Which Frogs A-Leaping?

Reported so far mainly in medical news outlets, e.g., in WebMD health news, was a survey from the Leapfrog Group naming the US best hospitals. There has also been some local coverage in areas in which some of the named hospitals are based, e.g., here in the Star-Telegram.

The Leapfrog Group proclaims itself to be "a voluntary program aimed at mobilizing employer purchasing power to alert America’s health industry that big leaps in health care safety, quality and customer value will be recognized and rewarded." It is usually described as a group of large employers out to improve health care.

Is that description accurate? Who are its members.? The most recent list is here.

On it are some well known large companies, such as Boeing and IBM. But what is most striking about its membership is the prevalence of health care corporations. A full 14 of 49 members (28.6%) are health care corporations. These include pharmaceutical companies, e.g.,

• Boehringer Ingelheim,
• Eli Lilly and
• Sanofi-Aventis.

These also include health care insurers and managed care organizations, e.g.,

• Aetna Inc,
• Blue Shield of California,
• HCA,
• UnitedHealth, and
• Wellpoint.

These include hospitals and hospital networks, e.g.,

• Greenville Hospital System, and
• Heartland Surgical Specialty Hospital.

And these include other health care companies, e.g.

• Milliman (purveyors of care guidelines), and
• Thomson Healthcare (providers of health care information resources).

The members also include companies who, while not being purely in health care, have significant health care businesses, such as General Electric.

One would expect that companies who make money by providing health care goods and services may have different ideas about health care costs and quality than companies who do not do any health care related business.

So it seems that it is the truth that the Leapfrog Group is an organization of employers, it is not the whole relevant truth. In fact, it appears that the Group includes significant representation of companies who have vested interests in health care being done in certain ways. Thus, its ideas about how to improve quality and lower costs may have been influenced by the vested interests of its members, which may not represent just the interests of employers who provide health insurance to their employees. At least, the organization should make clear that it includes "employers" who also sell drugs, sell health insurance, manage care, and market health care information.

This seems like another example, in a somewhat different dimension, of conflicts of interest in health care, and of the failure of such conflicts to be clearly disclosed. This also seems like another demonstration that things are rarely what they seem in the complex and not always honest world of health care, particularly in the US.

In my humble opinion, full disclosure of all relevant conflicts in all dimensions, and consideration of whether certain kinds of conflicts should be not merely disclosed, but reduced or eliminated, might go a long way to improving our problems with health care costs, quality, and access.

"Sunlight is the best disinfectant."

Note, see our previous post here about a previous version of Leapfrog Group membership.

ADDENDUM (19 September, 2007) - On the Running a Hospital Blog, Paul Levy posted a bit more positively about Leapfrog, although he finished somewhat ambiguously by wondering whether the group has "lost importance" by hopping "over their own approach."

The WSJ Health Blog provided more detail about the LeapFrog hospital quality report here.

Post Title → Which Frogs A-Leaping?

Not Passing the "Holy Cow" Test: UnitedHealth Group's Leadership Draws More Criticism

We have previously posted about the tremendous remuneration received by Dr William McGuire, CEO of UnitedHealth Group (see most recent post here). This largesse has attracted considerable media attention, and now has generated public criticism, and drawn the ire of some UnitedHealth Group stock-holders.

The Minneapolis-St Paul Buisness Journal reported that two advisor firms that suggest how institutional investors should vote their proxies, Institutional Sharehold Services (ISS) Inc. and Proxy Governance Inc advised withholding votes from two members of the compensation committee of UnitedHealth's board of directors who are up for election at today's annual meeting. They are Mary Mundinger, who is also Dean of the Columbia University School of Nursing, and James Johnson, a former CEO of Fannie Mae. ISS stated, "the over-$1 billion that Dr [William] McGuire currently holds in paper gains shows that the committee has not applied the 'holy cow' test, as fiduciary duty requires." We previously posted (here) about the apparent conflict of interest between Dean Mundinger's fiduciary duties to UnitedHealth Group and its stockholders, and her role as a thought leader in health services research. Her publications have advocated for advanced practice nurses to take over from doctors in some areas of health care, which would coincidentally lower the costs of health insurers, such as United Health Group. In some recent publications she did not disclose the apparent conflict of interest generated by her position on the board of directors of UnitedHealth Group.

