A $4.3 Million Dollar CEO for a Not-For-Profit Health Care Insurance Corporation

The US stock markets are at lows unseen for more than 10 years, unemployment is rising, around the world national deficits are increasing, and times are tough for ostensibly not-for-profit Blue Cross and Blue Shield of Massachusetts, the state's largest health care insurer/ managed care organization. Per the Boston Globe:

Blue Cross-Blue Shield's business was affected by the stock market decline, the recession, and the increasing cost of medical care.

Membership at the state's largest health plan declined about 40,000 to just over 3 million.

'The decline in membership had an impact on results,' said chief financial officer Allen Maltz. 'In addition, many of our customers changed their benefits plans to products that have much lower margins.'

Blue Cross-Blue Shield insures employees of national companies that have locations outside Massachusetts, Maltz said, and those customers accounted for some of the drop-off in membership.

Maltz said Blue Cross-Blue Shield aims for a profit margin of between 1.5 and 2 percent. Last year's margin was almost zero. The firm had operating income from its medical claims business of just $1.6 million.

A new state assessment on reserves lowered income by $21 million, Maltz said. Revenue was flat at $6.7 billion, and medical claims were also unchanged at $6 billion.

Like most health insurers, Blue Cross-Blue Shield also relies on investment income, which fell 28 percent to $111 million. Maltz said the firm managed to avoid losses in the market by investing primarily in bonds and avoiding derivative securities that have declined precipitously in value.

Well, things are tough all over. But they are apparently not so tough for Blue Cross Blue Shield's CEO:

The salary and bonus paid to Cleve L. Killingsworth, chairman and chief executive of Blue Cross and Blue Shield of Massachusetts, increased 26 percent last year, to $3.5 million, even though the health insurer's membership declined and its net income fell 49 percent.

Based on previous years' retirement benefits - which Blue Cross-Blue Shield did not report for 2008 - Killingsworth's total pay package was likely about $4.3 million, making him by far the highest paid healthcare executive in Massachusetts.

And what was the justification for Killingworth's stellar pay?

Salaries at Blue Cross-Blue Shield were inflated by a complex executive bonus plan in which senior officials get bonuses based on a rolling average of the previous three years.

'These executives and the company performed and exceeded our expectations,' said Jay McQuaide, a Blue Cross-Blue Shield spokesman. 'They earned these incentives.' The key metrics in the incentive plan are membership and net profit, he said.

The company's board of directors did not do badly either. Unlike most boards of not-for-profit corporations, this one was paid:

The insurer's board members also received a 33 percent increase in base pay, from $30,000 a year to $40,000. Most earn far more because of payments for attending meetings and serving on committees.

Finally, according to the Boston Herald, other executives did quite nicely too:

Bay State health insurance bosses continued to rake in multimillion-dollar compensation packages last year as the state and its taxpayers struggled to pay ever-increasing health-care costs.

Data filed yesterday with the state’s Division of Insurance shows that Blue Cross Blue Shield of Massachusetts, the state’s largest HMO, doled out million-dollar pay packages to five executives, while Harvard Pilgrim Health Care paid its two highest-ranking executives a total of $2.7 million.

Blue Cross’ top earner is Peter Meade, who retired last spring as executive vice president of corporate affairs. Meade took home $4 million, a sum that includes retirement benefits accrued during his 12 years at the HMO.

It's just amazing that with all their talk about "pay for performance," top executives of health care organizations seem to make huge sums year in and year out, regardless of their organization's performance. (As an aside, how could someone say that the company's pay for performance "main metrics" were membership and net profit, when both fell, yet the CEO's pay rose?)

There was a brilliant discussion of the culture that lead to this sad state of affairs in the Times (UK) by Minette Marrin. It was about British bankers, but it just as well could have been about American health care executives:

The filthy rich, as Peter Mandelson affectionately calls them, are different. It is not just that they’re rich but that there’s something about being extremely rich that blurs ordinary perspective in all but the most exceptional people. Power may corrupt, but extreme wealth blinds and deafens.

