsuit, it appears that the top executives who engineered the anti-competitive actions that may have harmed patients will actually face negative consequences.  The judge also said,

the jury was entitled to conclude that three Actelion executives - CEO Jean Paul Clozel, chief scientific officer Martine Clozel, and Simon Buckingham, director of corporate and business development - had shown a disregard for the rights of Asahi and its customers and were liable for $30 million in punitive damages, about 10 percent of the executives' net worth.

Sanofi Subsidiary Genzyme Settled Charges of Encouraging Unapproved Internal Use of SepraFilm for $22 Million

The longest version of this story appeared in the Tampa Bay Times.  The basics were: 

 A Massachusetts-based biotechnology company has agreed to pay $22.28 million to resolve allegations brought by whistle-blowers in Tampa and Miami that it marketed an inappropriate use for a surgery medication, U.S. government attorneys said.

Genzyme, a corporation known for its research into drugs for rare genetic diseases, is paying the settlement in a lawsuit over Seprafilm, a material it manufactures for use in the operating room.

According to court documents, Genzyme sales representatives encouraged doctors to use the product in a manner not approved by the U.S. Food and Drug Administration, leading to improper claims for reimbursement from hospitals.

The details were:

 According to court documents, Seprafilm is intended to be applied during open surgery to prevent organs and muscle tissue from sticking together. However, the whistle-blowers and lawyers for the federal government alleged that Genzyme sales representatives taught doctors to use it in less invasive procedures — such as laparoscopic or 'keyhole' surgeries — by mixing it into a liquidlike 'slurry' that could be injected into the body.

Apparently the sales representative who blew the whistle in this case "recognized that this was a potential danger."  It certainly seems possible that the unapproved use of this material modified to be injected within the body might have resulted in harm to patients, and that at least its harmfulness when used in this manner had had never been tested.  However, in this litigation as supported by the US Department of Justice the plaintiffs were "not required to prove ... that patients had been harmed."

Note that unlike the civil case above, and as is typical of federal lawsuits against big health care organizations, those company employees who authorized or directed the questionable actions did not suffer any negative consequences.

(Added on 19 January, 2013) - Further note that as the article implied, but did not emphasize, since 2011, Genzyme has been owned by Sanofi.  Sanofi's last three major settlements since 2007 were summarized here. 

Merck Fined 15.3 Million Euros for Smear Campaign Against Generic Competition

This case was reported by Ed Silverman on PharmaLot, and briefly by Reuters,

The French competition authority said on Thursday it had fined Schering-Plough, now owned by Merck, 15.3 million euros ($21 million) over what it called a smear campaign against generic competition to Subutex, its drug for opioid addiction.

It also handed out a fine of 414,000 euros to parent Merck and another of 318,000 euros to British supplier Reckitt Benckiser for anti-competitive behaviour in staging the campaign in late 2005.

Note that while this case did not involve any implications of physical harm to patients, it seemed to involve active deception.

Summary

First, as we have said for years, legal actions like those listed above may or may not result in huge financial penalties, and rarely result in penalties for individuals who authorized, directed or implemented the actions in question, but do serve as markers of the extent of misbehavior by large health care organizations.  Such misbehavior may have adverse consequences for patients and for public health and the health care system.

Second, also as we have said for years, such actions mark the problem, but are unlikely to deter future problems.  In fact, many large health care organizations have settled strings of cases since we started trying to keep track of them (and may not have done so completely).  For example, the Genzyme, hence Sanofi settlement this year is at least the fourth major settlement by this company since 2007. 

Settlements resulting in fines imposed on a company as a whole are diffused, paid by stockholders, employees, and patients, and hence are likely to be regarded as a cost of doing business by top  management.  Managers, however, often are given huge financial incentives for all actions that increase short term revenue.  So managers are likely to continue to enable or direct bad behavior as long as it can bring in lots of revenue at no personal risk.

Third, while there has been a modest increase in discussion of ill-informed, mission-hostile, self-interested, conflicted, or even criminal or corrupt management since we started Health Care Renewal, the increasing plight of journalism seems to be making these issues more anechoic.  The shutdown of PharmaLot and the silencing of its archives is another reminder of how public relations and marketing are now overwhelming disinterested reporting (see this report by Pro Publica).

If we really want to reverse the downward spiral of our ever more expensive, less accessible, and lower quality health care system, we first have to preserve our ability to identify and loudly discuss its problems.

Roy M. Poses MD for Health Care Renewal

"Emotion, not Information" - the Lucrative Deceptive Marketing of Hospice, and its Potentially Fatal Consequences

One of the real recent advances in health care, in my humble opinion, was the organization of compassionate, palliative care for people at the end of life.  During my training and early career I saw too many patients with terminal illness getting aggressive, sometimes very painful treatments which at best only offered hope of briefly prolonging their lives.  Some patients chose such treatments with full knowledge of the implications, at times with the hope that they might survive until some significant event, for example, the birth of a grandchild.  Many patients, however, seemed to be suffering with no purpose.

The hospice and palliative care movement, however, offered true comfort to those with little hope of prolonged survival.  Good hospice care eased the final days of patients with advanced disease for whom no definitive treatments could be found.

