What Does the Blumsohn - Procter and Gamble -Sheffield University Affair Say About the Fitness of the Latest VA Secretary Candidate?

Introduction - New Leadership for the US Department of Veterans Affairs

After reports of problems with access, manipulation of data about waiting times, and most recently "a corrosive culture," the US Department of Veterans Affairs, the country's large government run health system, has had a massive leadership overhaul.  President Obama's nominee to head the agency is now Robert A McDonald, former CEO of Procter and Gamble.

The choice of a former CEO or a large corporation was called "unorthodox" by the Boston Globe, but many saw merit in a business leader running the VA.  As reported by the Globe, House Speaker John Boehner said that as a "private sector" leader,  Mr McDonald is the "kind of person who is capable of implementing the kind of dramatic systemic change that is badly needed and long overdue at the VA."  The Chairman of Boeing, also a member of the P&G board, hailed Mr McDonald as the person who "navigated Procter & Gamble through the difficult post-financial-crisis years, where he expanded business in developing markets and made substantial progress improving the efficiency of the company’s internal operations...."

On the other hand, a column in the Washington Post suggested that expertise in "selling Tide and Pantene" might not be relevant to fixing the VA. Yet aside from a single article on the Ring of Fire web site, all news coverage and discussion so far has ignored Mr McDonald previous experience in health care leadership, but also that his relevant track record ought to raise questions about his fitness for the VA position.

Procter and Gamble and Health Care

According to Mr McDonald's official P&G biograpy, after various roles in various countries, before becoming CEO, 

Bob returned to the U.S. as the Vice Chairman of Global Operations (2004 to 2007) and later P&G’s Chief Operating Officer (2007 to 2009).

Although not widely known as a pharmaceutical company, P&G actually had a subsidiary that made prescription drugs, which Mr McDonald sold off in 2009 (see this Wall Street Journal report.)  As we noted here, its products still include over the counter pharmaceuticals (e.g., Pepto-Bismal, Metamucil, Prilosec OTC).  Also, while Procter & Gamble does not make it very obvious, it has owned MDVIP, a company that employs physicians to provide concierge medical services, since 2010, although as Cincinnati.com just reported, it will soon sell this unit to private equity.  So during Mr McDonald's tenure, his company was to some extent a pharmaceutical company, and a health care provider.

The Blumsohn - Procter and Gamble - Sheffield University Case

Furthermore, on Mr McDonald's watch as Vice Chairman of Global operations and Chief Operating Officer, there was a case involving Procter and Gamble that raised multiple concerns about the ethics of its pharmaceuticals operations.  We first posted about the case in 2005 (here).  For all relevant posts, look here. In 2009 we described the case thus,

The case involved suppression and manipulation of research, ghost-writing, institutional conflicts of interest, and attempts to silence a whistle blower. It provides lessons about the downsides of letting commercial firms sponsor and hence control human research designed to evaluate the products or services they sell; and of academic medicine becoming dependent on research money from such firms for such research.

We previously summarized the case's events

• Dr Aubrey Blumsohn, a senior lecturer at Sheffield University, and Professor Richard Eastell performed a research project on the effects of the drug risedronate (Actonel, made by Procter & Gamble Pharmaceuticals [P&G]) under a contract between P&G and the University.
• Although the research contract designated Blumsohn and Eastell as "Investigators" under whose direction the project would be carried out, Blumsohn was not given access to the original data collected by the project.
• Despite numerous requests, (like this one), P&G refused access to this data repeatedly.
  Blumsohn was concerned that he and Eastell could be accused of scientific fraud if they continued to make presentations and write articles and abstracts without access to the data which they were supposedly writing about.
• Blumsohn became suspicious that some of the analyses done by P&G could be misleading, especially related to a graph shown to him that omitted 40% of patient data.
• Blumsohn objected to P&G arranging for papers and abstracts to be written by a professional writer, but with Blumsohn listed as first author. Blumsohn was concerned that such ghost-written documents were mainly meant to convey "key messages" in support of P&G's commercial interests.
• Eastell warned Blumsohn not to aggravate P&G, because the company was providing a grant to the University which "is a good source of income."
• After repeated failed attempt to get the data, Blumsohn complained to numerous officials at Sheffield University, including Eastell, medical school Dean Tony Weetman, University Vice-Chancellor Robert Boucher, and the Head of the University's Department of Human Resources, Ms R Valerio.
• Still unable to get the data, he spoke with news reporters about his case. At this point, Sheffield suspended him, but then offered him a severance agreement if he signed a contract binding him not to make any detrimental or derogatory statements about the University and its leaders.

So the case involved suppression and manipulation of research, ghost-writing, institutional conflicts of interest, and attempts to silence a whistle blower. It provides lessons about the downsides of letting commercial firms sponsor and hence control human research designed to evaluate the products or services they sell; and of academic medicine becoming dependent on research money from such firms for such research.

Although this case occurred in the UK, it involved actions by the US based Procter and Gamble.  While many of the events in the case occurred before 2004, from 2004 to 2009 it became clear that Procter and Gamble was not going to go easy on Dr Blumsohn.  For example, according to Dr Blumsohn, in 2006, P&G released some scientific data relevant to the case, but not complete enough data to be meaningful.  In 2007, there was still shady business going on involving scientific abstract submissions apparently made in Dr Blumsohn's name by P&G operatives.

Since Procter and Gamble never made any known attempt to apologize, explain its conduct, or ameliorate Dr Blumsohn's plight during 2004 - 2009, as one of the most senior leaders of Procter and Gamble, seemingly with direct authority over its pharmaceutical operations in the UK during that time period, Mr McDonald ought to be held accountable for the company's misbehavior described above.  To my knowledge, though, no one at P&G, including Mr McDonald, has ever admitted responsibility or been made accountable in any way.  

Summary

Since Mr McDonald recently was an executive of a company that sold prescription and non-prescription pharmaceuticals, and provided direct health care, confirmation as Veterans Affairs secretary could be regarded as a transit through the revolving door, and hence open to question.  Since Mr McDonald got $15,928,015 in total compensation during his last year as CEO (2012-13) (see the company's 2013 proxy statement), and had accumulated 2,247,593 shares of stock or equivalent by 2013, worth approximately $179 million at today's price of $79.67, his ability to understand the needs of the often poor veterans whom the VA serves is also open to question. 

More importantly, while Mr McDonald held high executive positions at Procter and Gamble, the company was involved in a dodgy affair involving conflicts of interest, manipulation of research, and attempted silencing of whistle blowers.  In my humble opinion, given that these events occurred directly on his watch, his fitness to run a huge health care system ought to be in question unless his responsibility for these events is disproved.

The widespread huzzahs for Mr McDonald as potential VA leader based mainly on his exalted status as CEO of a big corporation show that many in the US still see corporate CEOs as aristocracy.  True health care reform would hold health care leaders accountable, particularly for upholding the health care mission and putting patients' and the public's health ahead of revenue generation and especially personal profit.

ADDENDUM (7 July, 2014) - Link to McDonald's official P&G biography fixed. 

ADDENDUM (8 July, 2014) - This post has been re-posted on Naked Capitalism, and on Open Health News. 

Through a Glass Darkly - How Can So Many Health Care Executives Be Visionaries?