The Associated Press reported that "Minnesota Attorney General Mike Hatch ... [will] press the state's $50 billion investment fund to vote against UnitedHealth Group CEO Bill McGuire for a new term as board chairman to protest McGuire's compensation." Bloomberg News reported that the California Public Employees' Retirement System (CalPERS) demanded a meeting before UnitedHealth Group's annual meeting to discuss the stock options granted to McGuire and other top UnitedHealth managers. CalPERS President Rob Feckner wrote, "these stock option grants are an insult and add injury in a market of skyrocketing healthcare costs in America, and as the third-largest healthcare purchaser, we find this situation intolerable." In response to CalPERS' complaints, the Business Journal reported that UnitedHealth Group offered to reform certain governance practices, and end stock-option grants to a few highly compensated managers, but not to rescind any stock option grants made previously. CEO McGuire also took the opportunity to defend Mundinger and Johnson, who he said have "intimate knowledge regarding our company's areas of focus, are experienced in public company matters, and embody the highest standards of integrity."

McGuire further defended his receipt of stock options. According to the Associated Press, he said "his pay has not come from at the expense of affordable health care." Instead, he said his pay cost shareholders money. His words were, "this isn't a giveaway of money that occurs out of premiums of health care recipients. These are shareholder dollars." However, even he admitted, "but they're still a lot. You can't get away from that."

Meanwhile, a report in the Wall Street Journal (available here through the St Paul Pioneer) suggested that UnitedHealth Group's alleged practice of back-dating McGuire's stock options could lead the company open to a substantial income tax liability, thus potentially costing the shareholders even more.

Finally, it turned out that shareholders are not the only ones upset at the their treatment at the hands of UnitedHealth Group's top managers. TheStreet.com reported that some UnitedHealth Group employees are irate at what they consider to be their own poor health benefits. Reporter Melissa Davis wrote, "UnitedHealth ranks as the most diversified health insurer in the country, a company that takes great pride in offering other companies a wide range of products - including some of the richest benefits available in the marketplace today. Yet the company's 55,000 employees have just three choices when it comes to their own health care coverage. And all of these are so-called 'consumer-driven' health plans." In a recent email to TheStreet.com, an employee wrote,

We UHG [UnitedHealth Group] employees -- who don't earn millions per year but perform a vital function for the company -- are left having to pay much more out of our own pockets. Maybe [McGuire] could give his own employees part of the millions he is using for the butterflies at the University of Florida so that we could have a normal co-pay plan like we used to, and like they offer most other employers ... [Meanwhile] , the UHG benefits people won't even address our concerns with the plan. They just say that is what is being offered, and we have to either take it or not.

The UnitedHealth Group annual meeting is on for today, so we will see what happens there. Of particular interest is how the Dean of the Columbia University School of Nursing will fare as a candidate for continued membership on the UnitedHealth Group board.

Meanwhile, UnitedHealth Group continues to serve as example of a big, influential health care organization that treats its top managers very well. Yet there are questions about how it treats not only its own employees, but also its stockholders, the actual owners of the company. And if these groups may not feel that their well-being is the company leadership's first priority, how should patients and physicians feel about the priority given to them? The most charitable answer I can give is: be very, very skeptical.

ADDENDUM (May 3, 2006): Via the Associated Press and Sacramento Business Journal - at the UnitedHealth Group annual meeting, only one shareholder spoke out about CEO McGuire's compensation, but he was the only such speaker to get applause. Mary Mundinger and James Johnson were both re-elected to the board of directors, but 28% of stockholders withheld votes from them. This is a fairly high rate of disapproval for a corporate board election.

Post Title → Not Passing the "Holy Cow" Test: UnitedHealth Group's Leadership Draws More Criticism

Leapfrog Over What?

In the US, large employers have become more vocal about the need to control the cost of their employees' health care, for which they pay, and improve its quality. Leading the charge on this one has been the Leapfrog Group, which announces itself as "an initiative driven by organizations that buy health care who are working to initiate breakthrough improvements in the safety, quality and affordability of healthcare for Americans." The Group proclaims that "today, doctors and hospitals are paid without regard to the quality or affordability of the care they provide. This practice discourages efforts to deliver better and more efficient care. Leapfrog and our members are working to create real incentives to improve care through new payment practices. We also encourage consumers to choose high quality health care providers."

