Lambert here: “… [S]ome sort of bubble into which no negative karma is allowed to penetrate…” True, I think, for most leaders of large organizations, not only in health care. But Earl Bakken’s bubble appears to be especially hard to pierce, and Medtronics appears to be an especially bad actor. At least I hope so.
By Roy Poses, MD, Clinical Associate Professor of Medicine at Brown University, and the President of FIRM – the Foundation for Integrity and Responsibility in Medicine. Cross posted from the Health Care Renewal website
On Health Care Renewal, we have posted story after story about amazingly well paid leaders of big organizations presiding over amazingly bad organizational behavior (including subversion of mission, conflicts of interest, deception, fraud, kickbacks, various other crimes and outright corruption). Yet the leaders often seem curiously disconnected from what occurs on their watches, while they are sometimes hailed as “visionaries,” and at times exude messianic confidence.
Medtronic’s Founder on its Sacred Mission
A recent article appearing in an unexpected place provides an example of leaders’ excess confidence in their own righteousness. In the IEEE (Institute of Electrical and Electronics Engineers) Institute was a commentary by Earl Bakken, the founder of medical device/ biotechnology giant Medtronic, modestly proclaiming the “secrets of corporate success.”
Keep in mind that while Mr Bakken founded the company, at age 91, while no longer its leader, he proclaimed, ” I stay involved with my company.” As such, he remains proud of its mission statement,
In 1960, when corporate mission statements were rare, I wrote one that has never changed. It remains the company’s guiding principle. There are six tenets, but the first one is the most important: To contribute to human welfare by application of biomedical engineering in the research, design, manufacture, and sale of instruments or appliances that alleviate pain, restore health, and extend life.
Starting in the 1970s, I met with all new employees, explained our history and mission, and in each of their hands I placed a medallion imprinted with the mission statement. I encouraged them to live by it—at work and at home.
Note that the official mission also includes,
To strive without reserve for the greatest possible reliability and quality in our products; to be the unsurpassed standard of comparison and to be recognized as a company of dedication, honesty, integrity, and service. [ital added]
Apparently, he believes that under the “visionary leadership” and “astute direction” of the current, this mission remains central to the organization.
At Medtronic, we live our mission. It’s the basis for how we behave in relationship to our stakeholders, each other, our communities, and the world. But it also guides our relationships with ourselves. We live the Medtronic Mission every day in truly genuine ways by serving others. I am proud to have a mission that is so deeply woven into the fabric of this company that improves millions of lives throughout the world.
Here’s to dreaming on.
Honesty? Integrity? – the Company’s 10 Year Track Record
I hate to disillusion a 91-year old, but in light of the company’s last 10 year track record, as discussed on Health Care Renewal, he does appear to be in a dream world.
Medtronic has provided our blog with lots of material, including some amazing stories about conflicts of interest (starting in 2006, here, here, here, here, here, here, here, here, and here,) and revolving doors (here, here, here, and here).
The company has also made a series of legal settlements of various allegations of infamous behavior, in chronological order…
2006
– We discussed detailed and vivid allegations that Medtronic had been paying off doctors starting in 2003.
– Medtronic subsidiary Sofamor Danek settled for $40 million allegations that it gave kickbacks to doctors in the form of sham consulting fees and lavish trips (look here).
2007
As Bloomberg summarized in 2014,
Medtronic agreed in 2007 to pay about $130 million to settle consumer suits accusing the device maker of hiding defects in its defibrillators.
2008
– Medtronic subsidiary Kyphon settled a suit for $75 million and signed a corporate integrity agreement for allegations that it defrauded Medicare through a scheme that lead to excessive hospitalization for patients who received the company’s spine surgery device (link here)
2010
Per the Bloomberg 2014 summary again,
The company agreed to a $268 million settlement of suits in 2010 over allegations that fractured wires in another line of defibrillators caused at least 13 patient deaths.
2011
– Medtronic settled for $23.5 million two other federal lawsuits alleging it paid kickbacks to encourage physicians to implant its devices (look here).
2014
In June, we discussed a settlement Medtronic made of allegations that Medtronic gave kickbacks (that is, bribes) to doctors to get them to use its cardiac devices.
2015
In April, 2015 we discussed three settlements made by Medtronic:
– Its subsidiary EV3 settled old allegations that it coached hospitals how to overbill the US government for procedures using its products
– The company settled allegations it gave kickbacks to physicians to induce them to use its neuromodulation devices.
– The company settled allegations it lied to the US military about US origins of its devices.
(And by the way, we will not belabor the contrast between the statement’s committment to “recognize the personal worth of employees,” and the gargantuan payments made to certain employees, that is, the top managers, all who got over $3.5 million in 2014, and the “visionary” CEO, who got over $12 million, look here.)
Summary
Someone needs to wake up Mr Bakken. He may still believe in the mission statement, and wish that it is central to his company. However, the track record seems to suggest that the mission statement has been honored often in the breach.
Perhaps the problem is that Mr Bakken is really much more detached from the company he founded than he now admits. However, I worry that this immensely positive spin suggests that he, like many other health care oragnizational leaders, live in some sort of bubble into which no negative karma is allowed to penetrate. Thus convinced of their own innate goodness, they can provide no check on continuing manifestations of corporate greed, most likely with the solace of the own fortunes they build up.
