Medical School Faculty Have Been Propping Up Academic Medical Centers, But Now Its Squeezing Their Education and Research Bottom Lines

One of my former fellows emailed me an article from Stat+ titled “Hospitals Have Been Financially Propping Up Medical Schools, But Now It’s Squeezing Their Bottom Lines”. The article reports that hospitals have been financially supporting medical schools and are feeling their bottom line squeezed (1). An example cited is the purchase of the University of Arizona Medical Center in Tucson by Banner Health and an agreement by Banner to help both of Arizona’s financially struggling medical schools. Financial statements show that Banner has dedicated roughly $2 billion to the schools and a faculty medical group it bought as part of the 2015 deal. Banner is blaming these expenses for shrinking its operating margin from 5% before the deal to 1% today (1). The businessmen who purchased the academic medical centers initially embraced these mergers but now are facing the financial reality of managing a medical school (1). It seems likely that there will be increasing friction between hospitals and their affiliated medical schools competing for funds. These editorial points out the other side of coin, i.e., that the medical schools are financially shoring up academic medical centers.

Count me as one who is not overly sympathetic to businessmen in charge of academic medical centers. They now collect the pro fees from physicians, paying themselves first. Banner is a good example where the CEO made in excess of $25 million in 2017 compared to the average $155,212 earned by physicians (2). This means the CEO earned more in 2 days than the average physician earned in a year or about $164 for every $1 earned by a physician. As medical education has become more expensive, medical schools now find themselves increasingly reliant on the money they get from their faculty seeing patients and less able to count on other revenue sources, like federal research funding or tuition (Figure 1).

Figure 1. Source of medical school income (1). Click here to view Figure 1 in a new enlarged window.

Furthermore, many physicians, especially pulmonary and critical care physicians, worked above and beyond during the COVID-19 pandemic (3). The pandemic’s resulting disruptions affected academic and educational pursuits such as research productivity, access to mentoring, professional development and networking and personal wellness (3). These disruptions were compounded for faculty at high COVID-19–volume medical centers where clinical responsibilities were necessarily prioritized. Many recognize that it is important to prepare for a postpandemic accelerated burnout syndrome that disproportionately affects early-career physician-scientists at high-volume centers. However, rewards for service have largely been unfulfilled (3).

One quick comment on the validity of hospital ledgers. Physicians are usually shown the finances that businessmen want them to see. The accounting can be prepared to justify further physicians sacrifice of even more time and money. Hospitals tend to see the money generated by physicians, nurses and other healthcare providers as “their” money (1). They see a revenue stream going to a medical school as robbing them of “their” profit and want to know what they get for it (1).

All the above stems from the “hyperfinancialization” of medicine and applying a corporate structure to institutions which should be not-for-profit other than in name only. It is hard to pinpoint an inflection point in medicine, the point in which the direction changed and the mission changed. Maybe it is because in reality the inflection point is not a point but a large blotch, a series of smaller dots in coalesce into a bigger stain brought on by greed. I worry that the core of medicine has been forever damaged; that the doctor patient bond has been replaced with institute/provider - patient service. This model has proven to be more costly, less rewarding and associated with higher burnout. Yet, we continue to move forward with this model. Mergers between community-based physicians and hospitals which are supposed to bridge the gap between evidenced-based care and practice-based care has only served to devalue the intangibles in medicine further, always looking for what can be standardized and more importantly… billable. A corporate structure with a board, CEO, and a variety of vice presidents and other corporate titles has not served the public well. Physicians make less, administrators make more and hospital services have declined or not improved (4). One needs to only look at outcomes such as life expectancy and costs as a percent of GNP (gross National product) to recognize there is a problem (5).

Many, including myself, remain skeptical of the intrusion of business interests into medical education. The oversight of academic medical centers provided by organizations such as the Accreditation Council for Graduate Medical Education (ACGME) that protects the public’s interests remain inadequate. Presently only a written statement must be provided every 5 years that “documents the Sponsoring Institution’s commitment to education by providing the necessary financial support for administrative, educational, and clinical resources, including personnel.” This is to be reviewed, dated, and signed by the designated institutional official (DIO), a representative of the Sponsoring Institution’s senior administration, and a representative of the Governing Body (6). It seems unlikely that review every 5 years by a DIO and other officials employed and dependent on medical center support is likely sufficient.

