US Presidential Candidates' Financial Relationships with Health Care Organizations

As the leadership of the large field of Republican candidates for the US Presidency shifts, different candidates come in for increased media scrutiny.  Recently, reporting about former Pennsylvania Senator Rick Santorum focused on his financial relationships with a health care organization. Senator Santorum, however, is only the candidate with ties to health care organizations to come into the spotlight most recently.  We will review the report on Santorum, and then summarize the publicly known relationships of the other candidates.

Republican Former Pennsylvania Senator Rick Santorum and Universal Health Services

The relationship was first revealed by Bloomberg,

Santorum’s greatest financial gain came from $395,414 in director fees and stock options he listed in a recent financial disclosure.

The fees and options came from King of Prussia-based Universal Health Services Inc., a publicly traded health-care management company....

Senator Santorum started on his board service in 2006. He resigned in June, 2011, when he started his campaign for the presidency.

Note that while Santorum served on the board, the company was accused of ethical missteps:

The Justice Department accused the company in a 2010 lawsuit of submitting fraudulent reimbursement claims under the Medicaid health-care program for the poor. The government said the company falsely claimed to have provided inpatient psychiatric services to children at a detention facility in Marion, Virginia. Pantaleoni said the case has been settled.

The company has also risked losing certification to receive Medicare reimbursement for medical centers that it owns.

According to a release on the UHS website, the Rancho Springs Medical Center and Inland Valley Regional Medical Center in Riverside County regained their certification in November after the Centers for Medicare and Medicaid Services threatened to terminate their provider agreement in June 2010. The state of California had also threatened to revoke the group’s hospital license.

It wasn’t the first time UHS risked losing certification for one of its facilities. In late September 2008, CMS terminated participation in Medicare for the Two Rivers Psychiatric Hospital in Kansas City. It’s a decision that led to a court appeal and settlement requiring Two Rivers to retain an outside monitor for six months.

Thus, Senator Santorum was on the board of a for-profit hospital corporation until just before he became a presidential candidate. While he was on the board, the company allegedly committed unethical actions.

Republican Former Georgia Congressman Newton Leroy "Newt" Gingrich and the Center for Health Transformation and its Numerous Corporate Sponsors

A few weeks ago, we posted about Congressman Gingrich's operation of a health care consulting firm, the Center for Health Transformation. It had relationships with a long list of major health care organizations, including Allscripts, the American Hospital Association, AstraZeneca, Blue Cross Blue Shield, GE Healthcare, Gundersen Lutheran Health System, Johnson and Johnson, Pfizer, Pharmaceutical Research and Manufacturers' of America, Siemens, and WellPoint. At a minimum, the Center helped some of these organizations try to influence health care policy to favor their vested interests in the guise of promoting health policy solutions.

The juxtaposition of the stories about Senator Santorum's and Congressman Gingrich's financial ties to health care organizations suggested we review whether other current candidates also had such ties. Some quick searching revealed that some others did. We will review the other current major candidates below, starting with the other Republicans, in alphabetical order.

Republican Former Utah Governor Jonathan Huntsman Jr

I could not find any publicly reported relevant relationships.

Republican Texas Congressman Dr Ronald E Paul

Dr Paul is a physician, an obstetrics-gynecology specialist. According to Wikipedia, he apparently practiced until his current stint in the Congress began in 1996. I could not find any publicly reported relevant relationships.

Republican Texas Governor James Richard "Rick" Perry and Merck

In September, 2011, Governor Perry's prominence in the campaign caused a reconsideration of his relationship to Merck. As MSNBC reported,

On the campaign trail, Perry had recently apologized for the executive order-which would have made Texas the first state in the country to mandate that all teenage girls, starting with 12-year-old sixth graders, be vaccinated with Gardasil.

Gardisil is made by Merck. Then candidate Representative Michele Bachmann noted that Governor Perry had received campaign contributions from Merck. As the Los Angeles Times reported,

In fact, Merck PAC — the company’s Washington, D.C.-based political action committee — has given Perry $28,500 since 2001, according to Texas Ethics Commission filings.

The bulk of that money came before 2007, when the governor signed an executive order mandating all sixth-grade girls in the state to receive the Gardasil vaccine against HPV.

However, Governor Perry had another tie to Merck, as noted by MSNBC,

Perry's order came after the drug company that manufactured the vaccine hired Mike Toomey, his former chief of staff, as one of the firm's top lobbyists in Austin.

Toomey, who is now running the main 'super pac' backing Perry's candidacy, was retained by pharmaceutical giant Merck & Co., maker of the Gardasil vaccine, which is designed to prevent the human papillomavirus, or HPV, an infection linked to cervical cancer in women.

