Health Care Experience? - Hospital CEOs Don't Need No Stinkin' Health Care Experience

It looks like the complete takeover of health care by generic managers is nigh. 

Who Are Now Candidates to be Hospital CEOs?

On PRWeb is a summary of data about what sort of CEO candidates hospitals' boards of trustees are seeking:

A Black Book Rankings poll of 1,404 healthcare provider organizations’ human resources officers and board members revealed the developing trend affecting the way headhunters will seek candidates. Black Book estimates that two-thirds of CEOs hired in 2014 will have little to no healthcare sector experience, in favor of non-industry productivity, business development and financial management experts with heavy technological expertise.

From where are the new CEOs coming?

 Among survey respondents, the most intriguing new hospital CEO candidates are emerging from the Venture Capital, Private Equity industry (idealized by 42% of survey participants), Finance and Accounting (40%), Banking (32%), Technology (22%), Marketing and Sales (19%), Not-for-Profits ( 14%), and Pharma/Biotech (12%).

Note that the CEO candidates did not seem particularly intimidated by running a hospital without any relevant experience, knowledge, or possibly values.

 94% of new CEOs without extensive hospital backgrounds indicate they do not believe healthcare expertise is required for replacing other senior leadership team members after a management overhaul.

Why Are Health Care Naive CEOs Increasingly Common?

What is causing the attractiveness of candidates without background in, knowledge of, to particular agreement with the values of health care?

'An outside hire will not have developed hospital management skills from within or understand an organization's unwritten rules at first, but that’s not a bad thing either as more hospitals face fresh ideas to avoid bankruptcy, expedite smoother consolidations, conquer payment reform, and productivity issues,' said Doug Brown, Managing Partner of Black Book™.

In addition,

A new CEO’s first decisions are often distruptive to a hospital’s staff, particularly the incumbent management team. 'An outsider's perspective on hospital operations will be controversial but often credited in several facility turnarounds for bolstering organizational financial stability, and ultimately profitability,' noted Brown.

It is not just Mr Brown's opinion,

89% of board members hiring outsiders agree that broad business operational expertise and singular vision pays off with fresh perspectives on efficiencies, value, cost savings, and the goodwill to the community.

What particular circumstances might prompt hospital boards to look for health care naive CEO candidates?

 'Hospitals facing stalled growth or new competitive challenges need fresh thinking. Hiring internal candidates with the same norms and values as your current team will not meet the long term strategic growth needs of the hospital organization. Relevant outside thinking makes a valuable contribution, enhancing business vitality, longevity and sustainability. Staying contemporary, revitalizing your brand, enhancing products and expanding into new markets all begin with the next person you interview and add to your senior leadership team,' added Brown.

By the way, similar surveys suggest the same trend affecting other parts of health care,

Payers, chains, ancillaries, ACOs, support firms, vendors, medical product manufacturers and pharmaceutical firms are tapping other business’ top talent, a major shift from the 'healthcare industry experience only' mindset for executive placement that has prevailed since the 1970’s, according to corresponding Black Book 2013 surveys.

Discussion

 In 1988, Alain Enthoven advocated in Theory and Practice of Managed Competition in Health Care Finance, a book published in the Netherlands, that to decrease health care costs it would be necessary to break up the "physicians' guild" and replace leadership by clinicians with leadership by managers (see 2006 post here). Thus from 1983 to 2000, the number of managers working in the US health care system grew 726%, while the number of physicians grew 39%, so the manager/physician ratio went from roughly one to six to one to one (see 2005 post here). As we noted here, the growth continued, so there are now 10 managers for every US physician.

Health care went from being controlled by clinicians to controlled by a growing volume of managers.  Most of these managers were generic, in that they had little if any knowledge of, experience in, or sympathy to the values of health care. These generic managers have used the same techniques advocated for the management of supermarkets or automobile manufacturers to manage health care organizations, despite all the obvious differences in context, goals, values, and people involved.  They also have been trained in theory of maximizing shareholder value (even though non-profit health care organizations have no shareholders), which actually means maximizing short-term revenue (financialization), and then using that revenue as an excuse to plutocratic pay packages for management.

The survey results above say the takeover is nearly complete.  The majority of top hospital management recruits are now generic.  It appears that the majority of top management recruits  in health insurance, medical device, pharmaceutical, and other health care corporations are also now generic  The reasons for their recruitment suggest that those exerting stewardship over hospitals are completely abandoning interest in improving health care, patients' outcomes, clinical practice, or anything related.  Instead, look at the wording (highlighted in color thus above) reflecting their concerns.

This is all about

 productivity issues

long term strategic growth

business vitality

revitalizing your brand

efficiencies 

cost saving

profitablity

Nobody is talking about quality of care, improving practice, patients' outcomes, public health, or about honesty, integrity, and particularly not about putting patients first.

Instead, it is now going to be all about the money. 

So of course the US has the most expensive health care (non) system in the world, and that system manages to at best be mediocre by nearly every measure of health outcomes. 

I say once again that true health care reform would put in place leadership that understands the health care context, upholds health care professionals' values, and puts patients' and the public's health ahead of extraneous, particularly short-term financial concerns. We need health care governance that holds health care leaders accountable, and ensures their transparency, integrity and honesty.

But this sort of reform would challenge the interests of the generic managers who are getting very rich off the current system.  So I am afraid the US may end up going far down this final common pathway before enough people manifest enough strength to make real changes.

A Plague of Bureaucrats - Now 10 Per Physician in US Health Care

There seems to be a reasonable argument that the US health care system is more dependent on the private sector, and in particular the for-profit private sector, than systems in other developed countries.  Advocates of private, for-profit health care often tout the private sector as more efficient and less bureaucratic than government.  

However, a post by Robert Kocher in the Harvard Business Review blog, of all places, noted that US health care is increasingly inflicted by a proliferation - perhaps a plague - of bureaucrats.


Dr Kocher looked at employment of physicians, other health care professionals and clinical workers, and bureaucrats in a more recent time frame, 1990-2012.  The key findings were:

 Using data from the Bureau of Labor Statistics (BLS) and the American Medical Association, my colleagues and I found that from 1990 to 2012, the number of workers in the U.S. health system grew by nearly 75%. Nearly 95% of this growth was in non-doctor workers, and the ratio of doctors to non-doctor workers shifted from 1:14 to 1:16.

Furthermore,

 Today, for every doctor, only 6 of the 16 non-doctor workers have clinical roles, including registered nurses, allied health professionals, aides, care coordinators, and medical assistants. Surprisingly, 10 of the 16 non-doctor workers are purely administrative and management staff, receptionists and information clerks, and office clerks. 

So, in summary, for every doctor, there are 6 clinical workers (nurses, aides, etc) and 10 bureaucrats (including managers).

Note that this data appears compatible with 1983-2000 employment data we summarized in 2005. During that period, the ranks of health care managers grew much faster than the ranks of physicians or nurses.  The growth rates from 1983 to 2000 were 1.39x (39%) for physicians, 1.54x (54%) for nurses, and a whopping 8.26x (726%) for managers.