I first came across the filthy rich just after I was married and went to live in Hong Kong in the 1970s. Leaving poverty-stricken Britain, my husband and I joined a gold rush of bankers and brokers to what was then still a crown colony. What we saw was wealth and conspicuous consumption beyond the wildest dreams of avarice.

Though we weren’t extremely highly paid, we spent a lot of time with people who were. Some were entrepreneurs and others were employees of banks and trading houses that, as today, offered them ways of making megabucks. Soon it became obvious that being very rich is like catching an insidious virus. Some people are able to resist it, but with most people the super-riches virus burrows into your nervous system for life. It blurs your perspective, weakens your grasp on reality and changes your identity into someone who is entitled to be very rich.

Ms Marrin's description of "plutocratic blindness" seems to apply to a CEO of a so-called not-for-profit organization who could claim more than $4 million in a year in which the global economy collapsed, and his own organization did rather badly by any financial measure.

This passage by Ms Marrin seems applicable to the Blue Cross Blue Shield Board who approved this disproportionate pay package:

But I do know things are done quite differently on the parallel planet inhabited by the filthy rich. Remuneration boards unselfconsciously award each other astonishing packages, wrapped up in euphemism.

The lack of selfconsciousness in this case may have been driven by the board's familiarity with how things used to be done in the American financial sector. A quarter of the board's members are leaders in that sector (see post here).

Let me close with Ms Marrin's suggested solution:

The filthy rich culture that has developed in the past 20 years is sick. It needs strong medicine, fresh air, open windows. Above all, what’s needed is a cold dose of fear – fear of failing, of being sacked and of losing the lovely money. Here is an excellent antidote to greed.

Where Is Our Medical Leadership on the Death Traps Known as Misdesigned Healthcare IT?

In my series on health IT (starting here) whose human engineering is ill conceived, philistine and presents clinicians with a mission hostile user experience, I have kept a neutral stance regarding the role of our so-called professional society representatives.

If we were pilots or police officers or even bus drivers asked to use such seriously impaired devices, we and our unions would have declared war long ago. (I worked some years ago as Medical Programs Manager for the regional transit authority in Philadelphia, and say this quite confidently. Mr. Lombardo would likely agree.)

Right next to my Feb. 18 Wall Street Journal letter to the editor on HIT was a letter from the President-elect of the American Medical Association, J. James Rohack, M.D.

Dr. Rohack wrote to the WSJ (emphases mine):

You admit in your editorial "A Health-Tech Monopoly" (Feb. 11) that electronic medical records "might do some actual good." We agree, and that is why we support the health information technology provisions of the economic stimulus bill.

The economic stimulus bill being considered will create important national HIT interoperability standards. These standards are essential to achieve the promise HIT holds to help increase patient safety, improve care coordination and reduce unnecessary paperwork. As is true in other industries, basic standards will provide the essential foundation on which the private sector can build innovative commercial products.

Competition and innovation are bedrocks of America's economic system, as they should be in health care. The HIT provisions in the bill maintain this vision, while building on existing federal efforts to encourage HIT adoption. This bill does not authorize the government to dictate clinical guidelines or national coverage decisions. Medical treatment decisions remain in the hands of physicians.

The bill also provides physicians with significant financial assistance for HIT purchases. This critical support is needed so that physicians can make HIT purchases [why would they want to buy defective and hard to use cybernetic monstrosities at any price? - ed.], and patients can then begin to reap the benefit.

Where's the innovation in vendor HIT products, whose user interaction even after decades of information science, computer science, biomedical informatics, HCI and other research looks like it was designed by high schoolers?

Interoperability standards and financial incentives are, I'm going to venture to say, nearly irrelevant to the poor acceptance of HIT by the average physician in 2009. Our medical leaders seem to be becoming parrots, repeating the irrelevant (in the near term, to 'Joe the Doctor' and 'Rosie the RN') mantras about standards and interoperability, seeing the galaxy while missing the Black Hole whose event horizon they are nearing.