Visionary (noun)

1:  one whose ideas or projects are impractical :  dreamer

2:  one who sees visions :  seer

3:  one having unusual foresight and imagination

 Merriam-Webster Dictionary online 

The Visionary, or Messianic Health Care Executive

In 1997, Sherif Abdelhak, the CEO of the then unusually large vertically integrated health care system based in Pennsylvania, the Allegheny Health Education and Research Foundation (AHERF) was described in an American College of Physicians publication as a "visionary." (See the summary beginning on p 5 here.) Abdelhak had previously been called a "visionary" or a "genius" in the media. [Gaul GM. Creator of a cross-state health system despite personal and financial questions, Sherif Abdelhak has boldly expanded from Pittsburgh to Philadelphia. Philadelphia Inquirer, March 4, 1991. P. D1. Gaul GM. The new prescription for health care: Hahnemann’s merger dwarfs - and frightens - many local rivals. Philadelphia Inquirer, November 21, 1993. P. E1.]   In 1998, AHERF was bankrupt, and Abdelhak eventually pleaded guilty to misusing charitable funds and went to jail. 

Mr Abdelak was one of the earlier examples I found of the hospital leader regarded as fearless leader, visionary, even messianic, and the possible bad effects of putting so much money, power, and faith in one person.  For more recent examples of how health care leaders may be described in messianic terms, look here, here, and here.  For  related, and also religiously allusional theories of the "divine rights of CEOs," look here and here.

Modern health care, the US economy, and many developed countries have seen increasing domination by administrators, managers and executives.  In particular, US hospitals were once small non-profit institutions based in communities or universities, often threadbare, and run by dedicated if harried health care professionals.  They now have morphed into huge organizations run by professional managers who may become multimillionaires in the process.  Meanwhile, US health care has become increasingly expensive, but without any obvious advantages to patients' or the public's health.  

As we have noted, justification for the domination by professional managers and their lavish remuneration often includes paeans to their brilliance.  Most recently we discussed how the rise of the professional manager has been explained by a not very clear analogy between such managers and the "great men" of history.  

Can They All be Visionaries?

The notion of every hospital CEO as a Napoleonic figure seems ridiculous, but there seems to be little public skepticism of the notion of executives, including hospital leaders as fearless leaders.  

One reason may be that the exposure most people have to these notions is limited.  One may see the local hospital CEO extravagantly praised, but it is always possible the local CEO is brilliant.  Most people probably do not see the praises sung for the CEO of the hospital 100 miles away.

So inspired by our most recent discussion of the public relations talking points used to justify health care CEOs often million dollar plus compensation, I set out to see if brilliant hospital leaders are really a dime a dozen.  My methods were simple.  I used Google News to search back about one month, and looked simply for hospital CEOs or other top leaders described as "visionaries." 

Here are the results, in chronological order.

CEOs of Frederick Regional Health System, Meritus Health, and Western Maryland Health System

[Maryland, June 9, 2014]

The context was,

 Frederick Regional Health System, Meritus Health and Western Maryland Health System announced Trivergent Health Alliance as the name of their regional health care alliance.

After a national executive search, Raymond Grahe, senior vice president and chief financial officer of Meritus Health based in Hagerstown, has been named chief executive officer of Trivergent Health Alliance MSO, the management services organization that is a subsidiary of the alliance.

This is what Grahe said about the CEOs of the three hospitals,

It is thanks to the dedication of these three visionary CEOs that Trivergent Health Alliance exists today. 

From the Cumberland Times-News.

Baystate Health CEO

[Massachusetts, June 18, 2014]

In the course of a tribute to retiring CEO Mark R Tolosky, an attorney by training, Mary Jo Stafford, a nurse, said,

He has been incredibly accessible and is a visionary

From Masslive.com.

Anna Jacques Hospital CEO

[Massachusetts, June 18, 2014]

On the announcement of the retirement of Delia O'Connor, David LaFlamme, chairman of the hospital board, said,

Her legacy is that of a visionary, decisive leader whose extraordinary contributions to the hospital and local area have earned her the trust and respect of the entire community.

From the Newburyport News

CoxHealth Vice President for Marketing and Public Affairs

[Missouri, June 23, 2014]

On the announcement of the appointment of Jim Anderson as the new Vice President for Marketing and Public Affairs, CoxHealth CEO Steve Edwards said,

 We welcome Jim Anderson, a great visionary with a passion for our community

From KY3.

Good Shepherd Medical Center Chief Medical Officer

[Texas, June 25, 2014]

Per a news report on the announcement of the appointment of Dr Lawrence T Verfurth as new Chief Medical Officer

Dr. Verfurth, who joined the Good Shepherd staff earlier this month, is a visionary physician executive with a broad base of operation and clinical leadership spanning the spectrum of healthcare

From KYTX.

Bassett Healthcare Newtork President and CEO

[New York, June 25, 2014]

On the occasion of awarding the Distinguished Service Award by the Healthcare Association of New York State (HANYS) to Dr William F Struck as Bassett Healthcare Network President and CEO, HANYS President Dennis Whalen said,

 Under Dr. Streck’s visionary leadership, a single hospital in Cooperstown, with 70 physicians, has grown into a network of six affiliated hospitals, with 45 community- and school-based health centers, and more than 400 providers serving eight counties

From a AHNYS press release.

Milford Hospital CEO

[Connecticut, June 26, 2014]

On the occasion of an article published by Milford Hospital researchers, Dr Sin Hang Lee, one of the authors and director of Milford Medical Laboratory, a Milford Hospital affiliated laboratory said,

the four employees of Milford Hospital's Department of Pathology are carrying out the commitment of the hospital's visionary president and CEO Joseph Palaccia

From a Milford Medical Laboratory news release via BusinessWire.

St Jude Children's Research Hospital

[Tennessee, June 26, 2014]

On the announcement of the appointment of Dr James R Downing as the new CEO of St Judge Children's Research Hospital, Terry Burman, chairman of the St Jude Board of Governors, said,

Dr Downing is an exceptional scientist whose visionary approach to the next era of growth and discovery at St. Jude will mirror the legacy established by Danny Thomas more than 50 years ago.

From the Menphis Daily News.

Summary

So with a very cursory search covering less than one month I was able to find eight CEOs, one vice president for marketing, and one CMO, from 10 hospitals in seven states who were called visionary or visionaries.  It is hard to believe that all these people were truly visionaries using the definition above.  

None of the news articles or press releases that used the v word provided any detailed justification.  In most cases, the visionary designation was made either by someone who worked directly for the leader in question, or was a member of the organization's board of trustees and hence responsible for that individual holding a leadership position. This is more evidence that there are cults of leadership surrounding most health care leaders these days.  

Actually, labeling a health care manager a visionary should evoke more suspicion than admiration.  As in the unfortunate case of Mr Abdelhak and AHERF, we have seen many health care leaders praised for their brilliance and paid royally despite leadership resulting in financial distress, threats to the organizations' health care missions, poor patient care, unethical behavior, or even crime.

Yet health care CEOs are just people, sometimes smart, but almost never brilliant.  Promoting them as messianic or "great men" (or more rarely women) to bewitch key constituencies, justify the remuneration of other top managers, and the hiring of more public relations flacks is likely to lead to the sort of organizational disasters and system-wide dysfunction we discuss on Health Care Renewal.  The rise of the falsely messianic leader may allow the entry of the most dangerous false messiahs, the psychopathic ones.  (We discussed the likelihood that some health care leaders are actually psychopaths here.)

In the secular occupation of health care, we ought not to yearn for messiahs, or even "great men" or women, but instead hope for reasonable leadership that draws on the collective knowledge and values of health care professionals rather than dubious "visions."  True health care reform would promote leaders who show accountability, integrity, transparency, honesty, and ethics.

The Continuing Mystery of the Fugitive Founder and Missing Money - What it Says About the Opacity of Offshore Medical Schools

The next chapter in the bizarre tale of the fugitive founder of an off-shore (from the US and Canada) Caribbean medical school, and his now convicted spouse, do not solve any mysteries, but raise larger concerns about the accountability, or lack thereof, of leaders of important health care organizations.