Another way to look at it is, in 1983 there was 1 manager for every 5.7 physicians and every 15.1 nurses. In 2000, there was 1 manager for every 0.96 physicians and every 2.9 nurses. Again, by 2000, the number of health care managers exceeded the number of physicians. There were more managers than any other species of health care worker other than nurses.

So, by 2000, there was one manager per doctor.  By 2012, there were 10 bureaucrats, including managers, per doctor. 

We have discussed the increasing power of managers, administrators and executives over health care.  Management gurus, such as Alain Enthoven, had advocated breaking the power of the supposed "physicians' guild" to reduce health care costs, and replacing physician leaders with managers (look here).  We have discussed the growing role of generic managers, that is leaders trained only to manage, but not experienced in , and often not sympathetic to the values of health care.  Now there is increasing evidence that managers and bureaucrats are increasingly numerous in health care, the former somewhat and the latter greatly out-numbering physicians.

We cannot scientifically prove that this plague of bureaucrats is responsible for US health care's mediocre quality and access, despite higher costs per capita than in any other developed country.  However, it does appear to be a reasonable hypothesis that increasing the relative numbers of health care professionals versus bureaucrats might produce at least more health care per dollar, if not also better health care per dollar.   

This suggests that true health care reform requires decreasing the influence of generic management.  Health care leaders ought to be those with some knowledge of health care and some sympathy for its values. Such health care leadership might be less concerned with increasing bureaucracy, and more concerned with more and better actual care of actual patients.  (But do not expect such reforms to be popular with the very well-paid generic managers who now run health care, and hence do not expect such reforms to be easy to implement.)

Guest Post: Incompetent Management Breeds Demoralized Physicians

Health Care Renewal presents a guest post by Dr Howard Brody, John P McGovern Centennial Chair of Family Medicine, Director of the Institute for Medical Humanities at University of Texas - Medical Branch at Galveston, and blogger at Hooked: Ethics, Medicine and Pharma. 

Danielle Ofri, a prominent internist/author at Bellevue in New York, started a recent op-ed piece, “Last week I was ready to quit medicine."

She described an encounter most physicians can relate to—a 15-minute appointment slot, a new patient who spoke only Bengali, a long and complicated problem list, a bag containing 18 different medicines, two forms that had to be filled out by the doctor on this day’s visit, and a computer that froze while she was trying to keep up with the electronic charting. She described how, 45 minutes into the supposedly 15-minute visit, she had a phone in one ear with the Bengali translator and tech support on hold in the other ear.

Ofri’s plaint caught my attention because I had recently put up a guest post on Health Care Renewal about another highly skilled, caring physician who was seriously considering quitting practice. This led me to write a column for some of our local newspapers about demoralized doctors

In the space allowed in an op-ed column, you can’t go into great depth in analyzing a complicated situation. So here’s what I would have wanted to say.

We can list all the management failures that this encounter represents. I won’t even start with the electronic record as that’s such a frequent theme in this blog. Who scheduled such a patient for a 15-minute visit? Where is the pharmacist who could have done a better job of going through all the lady’s medicines? Where is the staffer who could have filled out the forms for Dr. Ofri to sign? This is just to scratch the surface.

There are two things worrisome about this long list of management failures. If the goal of the health care system is actually to take good care of patients, then it seems obvious that Dr. Ofri, who wanted to try to provide high-quality care, had roadblock after roadblock thrown in her way.

Cynics will protest that this system obviously has no interest in quality patient care and seeks only to maximize revenue. If that’s so, is it really true that a board-certified MD is the most efficient labor source for keyboarding data into a computer, filling out paper forms, and doing all the other busy-work tasks that Dr. Ofri had to juggle? Can anyone really believe that this management structure supports either quality care orefficient resource use?

If the management of U.S. hospitals was severely understaffed or underpaid, then we could perhaps forgive such lapses. But we know that while the growth of physicians in the U.S. has been slow, the number of administrators has grown by leaps and bounds [The number of health care managers increased by 726% from 1983-2000 while physician numbers increased by 39%, look here - Ed]  . And we know that at least at the high end, these managers are paid munificent sums, and are lauded for their supposed genius (look here for example). 

So we appear to have a system that is slowly (in some cases rapidly) driving the best doctors out of practice, and yet somehow imagines that everything is going all right and there’s no problem—or if there’s a problem, it’s those whining doctors.

All us medical educators know that when we ask the first-year class how may of them have been told by practicing physicians that they’re making a big mistake coming to medical school, the majority will raise their hands. Yet the managers of America’s health systems apparently believe that they can go on demoralizing good practitioners and nothing bad will happen.

This may sound as if I am saying that health care managers are all evil people, but that’s an unfair characterization. These folks are simply trying to do what our society tells them. As I explained some time ago, most of our popular and political discourse has been captured by a belief system that can be variously called neoliberalism, market fundamentalism, or economism. The ideology can be summarized as a quasi-religious faith in the so-called “free market,” steadfast opposition to government regulation of the market, and opposition to just about any form of taxes (for more on the nature of economism, look here.)

Among other things, this ideology teaches us that everything important in our society can be accurately captured in objective measures of “productivity” and “efficiency.”  [This is akin to the "shareholder value" theory of management (look here), or "financialization." - Ed]  Once one has mastered the basic concepts taught in MBA school, there’s no need to learn anything about health care and what makes it a unique activity; there’s no basic difference between providing health care and flipping burgers at McDonalds or making widgets. [We have called this generic management. - Ed.]. And so we get the crazy style of management well documented on this blog, not because of personal nastiness or ill will, but due to the ideological Kool-Aid everyone has been drinking for several decades now.

Today’s physicians seem to be like the proverbial frog being boiled in the pot of water because the heat was turned up so gradually the frog never figured out it needed to jump. [That is, they are suffering from "learned helplessness." - Ed] Dr. Ofri herself seems to represent a typical frog. Why? Perhaps it’s the style of the blog or op-ed writer to start off with a downer and then try to end on an upbeat note. Or perhaps it’s the natural physician’s tendency to stay away from policy questions. I’m not sure.

After starting us off with this hard-hitting description of a dysfunctional system, Dr. Ofri ends by opining that things are going to be better in the future because more women are entering medicine and because today’s medical students are more tech savvy. She gives herself credit for managing to forge a bond with the patient because they sat together and faced this adversity. She cites an upbeat study, “when asked what was the most satisfying aspect of medical practice, the number one answer was relationships with patients. This is what keeps us going on even the most trying of days.”

Dr. Ofri gets full credit for remembering the importance of relationships, and feels that she bonded more firmly with her patient because they went through all this together. How about a word, though, about the people behind the curtain, who are responsible for all that she and her patient had to go through, and who don’t seem to have a clue how bad it is and what it all means? 

Dr Howard Brody

To all physicians: Fools hiring amateurs, to control you and land you in court?

Health IT systems will be/are used to control you - a medical professional - in your treatment of patients, and could land you in court if they contribute to your making a medical mistake.

