Who Is Really "Bullying?" - Academic Leaders and the Stifling of Critics of Conflicts of Interests

Universities, which are supposed to discover and disseminate knowledge, ought to be the foremost defenders of free speech and a free press.  However, in the past decades, university executives have become notorious for trying to control speech that offends their political sensibilities (for numerous examples, see the FIRE - Foundation for Individual Rights in Education web-site.) 

It seems that academic leaders get even more upset when their or their faculties' conflicts of interest are criticized, as demonstrated by updates about two important cases we have discussed.

Columbia University

We recently posted about reactions at the university to revelations in the movie "Inside Job" that the Dean of the Business School and one of its prominent professors failed to disclose pay they received that might have motivated their enthusiastic promotion of economic policies that helped contribute to the Great Recession. 

These reactions occurred six months after the movie came out.  A Columbia Spectator student columnist asked why it took so long:

Why have students waited until April to address the consequences of “Inside Job” when the film was released in October? Why has our reaction been delayed by seven months?

Her postulated answer:

Why should Columbia need an outside documentary to point out its ethical failures?

Embedded in the Spectator news article about the film—published April 15— is a quote from University Senator Liya Yu that offers a frightening answer to our question about the delayed student reaction. 'I think people in the Business School haven’t responded because they are afraid,' Yu was quoted saying. 'If you are the dean of a school, obviously all the students are going to be dependent on you for their careers and futures. It’s hard for them to do anything.' I think this explanation extends to students beyond those currently enrolled in the Business School. In fact, its implications pose a threat to student journalism as a whole. For the first time in history, everything that a student journalist writes during his or her time in college is published on the Internet. This is a good thing for many reasons: It increases readership, allows writers to cross-reference easily, etc. But it also creates a permanent, compromising memory that is available forever to anyone who seeks it.

From the moment the college application process began, we were told that the content of our Facebook profiles could be used against us in admissions. We have learned to censor our traceable online behavior so as not to compromise our professional or educational prospects. Unfortunately, this has led to journalistic over-caution. We fear that anything we say now will be used against us later. And maybe it’s true. After all, not enough time has passed for us to take a careful account of the degree to which students’ first publications can affect their futures. Even editors have advised me to mitigate the strongest claims in my columns for fear of consequences to come. Perhaps they are right. But the most insidious kind of censorship—the hardest to recognize, the hardest to combat—is self-censorship, the persistent imaginative failure that prevents us from even recognizing what we should be writing about.

In the Internet age, bravery in student journalism is not trailing a military unit on the Iraqi front lines. Rather, it is the willingness to address controversial issues as they surface, not once these points of view have become popular. Our brand of fear—which is frankly selfish—censors our thoughts almost unnoticed. Next time, let’s skip the delayed reaction. I for one hope to do better.

So students may fear challenging conflicted faculty or administrators for fear of immediate academic punishment and future harm to career prospects in a society in which criticism of acquisitive leaders is decreasingly tolerated.

University of Minnesota

Earlier this year we posted about the troubling case of the death of an ostensibly voluntary participant in a clinical trial at the University of Minnesota years ago.  A particular concern was whether the money they received from the trial's sponsor influenced faculty and university leaders to overlook problems that might have put patients at risk in a trial whose main goal was marketing, not science.

The case got recent attention in an article by Dr Carl Elliott, a university professor of bioethics, and a letter he signed with other faculty requesting a new university inquiry into the case.  Not only did the university administration rebuff this request, but it now seems to be looking for ways to deter any future criticism of the institution's human research.  As reported in the Chronicle of Higher Education,

At the prompting of the University of Minnesota's general counsel, a committee of the University Senate has taken up the question of how faculty should collectively respond to "factually incorrect attacks" on particular faculty research.

Some faculty members say that direct appeal from the general counsel, Mark B. Rotenberg, is an attempt to quiet some faculty members' criticism of drug trials conducted at the university, including one seven years ago in which a participant, Dan Markingson, committed suicide. Before they took up the general counsel's question at a meeting this month, members of the university's Academic Freedom and Tenure Committee were provided with copies of material related to that case, including a letter sent by eight bioethicists to the Board of Regents last fall, asking it to appoint a panel of outside experts to examine the ethical issues raised by the death.

Committee members discussed with two administrators who attended that meeting, on April 8, whether faculty members have a responsibility to respond to attacks on fellow faculty members, according to minutes from the meeting; failure to do so, one professor said, could be seen as parallel to 'bullying.'

Professor Carl Elliott, who wrote the Mother Jones article that brought the recent unpleasantness of the Markingson case back into the public view, was concerned:

In an interview, Mr. Elliott said the general counsel's actions are troubling. Instead of fostering an open discussion about research practices, Mr. Rotenberg, and by extension the university administration, is attempting to use the faculty senate as a 'stalking horse' for intimidation and punitive action, Mr. Elliott said.

