Plan For Your Retirement by Rejuvenating your Dental Practice

Retirement is supposed to be a time to kick back and unload the stresses of your career. But if you're not prepared with an exit strategy, selling your dental practice can give you enough stress to last you for a good long while. Here are a few tips to help you ready your practice for the time you're ready to sell and maximize the sale price.
Consult with a dental broker now.
Even if you aren't planning to sell in the near future it's never too early to start preparing. A dental practice brokerage firm like ADS Transitions can advise you on steps to take 10 years before the sale. This might include planning major changes like switching to paperless and making large equipment purchases. Brokers are constantly looking at what the market is doing and working with banks so they can greatly streamline your sales process and help you be ready with confidence when you give the word to list.
Build up clientele.
Remember that your patients are your bread and butter. Building up a strong client base will not only make you more money, it will make your practice more attractive to potential buyers. People tend to stay put when they find a dentist they like. So even when you transition out, they're likely to give your replacement a shot at keeping their business. Put some effort into building client loyalty by giving incentives your replacement can easily keep up. Consider partnering with other dentists if you still have a few years before retirement. This will not only allow you to pool your resources. Oak Park Dental offers gift cards for referring new patients. You could also build a reciprocal referral network with other doctors in your area. This will help maintain continuity through your transition, which will be a nice perk for a buyer.
Simplify and Update.
The more up-to-date you can get your office, the more you'll be able to list it for. It tells buyers they won't have to invest in huge upgrades soon after the sale. Make sure they're sensible upgrades that will be useful for the average dentist. Dr. Elena Puig, of Dynamic Smile Design in Orlando,FL, over her career has become certified in dental Implants, Invisalign, and other services that require intensive specialized training. That's great for an established dentist, but if a large percentage of your assets and clientele revolve around these kinds of services, you may find it difficult to show value to buyers who don't yet have the certification to provide those services. Before you list your practice, begin emphasizing your more basic services so they will account for the bulk of your income.

Pfizer's 13th Legal Settlement - Will it be Enough to End the Impunity?

It has been almost two months since we lasted noted misbehavior by giant global pharmaceutical firm Pfizer Inc. With little fanfare, however, a few small news items noted the corporation's latest legal settlements.

Deceptive Marketing of Protonix

The first settlement merited only a few paragraphs from Reuters.  The gist was:

Pfizer Inc will pay $55 million plus interest to settle charges that Wyeth promoted its acid reflux drug Protonix for unapproved uses and made unproven claims about the medicine, the U.S. Department of Justice said on Wednesday. 

The infractions took place between February 2000 and June 2001, long before the world's largest drugmaker acquired Wyeth in 2009 for $68 billion.

A report in the examiner explained that Wyeth did not merely go beyond the label in promoting Protonix, it went beyond the evidence.

Wyeth allegedly promoted Protonix as the 'best PPI for nighttime heartburn' even though there was never any clinical evidence that Protonix was more effective than any other PPI for nighttime heartburn. 

Furthermore, the charges were that systemic efforts to mislead were sanctioned by top management:

 The allegations in the complaint are that this superiority slogan was formulated at the highest levels of the company. Wyeth retained an outside market research firm, at the cost of tens of thousands of dollars, to ensure that sales representatives delivered that misleading superiority message.

Finally, the government asserted that Wyeth corrupted physicians' continuing medical education in the process:


Finally, the government alleges that Wyeth used continuing medical education (CME) programs to promote Protonix for unapproved uses. CME programs are sponsored by accredited independent providers, such as universities, nonprofit organizations, or specialty societies. Pharmaceutical companies are permitted to provide financial support for CME programs, but they are not permitted to use CME programs as promotional vehicles for off-label indications.

According to the complaint, Wyeth spent millions of dollars providing 'unrestricted educational grants' to CME providers, and these grants invariably included promises that Wyeth would not attempt to influence the content of the program in any way. Nevertheless, the government alleges that one of Wyeth’s core marketing tactics for Protonix was to use CME programs to drive off-label use of the drug. According to the complaint, the Protonix 'brand team' influenced virtually every aspect of these CME programs: program topics, speaker selection, organization, and content. In addition, the government alleges that Wyeth even insisted that the CME program materials use the same color and appearance as Protonix promotional materials–a tactic that Wyeth and the vendor called 'branducation.'

