Harvard Cut Money for Primary Care "Step-Child"

This story, about cuts in the funding for Harvard Medical School's minimal program in primary care, has received little attention in the US. I was alerted to an article about it in the Harvard Crimson by a news article in the British Medical Journal that was picked up by Medscape.

Here are the main points, from the Crimson article,

Harvard Medical School has suspended funding for its Primary Care Division as part of a broader departmental restructuring effort, prompting students and faculty to circulate a petition calling on HMS Dean Jeffrey S. Flier to reaffirm the School's commitment to primary care education.

According to Nancy J. Tarbell, dean for academic and clinical affairs at HMS, the School had provided roughly $200,000 in funding each year to the Division. She said that the Division, which has not been disbanded but whose structure and administration is being reviewed, will remain affiliated with HMS. The Division has always been funded exclusively by the Medical School, according to HMS spokesman David J. Cameron.

'The reorganization of this division is really a narrow administrative issue,' said HMS Dean of Medical Education Jules L. Dienstag. 'It has nothing to do with the commitment of HMS to primary care, which is unchanged, undiluted, and undiminished.'

Nevertheless, as of Thursday afternoon, over 450 individuals had signed the online petition, including students, residents, faculty, and physicians from HMS and its affiliated hospitals. The petition calls for the School's administration to present a detailed plan of action for expanding institutional support despite the budget cut, expand loan forgiveness initiatives that financially enable students to pursue primary care specialties, support efforts to strengthen primary care in a reformed national health care system, and solicit and implement proposals from the HMS community to improve primary care education.

The Division was previously part of the HMS-HPHC jointly administered Department of Ambulatory Care and Prevention (DACP), which Tarbell said was recently restructured and renamed as the Department of Population Medicine and placed solely under HPHC's administrative purview in order to better reflect its core research and teaching activities.

Tarbell, who seemed unclear about what actual services were provided by the Division, said that the HMS administration is conducting a 'comprehensive review' of the its programs and that the Division has historically been 'relatively small.'

'When you look at [HMS's primary care initiatives] as a whole, at the big picture, you can't make the argument that funding has decreased for primary care training at HMS,' Tarbell said, adding that the school is expanding its funding this year for a required third-year medical clerkship from $600,000 to $800,000.

But despite administrators' reassurances that primary care education remains a top priority at the Medical School, some students and faculty maintain that the cut sends a negative message about the School's priorities, which they say have traditionally centered on specialty medicine and research. And the petition expressed concern about the future of outreach activities previously coordinated by the Division, including a Primary Care Mentorship Program, if funding or a Divisional home were to be eliminated.

'Primary care, from the perspective of the Medical School, was sort of a stepchild [in the past], and not much was done to provide students with information about primary care careers or to connect them with role models in primary care,' said Susan Edgman-Levitan, executive director at The John D. Stoeckle Center for Primary Care Innovation.

'Harvard's goal has always been to create leaders in medicine, with regards to basic science and new developing fields. Primary care has never really been a major emphasis, although I think on a global basis, Harvard has put a major emphasis on reaching out to the rest of the world,' said Martin P. Solomon, an assistant clinical professor of medicine at the Brigham. 'People like Jim Kim and Paul Farmer are all very important and have had an enormous impact on primary care worldwide, but in our own backyard, Harvard has had very little impact. [Primary care] is not ... glamorous....'

Indicating where the medical school's priorities lie, during the month in which the cuts were announced, Dean Flier took the time to open, and thereby endorse the meeting of ACRE (the Association of Clinical Researchers and Educators). The grandiosely named group promotes unrestricted financial relationships among medical academics and health care corporations, and dismisses those concerned with the effects of these relationships (see our posts here and here).

It is true that the cuts in primary care occurred at a time of general belt-tightening, due to the sudden decline in the value of Harvard University's endowment. However, as reported in a muck-raking article in Vanity Fair by Nina Munk, even the reduced endowment is still the largest of any university in the US.

Furthermore, primary care generated relatively small costs to the university. However, as reported by Vanity Fair, the current financial crisis was generated on the University's tremendous building binge during the years the endowment seemed like it would grow forever:

... the university is facing the onerous financial consequences of over-building. Consider this: Over the 20-year period from 1980 to 2000, Harvard University added nearly 3.2 million square feet of new space to its campus. But that’s nothing compared with the extravagance that followed. So far this decade, from 2000 through 2008, Harvard has added another 6.2 million square feet of new space, roughly equal to the total number of square feet occupied by the Pentagon. All across campus, one after another, new academic buildings have shot up. The price of these optimistic new projects: a breathtaking $4.3 billion.

The University also rewarded the managers of the endowment with pay sufficient to make them very rich.

By the early 2000s, Harvard’s top moneymen were making as much as $30 million to $40 million a year. Finally, in 2003, seven members of Harvard’s class of 1969 wrote a strong letter of protest to the university’s president, Larry Summers. They spoke out loudly, publicly, informing any member of the media who would listen that compensation at Harvard Management Company was 'obscene.'

At other American universities, where investing money for the institution is regarded as a kind of public service, Harvard’s swagger raised deep suspicion. 'Harvard became a bunch of mercenaries,' the chief investment officer of another big private university told me.

Most of these managers decamped, taking the money with them, before the endowment value crashed.

By 2005, Jack Meyer had had enough. After 15 years at Harvard Management Company, frustrated by the circular fights about compensation, and sick of justifying himself to Summers and Rubin, he walked out and started his own giant hedge fund. Shamelessly, he took many of Harvard Management Company’s best people with him, about 30 portfolio managers and traders, along with the chief risk officer, chief operating officer, and chief technology officer. Harvard’s trading floor was decimated.

No one in the current or past Harvard leadership has yet been held accountable for the overspending that seemed predicated on the absurd (at least in retrospect) assumption that the endowment would continue to grow indefinitely.