His hiring was part of an aggressive lobbying push in Texas by the drug company, which also donated $16,000 to Perry's gubernatorial campaigns in the two and a half years prior to the executive order. Merck paid Toomey between $260,000 and $535,000 in lobbying fees between 2005 and 2010, according to state lobbying records.

Although Perry's GOP foes never brought up the connection during the debate, Democratic political operatives and a public watchdog group said Thursday his association with Merck is likely to be emerge as a prime example of Perry's 'crony capitalism,' should he win the GOP nomination.

Although there were no reports that Governor Perry personally financially benefited from a relationship with Merck, the company paid substantial amounts to his campaign and to an organization he ran, and to his former chief of staff. There seems to be at least a reason to think that these relationships had something to do with a decision he made that lead to increased sales of a Merck product, and which he now regrets.

Republican Former Massachusetts Governor Willard Mitt Romney and Bain Capital and Numerous Health Care Corporations

Today's Wall Street Journal summarized the investments made by Bain Capital, a venture capital and private equity firm lead by Governor Romney,

The Wall Street Journal, aiming for a comprehensive assessment, examined 77 businesses Bain invested in while Mr. Romney led the firm from its 1984 start until early 1999, to see how they fared during Bain's involvement and shortly afterward.

Among the findings: 22% either filed for bankruptcy reorganization or closed their doors by the end of the eighth year after Bain first invested, sometimes with substantial job losses. An additional 8% ran into so much trouble that all of the money Bain invested was lost.

Of the 10 firms that produced the biggest returns for Bain, four were involved in health care, PhysioControl, Waters, Dade, and Wesley Jessen VisionCare. Dade, a medical diagnostics company, went bankrupt in 2002.

Furthermore, in 2007, the Boston Globe (via the Deseret News) reported on Governor Romney's private equity career, including his involvement with a company that had its ethical challenge,

Bain Capital's 1989 purchase of Damon Corp., a Needham medical testing firm that later pleaded guilty to defrauding the federal government of $25 million and paid a record $119 million fine.

Romney sat on Damon's board. During Romney's tenure, Damon executives submitted bills to the government for millions of unnecessary blood tests. Romney and other board members were never implicated.

More than a decade later, when Romney was in pursuit of the Massachusetts governorship, his Democratic opponent Shannon O'Brien accused him of lax oversight at Damon and failing to report the fraud.

Romney replied that he had helped uncover the illegal activity at Damon, asking the board's lawyers to investigate. As a result, he said, the board took 'corrective action' before selling the company in 1993 to Corning Inc.

But court records suggest that the Damon executives' scheme continued throughout Bain's ownership, and prosecutors credited Corning, not Romney, with cleaning up the situation. Bain, meanwhile, tripled its investment.

Romney personally reaped $473,000.

Thus, Governor Romney was on the board of a device company, albeit many years prior to when he became a presidential candidate. While he was on the board, the company allegedly committed unethical actions.

Democratic President Barack Obama, Michelle Obama, and the University of Chicago Medical Center

The issue of then Democratic Senator Barack Obama's wife's role at the Medical Center was first discussed in 2008, with some follow up in 2009. As the Washington Post reported in 2008,

Shortly after Barack Obama joined the U.S. Senate in 2005, the medical center promoted Michelle Obama to vice president of community and external relations, and more than doubled her salary. She is now on leave from the $317,000-a-year post, in which she sought to bridge the gap between the wealthy institution and its poorer neighbors. The hospital declined to discuss the budget for her program or her input into budgetary decisions.

She was particularly involved in one program that became controversial,

A few years ago, executives at the prestigious University of Chicago Medical Center were concerned that an increasing number of patients were arriving at their emergency room with what the executives considered to be non-urgent complaints. The visits were costly to the hospital, and many of the patients, coming from the surrounding South Side neighborhood, were poor and uninsured.

Michelle Obama, an executive at the medical center, launched an innovative program to steer the patients to existing neighborhood clinics to deal with their health needs.

That effort, in time, inspired a broader program the hospital now calls its Urban Health Initiative.

The Post noted,

The medical center markets its initiative as an effort to improve patient health for the poor and at the same time free its resources for emergencies and complicated procedures. The Urban Health Initiative also could save the hospital substantial amounts of money, by removing the nonpaying poor patients from its emergency room.

However, after Senator Obama became President, his wife became the First Lady and quit her job at the medical center, the program became even more controversial. In March, 2009, the Chicago Weekly reported on the extensions of the Urban Health Initiative

or UHI, which has garnered a lot of criticism recently, such as accusations that it comes 'dangerously close' to the illegal practice of 'patient dumping.' Additionally, the emergency room structure that it will leave in its wake will likely result in a decline in the quality of care provided to Medicaid, Medicare, and uninsured patients.

Ultimately, the Wall Street Journal reported that:

More than 190 doctors at the University of Chicago Medical Center signed a letter to trustees protesting plans to reduce the number of beds available to emergency patients as 'unnecessarily risky' and a threat to patient safety.

