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Essential news and information for physician business executives Vol. 10/No. 11 • November 2006

NEWSIOM backs nationalP4P for physiciansPage 5

NEWSInspector general eyesdoc specialty hospitalsPage 6

PROFILEMGMA’s physicanexec of the year0

SPECIAL REPORTEthics all the talkat Cleveland confabPage 11

OPINIONWhat’s left when a superstar doc leavesPage 9

BY THE NUMBERSMedicaid data don’tadd up for physiciansPage 12

INSIDE

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Why pediatrician Lisa Swanson, M.D.,doesn’t see Medicaid patients

Page 2

Why pediatrician Lisa Swanson, M.D.,doesn’t see Medicaid patients

Page 2

BY JAY GREENEPediatrician Lisa Swanson,

M.D., doesn’t accept Medicaidpatients for one simple reason:Reimbursement rates don’t coverher costs.

“If I accepted even 10%Medicaid, I would have to closemy office,” says Swanson, a solopractitioner in the Dallas suburbof Mesquite. “Pediatricians makevery low margins. I am barely inbusiness. … It breaks my heart Ican’t treat Medicaid patientsbecause I took care of them whenI was a resident.”

Spencer Berthelsen, M.D., chair-man of the 300-physician Kelsey-Seybold Medical Group, Houston,says the group limits Medicaidpatients to two types: First, if theywere existing patients before theybecame Medicaid-eligible; second,if a Kelsey-Seybold physician on

call treats a patient in a hospitalemergency department.

The group doesn’t accept walk-in Medicaid patients becausereimbursement rates areless than 50% of costs,Berthelsen says.Medicaid charges repre-sent about 0.15%, or$500,000, of thegroup’s $340 million ingross annual charges.

“The Medicaid popula-tion has the real poten-tial of having higherchronic illnesses. It is avery challenging socio-economic group,”Berthelsen says.

Despite increasesnationally in Medicaidrates from 1998 to 2003, a grow-ing percentage of physicians aredeclining to accept Medicaid

patients or are limiting the number,according to a study released inAugust by the Center for StudyingHealth Care System Change.

Doctors cited lowreimbursement, exces-sive administrativepaperwork and bureau-cratic hassles as rea-sons they avoid orrestrict Medicaid, thecenter found.

In the last half of2004 and first half of2005, 14.6% of physi-cians reported receivingno Medicaid revenue,an increase comparedwith 12.9% during thesame periods in 1996and 1997. Moreover,

21% of physicians reportedaccepting no new Medicaidpatients, up from 19.4% from the

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Continued on p. 3

Berthelsen: “It’sa very challengingsocio-economicgroup.”

Modern Physician | November 2006 • 2

Higher rate of docs opt out of program citing low reimbursement, more chronically ill patients

Wanted: Better Medicaid pay

same periods in 1996 and 1997.“The few physicians I know

who accept Medicaid have hugevolumes of patients—80patients per day—and spend fiveminutes each with them,”Swanson says. “They don’t havetime for preventive care or edu-cation. You need to spend timewith patients, especially childrenand their parents.”

The center also found Medicaidpatients are becoming concen-trated in large medical groups,hospitals and community healthcenters. Solo practitioners likeSwanson have the lowestMedicaid participation rates.

“I spend 15 to 30 minutes witheach patient,” says Swanson,who employs two nurse practition-ers. “I can’t afford to do that

under Medicaid. Most patientsunderstand (her decision not toaccept Medicaid). Pediatriciansare of two mindsets. I am of thebusiness mindset that you don’ttake anything below your costs.”

However, other physicians“harass us greatly because theybelieve it is our job as doctors totake care of all patients,”Swanson says.

Doug Curran, M.D., a familymedicine physician with Lakeland

Click here for more stories on reimbursement

“If we do additional ancillarywork, that may help” stem finan-cial losses, he says. “The bottomline is Medicaid is so inadequatethat almost nobody can afford todo it.”

Of the 30 to 40 patients Curransees every 12-hour day, hereserves five to seven slots forMedicaid patients. “Every physi-cian has a different mix. Once wehit our limits, we don’t see (anymore) Medicaid patients thatday,” Curran says.

Uninsured illegal immigrantsalso are a problem for Texasphysicians. For example, Curranconducted the interview withModern Physician from 117-bedEast Texas Medical Center,Athens, while waiting to deliverthe baby of an illegal immigrant.“She will go on emergencyMedicaid,” Curran says.

