Exploring Human Potential

The Three Pillars of the Medical-Industrial Complex – and the Physician. Part 5. Decoupling Research.

Posted on | July 15, 2016 | 3 Comments


Mike Magee

Historically, for a century since the Flexner report, some 40 premier academic health systems have been the masters and the model for American health delivery, constantly reinforcing the three-prong definition of the ideal senior level “thought leader” and successful academic physician – researcher, teacher, clinician. But in 2009, AHA president, Rich Umberstock, predicted more change and more competition for the elite coming from every angle of his 5700 hospital institutions. As he saw it, the sources of this pressure would be electronically linked, seamless, risk-bearing integration, with and without an added graduate medical education apparatus.

As he said, “Our vision actually steps ahead of the traditional payment incentives that hospitals have been operating under.  And it also envisions a more integrated approach with physicians and other community interests because hospitals can’t improve the health of a population on our own – we need partners.  But, if the question is, should we be trying to diminish the reliance on treatment, then the answer is absolutely yes. Is there any other way to show that we’re on the side of the patient and the community?  No.”

That said, what should be done, if anything, about the 40 or so Academic Medical Centers whose academic physicians are the chief cogs in the wheels of commerce in the Medical-Industrial Complex, as they travel back and forth along the profitable roads that lead from bedside to research lab to government panels and Congressional testimonials? And how much money is at stake? Is it enough to make conflicts of interest unavoidable? And are these top flight institutions increasingly dependent and beholding to federal and industry dollars?

The answer to the final question is a definitive yes. As the government and insurers have moved to managed care, and payment restrictions and penalties have increased, occupancy rates have continued to fall. The losses on the in-patient side have continued to grow, though expansion of insurance coverage, especially for the poor and urban communities, and ramping up of faculty ambulatory practice plans have buffered the losses. Still, the reliance on federal and industry research dollars is now well-entrenched and expanding daily.

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The grand-daddy of the Academic Medical Center is Columbia-Presbyterian Medical Center, founded in 1928. This is where New York Times columnist, Steven Brill, turned for emergency surgery for his aortic aneurysm. It lays claim to being “the world’s first medical center to combine complete patient care, medical education and research facilities in a single complex.” Its medical school, the College of Physicians & Surgeons, is revered. In 1997, it merged with the New York Hospital and its’ Cornell School of Medicine to form New York-Presbyterian Hospital. In the following two decades, the corporation has expanded its care network folding in dozens of ambulatory sites and smaller hospitals. In the first decade of the new century, it also launched the Irving Cancer Research Building, the Audubon IV center for biotechnology research, and a new research building on 165th street. Those investments paid off richly. In 2007 alone, the organization was awarded 742 million in NIH grants. Were one to fold in state grants, Foundation grants, research directed personal philanthropy, and non-transparent financial support and research partnerships with pharmaceutical and medical device companies, this figure could be safely doubled.

As recounted by Brill, the institution now houses some 22,000 employees servicing roughly 125,000 patients a year who partially occupy 2500 hospital beds. Total revenue is in the range of $4 billion a year, with operating profits of around $500 million. Their are 11 skilled executives within the organization that earn over $1 million in compensation a year. At the top of the ladder is their physician CEO, with a salary well in excess of $3 million a year. He would willing tell you that the future viability of his organization is increasingly dependent on research dollars. But is that good for the physicians, patients, or society overall?

These select hospitals find themselves in the same quandary as the AMA, whose dependency on industry income though journal advertising, sponsorship of CME, or underwriting of specialty organizations and the fully bought consumer organizations they spawn, have left AMA leadership irreparably entangled and ethically compromised. One need only look at the current opioid epidemic for evidence. The prescription for hospitals is the same as for the AMA. Balance of power must be re-established through rules and regulations that manage these oligopolies.

For the Academic Medical Center, this means splitting off one of the three historic arms of the academic physician’s mission. In short, education and clinical care must create legal and ethical firewalls that separate it from research. Only by doing this can the public be confident that their interests, and not those of various corporate entities are being served. Research enterprises must stand on their own, in the full glare, and under the close examination of  “comparative effectiveness” research, with appropriate independent governmental agencies assuring safety, quality, and transparency.