Hospice seemed like a great alternative for such patients, but its reasonable use depended on physicians' abilities to identify patients who really were at the end of life, and for whom aggressive treatment would be futile.  The Achilles Heel of the hospice movement remained health care professionals' inability to reliably identify such patients.  The big problem is that putting a patient who actually potentially could survive for a long time in hospice will doom that patient were he or she to develop an acute illness for which treatment is available, like a bacterial pneumonia that might respond to antibiotics, because in hospice antibiotics are not given for acute infections.

So the development of hospice had a downside which could be fatal for some patients.  I think most physicians hoped, however, that we could minimize the number of such patients by trying hard to make accurate predictions, and that in the future, better technology would lead to better predictions.

The Rise of Corporate Hospices

Back in the 1980s, however, I did not anticipate that hospices might become parts of for-profit corporations, and that such corporations might be able to make more money by admitting more patients, even patients who really were not at the end of life.   Starting in 2011, however, we started to find cases in which that appeared to be what was going on (look here, then here, here, and here).

In 2013, more cases appeared, listed in chronologic order -

Hospice of Arizona LC and American Hospice Management LLC - Per a news release from the Department of Justice, these entities settled litigation that alleged, among other things, that they "submitted or caused the submission of false Medicare claims between Sept. 1, 2002, and Dec. 31, 2010, for Hospice of Arizona patients who did not need end of life care...."

 Hospice Care of Kansas, and parent company Voyager HospiceCare - Per a Topeka (Kansas) Capital-Journal article, these entities settled to resolve allegations that they "submitted inappropriate claims between January 2004 and December 2008 for patients without a terminal prognosis of six months or less."

Hernando-Pasco Hospice - Per the Tampa Bay Times, " Hernando-Pasco Hospice has agreed to pay $1 million to settle allegations that it billed the Medicare and Medicaid programs for patients who did not need end-of-life care, the U.S. Attorney's Office for the Middle District of Florida announced Monday.  The not-for-profit Hernando-Pasco Hospice, which goes by HPH Hospice, is accused of admitting ineligible patients in order to meet targets imposed by its management team, federal authorities said in a statement."

These were all small settlements, that is, less than $15 million, reported in relatively small media outlets.

This week the issue was in the media spotlight courtesy the Washington Post, in an article which provided yet more data and vivid examples suggesting that for-profit hospices were putting money ahead of vulnerable patients' well-being.   


The Post added to the background we provided above,

Medicare began paying for hospice care in 1983, following a resurgence of interest in end-of-life care, sparked in part by the publication of 'On Death and Dying' by Elisabeth Kubler-Ross.

'We can give families more help with home care and visiting nurses, giving the families and the patients the spiritual, emotional, and financial help in order to facilitate the final care at home,' Kubler-Ross testified to the Senate Special Committee on Aging in 1972.

After this well-intentioned beginning, there was a rapid increase in the use of hospice, and hence its costs,

The benefit was quickly embraced by Americans and continues to grow, with Medicare paying for hospice care for more than 1.2 million people annually. In 2000, Medicare spent $2.9 billion on the hospice benefit. By 2012, that figure has risen fivefold, to $15.1 billion.

But as more Americans have taken up hospice care, a profound change has been underway: Big businesses have moved in.

In parallel, the nature of hospices changed, going from being predominantly local non-profit organizations to predominantly corporate,

When Medicare paid its first hospice benefit, the vast majority of hospice-care providers were nonprofit groups. Over the past decade, however, the for-profits have come to dominate the industry.

In 2000, 70 percent of hospices were run by nonprofit organizations or government agencies. Today, nearly 60 percent are for-profit companies, and they may account for an even larger share of patients.

They really were for-profit,

The profit margins as measured by MedPAC, the Medicare watchdog, climbed to 8.7 percent in 2011.

The per-patient operating profit has risen from $353 in 2002 to $1,975 in 2012, according to the analysis of California data.

Big money lured aggressive players, in particular, private equity,

 The returns have attracted some prominent financial firms, whose analysts have run the numbers and decided to invest. Among the private investment companies that have put down bets on hospices in recent years are Kohlberg Kravis Roberts & Co., KRG Capital Partners and Summit Partners.

As we have discussed elsewhere, the private equity model involves not long term management, but trying to make big money in the short term, either by directly extracting it from the companies taken over, of by rapidly selling them, if necessary, piece by piece. 


Financial Incentives to Enroll the Wrong Patients

Keep in mind that the revenue fueling the uber capitalists involved in for-profit hospices came predominantly from the US government, and depended on the rules set by the government to pay for hospice,

The vast majority of those profits flow from the U.S. government and Medicare, which makes an estimated 85 to 90 percent of all payments to hospices.

The payments provide more profit from patients with the longest stay in hospice,

The reason that longer stays are more profitable is that hospice companies typically spend more on patients at the beginning of their care and then again at the end of their lives.

When a patient is first enrolled, the hospice often must diagnose the patient’s illness, set up home equipment and get them stabilized. Then, during the last week of life, a hospice typically must pay for more frequent home visits by the nurse, aides and others.

As a result, patients who live a longer time — and for whom there is a long, stable period in the middle — generate more profits.