At some point in the last five years, the men and women who run Harvard convinced themselves that the endowment would grow at double-digit rates forever. If Harvard were a publicly traded company, those people would have been fired by now.

Because of the case of the Harvard endowment, the US Internal Revenue service is reportedly investigating how university endowments were run (e.g., see Reuters).

But meanwhile, primary care, already a step-child, was cut.

The case of primary care at Harvard shows how the leadership of academia, and academic medicine in particular, has become entranced by the glamorous, the glitzy, the high-tech, and the prospects of wealth to be made by their pursuit, while neglecting the core academic and health care missions that are the reasons for the existence of universities and medical schools.

No wonder US health care is in a crisis. Those who want meaningful health care reform should find a way to push academic medicine to uphold its mission rather than enrich and glamorize its leaders, and to allow health care professionals to reaffirm their professionalism (regardless of past interpretations of US anti-trust law to the contrary).

ADDENDUM (5 August, 2009) - see more comments on Harvard's failed governance here on the ACTA Blog.

8:27 AM

BLOGSCAN - Reports from the ACRE Meeting

The proceedings at the first meeting of the benignly titled Association of Clinical Researchers and Educators (ACRE) was chronicled on the Carlat Psychiatry Blog here, and on Postscript, the Prescription Project blog here. ACRE, founded by Dr Thomas Stossel (see relevant post here on the sorts of arguments Dr Stossel has made), was founded to defend academics who are paid on the side by drug, biotechnology, and device companies from the complaints of the "pharmascolds." What I found most troubling was that the conference was officially opened by Dr Jeffrey Flier, the Dean of the Harvard medical school, implying a medical school endorsement of this group, and featured presentations by the presidents of the American Association of Clinical Endocrinologists, and the American Society of Hypertension, implying endorsement by these medical societies. But also see the comments by Dr Howard Brody on the Hooked: Ethics, Medicine and Pharma blog that there may be a silver lining to this cloud.

12:29 PM

"Man's Best Hospital," Run by the Boss of a MECC (Medical Education and Communications Company)?

In January, 2009 we posted about how the CEO of Blue Cross Blue Shield (BCBS) of Massachusetts and of Partners HealthCare, made a secret oral agreement that BCBS would pay Partners at a higher rate than that given to other hospitals.

Why BCBS would want to pay so much to this one hospital system was never clear. Partners does include some extremely prestigious hospitals, including the Brigham and Womens Hospital, and the Massachusetts General Hospital, ("Man's Best Hospital" in the House of God), but there are some other very prestigious teaching hospitals in Boston that were not blessed by BCBS' largess.

We speculated about one possible cause: the leadership of the two organizations may have felt they had more in common with each other than with the constituencies of their own organizations. A few leaders of each organization had direct ties to the other. Many leaders of both organizations were simultaneously leaders of finance, the same sector that has brought us what is now called the Great Recession. Leadership of both organizations had conflicted loyalties. The organizations' CEOs at the time, and many members of their boards had divided loyalties and apparent conflicts of interest. For example, Jack Connors, the chair of the Partners HealthCare board, is also the Chairman Emeritus of marketing communications company Hill, Holliday, Connors, Cosmopoulos Inc, whose clients include pharmaceutical and pharmacy benefits manager CVS / Caremark, and is also a member of the board of directors of Covidien, a medical device company.

The Boston Globe just published a report that Mr Connors had even more intense conflicts that had not heretofore been made public.

He's chairman of New England's largest healthcare company, and that position atop Partners HealthCare has tested the limits of Jack Connors's considerable corporate dexterity.

Though he has no background in medicine, Connors has been Partners' chief overseer, champion, and its most public face for 13 years.

[One board member] is the cofounder and chairman emeritus of Partners' advertising firm. That would be Jack Connors. And that potential point of conflict has been disclosed....

But to the chagrin of some former board members, never brought up for board review was Connors's stake in a leading medical education firm whose sale in 2004 made Connors a very wealthy man.

Nor has the board notified public officials of Connors's ownership of a fledgling home healthcare firm that has directly solicited Partners' hospitals for business.

Connors and top Partners officials defended the decision not to publicly disclose Connors's potential conflicts, saying that because Partners did not directly contract with either of Connors's firms there were no conflicts to report. Connors also defended his right to be an entrepreneur in the healthcare business while also chairing Partners' board, and strongly denied ever using his position for personal or financial advantage.

The larger company, M/C Communications, grew to become the biggest commercial provider of continuing education to physicians in the decade between its inception in 1994 and when Connors sold it in 2004. It profited hugely from an exclusive commercial relationship it maintained with Harvard Medical School, whose faculty teach at seminars the company holds. Partners' signature institutions, Massachusetts General Hospital and Brigham and Women's Hospital, are major teaching affiliates of Harvard Medical School.

In addition, M/C Communications benefited financially from millions of dollars in sponsorship revenue paid it from major pharmaceutical firms eager to play to this professional audience.

Connors said he was under no obligation to disclose his ownership of M/C Communications to the Partners board. He said that while there is an 'affiliation' between Harvard Medical School and the two Partners hospitals, there is no formal contract between them.

Connors said he informed Partners executives of his ownership of M/C Communications, and that they determined it did not warrant disclosure to the full Partners board.

'There is no contract between Partners and Harvard,' Partners said in a statement to the Globe.

Connors made a name for himself as an executive with Hill, Holliday, Connors, Cosmopulos, the Boston advertising company that he helped found and guided throughout a long career. Less well known is that he made most of his fortune from M/C Communications, which he sold to Bain Capital for $450 million in 2004.

The sale was the largest of a private healthcare-related company in Massachusetts that year, according to TM Capital Corp., an investment banking company. Connors, who led an investor group that bought the firm outright for $13 million in 2000, made about $250 million from its sale.