In a 2005 article in Health Affairs written by Robert S Galvin (director of corporate health care at General Electric), and Suzanne Delbanco (CEO of the Leapfrog Group), the authors proclaimed, "large employers can play a unique role in theU.S. health care system, using private-sector purchasing approaches to procure health benefits for their employees. Most employers believe that the appropriate use of market forces, such as public disclosure of physician and hospital performance measures, incentives to create price- and quality-sensitive consumers, and rewards for better care, is the optimal way to control costs and improve quality." So, " in 2000 a small group of large employers formed the Leapfrog Group to address these shortcomings in the market. They developed purchasing principles to deliver a new message to health plans and providers about the imperative of swift action to "leapfrog" over the current state of poor value."

The Leapfrog Group describes its members thus "Leapfrog has over 170 members who are made up of Fortune 500 companies and other large private and public organizations that provide health benefits for their employees, retirees and dependents. Together they spend nearly $67 billion each year on health care for 36 million Americans in all 50 states." Perusual of the Leapfrog Group's membership list does include some prominent, large corporations that employ many people, for example, Citigroup Inc, and Qwest Communications International Inc.

(It also includes many health care related companies, including pharmaceutical companies like AstraZeneca, Eli Lilly, GlaxoSmithKline, Merck and Co, and Schering-Plough, and managed care companies, like Aetna Inc, Cigna, HCA, Humana, and UnitedHealthGroup, just to name a few, which may have particular interests in quality and affordability issues beyond those entailed by their status as large employers who pay for their employees' health insurance. But that is for another day.)

Thus a recent article in the Wall Street Journal (available here from the Pittsburgh Post-Gazette) adds some irony for this Friday. The article is about how "former top executives at many corporations are receiving partial or full lifetime medical coverage on top of pensions valued at millions of dollars." Furthermore, "companies often provide their top executives with more generous health-care plans than other full-time employees get and then continue to provide the richer benefits through retirement." Most of these benefits are not clearly disclosed by the companies' public filings. Two relevant examples:

• "Citigroup Inc. promised to pay the premiums and out-of-pocket expenses for both health and dental care for Chairman Sanford I. Weill and his wife now, and it will continue to provide those benefits for the rest of the Weills' lives, the company's proxy statement says. Citigroup will also continue to pay for any taxes Mr. Weill owes on the imputed income arising from these benefits. A company spokeswoman says the benefit dates back to a 1980s contract and isn't available to other executives."
• "Regular employees who lose their jobs can apply for continued health-care coverage under Cobra, the federally mandated requirement that employers of a certain size allow departed employees to remain in the company health plan for some 18 months. However, the coverage, which can cost more than $1,000 a month, can be too expensive for laid-off workers." However, "Qwest Communications International Inc., pay[s] 100 percent of executives' Cobra costs, according to filings. A Qwest spokesman confirms those details but declines to comment."

Not to be too heavy-handed, but as mentioned above, Citigroup Inc, and Qwest Communications International Inc are both members in good standing of the Leapfrog Group. It looks like some large employers' concerns about controlling the costs of health care do not apply to their top employees. Top executives of such corporations may be well insulated from the sorts of concerns about health care that affect their employees. Yet it is the top executives, not the employees, who are represented in such organizations as the Leapfrog Group. Any changes that the Leapfrog Group manages to make in the provision of health care to their employees are not likely going to affect these top executives. So what is it, again, that the Leapfrog Group wants to leap over?
But as F Scott Fitzgerald said, "the very rich are different from you and me."

Post Title → Leapfrog Over What?

A Tale of Three Ironies: University of Miami's Janitors Still Have No Health Insurance

There are no lack of ironies in an emerging story about the University of Miami.

There has been an ongoing dispute involving the university, and a company called Unicco with which it contracts to provide janitorial services, and the Unicco's local employees. The Service Employee's International Union (SEIU) has been trying to organize the janitors. Recently, in one of its statements, a janitor who has worked for at the university for 25 years and makes $6.80 an hour claimed, "I was here the first time the university formed a committe to talk about our wages. I was making barely over minimum wages then, and I still am now." (See the Miami Herald story here.)

The union has just taken a strike authorization vote. In support of the vote, a worked at the university's down-town medical campus, which includes Jackson Memorial Hospital, said, "I am expected to clean the medical facilities at Jackson without safety equipment, without gloves, without training, and without health insurance, all for $6.40 an hour." (See the South Florida Business Journal article here.)

So the first irony is that the maintenance workers at the University of Miami medical center do not have health insurance provided by their employer.

What makes this story more interesting is how impetus built for the recent escalation of this dispute.