They could also land you in a sham peer review for being a "disruptive" physician if you complain about a poor EHR.

Here's an example of who gets hired to run such systems. Note the "Education" and "Qualifications Knowledge, Skills, and Abilities Required" I bolded.

This job description is not atypical of many "clinical informatics" job descriptions:

HCA

Clinical Informaticist(Job Number: 25388-35620)

https://hca.taleo.net/careersection/0hca/jobdetail.ftl?lang=en&job=1112401&src=JB-11444

More About HCA.....

• HCA has been Recognized in Computerworld Magazine's Top 100 Workplaces to work for Information Technology Professionals for the 3^rd consecutive year, coming in this year at #32.
• HCA has been recognized by the Ethisphere Institute as one of the 2011 World's Most Ethical Companies.

Summary of Duties

The Clinical Informaticist is accountable for driving successful adoption and clinical process optimization of clinical information systems. This is done through the application Clinical Adoption Methodology, incorporating best practice and evidence-based knowledge. Utilizes the knowledge and skills of clinical practice to determine clinical functions that are suitable for computer application and to ensure the information systems are consistent with professional standards of clinical practice. Acts on behalf of the Director of Applications in absence of said director.

Duties Include But Are Not Limited To

• Facilitates knowledge of current state, desired state, and gap analysis of core clinical processes that are enabled by clinical information technology, being mindful of operational requirements/ constraints and conflicts. Works collaboratively with QA to evaluate outcomes, and opportunities for improvement.
• Maintains a trusting and effective relationship with all customers. Assists clinical managers in identifying information systems needs and project management related to information systems.
• Maintains membership or consultation to appropriate committees, work groups or task forces as needed to facilitate the ongoing process of the design, implementation, and revision of the automated and manual components of the clinical information system. Conducts meetings and presentations, effectively and professionally.
• Maintains a current knowledge of a) trends and issues in health care, nursing practice, healthcare informatics, regulatory/accreditation requirements; b) organizational policies and procedures related to clinical practice and the legal implications of the clinical information system; c) structure and hierarchy of the organization.
• Functionality expertise for clinical applications supporting core patient care processes and their relationship to other organizational information systems.
• Works closely with counterparts in appropriate user organizations to ensure consistent and effective use of technology resources and optimization of installed applications and sustainability.
• Adheres to Code of Conduct and Mission & Value Statement. Understands the personal obligation to report any activity that appears to violate applicable laws, rules regulations or the Code of Conduct itself. Maintains confidentiality, promotes system security to promote compliance.
• As facility-care-area based position must learn and comply with System and facility safety policies and rules; must use appropriate safety equipment and procedures at all times; must immediately report all unsafe conditions to supervisors; must be familiar with all safety features of equipment, tools or materials encompassed by job duties; and must check with supervisors (prior to job performance) if there is a question as to the safe procedure to be used for any job function.
• Participate in special projects as needed and performs other duties as assigned.

Qualifications Knowledge, Skills, and Abilities Required

• Membership in an appropriate organization is required (HIMSS, AMIA, for example) that is specifically targeted to informatics in healthcare
• Working knowledge of Microsoft Office products (WORD, EXCEL, PowerPoint, Project Plan, and VISIO)
• Strong oral, written, and interpersonal communication skills; strong analysis/problem solving and critical thinking; strong leadership, facilitation and coaching skills; current knowledge of patient care practices; clinical expertise; ability to work in multi-disciplinary teams.

Preferred:

• Knowledge and skill in selection, implementation, and training of clinical information systems
• Project management skills
• Previous experience utilizing Meditech documentation system
• Previous experience with Quality Improvement initiatives and clinical process re-engineering

Education

• BSN or Bachelors degree in other Allied Health Professional degree from an accredited college
• Current (10/08) department incumbents must achieve Bachelors requirement by 12/31/2012

Wow...

BSN, allied health bachelors, or "must achieve Bachelor's by 12/31/12"?

Some (at best) MBA-level fool wrote this 'description' for the hiring of some amateur with a BS - or no degree - to perform functions that will seriously affect how you, with 4 years college, four years med school, PGY internship, residency, perhaps fellowship or other post doctoral experience, perform your profession?

Your kids may have more professional education and qualifications than your hospital's "health computing experts." Fantastic.

I add this:

Health IT cannot be made to work properly - ever - when being mismanaged by fools and amateurs.

-- SS

Semi-Retirement of a Salesman - Weldon to Retire as Johnson and Johnson CEO

The extremely well compensated CEO and Chairman of Johnson and Johnson, the huge and recently hugely troubled US based pharmaceutical and device company, is going to retire, at least as CEO.  Reporting on this event may shed a little more light on the sorts of leadership problems that now commonly afflict health care organizations.

The Credo

Johnson and Johnson was once one of the US' most respected companies.  Its credo, written in 1943 by Robert Wood Johnson, bravely begins:

We believe our first responsibility is to doctors, nurses and patients, to mothers and fathers, and all others who use our products and services. In meeting their needs, everything we do must be of high quality.

Dishonoring the Credo

Yet in the last few years the company has not honored this credo.

It seems to have lost the ability to manufacture high quality products. It has had to make 30 separate product recalls since 2009. The latest was Liquid Infant Tylenol. (The current WSJ Health Blog list of recalls can be found here.)

Johnson and Johnson also has an amazing recent record of ethical lapses and guilty pleas, including:
- Convictions in two different states in 2010 for misleading marketing of Risperdal
- A guilty plea for misbranding Topamax in 2010
- Guilty pleas to bribery in Europe in 2011 by J+J's DePuy subsidiary
- A guilty plea for marketing Risperdal for unapproved uses in 2011 (see this link for all of the above)
- Accusations that the company, which makes smoking cessation products, participated along with tobacco companies in efforts to lobby state legislators (see post here)
- A guilty plea to misbranding Natrecor by J+J subsidiary Scios (see post here)
-  Most recently, in 2012, testimony in a trial of allegations of unethical marketing of the drug Respirdal (risperidone) by the Janssen subsidiary revealed a systemic, deceptive stealth marketing campaign that fostered suppression of research whose results were unfavorable to the company, ghostwriting, the use of key opinion leaders as marketers in the guise of academics and professionals, and intimidation of whistleblowers.  After these revelations, the company abruptly settled the case (see post here).

Disconnect Between Leadership Performance and Rewards

Nonetheless, until very recently, the top leadership of the company continued to collect outrageous compensation, and to be regarded as a font of health care wisdom, even by the current US administration.

In 2010, the company gave CEO and Chairman William Weldon over $29 million in compensation, saying he "met expectations," (see this post).

In 2011, just days after the company pleaded guilty in the Risperdal marketing case (above), CEO and Chairman Weldon was invited to the White House to discuss health care (see this post.)

Just after his resignation was announced a few days ago, the Wall Street Journal reported that Weldon would get an increased bonus for 2011 ($3.1 million, up from $1.98 million in 2010), and an increased base salary ($1.97 million up from $1.92 million.)  His total compensation for 2011 was not yet revealed. 