Introduction: the Fugitive Founder and Convicted Spouse

As we posted in October, 2013, drawing an amazing for us number of comments, the couple who founded two Caribbean medical schools which catered almost entirely to US and Canadian students ran into significant legal trouble.  Founder David Leon Fredrick and his wife, Dr Patricia Lynn Hough were indicted for tax evasion for failing to report income from the two medical schools they allegedly owned, and later sold.

The schools were Saba University School of Medicine, on Saba, and the Medical University of the Americas, on Nevis.  The initial legal proceedings revealed that while Saba University School of Medicine was apparently first set up by a non-profit foundation (or NGO) run by the couple, somehow it became for-profit owned by Mr Fredrick and Dr Hough, and Saba and the Medical University of the Americas were subsequently sold to a private equity group, Equinox Capital.

Before jury selection started, Mr Fredrick disappeared.  Dr Hough was eventually convicted of defrauding the US Internal Revenue Service, and income tax evasion, after trial testimony to the effect that the couple concealed money in a Swiss bank, got $36 million from the sale of the schools, and bought an airplane, two houses, and a condominium.

Left mysterious at that time were Mr Fredrick's whereabouts, where the money that the couple derived from the sale of the medical schools went, and how a school that began as a non-profit organization became a for-profit corporation owned by the couple.  The case should have lead to some concerns about the leadership and governance of the off-shore medical schools that now train increasing numbers of would be US and Canadian physicians.

However, after Dr Hough was convicted, there was little public discussion of these issues, at least until Dr Hough's recent sentencing.  (There were some interesting comments made on our blog post, many from anonymous erswhile defenders of Saba University and/or Mr Fredrick and Dr Hough.  While they expressed some interesting opinions, in my humble opinion they did not add any substantive facts to the discussion.)

Latest Developments in the Case

In the past few weeks the case got a little more public notice in terms of reporting of the legal proceedings leading to the sentencing of Dr Hough   They brought to light some additional contentions by the prosecution, which deserve some attention because after all, they won their case.

The Amount of Money the Couple Made


As reported by the Sarasota (FL) Herald-Tribune,  Dr Hough was sentenced to two years in federal prison, three years of supervised release, and to repay $15 million to the IRS.  In addition,

 Prosecutors say Hough and Fredrick sold the schools and associated real estate in April 2007 for more than $35 million. An IRS agent testified last Thursday that Hough also made more than $12 million in income from the two schools from 2003 until 2007.

How much Mr Fredrick made was not discussed since it was not relevant to Dr Hough's sentencing. 

The Effort that Went into the Plot

According to Bloomberg,

'Hough’s crimes were neither impulsive nor isolated but required sophisticated transactions, coordination with foreign bankers, annual lies to the federal government, and by her own admissions, trips to Switzerland,' prosecutors wrote in a sentencing memo on April 14. 'Hough made calculated decisions to cheat, over and over again.'

Also,

Prosecutors accused the couple of crafting their scheme with UBS AG (UBSN) banker Dieter Luetolf and Swiss financial adviser Beda Singenberger, both unindicted co-conspirators.

Singenberger, who was separately charged with helping 60 U.S. clients hide $184 million in offshore accounts, hasn’t responded in federal court in New York.

In more detail,

Prosecutors said the couple used an array of accounts in the names of businesses to hide their money and employed 'e-mails, telephone calls and in-person meetings to instruct Swiss bankers and asset managers to make investments and transfer funds from their undeclared accounts at UBS.'

The Mysteries Remain



Where Did the Money Go?

As noted above, the sale of the two medical schools netted Mr Fredrick and Dr Hough about $35 million.  Where that went is still unclear.

How Did Mr Fredrick and Dr Hough Become Owners of a Previously Non-Profit Medical School?

As noted above and in our previous post, Saba University School of Medicine began as a non-profit managed by Mr Fredrick and Dr Hough.  Somewhere along the way, the couple assumed ownership of the school.  There seems to be no record and no discussion of how this happened.  In the US, a conversion of a substantial non-profit, like a medical school, to a for-profit, ordinarily would require some regulatory approval and public discussion.  Furthermore, in most cases, non-profit conversions to for-profit would require some sort of protection of the assets of the former non-profit, often leading to a spin-off of a new non-profit foundation.   None of this apparently happened in this case (which admittedly did not occur in the US.)  How did Mr Fredrick and Dr Hough just take over a non-profit, sell it, and keep all the money involved?

Where is Mr Fredrick and Why did He Flee?

We need Sherlock Holmes for this. 


What Does This Case Say About the Leadership and Governance of Offshore Medical Schools?

So the latest details revealed suggest a fairly intricate plot by the American couple who founded two Caribbean medical schools.  The plot allegedly netted them millions, and now resulted in one of the couple remaining a fugitive, and the other convicted of federal crimes.

The biggest issue raised by this case, in my humble opinion, is not about financial crimes, tax-evasion, or the hiding of assets in Swiss banks.  It is about the leadership and governance of offshore Caribbean medical schools, and by extension, of academic medicine and health care.  In 2010, Eckhert documented that the number of offshore medical schools, "for-profit institutions whose purpose is to train U.S. and Canadian students who intend to return home to practice," but not to train physicians to practice in the countries in which these schools are located, was rapidly growing.(1)  By 2010, there were 33 such schools, 20 of which were new since 2000.

These offshore medical schools are not accredited in the US or Canada, and such accreditation is currently not required for individual graduates of such schools to be admitted to US house-staff programs or for US licensure.  So perhaps it is not surprising that little is known about these schools.

How they choose students, the qualifications, or even names of their faculty, their curriculum, how they supervise clinical training (which is mostly done by affiliated North American hospitals), and what happens to their graduates are boscure.  Eckhert attempted to describe what is known, but noted "variability exists in the availability of information on faculty; where data exists, it is noted that most of the permanent on-site basic science faculty are internationally trained, many have no documented medical education experience in the United States, and it is not uncommon for them to be OMS [offshore medical school] alumni."

Even less is known about who leads these schools, who if anyone is responsible for their stewardship, and even who owns them.  The current case suggests that Saba University School of Medicine was run by couple who mysteriously assumed ownership of the school after leading it as a non-profit organization, then sold it to private equity for millions in a transaction that eventually left one a convicted criminal and the other a fugitive.  Yet none of this came to light until the federal government launched an investigation not of offshore medical schools, but of offshore money laundering and happened to catch the couple in the investigational web. No regulatory process, no watchdog organization in the US or Canada, or on Saba apparently found this out until it was revealed in an investigation by the US federal government that had nothing specifically to do with health care or offshore medical schools.  This suggests that offshore medical schools now can be lead and run by anyone, qualified or not, honest or criminal, without any oversight or accountability.  

For example, even today little is known about the leadership of Saba University School of Medicine.  The school currently provides only minimal biographical information on its administration.  Its President is listed as Joseph Chu MD MPH, who appears to have the same educational credentials (MD from Georgetown, MPH from University as Washington) as one Joseph Chu who is apparently a Clinical Associate Professor of Epidemiology at the University of Washington.   Dr Chu's specialty and previous experience are not apparent.  Whether the Dr Chu at University of Washington is the same as the President of Saba is unclear.  If they are the same, how Dr Chu holds down these two jobs is not clear.

For comparison, most US schools provide extensive information about their leadership.  Just as an example, see the introductory page on the Dean of the University Washington medical school.

Even less is known about the stewardship or governance of Saba University School of Medicine.  Many US medical schools have their own boards of trustees who are supposed to provide stewardship. For example, the UW board is here.  Their membership is generally known.  Furthermore, most US medical schools report to university leadership, again whose identity is known, and are subject to governance by a university board of trustees.  We have certainly criticized the leadership and governance of US academic medicine.  At least, however, it is possible to find out the names of the people responsible. 