Steven Corwin, MD, CEO of New York-Presbyterian likely well deserves his compensation. It is an enormous enterprise he is managing. But he need not be the czar of an entrepreneurial research effort as well, while attempting to serve New York City’s daily health and wellness needs. Segregating health and professional education and training, from profit driven biomedical research is long overdue. As AHA’s Rich Umbdenstock suggests, hospitals have their hands full already these days. CEO’s need to be judged primarily based on their provision of efficient, seamless, and integrated care of patients and community. He says, “Integration is a fancy word, I think, for everybody playing a role in a larger system, in a way that coordinates both resource deployment and service delivery… ideally the medical and nursing schools and clinical practicums will promote that, but also you’ll see it organizationally and rewarded within organizations because of the potential for both greater coordination and greater resource efficiency…there’s now a track record of greater integration across the country that President Obama has touted and others are looking to—the Cleveland Clinic Foundation, Geisinger Health System, Intermountain Healthsystem, Kaiser Foundation Hospitals, Mayo Clinic, and others.”

If we wish to substantially reform American health care, we must go where the money and bodies are hidden – that’s research. The AMA, its Federation and peer review journals, the AAMC, the premier Academic Health Centers, the NIH and FDA, and the public’s understanding of “scientific progress” and what’s best for our health, all tract back to a non-transparent and conflicted medical research apparatus. By segregating and exposing it’s finances and, in some cases, unhealthy relationships to critical examination, we may finally understand why the vastly expensive American health care system, at least on some scales, has so remarkably  under-performed.

Interactive Map Of Sources Of 33,000 Gun Deaths In America.

Posted on | July 15, 2016 | No Comments

Screen Shot 2016-07-15 at 8.42.38 AMSource: FiveThirtyEight

The Three Pillars of the Medical-Industrial Complex – and the Physician. Part 4. Inside the White House – Cost vs. Coverage.

Posted on | July 11, 2016 | No Comments


Mike Magee

When President Obama entered office in 2008, and made the political assessment that it was now or never for health care reform, he saw waste and excess everywhere he looked. As New York Times columnist, Steven Brill, explained in 2015, he found: an $86 billion expenditure annually for ineffective treatments of back pain; obesity driven knee and hip joint replacements to the tune $17 billion a year; 31.5 MRI machines per million (5X the number in the UK); pharmaceutical prices twice the rate in other developed nations; a health sector lobbying effort that was now the largest in the nation and 4X the size of the runner-up Military-Industrial Complex; 62% of personal bankruptcies now the result of health care bills; 40 million + citizens uninsured, and many more under-insured; and a $3 trillion dollar a year sector employing 1 in 6 American workers.

Following the play book laid out by Governor Romney in Massachusetts, a plan originating with the conservative Republican Heritage Foundation a decade earlier, the President engaged Senator Max Baucus, the 66 year old chair of the Senate Finance Committee, and former South Dakota Senator and health care guru, Tom Daschle, to mount a legislative campaign. Inside the White House, he also constructed two health care teams to advance what became two competing themes – cost and coverage.

The cost team was led by former Clinton aid and Harvard Economics professor, Larry Summer, supported by the director of the Office of Management and Budget (OMB), Peter Orszag. Rounding out the team were two physician economists – Zeke Emanuel, the taciturn brother of Obama’s Chief of Staff, Rahm Emanuel, and Bob Kocher, who had headed up the McKinsey Consulting firm’s health policy division. On the coverage side were Liz Fowler, Baucus’s former health policy lead for the Senate Finance Committee, University of Texas health policy wonk and Daschle ally, Jeanne Lambrew, and Obama’s trusted adviser, Valerie Jarrett.

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There was considerable early discussion about cost which reflected the realization that healthcare had now become so large it was synonymous with the US economy at large.  As Steven Brill recounts in his book, Fed Chairman, Ben Bernacke, said as much at the time with these comments, “the decisions we make about healthcare reform will affect many aspects of our economy, including the pace of economic growth, wages and living standards, and governments budgets, to name a few.” Orszag came armed with numbers citing that the sector wasted at least $750 billion a year. And some years later, President Obama himself reflected that “I believed that reforming our Healthcare System wasn’t a side project, but a vital part of rebuilding our economy…It was clear that we couldn’t address the problem of the middle class falling behind in the long term, without taking on Healthcare in the short term.” But, as Princeton Health Economist, Uwe Reinhardt, stated at the time, “Cutting health care costs means cutting someone’s income.”