So it seemed that the company put on quite an effort to promote what we have called elsewhere pseudo-evidence based medicine, yet, like many other legal settlements involving large health care organizations, this one involved no penalties of any type against the people within the organization who authorized, directed, or implemented the bad behavior. 

 Misleading Marketing of Zyvox, Lyrica 

Another settlement, for a few dollars less, got even less attention.  Fox Business news did report this:

 Pfizer Inc. (PFE) agreed to pay a combined $42.9 million to North Carolina and 32 other states in a settlement of allegations that the drug maker used unfair and deceptive practices in the marketing of antibiotic Zyvox and nerve-pain medicine Lyrica.

I could find no detail about the sorts of deception allegedly involved in the news media.  What little more Fox provided did suggest that this case also involved pitching drugs in instances in which their use was unsupported by good evidence:

The states had alleged that Pfizer had marketed Zyvox as superior to another antibiotic in fighting certain types of infections, though there allegedly wasn't substantial evidence to support superior results for some uses that Pfizer claimed.

The states also alleged that Pfizer marketed Lyrica for some off-label, or unapproved, uses.
There was no hint that again any individual would suffer any negative consequences for this particular set of deceits either.

Avoiding Impunity as a Topic of Polite Discussion

We have discussed a seemingly endless parade of legal settlements by large health care organizations.  In almost none was there any consequence beyond a fine paid by the company, and sometimes a pledge that the company would thereafter behave better.  While these relatively small costs were diffused throughout the organizations, almost never did the people who authorized, directed, or implemented the bad behavior pay any price or suffer any penalty.  Thus we have opined again and again (e.g., most recently here) that these settlements have become just another cost of doing business, and have no power to deter future bad behavior.
In addition, we have noted not only have multiple organizations made such settlements, some organizations have settled again and again.  Yet even in the cases of these multiple organizational offenders, the individuals involved maintain their immunity from any negative consequences.  Thus these are examples of impunity.  
Transparency International declared 23 November, 2012, as the International Day to End Impunity, explained as follows:
At Transparency International we view impunity as getting away with bending the law, beating the system or escaping punishment. Impunity is anathema to the fight against corruption.

However, impunity is one of those concepts which never seems to be a subject of polite conversation in health care, or, as we say, it has become anechoic.  

Therefore, it is fascinating that while these two Pfizer settlements were announced almost simultaneously, each was discussed, such as it was, as if it occurred in a vacuum.  Moreover, it also seems that each settlement was crafted by law enforcers without any attention to the record of the company making the settlement.  Thus, any implications about impunity were avoided.

Pfizer's Multiple Ethical Opfenses

In fact, during the time we have been posting on Health Care Renewal, Pfizer has become one of the great repeat ethical offenders in the health care arena.  Its track record since the beginning of the 21st century, (with yello colored background below, compiled from this post), is remarkable.

In the beginning of the 21st century, according to the Philadelphia Inquirer, Pfizer made three major settlements,
October 2002: Pfizer and subsidiaries Warner-Lambert and Parke-Davis agreed to pay $49 million to settle allegations that the company fraudulently avoided paying fully rebates owed to the state and federal governments under the national Medicaid Rebate program for the cholesterol-lowering drug Lipitor.
May 2004: Pfizer agreed to pay $430 million to settle DOJ claims involving the off-label promotion of the epilepsy drug Neurontin by subsidiary Warner-Lambert. The promotions included flying doctors to lavish resorts and paying them hefty speakers' fees to tout the drug. The company said the activity took place years before it bought Warner-Lambert in 2000.
April 2007: Pfizer agreed to pay $34.7 million in fines to settle Department of Justice allegations that it improperly promoted the human growth hormone product Genotropin. The drugmaker's Pharmacia & Upjohn Co. subsidiary pleaded guilty to offering a kickback to a pharmacy-benefits manager to sell more of the drug.

Thereafter, Pfizer paid a $2.3 billion settlement in 2009 of civil and criminal allegations and a Pfizer subsidiary entered a guilty plea to charges it violated federal law regarding its marketing of Bextra (see post here).  Pfizer was involved in two other major cases from then to early 2010, including one in which a jury found the company guilty of violating the RICO (racketeer-influenced corrupt organization) statute (see post here).  The company was listed as one of the pharmaceutical "big four" companies in terms of defrauding the government (see post here).  Pfizer's Pharmacia subsidiary settled allegations that it inflated drugs costs paid by New York in early 2011 (see post here).   In March, 2011, a settlement was announced in a long-running class action case which involved allegations that another Pfizer subsidiary had exposed many people to asbestos (see this story in Bloomberg).  In October, 2011, Pfizer settled allegations that it illegally marketed bladder control drug Detrol (see this post). Finally, in August, 2012, Pfizer settled allegations that its subsidiaries bribed foreign (that is, with respect to the US) government officials, including government-employed doctors (see this post). 