It defies common sense that Dr Elliott, representing only his own intellect and knowledge of ethics, was the "bully" in this case, while Mr Rotenberg, representing the university hierarchy, and the faculty members who ran the trial in which Mr Markingson died were the victims. As University of Minnesota faculty member Karen-Sue Taussig, a medical anthropologist, said per the Bioethics Forum:

I was worried the committee might be being used to intimidate a member of the faculty who was critical of the University. It seemed to me that there was a logical inconsistency in the University counsel's position: he did not provide any evidence that any individual faculty member felt chilled by Carl's work, yet his bringing up the issue clearly posed the threat of chilling Carl's speech. . . . In short, I was concerned about the possibility of an Orwellian attempt to invoke academic freedom in order to chill academic freedom.

By the way, there is also nothing to suggest that Dr Elliott's work was "factually incorrect."  Per the Bioethics Forum:

Philosopher and historian of science Ken Waters, who also attended the second meeting, was just as concerned. 'The University's general council planted a false question, the implicature of which [the committee] seemed to be uncritically accepting (that Carl was advancing factually incorrect claims),' he wrote to me in an e-mail. 'And in planting the question, the counsel was trying to turn the tables and squelch my colleagues' academic freedom by somehow suggesting that they were impinging upon the academic freedom of others.'

In the 1980s and 1990s, university administrators tended to attack speech they felt was hurtful to minorities and women, using speech codes (again as has been amply demonstrated by FIRE). Now they seem most sensitive to speech critical of their own exercise of power, and of the cozy financial relationships that generate conflicts of interest and threaten the academic mission.  Furthermore, now that it has become fashionable to decry "bullying," "anti-bullying" initiatives may become the chief way to quell criticism that make academic leaders uncomfortable.

Summary

At one time, university administrators and favored faculty justified attacks on free enquiry, a crucial part of the academic, by claiming a higher political or social purpose.  Now they seem to be willing to trash the core values of academia to stifle critics of their own actions, especially those involving lucrative conflicts of interest.   Such actions may be a major cause of the anechoic effect.
Increasingly, academic institutuions seem to be run more for the personal benefit of their leaders and their cronies than to discover and disseminate knowledge.  True health care reform would return academic medicine to its fundamental purpose, and return its leadership to those who would uphold the mission rather than fill their pockets.  

Hat tip to Ed Silverman in the PharmaLot blog re the University of Minnesota case.  See also comments by Prof William Gleason in the Periodic Table blog, e.g., here and here, and by Gary Schwitzer in the HealthNewsReview blog.

Henry Kissinger, Iceland's Promoter, Khadafy's Apologists, and the Rise of the Academic Mercenary

In which we discuss how medical academic mercenaries (like the key opinion leaders paid to promote drugs and devices cloaked in their academic and professional credentials) now appear to be just part of a larger problem.
Henry Kissinger

Almost 17 years ago, an article by David Halberstam in Vanity Fair(1) should have warned us of the rise of the academic and intellectual mercenary.  However, back in those go-go years of the new gilded age, most of us were not listening. 

Halberstam focused on Henry Kissinger, once a protege of New York Governor and then US Vice President Nelson Rockefeller, who became the infamous President Nixon's National Security Advisor, then Secretary of State:

Kissinger’s capacity to be all things to all campaigns—an overt Rockefeller man, a semi-overt Humphrey man, and a covert Nixon man—reflects the emergence of the rootless operator in the modern superstate. Kissinger was the first—though there were others to follow—of the wildly ambitious agents of opportunity set loose in the wilds of Washington and other capitals. They are interchangeable men, singular in their ambitions, unhampered by traditional loyalties or affiliations. They are men so cool and detached in their geopolitical views that they sometimes seem to be part of a new international elite, readily transferable to the governments of allies and adversaries alike.

Two recent dramatic stories show how prevalent academic mercenaries, another breed of "rootless operators," or "wildly ambitious agents of opportunity," have become.

Promoting Iceland: Columbia Professors' "Inside Job"

The Academy Award winning documentary film, "Inside Job," suggested that one cause of the Great Recession was the wrong-headed deregulation of the financial industry deceptively promoted by academics who failed to disclose they were being paid by those who stood to benefit from deregulation.  (See our post here.)

Reconsideration of the roles of two of the academics cited in the film who are faculty at Columbia University shed more light on how public policy was influenced by academics hired to do public relations. The Columbia Spectator just published a three- part series on the local controversy with global implications.