There is evidence that for-profit hospice management has reacted to these incentives to enroll patients who would live a long time, despite the fact noted above that hospice was intended for patients who were at the end of life, and were obviously thus expected not to live for a long time,

Indeed, it has been an open secret in the industry that, because of the method of payment, the way to run a hospice profitably is to enroll patients who stay for a long time.

The annual report in 2004 for one large hospice provider, VistaCare, noted that its fortunes depended on its ability to manage costs and 'maintain a patient base with a sufficiently long length of stay.'

The company also warned that 'cost pressures resulting from shorter patient lengths of stay . . . could negatively impact our profitability.'

'It is common knowledge in the industry that a longer length of stay is going to be more lucrative,' said Rachel Mason, who worked in marketing at Delta Hospice in California, where one of the company’s branches had one of the highest discharge rates of living patients in the state last year — 63 percent. 'If they come in very sick and die right away, it’s difficult to run a business that way.'

So, in the aggregate, stays have gone up, costs have increased, partially because there are more hospice ''urvivors," that is, patients who actually were admitted to hospice not at the end of life, survived much more than the six months which was supposed to have been their expected lifespan, and thus ended up graduating from hospice, a service meant originally for the terminally ill,

over the past decade, the number of 'hospice survivors' in the United States has risen dramatically, in part because hospice companies earn more by recruiting patients who aren’t actually dying, a Washington Post investigation has found. Healthier patients are more profitable because they require fewer visits and stay enrolled longer.

The proportion of patients who were discharged alive from hospice care rose about 50 percent between 2002 and 2012, according to a Post analysis of more than 1 million hospice patients’ records over 11 years in California, a state that makes public detailed descriptions and that, by virtue of its size, offers a portrait of the industry.

The average length of a stay in hospice care also jumped substantially over that time, in California and nationally, according to the analysis. Profit per patient quintupled, to $1,975, California records show.

Yet, while Medicare administrators have been warned about these perverse incentives, they have done nothing to fix them,

For five years, Medicare’s watchdog group has been recommending that the payments to hospice companies be revised to eliminate the financial incentive for improper care, but Medicare has not yet done so. To ensure that patients are appropriately selected for hospice care, Medicare relies on strict medical documentation requirements, a spokesman said. 

Perhaps Medicare administrators are listening harder to for-profit hospice executives than to their own advisory committee,

 The hospice industry is opposed to fundamental changes to the payment system. Jonathan Keyserling, senior vice president of health policy at the National Hospice and Palliative Care Organization, an industry group, said that the current payment system is sound and that tampering with it could have unintended consequences. 

Furthermore,

because of the large sums of money at stake, MedPAC in June added a sense of urgency to its recommendation.

'Given the magnitude of hospice spending devoted to long-stay patients, who are more profitable under the current payment system than other patients, it is important that an initial step toward payment reform be taken as soon as possible,' MedPAC wrote.

Yet Medicare administrators still seemed to feel no sense of urgency, and are not eager to address the specifics of the MedPac recommendations,

A spokesman for Medicare said the agency is considering hospice payment reform but that no such changes will happen in fiscal 2014.

'While the Medicare hospice benefit provides a choice for beneficiaries to seek the care that best meets their care needs and desires, Medicare has and will continue to take actions to safeguard this benefit from inappropriate use,' said Jonathan Blum, principal deputy administrator of the Centers for Medicare and Medicaid Services, said in a statement.

So to recap so far, the hospice movement devolved from one involving non-profit organizations providing care to the terminally ill to ever larger corporations providing care to the less ill, paid largely by the US government under rules from a simpler era.  However, since hospice provides only palliative care, this transition meant that some patients who were not terminally ill may have died from illness that would have been treated in an environment other than hospice.

Vivid Anecdotes of the Deceptive Marketing of Hospice

The Washington Post article summarized allegations from multiple legal actions that provided a disturbing tapestry of deceptive marketing deployed to recruit patients unsuitable to hospice care,

While the lawsuits against the for-profit hospices vary in the details, as a whole they depict an industry in which companies compete for new patients and provide services to patients who are not eligible for them.

Hospice 'outreach specialists' and 'community education representatives' seek out patients in a variety of ways: They solicit doctors and hospitals who might regularly deal with the terminally ill; they make connections at nursing homes, assisted-living developments and Meals on Wheels groups. They show up at the 'health fairs' held at senior centers with, for example, machines that test blood pressure. For families struggling to take care of a loved one, they offer the promise of extra help.

At AseraCare, officials gave advice to their recruiters on how to close a deal with families who are 'not ready yet' for hospice, according to a company presentation for Alabama employees. It instructed recruiters to 'focus families' by stressing the urgency of a decision, and saying things like, 'We only have 10 minutes left.'

'Effective communication is the transfer of emotion, not information,' the presentation said.

At Odyssey Healthcare, one of the nation’s largest hospice companies, representatives earned bonuses if they met their goals for new patients, according to that complaint. The case led to a $25 million settlement with the company.

At Vitas, a division of Chemed, a company that also owns the Roto-Rooter plumbing service, the corporate culture encouraged staff members to admit as many patients as possible, regardless of whether they were eligible for hospice care, according to the lawsuit. The lawsuit said the company paid bonuses based on the number of patients enrolled. One former manager said that the company philosophy was 'sign everybody up' and that medical staffers felt pressured to admit patients regardless of whether they were appropriate.