By my count, the two current settlements would be numbers twelve and thirteen.  Of course, while I believe this list is accurate, it may be incomplete.

Since none of these posts involved any negative consequences for any individuals who authorized, directed, or implemented the bad behavior, or who profited from it, and none involved any changed in the leadership or organization of the company, this becomes an amazing record of the impunity of Pfizer leadership over time and space. 
Will Impunity Finally Lead to Outrage?

Impunity, though, is a concept that is beginning to command some attention.

The Brasilia Declaration which was published at the conclusion of the 15th International Anti-Corruption Conference (hosted by Transparency International) included:
it is clear we all face a common challenge in our work: impunity for those who abuse positions of power. 
If impunity is not stopped, we risk the dissolution of the very fabric of society and the rule of law, our trust in our politics and our hope for social justice.

Activists, businesspeople, politicians, public officials, journalists, academics, youth and citizens who gathered in Brasilia to discuss the threat of corruption made it clear that impunity undermines integrity everywhere.

Whether we are investing collective efforts and resources in fighting poverty, human rights violations, climate change or bailing out indebted economies, we need to give the people a reason to believe that impunity will be stopped.

While the two latest Pfizer settlements barely got media coverage, maybe a $1.9 billion dollar settlement in the US by international banking giant will get more attention.  The charges in this case were not merely deceiving some doctors and patients about drug efficacy and safety.  The company was accused of aiding money laundering by drug cartels, and facilitating rogue regimes get around international sanctions.  As the New York Times reported,

State and federal authorities decided against indicting HSBC in a money-laundering case over concerns that criminal charges could jeopardize one of the world’s largest banks and ultimately destabilize the global financial system.

Instead, HSBC announced on Tuesday that it had agreed to a record $1.92 billion settlement with authorities. The bank, which is based in Britain, faces accusations that it transferred billions of dollars for nations like Iran and enabled Mexican drug cartels to move money illegally through its American subsidiaries.

Unlike Pfizer's slow-motion impunity, this example got attention.  The Los Angeles Times noted,

The massive penalty still was not enough to appease some critics. No bank executives were charged as part of the investigation, leading some analysts to question the government's willingness to hold powerful Wall Street firms accountable.

'It's mind-boggling how they think you can have a financial system and allow this kind of impunity,' said William Black, a former banking regulator who aided federal prosecutors during the savings and loan crisis of the 1980s and 1990s. HSBC 'put the world at enormous risk.'

A NY Times editorial opened,

It is a dark day for the rule of law.   Federal and state authorities have not to indict HSBC, the London-based bank, on charges of vast and prolonged money laundering, for fear that criminal prosecution would topple the bank and, in the process, endanger the financial system.  They have also not charged any top HSBC banker in the case, though it boggles the mind that a bank could launder money as HSBC did without anyone in a position of authority making culpable decisions.

Clearly, the government has bought into the notion that too big to fail is too big to jail.  When prosecutors choose not to prosecute to the full extent of the law in a case as egregious as this, the law itself is diminished.  The deterrence that comes from the threat of criminal prosecution is weakened, if not lost.

So maybe this huge financial case will prove to be the straw that breaks impunity's back.  So I will close by quoting the end of the Brasilia Declaration, in the hope that a few people will take it to heart in the context of health care, as well as in finance.


To take this important struggle forward the international anti-corruption community should promote greater people engagement and find ways to provide greater security for anti-corruption activists.

Reducing impunity also requires independent and well-resourced judiciaries that are accountable to the people they serve.

We call on leaders everywhere to embrace not only transparency in public life but a culture of transparency leading to a participatory society in which leaders are accountable.

We call on the anti-corruption movement to support and protect the activists, whistleblowers and journalists who speak out against corruption, often at great risk.

It is up to all of us in government, business and society to embrace transparency so that it ensures full participation of all people, bringing us together to send a clear message: We are watching those who act with impunity and we will not let them get away with it.