At least a few Columbia faculty realized that it did not look good for their colleagues to do public relations while pretending they were delivering disinterested academic opinions:

[Columbia Economics Department Chair Michael] Riordan added that it is important that Columbia protect its reputation and the public’s trust in its professors’ expert opinions.

'What does the university stand for but if not for the quality of the ideas that come out of that university?' he asked. (2)

Also,

Teachers College professor Kathleen O’Connell ... called the film 'appalling' and said that 'the Columbia professors were even more appalling.' She said she was especially surprised considering Hubbard and Mishkin have both had high-ranking government jobs—Hubbard was at one time a top economic adviser to former President George W. Bush, and Mishkin was a governor of the Federal Reserve.

'I was shocked at the lack of ethics that they displayed. They are in really powerful positions—they have been in powerful positions in the Federal Reserve and the President’s economic advisors,' O’Connell said.(3)

However, there was much resistance to change. Just as we have seen in arguments about conflicts of interest affecting medical faculty, there were those who denied that being paid to consult could affect any faculty member's thinking about the source of the payment:

But some, including Business School professor and University Senator Frank Lichtenberg, oppose the disclosure of consulting to the University. Lichtenberg said that many factors besides money can influence professors’ academic opinions.

'There are lots of other sources of bias and non-neutrality in academia anyway,' Lichtenberg said. 'People often have predispositions for or against different hypotheses, and unfortunately, those sometimes prevail.'

Some professors question whether paid consulting positions influence researchers at all. Business School professor Bruce Greenwald said that the economists featured in 'Inside Job' have 'long espoused and long promoted' pro-market ideas and would have made the same arguments regardless of financial ties.(4)

So we have economists denying the effect of economic incentives?

Beyond that, there were arguments that public disclosure of conflicts of interest would violate faculty members' privacy.

But full public disclosure is not likely to gain much traction in the debate over a University-wide policy. Steele said that it is not necessary to publicly release disclosures made privately to University officials.

'I don’t think that the public needs to have access to forms that people fill out and all the materials that go into that,' [Provost Paul] Steele said. 'That would be onerous at least, and there might be other objections … that you are invading people’s sense of privacy and freedom.'(2)

I suppose that would have made some sense if the faculty member had not made any public pronouncements that could have been influenced by the undisclosed conflicts. However, the contention in "Inside Job" was that conflicted academic economists publicly advocated on behalf of their undisclosed clients. For example,

In 2006, the Iceland Chamber of Commerce paid Columbia Business School professor Frederic Mishkin $134,858 to co-author a report on Iceland’s economy and banking systems. In the report, titled 'Financial Stability in Iceland,' Mishkin painted a bright picture of the country’s economic future, but he did not disclose who was paying him to write it.

'Although Iceland’s economy does have imbalances that will eventually be reversed, financial fragility is not high and the likelihood of a financial meltdown is very low,' Mishkin wrote.

Two years later, Iceland’s economy collapsed. Its major banks failed, its currency lost much of its value, and thousands of its citizens lost their jobs. The New York Times wrote at the time that, to Icelanders, 'the collapse came so fast it seemed unreal, impossible.'(2)

Harvard Professors' Paid Apologia for Moammar Khadafy

Praising Iceland's economy was one thing. Praising brutal Libyan leader Moammar Khadafy as democratic was another.

In March, 2011, Mother Jones disclosed(5) how a consulting group run by Harvard professors was hired in part to burnish the image of Moammar Khadafy, who since has ordered brutal attacks on protesters within his country.

In February 2007 Harvard professor Joseph Nye Jr., who developed the concept of "soft power,' visited Libya and sipped tea for three hours with Muammar Qad'afi. Months later, he penned an elegant description of the chat for The New Republic, reporting that Qaddafi had been interested in discussing 'direct democracy.' Nye noted that 'there is no doubt that' the Libyan autocrat 'acts differently on the world stage today than he did in decades past. And the fact that he took so much time to discuss ideas—including soft power—with a visiting professor suggests that he is actively seeking a new strategy.' The article struck a hopeful tone: that there was a new Qaddafi. It also noted that Nye had gone to Libya 'at the invitation of the Monitor Group, a consulting company that is helping Libya open itself to the global economy.'

Nye did not disclose all. He had actually traveled to Tripoli as a paid consultant of the Monitor Group (a relationship he disclosed in an email to Mother Jones), and the firm was working under a $3 million-per-year contract with Libya. Monitor, a Boston-based consulting firm with ties to the Harvard Business School, had been retained, according to internal documents obtained by a Libyan dissident group, not to promote economic development, but 'to enhance the profile of Libya and Muammar Qadhafi.' So The New Republic published an article sympathetic to Qaddafi that had been written by a prominent American intellectual paid by a firm that was being compensated by Libya to burnish the dictator's image.