Ultimately the steering committee leaned on those who had done it before in Massachusetts. Jon Kingsdale, who ran “Romney Care”, advised the group,“I think politically…we went for coverage before we went for specific cost containment. Though there is a broad agreement on the need for containment, any particular cost containment idea means reducing revenue flow to somebody, and there is always strong opposition from even a smaller party than there is broad depth of broad support. So, I think that’s the right order…So we’re now wrestling with cost containment…trying to control costs too much dooms whatever you do, because the lobbyists will kill you.” And the former Harvard economics PhD candidate, Jonathan Gruber, whose faculty adviser had been none other than Larry Summers, and who was credited with constructing the design of “Romney Care”, advised that lobbyists would broadly support coverage extensions “because that creates more customers. What it won’t allow is cost control.”

They did begin with coverage, copying the 3-legged Gruber design of the Massachusetts law. This included: 1) insurance for all with prohibitions on exclusions for any reason including prior conditions, 2) mandated coverage, with financial penalties managed by the IRS, for those employers who fail to provide insurance, and those individuals who fail to purchase insurance on new federal and state insurance exchanges, and 3) financial subsidies for those who can not afford insurance, with decreasing amounts that eventually peaked at incomes of 400% of the poverty level.

As we’ve seen, cost eventually was addressed as well in “givebacks” from  Billy Tauzin of PhRMA; Karen Ignani, Democratic daughter of a Rhode Island firemen, former health policy expert at the AFL-CIO, and now head of the insurance lobby group, AHIP (America’s Health Insurance Plans); and Rick Umbdenstock, president of the American Hospital Association. The launch of the Obamacare website,, which was the public’s link to new exchanges, was an early disaster. But the memory of that faded rapidly as a new team rebuilt the site, and sign-ups exceeded expectations. At the same time scores of legal challenges to the law were repelled, but not without draining administrative time and energy.

As 2016 arrived, numbers of uninsured were in steep decline, and health care cost projections were being adjusted, in some cases, dramatically downward. The successes have come, in part, without the cooperation of Republican leaning states. 36 states refused to organize new exchanges, leaving it to the federal government to fill the gaps. And initially, many refused to expand Medicaid, after the Supreme Court declared they had the right to decline. Gradually, those states have been reversing those decisions, especially on Medicaid, since the federal government is committed to funding the expanded coverage at 100% for three years and at 90% indefinitely after that. But 18 states continue to hold out.

But in general, the public has responded positively to the Affordable Care Act, which the President insists he is more than proud to see labeled “Obamacare”. Although Republicans have finally suggested an alternative, which would include turning back the clock, and repealing the law, this is highly unlikely. What is more likely is that some of the original pieces of the legislation prioritizing coverage over cost, which were deleted in order to get the law passed, will be added in the future, especially if the Democrats win Congressional control.

In the final segment of this 5 part series, we’ll take a close look at the future of our nation’s premier medical institutions, and recommend to the AMA and AAMC an ethical path of action that decouples clinical care and medical education from scientific research.

The Three Pillars of the Medical-Industrial Complex and the Physician. Part 3. Rapid Cost Escalation.

Posted on | July 6, 2016 | No Comments


Mike Magee

As we have seen, by the time the 1990’s arrived, prospects for the premier academic health systems were looking questionable. The educational enterprise was increasingly underfunded. Inpatient reimbursement continued to decline alongside admissions and length of stay. The massive faculty hirings of the 70’s and 80’s now left the institutions with aging, top heavy faculty, and little room for young, research savvy faculty to advance. Care was increasingly going out-patient, which complicated the training of residents and students. And cost-control, top down administrative pressures, and demands for time commitments to re-engineer patient care processes to increase efficiency and decrease costs were everywhere. Where the large academic centers had become comfortable with a 30% add-on compared to community hospitals, New York Times columnist, Steven Brill, comments that they now felt lucky if they could clear a 15% differential. Part of their solution, a large part, was to pursue more research dollars in earnest.

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Doctors everywhere felt under attack. The numbers of physicians kept increasing as patient utilization rates remained in steep decline. Malpractice rates were skyrocketing, exceeding $100,000 a year in some specialties like obstetrics, orthopedics, and neurosurgery. Private practice opportunities were increasingly rare. Managed care restrictions were pervasive and intrusive, and ate into patient care time. Doctors began to look elsewhere, with a new feeling, “If you want me to be a businessman, I’ll be a businessman”. Opportunities to invest in local for-profit Health Maintenance Organizations, testing facilities, ambulatory surgical units, mobile lithotripsy vans, free-standing CAT Scan and MRI units, all became worthy of consideration. As one health care analyst noted, the physician is “no longer a reliable ally”.