And at Angels of Hope hospice in LaGrange, Ga., audio recordings cited in the complaint described how some salespeople found patients: by cruising neighborhoods, looking for elderly people with disabilities.

The article coned down on specific litigation about AnseraCare,

One of the primary lawsuits against AseraCare was initiated by Dawn Richardson, a clinical manager at the company, and Marsha Brown, the former executive director at the company’s Monroeville, Mobile and Foley, Ala., outlets.

There was steady pressure for AseraCare managers to find more patients, the lawsuit said.

An executive who did not meet a quota was penalized, according to the lawsuit, and the company offered a massage chair for the person who brought in the most hospice patients.

'In order to make our admission goal for the month, we are down to the wire, and need today to be a huge admit day for every region,' a regional vice president wrote in an e-mail, according to the lawsuit. 'Mobilize your teams, get them into the game this morning . . . when we call on them, they always respond with referrals and a push to convert those referrals into admits ASAP.'

'We had a director who would be like, ‘Get a patient, get a patient, get a patient,’ ' Michael Bonham, a Lutheran minister who worked as a chaplain at the company in Alabama, said in an interview. He is not a party to any of the lawsuits.

These demands for patients were sometimes met with people who were sickly but not dying, according to the federal lawsuit, which outlines five examples.

One patient was supposed to have had end-stage heart disease and thus would have had trouble breathing and walking, according to the lawsuit.

He left the nursing home for his granddaughter’s graduation and for Christmas, had a good time and ate a lot, according to notes from hospice workers cited in the lawsuit.

Another, diagnosed with end-stage 'debility,' was not losing weight as is typically the case, according to the legal filing, and instead went out for a trip to Wendy’s and another to go birdwatching.

Hospice firms' public relations departments provided the usual high minded statements that did not address specific allegations about the marketing of hospice, for example,

'AseraCare provides an important and valuable service to patients and their families facing difficult end-of-life decisions,' the company said in a statement. 'Our policies and programs comply with the Congressional intent of the hospice benefit to reduce the stress and anxiety of the end of life of a loved one,' the company said.

'Doctors for each patient in question determined that the patient needed hospice care, and expressed their clinical judgment by signing the required physician certifications. Other independent and well-qualified physicians reviewed the charts of these ­patients, and overwhelmingly agreed with the original conclusions that these patients were entitled to receive the hospice benefit.'

The company declined to identify the doctors who certified the patients in Alabama.

That seems about as relevant as the mission and values statements of Golden Living, AseraCare's parent corporation,

Our Mission

To share our passion for improving quality of life through innovative healthcare — one person, one family and one community at a time.

Our Values

Make integrity and accountability your pledge.
Share our passion for excellence.
Be uncompromising in delivering quality care.

Summary

Yet somehow our society must make it right and possible for old people not to fear the young or be deserted by them, for the test of a civilization is in the way that it cares for its helpless members. 

Pearl S Buck, My Several Worlds, 1954, p 377 (see Wikiquote)

I also was once taught that the true test of a doctor is his or her care of the sickest and most vulnerable patients.  By this token,  how the hospice movement in the US evolved into corporate health care delivery which generates tremendous revenues from the most vulnerable patients, and in some cases may condemn ill but not terminal patients to death from treatable disease marks how badly US health care has failed.

The story combines many of the themes we have sounded before -

Perverse Incentives - a reimbursement scheme that made sense when hospices were local community non-profit organizations now provides incentives for commercial hospices to enroll patients who are not terminally ill, putting them at risk of inadequate care should they develop a new serious but treatable problem.

Money Before Mission - For-profit hospices which market themselves as equivalent to their community non-profit forerunners, are run, as is suggested above, to maximize revenue no matter the effect on mission. Presumably this is justified by the fallacy of maximizing shareholder value, which really means maximizing apparent short-term revenue in order to maximize executive compensation, no matter what the collateral damage.

Impunity - Although hospice enrollment of unsuitable patients not only may defraud the government, but may put such patients at risk of their lives, the only regulatory or law enforcement actions against big corporate hospices so far involve corporate fines that are small in comparison with revenues, but not penalties imposed on any individuals who authorized, directed or implemented such patient enrollment, even when patients wrongly enrolled have died from lack of treatment of potentially treatable problems.

Corporatism - Government agencies which could seriously challenge corporate hospices' actions have been curiously inert, perhaps because agency leaders feel more sympathetic to their fellow managers within corporate hospices than to the citizens whose interests they are supposed to protect.

Because of their potentially severe adverse effects on our most vulnerable patients, reform of hospices should be at the forefront of true health care reform.  At the least, we need vastly tougher regulation of corporate hospices, removal of perverse incentives for them from the government payment system, and vigorous law enforcement when their leaders induce them to misbehave.  Leaders of corporate hospices need to be held accountable for their actions, and must be pushed towards putting their patients' health ahead of all other considerations, including the leaders' personal enrichment.

Furthermore, the story of corporate hospices shows that while turning direct health care over to poorly regulated for-profit corporations may have been increased efficiency, been "disruptive" and lead to innovations, the efficiency, disruption and innovation have mainly lined the pockets of corporate insiders, and not improved patients' or the public's health.  We ought to give strong consideration to banning corporate hospices, and banning all forms of the corporate practice of medicine and corporate health care "delivery."