Swapping One Salesman for Another

A single New York Times article suggested one reason why Weldon's reign was ultimately so unsuccessful, and perhaps why his successor may not do better.

Alex Gorsky, the newly named chief executive of Johnson & Johnson, shares a crucial biographical detail with William C. Weldon, the man he is succeeding. Both got their starts as pharmaceutical sales representatives, a notoriously grueling job that — because it demands stamina, charisma and a near devotion to making the sale — has become a crucible for future drug company executives in recent years.

Indeed, Mr Weldon's official biography indicates he "served in several sales, marketing and international management positions." The official biography of CEO-to-be, Alex Gorsky, stated he "began his Johnson & Johnson career as a sales representative with Janssen Pharmaceutica in 1988. Over the next 15 years, he advanced through positions of increasing responsibility in sales, marketing, and management." Previously, he earned "a Bachelor of Science degree from the U.S. Military Academy at West Point, N.Y., and spent six years in the U.S. Army, finishing his military career with the rank of Captain. Alex earned a Master of Business Administration degree from The Wharton School of the University of Pennsylvania in 1996."

Apparently neither current nor nominated CEO had any direct experience in patient care, nor in biomedical or clinical science, nor in chemistry, engineering or manufacturing. So both are generic managers, that is, health care leaders without any direct experience in health care, or in the science and technology underlying it.

"Making the Numbers" Versus the Credo

Moreover, they are both a particular type of generic manager, salespeople. As the Times reported:

Mr. Gorsky, who is 51, fits the mold of someone who once 'carried the bag' — industry slang for working as a sales representative. He is known as a polished speaker and an intense yet likable manager who is a quick study when it comes to learning new topics.

However, while sales people may be personable, they often have goals that have nothing to do with responsibilities "to doctors, nurses and patients, to mothers and fathers,...." As the Times article also noted,

But the ethos of the sales representative may not be what Johnson & Johnson needs right now, said Erik Gordon, who teaches business at the University of Michigan. 'That culture was very much the Weldon culture writ large — we will make our numbers for the analysts, period,' he said. 'And if that means we have to cut costs on things that affect quality, then by God, we’re going to make those numbers.'

So while Johnson and Johnson for years prided itself as a company that put the needs of patients and health professionals first, it hired leaders from the culture of sales where the impetus is to "make the numbers," to fulfill short term revenue goals, no matter what. This illustrates how generic management given perverse incentives in an era that honors greed and puts short-term economic goals ahead of all others had hollowed out health care.

We wish Mr Gorsky well, but worry that if he too focuses just on making the numbers, the result will be only mischief.

The Moral of the Story

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. On the other hand, those who authorize, direct and implement bad behavior ought to suffer negative consequences sufficient to deter future bad behavior.


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.

Generic Leadership Fine for EHR Implementation in High Acuity, High Risk Areas Such as an Emergency Department?

At my Feb. 16, 2012 post "Hospitals and Doctors Use Health IT at Their Own Risk - Even if 'Certified'" I established that buyers and users of EHR systems do so at their own risk with regard to implementation problems or outright defects resulting in patient harm.

As I've also written at my April 2011 post "FDA Decides Regulating Implantable Defibrillator Medical Devices a Political Hot Potato; Demurs", FDA has admitted health IT is a medical device that they shy away from regulating because it's politically expedient not to do so. (The area is a "hot potato" per the Director of FDA's CDRH, the Center for Devices and Radiological Health, so FDA stays away.)

Yet FDA knows of the stakes. As I observed at my Aug. 2010 post "Internal FDA memorandum of Feb. 23, 2010 to Jeffrey Shuren on HIT risks" and elsewhere, patient harm is occurring due to these devices and FDA is aware. Due to admitted impediments to information diffusion, however, even FDA, IOM, The Joint Commission (due to a "dearth of data" as in their 2008 Sentinel Events Alert On Healthcare IT) and others do not know the true magnitude of the problem.

From the FDA internal memo at the preceding FDA memorandum link:

Limitations of the MAUDE [Manufacturer and User Facility Device Experience database] search and final subset of Medical Device Reports (MDRs) include the following:

1. Not all H-IT safety issue MDRs can be captured due to limitations of reporting practices including

... (a) Vast number of H-IT systems that interface with multiple medical devices currently assigned to multiple procodes making it difficult to identify specific procodes for H-IT safety issues;
... (b) Procode assignments are also affected by the ability of the reporter/contractor to correctly identify the event as a H-IT safety issue;
... (c) Correct identification by the reporter of the suspect device brand name is challenged by difficulties discerning the actual H-IT system versus the device it supports.

2. Due to incomplete information in the MDRs, it is difficult to unduplicate similar reports, potentially resulting in a higher number of reports than actual events.

3. Reported death and injury events may only be associated with the reported device but not necessarily attributed to the device.

4 Correct identification by the reporter of the manufacturer name is convoluted by the inability to discern the manufacturer of the actual H-IT system versus the device it supports.

5 The volume of MDR reporting to MAUDE may be impacted by a lack of understanding the reportability of H-IT safety issues and enforcement of such reporting.

... The results of this data review suggest significant clinical implications and public safety issues surrounding Health Information Technology. The most commonly reported H-IT safety issues included wrong patient/wrong data, medication administration issues, clinical data loss/miscalculation, and unforeseen software design issues; all of which have varying impact on the patient’s clinical care and outcome, which included 6 death and 43 injuries. The absence of mandatory reporting enforcement of H-IT safety issues limits the number of relevant MDRs and impedes a more comprehensive understanding of the actual problems and implications.

Finally, as I pointed out in my Dec. 2009 post "ONC Defines a Taxonomy of Robust Healthcare IT Leadership", the Office of the National Coordinator for Health IT at HHS (ONC) had published the following with regard to the qualification of those who could "lead the successful deployment and use of health IT to achieve transformational improvement in the quality, safety, outcomes, and thus in the value, of health services in the United States":

Clinician/Public Health Leader: By combining formal clinical or public health training with training in health IT, individuals in this role will be able to lead the successful deployment and use of health IT to achieve transformational improvement in the quality, safety, outcomes, and thus in the value, of health services in the United States. In the health care provider settings, this role may be currently expressed through job titles such as Chief Medical Information Officer (CMIO), Chief Nursing Informatics Officer (CNIO). In public health agencies, this role may be currently expressed through job titles such as Chief Information or Chief Informatics Officer. Training appropriate to this role will require at least one year of study leading to a university-issued certificate or master’s degree in health informatics or health IT, as a complement to the individual’s prior clinical or public health academic training. For this role, the entering trainees may be physicians or other clinical professionals (e.g. advanced-practice nurses, physician assistants) or hold a master’s or doctoral degree(s) in public health or related health field. Individuals could also enter this training while enrolled in programs leading directly to degrees qualifying them to practice as physicians or other clinical professionals, or to master’s or doctoral degrees in public health or related fields (such as epidemiology). Thus, individuals could be supported for training if they already hold or if they are currently enrolled in courses of study leading to physician, other clinical professional, or public-health professional degrees.