At that time, this admission appeared,

Dr. Madara, the hospital's chief executive, said in an interview last week that the hospital is seeking to admit more patients to its 'programs of distinction' such as oncology and advanced surgery, and treat fewer in the ER, and that these moves will mean more privately insured patients at the hospital.

Note that "programs of distinction" may also mean programs that provide the most revenue. Ultimately, the Chicago Tribune reported that the plan was halted by the university president, and a few months later, Dr Madara, the CEO resigned (again per the Tribune).

Thus, while he was a Senator, current President Obama's wife earned a substantial salary from a non-profit academic medical center and hospital system. A program she ran was then and later alleged to have compromised patient safety and perhaps acted unethically.

Summary

We have frequently discussed how large health care organizations seek to influence discussions of health policy to further their vested interests. At times, they have organized stealth health policy advocacy initiatives to comprehensively push their aims. For example, we discussed how commercial health insurance companies have tried, often succesfully, to influence health policy as recounted by former CIGNA public relations leader Wendell Potter in his book Deadly Spin.

It appears that the more one looks, the more one finds evidence of the web of influence of large health care organizations. Pulling together a variety of journalistic efforts over more than three years, it now appears that the majority of the current credible contenders for the presidency of the US have or had financial relationships with health care organizations.

Often these relationships appear significant enough to be called conflicts of interest were the people who had them communicating about health policy in a venue that requires conflict of interest disclosure, like a major medical journal. One candidate until very recently was on the board of directors of a for-profit hospital corporation, and hence had a fiduciary duty to that company and its stock-holders. One candidate until very recently ran a health care consulting company whose clients included major drug, device, and insurance companies. One candidate previously was on the board of a medical device company. One candidate's spouse previously was a top executive of a academic medical center and hospital system.

While the current candidates may now now be writing articles for medical or health care policy journals, by virtue of their candidacies they now receive enormous attention. Anything they say about health care policy is likely to be influential. Yet there is reason to be concerned that many of their views on health policy were influenced by their financial relationships. In particular, would a candidate who at one time got a major part of his or his family's livelihood from a big health care organization be likely to strongly challenge the status quo that allowed that organization to prosper?

In my humble opinion, there needs to be complete reconsideration of how health care policy is made. In particular, we must define how much of the discussion is driven by vested economic interests, and make sure such interests and their relationship to those in the discussion becomes clear. It is just as important for health policy analysts, pundits, and decision-makers to disclose in detail their conflicts of interest as it is for clinical researchers and educators. Maybe the Institute of Medicine would be willing to take up this issue as they took up conflicts of interest affecting research and education.

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Now a Mainstream Notion: "Profit-seeking Players in Finance and Health Care Have Captured Congress"

We have been writing - some might say wailing Cassandra-like - about health care dysfunction since I published about it in the European Journal of Internal Medicine in 2003.(1) However, while our dismal warnings were inspired by fears of  health care professionals who saw bad things happening in their local health care environments, the notion that things were really bad in health care really did not get a lot of traction. After all, we were in the second decade of a prolonged economic "great moderation," the good times were rolling, so who was really worried by a few whiners and complainers in health care?

However, after the fall of Lehman Brothers ushered in the global financial collapse, or great recession, this complacency was disturbed, and it began to appear that our problems in health care were not unique, but were linked to much bigger problems in the general political economy. However, the stock market rebounded, the bankers went back to making money, and economists declared the great recession over, reassuring those on the right, although the middle class continued to whine and complain about unemployment, stagnant wages, and mortgage foreclosures. Furthermore, a Democratic administration legislated both financial and health care reform, reassuring those on the left.

We on Health Care Renewal went on and on that things were not better, and health care reform no more than barely scratched the surface.

Now with stock markets falling around the world, it appears that the great recession/ global financial collapse may not really be over.  In this increasingly dismal era, the notion that health care dysfunction has not really improved, and may in fact be an important component of the larger political economic problems may be getting more mainstream.

To wit, last week, David Wessel wrote in the Wall Street Journal:

Two big sectors of the U.S. economy have been on steroids: finance and health care. If anything is crowding out more productive activities, it's them, as ... [New York University economist Paul] Romer argued in a recent National Academy of Sciences lecture.

The bloated financial sector—all those brains lured by big bucks who might otherwise have been employed in science, software, engineering or other fields—has harmed the U.S. economy more than any of our post-World War II communist adversaries did.

The American health system costs more per person than any other, but isn't delivering the world's healthiest people. The U.S. isn't getting its money's worth from either sector.

Furthermore, his diagnosis of the problem sounds like something we might have written on Health Care Renewal, if we wrote as well as he does:

Profit-seeking players in finance and health care have captured Congress, resisted regulation that would curb their excesses and exploited antiquated rules and policy for private gain.