Pennsylvania Patient Safety Authority: The Role of the Electronic Health Record in Patient Safety Events

The Pennsylvania Patient Safety Authority has released a report "The Role of the Electronic Health Record in Patient Safety Events."  A press release is at this link, and the full report in PDF is at this link.  In the report, the Pennsylvania Patient Safety Authority analyzed reports of EHR-related events from a state database of reported medical errors and identified several major themes.

The report was prepared with the assistance of Erin Sparnon, Senior Patient Safety Analyst the ECRI Institute near Philadelphia.  The ECRI Institute is an independent organization renowned for its safety testing of medical technologies and reporting on same, and that "researches the best approaches to improving the safety, quality, and cost-effectiveness of patient care."  I've mentioned it and its bylaws in this blog in the past as a model for independent, unbiased testing and reporting of healthcare techonlogies.

Regarding the Patient Safety Authority:


The Pennsylvania Patient Safety Authority was established under Act 13 of 2002, the Medical Care Availability and Reduction of Error ("Mcare") Act, as an independent state agency. It operates under an 11-member Board of Directors, six appointed by the Governor and four appointed by the Senate and House leadership. The eleventh member is a physician appointed by the Governor as Board Chair.  Current membership includes three physicians, three attorneys, three nurses, a pharmacist and a non-healthcare worker.

The Authority is charged with taking steps to reduce and eliminate medical errors by identifying problems and recommending solutions that promote patient safety in hospitals, ambulatory surgical facilities, birthing centers and certain abortion facilities. Under Act 13 of 2002, these facilities  must report what the Act defines as "Serious Events" and "Incidents" to the Authority.

The Authority maintains a database of serious events and incidents:

Consistent with Act 13 of 2002, the Authority developed the Pennsylvania Patient Safety Reporting System (PA-PSRS, pronounced "PAY-sirs"), a confidential web-based system that both receives and analyzes reports of what the Act calls Serious Events (actual occurrences) and Incidents (so-called "near-misses").

Cutting right to the chase, the paper's summary:

As adoption of health information technology solutions like electronic health records (EHRs) has increased across the United States, increasing attention is being paid to the safety and risk profile of these technologies. However, several groups have called out a lack of available safety data as a major challenge to assessing EHR safety, and this study was performed to inform the field about the types of EHR-related errors and problems reported to the Pennsylvania Patient Safety Authority and to serve as a basis for further study. Authority analysts queried the Pennsylvania Patient Safety Reporting System for reports related to EHR technologies and performed an exploratory analysis of 3,099 reports using a previously published classification structure specific to health information technology. The majority of EHR-related reports involved errors in human data entry, such as entry of “wrong” data or the failure to enter data, and a few reports indicated technical failures on the part of the EHR system. This may reflect the clinical mindset of frontline caregivers who report events to the Authority.

Results:

... Reported events were categorized by their reporter-selected harm score (see Table 1). Of the 3,099 EHR-related events, 2,763 (89%) were reported as “event, no harm” (e.g., an error did occur but there was no adverse outcome for the patient) [a risk best avoided to start with, because luck runs out eventually - ed.], and 320 (10%) were reported as “unsafe conditions,” which did not result in a harmful event. Fifteen reports involved temporary harm to the patient due to the following: entering wrong medication data (n = 6), administering the wrong medication (n = 3), ignoring a documented allergy (n = 2), failure to enter lab tests (n = 2), and failure to document (n = 2). Only one event report, related to a failure to properly document an allergy, involved significant harm.

A significant "study limitations" section was included that addressed: 

  • Issues regarding reporting statutes of the PA-PSRS errors database; 
  • lack of awareness of EHRs as a potential contributing factor to an error;
  • limitations of narrative reporting affecting both the types of reports queried and the tags applied (the study used textual data mining methodolgies);
  • query design of the study; and
  • the need for further refinement of the machine learning tool used in creating the working dataset, which may have missed relevant cases.

Some of these impediments to knowing the magnitude of extant HIT issues are also present in the 2008 Joint Commission Sentinel Events Alert on HIT, the 2010 FDA internal memorandum on HIT Safety, and the 2011 IOM report on the same topic.

(The IOM report specifically observed that the "barriers to generating evidence pose unacceptable risks to safety.") 