Monitor also sponsored trips to Libya for scholars from other universities who also later wrote positively about Khadafy's and his reign over Libya, presumably after they had received their large consulting fees.

The Boston Globe reported(6) in more detail about a proposal by Monitor to write a laudatory book about Khadafy:

It reads like Libyan government propaganda, extolling the importance of Moammar Khadafy, his theories on democracy, and his 'core ideas on individual freedom.'


But the 22-page proposal for a book on Khadafy was written by Monitor Group, a Cambridge-based consultant firm founded by Harvard professors. The management consulting firm received $250,000 a month from the Libyan government from 2006 to 2008 for a wide range of services, including writing the book proposal, bringing prominent academics to Libya to meet Khadafy 'to enhance international appreciation of Libya' and trying to generate positive news coverage of the country.

As further documented in the Globe article, it was very clear that Monitor was paid not just to provide consultation, but to do public relations work on behalf of the Khadafy regime.

Yet an article in the Nation(7) made it clear that the prominent academics it hired did not disclose who paid them, or the purposes of those payments:

Joseph Nye of Harvard’s Kennedy School wrote in The New Republic in 2007 that Muammar Qaddafi was interested in discussing 'direct democracy.'

Anthony Giddens of the London School of Economics wrote in the Guardian the same year that Libya under Qaddafi could become 'the Norway of North Africa.'

Benjamin Barber of Rutgers University wrote in the Washington Post, also in 2007, that Libya under Qaddafi could become 'the first Arab state to transition peacefully and without overt Western intervention to a stable, non-autocratic government.

Great minds think alike? Actually, no: all were being paid by Libyan money, under a $3 million per year contract with a consulting group which promised to 'enhance the profile of Libya and Muammar Quadhafi' in Britain and the US.

One more thing: none of them said in The New Republic, the Guardian, or the Washington Post that they were being paid by Libyan money.

So here again we have the elements of what Wendell Potter (see this post) called the "third party strategy." A public relations company hires outside "experts" with veneers of academic or professional credibility to promote the interests of its clients, without disclosing that the "experts" have become paid flacks. Again, this is bad enough when it is done on behalf of health policies favorable to commercial insurance companies. It is worse when it is done on behalf of brutal dictators.

More recently, the Globe discovered(8) that the Monitor Group negotiated with the head of the Libyan intelligence service who had been implicated in various violent acts,

He is Moammar Khadafy’s brother-in-law and his most trusted aide, convicted in absentia for the 1989 bombing of a French airliner and implicated in the 1996 massacre of 1,200 Libyan political prisoners.

But in 2006, Abdullah Al Sanusi was also the man who arranged the services of a noted Cambridge consulting firm in a very different project: revamping Libya’s reputation on the world stage.

Sanusi, a longtime head of Libya’s intelligence services, oversaw initial negotiations with the Monitor Group, which was vying for a contract with Libya to bring prominent Americans to speak to Khadafy as part of an effort to improve ties and nudge the pariah country toward reforms.

'We believe that your commitment to creating a program of mutual education and relationship building with the Unit ed States remains of critical importance at this turning point in Libyan history. We remain privileged to be trusted with this work,' Monitor’s chief executive, Mark Fuller, and project director, Rajeev Singh-Molares, wrote to Sanusi in 2006.

However, so far, Harvard leadership has if anything been more defensive about its faculty members' stealth public relations work for a brutal dictator than was Columbia's leadership about its faculty member's stealth public relations work for Iceland. As reported(9) again by the Boston Globe,

A prominent Harvard professor and former university administrator urged Harvard President Drew Faust during a faculty meeting yesterday to express 'shame'’ on behalf of the university at the disclosure of financial ties between a senior academic and Libyan dictator Moammar Khadafy.

Saying nothing would send the wrong message to students, giving them the impression that personal financial gain could come at the expense of ethical conduct, said Harry Lewis, a computer science professor who formerly served as undergraduate dean.

'Shouldn’t Harvard acknowledge its embarrassment, and might you remind us that when we parlay our status as Harvard professors for personal profit, we can hurt both the university and all of its members?' Lewis asked Faust at the monthly gathering of the arts and sciences faculty.

Faculty meetings are closed to outside media, but Lewis provided the Globe a written transcript of his statement, which he sent to Faust several days ago.

Faust — who, according to Lewis, told him she did not want to be 'scold in chief' — said she supports the wide discretion of faculty members to pursue the directions of academic inquiry and outside engagements they choose.