The Balanced Budget Act of 1997 reinforced all these trends by incentivizing the rise of Managed Medicare. The appearance of choice further strengthened the belief among employers that the health care benefits they provided their employees should increasingly be positioned as a “defined contribution” rather than a “defined benefit”. The creation of alternate choices for the Medicare population was predicted to save $115 billion over the next five years. The future survival of hospitals now required more choice, less cost, more efficiency, more ambulatory care, more patient empowerment and shared risk, and more prevention. To accomplish these goals, most hospitals focused on geographic dominance, integrated information systems, continuity of care plans, new information technology with shared compatibility among partners, and an emphasis on predicable cost, measured quality, and documented patient satisfaction.

Into the mix were thrown a vast array of non-profit and for-profit hospitals looking at reorganization as their salvation. The 1980’s had witnessed the closing of more than 600 hospitals. This trend continued for the next two decades, and included closure of hospitals from small rural to large city run public facilities. Many hospitals merged or were acquired. And physicians increasingly opted to be employees of these ever growing health systems rather than compete with them as independent professionals. As the community networks strengthened, the pressures on the top flight academic health centers intensified, as they found themselves competing with increasingly sophisticated suburban hospitals staffed with physicians and nurses they had trained.

What were their options now? They ended up largely doubling down on their differentiating strengths: biomedical research, specialty medical training and care, complex high tech interventional medical and surgical procedures, and care for urban, poor, and very sick patients with the hopes that supplemental funding would be provided. To do this, they signed cooperative research agreements with industry, built research buildings and opened clinical research units, staffed up specialized patent offices with intellectual property lawyers, and encouraged faculty to pursue federal grant money. They also widened their formal affiliations with a range of out-patient care organizations and an array of network hospitals, struck deals with pharmaceutical and medical device companies, and pushed their medical staff to be more productive in hospital-sponsored practice plans which would eventually generated more then 50% of their patient care revenue.

Hospital beds nationwide decreased by 200,000 in the ensuing decade, and yet occupancy rates still hovered at 65%. So the shake out of the hospital industry has continued. As reported by Steven Brill, clearly part of the strategy has been to eliminate the middlemen. This included insurers, and is why many large health systems have now formed their own insurance companies and are working directly with employers. Health economist, Zeke Emanuel, who labored on Obamacare, said, “Aetna is Blockbuster”. He believed their time has passed. But United Health Care CEO, Stephen Hemsley, saw just the opposite. He said, “We operate the largest hospital system in Brazil…We have the data analytic skills, the financial resources, and financing and regulatory experience that hospitals going into insurance may not have.”

It was under these circumstances that President Obama entered office in 2008, and made the political assessment that it was now or never for health care reform. He saw waste and excess everywhere he looked. In Part 4, we’ll look at the numbers and the White House team that designed the Affordable Care Act.

The 3 Pillars of the Medical-Industrial Complex and the Physician. Part 2. Evolution of The Hospitals and Insurers.

Posted on | June 27, 2016 | No Comments


Mike Magee

In Part 1 of this 5 part series, I described the financial power and stakes of the pharmaceutical, health insurance and hospital industries, as revealed in the “givebacks” they granted to the Affordable Care Act in return for policy concessions to the Obama White House. In Part 2, I explore the immediate post-WW II evolution of the hospital and health insurance industries that set the stage for our current conditions.

The historical tracts of both the hospital and the insurance industry have charted intersecting paths, and drawn the active participation of employers who have been bearing, in large part, the costs of employee health insurance premiums since WW II. Employer based health care exploded in the US after the National War Labor Board, which regulated wartime wage and price controls, ruled in 1943 that health insurance benefits would be exempt from the controls. Their action was subsequently reinforced by IRS rulings that these fringe benefits would not be taxed as income. The net effect was that 77 million Americans had gained health insurance coverage by 1950 delivering massive additional cash flow to hospitals. This was further augmented by federal dollars in the form of construction grants from the Hill-Burton Act and NIH research grants.