Again, I speak from experience. When I was CMIO, we were getting quite good results from our HIT efforts at Christiana Care a decade ago, long before standards were as well formulated as today, for example as seen at the Consolidated Informatics Initiative site at HHS.

Completely lacking in this relatively milquetoast letter to the WSJ is the issue of the mission hostile user experience presented to clinicians by most current HIT applications, designed as inventory systems by MIS-inclined mindsets rather than as clinical tools (if you don't believe me, then believe the U.S. National Academies and National Research Council, and its informatics pioneers Stead and Barnett):

Current efforts aimed at the nationwide deployment of health care information technology (IT) will not be sufficient to achieve medical leaders' vision of health care in the 21st century and may even set back the cause, says a new report from the National Research Council. The report, based partially on site visits to eight U.S. medical centers considered leaders in the field of health care IT, concludes that greater emphasis should be placed on information technology that provides health care workers and patients with cognitive support, such as assistance in decision-making and problem-solving.

... Most importantly, current health care IT systems offer little cognitive support; clinicians spend a great deal of time sifting through large amounts of raw data (such as lab and other test results) and integrating it with their medical knowledge to form a whole picture of the patient. Many care providers told the committee that data entered into their IT systems was used mainly to comply with regulations or to defend against lawsuits, rather than to improve care. As a result, valuable time and energy is spent managing data as opposed to understanding the patient

I encourage clinicians injured and offended by the hostile products they are being coerced to use, organizationally and now nationally, to write to our medical leadership.

I wrote the following to Dr. Rohack:

Dear Dr. Rohack,

I wish to call your attention to my series on the site of the Foundation for Integrity and Responsibility in Medicine, the multi author blog Healthcare Renewal.

The series outlines the major problems with today's healthcare information technology: poor design and vendor freedom from accountability and information sharing on defects.

The series starts here .

Thus the AMA leadership is informed of these issues. They can ignore them (after all, I'm just a nobody writing on a godforsaken corner of the digital gutter known as the blogosphere), or they can represent their profession.

I encourage others to write their medical leadership as well.

-- SS

Information Technology Makes Healthcare Easier? Is This Industry Trying to Harm Patients? Part 7 of a Series

This post is part 7 of a series on the stunningly poor human engineering of production healthcare IT from major vendors, in use today at major medical centers. These devices provide a decidedly mission hostile user experience, yet with an almost religious fervor are being touted as cybernetic miracles to cure healthcare's ills.

(Note: Part 1 is here, part 2 is here, part 3 is here, part 4 is here, part 5 is here, part 6 is here, part 7 is here, and part 8 is here.)

Want to make a doctor or nurse miserable?

Want to up the odds for error?

Simply force them to review lab results on a screen as sloppily designed and cluttered as this one:

(click to enlarge)

What technical genius programmed this monstrosity? The clutter is enough to impair the best clinicians who have to use such screens day in and day out on their often substantial patient loads.

How is such a screen better than paper?

Does the clinician really need to see subcomponents of panels such as General Chemistry split up all over the place, into sections of columns? Perhaps monolithic columns and horizontal scrolling would be less cognitively taxing? More columns, of course, could be placed in the available screen width if space were not wasted by ... units and Abn's!

Does the clinician really need to see "Abn" as opposed to, say, "A" for abnormals? (At least the abnormals are actually marked in this application, unlike here in "Warning! No warnings!)

Does the clinician need to see units such as mg/dL (milligrams pre deciliter) and mEq/L (milliequivalents per liter) on each and every lab value? Correction - on ANY lab value?

Could not that information be placed - once - in the column or row headers?

(Oh, wait ... as shown here, those headers in some products have a tendency to scroll away, forcing the "track the value with your finger" method of medical error prevention!)