Expensive and time-consuming

care, Fitzgerald says.“We gave over $1.5 mil-

lion in charity care in2005,” Fitzgerald says.But “we continue totake heat from primary-care physicians whenthey need a specialist.They ask us why wedon’t take Medicaid and‘Could you please seethis one patient forme?’ ”

While rising numbers ofphysicians declineMedicaid, the number ofMedicaid recipients hasexploded by 39% to 44.4

million in 2004 from 32 million in1999, according to the CMS.

As Medicaid moves to cost-cut-ting managed-care models, theCMS reports Medicaid spendinggrowth has declined from 12% peryear from 2000 to 2002, whilegrowth dropped to 7.2% from2002 to 2005. It is projected to

drop to 4.6% in 2006. State Medicaid spend-

ing is similarly dropping.Sixteen states are project-ing to have lowerMedicaid expenditures in2006 than the prior year,including California,Florida, Georgia,Maryland, Michigan, NewHampshire, Nevada,South Carolina, SouthDakota, Texas andWisconsin.

regulations also stifleMedicaid participation.“One issue is transla-tors,” says Chip Cover,senior associate admin-istrator with NemoursChildren’s Clinic, a 130-physician pediatricgroup in Jacksonville,Fla. “Anyone who can’tspeak (English) is eligi-ble for that, and thedoctor is required topay for it.”

Translators costNemours $60 for a minimum oftwo hours. “We get paid$90 for a midlevel visit. Our costsexceed what we get for thatvisit,” Cover says.

In Washington state, Medicaidpays doctors less than 50% ofMedicare rates, and onerous regu-lations place groups at unneces-sary financial risk, says DavidFitzgerald, chief executive officerof Proliance Surgeons, a135-physician grouppractice based inSeattle. “It is like givingeveryone a $10 bill forcoming to the office,” hesays.

In 2003, ProlianceSurgeons stopped for-mally accepting Medicaidpatients, but the sur-geons continue to takeMedicaid referrals on acase-by-case basis andwrite it off as charity

Medical Associates in Athens,Texas, says the 11-member groupalso limits its number of Medicaidpatients based on availableappointment slots, whetherthere’s an emergency and illnessstatus. About 20% of the group’spatient mix is on Medicaid.

In 2003, Texas cut Medicaidrates 2.5%. As a result, less than50% of Texas physicians partici-pate in Medicaid, saysBerthelsen, a member of theTexas Medical Association’sCouncil on Legislation. A recentassociation survey found that38% of physicians accepted newMedicaid patients in 2006, downfrom 67% in 2000.

Curran, who also is president ofthe Texas Academy of FamilyPhysicians, says the clinic loses$20 for every routine, moderate-complexity office visit.

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Continued from p. 2

Continued on p. 4


Fitzgerald: “It’slike givingeveryone a $10 bill forcoming to theoffice.”

PHYSICIANS AND MEDICAID PATIENTSOver the past decade, the percentage of doctors who don’t accept

Medicaid patients or who have stopped accepting newMedicaid patients has increased slightly

Source: Center for Studying Health System Change

Accept all newMedicaid patients

No newMedicaid patients

NoMedicaid patients

51.1%52.1%

19.4%21.0%

14.6%12.9%

1996-97 2004-05

Curran: “Almostno one can affordto do it.”

In August, the Bush administra-tion released its proposed 2007budget that calls for the federal gov-ernment to further curb Medicaid’s“excessive payments.” The Bushplan faces huge opposition acrossthe political spectrum in Congress.

But the Kaiser Commission onMedicaid shows mostMedicaid recipients havea greater percentage ofchronic diseases andare hospitalized moreoften than the generalpopulation.

“They are sicker. …Our biggest issue iscompliance,” saysNemours’ Cover. “Wegive them a prescription,and three weeks laterthey come back andhaven’t filled it.” About40% of Nemours’patients are onMedicaid, he says.

Physician groups such asNemours say they do not treatMedicaid patients differently tolower costs. But experts say physi-

cians with large Medicaid prac-tices are increasingly using suchcare-management techniques asprimary-care case management,registries and preventive-care edu-cation to keep costs down.

“We tend to use nurse practition-ers more in the Medicaid popula-tion because we find the Medicaid

patients need moreintervention than seeingthe doctor,” Cover says.

Bob Kneeley, directorof investor relations withPediatrix Medical Group,says the group makesup for Medicaid lossesby negotiating higher pri-vate-payer rates and byproviding efficient andhigh-quality care.