Given how many insiders make so much money from the current version of laissez faire capitalism in health care, however, I would expect strong resistance should such apparently "radical," but actually conservative proposals actually get any mainstream attention.    

How Many Straws? - Johnson and Johnson Settles Again, Again, Again...

It seems like a minor case, but is another straw for the camel.

The Latest Settlement

Reported in most detail by Modern Healthcare,

Two executives at a subsidiary of Johnson & Johnson have agreed to pay a total of $50,000 to resolve allegations that they knowingly sold mislabeled products used in the sterilization of gastrointestinal scopes and surgical drills.  The settlement also calls for the J&J subsidiary, Advanced Sterilization Products, to pay $1.25 million to resolve a civil complaint filed by the Food and Drug Administration. ASP President Bernard Zovighian will pay $30,000, while Richard Alberti, quality and compliance vice president, will pay $20,000. None admitted wrongdoing.

'ASP's actions violated the law and put patients at unnecessary risk for infection,' Steve Silberman, director of compliance at the FDA Center for Devices and Radiological Health, said in a statement.

Last year, ASP announced two recalls affecting a product called the Cyclesure 24 Biological Indicator, which is used to make sure that medical equipment sterilized using ASP's Sterrad low-temperature cleaning machines is free of bacteria, fungi and viruses.

FDA inspectors, according to a civil complaint last July, uncovered evidence that the company sold the Cyclesure 24 tests with 15-month expiration dates even though ASP's internal studies had not established the product's safe shelf life was that long.

After the issue was discovered, ASP shortened the shelf life of the Cyclesure indicators to six months. The company also recalled all lots of the products manufactured between February 2008 and December 2011.

Dirty endoscopes used during colon cancer screenings, for example, have been implicated in the transmission of hepatitis C and many types of bacteria, according to ASP's own website. 

Note that this case involves not just legal technicalities, but failures of disclosure that could have put real patients at risk of significant harm.

The Context

This case comes only one week after we discussed a huge ($2.5 billion) settlement by Johnson and Johnson of allegations that it withheld data about major safety problems affecting metal-on-metal hip prostheses, and two smaller settlements of allegations that it withheld safety data about the drug Topamax.


It is noteworthy that in this much smaller current settlement, two admittedly relatively low-level executives had to pay fines amounting to 4% of what the company had to pay. This is unusual.  Usually corporate executives escape any negative consequences, even in cases involving large amounts of money or possible harm to many patients.  If last week's settlement were to have imposed proportionate fines on executives, those fines would have totaled $100 million

The latest settlement does seem to follow the usual pattern: relatively small time individual offenders pay a penalty, while very rich and powerful individual offenders avoid all penalties. (For example, look here to see how one US prosecutor handled the case of Aaron Swartz versus the cases of misdeeds by big corporations)   Impunity by rich and powerful leaders of big organizations, and failure to enforce laws broken by such people is a very old story in American history, but that pattern was interrupted briefly after the great depression through the 1970s.  Now impunity for the rich and powerful is back, and maybe that is why 43% of the American population think our health care system is corrupt (look here).


Of course, the current settlement involved no admissions of wrongdoing.  Like most legal actions against big health care organizations, it is thus paradoxical.  Fines are paid, but at least on paper, not because of any wrongdoing.  So what were the penalties for?  Who knows?  But allowing a settlement without an admission of wrongdoing allows the next settlement to be made as if it were dealing with an isolated problem. 

As we mentioned in our last post on Johnson and Johnson, the latest settlement should be added to an increasingly  long list of the company's legal woes, often involving allegations and evidence of other unethical actions, sometimes involving guilty pleas to charges of such actions (see compilation of the record through July, 2013 here.)  Yet each settlement or action seems to take place in a vacuum, with no attention to what appears to be the company's record of ethical recidivism.  Of course, since nearly every action eschewed admissions of wrongdoing, on paper, there was no legal record of recidivism.  The whole situation is becoming so absurd that Jon Stewart on the Daily Show parodied the ability of Johnson and Johnson, and other big corporations, to escape any meaningful negative consequences of their actions.

The Daily Show
Get More: Daily Show Full Episodes,The Daily Show on Facebook

As quoted on the Wrap

'Holy sh**t. They knowingly bribed doctors to give useless drugs to old people, the disabled and babies,' a stunned Stewart said. 'You’re not even allowed to do that in ‘Grand Theft Auto.''

When these issues start becoming subjects of popular parody, maybe I can entertain a tiny hope that something might be done.

 Conclusion

So I get to say again, again again...  many of largest and once proud health care organizations now have recent records of repeated, egregious ethical lapses. Not only have their leaders have nearly all avoided penalties, but they have become extremely rich while their companies have so misbehaved.

These leaders seem to have become like nobility, able to extract money from lesser folk, while remaining entirely unaccountable for bad results of their reigns. We can see from this case that health care organizations' leadership's nobility overlaps with the supposed "royalty" of the leaders of big financial firms, none of whom have gone to jail after the global financial collapse, great recession, and ongoing international financial disaster (look here). The current fashion of punishing behavior within health care organization with fines and agreements to behave better in the future appears to be more law enforcement theatre than serious deterrent.  As Massachusetts Governor Deval Patrick exhorted his fellow Democrats, I exhort state, federal (and international, for that  matter) law enforcement to "grow a backbone" and go after the people who were responsible for and most profited from the ongoing ethical debacle in health care.