Up until now, hospitals had been relatively stable, non-profit entities. In the first half of the 20th century, physicians dominated, with reform of medical education and hospital care following the clear directives laid out in the Flexner Report. On the date of the Wall Street Crash initiating the Great Depression in 1929, the country had committed $3.5 billion or 3 1/2% of of its GNP to healthcare. In light of the limited therapies available, this seemed more than reasonable.They relied primarily on a voluntary physician staff, functioning independently under their own set of Medical Staff rules, and were governed by an independent Board of Trustees made up of community luminaries with philanthropic zeal. The poor in the community were treated, to varying degrees, based on the beneficence of their local hospital and physicians. Those physicians, according to biographer Lewis Thomas, were committed to “a life of hard work and modest economic returns.” Physician wages averaged 2 1/2 times those of a skilled worker.

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The focus on “care” not “cure”, began to change with scientific advances during and after WW II. Out of that war came specialization, new therapies, the Hill-Burton Act and NIH research dollars. A decade later, the health sector exploded with growth as medical schools generated ever more physicians.  Medicare and Medicaid supported cost-plus reimbursement, which helped fill the massive number of new hospital beds that had been constructed. Test, treat, cure was now the mantra. Community hospitals controlled 82% of all in-patient facilities, over 50% of the nation’s hospital beds, and 92 % of the admissions. But at the top of the 7000+ hospital food chain, stood 40 or so Academic Health Centers, each with a premier teaching hospital, a medical school, at least one other health professional school, a biomedical research program which collectively received 75% of all NIH grants, a range of residency programs churning out ever more specialists and the latest in technology and treatment for the most complex, highly specialized cases. All of this was supported by prices that were roughly 30% higher than the local community hospitals.

By 1973, the national debate had reverted from cure to cost. The Health Maintenance Organization Act rewarded insurers which created Health Maintenance Organizations or HMOs to manage care and cost. Movement to managed care was further reinforced, when, as a byproduct of the Employment Retirement Security Act (ERISA), corporations could self-insure their own employees with protections from liability. Over the prior two decades, bed capacity had increased by a third. But once employers took control of their own health care, they invariably became very cost conscious, with a goal of dropping 15% of the cost of care. Almost immediately occupancy levels and length of stay dropped precipitously. The recession of 1980-1981 reinforced that trend, as did advances in technology which promoted ambulatory procedures and less invasive interventions in nearly every specialty field.

The National Commission on Social Security, in 1982, quietly inserted an innocent hospital payment reform proposal, and delivered the package to the Reagan White House and Congress in January, 1983. A month later, Reagan approved the measure. It all but eliminated cost-plus hospital reimbursement for Medicare patients, substituting in its place a Prospective Payment System. Episodes of care were bundled under 400+ diagnoses or Diagnosis Related Groups (DRG’s). Under the new system, a patient being treated for pneumonia would be paid a fixed amount for that diagnosis, regardless of how long he or she was in the hospital, and regardless of how many resources had been consumed. If you were efficient and careful, you made money. If not, you ate the difference. The American Hospital Association did not put up a big fight at the time because their analysis suggested this could be a winner for hospitals. Academic Health Centers were supportive because they were awarded extra payments in acknowledgement of their role as educators of medical students and residents, their treatment of more complex patients, their service to the poor and uninsured, and their over-utilization of resources that was part and parcel of an educational training environment.

But the law, along with the expansion of managed care, and employer self-insured cost containment, fundamentally changed the hospital balance of power. Clearly, physicians no longer received a carte blanche in managing their patients in the hospital. Cost now mattered, as did the numbers of ordered tests and therapies, standardization of equipment in and out of operating rooms, and length of stay. Suddenly physicians found themselves being evaluated for both the quality and the cost they were directing. As one analyst put it, “The quiet change in payment methods introduced a cascading set of changes – dramatically shorter hospital stays, fierce competition,among health care payers, and new limits on physician autonomy.”  Another remarked, “how, where, and for how long patients would be treated is being circumscribed by new rules, regulations, and protocols.”

By 1984, the business community saw little relief as their health premium costs exceeded $100 billion nationwide. In response, they experimented with more choice, and lower cost plans. Fully half of all employers changed their offered health plans between 1983 and 1985. Many went for restrictive networks that often limited use of expensive Academic Health Centers. The top 40 or so premier institutions had witnessed spectacular growth since the passage of Medicare and Medicaid, and the explosion of research funding from the federal government. The grants covered a wide array of services and facilities, including reimbursement for direct and indirect costs. They received financial rewards for managing Veterans Hospitals, for covering poor patients, for training federally approved residents, and for a whole lot more.