However, while Saba University School of Medicine is still apparently owned by Equinox Capital according to the latter's website, to whom Dr Chu reports at Equinox Capital is unclear.  Whether Saba has a board of trustees, or any such similar stewardship mechanism, is unclear.  So who is ultimately accountable for Saba is unclear.  Probably just as unclear is who leads, who stewards, and who is accountable for the leadership of most other offshore medical schools.

While Eckhert wrote in 2010 that the increasing presence of offshore medical graduates in the US "obligates U.S. medicine to take a closer look at these educational programs," no such scrutiny has occurred since then.  While offshore medical schools account for the training of an increasing proportion of US (and presumably Canadian) physicians, we know next to nothing about their leadership and governance.  This seems to be just another part of the decreasing accountability of the leadership of US health care, and the increasing opacity of the governance and stewardship of US health care organizations.  True US health care reform would make leadership transparent and accountable.         

Reference
 1.  Eckhert NL.  Private schools of the Caribbean: outsourcing medical education.  Acad Med 1010; 85: 622-630.  Link here. 

Better Late than Never - JAMA Article Advocates Banning Academic Medical Leaders from Serving on Many Health Care Corporate Boards

Will wonders never cease? Eight years after we started posting about this issue, it has made it into a large circulation medical journal, albeit not completely

A JAMA Commentary Decries Leaders of Academic Medical Centers Serving on Boards of Organizations with Conflicting Priorities

A recent JAMA commentary(1) noted the importance of conflicts of interest affecting top leaders of academic medicine,

Conflict of interest is particularly relevant for those in the upper echelons of academic health system leadership—presidents, vice presidents, provosts, deans, chief executive officers, and the senior administrators who report to them.

(The article oddly omitted discussing conflicts of interest affecting the boards of trustees of such institutions, who are charged with their stewardship.)

Anyway, the authors' rationale was that,

Unlike most faculty and staff, senior institutional officials are involved in financial and business decisions, including purchasing, resource allocation, and development of corporate partnerships, and have fiduciary responsibility to the entire institution. In addition, it is critical that the public, students, employees, and faculty maintain confidence in the integrity of institutional leaders. Leaders have a responsibility to set an example for others in their institution, especially for those training to be health care professionals.

Independence and integrity of judgment are core precepts of professionalism. Every employee, faculty member, and student in an academic health system should feel confident that their leaders are making decisions based on the best interests of the institution and not driven by biases secondary to financial connections to outside corporate entities.

So,

Having a fiduciary responsibility to 2 separate entities is at best a very difficult situation. Will the leader direct business inappropriately to the outside company on whose board he or she sits? Will the leader inappropriately use information about the institution he or she leads to influence decisions by the outside corporation? It is difficult to separate these types of activities and decisions. In addition, there are administrative costs associated with the management of this level of conflict, and such relationships might have a 'chilling effect' on other companies that could do business with the academic health system. Beyond service on fiduciary boards, undertaking any paid role (consulting, participation on advisory boards, etc) with an outside entity with interests that overlap those of the leader’s institution raises the same issues.

The authors stressed that the most intense conflicts are generated by service on the boards of directors of "organizations with interests that overlap those of the academic health system."  Presumably they would have included among such organizations health care corporations that sell goods or services that might be used within academic medical centers, and/or be the subject of teaching or research by faculty at these centers, although the article did not make that explicit.

The authors suggested such conflicts are not infrequent, noting a survey by Campbell et al of department chairs in academic medical institutions that showed a majority had some sort of relationships with industry, although they did not specify what these relationships were.  In fact, the Campbell article did report that 11% of department chairs admitted to being on the board of directors of companies that had activities that related to the chairs' academic or administrative responsibilities.(2)

Finally, the authors called for banning most such conflicts

the fiduciary responsibilities of presidents, provosts, vice presidents, deans, chief executive officers, and those who report to them should preclude a paid relationship with an outside entity in related and relevant areas,... 

Note however that they did offer some loopholes.

unless a case can be made that there is a compelling institutional interest in the leader’s service in such a role, or if the role with the outside organization is outside the scope of the leader’s role at the academic health system.

Despite the omissions and loopholes, this is a very significant article.  It is the first challenge to such severe conflicts of interest affecting academic medicine to appear as an article in a major medical journal, at least to my knowledge. 

You Heard It Here First

However, on Health Care Renewal we have been attempting to challenge such conflicts for at least eight years. In 2006 we first discussed a newly discovered species of conflict of interest in health care, in which leaders of medical or health care organizations were simultaneously serving on boards of directors of health care corporations.

We posited these conflicts would be particularly important because being on the board of directors entails not just a financial incentive.  It ostensibly requires board members to "demonstrate unyielding loyalty to the company's shareholders" [Per Monks RAG, Minow N. Corporate Governance, 3rd edition. Malden, MA: Blackwell Publishing, 2004. P.200.]  Of course, after the global financial collapse of 2008 made us sadder and a little wiser, we realized that many board members actually seem to have unyielding loyalty to their cronies among top management.  However, in any case, the stated or actual interests of a member of the board of a health care corporation, like a pharmaceutical company or medical device company, could be very different and at odds with the mission of an academic medical institution or a non-profit ostensibly dedicated to improving health care quality.

Vivid Cases Would Strengthen the Argument

It is odd that the JAMA article included very little evidence about the occurrence of such conflicts of interest.  It really is not hard to find.  Since 2006, we have discussed numerous cases of such conflicts of interest.

The case that first attracted our attention was that of Marye Anne Fox, the then Chancellor of the University of California - San Diego, a major campus of the state university that includes a medical school.  January, 2006 media reports noted that Chancellor Fox was simultaneously servingon 10 corporate boards, including those of two health care corporations, Boston Scientific, a medical device company, and Pharmaceutical Product Development Inc (PPDI), a for-profit contract research organization.  At the time, I wrote,

having ultimate leadership responsibilities for a medical school and medical center, while also having ultimate fiduciary responsibilities for the management of a medical device company and a contract medical research company amounts to the biggest conflicts of interest I have ever seen.   

Nonetheless, beyond local media, the case got little attention at the time.  What attention it did get focused on the magnitude of Chancellor Fox's commitments to outside organizations, not the conflicts they apparently caused (look here).  Chancellor Fox apparently retired from the PPDI board in 2008 (look here) but did not retire from the Boston Scientific Board until 2011 (look here). 

Since then, we found many more striking cases.
-  A month later, there was the case of the president of the University of Miami, a board member of for-profit health insurance company UnitedHealth, whose lowest paid employees were on strike to protest their lack of health insurance, among other issues.
-  It turned out the UnitedHealth board in particular seemed to be a refuge for multiple academic leaders, at least one of whom seemed partly responsible for allowing the then UnitedHealth CEO to collect many backdated stock options (look here)..
-  Then there was the 2008 case of the conflict of interest involving an anti-health company.  After Virginia Commonwealth University was criticized for taking money from giant tobacco company Philip Morris for medical research, it turned out that the then president of the university, Eugene Trani, was on the board of another tobacco company, Universal Corp (see post here).
-  Then, in 2009, some attributed the problems at George Washington University's medical school that caused it to be put on probation to the conflict of interest of its provost and vice president for health affairs, John F Williams, who also sat on the board of Universal Health Services, which owned the university hospital (look here).
 We posted about a number of other colorful cases since then (look here)


Although this evidence is admittedly case based and therefore anecdotal, it could be used to highlight the importance of the problem and develop support for its solution.

A Welcome Addition to Previous Recommendations about Countering Conflicts of Interest

For whatever reason, this issue somehow seemed to escape the attention of many of those who have written about conflicts of interest in health care.  Even those who advocated taking a harder line on conflicts of interest have generally avoided this issue.