How low once proud institutions have fallen was demonstrated by a Harvard President who could not bring herself to "scold" faculty who were paid to provide public relations for a brutal dictator while hiding behind their Harvard titles.  Her action was not just "a weak standard for an institution of global leadership,"(10) but failed to erase "a distinctive odor, one that emanates from the corruption of academic reputation."(11)

Summary

Since before we first started this blog, we wondered somewhat despairingly how medicine, and particularly academic medicine, had become so badly lead.  Since the global economic collapse/ Great Recession it belatedly became clear that health care has just been swept along by the waves that drove larger social, economic and political institutions.  In particular, when we wondered how conflicts of interest had become so pervasive in medicine, we did not realize how pervasive conflicts of interest and corruption had become throughout the world.  The fact that leaders of previously revered educational institutions like Columbia and Harvard still cannot bring themselves even to admit the need to disclose conflicts, much less "scold" people for selling out to brutal tyrants indicates how deep the rot has gone.

Fixing the great problems of health care will require fixing the greater problems of society at large.  We must learn to discredit, not honor the "wildly ambitious agents of opportunity" that have been sent out to dominate the new gilded age.   


References


1.  Halberstam D. The new establishment: the decline and fall of the Eastern Empire. Vanity Fair, October, 1994. Link here.
2. Poliak S. 'Inside Job' prompts new look at conflict of interest policy. Columbia Spectator, April 13, 2011. Link here.
3. Poliak S. After documentary, B-school rethinking ethics. Columbia Spectator, April 15, 2011. Link here.
4. Poliak S, Roth S. 'Inside Job' sparks three separate reviews of disclosure policy. Columbia Spectator, April 14, 2011. Link here.
5. Corn D, Mahanta S. From Libya with love. Mother Jones, March 3, 2011. Link here.
6. Stockman F. Local consultants aided Khadafy. Boston Globe, March 4, 2011. Link here.
7. Wiener J. Professors paid by Qaddafi: providing 'positive public relations.' The Nation, March 5, 2011. Link here.
8. Stockman F. Top Khadafy aide helped craft deal with local firm. Boston Globe, March 30, 2011. Link here.
9. Jan T. Harvard leader confronted on professor's ties to Libya. Boston Globe, April 6, 2011. Link here.
10. Anonymous. Yes, Harvard chief should scold profs who worked for Khadafys.  Boston Globe, April 11, 2011.  Link here.
11.  Barrett PM. The professors and Qaddafi's extreme makeover.  Bloomberg BusinessWeek, April 6, 2011.  Link here.

Academic Medical Center Crime Wave?

Every large group or organization has a few bad apples.  My web searches constantly turn up stories of individuals working in health care who behave unethically or commit crimes.  I do not generally discuss these cases on Health Care Renewal, since they seem unavoidable, and their sporadic appearance does not necessarily have anything to do with systemic problems in health care.

However, in the last week, I noted four cases of rather exceptionally bad behavior by individuals working in large hospital systems, and the severity and proximity of these cases made me wonder if they reflect some new trend.

Pennsylvania State University Faculty Member Charged with Rape

As reported by PennLive.com,

Former Derry Township, Dauphin County, doctor Dr. Robert L. Yarwood stands accused of using his position and influence to addict two of his patients to painkillers and raping them multiple times.

Yarwood, 56, has been charged with more than 42 criminal counts, including rape and sexual assault, stemming from allegations made in 2008 by two women, ages 40 and 45.

He is accused of giving narcotics to the women to 'exert psychological force,' said Fran Chardo, Dauphin County first assistant district attorney.

'The case, speaking abstractly, is very disturbing because of the trust relationship between the patient and the doctor,' Chardo said. 'It’s a violation of trust.'

In an interview with The Patriot-News, one of the women said she had visited Yarwood several times over the course of a year. He was prescribing her pain medication, which she eventually became addicted to. Then, she said, he raped her. 'I was paralyzed. I was in shock,' she said. 'I trusted him.'

At the time of the allegations, Yarwood was an obstetrician and gynecologist at the Penn State Milton S. Hershey Medical Center, which he joined in the late 1990s. In August 2008, the medical center was apprised of the investigation and immediately suspended Yarwood from having contact with patients.

$5 Million Embezzlement from Columbia University Medical Center

As reported by the Wall Street Journal,

A 48-year-old Bronx man has been arrested and charged with grand larceny for allegedly stealing nearly $4.5 million from Columbia University over the course of two months, authorities said Monday.

George Castro is accused of adding a TD Bank account belonging to him as a payee in the Columbia University Medical Center's accounts payable system, netting payments of $3.4 million in October and $1 million in November, authorities said. Mr. Castro, whose relationship with the university is unclear, was arrested Wednesday.

A law-enforcement official familiar with the case said Mr. Castro had $200,000 in cash in his possession when he was arrested and had withdrawn $140,000 the day before his arrest. According to a criminal complaint, Mr. Castro told investigators the money 'just appeared' in his bank account and that he had gotten 'greedy.'