Here, though, is a more typical reality in today's hospitals, the background of an EHR deployment leader in one of the most risk-prone and difficult environments in healthcare, the Emergency Department (ED) in a large hospital of which I am aware:

Clinical Systems Analyst

January 2004 – Present

Project manager for implementation of an ED EHR [vendor name redacted]
Responsible for all aspects of implementation including build and process design, report build, testing, training, and go-live support.
Extensive knowledge ADT processes, HL7, and CPOE.
Manage software patches and upgrades.
Experience in HTML, SQL and SAP.

Financial Systems Analyst
November 2001 – January 2004

Project Team Lead for implementation of Patient Accounting system.
Responsible for system development and system build, training, testing, and reporting.

Education

[Regional university in the lower 50% of US News rankings in the region, name redacted]
B.S., Management Information Systems
2000 – 2003

[Name redacted] Community College

Associates Degree, Business Administration

So, ED physicians (with many years of doctoral and post-doctoral training and experience, boards testing their competence, etc.) may be placing the lives of patients and their careers in the hands of:

• An experimental medical device,
  
• unregulated by anyone,
  
• in a field whose qualifications for leadership are unregulated by anyone,
  
• devices known to be risky,
  
• but without anyone knowing the magnitude of that risk,
  
• whose implementation is led by a generic 'clinical' systems analyst "responsible for all aspects of implementation" with a Bachelor's degree in MIS from a second-tier institution, an Associates degree from a community college, and no medical or Medical Informatics education or experience whatsoever.

Further, that project lead jumped from financial systems analyst to 'clinical' analyst/leader of an ED EHR implementation.

One should also ask

• Who was the hiring manager who hired such a person and put them in the role?
• On what credentials and experience was the decision based?
  
• What were the hiring manager's own credentials?
  

I leave it to the reader to decide if this is an appropriate arrangement, and if they would place their trust in an ED whose activities center around a cybernetic system implemented in this manner.

-- SS

Feb. 17, 2012 Addendum:

At least in this case the person has degrees.

Per several prominent healthcare IT recruiters in the past in the article "Who's Growing CIO's" in the journal Healthcare Informatics, as mentioned at my Sept. 2009 post "Correcting historical information from the recruiter component of the Health IT Ecosystem", the School of Hard Knocks was plenty good for health IT leadership roles:

I don't think a degree gets you anything," says healthcare recruiter Lion Goodman, president of the Goodman Group in San Rafael, California about CIO's and other healthcare MIS staffers. Healthcare MIS recruiter Betsy Hersher of Hersher Associates, Northbrook, Illinois, agreed, stating "There's nothing like the school of hard knocks." In seeking out CIO talent, recruiter Lion Goodman "doesn't think clinical experience yields [hospital] IT people who have broad enough perspective. Physicians in particular make poor choices for CIOs. They don't think of the business issues at hand because they're consumed with patient care issues," according to Goodman.

-- SS

Just Business - Employee Control Fraud, Gresham's Dynamic, and the Race to the Bottom in Health Care

Since Enthoven called for the break up of the physicians' "guild," and handing over its supposed power to managers, (see post here) managers have taken over from physicians and other health care professionals as leaders of health care organizations.  Unfortunately, most of these managers are generic, often lacking knowledge and experience in health care, and understanding of its core values.  Instead, such generic managers may rely on the current management dogma.  The perils of doing so are illustrated by an analysis of the recent expose of conditions at Apple manufacturing plants in China.

The Apple Expose

The New York Times summarized in a landmark article how bad it is to work in factories building Apple products under contract in China.  Workers endure harsh conditions, toiling up to six days a week, 12 hours a day.  Meanwhile, banners remind them to "work hard on the job today or work hard to find a job tomorrow."  Workers may be exposed to hazardous, even poisonous materials (like n-hexane used to clean components).  Workers have died in explosions due to inadequate control of combustible dust. Over 18 workers at one factory attempted or committed suicide within two years.

The article suggested that while Apple managers may be well-intentioned, and "want to improve conditions in factories," the bottom line is more important:

that dedication falters when it conflicts with crucial supplier relationships or the fast delivery of new products.

In fact, because of its rigid insistence on cost control, its suppliers are sorely tempted to push their workers too hard:

Apple typically asks suppliers to specify how much every part costs, how many workers are needed and the size of their salaries. Executives want to know every financial detail. Afterward, Apple calculates how much it will pay for a part. Most suppliers are allowed only the slimmest of profits.

So suppliers often try to cut corners, replace expensive chemicals with less costly alternatives, or push their employees to work faster and longer, according to people at those companies.

'The only way you make money working for Apple is figuring out how to do things more efficiently or cheaper,' said an executive at one company that helped bring the iPad to market. 'And then they’ll come back the next year, and force a 10 percent price cut.'

So,

'You can set all the rules you want, but they’re meaningless if you don’t give suppliers enough profit to treat workers well,' said one former Apple executive with firsthand knowledge of the supplier responsibility group. 'If you squeeze margins, you’re forcing them to cut safety.'

William Black's Analysis: Employee Control Fraud and the Race to the Bottom

Writing in the Huffington Post, William K Black showed how Apple executives' relentless focus on cost could drive a race to the bottom. He began by analyzing Apple executives' explanation for out-sourcing their production:

'We shouldn't be criticized for using Chinese workers,' a current Apple executive said. 'The U.S. has stopped producing people with the skills we need.'

He noted that it is absurd to suggest that the US does not have workers with the technical skills necessary to build Apple products. He suggests, however, that these are not the skills that matter.

The suppliers want engineers and managers who will selectively apply their substantive skills. American engineers and managers cannot be counted on to provide the necessary selectivity. Apple's suppliers' often seek managers willing to order their workers to exceed the lawful workweek, to refuse to pay them for significant portions of the wages they have earned, to unlawfully employ child labor, and even to coerce abortions.

So, in the n-hexane example,

The engineer did not order the workers to use the nerve poison because he hated the workers. It was 'just business.' The nerve poison reduced cleaning time, so an engineer knowingly ordered the workers to use it and scores of other engineers did nothing to prevent the usage.

Note that Black calls this employee control fraud, deceiving the employee that he or she is working in a reasonably safe environment, and that employee health and safety is a concern, when in truth the only concern is the bottom line.

So what Apple executives, and by analogy, other multi-national corporate executives want are underlings, particularly middle and line managers who will do anything, anything to cut costs and improve the bottom line. This will produce the race to the bottom:

What we are observing is the essence of a Gresham's dynamic in which bad ethics drives good ethics out of the market.

Two aspects of this Gresham's dynamic are obscene, and both are produced by neoclassical economics dogma. Calling this process 'creative destruction' is baseless and dishonest. It is the fraudulent destruction of honest businesses, professions, and labor.

