Why HCA Is Like Barclays And JP Morgan 3

Earlier this week the New York Times reported on a pattern of seriously deficient cardiac care at a number of hospitals owned by HCA. Understandably, the most common reaction is simple disgust over more bad cardiology behavior. After the Mark Midei case, after subsequent and even worse cases in Maryland, Pennsylvania, and elsewhere, the easy thing is to say that many cardiologists, and especially interventional cardiologists, are corrupt and greedy.

But the larger significance of the HCA story has not been generally understood.

The real problem at HCA wasn’t so simple. Yes, some interventional cardiologists may have been acting like teenagers on spring break, and many may well have been guilty of poor medical judgement, and in some cases much worse. But that’s not what’s at the root of the HCA case.

And the real problem at HCA wasn’t that the hospital had no mechanism to deal with bad cardiologists. In fact, as readers of the Times article discovered, HCA had all sorts of internal and external controls and reviews. Time after time these reviews worked as intended and correctly identified the problem at hand.

The real problem at HCA was that all the oversight in the world meant nothing compared to the bottom line, and that power and authority flowed with the money. The problem is best exemplified by one anecdote in the Times story about a doctor at one HCA hospital:

Dr. Prasad Chalasani… was highlighted by the hospital in a 2009 business plan as being the most profitable doctor at the facility. “Our leading EBDITA MD,” the plan described him. (Ebitda, or earnings before interest, taxes, depreciation and amortization, is a measure of corporate earnings.) Just a few months earlier, hospital executives had received an outside review that characterized Dr. Chalasani as too quick to perform catheterizations, often without first doing the stress tests necessary to determine whether a patient needed the invasive and costly test.

Another example, featured prominently in the Times article, is the story of a nurse whose contract was not renewed after he reported  that unnecessary procedures were being performed at his hospital, although an internal HCA investigation had substantiated his allegations.

Medical judgement, the needs of patients, the responsibility to payers: these were all secondary. Oversight was blown away like so many  autumn leaves. Time and again, HCA executives ignored the reports of their own investigations or failed to implement programs and systems that would prevent them from recurring.

Now I don’t mean to suggest that the bad actions of individual physicians should not be taken seriously But there will always be incompetence, and there will always be individuals who seek to game the system to get more than their fair share. The question is whether the encompassing system is designed to encourage or hinder that behavior. Problems may arise even in the strictest systems, but they probably won’t lead to a federal investigation.

I think the best way to understand HCA is to look at the banks, since in many respects HCA acted like Barclays or JP Morgan, two banks whose inner workings have been exposed by recent scandals.  I’m not a financial journalist by any means, but several clear lessons have emerged from these scandals.

The problem– at HCA and the banks– starts with a bad individual or  individual, but ultimately the problem grows into a much bigger problem because of the failure of the larger system controlling and restraining these individuals. JP Morgan’s London Whale, it could be argued, was only doing his job. Traders are risk takers, after all. But the bank’s systems of checks and balances failed when it refused to empower the risk management team to harpoon the Whale.

Like Barclays role in manipulating LIBOR, HCA cynically used its insider status to manipulate the rules and distort the playing field to benefit its own financial interests. One of the most grotesque anecdotes in the Times story tells how HCA executives exploited rules designed to promote ethical care and used them for far less idealistic purposes. As one HCA executive wrote:

“Clearly, we have protected ourselves under the peer review umbrella and have released very little information.”

In another message, one HCA representative “said the company had successfully used confidentiality rules to withhold” a damaging report “from the Florida attorney general, whose Medicaid Fraud Control Unit had started an investigation.”

Banks and hospitals. Our health– economic and physical– depends on them. Yes, they are businesses, but the very reason for their existence requires that profitability should never be the sole motive for their behavior.

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3 comments

  1. Larry,

    Great observations here.

    One thing hospitals and banks have in common is that the quality of their work is obscure and not easily measured by the consumer. Systematic abuses can go undetected without direct supervision and public reporting.

    At least a banker’s work is directly supervised by their peers. In a hospital, there is no direct supervision on the actions of the doctors. It is quite easy to work alongside another doctor for years without really knowing how good or bad they are. Current quality measures are easily gamed and do not really measure what they are intended to measure. Any practicing physician will tell you that.

    Because our patients are not able to evaluate the quality of their care and external quality metrics are so poor, I wonder if the time might be right to introduce real supervision into medical practice. In his excellent piece in the New Yorker this week, Atul Gawande spends some time discussing ICU doctor supervision via the electronic ICU system. It may be time to extend this type of “check and balance” system into more clinical arenas. Imagine a physician supervisor making rounds into cath labs and ORs, reviewing charts and interviewing MDs. This sort of thing would likely be resisted by many doctors, but would be a better way to pick up outliers than computerized checklists.

    Now that most doctors are employees of hospital systems, it would be feasible to set up such a supervision system (assuming federal privacy rules don’t get in the way).

    Jay

  2. Pingback: Guest Post: Is It The Right Time To Introduce Real Supervision Into Medical Practice? « CardioBrief

  3. This is not uncommon.
    8-10 years ago,. a cardiologist in AZ was/is putting stents into normal coronaries under the watchful eye of a roomful of cath lab personnel and hospital administrators all over Phoenix.

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