Duke Surgeon and Surgical Department Business Manager Accused of Embezzlement

As reported by WRAL.com,

A former Duke University surgeon and manager have been charged with stealing $267,000 from the university, police said Tuesday.

Dr. Eric Joel DeMaria, 51, of 1101 Tacketts Pond Drive in Raleigh, and John William Cotton, 39, of 7228 Loblolly Pine Drive in Raleigh, were each charged with embezzlement of more than $100,000. Cotton also was charged with obtaining property by false pretense.

Cotton was arrested last Wednesday, and DeMaria surrendered to police Tuesday morning. Both have been released on $25,000 bonds.

DeMaria was director of Duke's bariatric surgery program, while Cotton was a business manager in the surgical department at Duke University Hospital, according to Michael Schoenfeld, Duke's vice president for public affairs.

Office Worker Accused of Stealing $3.8 Million from Memorial Sloan-Kettering Cancer Center

As reported by the New York Post,

A former worker at Memorial Sloan-Kettering stole nearly $4 million from the cancer center in a massive scheme that involved ordering a boatload of unnecessary printer cartridges and reselling them, authorities said.

The loot from the elaborate scam was used to fund a lavish lifestyle that allowed $37,000-a-year receiving clerk Marque Gumbs to move from a Bronx housing project to a luxurious Trump high-rise in the suburbs.

Gumbs, 32 -- who was arraigned yesterday in Manhattan Criminal Court on charges of grand larceny and criminal possession of stolen property -- allegedly began his scheme in 2004 by ordering extra toner cartridges and reselling them.

In one astounding stretch from October 2009 through August 2010, Gumbs ordered $1.2 million worth of toner that wasn't usable for any machine at the hospital, authorities said.

His alleged ruse cost the hospital $3.8 million.

Summary

So here is the box-score. Reported in one week were three alleged theft/ embezzlement schemes with values from $267,000 to $5 million, and one alleged series of multiple rapes. The alleged perpetrators included two academic physicians (one in surgery, one in obstetrics-gynecology), two hospital staff, one in management, and a person with an unclear relationship to the hospital. All involved large, prestigious academic medical centers.

So, again, maybe these were just coincidences. However, it may be that there is a real trend toward bigger and more spectacular thefts and embezzlements from big, not for profit health care institutions.  The most likely explanation is simply that the increasingly huge amounts of money flowing through such institutions attracts those who go to where the money is, and that the increased complexity of the bureaucracy of ever-growing health care institutions makes it easier to hide such thefts.  At least, this odd string of cases should prompt more questions about the conventional wisdom that it is good for health care organizations to grow ever larger. 

However, just to be speculative, note that three of these incidents occurred at institutions whose leadership has attracted our attention before.  We discussed conflicts of interest affecting one Columbia academic leader here, and the prevalence of leaders of failed financial services companies on the New York-Presbyterian board here.  We discussed a leader of two of the firms most involved in the global financial collapse who was also the chairman of the board of Duke University here.  A quick skim of Memorial Sloan-Kettering's Board of Overseers (in its 2009 annual report) showed the presence of at least two leaders of failed financial services firms heavily involved in the global financial collapse (E Stanley O'Neal, former CEO of Merrill Lynch, and Sanford I Weill, former CEO of Citigroup).  The speculation is that as academic medical centers and hospital systems and their parent universities have increasingly been recipients of the "stewardship," and hence immersed in the culture of the financial services industry, particularly firms which contributed to the global financial collapse, the culture of health care became increasingly laissez faire, anything goes, wild, wild west, and so it got easier for the wrong people to be hired, and for the wrong people to pull off truly spectacular capers.

I submit that the first criterion for being a trustee or director, and hence ostensibly a steward of an academic medical institution should be devotion to the mission of the organization, not size of one's contribution.

With Leaders Like These...

My current favorite book about the global financial meltdown, aka great recession, The Sellout, by Charles Gasparino, featured vivid portraits of the bad leadership that lead to the collapse.  For example:

Richard S Fuld, Jr, former CEO of Lehman Brothers (now bankrupt) -

Fuld had become more isolated and arrogant. (p.208)

As the firm's leverage increased, Fuld's grip on his management and board grew. He was revered by so many people in his circle of senior advisers that almost no one dared to speak out about the firm's risk and leverate, and almost never to Fuld himself. Everyone else was so scared to be cursed at in public or even fired that they simply kept their mouths shut.

Fuld's leadership was more like that of a cult leader than even that of an imperial CEO. (p. 209)

Maurice R ("Hank") Greenberg, former CEO of AIG (now bailed out by the US government) -

Greenberg had begun the financial products group that sold all those [now discredited] credit default swaps in the late 1980s....