Brennan et al made recommendations about reducing conflicts of interest in 2006, but focused on students and faculty, not top leaders and executives (see post here).(3)  The 2009 Institute of Medicine report set relatively tough standards for managing conflicts of interest affecting clinical research and teaching, which unfortunately since have largely been ignored.  It did call for senior institutional officials to disclose their conflicts of interest, and for institutional boards of trustees to form conflicts of interest committees that would exclude conflicted individuals, but otherwise did not address conflicts of interest affecting academic leaders or institutional trustees.  The 2013 Pew Charitable Trusts Conflicts-of-Interest Policies for Academic Medical Centers suggested restrictions on conflicts affecting faculty, trainees, and students, but again did not mention senior institutional leaders or boards of trustees.

Conclusion

So it is very nice to see that the issue of what we once called a new species of conflict of interest finally has made the big time.  Whether it now gets any traction remains to be seen.  Unfortunately, since conflicts of interest can be so profitable for the directly affected parties, I fully expect they will continue to oppose any restrictions.  The money they have made will likely be used to deploy marketing and public relations personnel and legal counsel to counter any attempts to try to make this aspect of health care more honest.

As we have said again and again, the web of conflicts of interest that is pervasive in medicine and health care is now threatening to strangle medicine and health care.  For patients and the public to trust health care professionals and health care organizations, they need to know that these individuals and organizations are putting patients' and the public's health ahead of private gain. Health care professionals who care for patients, those who teach about medicine and health care, clinical researchers, and those who make medical and health care policy should do so free from conflicts of interest that might inhibit their abilities to put patients and the public's health first. 


References

1. Pisano ED, Golden RN,Schweitzer L. Conflict of interest policies for academic health system leaders who work with outside corporations.  JAMA 2014;311(11):1111-1112. doi:10.1001/jama.2014.788  Link here.

2.  Campbell EG, Weissman JS, Ehringhaus S et al.  Institutional academic-industry relationships.  JAMA 2007;298(15):1779-1786. doi:10.1001/jama.298.15.1779.  Link here.
3,  Brennan TA, Rothman DJ, Blank L et al.  Health industry practices that create conflicts of interest.  a policy proposal for academic medical centers.  JAMA  2006;295(4):429-433. doi:10.1001/jama.295.4.429  Link here.

A Sewage-Laden Cruise Ship, Burning Aircraft Batteries, Neo-Nazi Factory Security - Will Jaw Dropping Cases Prompt the Public to Demand Better Leadership?

The dysfunction of modern health care likely arises from larger trends within the economy and the society.  We frequently discuss how poor leadership and governance within health care and other organizations exist in a context of focus on short-term revenue above all else (financialization); perverse incentives, particularly leading to excess executive compensation unrelated to leaders' actions or performance; deception, especially in marketing and public relations coupled to suppression of internal dissent and whistle blowing;  lax regulation and law enforcement, in a climate of regulatory capture and by governments afflicted with the revolving door allowing conflicts of interest and corruption, etc, etc.

I was thinking of this last weekend while like many Rhode Islanders we were shivering in an unheated house.  A big but not unprecedented snow storm had apparently caused the failure of multiple high-voltage electrical transmission lines and substations, which should be designed to resist such conditions.  (National Grid says cause still unknown for failure of high-voltage lines serving East Bay, Aquidneck Island.)

Poor leadership and governance under these circumstances likely lead to threats to public health and safety.  Focus on cost-cutting and current revenue to drive executive compensation may lead to bad design, manufacture, and maintenance of critical systems.  So maybe we should not be surprised at a recent barrage of cases involving threats to health and safety by well-known corporations:

Walmart in Supply Chain Crackdown after Bangladesh Factory Fire

Apple Vows to Eradicate Child Labour from Workforce

HSBC Got Away with Murder: the Bank Laundered Money for Drug Traffickers and Terrorist Groups...

Probe of Boeing 787 Battery Fire Expands

Sewage-laden Carnival Cruise Ship Docks in Mobile, Alabama: Passengers Finally Disembark from Vacation Vehicle Turned Smelly Nightmare

Amazon 'used neo-Nazi guards to keep immigrant workforce under control' in Germany


Those were just the cases I could easily recall.  Readers are invited to add more to the comments section.


At least, I don't think I can blame poor leadership and governance for a huge exploding meteor:




But maybe a society less dominated by top insiders skimming off more and more money would be better prepared for the next meteor strike.

One can only hope that this onslaught of increasingly jaw-dropping cases that threaten health and safety that would have been unimaginable a short time ago might lead the public to demand accountable, transparent, mission-focused, honest leadership of the big organizations, for-profit, non-profit and governmental, that now control our lives.

Question for the New Year: Why is There Next to No Reaction to the Gilded Age of Health Care?

For the New Year, it is time to ponder- why is there still no organized outrage over the ongoing incompetent, uncaring, self-interested, conflicted, and often outright corrupt leadership of health care organizations we have documented incessantly on Health Care Renewal?

For example, just a few days ago, we documented a series of cases in which large US and multinational health care organizations settled cases alleging they deceptively marketed drugs so as to exaggerate their benefits and conceal their harms, bribed doctors and officials  outside of the US, gave kickbacks to US doctors, defrauded the US government, and monopolized markets for drugs, yet few leaders, and no top leaders of the companies involved suffered any negative consequences for authorizing, directing, or implementing these activities.  We have discussed many previous legal settlements involving similar bad behavior and similar impunity by the leaders of the organizations involved.   Again and again we have discussed how large organizations, often but not always drug, biotechnology and device companies, have manipulated the scientific literature (e.g., see examples of manipulation of clinical research, suppression of clinical research, and specific practices such as ghost-writing of apparently scholarly articles to benefit vested interests.)   We have discussed overblown compensation that made top managers and other organizational insiders rich without any rationale other than their ability to take such money off the top.  Yet in the US, despite ever rising costs presumably provoked by such leadership, without corresponding improvements in quality or access, there is still no organized movement for change.

The problems in US health care, however, seem to parallel problems in the larger society, and the world at large.  We have discussed parallels with bad leadership of financial firms, including the firms that drove us into the global financial collapse/ great recession, and to continuing income stagnation, recession, austerity, and decreasing opportunity for the poor and middle class around the world.

Yet parallel questions are just beginning to be asked about larger related political economic problems.  Recently, historian Brad DeLong attempted to address the question, "why next to no reaction to the second gilded age?"  (See this.).  Unfortunately, while he could demonstrate two powerful political movements that opposed the first Gilded Age, he was completely at a loss to explain why there has been no similar organized outrage about the second Gilded Age in which we exist today.  Despite incompetent, uncaring, self-interested, conflicted, and often outright corrupt leadership of many large corporations, non-profit organizations, and government agencies only a few voices, often bloggers like us, have objected.

Economist Mark Thoma then took up the question, but the best he could do was suggest that outrage has been moderated because of the existing, if frayed, social safety net, and because many people nonetheless saw the last two decades as a time of increasing economic opportunity. (See this. )   He did not address how this view may have been wrong, since the last two decades were a time of obviously worsening income inequality.

Yves Smith of Naked Capitalism finally offered some insight (see this) by noting the importance of "propaganda," corresponding, I think, to the widespread deceptive marketing and public relations, and the use of covertly paid key opinion leaders to further both that we frequently discuss.  Finally she suggested that people feel powerless because they see themselves as "atomized individuals," even though they many are currently being treated as interchangeable parts by the leaders of large organizations who can control the actions of large number of employees to further their self-interest.

There must be more reasons.  There ought to at least be some organized discussion of these reasons.  After that there needs to be some organized action to promote real reform.  I conclude the often miserable 2012 with a plea for those who are interested and concerned to come together to create real solutions.

ADDENDUM (1 January, 2013) - see comments by Dr Howard Brody on the Economism Scam blog.

Health Care Academics' Unrest and Bad Health Care Leadership?

