Healthcare Business News

Ill. governor’s healthy thoughts

Healthcare at center of Blagojevich allegations

By Gregg Blesch
Posted: December 15, 2008 - 12:01 am ET

As President-elect Barack Obama introduced former Sen. Tom Daschle as his pick for HHS secretary, the nation’s mind was on another man who federal prosecutors say dreamed up a scheme to get the job by granting Obama a favor.

That was Illinois Gov. Rod Blagojevich, charged last week with conspiracy to commit mail and wire fraud and soliciting bribes. The two-term governor positioned himself as a national leader in expanding state programs to make healthcare accessible and affordable. His efforts met with diminishing success as his relationship with nearly every other elected official in the state fell apart and his name became increasingly entangled in investigations and prosecutions of corruption.

In the end, according to a 76-page affidavit, Blagojevich allegedly saw influence peddling as his road to a rehabilitated image and national role in healthcare, plotting in the days after the November election to get himself named HHS secretary in exchange for appointing Obama’s favored candidate to fill his vacated Senate seat. Blagojevich fairly quickly realized getting the HHS job was improbable and mulled an array of other ways to leverage the appointment, including getting the Service Employees International Union to install him at the top of the labor coalition Change to Win, according to the affidavit. There was no indication that Obama or his advisers discussed or knew about what the governor was allegedly cooking up. While introducing Daschle Dec. 11, Obama said he was “appalled” by the allegations.

Even as Blagojevich envisioned himself at the helm of Obama’s expansive healthcare agenda, according to the affidavit, the governor attempted to squeeze Patrick Magoon, president and chief executive officer of 247-bed Children’s Memorial Hospital, Chicago, for a $50,000 campaign contribution in exchange for $8 million in increased Medicaid funding for the state’s pediatric subspecialists. Magoon and Children’s Memorial took the lead in the lobbying effort for the funding. But Magoon, according to Blagojevich’s expletive-laden conversations with staff and advisers recorded by the FBI and transcribed in the document, didn’t respond to repeated requests for the money. In an intercepted phone call with a staff member Nov. 12 the governor allegedly asked, “What do we do with this guy?” and wondered about the funding, set to become available Jan. 1, 2009. “We could pull it back if we needed to—budgetary concerns—right?”

Since 2002 Magoon has donated $4,500 to Blagojevich’s campaign fund, according to state records, which indicates nothing untoward; the governor has made ambitious if only partially successful moves to advance healthcare causes. His signature first-term achievement was All Kids, a program that allows families to buy insurance through the state at premiums on a sliding scale according to income. “All Kids is wonderful, but there’s also a reimbursement issue with it,” Children’s Memorial spokeswoman Julie Pesch said. “Many doctors in Illinois can no longer afford to care for patients covered by All Kids.”

The Illinois Hospital Association has contributed $544,000 to Blagojevich’s campaigns. “With regard to healthcare, the goals were the right goals,” said Howard Peters, the association’s senior vice president for government affairs. “He got some things done and failed on other things.” Asked if the governor’s fundraisers pressured the association for dollars in exchange for action, Peters said, “Would they call and say, the governor is having a fundraiser and we sure would appreciate if you guys would support us? Of course they did. … Never did anyone have a conversation, for example, ‘If you give us X, we’ll fix the Medicaid program.’ ”

The allegations against Blagojevich also describe him as directing and benefiting from kickback schemes involving Stuart Levine, a former member of the state’s Health Facilities Planning Board who pleaded guilty and went to prison, and Blagojevich fundraiser Tony Rezko, who was convicted in June and awaits sentencing.

In October, six-hospital Provena Health, Mokena, Ill., confirmed receiving a federal subpoena regarding the planning board, the system’s relationship with lobbyist John Wyma and a $25,000 contribution Provena made to the governor in 2004, at a time the system had its own business before the plann board and was opposing competitors’ applications for new hospitals. Spokeswoman Lisa Lagger declined to comment but previously told a reporter the subpoena did not indicate Provena was the target of any investigation.

Wyma, a close friend of the governor’s, has been hired at one time or another by several prominent hospitals and systems in the Chicago area, state records show. He is widely reported to be named in the affidavit as “Individual A,” who is described as telling prosecutors about the pressure put on Magoon.

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In 2006, Modern Healthcare named Blagojevich one of 30 people who could have a powerful impact on healthcare in the future.



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