In the process, the power curve shifted in the large Academic Health Centers. Department Heads now controlled fiefdoms, and contributed money in the form of a “Dean’s Tax”, which the Medical School Dean could use at his discretion. But beginning in the 1970’s and extending into the 1980’s, there was a pull back in this open-ended funding, just as hospital occupancies were rising and managed care scrutiny was expanding.

By the time the 1990’s arrived, prospects for these premier institutions were looking questionable. In Part 3 of this series to follow, we’ll tract the changes over the following two decades that laid the groundwork for the passage of President Obama’s historic legislation.

The Three Pillars of the Medical-Industrial Complex and the Physician. Part I. The Financials.

Posted on | June 24, 2016 | 1 Comment


Mike Magee

Despite the fact that last week Paul Ryan, on behalf of the Republican party, unveiled their alternative to Obamacare, the likelihood that the President’s signature legislation, and the cascade of transformative changes it has unleashed, will be overturned is slim to none. This is because it has pointed America in an appropriate direction, appears to have dampened health care consumption, and is popular among US citizens.

It has also been embraced by the three pillars of the Medical-Industrial Complex – pharmaceuticals, insurers, and hospitals. A look back at the 2009 administrative negotiations and “givebacks”, well documented by New York Times columnist, Steven Brill,  is revealing in that it reflects what each industry had to gain financially in moving toward universal coverage.

When President Obama elected to pursue, as his primary legislative objective, health care reform in 2008, he knew that he would have to co-opt the support of the pharmaceutical industry, the health insurance industry, and the hospital industry. His goals were two-fold. First, he needed to neutralize the potential impact of well-funded opposition to his plans. He recalled the speed with which the Clinton Health Care initiative had collapsed 14 years earlier when these sector lobbyists, reinforced by the famous “Harry and Louise” campaign, attacked what was an eminently reasonable plan. His second goal was to proactively negotiate “givebacks” from each of these sectors as part of a plan to fund new benefits for the uninsured.

The size of those “givebacks”, negotiated with the help of a former Lehman Brother’s health care analyst, Tony Clapsis, and based on the projected 10-year profits that each sector would accrue as a result of near universal health insurance coverage, provided a glimpse into each sector’s financial stake in the health and welfare of the Medical-Industrial Complex. The pharmaceutical industry profit over 10 years was pegged at $200 billion. They ultimately settled on concessions amounting to $120 billion, along with assurances that Medicare Part D drug prices would remain unchallenged, and that drug importation from other countries would continue to be prohibited.

The insurance industry agreed to contribute $102 billion, while negotiating wiggle room in the Medical Loss Ratio (MLR) which defined what percent of a premium could go to administrative costs (read, profits), as well as how large the premium price variance could be between healthy “young invincibles” and older, sicker patients with complex chronic diseases. Insurers wanted a 5:1 spread. The administration insisted on a 2:1 spread. They settled for 3:1. Insurers also received assurances that Medicare Advantage plans would be preserved, along with their profitability profiles.  Finally, the hospital industry’s predicted profit was between $200 and $250 billion. They ultimately settled on a “giveback” of $155 billion, with assurances that federal research dollars would continue to flow, and various formulas to financially support medical education and the care of poor, sick patients would stand.

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The size and similarities of these 10 year profitability figures underscore the fact that the the Medical-Industrial Complex is supported by three powerful pillars, who share and exchange, and compete for resources. And at the center of all this commerce is the physician – the one who writes the prescription, who orders the tests, who admits and operates and treats the patients, and who accepts the insurance payments. In fact, various studies have confirmed that over 70% of all costs incurred by the American health care system are at the direction of a physician.

Now, five years later, the administration, after a rocky start, has met or exceeded its goals for enrollment and cost savings. In short, the public has responded positively to the Affordable Care Act, which the President insists he is more than proud to see labeled “Obamacare”.  Although Republicans have finally suggested an alternative, which would include turning back the clock, and repealing the law, this is highly unlikely. What is more likely is that some of the original pieces of the legislation, which were deleted in order to get the law passed, will be added in the future, especially if the Democrats win Congressional control. These include: 1) Increases in the financial penalties as part of mandated insurance, which have been delayed. 2) A fresh look at an original proposal to expand access to Medicare for those age 55 to 64. 3) Comparative effectiveness research, designed to prove the utility and added value of new pharmaceutical or medical device treatments, which Zeke Emanuel had fought for and lost, will be required in the future. 4) Medicare Part D prices will be re-visited. 5) A comprehensive investigation of conflict of interest in clinical research and the value and integrity of double-blind human trials in the future.