After his 2004 windfall, he founded a company that helps elderly patients readjust to life at home after a hospitalization.

That company, Dovetail Health, has - Connors acknowledged - solicited business from hospitals owned by Partners. And Connors confirmed that after Dovetail executives failed to convince Blue Cross Blue Shield of Massachusetts to contract with the firm, he personally spoke to the giant insurer's president, Cleve L. Killingsworth, on Dovetail's behalf. Partners and Blue Cross Blue Shield regularly negotiate over $2.5 billion worth of medical business a year.

Connors acknowledged in an interview that it might have appeared 'inappropriate' to some for him to pitch Killingsworth. But he said the conversation stemmed from a shared belief that new ways must be found to reduce frequent return trips of elderly patients to the hospital. More recently, however, he said he does not believe his approach to Killingsworth was inappropriate.

So let's try to recap this.

While Jack Connors has been chairman of the board of Partners HealthCare, the largest and most prestigious hospital system in Massachusetts, he also ran an advertising agency that did business with Partners, and has been on the board of Covidien, a medical device company. Both of these relationships he disclosed to his fellow board members, although no one seemed troubled by them.

However, while a Partners board member, Connors was also the founder, and ultimately profited very handsomely from the sale of M/C Communications. M/C Communications apparently begat M/C Holding Corporation, which in turn owns M/C Communications and Pri-Med Institute LLC. M/C Communications now describes itself as " established in 1994 and has become a leading provider of medical education event management solutions for health care professionals and others around the globe." M/C Communications runs Pri-Med, which is described thus: "Pri-Med is a platform for science and medicine that includes meetings, resources, online, and new media tools designed to meet the information and education needs of today’s practicing physician." Pri-Med markets itself to industry, presumably the pharmaceutical, biotechnology, and device industry, "Sixty percent of doctors’ offices restrict rep access, making it more challenging than ever to get in front of your customers. But with Pri-Med, you get to meet clinicians in a professional environment where they seek you out. More than 66% of attendees say they come to Pri-Med events to meet you, industry representatives." So Connors' company was a medical education and communication company (MECC), which provided what appeared to be educational programs to physicians that in fact were also sold to the health care industry as marketing opportunities.

So Partners HealthCare, which includes two of the world's most prestigious teaching hospitals, has been run by the boss of a MECC? Say it ain't so.

Not only did Connors own a company that had an exclusive contractual relationship (as described above) with the Harvard faculty who staff the main Partners HealthCare hospitals, that company was engaged in marketing the products of sponsoring drug and device companies disguised as education. Finally, Connors denied that this presented any kind of conflict of interest, because Partners HealthCare has no explicit contract, just an "affiliation" with Harvard Medical School.

Finally, just to ice the cake, Connors' latest venture is a home health care company that did business with Partners, and tried to do business with BCBS, spearheaded by Connors' direct conversations with the BCBS CEO.

Jack Connors thus seems to have just become the latest poster boy for leaders of health care organizations who put their personal financial interests ahead of their responsibilities to those organizations, and function as a power elite whose collective interests trump those of the constituents of the organizations they run.

Quoting from BoardSource, the main duties of the leader of any US not-for-profit are:

Duty of Care

The duty of care describes the level of competence that is expected of a board member, and is commonly expressed as the duty of 'care that an ordinarily prudent person would exercise in a like position and under similar circumstances.' This means that a board member owes the duty to exercise reasonable care when he or she makes a decision as a steward of the organization.

Duty of Loyalty

The duty of loyalty is a standard of faithfulness; a board member must give undivided allegiance when making decisions affecting the organization. This means that a board member can never use information obtained as a member for personal gain, but must act in the best interests of the organization.

Duty of Obedience

The duty of obedience requires board members to be faithful to the organization's mission. They are not permitted to act in a way that is inconsistent with the central goals of the organization. A basis for this rule lies in the public's trust that the organization will manage donated funds to fulfill the organization's mission.

By leading companies that did direct business with Partners and its staff, and failing to disclose that he was doing so to his fellow Partners board members, Connors appeared to have violated the Duty of Loyalty.

By running a MECC that helps drug and device companies market to physicians in the guise of education, using faculty from the academic teaching hospitals that he lead, Connors seems to have mocked the mission of the academic hospitals within Partners, and thus appeared to violate the Duty of Obedience.

This episode certainly does suggest that health care, and the organizations involved in this case, are lead by an "old-boy network," as one person interviewed for the Globe article suggested. More than just an old-boy network, they seem to be lead by chummy members of the power elite whose collective personal interests supersede the missions of the organizations they are supposed to steward. When this happens, is it any surprise that health care becomes less accessible, more expensive, and of lower quality?

Yet challenging the power elite that are increasingly revealed as controlling much of health care seems to be something that one cannot talk about when discussing health care reform. However, failing to address this problem will likely doom any effort, no matter how well intentioned, to improve health care.

Hat tip to and see comments by Alison Bass on the Alison Bass Blog.

ADDENDUM (3 June, 2009) - See also comments by Dr Daniel Carlat on the Carlat Psychiatry Blog.

11:37 AM

WellCare Settles, Accepts Deferred Prosecution Agreement

'Tis the season for deferred prosecution agreements for health care organizations. As reported by the Wall Street Journal:

WellCare Health Plans Inc. agreed to pay $80 million to settle a Florida Medicaid fraud investigation that has embroiled the company since the fall of 2007, previously prompting a management shake-up and restatement of more than three years of the company's earnings.

The settlement resolves federal and state criminal probes into allegations that WellCare defrauded Florida benefits programs for low-income adults and children of about $40 million by improperly inflating what it spent on care.

WellCare, based in Tampa, Fla., administers medical benefits for about 2.5 million enrollees in government-sponsored plans in several states.