Last month we discussed a recent, large scale study of physician burnout, and wondered whether it would finally inspire some discourse about why physicians are really so upset.  In particular, we hypothesized,  based on some real, if limited data, that physician angst, dissatisfaction, burnout, etc may mainly be a response to the problems with leadership and governance of health care organization we post about on Health Care Renewal.

After that post, one of our scouts found a very interesting and relevant article from earlier this year which got little attention at the time, but deserves more.  [Pololi LH, Krupat E, Civian JT, Ash AS, Brennan RT. Why are a quarter of faculty considering leaving academic medicine? A study of their perceptions of institutional culture and intentions to leave at 26 representative U.S. medical schools. Acad Med. 2012; 87: 859-69. Link here.]

Study Design

This was a cross-sectional survey of faculty at 26 medical schools in the US, selected to be similar to the general population of medical schools in the country.  At each school, 150 faculty were randomly chosen stratified by sex and age, and then the sample was enriched to include additional minority faculty and women surgeons, for a total of 4578.

The faculty were sent a multi item survey to assess their perception of the organizational culture of their institutions, and asked about their intentions to continue in or leave their current positions and academic medicine.  Responses to each survey item were allowed to be from 1 = strongly disagree, to 5 = strongly agree.  The items on the survey were combined into various scales.  A number of items on the survey seemed to be related to issues we frequently discuss on Health Care Renewal.  These items ended up in three different scales, entitled Relatedness/Inclusion, Values Alignment, and Ethical/Moral Distress.  The survey items are listed below, grouped by issue, with the scales into which they were combined noted.

Issue: Mission-Hostile Leadership

Administration only interested in me for revenue   (Reverse coded) (Values Alignment)
Institution committed to serving the public (VA)
Institution's actions well-aligned with stated values and mission (VA)
Institution puts own needs ahead of educational/clinical missions (RC) (VA)
My values well-aligned with school's (VA)
Institution awards excellence in clinical care (VA)
Institution does not value teaching (RC) (VA)
Have to compromise values to work here (Ethical/Moral Distress)

Issue: Deceptive, Unethical Leadership

Felt pressure to behave unethically (Ethical/Moral Distress)
Need to be deceitful in order to succeed (EMD)
Others have taken credit for my work (EMD)

Issue: Generation of the Anechoic Effect by  Suppression of Free Speech, Academic Freedom, Dissent, Whistle-Blowing,

Feel ignored/ invisible (RC) (Relatedness/Inclusion)
Hide what I think and feel (RC) (R/I)
Reluctant to express opinion/ fear negative consequences (RC) (R/I)

So in summary, the survey contained quite a few questions about mission-hostile management, comprising nearly all of the Values Alignment scale, some questions about deceptive or unethical leadership, all in the Ethical/Moral Distress scale, and some about generation of the anechoic effect by suppression of free speech, academic freedom, dissent, and whistle-blowing, all in the Relatedness/Inclusion scale.

Results

The response rate was 52% (N=2381.)

Unfortunately, the article did not include the distributions of the responses to individual survey items, and only included the mean and standard error of the scale scores.  The values for the scales of most interest were:
Relatedness/Inclusion  3.56 SE= 0.022
Values Alignment  3.25 SE=0.028
Ethical/Moral Distress 2.36 SE=0.022

Note that the article did not address the degree individual items, especially those listed above, contributed to variation in the scale scores.


A small majority of faculty indicated their intentions to stay at their institutions (57%).  Of the remainder, 14% were considering leaving their school due to dissatisfaction, and another 21% were considering leaving academic medicine due to dissatisfaction.  The remainder were considering leaving due to personal/ family reasons or to retire.

The authors did complex multinomial logit modeling to assess the relationships among the various scales, demographic factors, and intention to leave.  Most relevant to us, Relatedness/Inclusion was significantly related to intention to leave the institution due to dissatisfaction (Coefficient -0.69, p lt 0.001, OR =0.50), as was Values Alignment (-0.39, p=0.04, OR=0.68), but not Ethical/ Moral Distress.  Furthermore, Relatedness/Inclusion was related to intention to leave academic medicine due to dissatisfaction (-0.48, p lt 0.001, 0.62), as was Ethical/Moral Distress (0.60, p lt 0.001, OR =1.82). The article did not address whether individual survey items, including those of most interest listed above, were related to intention to leave.  The article also did not address whether responses to the survey or intention to leave varied across faculty characteristics, medical school characteristics, or individual medical schools. 

Summary and Comments

This very large survey of faculty from multiple US medical schools showed that more than one-third were considering leaving their institutions or academic medicine due to dissatisfaction, indicating a striking prevalence of faculty distress.  Their responses to questions about perceived organizational cultural and leadership problems, including those possibly related to leadership's perceived hostility to the mission, leadership's perceived dishonesty or unethical behavior, and leadership's suppression of dissent, free speech, academic freedom, and whistle-blowing were related to their intentions to leave due to dissatisfaction.

These results suggest the hypothesis that much of faculty angst may be due to the sorts of problems with leadership and hence organizational culture that we discuss on Health Care Renewal.  Since this was a cross-sectional survey, it certainly does not offer scientific proof of this hypothesis.  Note that there is other evidence from numerous cases discussed in Health Care Renewal, qualitative studies and our much smaller study published only in abstract form that also supports this hypothesis (look here). 

One part of the author's discussion of their findings was particularly relevant:

Our findings are congruent with metaanalyses of 25 years of organizational justice research outside medicine. These studies suggest that employee perceptions of organizational justice and an ethical climate are related to increased job satisfaction, trust in leadership, enhanced performance, commitment to one’s employer, and reduced turnover.

 The scale of ethical/moral distress (see Table 1) reflects reactions to the prevailing norms and possible erosion of professionalism and increased organizational self-interest. There is a growing belief that organizations influence and are responsible for the ethical or unethical behaviors of their employees.To our knowledge, faculty perceptions of 'moral atmosphere' and 'just community' embedded in our survey have not been previously investigated in academic medicine, even though the ethical concepts of professionalism and justice can be used to guide the pursuit of excellence in the missions of medical schools. Several scholars have called for academic medicine to attend to its social justice and moral mission. Faculty perceptions
of organizational justice are pivotal to the critical issue of professionalism in medicine. The ethical/moral distress scale in the survey reported here included items such as 'the culture of my institution discourages altruism' and 'I find working here to be dehumanizing.' (See Table 1 for other items in this scale.) In that ethical/moral distress was more strongly related to intent to leave academic medicine entirely than intent to leave one’s own institution, these negative feelings among faculty must be particularly disheartening to them and may color major career decisions.

I believe that the study by Pololi et al adds to the evidence that physician distress is a symptom of a dysfunctional system in which major health care organizations have been taken over by leaders more devoted to self-interest and short-term revenue than the values prized by health care professionals and academics.  This applies obviously to academic medical institutions, but also to other organizations that might have been expected to defend such professional and academic values, such as professional associations, accrediting organizations, and health care foundations.  As we said before, if physicians really want to address what is making them burned out and dissatisfied, they will have to regain control of their own societies, organizations, and academic institutions, and ensure that these organizations put core values, not revenue generation and providing  cushy compensation to their executives, first.  

Traits that "Define a Great Hospital CFO" - Honesty, Integrity, Accountability not Included

A recent article in Becker's Hospital Review entitled, "6 Traits That Define a Great Hospital CFO" [Chief Financial Officer] was most remarkable for what traits were not included.