The major obstacle to this study in my view, though, was the nature of the dataset.  The database is for general reporting of medical errors, and it contains no specific fields or reminders about EHRs or the known ways in which they can contribute to, or cause, medical mistakes.  

The attempt was made, as acknowledged in the study, to glean information about EHR-related events from, in large part, textual analysis of narrative in the hopes that the reporter recognized the role of IT, and reported it using terms that could be detected by the search algorithms.  In other words, the data was not "purposed" for this type of study.  

It is axiomatic that one cannot find data that is simply not present, no matter how fancy the search algorithm.  Further, passive analysis of clinical IT risk/harms data in an industry where lack of knowledge of causation and misconceptions abound will produce only partial results that suggest further study is needed, and not give an indicator of just how incomplete the results are.

Thus, this cautionary statement was made in the new PA Patient Safety Authority report:

"Although the vast majority of EHR-related reports did not document actual harm to the patient, analysts believe that further study of EHR-related near misses and close calls is warranted as a proactive measure." 

My comments:

The report is welcome.

The most important part of the paper, I point out, is the “Limitations” section. FDA, IOM and others have made similar observations – we don’t know the true magnitude of the problem due to systematic limitations of the available data. 

Therefore, at best what is available must be deemed as risk management-relevant case reports, a “red flag” that could represent (using the words of FDA CDRH director Jeffrey Shuren regarding HIT safety), the tip of the iceberg.

It is imperative far more work be done in post-market surveillance as this technology is deployed nationally and internationally.  This is to ensure that good health IT (GHIT) prevails and bad health IT (BHIT) is either remediated or removed from the marketplace.  I had defined those in other writings as follows:

Good Health IT ("GHIT") is defined as IT that provides a good user experience, enhances cognitive function, puts essential information as effortlessly as possible into the physician’s hands, keeps eHealthinformation secure, protects patient privacy and facilitates better practice of medicine and better outcomes. 

Bad Health IT ("BHIT") is defined as IT that is ill-suited to purpose, hard to use, unreliable, loses data or provides incorrect data, causes cognitive overload, slows rather than facilitates users, lacks appropriate alerts, creates the need for hypervigilance (i.e., towards avoiding IT-related mishaps) that increases stress, is lacking in security, compromises patient privacy or otherwise demonstrates suboptimal design and/or implementation. 

An additional major factor that also contributes to lack of knowledge of EHR-related adverse events is hospital reporting non-compliance. For instance, I know of cases from my own legal consulting work and personal experience that I would have expected to appear in the database, but apparently do not.

But don’t take it from me alone. Here is PA Patient Safety Authority Board Member Cliff Rieders, Esq. on this.

From “Hospitals Are Not Reporting Errors as Required by Law, Phila. Inquirer”, pg. 4,http://articles.philly.com/2008-09-12/news/24991423_1_report-medical-mistakes-new-jersey-hospital-association-medication-safety:
  

... Hospitals don’t report serious events if patients have been warned of the possibility of them in consent forms, said Clifford Rieders, a trial lawyer and member of the Patient Safety Authority’s board.

He said he thought one reason many hospitals don’t want to report serious events is that the law also requires that patients be informed in writing within a week of such problems. So, if a hospital doesn’t report a problem, it doesn’t have to send the patient that letter. [Thus reducing risk of litigation, and, incidentally, potentially infringing on patients' rights to legal recourse - ed.]

Rieders says the agency has allowed hospitals to determine for themselves what constitutes a serious event and the agency has failed to come up with a solid definition in six years.

Fixing this “is not a priority,” he added.

This coincides with my own personal experience precisely.  In a case where my relative was permanently injured as a result of EHR-related medication error, and then died of the injuries, I never received the required report in writing from the hospital.  I also do not believe the case was reported to the Safety Authority, at least not as IT-related.

I suspect the true rates of EHR-related close calls, reversible injuries, permanent injuries and deaths is significantly higher than the limited data available suggests. That data is merely a red flag that much more education, stringent reporting requirements,  templates of known causes of error, and enforcement are needed.  (An April 2010  "thought experiment" on this issue I wrote about at "If The Benefits Of Healthcare IT Can Be Guesstimated, So Can And Should The Dangers" certainly suggested as much.)

Slides where I made those types of recommendations to the Patient Safety Authority, at a presentation I gave in July 2012 at their invitation, are at http://www.ischool.drexel.edu/faculty/ssilverstein/PA_patient_safety_Jul2012.ppt

A major concern I have is that the HIT industry will use this new report in a manner that ignores its limitations.