As we have said before, true health care reform would make leaders of health care organization accountable for their organizations' bad behavior.

Roy M. Poses MD on Health Care Renewal 

Six Years Later, Ranbaxy - Oops, Daiichi Sankyo - Pleads Guilty to Adulteration, Pays $500 Million

It only took until 2013, but the US Food and Drug Administration finally secured guilty pleas and fines.  The basics are in an Associated Press story (via the Washington Post):

 A subsidiary of India’s largest pharmaceutical company has agreed to pay a record $500 million in fines and penalties for selling adulterated drugs and lying to federal regulators in a case that is part of an ongoing crackdown on the quality of generic drugs flowing into the U.S.

Federal prosecutors say the guilty plea by Ranbaxy USA Inc. represents the largest financial penalty against a generic drug company for violations of the Federal Food, Drug and Cosmetic Act, which prohibits the sale of impure drugs.

Note that the company pleaded guilty to criminal charges.

 The subsidiary of Ranbaxy Laboratories Limited pleaded guilty to federal criminal charges and the company separately agreed to resolve civil claims with all 50 states and the District of Columbia. The company had earlier set aside $500 million to cover potential criminal and civil liability stemming from the Justice Department investigation.

It admitted as part of the deal that it sold adulterated batches of drugs — including an antibiotic and generic versions of medications used to treat severe acne, epilepsy and nerve pain — that were developed at two manufacturing sites in India. 

Ironies

Note that this resolution has certain ironies.

Lateness

There is a saying that justice delayed is justice denied.  Note that it took six years to obtain the guilty pleas.  As noted by the AP,

 The problems were largely revealed by a whistleblower in a federal lawsuit filed in Maryland in 2007. 

Ambiguities about Responsibility

First, note that while all the headlines are about Ranbaxy, Ranbaxy is not really an independent company.  As reported by Reuters (and only by Reuters so far as I can tell at this time),

Ranbaxy ... [is] majority-owned by Japan's Daiichi Sankyo.

Second, as per the AP, see the comment made by the Ranbaxy CEO,

'While we are disappointed by the conduct of the past that led to this investigation, we strongly believe that settling this matter now is in the best interest of all of Ranbaxy’s stakeholders; the conclusion of the DOJ investigation does not materially impact our current financial situation or performance,' Ranbaxy CEO and managing director Arun Sawhney said in a statement.

Maybe there was something lost in translation, but the CEO certainly spoke as if someone else was responsible for the "conduct of the past."  Incidentally, it does not appear that so far any journalist has even sought comment from the people really in charge, at Daiichi Sankyo.

Third, just like many other cases we have reported before, no individual, especially anyone who authorized, directed, or implemented the bad behavior, was held legally responsible.  The cost of the fines will no doubt be spread among the corporate structures involved.  Since a company pleaded guilty, no individual pays a fine, much less goes to jail.

It does appear that when the settlement was first announced in 2011, a cut in compensation for top executives of Daiichi Sankyo was announced, but the cuts were temporary, and apparently in response to the immediate financial consequences of the settlement, not any larger implications.  See Bloomberg's report:

 Chief Executive Officer Joji Nakayama and board members will receive 5 percent to 30 percent less compensation for six months in response to the cut in the earnings forecast, Daiichi Sankyo said today. The company has lost about half its market value since agreeing to buy a majority stake in Ranbaxy, India's largest drugmaker, in June 2008. 

 The Contrast with the Case of the Adulterated Heparin

Note that in this case, there have been no allegations that patients were harmed by the admitted adulteration,  Per the AP:

 It’s not known whether the problems with the drugs led to any health issues.... The government’s allegations against the company make no claims that the drugs, whose strength, purity or quality differed from the specifications, harmed anyone.

In 2008, we began blogging about how  US patients started to get sick and die after being infused with heparin, the common anti-coagulant drug. As we have discussed repeatedly  (look here, and see the summary at the end of the post), Baxter International was selling contaminated heparin under its label which was made in unregulated workshops in China, and then transmitted through a complex chain of Chinese and US companies.

The AP article stated,

 The case comes as federal regulators and prosecutors focus attention on the quality of ingredients of generics and other drugs manufactured overseas, said Allan Coukell, an expert on drug safety at The Pew Charitable Trusts. He said the 2008 deaths linked to tainted batches of the blood-thinner heparin that were imported from China served as a 'wake up call' about just how much of the nation’s drug supply comes from overseas.

So perhaps this wake up call helped propel the current case against Ranbaxy, that is, Daiichi Sankyo.  However, since 2008, if there has been a criminal investigation of the tainted heparin, which appears to have been much more consequential, sometimes fatally so, to patients, the results have not been made public.  A cynic might note that the contaminated heparin was sold by a US based manufacturer of branded pharmaceuticals, not a foreign based manufacturer of generic drugs.

Summary

The most fundamental obligation of a drug company is to produce pure, unadulterated drugs.  The first attempts to regulate the drug industry in the US were meant to ensure that these companies fulfilled this obligation.  Yet now there is increasing evidence that the contemporary pharmaceutical industry has trouble with this most basic responsibility. 