Under a deferred prosecution agreement, the U.S. Attorney's Office for the Middle District of Florida in Tampa filed a fraud conspiracy charge against the company but said it wouldn't prosecute the case if WellCare meets all of the deal's terms.

U.S. Attorney A. Brian Albritton said in a news conference Tuesday that his office could have pursued a conviction but that it likely would have put the insurer out of business, hurting customers, innocent employees and shareholders. In penalizing the company, 'we have, at the same time, tried to avoid crushing it,' he said.

Under the terms, WellCare must forfeit $40 million and pay another $40 million in restitution to Florida's Medicaid and 'Healthy Kids' plans. WellCare also has agreed 'to accept and acknowledge full responsibility for the conduct that led to the government's investigations,' according to the deferred prosecution agreement. The company declined to elaborate.

In addition, the company also must retain an independent monitor to review its business operations, cooperate with the government's ongoing investigations and implement new procedures within 60 days to prevent future abuse or faulty reports to state health care programs.

This was not the first bit of trouble WellCare got itself into. We posted here about how the state of Connecticut stopped WellCare from running a plan for poor children after the company refused to reveal what it was paying physicians, and why it was failing to pay for particular services.

So, as we have found from blogging on Health Care Renewal for a while, organizations that are found to be committing one sort of mischief often are also found to be committing another sort.

We also see some other familiar patterns. While human beings authorized or committed the acts that got the organization in trouble, rarely do these people seem to suffer any negative consequences. At most, the organization may pay a seemingly large fine. This, however, may come out of dividends or the stock price, dispersing the cost to stock-holders, or out of salaries across the board. Thus, those who got the organization into trouble are unlikely to feel pain from it. Perhaps because of reverence for all organizations related to health care, and fear that the bankruptcy of any health care organization, even a health care insurance company, will leave patients in the lurch, prosecutors do not seem inclined to actually prosecute such organizations. The net effect, though, seems to be that dishonest executives of health care organizations can continue to act with impunity.

Until bad leadership of health care organizations leads to negative consequences for those practicing it, health care leadership can be expected to continuously degrade.

By the way, one member of the WellCare board of directors is Regina Herzlinger, a well known and prolific health policy expert, and holds the Nancy R. McPherson Professor of Business Administration Chair of the Harvard Business School. As far as I know, Prof Herzlinger is one of the many health policy experts who avoids discussing the sorts of problems with the accountability, integrity, and transparency of health care leadership which is grist for the mill here at Health Care Renewal. Yet under the stewardship of such an august expert, WellCare had to "accept and acknowledge full responsibility for ... conduct" that included fraud. Perhaps, Prof Herzlinger, like many other main stream health policy experts, should learn to acknowledge that health care leadership may be unaccountable, opaque, dishonest, and sometimes flagrantly corrupt. Furthermore, Prof Herzlinger, like many other well-paid board members of health care organization, should pay a bit more attention to the mischief being committed by those who answer to her.

12:21 PM

BLOGSCAN - Accountable Academic Governance Under Threat

On The Torch blog, hosted by FIRE (Foundation for Individual Rights in Education), this post by Kyle Smeallie summarized the travails of "petition candidates" for the boards of trustees of two elite American universities (Dartmouth and Harvard). As we have noted, at most universities, the boards of trustees, the bodies ultimately responsible for upholding the universities' missions, are closed shops. At most universities, the boards appoint new members to replace departing ones, without input from alumni, parents, students, faculty or anyone else who might be considered constituents. Thus, at most universities, even though the boards are ultimately responsible for the stewardship of the institutions, and upholding the institutions' missions, practically, they are accountable to no one. At very few universities, there may be contested elections for a few board seats, and an opportunity for those outside the board, usually alumni, to place candidates on the ballot. However, even at those somewhat more enlightened universities, those candidates face an uphill battle. Thus, while Dartmouth and Harvard have somewhat more transparent, accountable, and representative governance than do most academic institutions, even that is under threat.

8:42 AM

Hedge Fund U, Version 2

We have posted frequently on the governance and leadership of academic medical organizations. While one would think that health care organizations, and especially academic health care organizations ought to be held to a particularly high standard of governance, we have noted how their governance is often unrepresentative of key constituencies, opaque, unaccountable, unsupportive of the academic and health care mission, and not subject to codes of ethics. How the governance of organizations with such exemplary missions and sterling repuations got this way has been unclear.

In 2007, we reported on one famous institution which had a more representative, transparent, and accountable form of governance. Let me provide a summary of the background from FIRE, the Foundation for Individual Rights in Education,

For over a century, Dartmouth College provided alumni with an avenue for direct participation in selecting leadership, with eight of the 18 members of Dartmouth's Board of Trustees coming from popular vote (the other ten were appointed by the Board). Starting in 2004, petition candidates—those who had to gather alumni signatures to be nominated—challenged those selected by the Association of Alumni in the annual trustee elections. Alumni responded in kind: over the next four years, four petition candidates were elected to the Board of Trustees.

These trustees spoke out when they perceived their alma mater as not living up to its mission, and Dartmouth students benefited. In May 2005, the college repealed its speech code, and it immediately moved from FIRE's "red-light" rating and became a 'green-light' institution.

These developments did not please everyone, however. Some campus officials viewed the propensity of petition candidates to voice their opinions on illiberal policies as detrimental to the school's image. The Wall Street Journal profiled T.J. Rodgers, a petition-nominated trustee, who explained the criticisms leveled at the 'divisive dissidents.'

>> If 'divisive' means there are issues and we debate the issues and move forward according to a consensus, then divisive equals democracy, and democracy is good. The alternative, which I fear is what the administration and [Board of Trustees Chairman] Ed Haldeman are after right now, is a politburo-one-party rule. <<

As the petition candidates grew in numbers (including George Mason Law Professor Todd Zywicki), so too did the official criticism. After Zywicki expressed disagreement with Dartmouth's leadership, the Board's chairman responded.