Medicaid accounts for27% of Pediatrix’s net rev-enue and 54% of itsgross revenue. Pediatrix isan 875-member pediatricspecialty group based in

Sunrise, Fla., that contracts with240 hospitals in 32 states.

“Anything we have done toimprove care and outcomes reallyis focused on all our patients,”Kneeley says. “We have been ableto identify best practices acrossour network, and that improvesquality and holds costs down.” ■

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Jay Greene is a former ModernHealthcare reporter and now afreelance healthcare writer basedin St. Paul, Minn. Contact Greeneat [email protected]

Cover: “We tendto use nursepractitioners”more withMedicaid patients.

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BY MATTHEW DOBIASThe Institute of Medicine last

month recommended that Congressstep into the pay-for-performancefray by requiring the CMS to trim itsphysician payments to fund a muchbroader use of the measures.

Under the IOM’s recommenda-tions, Congress wouldrequire Medicare toreduce its base paymentsor scheduled payincreases, and then poolthat money to awardproviders demonstratinghigh-quality, patient-cen-tered and efficient care.In its report, the IOM saidit would let Congressdetermine by how muchto decrease payments,but added it would haveto be sufficient to createincentives large enough to goosedoctors into action.

But how federal lawmakers mighthammer out such a shift with

already prickly physician groups isuncertain. Doctors already havebeen working hard in Washingtonto fight a 5.1% cut to Medicarereimbursement scheduled to take

effect Jan. 1, 2007. As part ofthat jockeying, the AmericanMedical Association rebuffed thechairman of the House Ways andMeans Committee, which had ham-mered out a deal that would haveblocked the 5.1% reduction andincreased reimbursements by up

to 2.8% for those doc-tors who agreed toreport quality-of-caredata to the government.

AMA Chairman CecilWilson, M.D., said in astatement that the successof the outlined IOM pay-for-performance programwould hinge on whetherCongress could kick inadditional funds, becausecuts alone wouldn’t provideenough incentive toimprove performance.

But Robert Reischauer, presidentof the Urban Institute and a co-chairman on the IOM panel thatsteered the pay-for-performancerecommendations, says there aremany physician organizations thatfavor a rewards-based system.

“They have participated in a lotof nonprofit collectives where theyhave been able to generate per-formance measures,” Reischauersays. For the most part, heexplains, the doctors will go alongwith a pay-for-performance programas long as it’s done right. ■

IOM: Trim payments Institute wants some Medicare cash to go to providers

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Wilson: Cutsalone would notprovide incentive.


Click here for more stories on pay-for-performance

BY MARK TAYLORThe battle over physician-owned

specialty hospitals could grow evenmore contentious as healthcare’sbiggest enforcement agency setsits sights on ensuring they offerquality care.

HHS Inspector General DanielLevinson released theagency’s 2007 workplanin September, vowing toassess the CMS’ over-sight of physician-ownedspecialty hospitals.

The agency will examinethe CMS’ oversight “toensure patient safety andquality of care at thesehospitals,” the inspectorgeneral said in the 93-page workplan, and it willalso scrutinize “policiesrelating to staffingrequirements at these hospitals.”

The inspector general’s decisionto include specialty hospitals asone of its priorities was in response

to a request from Senate FinanceCommittee Chairman ChuckGrassley (R-Iowa) for tighter over-sight of physician-owned hospitals,according to a spokesman from the

inspector general’s office. Theissue has grown in importance withthe end in August of a two-yearmoratorium on Medicare certifica-tion of physician-owned hospitals(“Hospitals vow to fight on,”September 2006, p. 4).

Randy Fenninger, Washington lob-byist for the AmericanSurgical HospitalAssociation, says he isn’tsurprised by the inspectorgeneral’s interest. We pre-sumed it was in thepipeline,” Fenninger says.“It’s nothing new. We’rehappy to have them lookat our quality. “We thinkwe’ll do just fine, although,after we’ve been so ana-lyzed” by the GovernmentAccountability Office andthe CMS, he says, “I’m

not sure there’s much left for theinspector general to look at.”

But HHS’ move didn’t seem toplease everyone. Chip Kahn,president of the Federation ofAmerican Hospitals, character-ized the inspector general’s polic-ing effort as “a day late and adollar short.”

