Congressmen looking for advice on tough healthcare issues often ask the only doctor in the Senate, William Frist. But the Tennessee Republican's vast personal financial stake in for-profit healthcare companies has raised questions about whether he speaks as doctor or investor.
His brother Thomas' recent elevation to head of Columbia/HCA Healthcare Corp.-under investigation for Medicare and Medicaid fraud-is the latest instance. Frist spokeswoman Margaret Camp said her boss is just one of many congressmen caught in the Catch-22 of financial success achieved before he was elected to office.
"You have lots of businessmen in the Senate," she said. Frist has taken steps to separate his private finances from his public responsibilities. But Frist also believes "he really has a responsibility as an elected official to use his expertise to improve healthcare," Camp said.
Indeed, the senator has taken an active role in measures to open Medicare to more private competition and to relax Food and Drug Administration rules-measures that would benefit for-profit hospitals and smaller medical companies in which he also owns stock. Frist's father, Thomas F. Frist Sr., M.D., and brother made a family fortune with Hospital Corporation of America, which after a 1994 merger became the current Columbia. In July, federal investigators raided Columbia medical centers, and three company executives were indicted on charges they overbilled Medicare by $1.8 million.
In the midst of the crisis, the senator's brother, Thomas Frist Jr., M.D., took Columbia's helm.
Sen. Frist, his wife and children own $9 million to $25 million in Columbia stock, according to the annual financial statement each senator must file. Frist used the stock as collateral against a loan to help finance his 1994 Senate campaign. The senator has never worked for or consulted with Columbia, Camp said, and is on leave without pay as a Vanderbilt University heart surgeon. Frist also has smaller investments in medical companies making a variety of FDA-regulated products such as surgical lasers.
According to Camp, the Senate Ethics Committee reviewed the holdings shortly after Frist was elected and found no conflict of interest. He nevertheless placed the medical investments in a blind trust.
Frist has no say in or knowledge of the day-to-day trading of his stock, which is handled by a financial custodian. But he does find out once a year what he owns. Frist and his staff do not meet with Columbia officials, and Camp said Frist would decline to vote on legislation specifically targeting the company. But Frist does hear from other hospitals, and he votes on issues that affect the industry in general.
In one recent instance, Frist co-sponsored a proposal to let senior citizens on Medicare join health plans managed by doctors and hospitals instead of only those run by insurance companies. The Federation of American Health Systems, of which Columbia is the largest member, backed the plan, included in the balanced-budget deal. It was opposed by insurance companies.
Frist also worked recently to craft a bill to change the way the FDA reviews drugs and medical devices. Frist's opinion helped sway colleagues to agree to FDA changes that would make it easier for drug companies to promote products for uses other than those the government has approved. Opponents fear profiteering and harm to patients.
Frist says the change would help doctors take advantage of up-to-the-minute research. But critics say Frist also stands to profit because of his partnership stake in Alza TTS Research Partners of Palo Alto, Calif. The company markets stick-on patches used to administer drugs through the skin. Frist reported earning $4,653 from Alza last year.
"The more of those drugs are sold the better it is for Alza," said Sidney Wolfe, M.D., director of the consumer watchdog Public Citizen's Health Research Group. "I think he gets far more mileage and trust as a doctor than he should."
But Camp notes that in supporting the budget agreement, Frist also voted for cuts in Medicare payments that will hit hospitals particularly hard. She also said Frist asked Senate colleagues whether they had concerns with his taking a lead in the Medicare debate, and was reassured his guidance was appreciated.
"That's one of the great advantages from having him here," said Sen. John D. Rockefeller (D-W.Va.), co-sponsor on the Medicare measure. Similarly, Sen. James Jeffords (R-Vt.) said he "never had the slightest qualm" about working with Frist to craft the FDA bill, which is still pending. "You always take into consideration people's background," said Jeffords, but "we ask his advice."