The Six Traits

Based on interviews with a managing director of health care recruiting for a large executive search firm, and an experienced CFO of large hospital system, the included traits were:
- "Conviction," including "some type of conviction and confidence that their decision-making abilities will lead the hospital to great healthcare outcomes, a healthy population and — as a result — a more financially stable organization."
- "Nimbleness and flexibility"
- "Calm demeanor"
- "Willingness to understand the clinical aspects," in particular, the ability to "at least understand the [clinical] processes from a layperson's point of view, and the most effective CFOs have great working relationships with physicians, nurses, technicians and others."
- "Ability to think long term"
- "Sense of humor"

To be fair, I am glad to see expectations that hospital leaders, even chief financial officers, know something about clinical care, and that they have some sort of commitment to it. This seems to be in contrast to our frequent posts about how the leadership of health care organizations often seems ignorant and uncaring about the health care context and health care values. (However, the phrase above about conviction was not clearly worded. In particular, it did not explicitly suggest quality clinical care ought to be a higher priority than revenue, and could have been read to mean that good care is just a means to increase revenue.)

I am also glad that the article promoted long-term thinking. It also seems to contrast with concerns (e.g., here) about how health care leadership may put short-term revenue ahead of all other goals, also called "financialization." However, again, the article did not explicitly give long-term goals a higher priority than short-term ones.

What was Missing

However, what was more striking were the dogs that did not bark. In particular, transparency, honesty and integrity or even being law-abiding were not on the list of key traits for a CFO. This is particularly noteworthy given how often we have discussed bad behavior by large health care organizations, including various kinds of deception and dishonest behavior, as well as outright crime, such as fraud, bribery or kickbacks, etc.

Also, the list of important traits did not include responsibility or accountability.   This is also noteworthy given that rarely if ever have the leaders of these organizations taken any responsibility or paid any penalty for bad behavior occurring on their watches. Although may large health care organizations have made numerous legal settlements of accusations that include fraud, kickbacks, etc, the leadership almost never admitted wrongdoing in any of them, and almost never had to accept any financial penalty form the organization. This parallels how the US legal system has rarely sought to punish any leader of a large health care organization in such cases, suggesting that health care leaders now have developed impunity.

Given that the article appeared in Becker's Hospital Review, a leading publication for hospital leaders, its apparent cynicism about what once were considered indispensable characteristics of good leadership was disturbing.  It is also disturbing that at the time this was written, the only comment on the on-line version of the article, also the only comment to note this lack, was written by your this humble scribbler.

Summary

This may test some CFOs' sense of humor, but instead let me propose my hopes for better health care leadership. To truly reform health care we should seek reasonable leadership that draws on the collective knowledge and values of health care professionals, and that shows accountability, integrity, transparency, honesty, and ethics.  Not asking our leaders to be honest, ethical and accountable just enables the current dysfunction. 

More "Visionary" Leadership That Turned Out to be "More Interested in Flash than Substance" - Continuing Troubles at the University of Miami

Over the last 20 years or so, health care organizational leaders somehow ceased to be mere mortals, and became visionaries.  The latest example of how their visions turned out to be cloudy appeared in the Miami Herald.

Background: Donna Shalala as "Visionary" President of the University of Miami

Donna Shalala, formerly the US Secretary for Health and Human Services, became President of the University of Miami in 2001 (see her official biography).  She has since been hailed literally for her "visionary leadership" (as recipient of the Health Leadership Award from the National Hispanic Medical Association in 2005).  In 2008, then US President George W Bush awarded her the US Medal of Freedom, the highest US civilian award, as "one of our nation’s most distinguished educators and public officials. She has worked tirelessly to ensure that all Americans can enjoy lives of hope, promise and dignity.")

At the University of Miami, as described in a detailed investigative report by Paul Basken in the Chronicle of Higher Education in 2011, Ms Shalala pursued a grand strategic vision to " bring the University of Miami into the ranks of the nation's elite research universities."  In an interview at that time, she claimed to have had "a very disciplined strategic plan to make this place much, much better, to move into the top ranks of American universities."

Cracks in the Wall Appear in 2011

However, Mr Basken reported that by 2011, that strategy was showing signs of failure.  He noted problems including rising deficits and a worsening credit rating; allegations that the university was failing to meet the needs of the poor patients for whom its doctors had traditionally cared for at Jachson Memorial Hospital while favoring paying patients at its newly acquired medical center; and concerns about conflicts of interest affecting top leadership of the university, including Ms Shalala (see our post here).  At the time, university leadership scoffed at the importance of these problems.  For example, Ms Shalala ridiculed doctors "who gripe" that the university had become over-extended by pushing research over patient care as "these people complaining they want to live their little lives without being researchers." 

After the 2011 report came out, Ms Shalala ridiculed  it in print as "a shocking example of irresponsible and lazy reporting."

Note that on Health Care Renewal, we had previously raised questions about Ms Shalala's conflicts of interests, particularly her role on the board of UnitedHealth at the time its CEO was receiving hundreds of millions in back-dated stock options (in 2006, look here); and about her priorities, including the contrast between her lavish compensation, which encompassed her residence in a fully-staffed mansion, and how the university treated its low level workers, particularly its janitors who did not receive health insurance (also in 2006, look here). 

The Cracks Widen in 2012

In retrospect, Mr Basken's article appears quite responsible and accurate.  Last week the Miami Herald reported that Ms Shalala's "ambitious moves vaulted UM’s medical school to the national stage — but they may also have seriously damaged it."  Soon after Ms Shalala ridiculed the Chronicle of Higher Education article, already internal reports showing even more trouble were appearing. 

As far back as October, billionaire car dealer Norman Braman wrote in a memo to fellow UM trustees that he and colleagues had been receiving anonymous letters for months 'outlining a host of wrongdoings, mostly at the medical school. Braman and others closely tied to the school warned UM officials the medical school was spending too much, too fast in the push to build a world-class medical center.

There were problems beyond those described by the CHE article:

The medical school also had major problems of its own. According to internal documents, the school suffered from bloated staffing, a faulty billing system and prices that sometimes ran much higher than at other South Florida hospitals. Internal controls apparently were weak at best: A whopping $14 million in expensive cancer drugs disappeared from a UM pharmacy over three years before an employee was charged with theft in June 2011.

The medical school’s difficulties even began to impede its relationship with the ailing, taxpayer-financed Jackson Health System, endangering a decades-long partnership with the public hospital system.

The Herald article includes substantially more detail to support these assertions.

Trustee Braman summarized it thus:

Poorly conceived decisions by the medical school administration have put the university at significant risk and, at the same time, injured Jackson Memorial Hospital.

As we noted, earlier this year the university's financial problems lead to layoffs, but at the same time, the university was building an even fancier mansion for President Shalala. After the lay-offs, Braman said they were:

a real tragedy that never should have happened. ... The people at the top were very much more interested in flash than substance.

Summary

Since the early 1990s we have suffered the rise of extremely confident, extremely well-paid, "visionary" health care leaders. Anyone within the organization who doubted their visions risked being labeled a malcontent or worse. Any skeptic outside the organization might be met by a barrage of propaganda from the organization's well financed public relations operation. Yet the visions these leaders produced often appeared to be clouded at best.

One of the most striking early examples remained anechoic for a long time. The then CEO of the Allegheny Health Education and Research Foundation, Sharif Abdelhak, was publicly labeled a "visionary" and "genius" for assembling a large, vertically oriented health care system, which eventually went bankrupt. Abedlhak went to jail. (Look here for summary). In the greater business world, whose culture now seems to rule health care, there are other examples of such failed visionaries (look here).  Yet this case, and other since, have largely been ignored.

However, as the case of the leadership of the University of Miami now seems to show in retrospect, many people seem to fall again and again for the now tired hucksterism of the "visionary," or "genius" leader selling grandiose and often self-serving pipe dreams.

Maybe it would be enough in health care to simply aspire to good patient care, responsible education, and honest research.

Meanwhile, health care professionals, health policy leaders, and the public at large should start showing appropriately pointed skepticism of our current self-proclaimed "visionary" leadership.