(Disclosure: I was an invited reviewer of this new PPSA report.)

-- SS 

Addendum Dec. 13:   

Also worth review is "Patient Safety Problems Associated with Heathcare Information Technology: an Analysis of Adverse Events Reported to the US Food and Drug Administration", Magrabi, Ong, Runciman, and Coiera, AMIA Annu Symp Proc. 2011.  

Data here came from FDA's voluntary (i.e., also tip of the iceberg) Manufacturer and User Facility Device Experience (MAUDE) database.  Ironically, the study was done in Australia using Australian grant funds.

-- SS

Health Care Hired Managers Not Playing by the Same Rules - the Example of Lancaster General Health

That all people in the US do not play by the same rules, and that more specifically the richest people do not play by the same rules as the somewhat or a lot less rich, became a topic of discussion after the 2008 global financial collapse/ great recession.  A powerful discussion of this theme appeared in Predator Nation, the book by Charles Ferguson that followed his award winning documentary, Inside Job:

Ponder the toxic effects of too much wealth, too much power, the new culture of American investment banking, and a life conducted within the cocoon of America's new oligarchy. [p 112]

He focused on the culture of finance, but as we have seen, this culture has overlapped the culture of health care.  Thus we have shown multiple examples of those who have become rich due to their positions in health care, almost always positions as high-ranking hired managers of health care organizations.  They get paid according to different rules than apply to other hired employees, and live by different rules than their less-favored fellow employees, again by virtue of their positions.

Some of these examples were of CEOs of huge, for-profit health care corporations,  However, we have increasingly seen hired managers of moderate size non-profit organizations who also appear to play by different rules than their fellow employees.

The Executives of Lancaster General Health

The latest example appeared through reporting found in LancasterOnline, the web presence of several newspapers in Lancaster, Pennsylvania, about a regional community health care system, Lancaster General Health.  The system includes one major hospital, Lancaster General, an obstetrics hospital, and a variety of satellites and out-patient facilities.    

The system was facing challenges in 2010:

In 2010, times were getting tougher for Lancaster General Health.

The mammoth [sic] health care system would notch record revenues of nearly $1 billion that year. But its annual surplus fell for the fourth straight year. Though destitute by no means, galloping expenses and uncertainty in the marketplace were hammering LGH's business model, prompting changes. Two units were closed, some positions were eliminated, and 170 employees were reassigned.

However, despite these difficulties,

Two executives — CEO Tom Beeman, who was on military leave part of the year, and Executive Vice President Jan Bergen, who helped fill in for Beeman in his absence — earned more than $1 million in total compensation; another six got at least $500,000.

And those top 21 executives collectively received more than $2 million in bonuses and incentives.

That lavish total compensation included "perks" that were likely not furnished to lesser employees, for example


The IRS form lists few explicit perks, save one: LGH paid $1,044 in social club dues for Beeman in 2010.

Said Regina Mingle, LGH's executive vice president of human resources: 'In this community, if you need to do business, you do it at the Hamilton Club or Lancaster Country Club. We decided ... we would pay those fees.'
It seems doubtful, however, that any other employees who felt that they did "business" at country clubs or similar establishments were entitled to subsidized dues.

This relatively lavish pay was part of a pattern.  Executive compensation had been increasing out of proportion to any obvious benchmark for a while.

 In fiscal year 2005-06, CEO Tom Beeman earned a comparatively modest total compensation of $646,094. By 2010, that had more than doubled, to $1.35 million. That figure included a base compensation of $606,728, along with $345,000 in bonuses and incentives and $279,511 in retirement and other deferred compensation.

Bergen, who along with Executive Vice President Marion A. McGowan took on some of Beeman's duties when he left in October 2010 for a nine-month military leave of absence, saw her compensation rise from $332,823 in 2005-06 to a total of $1.1 million in 2010. The latter figure included $425,967 in base pay, $177,752 in bonuses and incentives, $111,383 in retirement and other deferred compensation, and $320,208 in what the IRS calls 'other reportable compensation' such as employee contributions to 401(k) or 403(b) retirement plans.

The third highest-paid LGH executive in 2010 was McGowan, whose compensation package totaled $772,978, including $456,789 in base pay and $192,226 in bonuses and incentives. Fourth on the list was 
Dr. Lee M. Duke II, senior vice president and chief physician executive, whose compensation totaled $746,830, including $405,083 in base pay and $140,377 in bonuses and incentives.

