Health Care “Reform” by Insiders Who Benefit from the Status Quo: Media Fails to Report Conflicts of Interest

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. Originally published at Health Care Renewal

Perceptions that the US health care system is dysfunctional and needs major reform go way back.  A timeline from the Tampa Bay Times noted President Theodore Roosevelt’s proposal for a national health service in 1912.  Nonetheless, as we have discussed endlessly, most attempts at reform failed, and health care dysfunction seems to be getting worse.

One big problem may be that we don’t understand how much discussion of health care reform is driven by those who benefit from the status quo.

A Personal Anecdote

When I began my academic career in 1983, I was often in the audience for talks about how to fix health care by people billed as experts.  Often these talks seemed oddly disconnected from the realities on the ground for a junior assistant professor with a lot of clinical and teaching responsbilities.  Worse, many of the solutions they offered seemed to entail greater burdens for health care professionals, with no obvious compensation other than the warm feeling that we would be benefiting society.  Who else these solutions might benefit was not discussed.

One talk given a bit later stands out in my memory. On November 29, 2001, one Dr John W Rowe gave the prestigious Levinger Lecture at Brown University entitled “Good Health: Can we Afford It?” (referenced here, see items for 11/14 and 11/16)  As I recall, Dr Rowe spent considerable time scolding us hard working physicians for overuse of medical interventions leading to endless increases in health care costs, and promising more burdensome bureaucratic interventions to rein in our follies.  While promising more burdens on physicians, Dr Rowe did not dwell on how the resulting cost savings might benefit him in his role as CEO and Chairman of Aetna Inc.  Aetna had purchased the notoriously physician-unfriendly US Healthcare, and thus had become a big for-profit health care insurer already known for imposing bureaucratic burdens on physicians in hopes of decreasing their utilization, while increasing the company’s revenues (look here).  Were Dr Rowe’s pontifications really about improving health care for all Americans, or about justifying his previous management behavior, and perhaps supporting the price of his shares in Aetna? Why was Aetna’s public relations given the patina of an academic lecture?

These days, health care professionals continue to be exhorted about health care reform.  Many such pontifications may be not so much about true health care reform as about preserving the fundamental status quo which has benefited and enriched so many insiders. The interests of the pontificators are often less obvious than those of Dr Rowe.  Maybe that is so why there has been so little real reform, and what little reform there has been seems to be under continuous attack.

Two Examples of How Hard It Is to Discover the Interests of Health Care Policy Pontificators

In the last few weeks I posted about two recent ostensibly authoritative pontifications.  One was about ways to address the worsening problem of physician burn-out (see this post). It was written by the CEOs of large, non-profit hospital systems, joined by the CEO of the American Medical Association.  The other was about a health care reform proposal from the prestigious National Academy of Medicine (see this post).  A rather uncritical article in the Washington Post hailed it as a “radical idea” because it was written by “doctors.” In both cases, I was skeptical, mainly because many of the proponents had conflicts of interest, mostly undisclosed, that suggested they were already benefiting mightily from the current system.

However, it gets worse.  While I thought my posts were based on reasonable efforts to find undisclosed conflicts of interest affecting the authors of these exhortations, within a few weeks I realized I had missed one important item affecting each.  The lesson is that the web of conflicts of interest that ensnares the insiders who run most of US health care is even more complex and adherent than any of us realizes.

Dr John Noseworthy, Author of the Health Affairs Post on Reducing Physician Burnout: CEO of the Mayo Clinic, But Also Now Nominated to be a Director of Merck

Dr Noseworthy, CEO of the Mayo Clinic, was the lead author of a post in HealthAffairs about reducing physician burnout.  (Oddly enough, none of the proposed action items seemed to involve increasing physician autonomy by reducing the power of managers over health care professionals.)

Two weeks after Noseworthy and colleagues’ post appeared, an article on the Minnesota Public Radio website reported that Dr Noseworthy has just been nominated to a seat on the Merck board of directors.  Presumably the possibility of this nomination had been known at the time the post was published.

I had previously written that two of the authors of the Health Affairs post were on corporate boards.  One, Dr Paul Rothman, was already on the board of Merck.  As corporate directors, they have fiduciary responsibilties to promote the revenues of their corporations.  Now it turns out there were at least three such board members among the health system CEOs who had pontificated to physicians about how to reduce their burn-out.