To provide oversight I recommend that a system be developed to hold medical center administrators accountable for decisions that lead to a decline in efficiency at both in the medical center and their affiliated medical schools (4). If they are in charge of medical care as they seem to think they are, then deficiencies need to be laid at their feet - the same for medical education and research. After all they now credential the healthcare providers and any deficiencies would seem to have resulted from a poor work environment or  poor administrative judgment in credentialing. It is time that administrators are held to the same standard. Physicians are required to have continued medical education, board certifications, etc. for credentialling. Present hospital systems where a board elects its own members with the nomination and blessing by the hospital CEO need to end. The chief of staff should be elected by the hospital staff and the majority of members of a hospital board need to be independent of the CEO and knowledgeable about the practice of medicine at that medical center (7). If administrators are not acting in a manner that promotes the doctor patient bond, increases the access to care, promoting cost containment in a transparent manner, and promote physician well-being, then it is time for them to go. 

Richard A. Robbins MD

Editor, SWJPCCS

References

1. Bannow T. Hospitals have been financially propping up medical schools, but now it’s squeezing their bottom lines. Stat+. April 14, 2022. Available at: https://www.statnews.com/2022/04/14/hospitals-medical-schools-financial-relationship-tension-squeezing-bottom-line/ (requires subscription).
2. Robbins RA. CEO compensation-one reason healthcare costs so much. Southwest J Pulm Crit Care. 2019;19(2):76-8. [CrossRef]
3. Kliment CR, Barbash IJ, Brenner JS, Chandra D, Courtright K, Gauthier MC, Robinson KM, Scheunemann LP, Shah FA, Christie JD, Morris A. COVID-19 and the Early-Career Physician-Scientist. Fostering Resilience beyond the Pandemic. ATS Sch. 2020 Oct 23;2(1):19-28. [CrossRef] [PubMed]
4. Jeurissen PPT, Kruse FM, Busse R, Himmelstein DU, Mossialos E, Woolhandler S. For-Profit Hospitals Have Thrived Because of Generous Public Reimbursement Schemes, Not Greater Efficiency: A Multi-Country Case Study. Int J Health Serv. 2021 Jan;51(1):67-89. [CrossRef] [PubMed]
5. Cohen J. Dismal U.S. Life Expectancy Trend Reflects Disconnect Between Dollars Spent On Healthcare And Value Produced. Forbes. Nov 1, 2020. Available at: https://www.forbes.com/sites/joshuacohen/2020/11/01/dismal-us-life-expectancy-trend-reflects-disconnect-between-dollars-spent-on-healthcare-and-value-produced/?sh=3657f353847e (accessed 5/2/22).
6. Accreditation Council for Graduate Medical Education. Institutional Requirements. Available at: https://www.acgme.org/globalassets/pfassets/programrequirements/800_institutionalrequirements2022.pdf (accessed 5/2/22).
7. Robbins RA. Time for a Change in Hospital Governance. Southwest J Pulm Crit Care Sleep. 2022;24(3):43-5. [CrossRef]

Cite as: Robbins RA. Medical School Faculty Have Been Propping Up Academic Medical Centers, But Now Its Squeezing Their Education and Research Bottom Lines. Southwest J Pulm Crit Care Sleep. 2022;24(5):78-80. doi: https://doi.org/10.13175/swjpccs023-22 PDF

Deciding the Future of Healthcare Leadership: A Call for Undergraduate and Graduate Healthcare Administration Education

Good medical leadership is the cornerstone of quality healthcare. However, leadership education for physicians has traditionally been largely ignored, with a focus instead on technical competence. As a result, physicians in many cases have abdicated their role as medical leaders to others, usually businessmen without medical training or expertise, and often a lack of understanding of the human issues inherent to healthcare. Recently, the Southwest Journal of Pulmonary, Critical Care & Sleep published a manuscript, “Leadership in Action: A Student-Run Designated Emphasis in Healthcare Leadership”, describing a curriculum designed to develop future healthcare leaders (1). Hopefully this and similar curricula will prepare physicians in setting direction, demonstrating personal qualities, working with others, managing services, and improving services (2). 