Haldeman and his cohorts wrote in a statement on the board's Web site that Zywicki 'violated his responsibilities as a trustee of Dartmouth College, which includes acting in the best overall interests of Dartmouth and representing Dartmouth positively in words and deeds.'

It was clear that a frank discussion of the issues at Dartmouth was not welcome on the governing board. The Trustees thus moved to alter the playing field. In September 2008, the Board declared that it would add five new positions—all hand-picked by current Trustees. The century-long tradition of parity between alumni-elected Trustees and the self-perpetuating Board members was erased. It came as no surprise when the Association of Alumni announced in January that the 2009 election would feature no petition candidates.

In 2007, what really got our attention was the stated rationale for this push towards less representative and accountable governance. Mr Haldeman, the chairman of the board of trustees, announced a smaller proportion of elected trustees would ensure that the board "has the broad range of backgrounds, skills, expertise, and fundraising capabilities needed," and that the board members would possess "even more diverse backgrounds." Yet when we examined the backgrounds of the current charter trustees, we found that they exhibited little diversity. Remarkably, three-quarters (6/8) were in leaders of the finance sector. In 2007, they seemed not very diverse, but why the majority should be in the financial sector, and what implications that had, was then obscure.

Things have changed. In the fall of 2008, the world economy descended into an unprecedented financial collapse. Many concluded that the global economic collapse was caused by arrogance, greed, and corruption within the financial sector.

This suggested that leadership of academia, and academic medicine in particular, by leaders of the finance sector might not, in retrospect, have been a such a good idea. Furthermore, when we had other occasions to look, we found that Dartmouth College was not an isolated case.

We noted that half of the Fellows of Harvard, the university's equivalent of a board of trustees, were from finance, and two were affiliated with corporations at the center of the global financial collapse. We recently found that almost 40% of the board of Yeshiva University were from finance as of the end of 2008. One former board member was Bernie Madoff, now in jail for running a giant Ponzi scheme disguised as an unregistered hedge fund. Yeshiva lost $110 million of its investments with Madoff. Another former member was indicted, accused of fraudulently abetting Madoff's operations. One current member runs a hedge fund that had to pay $180 million to settle other fraud allegations.

So we raised the hypothesis that some of the problems of academia, and particularly the problems of medical academia, may have been at least enabled by leadership more used to working in an increasingly amoral marketplace than to upholding the academic mission. Simultaneously, a commentary in the Chronicle of Higher Education put it this way,

Most college and university boards are composed largely of wealthy people, usually from the worlds of finance, law, and private enterprise. They are sometimes alumni but are often selected for their personal capacity to give, their links to other people who might give, or their historical record of having given.

Many trustees today have in fact been part of the elite sectors of finance, law, and enterprise that have proven improvident, shortsighted, and badly governed. Can they be seen as the wisest of our wise who will bring both generosity and wisdom to the academy?

News items from last week, some generated by release of financial disclosure forms from new members of the current US administration, add insight into what now appears to be a pervasive web of entanglements among academia and the finance sector.

One set of stories was about Lawrence Summers, now chief economic advisor to the US President, but president of Harvard University from 2001-2006. Just after resigning as president, and while still a professor at the university's Kennedy School of Government, Mr Summers suddenly began lucrative relationships with multiple players in the financial sector. Per the New York Times, Mr Summers assumed an amazingly well-paid part-time position at a hedge fund,

Mr. Summers, the former Treasury secretary and Harvard president who is now the chief economic adviser to President Obama, earned nearly $5.2 million in just the last of his two years at one of the world’s largest funds, according to financial records released Friday by the White House.

Impressive as that might sound, it is all the more considering that Mr. Summers worked there just one day a week.

Much is known about Mr. Summers’s days in Washington and Cambridge, but little attention has been paid to his two years in New York, from late 2006 to late 2008, advising an elite corps of math wizards and scientists devising investment strategies for D. E. Shaw & Company.

Mr Summers also collected prodigious speaking fees from many financial corporations, some of which subsequently failed or had to be bailed, out, as per the Washington Post, he

was paid more than $2.7 million in speaking fees by several troubled Wall Street firms and other organizations.

Financial institutions including JP Morgan Chase, Citigroup, Goldman Sachs, Lehman Brothers and Merrill Lynch paid Summers for speaking appearances in 2008. Fees ranged from $45,000 for a Nov. 12 Merrill Lynch appearance to $135,000 for an April 16 visit to Goldman Sachs, according to his disclosure form. Summers reported donating two fees totaling $70,000, including the payment from Merrill Lynch, to charity.

Summers received all this money why he was still a faculty member at Harvard. As noted by the Washington Post, he did not leave his faculty position there until 2009.

Although there is no evidence that Summers had financial relationships with corporations in the finance sector while president of Harvard, his sudden and very lucrative jump into that sector after leaving the presidency, and while nominally a full-time faculty member, suggests at least a major alignment of interests. Some commentators have made this point more forcefully, for example, Robert Scheer in the Nation,

Not surprisingly, Lawrence Summers is convinced that he deserved every penny of the $8 million that Wall Street firms paid him last year. And why shouldn't he be cut in on the loot from the loopholes in the toxic derivatives market that he pushed into law when he was Bill Clinton's treasury secretary? No one has been more persistently effective in paving the way for the financial swindles that enriched the titans of finance while impoverishing the rest of the world than the man who is now the top economic adviser to President Obama.