Kahn said HHS’ plan to tacklethe specialty-hospital issue throughits enforcement arm reflects thelack of commitment shown to thecrisis caused by physician-ownedspecialty hospitals. ■

‘Special’ plans for CMSHHS to keep tabs on physician-owned hospitals

N E WS

Fenninger: We’reglad to have theHHS scrutiny.


Click here for more stories on specialty hospitals

Second CON a charm?Nemours, Jacksonville, Fla., filed asecond certificate-of-need applica-tion in its effort to build a $260 mil-lion, 95-bed children’s hospital inOrlando, Fla. The Florida Agency forHealth Care Administration, whichrejected the first application, isexpected to make a decision onthe second CON by mid-December.Nemours is appealing the initialdenial. Nemours says it adjustedits second CON application “to bet-ter explain our proposed children’shospital and its benefits to thecentral Florida community.”Nemours, a pediatric specialtygroup, owns four specialty centersin Florida and Wilmington, Del.,and 172-bed Alfred I. duPontHospital for Children, Wilmington.

Indiana docs get go-aheadA $20 million physician-owned hos-pital in Clarksville, Ind., receivedplanning commission approvalafter a federal judge last year over-turned a protective county law.Construction on the 60-bedKentuckiana Medical Center, a gen-eral acute-care hospital, is expectedto begin shortly. The for-profit hos-pital, owned by 25 physicians, isscheduled to open within twoyears. At least five Indiana coun-ties had passed moratoriums orlocal certificate-of-need lawsrestricting hospital projects afterphysicians proposed building facili-ties that would compete with localhospitals. Federal judges struckdown the laws last year.

New head for clinic hospitalsThe Cleveland Clinic named FredDeGrandis as president and chiefexecutive officer of its eight regionalhospitals, a leadership restructuringthat consolidates oversight of thehospitals. DeGrandis, 56, will reportto Cleveland Clinic President andCEO Toby Cosgrove, M.D. The clinicpreviously had divided the hospitalsinto eastern and western regions.DeGrandis was CEO of the three-hospital western region. The posi-tion held by Thomas Selden, whowas head of the four-hospital east-ern region, has been eliminated.

Pediatrix settles billing casePediatrix Medical Group, Sunrise,Fla., will pay $25.1 million to settlecivil Medicaid fraud allegations thatit upcoded claims for neonatalintensive-care services from 1996until 1999. Pediatrix, which deniedthe allegations in the settlement,also signed a five-year corporateintegrity agreement with HHS’inspector general’s office. The pub-licly traded company provides serv-ices to hospital neonatal intensive-care units. The government allegesthat as many as one-third of infantsweren’t critically ill when admitted tothe ICUs and about half of infantsweren’t critically ill during subse-quent treatment, although Pediatrixbilled as if they were.

Med school enrollment upFirst-year enrollment in U.S. med-ical schools edged up slightly—by

B R I E F LY

Continued on p. 8

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2.2%—in 2006 for the secondstraight year, reaching an all-timehigh of 17,340, according to theAssociation of American MedicalColleges. The increase is a smallstep toward a long-term resolutionof an expected future shortage ofphysicians, AAMC PresidentDarrell Kirch, M.D., says. TheAAMC, which represents all of thenation’s 125 accredited medicalschools, has called for a 30%increase in medical school enroll-ment by 2015. Twenty-eight med-ical schools boosted first-yearenrollment by 5% this fall. Kirchsays the AAMC data also showgreater student diversity.

Judge won’t dismiss hospital tax caseA U.S. District judge in Chicagorefused to dismiss a lawsuit broughtby the University of ChicagoHospitals seeking $5.5 million inemployer tax refunds from theInternal Revenue Service. The judgeis the third to refuse federalrequests to dismiss lawsuits involv-ing taxes paid for medical residentsunder the Federal InsuranceContributions Act. In July andAugust, federal courts refused togive summary judgments for casesinvolving 448-bed UniversityHospital, Cincinnati, and the Centerfor Family Medicine at the Universityof South Dakota, Sioux Falls. Inall three cases, the hospitalscontend that medical residentsare students and exempt fromFICA taxes.

Specialists see better pay in ’05Median compensation for specialtyphysicians rose to $316,620 in2005, a one-year increase of 6.6%and a 20.3% jump since 2001,according to an annual survey bythe Medical Group ManagementAssociation. Primary-care physicianssaw slightly slower compensationgrowth. Their median compensationhit $168,111 in 2005, a 3.9%increase from the previous year anda 12.8% rise since 2001. Doctors’work volume as measured by grosscharges also rose, a sign that physi-cians are boosting productivity, theMGMA says. From 2004 to 2005,specialists’ gross charges rose6.5% and primary-care physicians’gross charges increased 6.8%.