The US suffers from a crisis in healthcare partially rooted in a lack of physician- and patient-oriented leadership which has led to “hyperfinancialization” in many instances. Beginning in the 1980’s there has been an explosion in administrative costs leading to reduced expenditures on patient care but a dramatic rise in total healthcare costs, the opposite of efficient care (3). The substitution of primarily businessmen for physicians as healthcare leaders has at times led to the bottom line being the “bottom line” for assessing success in healthcare. Although it is true that metrics of “quality of care” are often measured, quality of care is hard to define and implement in a way that functionally addresses the concerns of the healthcare system, patients, and physicians. Furthermore, the concept that business personnel acting alone can improve the quality and efficiency of healthcare is difficult to support. It seems to us that the combination of business acumen, an understanding of financial realities, an appreciation of physician needs and their careers, and a deep understanding of the human side of patient care is what is needed. We believe that educating and empowering physician leaders could begin to address this need.

As can be seen in many instances in the country, new medical schools and many training programs are being created as part of, and “report” to, large health care systems, including for-profit, “not-for-profit”, and non-profit organizations(4-6). We must be very cognizant of the potential conflicts in priorities that may occur in such situations, as well as potential opportunities. While a concern could justifiably be that a system or organization focused primarily on finances might neglect the human or science-based aspect of medical training, there could also be opportunities to create leadership training that takes advantage of leadership qualities and skills from both business and medicine. On the other side of the coin, university-based training programs cannot neglect the realities of today’s healthcare system where a facility with administrative and financial issues is required for successful leadership.

We must begin to train physicians to be administrative leaders early in their careers. Leadership training in medical school such as the program described in the article by Hamidy et al (1), and other programs like a residency dedicated to providing a broad medical experience as well as administrative experience under the supervision of physician administrators would be a great start. We already see many physicians in leadership returning to school to complete MBA programs, but training must start earlier if physician leaders are to be successful. The Institute of Medicine has recommended that academic health centers “develop leaders at all levels who can manage the organizational and system changes necessary to improve health through innovation in health professions education, patient care, and research” (7).  To this end, a few healthcare organizations such as the Mayo Clinic, the Cleveland Clinic, the University of Nebraska Medical Center, and UT Tyler are all headed by physicians and could provide the necessary education with administrative emphases on care and financial stewardship, rather than pure profit (8-11). These better trained administrators would hopefully earn the cooperation of their providers and business partners in providing high quality care that is focused on the humanity of our patients, while keeping in mind strong financial stewardship. 

Richard A. Robbins MD, Editor, SWJPCCS

Brigham C. Willis, MD, MEd, Founding Dean, University of Texas at Tyler Medical School of Medicine Medical Center, Tyler, TX USA; Associate Editor (Pediatrics), SWJPCCS

References

1. Hamidy M, Patel K, Gupta S, Kaur M, Smith J, Gutierrez H, El-Farra M, Albasha N, Rajan P, Salem S, Maheshwari S, Davis K,  Willis BC. Leadership in Action: A Student-Run Designated Emphasis in Healthcare Leadership. Southwest J Pulm Crit Care Sleep 2022;24(3):46-54. [CrossRef]
2. Nicol ED. Improving clinical leadership and management in the NHS Journal of Healthcare Leadership 2012;4:59-69. Available at: https://pdfs.semanticscholar.org/3cc3/36f891d6a4b47d951b2bd280e46f4687dd5b.pdf (accessed 3/25/22). 
3. Woolhandler S, Campbell T, Himmelstein DU. Costs of health care administration in the United States and Canada. N Engl J Med. 2003 Aug 21;349(8):768-75. [CrossRef] . [PubMed]
4. Banner University Medical Center-Phoenix. https://phoenixmed.arizona.edu/banner (accessed 3/28/22)
5. HCA Healthcare. https://hcahealthcare.com/physicians/graduate-medical-education/ (accessed 3/28/22)
6. Kaiser Permanente School of Medicine. https://medschool.kp.org/homepagJCe?kp_shortcut_referrer=kp.org/schoolofmedicine&gclid=CjwKCAjwuYWSBhByEiwAKd_n_kFPWcSP0Mj_VbqHJEsnwSwT_YkIErrb1PhcWQgQnRI_odNs5qbHZRoCaMIQAvD_BwE (accessed 3/28/22)
7. Institute of Medicine (US) Committee on the Roles of Academic Health Centers in the 21st Century. Academic Health Centers: Leading Change in the 21st Century. Kohn LT, editor. Washington (DC): National Academies Press (US); 2004. [PubMed]
8. Mayo Clinic Governance. Available at: https://www.mayoclinic.org/about-mayo-clinic/governance/leadership (accessed 3/25/22). 
9. Executive Leadership Cleveland Clinic. Available at: https://my.clevelandclinic.org/about/overview/leadership/executive(accessed 3/25/22). 
10. University of Nebraska Medical Center. Meet Our Leadership Team. Available at: https://www.nebraskamed.com/about-us/leadership#:~:text=James%20Linder%2C%20MD%2C%20Chief%20Executive,Nebraska%20Medical%20Center%20(UNMC). (accessed 3/25/22). 
11. University of Texas at Tyler. https://www.uttyler.edu/president/about/ (accessed 3/28/22)

