A powerful wave of corporate transparency finally capsized the Healthcare Research & Development Institute, the secretive for-profit think tank that brought together top executives from some of the countrys most elite hospitals with leaders of many of the largest healthcare suppliers and vendors for two closed-door networking conferences each year.
Pensacola, Fla.-based HRDI will cease to exist sometime in the next several weeks, forced to disband as part of an agreement that ends a nearly two-year antitrust investigation by the Connecticut attorney generals office and its counterpart in Florida. In an industry that has intensified the focus on conflicts of interest in recent years, HRDI and its business model became a prime target for reformers.
I think the very high levels of transparency certainly brought this to the top of somebodys radar screen, said Dennis Pointer, the Austin Ross Virginia Mason Professor of Health Administration at the University of Washington and a national authority on corporate governance. Im not saying there was anything unethical (about HRDI). But I think people need to be exceedingly cautious about the types of relationships they forge, and they need to pay considerable attention to the perceptions of conflicts of interest.
The rules have changed, perceptions have changed, and, accordingly, behavior has to change, Pointer said.
Under the agreement with Connecticuts attorney general, Richard Blumenthal, who began his investigation 23 months ago, HRDI agreed to restructure as a not-for-profit, revamp the composition of its membership and pay a fine of $150,000. As part of the settlement, the new organizationthe slightly renamed Healthcare Research & Development Institute of Americawill exclude vendors entirely for the next three years, and must create tough new restrictions thereafter to ensure that suppliers influence on healthcare executives is limited.
Any decision to readmit vendors will require notification of the attorneys general in Connecticut and Florida. Also, compensation for members of the newly constituted not-for-profit will be strictly limited to an aggregate amount of $2,500 annually.
The for-profit consulting group officially shut down last week except for winding up obligations and liabilities, Blumenthal said. The attorney generals office in Florida joined Connecticut in the agreement. A separate fraud investigation launched in August 2006 by Illinois Attorney General Lisa Madigan is ongoing while officials review the settlement.
HRDI, now off the hook in at least two states, was owned by individual members who received tens of thousands of dollars a year to attend the conferences with vendors and suppliers. It boasted some of the biggest names in healthcare administration, including: Dan Wolterman, president and chief executive officer of Memorial Hermann Health System, Houston; Kevin Lofton, president and CEO of Denver-based Catholic Health Initiatives and the current chairman of the board of the American Hospital Association; and Bill Nelson, president and CEO of Intermountain Healthcare in Salt Lake City.
Vendors and suppliers, who paid $40,000 a year for the right to join the executives at the private conferences, included such industry powerhouses as Abbott Laboratories, Aramark Corp., Boston Scientific Corp., GE Healthcare, Siemens Medical Solutions, Johnson & Johnson and Kimberly-Clark Corp.