And what of the pillars of the Medical-Industrial Complex, and the physicians entangled in the maze. Clearly, the most vulnerable, at the moment is the insurance industry, which will be dogged by public support for government sponsored health insurance, which is standard fare in every other developed nation. While the Affordable Care Act, in design and execution, has been far from perfect, it has signaled the end of the status quo. 30% Medical Loss Ratio’s, coverage denials, and massive profits by an industry with twice the number of employees as physicians but none of the caring power, is fading in its’ usefulness to society. In its’ place will emerge hospitals with their own insurance arms, self-insured employers with direct contracts with regional health system networks, a few insurers that run nuts and bolts health delivery systems, or public option plans, modeled on Medicare, but with more risk and responsibility for American patients.

The day of reckoning is also on the near horizon for the pharmaceutical industry. 2015 was a year of controversy and bad publicity for the sector. Pfizer and others willingness to seek an inversion and exit America to avoid taxes; unconscionable pricing for biotechnology drugs by brazen venture capital profiteers; and over-exposure of direct to consumer advertising with continued questions about the integrity and transparency of research, all suggest a reversal of their good fortune. First to go will likely be the hands-off negotiations on Medicare Part D pricing. Then will come restrictions on DTC advertising, and tougher standards on underwriting America’s continuing medical education apparatus. And finally, more dramatic exposure of compromised physician “thought-leaders” and their professional associations and institutions who industry has relied upon to endorse and promote over-consumption of products with marginal usefulness, or dangerous consequences like the current opioid epidemic.

Finally, there is the hospital industry. What will become of it – now 5700 or so institutions, of varying quality; rural, suburban and urban; non-profit and for-profit; integrated into expansive systems or free-standing; teaching and research institutions with massive technologic capacity and those with far more modest offerings; all increasingly dependent on federal dollars for survival. What will the future hold for them, and for the physicians who increasingly are in their employ?

The answer to that question will follow in Part 2, next week.

NEJM Critique of US Medical Research – 1966 vs. 2016. A Deeply Conflicted System.

Posted on | June 6, 2016 | No Comments

image.aspx Henry K. Beecher,MGH

Mike Magee

“Assessing the Gold Standard – Lessons from the History of RCTs” , in last week’s NEJM, provided useful historical perspective, but was intentional selective and treaded lightly on the darker side of America’s medical-industrial complex, and its conflicted role in human medical experimentation.

The most significant determinant that defined the direction of medical research in the post-WW II period was not the emergence of randomized controlled trials (the “gold standard”) but money. Over a short two decades, funding of medical research, flowing primarily through the federal government, exploded. Advances by 1950 to a total expenditure of $161 million seemed significant, but they were nothing compared to the $2.3 billion in funding that existed by 1968.(44) By then, financial incentives had solidified a deep and enduring bond forged by medical research leaders who traveled unimpeded from government to academia to corporate offices and back again.

There was a great deal of discussion about ethics in clinical research that accompanied those piles of cash, but, as it turned out, the words did not routinely match the deeds. In the wake of the Nuremberg Trials, the full extremes of Nazi medical experimentation had been revealed years earlier to the full glare of a horrified global audience. It was clear from the directives that followed that medical experimentation in humans could only be justified within certain well-defined boundaries.  Ten rules or principles were laid out.

This was the determination of a worldwide Allied Tribunal that was conducted under the direction of U.S. judges and prosecutors, and which, in all respects, carried the criminal procedural standards of the U.S. government.  And yet, another 25 years would pass before any of the ten agreed upon standards, cited in this code, were cited in a U.S. Court.

Legal scholars attribute this lapse to the professional biases of those in the lead of medical and pharmaceutical sectors in the 25 years following the war. As one prominent medical leader stated of the Nuremberg Code, “It was a good code for barbarians, but an unnecessary code for ordinary physician-scientists.”

The American medical leadership sought refuge in semantics. To them “therapeutic research” that benefited patients while expanding physician knowledge, was an entirely different kettle of fish than Nazi “non-therapeutic” research which meant clearly to do harm to the patients. American Medicine’s noble professionalism was adequate to ensure ethical research, most doctors believed. That was until June 16, 1966, when the New England Journal of Medicine published an article titled “Ethics and Clinical Research”.

