Should Health Care be a "'Commodity, Subordinate to the Laws of the Market?" - a Powerful Rebuttal

In the US, it has become the accepted wisdom that health care is now an industry, not a calling or a profession, and the health care it produces is a commodity, not a human service. 

The Conventional Wisdom

For example, earlier in 2012 we quoted Dr Ralph de la Torre, the CEO of Steward Healthcare (formerly the Caritas Christi health system, a Catholic health care system whose take-over by Cerberus Capital Management, a private equity firm, was arranged in part by Dr de la Torre [see posts here]):

In deference to those who love the individual hospital, you have to look back at America and the trends in industries that have gone from being art to science, to being commodities. Health care is becoming a commodity. The car industry started off as an art, people hand-shaping the bodies, hand-building the engines. As it became a commodity and was all about making cars accessible to everybody, it became more about standardization. It's not different from the banking industry and other industries as they've matured. Health care is finally maturing as an industry, and part of that maturation process is consolidation. It's getting economies of scale and in many ways making it a commodity

More recently, Human Events, which describes itself as "the nation’s first conservative weekly," featured a description of a new book by one Edmund L Valentine, "CEO of the Stamford, Conn.-based MMC International, a health care consulting firm, which emphasizes its expertise in the pharmaceutical and device manufacturing fields.  In it, Mr Valentine stated that one should:

treat health insurance as a commodity, where companies only compete based on their reputation and price.

but presumably companies should not compete based on the effects of their products on the health of those who buy them.

Furthermore, he supported

the further industrialization of healthcare, ...


'Industrialization created our great economy,' he said. 'Allow the market and competition can fix the inefficiencies in the system.'

This ignored the arguments going back to the work of Kenneth Arrow that health care cannot be an ideal market (see this post), and all the data suggesting that in the last 20-30 years, when the market fundamentalists became so influential in US health care, costs have risen continuously and quickly without commensurate gains in access or quality.    These are just the latest of many examples of the business people who now run health care justifying approaching it as just another business.

A Strong Rebuttal of the Argument that Health Care is an Industry that Produces a Commodity  

For quite a while, Dr Arnold Relman has lead a relatively lonely quest to restore medicine as a profession and health care as a calling  (see posts here, here and here).  He noted that at one time, the notion that "the practice of medicine should not be commercialized, nor treated as a commodity in trade.'" was considered very mainstream.  (The quote came from the mid- twentieth century AMA code of ethics.)  We have done what little we can to support him.  However, the opposition to the new normal of health care as an industry that produces a commodity has paled compared to the conventional wisdom favored by rich executives and supported by billions of dollars of marketing, public relations, and lobbying budgets.    

However, this week strong support for health care as professions, as a calling, and hospitals as serving a mission just appeared in a big way in a major address to a health care meeting in Europe.  First, in the context  

during the current economic crisis "that is cutting resources for safeguarding health,"...   Hospitals and other facilities 'must rethink their particular role in order to avoid having health become a simple 'commodity,' subordinate to the laws of the market, and, therefore, a good reserved to a few, rather than a universal good to be guaranteed and defended,'  

  
Furthermore,

'Only when the wellbeing of the person, in its most fragile and defenseless condition and in search of meaning in the unfathomable mystery of pain, is very clearly at the center of medical and assisted care' can the hospital be seen as a place where healing isn't a job, but a mission,

  The speaker thus directly challenged the current notion that health care is a commodity, and those who work in health care have jobs, not callings or missions. 

While the speaker was in fact a retired distinguished professor from a European university, but before any market fundamentalists start thinking he could be pilloried as some radical European academic, note the following.

The conference was the XXVI International Conference of the Pontifical Council for Health Care Workers, and the speaker quoted above was Pope Benedict XVI. 

Thus there is some very distinguished, albeit not numerous support for the ideas that held sway before market fundamentalism took over much of health care, the ideas that medicine is a profession and a calling, and hospitals should be mission oriented organizations, and that health care professionals and institutions should put patients' health and welfare first, very far ahead of short-term revenue and the accumulation of wealth by health care organizational leaders. 

Health Care Dysfunction Explained by the Fallacy of "Maximizing Shareholder Value"

Over the last two weeks, the Naked Capitalism blog ran a multi-part series (1-4) on what has gone wrong with US public for-profit corporations.  Although not targeted specifically on health care, the series included several themes we have discussed on Health Care Renewal, and suggested some important new ones.  So let us review the most relevant topics.

"Financialization," and the Exclusive Ostensible Focus on Shareholder Value

In the first post,(1) William Lazonick explained how corporations gave up their devotion to societal values to ostensibly focus only on the interests of shareholders: 

What went wrong? A fundamental transformation in the investment strategies of major U.S. corporations is a big part of the story.

A generation or two ago, corporate leaders considered the interests of their companies to be aligned with those of the broader society. In 1953, at his congressional confirmation hearing to be Secretary of Defense, General Motors CEO Charles E. Wilson was asked whether he would be able to make a decision that conflicted with the interests of his company. His famous reply: 'For years I thought what was good for the country was good for General Motors and vice versa.'