Greenberg had a love-hate relationship with the group and its various leaders. He hated the risks they took and the independence the top people in the group sought. But he loved the profits the financial products group ... produced.

Yet Eliot Spitzer, the New York State attorney general and by now Wall Street's most famous enforcer, believed Greenberg ran a company that regularly committed accounting fraud and created fictional profits through a series of sham transactions that had nothing to do with credit default swaps. Greenberg considered these possible transgressions so trivial that he called them 'foot faults,' as in a minor foul in tennis.

Greenberg eventually did resign.... (p. 204)

[and the financial products unit nearly drove AIG bankrupt]

John A Thain, former CEO of Merrill Lynch (bailed out by being forcibly merged into Bank of America under pressure from the US government)

Over time, it became difficult to keep track of every statement coming out of Thain's mouth that turned out to be wrong since nearly the moment he had taken over as CEO. (p. 417)

Thain was becoming unhinged; during a briefing in one of his finely decordated conference rooms that had been part of the $1.2 million office spending spree, people close to the firm said, he completely lost his compusure when an aide informed him about the size of the [company's] losses. What Thain did isn't clear, but Merrill Lynch had to replace a shattered glass panel that appeared to have been the target of the CEO's rage. (p. 419)

- Sanford I Weill, former CEO of Citigroup (bailed out by the US government)

But in reality, Will never really ran anything. He was a visionary, to be sure, but one whose vision was so myopically focused on building the empire had lusted for for so long and on its share price that he ignored just about everything else. (p. 144)

So here we again have reminders of how bad leadership of major US financial firms lead to the collapse. We had discussed a series of such factors and how they obtain in health care, suggesting that health care is undergoing a bubble likely to burst just as badly as did the financial/ housing bubble.

However, I supplied these quotes not just to underline this point.  It turns out that Mr Fuld, Mr Greenberg, Mr Thain, and Mr Weill have something in common other than having helped to lead their financial firms toward the brink, something in common with relevance to health care.

We recently discussed the outsize compensation given to the current CEO and other top leaders of one of the country's revered medical centers, New York - Presbyterian Hospital.   I suggested that such "compensation madness" will continue to inflate the health care bubble.  What that post did not discuss was how these leaders got to be so well paid.  Presumably, their compensation was set, or at least acquiesced to by the Board of Trustees of the hospital.  So I thought it might be entertaining to see who is currently on this Board.

According to the medical center web-site, the Board of Trustees as of October, 2009, was quite large (including 88 people by my count).  The web-site lists only names, not biographies, so that who most of the members are was not obvious.  This lack of transparency, which is not uncommon in health care organizations, would make figuring out who all the people ostensibly responsible for the $9.8 million dollary man are quite laborious.  However, I did recognize a few names immediately.  These were Richard S Fuld, Jr, Maurice R Greenberg, John A Thain, and Sanford I Weill. 

Thus, the Board of Trustees of New York - Presbyterian Hospital includes four of the most well-known architects of the global financial meltdown.  Thus, is it any wonder why the Board of Trustees was happy paying the CEO of a not-for-profit health care institution at a level comparable to a for-profit corporate CEO?  (And is it any wonder that the Dean of the Faculties of Health Sciences and Medicine, and Executive Vice-President for Health and Biomedical Sciences at Columbia University, one of the two medical schools that provide students, trainees and faculty at New York - Presbyterian Hospital, once admitted that the school's main criterion for faculty success was ability to generate external funds, which he called being a "taxpayer," rather than ability to teach, research, or take care of patients?)

As we have discussed before, boards of trustees of not-for-profit health care institutions have a primary duty to uphold the institutions' missions.  Thus, one would think such boards would be selected according to their dedication to their missions.  But perhaps, in the grubby real world, there may be more important criteria, possibly such as the size of their donations to the institution.  Furthermore, those likely to donate the most  may be more likely to be richest (and perhaps most in need to making themselves appear philanthropic and public-spirited) than the most fervent upholders of patient care, teaching and research.

Maybe giving stewardship of our once proud health care institutuions to people most likely to defend their missions, rather than most likely to donate a lot of money, would result in somewhat poorer institutions which do a better job of patient care, teaching and research. 

The $9.8 Million Dollar Man

We seem to have a new candidate for the award for best-paid CEO of a not-for-profit academic medical center, as reported in the New York Post,

Wall Streeters aren't the only ones raking in big bonuses during tough economic times.

Hospital presidents and CEOs also collect fat bonuses and 'incentive payments,' even as health-care systems cry poverty, claiming they struggle to break even against government cutbacks, tightwad insurers and skyrocketing costs.

While warning of layoffs and slashed patient services, many hospitals shower their top execs and department heads with bonuses and perks. They include housing allowances, chauffeurs, first-class air travel, tuition for their kids and country-club memberships.