Cite as: Robbins RA, Willis BC. Deciding the Future of Healthcare Leadership: A Call for Undergraduate and Graduate Healthcare Administration Education. Southwest J Pulm Crit Care Sleep 2022;24(3):55-57. doi: https://doi.org/10.13175/swjpccs006-22 PDF

Time for a Change in Hospital Governance

The SWJPCCS has been following the case of nine oncologists who filed a lawsuit against the Anne Arundel Medical Center (AAMC), in Annapolis, Maryland, last year (1). The oncologists claimed that the hospital chose profit over the needs of cancer patients, as it slashed oncology care services to cut costs, and both fired and denied them hospital privileges when they complained. At that time, the oncologists were not free to respond because of the ongoing litigation, but now that the lawsuit is over and the dust has settled, they are free to speak, and they contacted Medscape Medical News to tell their side of the story (2).

AAMC is a private, not-for-profit corporation that operates a large acute care hospital in Annapolis, Maryland. It is affiliated with Luminis Health, the parent company of the medical center. Until October 23, 2020, the nine oncologists were employed by the Anne Arundel Physician Group. The oncologists had privileges at AAMC for many years and their “capability as physicians is unquestioned,” according to the court filing made on behalf of the oncologists." AAMC created “a very toxic and difficult interpersonal work environment, and that made it difficult to do patient care," said Carol Tweed MD, who served as the unofficial spokesman for the group. "We would go to them and let them know that we were having difficulty delivering optimal patient care because we didn't have enough staff or the resources we needed for safety — and it got to the point where we were being ignored and our input was no longer welcome." There was a continuing cascade of events, and the oncology group mulled over some ideas as to how to provide optimal patient care. The decision they reached was to discuss running their own practice. Within a week of sending their proposal for setting up their own practice, all nine physicians were fired. “Instead of arranging a discussion, we received termination letters,” "We were terminated without cause.”

The oncologists’ case illustrates several problems with hospital ownership of physician practices. First, the oncologists had signed a contract with a noncompete clause. “The only thing we wanted was to be able to practice in this town,” said Tweed. “And what is important to know is that it was never for money, and that was never our motivation for wanting to form our own practice.” The second problem is that AAMC removed the oncologist’s hospital privileges. Removal of hospital privileges carries a special stigma making it difficult to apply for hospital privileges at other hospitals.

It disturbs me that physicians or physician executives would want to practice and patients would want care from a system where quality of care was alleged to be an issue. That aside, it is clear that the hospital used its position as the credentialing agent to limit competition and solicit patients. "This isn't ethical, but they tried to do everything to keep us from seeing our patients," Tweed said. This is patient choice, but they were telling patients they could not choose us as your doctors.

Below are several solutions which could potentially improve the credentialing process and allow the oncologists and other physicians to practice high quality medicine.