Perhaps this alignment was related to charges that while president of Harvard, Summers helped stifle someone who tried to blow the whistle on excessively risky investment practices involving financial derivatives at the Harvard Management Company. Per the Harvard Crimson,

After a year-long stint at a European investment bank and another at Enron, Iris M. Mack signed on to be a quantitative analyst for Harvard Management Company in early 2002, hoping, she says, to find job security and distance from the risky trading and accounting practices that forced her last employer into bankruptcy in the company charged with managing Harvard’s endowment.

But only a few months later, Mack says she was fired after she raised concerns to University officials about managers’ qualifications and possibly irresponsible usage of financial instruments that could have contributed to the recent and sudden decline in Harvard’s endowment.

In an e-mail sent May 30, 2002 to Marne Levine, chief of staff for then-Harvard President Lawrence H. Summers, Mack detailed her concerns regarding what she deemed HMC’s 'frightening' usage of derivatives and statistical modeling techniques, as well as the Company’s lack of a timely and portfolio-wide risk management system, high employee turnover rate, and low level of productivity in the workplace, specifically among managers.

According to documents and e-mail records, all provided by Mack, Levine had initially assured Mack that their correspondence would remain confidential. But on July 1, HMC chief Jack R. Meyer called Mack into a meeting, in which she was presented with copies of her e-mails, according to a letter sent to Levine and Summers by Mack’s attorney.

The next day, Meyer dismissed Mack, pointing to 'these baseless allegations against HMC [that you sent] to individuals outside of HMC,' the letter says.

Ultimately, Mack says she reached an out-of-court settlement with Harvard over her firing because her lawyers felt that the University did not want to attract media attention from the dismissal....

Now, with the economy in an unprecedented slump in part due to the widespread and unregulated use of derivative contracts, Mack says she feels 'vindicated' but also sad.

'I’m not trying to pretend I’m omniscient or anything, but a lot of people who were quantitative traders, in the back of our minds, we knew a lot of these models were just that: guestimates,' Mack says. 'I have mixed feelings, on the one hand, I wasn’t crazy, I knew what I was talking about. But maybe if more and more people had spoken up, the economy wouldn’t be the way it is now.'

So now we wonder whether the poor governance practices, and resultant poor leadership of many academic health care institutions may have resulted from the increasing dominance of the governance of these organizations by people from the "improvident, shortsighted, and badly governed" finance sector?

11:18 AM

A Health Care CEO Who Didn't Put His Own Pay First

We recently posted about executives at two different not-for-profit health care insurance companies/ managed care organizations whose pay seemed to keep levitating, despite organizational financial losses, and commented on how the compensation of top executives of health care organizations seems always to go up, regardless of the financial fortunes, or quality of the products or services provided by their organizations. (Posts here and here.)

Today's Boston Globe, however, provided a contrast. The background is that the Beth Israel Deaconess Medical Center (BIDMC), a renowned Harvard teaching institution, is facing a budget shortfall.

Paul Levy, the guy who runs Beth Israel Deaconess Medical Center, was standing in Sherman Auditorium the other day, before some of the very people to whom he might soon be sending pink slips.

In the days before the meeting, Levy had been walking around the hospital, noticing little things.

He stood at the nurses' stations, watching the transporters, the people who push the patients around in wheelchairs. He saw them talk to the patients, put them at ease, make them laugh. He saw that the people who push the wheelchairs were practicing medicine.

He noticed the same when he poked his head into the rooms and watched as the people who deliver the food chatted up the patients and their families.

He watched the people who polish the corridors, who strip the sheets, who empty the trash cans, and he realized that a lot of them are immigrants, many of them had second jobs, most of them were just scraping by.

And so Paul Levy had all this bouncing around his brain the other day when he stood in Sherman Auditorium.

He looked out into a sea of people and recognized faces: technicians, secretaries, administrators, therapists, nurses, the people who are the heart and soul of any hospital. People who knew that Beth Israel had hired about a quarter of its 8,000 staff over the last six years and that the chances that they could all keep their jobs and benefits in an economy in freefall ranged between slim and none.

'I want to run an idea by you that I think is important, and I'd like to get your reaction to it,' Levy began. 'I'd like to do what we can to protect the lower-wage earners - the transporters, the housekeepers, the food service people. A lot of these people work really hard, and I don't want to put an additional burden on them.'

'Now, if we protect these workers, it means the rest of us will have to make a bigger sacrifice,' he continued. 'It means that others will have to give up more of their salary or benefits.'

He had barely gotten the words out of his mouth when Sherman Auditorium erupted in applause. Thunderous, heartfelt, sustained applause.

The editorialist's conclusion was:

Paul Levy is trying something revolutionary, radical, maybe even impossible: He is trying to convince the people who work for him that the E in CEO can sometimes stand for empathy.

Note that Levy is one of the few health care CEOs who blogs, and he appears to write his blog on his own, unfettered by public relations flacks or risk-averse lawyers. His discussion of his revolutionary plan is here.

Further note the context in which he is working. While his medical center does not seem to receive particularly payments from insurance companies and managed care organizations, a previously secret agreement between the previous CEO of Partners Healthcare, another renowned, but competing Harvard-affiliated medical system and the previous CEO of Blue Cross and Blue Shield of Massachusetts, the state's biggest, and not-for-profit health care insurer/ managed care organization awarded much higher payments to that health care system (see posts here and here). And the current CEO of that Blue Cross and Blue Shield of Massachusetts just received (see this post) a substantial raise, enough to make him the best paid health care CEO in the state, while his organization's revenues and membership decreased.

This case shows it is possible for a health care CEO to put the organization's mission, and the welfare and morale of its hard working staff ahead of his own remuneration. If only this example were not so rare.

1:17 PM

The Color of Money: What Sort of School Doesn't Pay Its Faculty to Teach?

A letter to the NY Times by Dr Daniel Becker in response to the recent controversy at Harvard Medical School over financial relationships among industry and faculty (see our post here) brought up an interesting point:

I take issue with the implicit assumption that faculty members who accept drug money are driven exclusively by greed; this issue is much more complicated than it may seem at first.