Two weeks ago, the New York Times ran a relevant article (available here, but requires subscription to view.) Was the article about health care policy? Not really. It was a Times Magazine profile in "The Way We Live Now" series about University of Miami President Donna Shalala, the former Secretary of Health and Human Services in the Clinton administration, and one of the principal advocates of Clinton's health care reform plan, which was meant to provide universal health care insurance.

According to the Times, Shalala lives in a 9000 square foot mansion (owned by the university), with mango trees in the garden. She drives a Lexus (hybrid, naturally). She owns a 29 foot boat, but doesn't get to use it much. She has house-hold help who makes her bed for her.

After the Times article was published, a Washington Post commentator wrote,

Note to the Haves: When involved in a labor dispute, skip the luxury home profile.

Then the story hit the blogsphere. Wonkette's post on the story was entitled, "Let Them Eat Mangoes."

So the second irony is obvious.

But there is a third irony.

Not reported by any newspaper, so far, is another responsibility Shalala now has. In her spare time, Shalala is a director of UnitedHealth Group, the parent company for the UnitedHealth managed care organization, and hence has a fiduciary duty to the UnitedHealth. This company's mission statement includes,

UnitedHealth Group is a diversified health and well-being company dedicated to making the health care system work better. The company directs its resources into designing products, providing services and applying technologies that:
* Improve access to health and well-being services;
* Simplify the health care experience;
* Promote quality; and,
* Make health care more affordable.

The benefits received by directors are as follows, per United's 2005 proxy statement,

Directors who are not Company employees receive an annual retainer of $30,000, a $1,500 fee for attending each Board meeting in person ($750 for attending by telephone), and a $1,000 fee for attending each committee meeting in person ($500 for attending by telephone). Directors also receive the standard fee for attendance by telephone if they are unable to attend a meeting, but receive an update by telephone prior to or after the meeting. In addition, we pay the Chairman of each of the Audit Committee and the Compensation and Human Resources Committee an annual retainer of $5,000.
We provide health care coverage to current and past directors who are not eligible for coverage under another group health care benefit program or Medicare.
Non-employee directors also receive grants of non-qualified stock options under the UnitedHealth Group Incorporated 2002 Stock Incentive Plan (the “Stock Incentive Plan”). Under the Stock Incentive Plan (and terms approved by the Compensation and Human Resources Committee with respect to non-employee director grants made pursuant to the Stock Incentive Plan), our non-employee directors receive three types of option grants: (1) initial one-time grants of non-qualified stock options to purchase 36,000 shares of our common stock; (2) quarterly grants of non-qualified stock options to purchase 5,000 shares of our common stock; and (3) conversion grants made pursuant to an election by a director to convert annual retainer and meeting attendance fees into options to purchase our common stock.
The initial grants are made automatically on the date the eligible director is first elected to the Board of Directors and become exercisable over the following three years at the rate of 12,000 shares per year. The quarterly grants are made automatically on the first business day of each fiscal quarter and become exercisable immediately upon grant. The conversion grants are made on the day of each regularly scheduled Board meeting and become exercisable immediately upon grant. The number of shares covered by a conversion option will equal four times the amount of the retainer and meeting fees foregone, divided by the fair market value of one share of our common stock on the date of grant.

According to the proxy, Shalala had received options for 30,000 shares of stock by 2005.

Gotta love those mangoes.

Post Title → A Tale of Three Ironies: University of Miami's Janitors Still Have No Health Insurance

Refusing to Hire Smokers to Reduce Health Insurance Costs

Montgomery County, Pennsylvania, is considering whether to stop hiring anyone who smokes, according to the Philadelphia Inquirer. The reason is to save health insurance costs. The Chairman of the County Commissioners, James Matthews, said, "if we can cut down health care cost by not hiring smokers, let's do it. This is not about taking away anything from anybody."
This is another example of the confusions resulting from having employers pay for their employees health insurance (presumably with money that would otherwise have increased their salaries). A small, but growing number of employers obviously assumes that this practice, which arises from history and tax law, gives them a license to either control their employees behavior or exclude employees whose private behavior raises the risk of bad health outcomes.
Of course, if one takes this to the logical extreme, think of all the sorts of people an employer could refuse to hire on the grounds that their private behavior increases their health risks....

Post Title → Refusing to Hire Smokers to Reduce Health Insurance Costs

How Intrusive Should Employee Health Programs Be?