[Paul Romer said,] 'The legislative process may just be too vulnerable to manipulation by very well-financed entities with an enormous amount of wealth and income at stake,' he said. 'Congress is for sale at bargain-basement prices.'

My only quibble is that while those who have personally profited from health care and finance have exploited antiquated rules, they also cannily managed to dispose of many time-proven rules that stood in their way.

In any case, we have written repeatedly about the linkages between finance and health care,(2) and how the current corrupt culture of finance has affected health care; that true health care reform will be very difficult because it will be resisted by those who have been made wealthy by the current system;(3) that they were made wealthy by the increasing commercialization of health care accompanied by the abandonment of previous regulations and safeguards;(4) and about their use of regulatory capture and embedded networks of influence(5) to further their aims.

You heard it here first.

Wessel's solution is:

Congress should tie its own hands more often, retaining power to investigate and vote proposals up or down but avoiding the detailed crafting of legislative provisions that influence the flow of money.

In other words, he wants more bodies such as the Base Closure and Realignment Commission (to decide which military bases to close), the Independent Payment Advisory Board (to identify ways Medicare can save money) and, perhaps, the new Joint Select Committee on Deficit Reduction (to find $1.5 trillion in deficit-reduction cuts).
Maybe that's an answer. But it's clear that future prosperity depends on the U.S.—its government, business, people and universities—coalescing behind a strategy for growth and creating incentives so talent and capital flow to promising sectors where the U.S. still has an edge in an increasingly competitive global economy.

My general suggestions maybe are complementary.

True health care reform would help physicians and other health care professionals uphold their traditional values, including, as the AMA once stated, "the practice of medicine should not be commercialized, nor treated as a commodity in trade." True health care reform would put health care "delivery" back in the hands of mission-focused, not-for-profit organizations, which put patients' health, safety and welfare first.

Health care organizations need leaders that uphold the core values of health care, and focus on and are accountable for the mission, not on secondary responsibilities that conflict with these values and their mission, and not on self-enrichment. Leaders ought to be rewarded reasonably, but not lavishly, for doing what ultimately improves patient care, or when applicable, good education and good research.

If we do not fix the severe problems affecting the leadership and governance of health care, and do not increase accountability, integrity and transparency of health care leadership and governance, we will be as much to blame as the leaders when the system collapses.

Notes:

1. Poses RM. A cautionary tale: the dysfunction of American health care.  Eur J Int Med 2003; 14: 123-130.  Link here.

2.  Medical school leaders become stewards (as members of boards of directors) of for-profit health care corporations - An example is here, and a summary of how we discovered this phenomenon in 2006 is here. The conflict of interest is severe because directors of for-profit corporations are supposed to have unyielding loyalty to the interests of the corporation and its stockholders, although they are frequently accused of acting mainly as cronies of the top hired executives (see here and here).

Leaders of failed finance firms become stewards of academic medicine - We have found numerous examples, e.g., here, here, and here, of top executives and/or board members of the finance firms who helped bring on the global financial collapse also being trustees of medical schools, academic medical centers, or their parent universities. Such "stewards" may bring to the academic environment the "greed is good" culture now pervasive in finance.

3.  For example, see this post and its links
 
4. In the US, a Supreme Court decision was interpreted to mean that medical societies could no longer regulate the ethics of their members.  Until 1980, the US American Medical Association had  ruled that the practice of medicine should not be "commercialized, nor treated as a commodity in trade."  After then, it ceased trying to maintain this prohibition.  The result was increasing, now rampant commercialization.  See posts here and here.   Furthermore, the notion that information asymmetry, uncertainty and ambiguity, and inability of patients to make coldly rational decisions about disease and its management made it impossible for health care to be an ideal free market, necessitating mechanisms to compensate for market failure became passe.  Such mechanisms were then abandoned, with disastrous results.  For further discussion, see this post
 
5.  For example, see this post

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BLOGSCAN: Florida Doctors Endorse Ex- Columbia/ HCA CEO for Governor

Rick Scott was the CEO of for-profit hospital chain Columbia/ HCA.  The company ended up settling civil and criminal charges for $1.7 billion.  Like many other examples in the march of legal settlements about which we have often posted, no individual who authorized, directed, or implemented the relevant bad behavior suffered any sort of negative consequence or paid any penalty.  Rick Scott left the company, but with a golden parachute.  Now he his running for Governor of Florida, using a substantial amount of his own money (but money that probably mostly came from Columbia / HCA). (See post here.)  He may be in the lead.  And the Florida Medical Association has just endorsed him.  In the Health Beat blog, Maggie Mahar is all over this story.  Read it and weep.  Remember another good reason for the people who lead health care organizations to be truly accountable for their actions.

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