Harvard Medical School’s 'drug money' problem relates, in part, to a little-known fact: Harvard rarely pays the salaries of its medical faculty directly. Despite substantial revenue from tuition, most faculty members teach medical students on a volunteer basis.

Similarly, the salaries of research faculty are not paid by Harvard, but rather by grants from the National Institutes of Health, private foundations and in some instances, grants from pharmaceutical companies. If these financing sources dry up, professors are often forced to find a new job.

Wait a minute, it's a medical school, so shouldn't the faculty be paid to teach and do research? That's what faculty are supposed to do.

The above letter, although it may be a bit simplistic, fits in with other anecdotal evidence that, in fact, medical schools do not pay faculty much to teach or do research. Instead, they are mainly tasked with raising money from external sources to "cover" the academic work one would think should be central to their jobs. Failing that, they must bring in fees for their clinical work.

In 2005, we quoted the editor of JAMA as saying, "few medical schools provide adequate, if any, reimbursement for teaching time."

In 2007, we noted that it was news when Harvard Medical School pledged to actually start paying hospital-based faculty meaningful amounts for teaching medical students. Previously, they were paid an average of $30/hour for doing so. However, I have not seen any follow-up as to whether the school carried out the promise. Moreover, at that time, we noted that Harvard required its faculty "to teach or volunteer on committees 50 hours a year, but Harvard does not track how many hours doctors teach and does not actively enforce the policy." Again, one might be forgiven for thinking that a faculty member generally should spend a substantial amount of time teaching. But at Harvard, they only apparently need to spend about 2% of their time doing so.

Later in 2007, we discussed a medical school dean's revelation that his school primarily judge faculty was by how much external funding (grants, contracts, practice income, etc) they brought in, not by how well or how much they taught, or the quality and quantity of their research.

Finally, in 2009, we discussed how two-thirds of the salary of one university president seemed to come from his medical school, even though that school accounted for only one-eighth of his students.

Putting it all together, it seems that the "faculty" at some, maybe most medical schools are not faculty in the ordinary sense. There is little expectation that they teach. Instead, they are supposed to do research funded by external grants, or failing that, collect fees from direct patient care. They are judged by how much money these pursuits provide, not by the quality of their research, and certainly not the quality of their teaching. The money they provide disproportionately goes to fund parts of the university outside of the medical schools. Presumably, the pressure to bring in ever more money drives "faculty" entanglements with pharmaceutical, biotechnology, device and other corporations. If one must constantly pursue grants, now mostly available from industry, one must constantly interact with industry representatives. Under this sort of pressure, is it any wonder that "faculty" might find it hard to turn down consulting work, speakers' fees, and offers to serve on advisory boards from the same people they must please to obtain grants?

So I believe Dr Becker is right. The problem is simply not the greed of "faculty" members (although some, of course, can become greedy.) Much of the problem appears to be the greed of university administrators who see their medical schools and academic medical centers as cash cows, and see nothing wrong with hiring "faculty" who scarcely teach, as long as they keep bringing in the cash.

1:52 PM

Harvard Medical Students Against Marketing in the Guise of Medical Education

An article by Duff Wilson in the New York Times this week provided a new look at the pervasiveness of financial relationships among academic medicine and health care corporations, and the beginnings of resistance to them.

The Scope of the Relationships

Many individual Harvard Medical faculty members receive tens or even hundreds of thousands of dollars a year through industry consulting and speaking fees. Under the school’s disclosure rules, about 1,600 of 8,900 professors and lecturers have reported to the dean that they or a family member had a financial interest in a business related to their teaching, research or clinical care. The reports show 149 with financial ties to Pfizer and 130 with Merck.

The rules, though, do not require them to report specific amounts received for speaking or consulting, other than broad indications like 'more than $30,000.' Some faculty who conduct research have limits of $30,000 in stock and $20,000 a year in fees. But there are no limits on companies’ making outright gifts to faculty — free meals, tickets, trips or the like.

Other blandishments include industry-endowed chairs like the three Harvard created with $8 million from sleep research companies; faculty prizes like the $50,000 award named after Bristol-Myers Squibb, and sponsorships like Pfizer’s $1 million annual subsidy for 20 new M.D.’s in a two-year program to learn clinical investigation and pursue Harvard Master of Medical Science degrees, including classes taught by Pfizer scientists.

Academic Medical Leaders' Defense of Their Relationships with Industry

Dr. Flier, who became dean 17 months ago, previously received a $500,000 research grant from Bristol-Myers Squibb. He also consulted for three Cambridge biotechnology companies, but says that those relationships have ended and that he has accepted no new industry affiliations.

So maybe it is not surprising that:

Dr. Flier says that the Harvard Medical faculty may lead the nation in receiving money from industry, as well as government and charities, and he does not want to tighten the spigot. 'One entirely appropriate source, if done properly, is industrial funds,' Dr. Flier said in an interview.

But,

That is in contrast to his predecessor as dean, Dr. Joseph B. Martin. Harvard’s rules allowed Dr. Martin to sit on the board of the medical products company Baxter International for 5 of the 10 years he led the medical school, supplementing his university salary with up to $197,000 a year from Baxter, according to company filings.

Dr. Martin is still on the medical faculty and is founder and co-chairman of the Harvard NeuroDiscovery Center, which researches degenerative diseases, and actively solicits industry money to do so. Dr. Martin declined any comment.

Note that we discussed Dr Martin's directorship of Baxter on Health Care Renewal here in 2006, and that we also found that he was on the board of biotechnology company Cytyc. Note also that we have discussed how serving on the board of a health care corporation can produce particularly intense conflicts of interest for academic medical leaders, since such board service implies not just warm and fuzzy feelings for the company, but "unyielding loyalty" to the financial interests of the company and its stockholders (e.g., see this post).