(click to enlarge)

Then there's this, just in from Down Under on clinical decision support, touted as one of the most important benefits of HIT:

Quality of drug interaction alerts in prescribing and dispensing software

Sweidan et al., Medical Journal of Australia 2009; 190 (5): 251-254

Objective: To investigate the quality of drug interaction decision support in selected prescribing and dispensing software systems, and to compare this information with that found in a range of reference sources.

Design and setting: A comparative study, conducted between June 2006 and February 2007, of the support provided for making decisions about 20 major and 20 minor drug interactions in six prescribing and three dispensing software systems used in primary care in Australia. Five electronic reference sources were evaluated for comparison

Results: Six of the nine software systems had a sensitivity rate ≥ 90%, detecting most of the major interactions. Only 3/9 systems had a specificity rate of ≥ 80%, with other systems providing inappropriate or unhelpful alerts for many minor interactions. Only 2/9 systems provided adequate information about clinical effects for more than half the major drug interactions, and 1/9 provided useful management advice for more than half of these. The reference sources had high sensitivity and in general provided more comprehensive clinical information than the software systems.

Conclusions: Drug interaction decision support in commonly used prescribing and dispensing software has significant shortcomings.

More in part 8.

-- SS

We're Only In It for the Money: the Disproportionate Funding of University Administrators by Academic Medicine

We have previously discussed how academic medical leadership seems to care more about how much money their faculty bring in than their clinical, teaching or research performance. Why academic medicine came to put money ahead of mission has never been clear. However, a little bit of insight has been (probably inadvertently) provided by an announcement of a new university president.

After the early resignation of President Trani, under fire for his coziness with tobacco money (see post here and links backwards), Virginia Commonwealth University (VCU) just announced its new President, Michael Rao. The official announcement of his appointment included:

The VCU Board approved Rao’s salary of $488,500, $176,113 of which is paid by state funds and $312,387 from VCU Health System and private funds, for the positions of VCU president and president of the VCU Health System. His total compensation package, approved by the board, also includes $66,500 in deferred compensation, a $60,000 housing allowance, and use of a car, all paid by private funds. Separate from the compensation package, Rao will receive a signing bonus of $275,000, paid by private funds. He will be required to repay $200,000 if he leaves the university within five years.

This announcement is unusual, perhaps unique, in that it breaks down the sources of a university president's salary. Very few universities publish any details about their budgets, and hardly ever explain money flows among their different sub-divisions.

What is striking is that 63% of President Rao's salary will come from the health center. However, the health center only accounts for about one-eighth of the university's students. (Total university enrollment is more than 32,000, and 2008 Health Sciences enrollment was 4278.) So, the president of a university will derive approximately five times more of his funding from the health sciences division of the university than would be expected by the size of that division.

I suspect that this situation is not unique, or even uncommon. What is unique is that VCU has made it public.

(Note also that President Rao's total compensation, while far more than that of the average faculty member, is nowhere near as outrageous as that of some other university presidents. Finally, in the interests of disclosure, I should note that I was a full-time faculty member at VCU from 1987-1994, and still serve as an adjunct faculty member there.)

In my experience and humble opinion, it seems that the pressure academic leaders put on their faculty to bring in ever increasing amounts of money is out of proportion to the needs of academic medical centers or medical schools, or even the greed of their leaders. Instead, it may be that academic medical centers and medical schools, in turn, are under pressure to be the cash cows of their universities.

Many universities have expanded their administrative staffs and budgets, and raised the salaries of their top leaders far more than inflation or increases in enrollment would justify. They have also erected palatial buildings, funded extravagant sports programs, and provided students luxuries unheard of when the baby boomers went off to college.