1. Physician candidates should have their contract negotiated by a lawyer or agent experienced in the appropriate areas of labor law. Candidates should not sign a contract with a noncompete clause. Even though such a clause is unlikely to hold up in court, the process of fighting a large healthcare organization is expensive and medical centers have deeper pockets. The hospital administration is not necessarily a physician ally. Even if the administration is easy to work with at present, hospital administrations change and the next administration might be more concerned with profit than quality of care.
2. Credentialing should be a function of an independent medical staff overseen by an elected chief of staff. Mitchell Schwartz, MD was chief medical officer at AAMC until January 2020 and succeeded by Stephen Selinger MD in May 2021. It is unclear what role Dr. Swartz or Selinger played in this dispute. Physician candidates should be wary if the chief of staff seems to represent the hospital administration to the physicians rather than the hospital staff to the administration. Potential physician candidates should request meetings with the chief of staff to assess for themselves their sincerity in working with the medical staff.
3. An independent hospital staff could vote to require administrators to be credentialed. An administrator’s credentials could be removed by a majority physician vote if there is extensive evidence that business decisions jeopardize patient safety. It seems likely that administrators would be less likely to use credentialing as a weapon when credentialing is counterbalanced in this fashion.
4. Physicians witnessing suboptimal patient care in the face of a nonresponsive hospital administration, could use their power as physicians to advise their patients to seek care elsewhere. I personally have seen such a nuclear option lead to hospital closure if sufficient physicians believe the hospital care is inadequate.
5. Healthcare credentialing agencies could become more responsive to physician complaints. This could avoid confusing evaluations such as the Phoenix VA being named to the Joint Commission of Healthcare Organization’s "Top Performer" honor in 2011 but 3 years later being accused of suboptimal care (4).  JCAHO inspections usually are conducted by a retired hospital administrator, physician and nurse. They usually review policies and procedures but rarely meet with physicians, nurses, technicians or clerks directly involved in patient care.
6. State Board of Medical Examiners should concern themselves with quality of care rather than disruptive physicians. In some cases, disruptive physicians advocating for better care are likely justified (4).
7. Insurers, including the Centers for Medicare and Medicaid Services, could remove the incentive for hospitals to own practices by limiting payments to centers with hospital-employed physicians. These centers have charges that average about 5.8 percent higher than those that do not employ their physicians (5).

These are just a few ideas many of which will be difficult to establish. Regardless, it is time to discard the notion that physicians are just waiting to collude and fix prices but to recognize that hospital administrators have self-granted themselves too much power leading to increased charges and poorer patient care. The time for change in hospital governance is now!

Richard A. Robbins, MD

Editor, SWJPCCS

References

1. Nelson R. Nine Oncologists Sue Medical Center Over Termination. Medscape Medical News. March 23, 2021. Available at: https://www.medscape.com/viewarticle/947976 (accessed 3/14/21).
2. Nelson R. Free Now to Speak, Nine Oncologists Spill the Beans Over Firing. March 11, 2022. Available at: https://www.medscape.com/viewarticle/970124?sso=true&impID=4083165&uac=9273DT&src=wnl_tp10n_220312_mscpmrk_eom#vp_1 (accessed 3/14/22).
3. 22 Ill.194 Ariz. 363, 982 P.2d 1277, 15 IER Cases 419 (1999)
4. Robbins RA. The disruptive administrator: tread with care. Southwest J Pulm Crit Care. 2016:13(2):71-9. doi: http://dx.doi.org/10.13175/swjpcc049-16
5. Ho V, Metcalfe L, Vu L, Short M, Morrow R. Annual Spending per Patient and Quality in Hospital-Owned Versus Physician-Owned Organizations: an Observational Study. J Gen Intern Med. 2020 Mar;35(3):649-655. [CrossRef] [PubMed]

Cite as: Robbins RA. Time for a Change in Hospital Governance. Southwest J Pulm Crit Care Sleep 2022;24(3):43-5. doi: https://doi.org/10.13175/swjpcc013-22 PDF 

Protecting the Public’s Health-Except in Tennessee

State regulatory boards that regulate professionals such as doctors, nurses, psychologists, etc. are often appointed by politicians and headed by lawyers. Under this category has been most Medical Boards and their parent organization the Federation of State Medical Boards. Although they claim to be protecting the public, they seem more concerned with identifying “disruptive” physicians and blacklisting them through the National Practitioner Data Bank (1). However, in July the Federation issued a warning to physicians against propagating COVID-19 vaccine misinformation and disinformation citing a "dramatic increase" by physicians (2). The statement gave some hope that the Federation was striving to maintain some degree of professional standards by saying that spreading disinformation to the public was dangerous because physicians enjoy a high degree of public credibility.

The Tennessee Board of Medical Examiners followed the Federation’s lead by issuing a verbatim restatement warning that physicians who spread false information about COVID-19 vaccinations risk suspension or revocation of their medical license. Under repeated threats by Rep. John Ragan, R-Oak Ridge, co-chair of the State of Tennessee’s Joint Government Operations Committee, the warning was removed on December 7. 