Unsurprisingly, faculty who have their own lucrative relationships with industry are all for more of the same:

Encouraging them is Dr. Thomas P. Stossel, a Harvard Medical professor who has served on advisory boards for Merck, Biogen Idec and Dyax, and has written widely on academic-industry ties. 'I think if you look at it with intellectual honesty, you see industry interaction has produced far more good than harm,' Dr. Stossel said. 'Harvard absolutely could get more from industry but I think they’re very skittish. There’s a huge opportunity we ought to mine.'

Note that Dr Stossel defended academic-industry "interaction," but did not explain why such interaction seems always to generate large money flows from industry to academic institutions and their individual faculty members. People can surely interact without paying each other.

Note further that Dr Stossel may have even more financial relationships with industry than appeared in the NY Times article. When we analyzed some of the logical fallacies Dr Stossel employed in favor of industry payments to physicians in 2007, we cited Stossel's attck on the rigorous conflicts of interest rules re-imposed on the US National Institutes of Health (NIH) in which Stossel had to disclose "having received consulting fees from ZymeQuest, owning stock options in ZymeQuest and Biogen, and having pending and issued patents, owned by Brigham and Women's Hospital, some of which are licensed to ZymeQuest." [Stossel TP. Regulating academic-industrial research relationships - solving problems or stifling progress? N Engl J Med 2005; 353: 1060-1065.] In this paean to a laissez-faire approach to conflicts of interest, Stossel also disclosed that he "is a member of the Board of Directors of Zymequest Inc, and the Scientific Leadership Advisory Board of Merck & Co. The author is a founding scientist of Critical Biologics Corporation and a consultant to Boston Scientific, Inc., and Gerson-Lehrman, Inc." [Stossel TP. Regulation of financial conflicts of interest in medical practice and medical research. Perspect Biol Med 2007; 50: 54-71. ]

Another defender of the status quo also has her own major relationships with industry:

Merck built a corporate research center in 2004 across the street from Harvard’s own big new medical research and class building. And Merck underwrites plenty of work on the Harvard campus, including the immunology lab run by Dr. Laurie H. Glimcher — a professor who also sits on the board of the drug maker Bristol-Myers Squibb, which paid her nearly $270,000 in 2007.

Dr. Glimcher says industry money is not only appropriate but necessary. 'Without the support of the private sector, we would not have been able to develop what I call our ‘bone team’ in our lab,' she said at a recent student and faculty forum to discuss industry relationships. Merck is counting on her team to help come up with a successor to Fosamax, the formerly $3 billion-a-year bone drug that went generic last year.

Note that Dr Glimcher now seems to view her role not as someone seeking to discover and disseminate the truth, but as someone seeking to develop commercial products. Again, maybe that is not surprising, since she is supposed to have an "unyielding loyalty" to the prominent pharmaceutical company on whose board she sits.

The NY Times article did not quote anybody in favor of financial relationships between academic medicine and industry who did not themselves have such relationships. I don't believe I have ever seen a defense of these relationships not authored by someone who was not already personally profiting from such relationships.

The Revolt of the Medical Students

While he documented how Harvard faculty who also lead huge pharmaceutical firms have no qualms about industry pouring money into medical academics, Mr Wilson found that medical students seem to have figured out the downside of being taught by pharmaceutical, biotechnology and device company employees:

In a first-year pharmacology class at Harvard Medical School, Matt Zerden grew wary as the professor promoted the benefits of cholesterol drugs and seemed to belittle a student who asked about side effects.

Mr. Zerden later discovered something by searching online that he began sharing with his classmates. The professor was not only a full-time member of the Harvard Medical faculty, but a paid consultant to 10 drug companies, including five makers of cholesterol treatments.

'I felt really violated,' Mr. Zerden, now a fourth-year student, recently recalled. 'Here we have 160 open minds trying to learn the basics in a protected space, and the information he was giving wasn’t as pure as I think it should be.'

Mr. Zerden’s minor stir four years ago has lately grown into a full-blown movement by more than 200 Harvard Medical School students and sympathetic faculty, intent on exposing and curtailing the industry influence in their classrooms and laboratories, as well as in Harvard’s 17 affiliated teaching hospitals and institutes.

They say they are concerned that the same money that helped build the school’s world-class status may in fact be hurting its reputation and affecting its teaching.

Note that the example, while anecdotal, shows how financial relationships could lead to biased education. The students have made surprising progress:

The Harvard students have already secured a requirement that all professors and lecturers disclose their industry ties in class — a blanket policy that has been adopted by no other leading medical school. (One Harvard professor’s disclosure in class listed 47 company affiliations.)

'Harvard needs to live up to its name,' said Kirsten Austad, 24, a first-year Harvard Medical student who is one of the movement’s leaders. 'We are really being indoctrinated into a field of medicine that is becoming more and more commercialized.'

David Tian, 24, a first-year Harvard Medical student, said: 'Before coming here, I had no idea how much influence companies had on medical education. And it’s something that’s purposely meant to be under the table, providing information under the guise of education when that information is also presented for marketing purposes.'

The students say they worry that pharmaceutical industry scandals in recent years — including some criminal convictions, billions of dollars in fines, proof of bias in research and publishing and false marketing claims — have cast a bad light on the medical profession. And they criticize Harvard as being less vigilant than other leading medical schools in monitoring potential financial conflicts by faculty members.

Unfortunately, many academics of my generation have become so used to making some extra dollars by working part-time for companies selling health care goods or services that they cannot see how these relationships have distracted them from the academic mission and their professional ideals. Maybe the rising generation of students, now living in a time when the consequences of arrogance, greed, and corruption among our leaders has become so apparent, will put professionalism ahead of personal enrichment.

10:17 AM