Yet the power of such health care systems, whose management is often mission-hostile, and who often put revenue ahead of physicians’ professional values (per the shareholder value theory), is arguably a major cause of physician burnout.  Furthermore, Merck, in particular, has had its share of management misbehavior as demonstrated by a recent $830 million settlement for deceiving shareholders, a mere $5.9 million 2015 settlement for deceptive marketing, and multiple setttlements, cumulatively totaling more than $1 billion, plus one guilty plea for the historic deceptive marketing of Vioxx (see this post).

So to what extent are the authors of this pontification about reducing physician burnout (without really giving physicians much new autonomy) insiders benefiting from the status quo in health care?  It may be more than what we think, even now.

Mr Leonard Schaeffer, Author of National Academy of Medicine Article on Health Care Reform: Member of the Boards of Wahlgreen Boots, Quintiles, scPharmaceuticals, but Also Long-Term Director of Amgen

Mr Schaeffer was an author of the National Academy of Medicine article, now published online in JAMA, about health care reform.  (Oddly enough, none of the “vital directions issue areas” mentioned in the article involved real challenges to the power of large health care organizations, particularly for-profit corporations, or increased autonomy for health care professionals.)

The version of the article published online by the NAM did not include any explicit disclosures of conflicts of interest.  It did note that two authors were full-time employees of health care corporations, one was a consultant to health care corporations, one was a lobbyist for health care corporations, and one was on the boards of health care corporations.  The online JAMA version added more disclosures, but these were incomplete.  In my post, I noted that fully 13 of the 19 authors had major ties to large health care corporations, as employees, lobbyists, consultants or  board members.

In particular, Mr Leonard D Schaeffer was listed in the NAM version as simply affiliated with the University of Southern California, but I found was actually on the boards of Wahlgreens Boots Alliance, Quintiles Transnational, and scPharmaceuticals Inc.  That was still an incomplete picture of his conflicts of interest.

A ProPublica article from February, 2017 recounted how big pharmaceutical companies engaged Precision Health Economics to wage public relations campaigns to try to justify high pharmaceutical prices.  The article noted the following about Mr Schaeffer.

Amgen has ties to all three founders of Precision Health Economics. Working for other firms, Philipson has twice testified as an expert witness for Amgen, defending the company’s rights to drug patents, according to his curriculum vitae. The other two founders, Goldman and Lakdawalla, are principals at the Leonard D. Schaeffer Center for Health Policy and Economics at USC, which received $500,000 in late 2016 from Amgen for an ‘innovation initiative,’ according to public disclosures. Goldman said the funds were unrestricted and could be used at the center’s discretion. Robert Bradway, the CEO and chair of Amgen, is on the advisory board of the university center, and Leonard Schaeffer, a professor at USC and the namesake of the center, sat on Amgen’s board of directors for nearly a decade.

With funding from Amgen, the Schaeffer Center hosted a forum in Washington, D.C., in October 2015 on the affordability of specialty drugs. Before a panel focused on the new cholesterol treatment, Goldman cautioned against lowering drug prices.

So Mr Schaeffer, in addition to his current board positions, turns out to have had a long relationship with Amgen.  Given that according to the 2013 Amgen proxy statement, Mr Schaeffer retired from the board with at least 28,277 shares of Amgen stock and options for 15,000 more, he may have current financial ties to the company.

So once again, to what extent were the authors of the 2017 NAM report on health care reform (which did not challenge the influence of large health care corporations over the health of US citizens) insiders benefiting from the status quo in health care?  It may be more than what we think, even now.


Health care professionals, policy makers, and the public are constantly harangued by apparently unbaised experts about health care reform.  Yet many of these authorities are insiders who benefit from the status quo.  Many of their financial connections to the corporations that make the most money from the US commercialized health care system are not disclosed.  It may take considerable investigation to determine their involvement in a web of conflicts of interest that drapes over the US health care system.

Meanwhile, audiences should demand that those who lecture us about health care reform disclose all their financial conflicts of interest.  Any whiff of deception about their personal interests should suggest intense skepticism.

True health care reform requires honest discussion of the issues.  Honesty in this case entails complete and detailed disclosure of the discussants’ conflicts of interest. Until such honest is the rule, be very, very careful about taking sanctimonious spiels at face value.