Black concluded:

firms that are anti-employee control frauds are likely to commit other forms of control fraud. Apple and its Western counterparts have driven the creation of an Asian network of fraudulent firms that has distorted international trade, hollowed out U.S. manufacturing, and created a bizarre hybrid: quasi-communist crony capitalism. It boggles the mind that theoclassical economists celebrate the corrupt result as the essence of creative destruction. The network is corrupt. It will not play by the rules. Firms like Apple help create the perverse incentives that encourage the network to cheat. Surviving U.S. manufacturing firms are whipsawed by the powerful Gresham's dynamic that the frauds produce. U.S. firms and workers are constantly pressured to reduce wages and workforce to try to compete with the foreign frauds. This is the 'Road to Bangladesh' strategy that has caused U.S. working class wages to stall for decades. Europe is retreating along this same road at an even more rapid rate. The Gresham's dynamic tilts the world in favor of fraudulent firms operating in fraud-friendly nations.

The Race to the Bottom in Health Care
Note that we have written about numerous examples of executives of US health care organizations putting revenue ahead of the health care mission, ahead of workers' morale, ahead of patients' and the public's health. Some of these examples involve executives of nominally non-profit organizations that are supposed to have charitable purposes. (Look under our heading of mission-hostile management.)

In fact, just yesterday, Dr Carl Elliott, writing for the Chronicle of Higher Education, summarized how pharmaceutical companies have out-sourced clinical research. The resulting commercial clinical research have generated conditions as bad for the research subjects as those endured by the Chinese electronics workers above:

If the past decade had an emblematic moment for clinical research, it was probably November 12, 2005, the day when Bloomberg Markets published its cover story, “Big Pharma’s Shameful Secret.” In that issue, Bloomberg reporters laid out the story of SFBC International, a contract research organization in Miami that was paying undocumented immigrants to test the safety of new drugs in a seedy motel. The SFBC owners had converted the lobby into a large waiting area with plastic chairs, and they were housing their research subjects six to a room. The medical director of the research site was unlicensed to practice medicine; the Institutional Review Board that approved many of the studies was owned by the wife of the company vice-president; and the converted motel, which had been cited for fire and safety violations, was eventually demolished. Nonetheless, SFBC had become an astonishingly successful enterprise. Just a few years before the Bloomberg Markets report, Forbes had named SFBC one of the most admired small businesses in America. Virtually every major pharmaceutical company had tested drugs with the company. In fact, with 675 beds, the converted motel was the largest research facility in North America.

Note: see our relevant posts here on SFBC International, and on contract research organizations.

Moreover, such out-sourcing has produced the sort of race to the bottom described by Black, but this time involving one of the US most important health care institutions, academic health care:

the more important reason is money. In medical schools, faculty members are often expected to generate their own salaries, either by seeing patients or getting grants and contracts. Likewise, academic departments are often expected to be financially self-sufficient, with as little support as possible from central administration. 'Eat what you kill' is the phrase used, without irony, by medical school deans and department heads. And if you are not killing it with NIH grants, you probably need to be killing it with AstraZeneca or Pfizer.

This system has not been good for human subjects, but it has not been good for academic physicians either. According to a recent study of over 5,000 faculty members at U.S. medical schools, 51 percent of respondents said that the administration is only interested in me for the revenue I generate.' Thirty-one percent said that their institution discourages altruism; 27 percent said that it does not reward clinical excellence; and over half said that it does not value teaching. Nearly half of respondents were considering leaving their current jobs; almost a third were considering leaving academic medicine altogether. Asked if their values lined up with the medical schools where they worked, over half said no. And just in case you are wondering why these physicians are not standing outside the building with picket signs, protesting the injustice of the system, the survey offers another clue. Thirty percent of respondents agreed with the statement, 'I am reluctant to express my opinion for fear of negative consequences.' [This was from an abstract by Pololi L et al.  See our relevant post here.]

Of course, this survey does does not exactly match up with the happy propaganda disseminated by the media-relations offices at most medical schools. Instead, it offers a picture of alienated, demoralized physicians, unhappy in their jobs, pressed to work according to values that repel them in order to prop up an institution that views them primarily as instruments to generate profit. In this environment, contract research makes perfect sense. It may not require much intellectual work, but it pays the bills and keeps the authorities happy. And if medical schools don’t really value intellectual work anyway, that may well be enough.

So the pressures on medical school faculty are little different from those on corporate middle management.  Their only role is to make money, mainly so that the top leaders can become multi-millionaires, and woe unto them if they object.
Summary

What is missing in all this is any organized opposition to the race to the bottom. As long as top executives can make nearly unlimited money, as long as they can do so by making their subordinates put revenue ahead of all else, as long as there are no countervailing forces, the race to the bottom will continue.

To stop it, we need some combination of efforts by honest government regulators, professional and trade organizations, civil society organizations including non-profit organizations and NGOs that really care about patients' and the public's health, and finally an activated, and properly outraged public.

As long as we think that a laissez faire policy allowing continual market dysfunction to continue, the good times for executives will keep rolling, over all of the rest of us.

"Conspiracy Theory" Proven - Taking UCSF Private

Students and faculty at the University of California have come up with a vivid, and prescient example of how the hired executives and bureaucrats have taken over higher and health care education. 

"Run in the Interests of the Administration"

Two weeks ago, the Orange County Register reported:

Over the past few months, the University of California has raised undergraduate tuition by 18 percent, awarded raises of as much as 23 percent to a dozen high-ranking administrators and announced a possible 81 percent tuition increase over the next three years.

Students haven't taken the news well.

At campus rallies across the state, thousands of students and their faculty supporters have decried the actions, staging raucous rallies and 'Occupy'-style sit-ins that in some cases have ended in clashes with law enforcement. They've also descended en masse on UC regents' meetings, disrupting proceedings and even forcing officials to retreat to a private room.

Behind the angry chanting and acts of civil disobedience is a growing sense that the 10-campus UC system is no longer a public institution accessible to the middle class, but rather a sprawling bureaucracy of hospitals and auxiliary research institutions buffeted by an ever-expanding roster of administrators.

The problem, as the student activists see it, is that none of these functions translates directly into expanded course offerings or improved student-to-faculty ratios, even as their tuition dollars help sustain the system.

'The university is now being run in the interest of the administration,' said UC Irvine student activist Anne Kelly, a Ph.D. candidate in earth system science. 'They're promoting their own internal growth, asking us to sacrifice with higher tuition – but administrators have had raises.'

In higher education, as well as in health care education and in health care in general, the pattern is the same: rising costs without any obvious increase in quality or quantity of services. As in health care, however, the pain never seems to extend to administrators/ managers/ bureaucrats/ executives. Worse, as their numbers grow, these insiders seem to run organizations more for their own benefit, and less for the mission.

One Manager Per Faculty Member

Furthermore, UC faculty have data:

The students' growing frustration is fueled by UC employment data that show that almost three-fourths of UC's 152,500 employees last year were designated 'non-academic personnel,' according to an annual UC employment report.

In the report, UC characterizes the growth in its non-academic staff as the inevitable byproduct of 'an increasingly complex university system that 'requires greater professionalization of its staff, who must meet higher technical and competency standards.' Non-academic personnel includes everyone from custodians and food-service workers to accountants and plant operators. [The question begged is whether it was the managers and executives that caused this complexity - Ed.]