We had previously posted about Weyco, the company which fired workers who would not submit to testing to see if they were smoking after-hours.
Today the Washington Post reported on a growing number of firms which are developing increasingly intrusive efforts supposedly to improve their employees' health. One example is PacifiCare, the West Coast managed care organization. The current PacifiCare health promotion program is strictly voluntary, but includes, for example, the availability of computer software into which the employee enters a record of his or her entire dietary consumption and exercise. However, the program's leader, Dr. Sam Ho, PacifiCare's Chief Medical Officer, reportedly said that "the company plans to introduce modifications to make it stricter in the next few years. Parts of the program may become mandatory, and there may be monitoring of reported indicators of health such as weight loss and exercise."
Other examples include "a Florida sheriff's office is requiring some applicants to take a polygraph test with questions about their smoking habits. Omaha-based Union Pacific Corp. last fall stopped hiring smokers in seven states."
But, as Lewis Maltby, President of the National Workrights Institute, asked, "do we really want employers conducting an extensive sruvey of employees' every unhealthy lifestyle choice? Do you really want your boss asking you what you eat and what you do for recreation?"
Again, some of this reflects a fundamental confusion. Because of US tax law and history, employers often pay for health insurance on behalf of their employees, using presumably dollars that would have gone into the employees' salaries instead. But some employers now thinks this makes them responsible, not just for paying for health care, but for their employees' health in its entirety.
I submit that large corporations, no matter how well intentioned, cannot possibly make better health care decisions for their employees than their employees could make for themselves. And not all may be so well-intentioned.

Post Title → How Intrusive Should Employee Health Programs Be?

Light Up at Home, Lose Your Job

I previously posted on some fundamental confusions caused by having employers pay directly for their employees health insurance. One was employers thinking that such payments entitle them to control their employees' health-related behavior, even off the job.
The Detroit News just reported that Weyco, ironically a medical benefits adminstration firm, fired four workers because they refused to be tested to see if they were smoking during off hours. The company already had stopped hiring smokers, and fined workers who continued to smoke. Weyco President Howard Weyers said his motivation included "saving money on the company's own insurance claims," according to Reuters. An editorialist also quoted him as saying, "I don't want to pay for the results of smoking." Next on his agenda, again according to Reuters, is to "tell fat workers to lose weight or else."
The trend is spreading locally in Michigan, as Kalamazoo Community College is refusing to hire smokers to "reduce health care claims by 10 percent," per Sandy Bohnet, its Vice President for Human Resources.
The federal tax laws allow companies, but not individuals to deduct health insurance payments, so employers take money that could have added to employees' salaries to pay directly for their health insurance. Because they "pay" for employees' health insurance, some employers now seem to think they own their employees' bodies.
As a physician, I am no fan of smoking, but firing employees just because they smoke (off the job) just adds insult to injury. Of course, more rational tax laws could let individuals could make their own decisions about health insurance and health-related behavior, and be the ones responsible for their actions.

Post Title → Light Up at Home, Lose Your Job

Employers' vs Employee's Control of Health Care

In the US, most employers provide employees health insurance benefits. The reasons for this have to do with history and tax law. In World War II, because of wage controls, employers could not bid for scarce employees by offering higher salaries, so they offered other benefits, such as health insurance, instead. Furthermore, employers can deduct employees' health care insurance from their income for tax purposes, while individuals cannot generally deduct what they pay for their own health insurance. This arrangement gives employers, rather than individuals, control over what health insurance options they can choose. It also can even further tilt the balance of power and control over health care to large organizations (large employers) and away from the individuals who actually need the care. Such large organizations may not always make decisions about health care that are best for their individual employees.
One example is an argument that was distributed over two other health care blogs. Medical Rants included a post from Managed Care Matters which argued that "the real issue employers have with health care costs is they have NO sense for their return on the investment. " Thus "what employers SHOULD be thinking about is the demonstrated ability of a health care provider to 'deliver' healthy, fully functional employees and families." Of course, it really is the patient who should be concerned about his or her health care provider's abilities. How a corporate benefits manager could figure out the performance of all employees' health care providers, and then sensibly figure out how to improve them, is unclear. A few comments made this point more eloquently.
A more fundamental confusion appears in a story out of Detroit. A local medical benefits administration company, Weyco, Inc. has apparently decided not to hire any new cigarette smokers, and to fire any current employees who refuse to quit. The rationale by the company president, "increasing health care costs were choking his business." I am a strong advocate of quitting smoking, but as the Detroit News editorialist wrote, punishing smoking employees by firing them has surely "gone too far."

Post Title → Employers' vs Employee's Control of Health Care