Figure 1. Representative John Ragan.

Rep. Ragan insisted board members do not have the authority to create a new disciplinary offense without the approval of the lawmakers on his committee. He threatened to dissolve the board and appoint all new members if it did not immediately take it down and the Tennessee board succumbed to Rep. Ragan.

Across the country, state medical licensing boards are struggling to balance the politics and public interest with how to respond to scientifically baseless public statements about COVID-19 by some physicians. The Federation says the statements are increasing public confusion, political conflict, preventable illnesses and deaths (3). There have been only a small number of disciplinary actions by medical boards against physicians for spreading false COVID-19 information. Critics say the boards have been weak in responding to these dangerous violations of medical standards. For example, Dr. Lee Merritt, an orthopedic surgeon, from my home state of Nebraska has appeared on talk shows and in lecture halls to spread false information about COVID-19 (4).

Figure 2. Dr. Lee Merritt

Among her claims: that the SARS-CoV2 virus is a genetically engineered bioweapon (the U.S. intelligence community says it is not) and that vaccination dramatically increases the risk of death from COVID (data show the opposite). The entire pandemic, she says in public lectures, is a vast global conspiracy to exert social control. Yet, in October, she was able to renew her medical license in the state of Nebraska. Documents obtained through a public records request by NPR showed it took just a few clicks: 12 yes-or-no questions answered online allowed her to extend her license for another year.

Physician ethics have also been under assault in medical schools. Several medical schools recently founded by healthcare organizations seem overly concerned that their graduates might object to some COVID-19 statements on a scientific basis (5). Through these new medical schools, business interests hope to indoctrinate medical graduates on how to serve the public any way a healthcare administrator tells them. Even a healthcare organization as lofty as the American College of Physicians now has their ethics statement written by a lawyer (6).

These, as well as other examples, demonstrate that as we lose control of the ethics of our profession, we lose control of our profession. Assuming the physicians reading this editorial are against the dissemination of false information, what can we do? One example, came from Houston, Texas where Dr. Mary Bowden, who posted "harmful" and "dangerous misinformation" about Covid-19 and its treatments on social media, had her medical staff privileges suspended. She subsequently resigned from Houston Methodist (7).

We as physicians should work through our medical staffs over these issues. Hopefully, we will not try to repress legitimate concerns from physicians expressing objections to hospital or medical staff policies through appropriate channels. However, if the medical staff chooses to proceed over those objections, each physician can use their conscience to refuse to work with physicians disseminating misinformation. We are one medical family and what hurts one of us, hurts us all.  

Richard A. Robbins, MD                                  

Editor, SWJPCC

References

1. Robbins RA. The disruptive administrator: tread with care. Southwest J Pulm Crit Care. 2016:13(2):71-9. doi: http://dx.doi.org/10.13175/swjpcc049-16.
2. Federation of State Medical Boards. FSMB: Spreading Covid-19 Vaccine Misinformation May Put Medical License at Risk. Available at: https://www.fsmb.org/advocacy/news-releases/fsmb-spreading-covid-19-vaccine-misinformation-may-put-medical-license-at-risk/ (accessed 12/13/21).
3. Sawyer N, E Bloomgarden E, Cooper M, Nichols T, Hickie C. Opinion: State medical boards should punish doctors who spread false information about covid and vaccines. The Washington Post. September 21, 2021. Available at: https://www.washingtonpost.com/opinions/2021/09/21/state-medical-boards-should-punish-doctors-who-spread-false-information-about-covid-vaccines/ (accessed 12/13/21).
4. Brumfiel G. A doctor spread COVID misinformation and renewed her license with a mouse click. Heard on All Things Considered. November 4, 2021. Available at: https://www.npr.org/sections/health-shots/2021/11/04/1051873608/a-doctor-spread-covid-misinformation-and-renewed-her-license-with-a-mouse-click (accessed 12/13/21).
5. Shireman R. For-Profit Medical Schools, Once Banished, Are Sneaking Back. The Century Foundation. March 20, 2020. Available at: https://tcf.org/content/commentary/for-profit-medical-schools-once-banished-are-sneaking-back-onto-public-university-campuses/ (accessed 12/13/21).
6. Sulmasy LS, Bledsoe TA; ACP Ethics, Professionalism and Human Rights Committee. American College of Physicians Ethics Manual: Seventh Edition. Ann Intern Med. 2019 Jan 15;170(2_Suppl):S1-S32. [CrossRef] [PubMed]
7. Watts A, Elassar A. Texas doctor suspended for spreading 'misinformation' about Covid-19 submits resignation letter. November 16, 2021. Available at: https://www.cnn.com/2021/11/13/us/houston-doctor-suspended-covid-19/index.html (accessed 12/13/21).