University leaders may well have taken advantage of the abundant money flowing through health care, especially that supplied by pharmaceutical, biotechnology and device companies to generate research and "education" to market their products, and that supplied by a physician and hospital reimbursement system rigged to pay handsomely for an ever increasing number of procedures (see post here). But having become accustomed to this money to fund expansive administrative budgets, it is no wonder that university leaders have pushed for more and more financial production from medical school faculty, no matter what. And funded by their cash cow academic medical sub-divisions, it is no wonder that university leaders have turned a blind eye towards, if not actively encouraged financial entanglements by faculty and administrators that would dull their scruples about the sources and reasons for their outside financial support.

If we want universities and their academic medical components to go back to putting their mission before their margins, we need to wean university leaders off the narcotic of surplus funds provided by their academic medical sub-divisions' external financial support.

An economist's advice on healthcare information technology

In a Feb. 28, 2009 New York Times article entitled "How to Make Electronic Medical Records a Reality", we get advice from the same profession in part responsible for the worst economic downturn since 1982 and perhaps 1929:

... It is scarcely surprising, then, that only about 17 percent of the nation’s physicians are using computerized patient records [to various extents, 13% of that 17% only having basic functionality - ed.], according to a government-sponsored survey published last year in The New England Journal of Medicine.

"This is really not a technology problem,” observed Erik Brynjolfsson (bio), an economist at the Sloan School of Management at the Massachusetts Institute of Technology. “It’s a matter of incentives and market failure.”

No, Prof. Brynjolffson, it is a matter of technology - as in, the misuse thereof. It's also a matter of logic failure, incompetence, conflict of interest, and vendor exploitation of physician learned helplessness.

Vendors are already getting $70 to $100 million and up for these products from individual medical centers, enough to build entire new hospitals. What more incentive to produce reasonable, safe, effective products do they need?

On the other hand, the incentive you need to get physicians and other clinicians to purchase and use ill conceived, cavalierly designed HIT that saps their time and cognitive focus is not monetary. The necessary incentive is HIT that presents an acceptable user experience and that facilitates real, live clinicians in improving the quality of care.

Only in healthcare could products with hundreds or thousands of known defects (known to individual healthcare organizations in isolation, that is, some being critical defects that can kill patients and others merely raising risk of clinician cognitive overload that promotes error), be sold to other healthcare organizations without disclosure of such defects. Further, contractually the customers are usually restricted from sharing those known defect lists with other organizations.

Only in HC could vendors of defective products also be shielded from liability from their products' defects on "learned intermediary" principles, as if these learned intermediaries cannot be misled or caused to make errors by defective information.

As I mentioned in part 5 of my series on HIT's mission hostile user experience, I have now become aware of organizations with defects/clinician complaint lists for contemporary HIT including CPOE, EHR etc. amounting to well over a hundred pages in one case, and well over a thousand individual items in another, and a number of unquantified but considerable in-betweens. How many defects lists are concealed?

(Perhaps it's time to start calling in the state Attornies General on the basis of sale of known defective and possibly harmful software, without disclosing such defects, in my mind a form of fraud?)

One wonders if Prof. Brynjolffson is aware of issues of HIT mission hostile user experiences due to gross violations of the most basic tenets of user centered design such as I've outlined starting here. How about vendors using hospitals as guinea pigs for apparently poorly tested products as in this Civil Complaint (PDF) against HIT vendor AllScripts?

How about the issues at my site on HIT difficulties?

My final comment:

Economists, please spare the medical profession from your advice. It is not helpful nor wanted.

We are getting tired of cross-occupational invasions by biomedical and healthcare informatics dilettantes. If you've not gone to medical school, not done a residency, and/or (for those many competent nonmedical informatics professionals) not had considerable education and experience in information science, computer science, biomedical informatics, social informatics, and other areas, you're an HIT dilettante. Period. No ifs, no buts, no debate.

(Such people perhaps need to read "Unskilled and Unaware of It: How Difficulties in Recognizing One's Own Incompetence Lead to Inflated Self-Assessments" and stop rendering expert advice in areas in which they lack expertise.)

I leave it to other bloggers here to determine if anyone cited in the NY Times article holds financial interests in HIT-related companies.

-- SS