UC Davis horticulture researcher Richard Evans, who has independently analyzed UC personnel data, offered a different take on the data, publishing a tongue-in-cheek piece for UC faculty in 2010 entitled 'Soon every faculty member will have a personal senior manager: Is this a good way to spend money?'

'Data available from the UC Office of the President shows that there were 2.5 faculty members for each senior manager in the UC system in 1993,' Evans wrote in his piece. 'Now there are as many senior managers as faculty. Just think: Each professor could have his or her personal senior manager.'

In his analysis, Evans compared the number of UC employees classified as either 'senior management' or 'managers and senior professionals' with the number of tenure-track UC faculty members.

As of spring 2011, UC employed 8,144 senior managers, managers and senior professionals, and 8,521 tenure-track faculty members, according to the latest available UC data.

This pattern is similar to that seen in some data we discussed a long time ago about the ever rising numbers of administrators/ managers/ bureaucrats/ executives in health care.  In 1988, Alain Enthoven advocated in Theory and Practice of Managed Competition in Health Care Finance, a book published in the Netherlands, that to decrease health care costs it would be necessary to break up the "physicians' guild" and replace leadership by clinicians with leadership by managers (see 2006 post here). Thus from 1983 to 2000, the number of managers working in the US health care system grew 726%, while the number of physicians grew 39%, so the manager/physician ratio went from roughly one to six to one to one (see 2005 post here). Health care went from being controlled by clinicians to controlled by a growing volume of managers.  Most of these managers were generic, in that they had little if any knowledge of, experience in, or sympathy to the values of health care. These generic managers have used the same techniques advocated for the management of supermarkets or automobile manufacturers to manage health care organizations, despite all the obvious differences in context, goals, values, and people involved.

A "Conspiracy Theory" About the Privatization of the University

At the University of California, the Register reported that there is a "conspiracy theory" about the next step to increase the domination of the managers:

The salaries and size of UC's administrative staff, in particular, have fueled conspiracy theories among students and faculty that the system has deliberately sought to 'privatize' itself – in other words, to compete with private universities on all fronts, from the scope of its non-instructional programs to executive compensation to the amount of tuition that students pay.

Three years ago, the head of a UC faculty group advanced the privatization theory in a multi-part series called 'They Pledged Your Tuition.'

Of course, the administrators denied, sort of, anything so far-fetched:

For its part, UC denies all such allegations, saying that while the university has arguably become privatized, outside influences beyond its control are entirely to blame.

"It is not something we advocate, not something we want,' Klein said. But, 'he added, 'times have changed; the economic model has changed.'

Not Just a "Conspiracy Theory" - UCSF Chancellor Advocates Privatization

It only took two weeks, however, for the notion of administrators taking the university private to go from "conspiracy theory" to official plan. Yesterday, the San Francisco Chronicle reported,

UCSF Chancellor Susan Desmond-Hellmann told the regents, delicately, that she wants out.

Under her proposal, UCSF's medical school, hospital, clinics and research facilities would remain a public university connected to UC, the chancellor assured the regents. But the tendrils connecting the two entities should be thinner than they are today.

Desmond-Hellmann said she envisions a relationship like those of UC Hastings College of the Law, Lawrence Livermore National Laboratory and Lawrence Berkeley National Laboratory, which contract with UC for health and pension services. While ultimately accountable to the regents, they are autonomous with their own boards of directors.

Referring to 'alternative governance models' and 'examining UCSF's financial relationship with UC,' the chancellor and campus executives talked of their ambition to become the world's leading innovator in the health field - a goal better achieved, they hinted, without the rest of the university weighing it down.

To Health Care Renewal readers, that UCSF would be proposed as the first part of the University of California to privatize should not come as a shock. After all, Chancellor Desmond Hellmann came not from academia, but from the world of for-profit biotechnology. She was a former president for drug development for Genentech.

Two and one half years ago I suggested that "hiring a lavishly compensated top executive from a biotech firm known for its high drug prices to run a public health sciences university does considerably blur the line between academic medicine and the health care industry." Furthermore, three months ago I noted that Dr Desmond Hellmann seemed be advocating that the university's focus turn to product development, so that it would start to emulate a contract research organization. Now it appears that Dr Desmond Hellmann wants to traverse the line between government and the private sector, so that the organization could "make a ton of money," and "focus on spinning innovations into business deals," according to the San Francisco Chronicle.

What any of this has to do with the university's fundamental mission to discover and disseminate knowledge, and with this health care university's mission to take the best possible care of its patients is not clear.

Summary

Turning UCSF into a private, quasi contract research organization might conceivably yield some good research and drug development. Why a formerly academic organization would be better at this than a purpose-built CRO is hardly proven. Whether UCSF recast as a CRO would yield better research, leading to better patient outcomes than would have resulted if it continued as a state government sponsored health care university is also hardly proven.

Turning UCSF into a quasi CRO, however, would likely be very much in the self-interest of its administrators/ managers/ bureaucrats/ executives who would be freed from any constraints on their incomes, and the disclosure of same that were previously obligated by the messy representative democracy to which they formerly had to answer.

On the other hand, it is hard to conceive of how such a privatization would be good for students or patients. In fact, it is not the least bit clear why a medical, nursing, or other health professional student would want to study within what would basically be a contract research organization. It is also unclear whether patients seeking care from such an organization could trust it to put their interests, rather than the organization's revenue and the self-interest of its administrators/ managers/ bureaucrats/ executives first.

We are now a good 30+ years into our ill-fated American experiment about the effects of turning medicine commercial and making health care a commodity. So far, it has yielded the highest costs in the world, but declining access, mediocre quality, and demoralized professionals. Turning one of our once proud and  prestigious state government sponsored academic medical institutions into a private contract research organization would be a powerful symbol of our final national health care decline.

Let us hope that the students and faculty whose "conspiracy theory" about privatization proved true will now mount a more effective protest before UCSF falls into the muck.

Hospital Executives - What Will They Think of Next?

Health care organizations are now most often run by people with management, not clinical backgrounds.  It seems like business schools have taught managers to sign on to whatever the latest management fashions are.  So what are the latest fashions in hospital management?  Here are a few hot items.

Retreading Pharmaceutical Representatives

My jaundiced reading of the business news suggests that most executives think that marketing is the most important part of their organizations, and that clever marketing can sell any product or service. For example, the pharmaceutical industry spends about twice as much on marketing as it does on research and development (despite pharma executives' protestations that they run research driven businesses) (see this post). So it should be no surprise that now hospitals are using "hospital representatives" to market referrals to their institutions to doctors.

From last week's USA Today:

n northwest Indiana, Carrie Sota visits five or six doctors' offices every workday as part of her new sales job.

But Sota isn't selling the physicians on a prescription drug or a medical device. She's promoting her hospital — the University of Chicago Medical Center.