Cite as: Robbins RA. Protecting the Public’s Health-Except in Tennessee. Southwest J Pulm Crit Care. 2021;23(6):162-4. doi: https://doi.org/10.13175/swjpcc067-21 PDF 

Refunds If a Drug Doesn’t Work

One aspect of the high cost of healthcare is the cost of new drugs. Cancer drugs have received much of the attention because of their extremely high price (1). For example, crizotinib, used to treat non-small cell lung cancer (NSCLC), costs $19,144 for each month's supply. Pfizer, the manufacturer of crizotinib, has just announced that they are offering a refund if its drug "doesn't work" (2). If crizotinib use is discontinued and documentation of ineffectiveness is provided, Pfizer will refund the out-of-pocket amount that was paid for up to the first three bottles (30-day supply) of crizotinib, up to a maximum of $19,144 for each month's supply, or a total of $57,432. Of course, the cost of care includes more than just a single drug and can be much higher and Pfizer is reimbursing only the drug cost. 

Although Pfizer claims that its pilot program is a first in the industry, there have been others that were similar (2). In 2017, Novartis offered something comparable for tisagenlecleucel (Kymriah®), the B-cell acute lymphoblastic leukemia therapy that launched with a daunting price tag of $475,000. After receiving backlash over the cost, the manufacturer Novartis announced that if the drug does not work after the first month, patients pay nothing. Italy has been using this system for several years. In Italy pharmaceutical companies must refund the cost if a drug fails to work. In 2015, the state-run healthcare system collected €200 million ($220 million) in refunds.

At first glance, Pfizer’s offer with crizotinib appears very reasonable. However, the drug is usually given for at least 3 months to judge effectiveness with only 50-60% of ALK+ patients responding (3). However, that said, there is usually a fairly dramatic response when a patient does respond. Unfortunately, most patients with ALK-positive lung cancer who respond to crizotinib undergo a relapse within a few months to years after starting therapy (3).

In our view Pfizer is practicing medicine on contingency. In an industry notorious for overpricing, Pfizer is asking permission to overcharge upfront. However, the concept that Pfizer will not make considerable profit from this scheme is naive. Furthermore, there will be some that take advantage of the program. Now with hospitals and other healthcare organizations often collecting physician professional fees, the possibility of nefarious financial arrangements likely increases.

We suspect there would be a great outcry if physicians were allowed to bill similarly. For example, a physician might charge $20,000/month to treat a patient with NSCLC. Similarly, a physician could charge $10,000 to care for a patient with an exacerbation of COPD with a similar promise that if the patient did not improve, they do not have to pay.

Schemes such as Pfizer’s are an indicator of overpricing and are nothing more than another nefarious billing practice. They will not reduce healthcare costs and are susceptible to fraud. We oppose such billing schemes as not being in our patients’ or the public’s best interests.

Richard A. Robbins MD¹ and Thomas D. Kummet MD²

¹Phoenix Pulmonary and Critical Care Research and Education Foundation

Gilbert, AZ USA

²Sequim, WA USA

References

1. Nelson R. High Cost of Cancer Drugs Does Not Reflect Clinical Benefit. Medscape. May 13, 2020. Accessed October 21, 2021. Available at: https://www.medscape.com/viewarticle/930424#vp_2.
2. Nelson R. Pfizer Offers Refund if Drug 'Doesn't Work'. Medscape. October 20, 2021. Accessed October 21, 2021. Available at: https://www.medscape.com/viewarticle/961221.
3. Awad MM, Shaw AT. ALK inhibitors in non-small cell lung cancer: crizotinib and beyond. Clin Adv Hematol Oncol. 2014;12(7):429-439. [PubMed] 

Cite as: Robbins RA, Kummet TD. Refunds If a Drug Doesn’t Work. Southwest J Pulm Crit Care. 2021;23:107-8. doi: https://doi.org/10.13175/swjpcc050-21 PDF