The article was written by a highly-respected Harvard physician mentor of Lou Lasagna, Henry K. Beecher, who practiced at the prestigious Massachusetts General Hospital. Dr. Beecher’s opening paragraph said, “Human experimentation since World War II has created some difficult problems with the increasing employment of patients as experimental subjects when it must be apparent that they would not have been available if they had been truly aware of the uses that would be made of them. Evidence is at hand that many of the patients in the examples to follow never had the risk satisfactorily explained to them, and it seems obvious that further hundreds have not known that they were the subjects of an experiment although grave consequences have been suffered as a direct result of experiments described here. There is a belief prevalent in some sophisticated circles that attention to these matters would ‘block progress.’”

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As for motivation for the ethical violations, he was about to catalogue in exquisite detail, he explained, “Since World War II the annual expenditure for research (in large part in man) in the Massachusetts General Hospital has increased a remarkable 17-fold.  At the National Institutes of Health, the increase has been a gigantic 624-fold. This ‘national’ rate of increase is over 36 times that of the Massachusetts General Hospital…Taking into account the sound and increasing emphasis of recent years that experimentation in man must precede general application of new procedures in therapy, plus the great sums of money available, there is reason to fear that these requirements and these resources may be greater than the supply of responsible investigators. All this heightens the problems under discussion…Medical schools and university hospitals are increasingly dominated by investigators.” 

From here, Beecher went on to share the review of 50 distinct American clinical studies with ethical violations. During this period, in and around the time of Beecher’s paper, other alarms were raised, only to be ignored. For example, there was a young physician from Detroit, named Irwin Schatz, who came across the study in a medical journal in 1964.  It’s title was “The Tuskegee Study of Untreated Syphilis: 30 Years of Observation”. He couldn’t quite believe it and shot off a letter to the editor which read, “I am utterly astounded by the fact that physicians allow patients with a potentially fatal disease to remain untreated when effective therapy is available.”

Later records revealed that his unanswered letter had been read by one of the Public Health Service authors who wrote to her superior, “This is the first letter of this type we have received. I do not plan to answer this letter”.  Schatz letter was attached. The study continued for another seven years.

What eventually catapulted the issue to the forefront was a New York Times article on July 26, 1972, titled “Syphilis Victims in U.S. Study Went Untreated for 40 Years.”(51) The whistle blower on what then remained an active human experiment was Peter Buxtan, an epidemiologist for the U.S. Public Health Service. He later said, “I didn’t want to believe it. This was the Public Health Service. We didn’t do things like that.”

In all, 399 infected patients were victimized before the plug was officially pulled on November 16, 1972 by President Nixon’s Assistant Secretary of Health, Merlin DuVal. The official apology for these crimes to humanity would have to wait another quarter century and were delivered by President Bill Clinton who said, “[t]he United States government did something that was wrong — deeply, profoundly, morally wrong.”

Congress did pass the 1974 National Research Act. It finally incorporated some of the protections recommended at Nuremberg. Voluntary consent was now required by law for all participants in U.S. medical research studies that received any federal funding. Study design had to be reviewed and pre-approved on ethical grounds by new institutional review boards (IRB’s) – a body of local professionals who would critique each proposed study and attest to its ethical construct. Finally, the Act established a National Commission for the Protection of Human Subjects of Biomedical Research that was charged to identify “the basic ethical principles which should underlie the conduct of biomedical and behavioral research involving human subjects.”

Case closed. Problem solved. Well, not exactly. In fact, the National Institute of Health has catalogued at least 11 milestone corrective legislative and rule setting events that have occurred since that time.  And through it all, controversy and illegality has continued to swirl unabated. This has not only occurred in far off lands like Nigeria, but also on our own shores as well. Today’s problems are centered, not so much in the arena of treatment of research subjects, although there is always room for improvement, but rather in three derivative areas.

The first is data, or more specifically, how research data and study design is manipulated in pharmaceutical studies to exaggerate benefit and minimize risk in study results that lead to FDA approval.

The second area, not new really since it was the major concern that led to the Kefauver hearings over a half century ago, is the accuracy and purpose of the information that is regularly communicated, largely through marketing departments, to the American people and to their clinicians.

And finally, there is general agreement that the system is ripe with financial conflict of interest, heavily involving physician researchers and “thought leaders” who simultaneously direct academic medical departments, staff government drug review panels, and cash pay checks provided by the very companies whose potential products they are reviewing.

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