IMHO, we need to break up these huge health care organizations which have become so big that those who run them cannot be in touch with what really goes on. We need to reestablish the accountablity of leaders, and no longer allow them to get credit for all the good that happens, and dodge responsibility for all the bad. True health care reform would entirely transform health care leadership, so that it can become well-informed, supportive of the mission, unconflicted, less self-interested, honest, and certainly law abiding.
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Popping the bubble indeed. Since the accumulation of money has become the sole driving point in society today, those “earning” the most money cannot see anything wrong with their actions or even look to closely at the outcomes. The money reward has been made and that is all that matters. Is this attitude evil or just criminally short sighted? Criminal is the more hopeful perspective because the solution entails the enforcement of laws. Extirpating evil is another matter entirely and take a different tract.
While it is easy to see the delusional and isolated lives our cultural leaders live, it is probably more important to recognize how this delusion is transmitted to everyone in society. Breaking up large corporate structures will only begin when people realize that they no longer what to participate in this charade.
Living as human beings is not a zero sum game. Living with nature is not a zero sum game. Gardening taught me those lessons.
I doubt breaking large corrupt organisations into smaller corrupt organisations will make much difference.
We have to prosecute and enforce existing laws and introduce new laws to catch newer more creative forms of corruption. Then design systems that better incentivise appropriate behaviour.
Really how does simply breaking up companies stop corruption? Maybe it reduces some individuals personal clout, little else.
Corporations are efficient organisations. My first day as King would be to empower, organise and focus regulatory agencies. Second day start legislation to diminish the power and control of financial capital. Making corporations and other organisations more accountable to employees, customers, society and the environment.
Corruption and Power. By turning citizens into consumers, the oligarchs have taken all power away from ordinary people. The revolutionary and radical effects behind this action are finally impacting the majority of people in a negative way. The good days are over.
The main propaganda tool was convincing people that government was the source of the problem, not the corrupt corporate structures that depended on government support for their survival. Corporate power rivaled government power and has now completely taken over. A structure only interested in the accumulation of private wealth and power needs to be reformed. What large corporations are having a positive net effect on human society?
Corporations are most efficient at concentrating political and economic power upon a few unaccountable individuals. When corporations control the government, there is no democracy.
Effectively fighting corruption can only happen on a small scale because the power structure needed to work on the large scale no longer exists. Non-participation and rejection of the dominant ideology is a strong beginning. Working within this system is like living in a fanticy world- or a bubble.
Viewing the world through the lens of accountability and responsibility will be the next revolution.
Living in a world without corruption, now that is a radical idea.
I’m a great believer that top management (and their Boards) of any type of business will live in a bubble unless and until the law requires that all fines and lawsuit payouts for egregious company wide practices first be taken from salaries and bonuses of top management and Boards of Directors. So much that it allows them to keep only ten times the lowest paid weekly employee’s annual salary, which will be a huge fine indeed to those that see double, triple, or more than that in a week.
Because the reality is that the reason so many of our conservative ‘leaders’ and corporate asses talk of skin in the game is that they know that unless they are on the hook for anything they do not give a damn.
Why the arbitrary limit of ten times the lowest paid? If the goal is to help them “be in touch”, why not make the bastards live for a year on the exact pay of their lowest paid?
Both good ideas and as I’ve tried to point out to fans of the current crop of democrat politicians if there’s no punishment things escalate until there is punishment, and fines are not punishment they’re cost of doing biz. Having to live for a year on your lowest paid wage, I wouldn’t call it a salary, they get $7.25/hr and they better be on time or they’re fired. That’s punishment…
. . . unless and until the law requires that all fines and lawsuit payouts for egregious company wide practices first be taken from salaries and bonuses of top management and Boards of Directors.
The other day, or was it a few weeks ago, the financial press announced in celebratory fashion that Loyd Blankfein and Jamie Dimon were now billionaires. As employees of banks, they were now personally, billionaires.
If those types of laws were in effect, they would be in the hole by at least a few billions, each, and there wouldn’t be enough time left, for them to “earn” their way out of it. Capital punishment, as it were. Their money would be getting morcellated.
Unfortunately, these two have an undue influence when it comes to enacting personal liability laws. And so do the rest, at the top.
ask inconvenient questions and you will be fired.
like the wsj reporter who asked yellen about the fed leaks.
this is the way the system keeps you in check.
say anything out of the line, especially about Israel or CEO / visionary complex (and these two are highly overlapping), you will not be able to pay your mortgage anymore.
anyone who is using real names on the internet will have a rude awakening one day.
There is an anti-kick back law on the books for Doctors and corporations. Why isn’t anyone enforcing this? Not only that, we are notsupposed to allow monoplies. What happened to that? Health care is now a monopoly and is destroying peoples lives instead of helping. Obama care is a nightmare and must be over turned. This country is screwed and WE the People are allowing it. God help us (those whom are worthy) and for the rest, let the devil have his full dues.
Corporate charters should be for limited, renewable periods with regular reviews and a public comment period. There is no reason that corporations should not be subject to capital punishment.
Old saying: “There’s no fool like an old fool”. Either that or he just babbles the words put in his mouth by his raving legions of “yuppie nerds”.
For this Aetna CEO, mindful management means yoga for employees