However, then(1)

the U.S. business corporation has become in a (rather ugly) word 'financialized.' It means that executives began to base all their decisions on increasing corporate earnings for the sake of jacking up corporate stock prices. Other concerns — economic, social and political — took a backseat. From the 1980s, the talk in boardrooms and business schools changed. Instead of running corporations to create wealth for all, leaders should think only of 'maximizing shareholder value.'

This was formalized in the the scholarly management literature,(1)

But in 1983, two financial economists, Eugene Fama of the University of Chicago and Michael Jensen of the University of Rochester, co-authored two articles in the Journal of Law and Economics which extolled corporate honchos who focused on 'maximizing shareholder value' — by which they meant using corporate resources to boost stock prices, however short the time-frame. In 1985 Jensen landed a higher profile pulpit at Harvard Business School. Soon, shareholder-value ideology became the mantra of thousands of MBA students who were unleashed in the corporate world.

Ignoring the Interests of Employees: Cost Cutting, Layoffs, Off-Shoring

Maximizing shareholder value only really seems to mean maximizing shareholder value in the short run, often by short-term cost-cutting that will reduce the ability to improve existing or develop new products and services. Hence, now(1)

When the shareholder-value mantra becomes the main focus, executives concentrate on avoiding taxes for the sake of higher profits, and they don’t think twice about permanently axing workers. They increase distributions of corporate cash to shareholders in the forms of dividends and, even more prominently, stock buybacks. When a corporation becomes financialized, the top executives no longer concern themselves with investing in the productive capabilities of employees, the foundation for rising living standards for all. They become focused instead on generating financial profits that can justify higher stock prices....

Furthermore,(1)

n the name of shareholder value, by the 1990s U.S. corporations seized on these changes in competition and technology to put an end to the norm of a career with one company, ridding themselves of more expensive older employees in the process. In the 2000s, American corporations found that low-wage nations like China and India possessed millions of qualified college graduates who were able and willing to do high-end work in place of U.S. workers. Offshoring put the nail in the coffin of employment security in corporate America.

Thus, "maximizing shareholder value" was the rationale for a variety of short-term cost-cutting approaches that turned employees (excepting, of course, the hired executives and their favorites) not merely into the makers of widgets, but into widgets themselves. By extension, this attitude that all employees (again, with the exception of top management and their cronies) are interchangeable applied even to highly skilled professional, technical and scientific employees, e.g., research scientists in a pharmaceutical company.

By further extension, as we have noted, health care organizations, including non-profit institutions like hospitals, insurance companies, and academic medical institutions, have been taken over by hired managers who are decreasingly health care professionals. Such hired generic managers have carried the latest fashionable management ideas into health care with them. Thus, in my experience, even experienced academic physicians began hearing that they had no individual value, were interchangeable and could easily be replaced starting in the 1990s.

For organizations that depend on highly trained, dedicated technical, scientific, and/or professional workers, devaluing and demoralizing such employees wold appear to be the height of foolishness.

As Lazonick pointed out in a later post(3), treating workers as interchangeable can be the death knell for innovation:

As is generally recognized by employers who declare that 'our most important assets are our human assets', the key to successful innovation is the extra time and effort, above and beyond the strict requirements of the job, that employees expend interacting with others to confront and solve problems in transforming technologies and accessing markets. Anyone who has spent time in a workplace knows the difference between workers who just punch the clock to collect their pay from day to day and workers who use their paid employment as a platform for the expenditure of creative and collective effort as part of a process of building their careers.

As members of the firm, these forward-looking workers bear the risk that their extra expenditures of time and effort will not yield the gains to innovative enterprise from which they can be rewarded. If, however, the innovation process does generate profits, workers, as risk-bearers, have a claim to a share in the forms of promotions, higher earnings and benefits. Instead, shareholder-value ideology is often used as a rationale for laying off workers whose hard and creative work has contributed to the company’s success. That’s grossly unfair.

A Fallacious Rationale: Only Stockholders at Risk

However, the reasoning, such as it was, behind the "maximizing shareholder value" mantra contained a rationale for so devaluing and demoralizing even the most dedicated and well-trained employees. As Prof Lazonick explained,(1)

Proponents of the Fama/Jenson view argue that for superior economic performance, corporate resources should be allocated to maximize returns to shareholders because they are the only economic actors who make investments without a guaranteed return. They say that shareholders are the only ones who bear risk in the corporate economy, and so they should also get the rewards.

He then went on to easily explain why this was complete rubbish(1):

But this argument could not be more false. In fact, lots of people bear risks of investing in the corporation without knowing if they will pay off for them. Governments in the U.S., funded by the body of taxpayers, are constantly making investments in physical infrastructures and human capabilities that provide benefits to businesses, but without a guaranteed return to taxpayers. An employer expects workers to give time and effort beyond that required by their current pay to make a better product and boost profits for the company in the future. Where’s the worker’s guaranteed return? In contrast, most public shareholders simply buy and sell shares of a corporation on the stock market, making no contribution whatsoever to investment in the company’s productive capabilities.