As we discussed here, the managers of pharmaceutical companies have been swept up in a dominant business management fad, outsourcing, as a means to cut costs to the bone.  (It seems that most health care managers are also caught up in the larger rage for financialization, to emphasize short term revenue over all other concerns, including patients' and the public's health.)  As the New York Times reported  re the Ranbaxy case,

Others say the company’s problems highlight how little oversight federal drug safety officials have of overseas plants. Studies that have shown the F.D.A. inspects foreign generic manufacturing plants about once every seven to 13 years, compared with once every two years for domestic manufacturers. A law passed last year will eventually require the F.D.A. to apply the same standards when inspecting all manufacturing plants, regardless of location. But some worry that federal budget cuts are slowing the adoption of that law. 

'They just happened to stumble across the Ranbaxy problem at those two plants in India,' said Joe Graedon, a pharmacologist who runs a consumer Web site, the People’s Pharmacy, which has raised questions about the safety of generic drugs. 'Ranbaxy was the biggest and one of the best in India. What about all the smaller ones? What does that say about them?'

Again, all pharmaceutical companies, not just generic drug manufacturers, have seen fit to outsource much, if not most of their production.

In our rush to market fundamentalism, we seem to have deregulated, at least de facto, most aspects of health care.  We now cannot trust the drugs we take to have been made by the companies whose labels they bear, or to be pure.  We now cannot trust that regulators will find that out, or having found that out, will do anything about it in a timely manner. 

To repeatedly reiterate, as long as the leaders of health care organizations are not held accountable for the results of their decisions on health care quality, cost, and access (even in such extreme quality violations as those resulting in multiple patient deaths), we can expect continuing decisions that sacrifice quality, increase costs, and worsen access, but that are in the self-interest of the people making them.

To really reform health care, we must hold health care organizations and their leaders accountable (and not blame all the problems on doctors, other health care professionals, patients, and society at large).

- Roy M. Poses MD for Health Care Renewal 


Appendix - Heparin Case Summary

- We have posted several times, recently here about the tragic case of suddenly allergenic heparin. Although heparin, an intravenous biologic anti-coagulant, has been in use for over 70 years, serious allergic reactions to it had heretofore been rare. Starting late in 2007, hundreds of such reactions, and 21 deaths were reported in the US after intravenous heparin infusions.All the heparin related to these events in the US was made by Baxter International.

- We then learned that although the heparin carried the Baxter label, it was not really made by Baxter. The company had outsourced production of the active ingredient to a long, and ultimately mysterious supply chain. Baxter got the active ingredient from a US company, Scientific Protein Laboratories LLC, which in turn obtained it from a factory in China operated by Changzhou SPL, which in turn was owned by Scientific Protein Laboratories and by Changzhou Techpool Pharmaceutical Co. Changzhou SPL, in turn, got it from several consolidators or wholesalers, who in turn got it from numerous small, unidentified "workshops," which seemed to produce the product in often primitive and unsanitary conditions. None of the stops in the Chinese supply chain had apparently been inspected by the US Food and Drug Administration nor its Chinese counterpart. (See posts here and here.)

- We found out that the Baxter International labelled heparin was contaminated with over-sulfated chondroitin sulfate, a substance not found in nature, but which mimics heparin according to the simple laboratory tests used in the Chinese facilities to check incoming heparin. (See post here.) Further testing revealed that the contamination seemed to have taken place in China prior to the provision of the heparin to Changzhou SPL. (See post here.) It is not clear whether Baxter International or Scientific Protein Laboratories had inspected most of the steps in the supply chain, or even knew what went on there.

- The Baxter and Scientific Protein Laboratories CEOs did not seem aware of where they got the heparin on which the Baxter International label was eventually affixed. But one report in the New York Times alleged that Scientific Protein Laboratories would not pay enough for heparin to satisfy any sources other than the small "workshops."

- Leaders of all organizations involved, Baxter International, Scientific Protein Laboratories, Changzhou SPL, the Chinese government, and the US Food and Drug Administration, and the US Congress assigned blame to each other, but none took individual or organizational responsibility. (See post here.)  Note that SPL was recently bought out and taken private, making its current leadership even less transparent (see post here).  A 2010 inspection of an SPL facility by the FDA revealed ongoing manufacturing problems (see post here).

- Researchers (who turned out to have financial ties to a company which is developing an anti-coagulant drug that could compete with the heparin made by Baxter International) investigated the biological mechanisms by which the contamination of the heparin lead to adverse effects, but no one investigated further how the contamination occurred, or who was responsible. (See post here.)

- Hundreds of lawsuits against Baxter have now been filed, so far without resolution. (See post here.)  Efforts to make documents to be used in these cases public so far have not succeeded (see post here).

- A government report which attracted little attention warned of the dangers of pharmaceutical ingredients made in China and subject to virtually no oversight. (See post here.)

-  Despite requests from the US, the Chinese government did not investigate the production of the heparin that lead to the deaths (see post here.)

-  In February, 2011, a congressional investigation of the case was announced, but results are so far unavailable (see post here.)

-  In June, 2011, a jury returned the first verdict in a civil case about the contaminated heparin, awarding money from Baxter International and Scientific Protein Laboratories to the estate of a man who apparently died due to tainted heparin (see post here).