Docs sue to protect surgery centerPeoria (Ill.) Day Surgery Centeraccused 593-bed OSF St. FrancisMedical Center of antitrust viola-tions in a lawsuit filed in U.S.District Court, Peoria. The surgerycenter alleges that the Peoria-basedhospital used boycotts, tyingarrangements and exclusive con-tracting in an attempt to monopolizeoutpatient surgeries. The center per-formed about 4,770 surgeries in2004, or about 14% of the market,according to the lawsuit. St. Francisand St. Francis’ ambulatory surgerycenter performed about 14,600surgeries in 2004, or about 42% ofthe market, according to the law-suit. A St. Francis spokesman saysthe hospital does not comment onpending litigation.

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Continued from p. 7


O P I N I O N

It looks like averting a Medicarephysician payment cut isn’t going tobe the slam dunk it has been thepast four years. This year’s reprieveis entangled in a web of congress-ional tactics, deficit politics and grow-ing concerns that patients aren’t get-ting their money’sworth from doctors.

The hope is thateveryone will come totheir senses by avert-ing the payment cut for2007, but only inexchange for publicreporting of qualitydata. Meanwhile, seri-ous work should com-mence on refining pay-for-performance pro-grams so they achieve the goal ofcost-efficient care, as the Institute ofMedicine recently recommended(See story, p. 5).

Current P4P projects focus onrewarding providers who already arehigh achievers. That needs to shifttoward finding ways to rewardacross-the-board improvement inadhering to quality indicators and/orachieving better outcomes.

Furthermore, we need a systemthat pays primary-care physicians tospend more time with patients.Primary-care physicians need to beencouraged to prevent illnesses,find them earlier and manage thembetter when they do occur.

What is clear from the currentCMS data on utilization is that thecurrent physician payment formula isfatally flawed. Doctors frustrated withlagging payment updates have beentreating Medicare patients like theyare ATMs. Medicare expenditures

for physicians’ servicesgrew by 10% in 2005, buta study by the Center forStudying Health SystemChange found that privatehealth insurance spend-ing on physician servicesrose at a slower pace of7% the same year. Aswork by the DartmouthAtlas team and the RANDCorp. has found, all thisgreater spending actually

leads to worse outcomes. Based on the current formulas,

replacing planned Medicare paymentcuts of 5.1% in 2007 and a total of37% through 2015 would cost tensof billions of dollars that we don’thave. Projected Part B spending isalready outrunning targeted spend-ing by $30 billion just over the nextfive years, the CMS says.

This seems like a critical juncture.Simply plowing ahead with a pay-ment increase without a majorrestructuring of the way we pay forand provide care is lunacy at a timewhen deficits are set to explodeagain and the pressure on accessto care couldn’t be greater.

Attach some strings We’re still hereAlthough it may seem odd, many ofus at Loyola University HealthSystem can’t help but smile whenwe see that our name has made itinto a competing hospital’s market-ing and advertising (September2006, p. 1). When a doctor moveselsewhere, the physician’s new pub-lic relations team typically wastes lit-tle time in announcing that they’verecruited a Loyola physician. Afterall, the Loyola name stands forquality, and that’s a good thing.What is perplexing, however, is yourimplied assertion that the recruit-ment of three of our physicians hassomehow crippled us.

First, the facts: Our lung trans-plant team has 40 members, not12. The effect of three physiciansleaving barely registered a blip aslung transplant volumes remainedconsistent in the weeks andmonths following the move. Havewe lost our stars? Hardly. Our chair-man of cardiovascular and thoracicsurgery is Mamdouh Bakhos, M.D.,the renowned surgeon whose firstlung transplant at Loyola in 1988was also the first in Illinois. Ournewest recruit is Robert Love,M.D., one of the finest transplantsurgeon-researchers in the nation.Love built the lung-transplant pro-gram at the University ofWisconsin. I, myself, have been apart of this program for 17 years.

However, perhaps too much

Pair Medicare pay freeze with comprehensive reformL E T T E R S

TODD SLOANEAssistant Managing

Editor Op/Ed

value is placed on “star doctors”and not enough on the team thatbacks these doctors up. Our trans-plant team’s collaborative effortover the past two decades is whathelped Loyola achieve its status asone of only seven in the nation tocomplete 500 lung transplants.