Fifth was Chief Financial Officer F. Joseph Byorick Sr., whose total compensation of $652,667 included $397,160 in base pay and $140,500 in bonuses and incentives.

So note that CEO Beeman's compensation was for less than one full year's worth of work.  His annualized rate would have been even more.

A companion article noted that part of CEO Beeman's bonus for 2010 was justified by his efforts to keep in touch with the institution while he was physically not present, and was, in fact off-site for an extended period fulfilling a military reserve commitment

 In October 2010, Lancaster General Health had a problem.

Its CEO, Tom Beeman, was shipping out for a military tour of duty, to serve as deputy director of the National Intrepid Center of Excellence in Bethesda, Md. Two other administrators —  Executive Vice Presidents Jan Bergen and Marion W. McGowan — would step into Beeman's shoes while he was away.

Yet Beeman stayed involved. 'We had regular Skype [video-conferencing] calls,' said Alex Henderson, chairman of the LGH Board of Trustees.

That, LGH officials believed, merited a bonus. So Beeman got nearly $90,000 for his efforts in absentia.

Note that this verified that Beeman got more than $1 million in compensation despite not having worked a whole year, since it was necessary for two other executives to take over his work.

Furthermore, while US law does mandate employers to re-hire employees who take leaves to fulfill military reserve commitments (look here),  I suspect that very few employers pay employees anything while they are away (although reservists are certainly paid by the government for their reserve duty).  However, Beeman got a bonus merely for keeping in touch while he was away doing another job.  I further suspect it is extremely unusual to pay an employee a bonus for trying to keep in touch during his or her military service.

So the reporting on compensation given to top hired managers at Lancaster General emphasized that executive pay is set using very different rules than are used to set the pay of other employees.

The Talking Points Reappear as Justifications for Exceptional Compensation of Hired Managers

Furthermore, the justifications made for the Lancaster General top executives' large compensation packages echoed talking points used to support such largess for top hired managers in other health care settings, but did not explain why hired managers merit exceptional treatment.   We first listed the talking points here, and then provided additional examples of their use here, and here.   The talking points are:
-  we pay what everyone else pays
-  CEOs work hard and are brilliant, and so deserve high pay
-  high pay is needed to attract and retain competent, if not brilliant people.

None of the examples of these talking points we have seen so far explain why these apply to CEOs and other top hired managers, but not to other kinds of employees.  .

We Pay What Everyone Else Pays

A third article in the LancasterOnline series noted that executive compensation was based on information on what everyone else pays,

nonprofits must hire consultants to study how similarly sized nonprofits pay their executives.

LGH's consultant is a firm called Mercer, headquartered in New York City with an office in Philadelphia. Charlie Scott, of Mercer, has in recent years helped LGH determine what to pay its highest-compensated executives.

 'Our role is to be [an] independent source of market norms,' said Scott, determining 'levels of compensation available in the market for executive positions, as well as how compensation is paid.

This is an interesting variant of this talking point, because it essentially blames the reasoning on the Internal Revenue Service.  The article did not explain how Mercer determined the extent of the appropriate market, nor how it obtained a representative sample of data about that market.

CEOs Work Hard and Are Brilliant, and So Deserve High Pay

High Pay is Needed to Attract and Retain Competent, if not Brilliant People

These justifications are often combined.  In the case of Lancaster General, the examples included

At LGH, officials say the generous compensation is necessary to attract and retain the top talent. Said Lancaster attorney Alex Henderson III, chairman of the Lancaster General Health board of trustees and its compensation committee, which decides what to pay top execs: 'Demand for top-notch hospital executives has grown, and we have to respond to that.'

'We're not looking to be average.'

I seriously doubt that the hospital system is committed to "generous" pay to get "top talent" for all of its job openings.  Again, I doubt the generosity includes full pay for leaves taken for military service, or, for that matter country club dues.

Another version was offered by the chair of the system's board of trustees:

 Trustee Henderson said that as LGH's goal isn't to maximize revenue but save lives, executives can be doing a fantastic job — worthy of six-figure bonus and incentive pay — even when the system's financial performance slips.