The CEO as False Messiah

Why is the leadership of health care organizations so bad?  An important explanation of one part of the puzzle appears on InformationWeek's Brainyard blog written by Venkatesh Rao. 

The Visionary, Charismatic, or Messianic Leader

In "The Fall of the Messiah Leader," Rao described the rise of the concept of "visionary" leadership:

we'll look at the rise in the 1980s and impending fall of the idea of 'Leadership' as a pop business construct. The role of visionary leader emerged to make up for the apparent failure of the manager mind, but it evolved into something very different, illustrated in the picture below: a role dedicated mainly to creating and maintaining an illusion of control in the markets interspersed with occasional Big Bold crisis management moves that generally fail.

Rao suggested that the first example of the messianic organizational leader was former General Electric CEO Jack Welch:

Welch was the first modern example of 'charismatic leadership,' and his was the first widely recognized business name since the robber barons. I challenge you to name, off the top of your head, one "celebrity" business name between Rockefeller and Welch that the average man on the street would have recognized.

Rao described the charismatic, or visionary leader in truly messianic terms:

one savant-like figure can intuitively read market conditions, spot brilliant strategic opportunities, create clarity of purpose in pursuit of that opportunity, and steer by an innate sense of True North, without a compass.

Oh yeah, and while performing this miracle routinely, the leader also models virtues and values that would put saints to shame. This idealized leader sparks a pursuit of corporate greatness with a brilliant strategic insight every few years, and he ensures that the pursuit is conducted in accordance with values so noble you feel like writing epic poems in his honor.

These charismatic figures are supposed to be capable of intuitively cutting through complexity and producing visionary decisions that make the managers' jobs tractable again.

In case this description of supposedly messianic leaders of recent years sounds far-fetched, recall the example of the failed, then eventually jailed CEO of what was once the Allegheny Health Education and Research Foundation (AHERF), one of the largest vertically integrated health care systems of the 1990s. (Currently, we call such organizations accountable care organizations, or ACOs.) Abdelhak was described in an American College of Physicians publication as a "visionary." (See the summary beginning on p 5 here.) Abdelhak had previously been called a "visionary" or a "genius" in the media. [Gaul GM. Creator of a cross-state health system despite personal and financial questions, Sherif Abdelhak has boldly expanded from Pittsburgh to Philadelphia. Philadelphia Inquirer, March 4, 1991. P. D1. Gaul GM. The new prescription for health care: Hahnemann’s merger dwarfs - and frightens - many local rivals. Philadelphia Inquirer, November 21, 1993. P. E1.]  For more recent examples of how health care leaders may be described in messianic terms, look here, here, and here.

The False Messiahs

Just as Abdelhak proved to be not a messiah, but a criminal, most messianic leaders are anything but. As Rao put it,

Do these Messiahs actually do the job required of them--relieve beleaguered mere-mortal managers and steer the company toward greatness? Nine out of 10 times, they do nothing of the sort. What they do is convince people that they're in control.

His main point is that the "messiahs" are just people playing at that role, supported by public relations, if not propaganda and disinformation:

Heroic, charismatic leadership in the context of large public companies is mostly a myth. What makes it a myth isn't that such figures don't exist (there have been a handful, such as Welch himself, Jobs, and Bezos), but the idea that the phenomenon can be studied in general terms, codified, and turned into a teachable skill.

True leaders are born, not manufactured. And they're quite rare. What the leadership cottage industry can manufacture are false leaders: People who can act like leaders. That theater has two audiences: the media and Wall Street.

The psychological allure of 'leadership' as a concept is almost entirely due to its profitability as a business-writing cottage industry, which in turn is based almost entirely on appealing to the vanities of wannabe-Messiahs. On the other side, there's an entire shadow world devoted to manufacturing perceptions of Messianic capabilities, by 'proving' claims to charismatic leadership using hagiographic narratives.

Rao claimed that the rise of such falsely messianic leadership was due to the ability of such leaders to bewitch investors:

The de facto job of a leader is to manage perceptions on Wall Street and thereby manage the stock price. Projecting an image of charismatic leadership is the easiest way to do that. Managers fight fires out of sight, creating a perception of corporate normalcy and control, and the Glorious Leader uses that blank canvas of apparent normalcy to spin tales that mesmerize Wall Street.

Who Else Benefits

Rao wrote mainly in the context of understanding the stresses and challenges of managers (who he sees as distinct from leaders in the context above). Thus he may not have written about other factors in the etiology of falsely messianic leaders.

I hypothesize that such leaders are not only good at bewitching investors, but bewitching other constituencies and stakeholders. Most health care organization now must deal with government agencies. Non-profit health organizations must deal with groups that are interested in their ostensibly charitable missions. Having a apparently messianic leader makes it possible to bewitch these groups.

Furthermore, I hypothesize that falsely messianic leaders greatly benefit two groups within their organizations. The first is obviously their apostles, often the top layers of organizational executives just below the CEO. Such positions are now almost as personally remunerative as are CEO positions. The second is obviously the spin-doctors, that is mainly the public relations and sometimes the marketing people who help produce the theatre that creates the perception of messianic qualities.

The Final Common Pathway

Rao suggests that falsely messianic leaders are likely to lead their organizations to a bad end, even if they themselves may escape the consequences:

Charismatic theater-leadership is about to die a messy death, like Qadaffi, because the sheer amount of chaos converging in a bottom-up torrent to the CEO's office will become unmanageable very soon. The theater will become increasingly hard to sustain.

Leaders fail when their managers fail to keep up with the fire-fighting. Once the fires become visible externally, the apparent normalcy necessary for the leader to manage perceptions is gone.

At this point, the leader is an impossible situation, but the theater must continue. And so we're treated to the grand finale of the tenure of a CEO: the Big Bold Move, the Bet The Company moment.

The Big Bold Move is usually a Big Dumb Move--deciding to go after large new markets, taking on bold new product initiatives costing hundreds of millions of dollars, making major acquisitions. It's a high-stakes game with a billion-dollar ante.

And usually these moves fail because charismatic leaders are forced to make them at terrible times, with bad data, when growth has stagnated or is plummeting, and there's a need for an 11th hour business model shift to replace hundreds of millions of dollars of collapsing revenue streams. A case of too much, too late.

The leaders who fail are sacked, land safely with golden parachutes, and proceed to loudly blame 'culture' (read: 'incompetent middle management') for the failure.

Rao is writing for a general business audience. The outcomes of such failures when the falsely messianic leader is in charge of a health care organization can obviously be even worse, leading to rising health care costs, declining access and quality, and threats to patients' and the public's health.

Summary

We have seen many health care leaders praised for their brilliance and paid royally despite leadership resulting in financial distress, threats to the organizations' health care missions, poor patient care, unethical behavior, or even crime. (The most recent example as of the time this was written was here. For other examples look here.)   Yet health care CEOs are just people, sometimes smart, but almost never brilliant.  Promoting them as messianic to bewitch key constituencies, justify the remuneration of other top managers, and the hiring of more public relations flacks is likely to lead to the sort of organizational disasters and system-wide dysfunction we discuss on Health Care Renewal.  The rise of the falsely messianic leader may allow the entry of the most dangerous false messiahs, the psychopathic ones.  (We discussed the likelihood that some health care leaders are actually psychopaths here.)

Rao's theory of falsely messianic leadership (and related, and also religiously allusional theories of the "divine rights of CEOs," look here and here), suggest that the better paid the CEO, and the more expansive the descriptions of the CEOs talents, the more skeptical we ought to be. 

In the secular occupation of health care, we ought not to yearn for messiahs, but hope for reasonable leadership that draws on the collective knowledge and values of health care professionals rather than dubious "visions," and that show accountability, integrity, transparency, honesty, and ethics.