Under new IRS rules, the extras are disclosed for the first time in recently filed 2008 tax records obtained by The Post.

The filings for the city's biggest and most prestigious private, tax-exempt hospitals show at least a dozen CEOs get compensation of $1 million and up. Some also cash in early on million-dollar pre-retirement payouts while on the job.

Dr. Herbert Pardes, who runs the New York-Presbyterian Hospital and its health-care system -- the city's largest private hospital network -- received a $1 million bonus in 2008 on top of his $1.67 million salary.

The hospital has a 'pay for performance' philosophy but says even though Pardes met his goals, his bonus was smaller than 2007's to 'reflect the current external environment.'

But Pardes' compensation totaled $9.8 million in 2008 because he vested in a retirement plan that will pay $6.8 million when he leaves in 2011. He also received a $93,500 housing allowance and the use of a car and driver.

The Post article also listed two other hospital CEOs who got over $4.5 million in compensation, and several other top executives at other hospitals who got substantial compensation despite the hospitals' financial distress or accusations of unethical behavior.  On the other hand, the CEO of the city's Health and Hospital Corporation, with a budget of $6.3 million, got only $291,000.

Note that Dr Pardes' total compensation was more than double the compensation for a Boston medical center CEO that I thought was so outlandish back in September, 2009.

So here is much more evidence about the continually inflating health care bubble.  Not only do executives of big, for-profit drug, device, biotechnology and health insurance companies make seven and eight figure salaries, now it appears executives of ostensibly not-for-profit, charitable organizations can also make this much. 

Is it possible that at least Dr Pardes' compensation was a fluke, related to a one-time retirement payment?

The answer appears to be negative.  The New York - Presbyterian Hospital's 2007 US Internal Revenue Service (IRS) form 990, which was organized somewhat differently and may have used somewhat different definitions than the 2008 form from which the Post reporters apprently got their information, showed Dr Pardes total compensation to be $4,736,824 plus a $1,433,761 contribution to employee benefit plans and deferred retirement plans in that year. In addition, in 2007, (apparently former) executive Vice President Michael A Berman, MD received $5,949,092 in compensation plus $31,830, current Executive Vice President and Chief Operating Officer Steven J Corwin MD received $2,671,747 plus $455,304, Senior Vice President and Chief Financial Officer and Treasurer Phillis RF Lantos received $2,481,044 plus $336,284, Senior Vice President and Chief Operating Officer Robert Kelly received $1,538,412 plus $271,641, Senior Vice President and Chief Operating Officer Cynthia N Sparer received $1,370,541 plus $307,259, Senior Vice President and Senior Legal Officer Maxine Fass Esq received $1,337,354 plus $257.06, Senior Vice President, Finance Dov Schwartzben received $1,314,960 plus $173,848, Senior Vice President and Chief Nursing Officer Wilhelmina Manzano received $1,218,966 plus $159,555.  In summary, in 2007, the medical center paid at least 10 current and former executives each substantially more than $1 million a year.

By my calculations, the medical center paid these ten executives over $26 million a year, approximately equal to 25% of the center's fund excess (e.g., profit equivalent), of slightly over$106 million.  These ten executives received nearly 1% of the entire 16,850 employee institution's budget.  Furthermore, note that in the medical center's 2007 expense statement, general and administrative expenses, over $675 million, made up about 24% of the center's total expenses. 

So it appears that gigantic compensation for New York - Presbyterian Hospital executives, which is outsize both in comparison to the Hospital's fund excess and total budget, is part of a long-term trend
The Post quoted Brian Conway of the Greater New York Hospital Association with this excuse:

There are thousands of 20-somethings on Wall Street making millions who don't have anywhere near the responsibilities or skills of New York hospital CEOs.

This fits in our catalog of logical fallacies.  It is an appeal to common practice.  Of course, the particular practice to which Mr Conway appealed is the exaggerated executive compensation in finance that many believe was a cause of the global financial melt-down, aka great recession.  One could also argue that not one Wall Street executive has the life and death responsibilities of the typical practicing primary care physician.  I doubt Mr Conway would try to argue that Dr Pardes' job requires 40 times the skill of full-time practicing primary care or cognitive physician.

Instead, executive compensation for hospital CEOs seems best described as Prof Mintzberg described compensation for finance CEOs, "All this compensation madness is not about markets or talents or incentives, but rather about insiders hijacking established institutions for their personal benefit."  As it did in finance, compensation madness is likely to keep the health care bubble inflating until it bursts, with the expected adverse consequences.  Meanwhile, I say again, if health care reformers really care about improving access and controlling costs, they will have to have the courage to confront the powerful and self-interested leaders who benefit so well from their previously mission-driven organizations.