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  1. Paul Greenwood

    One of the reasons Europe has a different healthcare model (and Switzerland is second only to the US in excessive cost) is WAR. The NHS grew out of the Emergency Medical Service of WWII handling civilian casualties of bombing and keeping a healthy population for fighting and national stability. Most European countries (except Switzerland) were combat zones with displaced population and disease. The need to provide full cover to protect against cross-infection was the basis of total cover.

    The USA has not faced such a situation since 1865. No Japanese invasion or bombing on Mainland USA

    1. Piotr K

      Historical background need to be consider also. In medieveal ages hospitals were build and financed by the wealthiest citizens of the cities/areas- king, duke, lord, mayor etc. It was a kind od Christian way of charity, and sharing back tax income by “state” official. Today, in US you have “capitalism”. And it became more and more agressive.
      Imagine in modern times, to force walthiest peoples to share they profit with poor peoples…
      You can imagine screams that, this is comunism…

  2. makedoanmend

    The NHS came about because people who fought in WWII wanted a piece of the action after the war. They didn’t fight and sacrifice themselves so that insurance companies could profit. They lived through the former deprivation of inadequate health care prior to the war. Aneurin (Nye) Bevan was the Labour member who brought the NHS to fruition despite the grave economic conditions the UK faced post-war. (One might also ponder how the monied (moneyed) establishment when faced with a disciplined group of citizens with war experience felt it might be necessary to acquiesce to mere labourer’s demands during this era.)

    As Bevan stated in fulfilling Labour’s 1945 manifesto:

    “The collective principle asserts that… no society can legitimately call itself civilised if a sick person is denied medical aid because of lack of means.”

    A nice and brief history of the NHS is available from the NHS itself:

    Whilst the war revealed that the “state” could indeed create responsive programs and institutions, it was the implacable will of the electorate and certain Labour politicians post-war that made the NHS a reality rather than a talking point.

    1. Mark P.

      Implacable will, indeed. Here’s Bevan on his enemies —

      “No amount of cajolery, and no attempts at ethical or social seduction, can eradicate from my heart a deep burning hatred for the Tory Party that inflicted those bitter experiences on me. So far as I am concerned they are lower than vermin. They condemned millions of first-class people to semi-starvation.’

  3. financial matters

    Nice job bringing these points to light.

    In an interview of Noam Chomsky by Abby Martin, Chomsky makes the point that the lower 70% of the population on the economic scale are disenfranchised. As an example the majority of people want a single payer/national health care program but the press keeps saying that it is ‘politically’ impossible. That is, it doesn’t matter what the public wants.

    The press doesn’t seem to be helping in the fight against the power of the large insurance and pharmaceutical companies.

    Trump campaigned on fighting for lower drug prices with some of the recent well publicized abuses but his meeting with Noseworthy doesn’t seem to bode well.

  4. oh

    Healthcare should be a right not an option. Ever since Tricky Dick and his Congress ushered in the HMO’s health care costs have gone up, with the overriding cause being profit seekers at every level. Insurance companies serve to limit payments and decrease the overall level of care received. Hospitals serve to compound this by the use of RVU’s (Relative Value Units) so that the most expensive treatments are more $$$ for Physicians vis-a-vis preventative and/or one-on-one diagnosis/care sans expensive procedures. Hospital Administrators make a huge bundle (salary+bonuses+options). The net result is that even caring physicians are forced to gravitate toward high RVU care and worsening of health care and higher costs.

    Insurance companies need to be removed from the health care. Hospitals should be regulated. Physicians’ compensation need to be uniform rather than based on RVU’s (i.e. profit). Single payer will (hopefully) accomplish a lot of this. Then perhaps we’ll have decent health care.

  5. Loblolly

    To the sociopath MBAs that run everything, labor is a cost to be reduced.

    To the sociopath MBAs that run everything, we are all labor and a cost to be reduced.

  6. Parker C Dooley

    The author failed to mention Mr. Schaeffer’s connection with the Anthem-Wellpoint merger. A search on “Leonard D. Schaeffer Anthem Wellpoint merger compensation” brings up many interesting tidbits, including:

    At the time, I estimated that the proposed compensation for Mr. Schaeffer’s 2 years of “work” in arranging this merger, after leaving HHS, amounted to the annual health insurance premiums of 100,000 families. As a burned out rural primary care doc, I was pretty pissed at the time, and remain so after learning of his subsequent career.

    The web of conflicts is large indeed.

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