Democratic senators, several of whom are themselves avid traders in healthcare stocks, were right to roast HHS secretary designee Dr. Tom Price for his unseemly plunges into individual healthcare equities.
It brings to mind the famous scene in the 1942 classic film Casablanca where Capt. Renault tells Rick why he's shutting down his casino. “I'm shocked, shocked to find that gambling is going on in here.”
Less well remembered is the next line, uttered by the croupier who slips a wad of cash into Renault's hand. “Your winnings, sir.”
“Oh, thanks,” Renault says as he pockets the money.
Conflicts of interest are a major issue in healthcare and on Capitol Hill. But trying to tie Price's stock trading to some kind of quid pro quo or campaign contribution misses the much larger problem with his nomination.
Since getting elected to Congress in 2004, the former orthopedic surgeon has championed policies that further the interests of entrepreneurial surgeons in particular and unbridled fee-for-service medicine in general. Once installed at HHS, he will have the power to eliminate the CMS' most promising move toward value-based reimbursement—mandatory bundled payments.
Before entering politics, Price ran Resurgens Orthopaedics, the largest such group in Georgia, now with 96 physicians at 21 sites. In the mid-1990s, after Republicans took control of Congress, his specialty society played the lead role in lobbying to defund the Office of Technology Assessment, which had pioneered in comparative effectiveness research when it questioned the value of orthopedic implants.
He has been a champion of entrepreneurial medicine throughout his career. He would have introduced legislation backed by the orthopedic surgical societies to roll back the mandatory bundled payment programs even if he hadn't purchased stock in Zimmer Biomet, an orthopedics implant manufacturer.
In his testimony last week, he accused mandatory bundled payments of “dictat(ing) to your doctor what kind of prosthesis, surgical procedure your doctor could do for you regardless of what is in your best interest.”
In fact, hospital systems, insurers and more open-minded orthopedic practices in the 68 markets where the bundled payments are in effect are working overtime to learn how to live within the set payment. Part of that usually involves standardizing what implants they buy as a way of lowering costs.
Systems taking that approach set up committees that include their orthopedic surgeons to review the evidence and make those choices. Most have policies that allow for exceptions when medically warranted. That poses a problem for implant makers. They rarely have evidence to support the use of one implant over another.
What there is plenty of evidence to show—thanks to disclosures required by the Affordable Care Act—is that thousands of orthopedic surgeons have financial arrangements with particular implant manufacturers. Many of their practices balk at participating in standardization efforts that would effectively put an end to those relationships.
The CMS and taxpayers will pay a hefty price if Price unwinds the mandatory joint replacement bundled payment program. A new study in JAMA Internal Medicine found hospitals working within the predecessor voluntary program lowered costs by 8% in a year where overall payments rose 5%. One participant, San Antonio-based Baptist Health System, lowered costs by 21% per episode at its five hospitals.
This issue isn't unique to orthopedics. Another recent study in JAMA Internal Medicine revealed the conflicts of interest among clinical practice guideline writers on committees looking at cholesterol management and treatment of hepatitis C—two of the more costly conditions in medicine.
Both committees routinely violated the conflict-of-interest standards issued by the Institute of Medicine. Fully 72% of the hepatitis C guideline writers had ties to drug companies as did 4 of 6 co-chairs.
Lambasting Price for his stock trading generates great sound bites. But what healthcare leaders who believe in value-based reimbursement should worry about more are the policies he will implement once installed at HHS.