Sota, 30, is one of four employees the academic medical center has hired in recent months to make 'sales calls' on physicians in the hope that they will send more patients to the hospital. 'We are trying to build meaningful relationships,' said Sota, who was previously a saleswoman for a small medical device company.

The University of Chicago Medical Center is one of a growing number of hospitals nationwide hiring former drug and device sales reps to visit doctors' offices to persuade them to use their services over competing facilities.

Rather than handing out samples of prescription drugs, the sales reps call on doctors armed with the latest information on how their facility is reducing hospital-acquired infections and improving patient-satisfaction scores.

In visits that can last five to 20 minutes, reps try to win doctors' loyalty by helping them get better times on operating room schedules or easier patient referrals to hospital-based specialists. The sales reps can also carry messages back to the hospital, such as a doctor's request for a new medical device to be available in surgery.

The article suggested a few problems with this approach. First, the point of the marketing is not to improve the match between patients' needs and the services the hospital provides. Rather, it is to generate referrals that have the potential to provide the maximum revenue:

While hospitals have always tried to woo doctors to refer patients to them, the institutions are growing more direct in their efforts. The hospitals mine data to see which doctors have the most profitable, well-insured patients, and then they assign those doctors to a sales rep.

So in particular,

Many of the physician liaisons focus on specialists, who bring in patients for services with the highest profit margins, including orthopedics, cardiac care and cancer care, [Duke University Health System physician liaison manager Christine] Perry said.

Second, the hospital reps have incentives based on revenue, not on value to the patient:

About two-thirds of Tenet's liaisons are former drug and device sales reps, and they can make tens of thousands of dollars in bonuses if doctors increase their referrals to the hospitals.

Third, across the system, the revenues generated may be much less than the costs incurred, since most of the marketing will only succeed in moving patients from one hospital to another:

Paul Ginsburg, president of the non-partisan Center for Studying Health System Change, said, 'When you look at the health system, this is a waste of resources. It's a zero-sum game.'

He added: 'The net results of changing physician-referral patterns is that one hospital gains at a cost of others, and all the hospitals burn resources to pay (sales)people who take up the doctor's time.'

Of course, the reps could succeed in persuading doctors to refer patients to specific hospitals for services the doctors originally did not think the patients needed. That would be good were the patients to need those services, but bad if they were not.
Fourth, we have discussed (for example, here and here) how pharmaceutical representatives use sophisticated psychological and emotional manipulation, despite claims that all they do is provide unbiased information and educational, to influence physicians to prescribe drugs. Again, this may result in patients getting drugs whose benefits do not outweigh their harms. It is possible that hospital representatives will do something similar:

'These people are really good and really assertive and very sophisticated,' said Stephen Newman, Tenet's chief operating officer.

Unbundling Payments

The airlines decided a while ago that they could make more money by charging passengers for each checked bag, and even for those little meals on plastic trays. It looks like hospital executives have discovered a new way to unbundle.

As reported last month by the St Louis Post-Dispatch, hospitals have begun charging often hefty "facility fees" for patients seen as outpatients in hospital clinics or hospital owned practices, even for very minor procedures or just office visits, and even for Medicare patients. (Private physicians who see patients in their own offices cannot charge such fees to Medicare patients, and most private insurance companies will not cover such fees.):

A few weeks after Allison Zaromb took her 4-year-old son Meir to see a dermatologist in an outpatient office at the SSM Cardinal Glennon Children's Medical Center campus, she received separate bills from the doctor and the hospital.

The cost for a 3-minute procedure to treat Meir's warts totaled $538, which included a $220 bill for physician services - and a separate bill for a $318 hospital 'facility fee.'

Zaromb, a periodontist who lives in University City, is now suing SSM Health Care Corp. and Cardinal Glennon Children's Medical Center in a proposed class action lawsuit on behalf of other patients

More generally,

With the proliferation of hospital-owned outpatient centers and hospital-owned physician practices, hospital 'facility fees' have become increasingly common. Such hospital facility fees often involve greater dollar amounts than the fees charged by physicians.

Technically, it all appears to be legal:

Under federal regulations, health systems are permitted to charge a hospital facility fee for an outpatient service if it's done in a clinic that is 'hospital-based' - meaning that the clinic is owned and operated as part of a hospital or health system, regardless of whether the clinic is physically located on the hospital grounds.

This technique does seem to be a way to increase revenue. But one person's revenue is another person's cost, so it also seems to be a great way to further increase the already high cost of US health care. It is not obvious, however, that these increased costs will lead to increased quality of care or value for the patient:

'From a consumer's perspective, when you go see your doctor, you go see your doctor - whether it's in an office inside a larger hospital complex or right across the street,' [Zaromb's lawyer John] Phillips said. 'The doctor's practice remains the same. ... They're making the doctor's office a ‘hospital-based' clinic for one reason: to make money by charging a facility fee, not to improve consumer service.'

Negotiating the Costs of Medical Devices

One of the favorite topics on Health Care Renewal, at least before we found even more outrageous subjects, was the stratospheric cost of medical devices. For example, look at posts from 2005 here, here, here, and here. So last month we found out that hospital executives have come up with a revolutionary idea to combat the high cost of devices. They will actually try to see what prices the device companies charge other hospitals, and then negotiate the prices down, as Reuters reported as big news in late November:

Implantable devices make up a sizable chunk of typical hospital budgets, and administrators are devising new ways to limit that cost as they brace for cuts to government reimbursement and treat more patients who can't pay for care.

That means methodically working through each category of device, from heart valve replacements and stents to spinal products, to see where they can negotiate lower prices. It also means creating databases of shared information on pricing between hospitals.

Imagine that! Of course, the notion that buyers ought to bargain with sellers to get the best price goes back a few years. However, only in 2011 did it apparently occur to hospital executives that they ought to negotiate the prices of one their most expensive purchases. This suggests that there has been something profoundly wrong with the basic assumptions underlying the commonly accepted wisdom that making the health care system more of a market will lead to more financially efficient care. 

Summary

In 1988, Alain Enthoven advocated in Theory and Practice of Managed Competition in Health Care Finance, a book published in the Netherlands, that to decrease health care costs it would be necessary to break up the "physicians' guild" and replace leadership by clinicians with leadership by managers (see 2006 post here). Thus from 1983 to 2000, the number of managers working in the US health care system grew 726%, while the number of physicians grew 39%, so the manager/physician ratio went from roughly one to six to one to one (see 2005 post here). Health care went from being controlled by clinicians to controlled by a growing volume of managers.  Most of these managers were generic, in that they had little if any knowledge of, experience in, or sympathy to the values of health care. These generic managers have used the same techniques advocated for the management of supermarkets or automobile manufacturers to manage health care organizations, despite all the obvious differences in context, goals, values, and people involved.

So these generic managers have brought us such "innovations" as the "hospital (marketing) representative," and the "facility fee" for outpatient visits, but only thought to negotiate device prices in 2011. But that is why we pay them the big bucks.

How many more arguments do we need that health care organizations ought to be lead by people who understand the health care context, share its core values, and are accountable for how these organizations affect patients' and the public's health?