Charles Alex, M.D.Medical director

Lung transplant programLoyola University Health System

Maywood, Ill.

Wary of gain-sharingYou are spot-on with your concernson gain-sharing as used in thismanner (October 2006, p. 10).Financial incentives for providers ina pay-for-performance model mustreward providers for higher-qualitycare. Anything else is tainted.

Jim DempsterExecutive director

MedEncentiveOklahoma City


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Mountains and mid-Hudson Valley,about 65 miles northwest of NewYork, Teitelbaum faced many obsta-cles in building the practice to 130physicians in seven offices.

From Day One, the fledgling groupfaced a boycott from local primary-care physicians who refused torefer patients because they did notwant competition. Undaunted,Teitelbaum recruited his own pri-mary-care physicians.

But once Crystal Run grew intomultiple offices, the lack of central-ized patient medical records causedstaff to waste time looking forpatient histories. The problem wassolved in 1999, when the groupinstalled an electronic health-recordsystem. More recently, 62 of thegroup’s physicians experienced diffi-culties in gaining full privileges at

BY JAY GREENEHal Teitelbaum, M.D., is not inter-

ested in maintaining the status quo.As managing partner and founder

of Crystal Run Healthcare, Middle-town, N.Y., Teitelbaum started themultispecialty group in 1994 to com-bat the growing clout of managed-care organizations and to enablepatients to receive the highest quality care.

This meant shaking up the sys-tem. “We saw increasing difficultiesin providing high-quality care withoutcontrolling more of the system,”Teitelbaum says. “The whole reasonfor forming the practice was to gaincontrol.” Teitelbaum also believesdelivering optimal patient caremeans creating the best possiblework environment for physicians andstaff, and providing them with themost up-to-date information technol-ogy, clinical services and back-officebusiness support.

But in the popular summer vaca-tion area of the lower Catskill

P RO F I L E

Shaking things up 274-bed Catskill Regional MedicalCenter in nearby Sullivan County.

In June, Crystal Run’s physiciansresigned from Catskill Regional’smedical staff, complaining to thestate’s Department of Health aboutquality problems and alleging dis-criminatory medical staff bylaws.After the state cited the hospital in

Harris for four quality violations inlate September, the hospital’s presi-dent and chief executive officer,Arthur Brien, resigned.

In recognition of his business acu-men and commitment to expandingpatient access, the AmericanCollege of Medical PracticeExecutives and the Medical GroupManagement Association have cho-sen Teitelbaum as their 2006Physician Executive of the Year.

“He exemplifies the business ori-entation that we look for in physi-cian leaders,” says William Jessee,MGMA president and CEO. “Yousee so many doctors who see

MGMA award winner isn’t afraid to tackle problems


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something wrong in the industryand complain about it. He has donesomething about it.”

Born in Queens and raised onLong Island, Teitelbaum spent mostsummers until medical school inSullivan County, where his grandpar-ents owned and operated a bagelbakery. His father was an account-ant who wanted Teitelbaum to joinhis practice. “I knew I wanted to bea physician since I was 5 years old. Ihad no doubt in my mind,” he says.

After his residency in internal med-icine at New York Hospital-CornellMedical Center and a fellowship inmedical oncology at MemorialSloan-Kettering Cancer Center in1980, he joined the faculty of AlbertEinstein College of Medicine. In1982, Teitelbaum moved to OrangeCounty, N.Y., where he met his wife,Jennifer. Along with partner RobertDinsmore, Teitelbaum in 1994 laidthe groundwork for Crystal Run bydeciding to hire two oncologists anda cardiologist. Teitelbaum soon real-ized he needed more businessskills, so in 1996 he enrolled atColumbia Business School. Heearned an executive MBA in 1998.

In 2005, Teitelbaum was namedthe second most powerful individ-ual in the Hudson Valley andCatskill region by the Times Herald-Record newspaper. ■

Jay Greene is a former ModernHealthcare reporter and now afreelance healthcare writer basedin St. Paul, Minn. Contact Greeneat [email protected]

Hal Teitelbaum, M.D.Age: 54

Education: B.S. in biology and M.D. from the six-year jointprogram at Rensselaer Polytechnic Institute, Troy, N.Y., andAlbany (N.Y.) Medical College of Union University; MBA, ColumbiaBusiness School, New York

Residency: New York Hospital-Cornell Medical Center, fellowshipat Memorial Sloan-Kettering Cancer Center, New York

Practice: Hematology and medical oncology

Leadership: Founder and managing partner,Crystal Run Healthcare, Middletown, N.Y.