-  If there was a criminal investigation of the case, its results have not yet appeared. 

Amgen CEOs Prosper Despite (or Because of) Continuing Ethical Questions

This is becoming a familiar narrative on Health Care Renewal: top health care leaders continue to enrich themselves while their organizations' behavior continues to raise ethical questions.

For our latest example we return to the ongoing adventures of biotechnology giant Amgen.

CEOs Get Richer

An AP story (via the LA Times) documented the continuing enrichment of its current CEO:

Amgen Inc's new chief executive, Robert A. Bradway, received total compensation of $13.6 million in 2012, more than his predecessor, according to an analysis of a company regulatory filing.

Bradway, who was promoted from chief operating officer to chief executive May 23, saw his compensation nearly double from $7.1 million in 2011.

Last year Bradway, 50, was paid a salary of $1.26 million and received stock awards worth $8.57 million, incentive payments of $3.32 million and miscellaneous compensation totaling $420,059. That included nearly $314,000 in retirement plan contributions, $65,000 for personal use of company aircraft, more than $20,000 for his personal expenses and those of guests during business travel, and $15,000 for financial planning services.

The former CEO also did very well in his final year in office.

Former CEO Kevin W. Sharer, who stepped down from his seat on Amgen's board when he retired Dec. 31, received compensation totaling $9.13 million last year.

Sharer was paid a 2012 salary of $1.81 million and received stock awards worth $3.66 million, incentive payments of $2.31 million and miscellaneous compensation totaling $1.36 million. That included $801,000 in retirement plan contributions, nearly $262,000 for personal use of company aircraft, more than $38,000 for his personal expenses and those of guests during business travel, $15,000 for financial planning services and more than $255,000 for secretarial, information technology and travel support. Much of that support runs through 2017.

You would think they could both afford financial planning on their own.

Legal Settlements Pile Up

Keep in mind that as we discussed in late 2012 and early 2013, Amgen pleaded guilty to a charge of misbranding for promoting its epoetin drug Aranesp for unapproved indications, and settled allegations of giving kickbacks to physicians to increase the drug's use, among other charges, for a total of $762 million.

Furthermore, soon after the CEOs' compensation was announced, tiny articles in local media announced two more settlements by Amgen.

A small AP story (again via the LA Times) noted another settlement regarding allegations of unethical promotion of Aranesp:

The US Department of Justice said Tuesday that biotech drug maker Amgen Inc. will pay $24.9 million to resolve claims it paid kickbacks to increase sales of its anemia drug Aranesp.

The Justice Department said Amgen paid kickbacks to Omnicare Inc. and PharMerica Corp., which sell drugs to long-term care providers such as nursing homes and hospitals, and Kindred Healthcare Inc., which runs long-term acute-care hospitals and nursing and rehabilitation centers.

Amgen wanted the companies to switch Medicare and Medicaid beneficiaries to Aranesp from competing drugs and tried to get consultant pharmacists and nursing home staffers to encourage the use of Aranesp in patients who didn't have anemia associated with kidney failure, the Justice Department said.

The Thousand Oaks company made payments based on the sales volume or market share of Aranesp, the agency said.

Then a few days ago, a story in the San Fernando Valley Business Journal described yet another Amgen settlement:
 

Thousand Oaks biotech Amgen Inc. has reached an $11 million settlement with 36 states over charges it inflated pricing data and caused Medicaid to overpay for six of its drugs, the New York State Attorney General said Monday.

The charges allege Amgen inflated cost benchmarks for drugs used to treat kidney disease and cancer patients. The drugs involved were Aranesp, Enbrel, Epogen, Neulasta, Neupogen and Sensipar. Those benchmarks are used to set pharmacy reimbursement rates for drugs dispensed to state Medicaid beneficiaries.

Keep in mind that all these recent settlements involved allegations of efforts made to oversell Aranesp.  As we noted previously, this drug carries a "black box" warning about serious and potentially fatal side effects.  The official Aranesp label states (in a black box warning, in capital letters):

 ESAs INCREASE THE RISK OF DEATH, MYOCARDIAL INFARCTION, STROKE, VENOUS THROMBOEMBOLISM, THROMBOSIS OF VASCULAR ACCESS AND TUMOR PROGRESSION OR RECURRENCE

So the overselling of Aranesp not only appeared unethical, it seemed to put short term revenue ahead of patient safety, and could conceivably have lead to patients dying so that the company could make more money.   

Summary

So while the evidence mounts that health care organizations, and in this case, Amgen, continue to aggressively pursue short-term revenue even is their means of doing so endangers patients.  However, legal efforts to challenge such reckless practices continue to fail to impose any negative consequences on those who personally profited from this behavior, and particularly those corporate executives who authorized and directed the bad behavior.  Moreover, while such evidence mounts, the top leaders of these organizations continue to pile up riches.  It seems that CEOs of health care organizations continue to prosper despite, or perhaps because of their organizations' continuing unethical and dangerous behavior.

As we have said far too many times, we will not deter unethical behavior by health care organizations until the people who authorize, direct or implement bad behavior fear some meaningfully negative consequences. Real health care reform needs to make health care leaders accountable, and especially accountable for the bad behavior that helped make them rich.