Consider an executive who devises a way to shorten stays for patients, Henderson said: 'That's great for the patients, for insurance companies, for nurses who don't have to take care of people who don't need to be here' — but it's bad for LGH's bottom line.

Left out of the first part of the statement was how one could attribute lives saved to the work of a hired manager, especially, as in the case of CEO Beeman, a manager with no direct experience caring for patients.  Mr Beeman's official hospital bio listed this educational background,

Prior to joining Lancaster General Health, he served at Saint Thomas Health Services as its President and Chief Executive Officer, and the Senior Vice President for Hospital Operations and Executive Director of the Hospital of the University of Pennsylvania.

It did not include any former positions that would have involved direct patient care. 

Health care actually does not save lives that often, but hopefully does often ameliorate disease and injury, reduce suffering and improve function.  However, the people who actually directly accomplish this are health care professionals, nurses, doctors, therapists, etc, not managers who sit in offices.  

I will merely note that Mr Henderson's second example apparently was theoretical.  There was no example given of an executive who actually did shorten length of stay.  

In a third article in the LancasterOnline series, the compensation consultant employed by Lancaster General Health reiterated the argument that one must pay top dollar for scarce managerial talent:
[Mercer consultant Charlie] Scott said that the law of supply and demand that applies 'to any type of talent pool applies to health care executives. There's normally a lack of supply of what's considered blue-chip talent ... [and] the increasing complexity of the health care industry requires an increasing level of talent and capability.'

Note that no one who defended the compensation given to CEO Beeman or other top managers provided evidence that they are "top" or "blue chip" talent, or that they, rather than the health care professionals who work at or for the system save lives.

Summary

In our last US election campaign season, a few candidates pledged to level the playing field so that rich and poor would play by the same rules.  Other candidates scoffed at the importance of the problem, or called its invocation class warfare.  Meanwhile, in health care, we just accumulate more examples that different people play by different rules.

So we have yet another particular example of how top hired managers, particularly CEOs, of even modestly sized, non-profit health care organizations get to play by different rules than those affecting other employees, and other people who work in health care.  As in previous cases, the justifications provided for these different rules were basically a repeat of poorly conceived arguments that have been cited often by defenders of executive exceptionalism. 

The "we pay what everyone else pays" is basically an appeal to common practice fallacy.  Why we have to do so is never stated.  In any case, the argument did not include why the limited selection of comparator hospitals and executives used is a representative sample of "everyone."  Furthermore, as we noted here, what evidence there is suggests that skills required to run one organization do not necessarily transfer to another, suggesting the comparison to "everyone" makes no sense.

As is usual, the "CEOs are brilliant" argument is basically an appeal to authority fallacy, and provided no evidence that the particular CEO is brilliant.  In fact, it seems that everyone who has used this talking point before claims his or her CEO is brilliant. (Look here for example.) Obviously, all CEOs cannot be above average. 

Finally, as noted here, there is no evidence that without high pay worthy leaders could not be hired or retained.

Unfortunately, the otherwise excellent articles on Lancaster General did not challenge any of the defenders of executive exceptionalism to better justify their assertions.  Nor were they asked to consider its adverse effects. 

As we have frequently said, current policies about paying hired health care managers leave the managers unaccountable for the effects of their actions on patients' and the public's health, and worse, fail to deter and may even encourage ignorance of the health care mission, frankly mission-hostile behavior, self-interest, conflicts of interest, and outright corruption.  Meanwhile, paying nearly all top managers as if they were brilliant, while setting much harsher standards for the employees who actually take care of patients, including health professionals, demoralizes those on whom patients actually depend for care.

As we have said endlessly,....   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.

Fred Schulte on Investigative Journalism: "Race to electronic health records may come with a price"

Investigative reporter Fred Schulte of the Center for Public Integrity has written up his experiences on his investigation of upcoding and Medicare billing inflation due to the effects of EHRs.

The piece is of interest in regard to, at the very least, the personal recollections of how an investigation comes to be and is conducted.

I thought his piece would be of interest to HC Renewal readers.  It is at the site of the American Association of Healthcare Journalists and entitled "Race to electronic health records may come with a price."

(The result of the investigation is the series entitled "Cracking the Codes.)


Fred Schulte

This work contributed substantially and materially to a reluctant HHS and ONC deciding it was time to actually investigate the issue.

(Perhaps sometime soon HHS and ONC may also seriously investigate health IT safety, and take more than Milquetoast action.)

-- SS