S P EC I A L R E P O RT

BY MARK TAYLORConflicts of interest aren’t easy to resolve.That’s why they call them conflicts. So the 200 ethics, compliance and conflict-of-

interest officers attending the Cleveland Clinic’sSept. 20 conference—A National Dialogue onBiomedical Conflicts of Interest and InnovationManagement—heard many differing opinionsand much public soul-searching about how tostimulate and support innovation in universityresearch facilities and academic medical centerswithout surrendering ethical values.

They heard government regulatorsand grantmakers talk about newefforts to encourage transparencythrough disclosure—and what conse-quences face them if they fail toadopt those measures.

That’s becoming increasingly diffi-cult given the many subtle and obvi-ous temptations from pharmaceuticalcompanies and devicemakers spon-soring or purchasing the fruits of thatresearch. The conference broughttogether some of the top names inacademia, research and business tograpple with issues researchers face daily.

Inventing the next breakthrough drug or mira-cle device has delivered wealth and prestige to

individuals and universities, making reputationsand attracting other bright minds, clinical studiesand research grants from government agenciesand the private sector. But in a fewcases, ethical lapses and decision-making driven more by profit thanby patient safety have cost lives,created negative press and broughtshame, lawsuits and even criminalcharges to the doorsteps of someof the best-regarded institutions inthe country.

Philip Pizzo, M.D., dean of theStanford University School ofMedicine, says: “Some people willalways do the right thing. Most need

guideposts. But a handfulwill violate the law.”

He says Stanford offi-cials know there will beconflicts of interest, butsays leaders there help the faculty tomanage those to support innovation.Pizzo says Stanford accomplishesthat through extensive transactionaland annual disclosure statementsthat include declaring financial inter-ests, including more than $10,000 inequity in a private company.

“Our institution will divest an interestin any company doing clinical trials at

Stanford,” Pizzo says. He says the free mealsand gifts to physicians, researchers and staffcreate a “too close” intermingling of intereststhat could influence decisionmaking, and saysStanford has eliminated “all things that createconfusion in the public mind and cost publictrust … breaking the shackles of marketing.”

Former Merck & Co. Chief Executive OfficerRoy Vagelos, M.D., says those holding financialinterests in a prospective product should not beallowed to conduct human research testing of

those products. Vagelos says he tried but failedto get rid of the pharmaceutical sales represen-tatives who market drugs to physicians, better

known as “detailers.” He says educating physicians

about drugs is important to bothmanufacturers and physicians, butsuggests a different environment,such as a conference, where doc-tors can learn without beingpitched or bribed with gifts.

He says the drug companiesdon’t give away lunches and giftsout of pure generosity, butexplains their studies tell themthat the giveaways do influencephysician prescribing behavior.

However, Thomas Stossel, M.D.,an entrepreneur and HarvardUniversity professor, says the dis-closure requirements from universi-

ties and federal agencies are becoming onerousand intrusive. Stossel says the transparencymovement discourages the best and the bright-est from entering the commercial arena: “Are wesolving problems? I don’t think so.” He says theexcessive disclosure requirements of privateownership and conflicts of interest violate individ-ual privacy and could discourage innovation.

While Stossel is not alone in his opinions, thetone of the audience responses seemed to indi-cate a grudging acceptance of tougher rules andgreater disclosure to rebuild and maintain publictrust. “There’s a growing sentiment of distrust,”says former U.S. Attorney General RichardThornburgh, or an erosion of public trust.Thornburgh, a Pfizer board member, says if thebiomedical establishment can’t regulate itself,“We can expect increasing government involve-ment. Appearance is everything. Vigilancerequires attention to conflicts of interest on per-sonal and institutional levels.” ■

Pizzo: “A handfulwill violate thelaw.”


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Thornburgh: “There’s agrowing sentiment ofdistrust.”

BY T H E N U M B E R S

Reasons for limiting Medicaid patients

* Volunteered Source: Kaiser Family Foundation’s National Survey of Physicians, March 2002 (Most recent data available)

Among the 22% of physicians who are limiting the number ofnew Medicaid patients they accept

Major reasons

Physicians and Medicaid patients

Among the 62% of physicians not limiting the numberof Medicaid patients they see, the percentage of their

patient mix who utilize Medicaid

No Medicaid patients presenting themselves

Limiting all new patients/practice full*

63%

47%

44%

33%

28%

19%

6%

6%

High potential for lawsuits*

Group/hospital does not accept*

Difficult patients*

1%

1%

1%

Other reasons3%

Percentage of physicians currently limiting the numberof Medicaid patients they accept

62%

16%

22%

Yes, limiting

No current Medicaid patients

No, not limiting

The majority of physicians don’t limitMedicaid patients; only one-third have a significant portion of Medicaid patients

21%

33%24%

22%

More than 20%

1-5% of patients

6-10% of patients

11-20% of patients

Low payment rates

Administrative problems

Payment delays

Difficulties making referrals to specialists

Missed appointments (or other noncompliance)

Difficulties in providing treatment


N E WS M A K E R S

ASSOCIATIONSRick Kellerman, M.D., a family physi-cian from Wichita, Kan., is the newpresident of the 94,000-member

American Academyof FamilyPhysicians, thenation’s second-largest medical-spe-cialty society.Kellerman, 52,took over the toppost in Septemberduring the organiza-tion’s annual meet-

ing. Kellerman is a private practitionerwho also serves as a professor andchairman of the Department ofFamily and Community Medicine atthe University of Kansas School ofMedicine-Wichita. … StevenWaldren, M.D., was promoted todirector of the AAFP’s Center forHealth Information Technology, replac-ing David Kibbe, M.D. Kibbe, 56, willwork as an adviser to the center asneeded, the AAFP says. Waldren,33, served as co-chairman of theASTM Continuity of Care RecordTechnical Committee and has workedon the compromise Continuity ofCare Document standard, a jointdevelopment between ASTMInternational and Health Level 7.

GOVERNMENTFormer CMS Administrator MarkMcClellan, M.D., will become a vis-iting senior fellow at the AEI-Brookings Joint Center forRegulatory Studies, where he willfocus primarily on improvements toboost healthcare quality, affordabilityand innovation. McClellan, 43,announced his resignationfrom the CMS in September andleft the agency last month. ... The Association of American Indian Physicians named KellyMoore, M.D., the 2006 IndianPhysician of the Year. Moore, 51, isa clinical consultant in the IndianHealth Service Division of DiabetesTreatment and Prevention,Albuquerque, and serves as chairwoman of the American Indian and Alaskan Native WorkGroup of the National DiabetesEducation Program.

HOSPITALS, SYSTEMSBernard Gawne, M.D., was namedvice president and chief medical offi-cer at SSM St. Mary’s HealthCenter, St. Louis. Gawne, 61, wasthe former CMO for the ProvenaHealth Central Illinois Region. …

Brian Issell, M.D.,was named vicepresident of clinicalresearch atScripps Health,San Diego. He willstart his new job inDecember. Issell,62, is the formerdirector of the clini-

cal-trials unit at the University ofHawaii’s Cancer Research Center.

... Barbara Paul,M.D., joinedCommunity HealthSystems, Brent-wood, Tenn., in the new post ofnational medicaladviser. She willprovide consultingassistance to thequality- and

resource-management team and thehospital system’s physician advisorygroups. Most recently, Paul, 52, wassenior vice president and CMO atBeverly Enterprises.

INSURERSWilliam McGuire,M.D., resigned as chairman of Minnetonka,Minn.-basedUnitedHealthGroup in the wakeof a stock-options

CONTACT USDepartment Phone Fax E-mailEditorial 312-649-5418 312-280-3183 [email protected]

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backdating scandal at the 28.3 mil-lion-member health insurer.McGuire, 58, also will resign asUnitedHealth’s CEO effective Dec. 1.Modern Physician readers votedMcGuire to the No. 1 spot in theMost Powerful PhysicianExecutives in Healthcare list for2006 (May 2006, p. 1).

SUPPLIERS, VENDORSCardiac surgeon MichaelGallagher, M.D., was named med-ical director for eNotes Systems,a Pacific Palisades, Calif.-baseddeveloper and marketer oftelemedicine products and services.Gallagher was also appointedchairman of the eNotes Systemsmedical advisory board.Previously, he served as vicechairman of the CardiothoracicSurgical Section at MemorialHermann Southwest Hospital inHouston and as a clinical assis-tant professor in the surgerydepartment at the University ofTexas (Houston) Medical School.

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