By Extension, In Health Care, Ignoring the Interests of Patients and the Values of Health Care Professionals

If one believes only stockholders are at risk and hence only stockholders deserve benefit from corporate activities, by extension this eliminates the interests of patients and the values of health care professionals from consideration by the leadership of health care corporations.

Of course, in health care, the patients may be the ones most at risk from corporate activities. For example, think of a patient who pays a large amount out of pocket for a drug that fails to benefit him or her. Worse, patients are not only at financial risk, but are at physical risk. For example, think of a patient who suffers an unusual, but severe adverse reaction to a drug.

In addition, in health care, health care professionals who do not work for a particular health care corporation may be at risk from its activities. For example, think of a physician who is fooled by a pharmaceutical company's manipulation of clinical research into believing a drug is effective and safe when it is actually useless and harmful. We have documented numerous instances of suppression of clinical research, manipulation of clinical research, ghost writing, deceptive stealth marketing, and other tactics used by pharmaceutical, biotechnology and device companies to deceive physicians about the effectiveness and safety of drugs and devices. Physicians who have been thus deceived are at risk of violating their fundamental responsibility to put individual patients' interests first.

Subverting the Mission of Non-Profit Health Care Organizations

As we mentioned earlier, there is ample evidence that non-profit organizations are now most often lead by hired managers who have brought the latest management with them, rather than health care professionals. It is therefore likely that the dominant notion of "maximizing shareholder value" has been operationalized even in non-profit organizations that do not have shareholders.

Most likely it has been transformed into simply maximizing short-term revenue. We have certainly seen many instances of leaders of such health care organizations who seem mainly preoccupied with short-term financial goals. Bad as this is for a public for-profit corporation, it is potentially disastrous for a non-profit organization which is supposed to put upholding its mission ahead of financial concerns (see examples of such mission-hostile management here).

Interests of Shareholders or Interests of Executives?

It is terribly ironic that in practice "maximizing shareholder value" turns out to mean maximizing executive compensation. In retrospect, this mantra looks entirely self-serving.  As Prof Lazonick noted in a second post, executive compensation has soared in recent years(2)

When all the data from corporate proxy statements are in within the next month or so, they will show that 2011 was another banner year for top executive pay. Over the previous three years the average annual compensation of the top 500 executives named on corporate proxy statements was 'only' $17.8 million, compared with an annual average of $27.3 million for 2005 through 2007. Yet even in these recent 'down' years, the compensation of these named top executives was more than double in real terms their counterparts’ pay in the years 1992 through 1994.

It might surprise you to learn that in the early 1990s, executive pay was already widely viewed as out of line with what average workers got paid. In 1991 Graef Crystal, a prominent executive pay consultant, published a best-selling book, In Search of Excess: The Overcompensation of American Executives, in which he calculated that over the course of the 1970s and ’80s, the real after-tax earnings of the average manufacturing worker had declined by about 13 percent. During the same period, that of the average CEO of a major US corporation had quadrupled!

We have documented seemingly endless examples of bloated executive compensation in health care.

In fact, as Prof Lazonick noted in his first post(1), by increasing stock prices short-term, executives of for-profit corporations can markedly boost their own compensation,

When a corporation becomes financialized, the top executives no longer concern themselves with investing in the productive capabilities of employees, the foundation for rising living standards for all. They become focused instead on generating financial profits that can justify higher stock prices – in large part because, through their stock-based compensation, high stock prices translate into megabucks for these corporate executives themselves.

The Conspiracy to Increase CEO Compensation

As CEO compensation climbed, they and their supporters have invoked a market-based rationale, as Prof Lazonick described in his third post,(3):

You often hear that stratospheric executive pay is the result of some inexorable law of supply and demand. If we don’t give top executives their multimillion dollar compensation, they won’t be willing to come to work and do their jobs. They are supposedly the bearers of 'scarce talent' that demands a high price in the market place. Even Robert Reich, Secretary of Labor in the Clinton administration and a critic of U.S. income inequality, has justified the explosion in executive pay, arguing that intense competition makes it much more difficult than it used to be to find the talent who can manage a large corporation (Supercapitalism, 2008, pp 105-114).

We have provided many examples of similar talking points used to support fat compensation for health care leaders (e.g., here. here, and here).
However, as we described here, the mechanism that executives have developed to set their own pay in line with the supposed market does nothing like that,(3)

That is not what determines executive pay. Here is how it works: Top executives select other top executives to sit on “their” boards of directors. These directors hire compensation consultants to recommend an executive pay package, which consists of salary, bonus, incentive pay, retirement benefits, and all manner of other perks. The consultants look at what top executives at other major corporations are getting, and say that, well, this executive should get more or less the same. Since the directors are mostly these very same “other executives”, they have no interest in objecting – and if any of them were to do so, they would find that they are no longer being invited to sit on corporate boards.

Meanwhile, given the preponderance of stock-based compensation (especially stock options) in executive pay, whenever there is speculative boom in the stock market, top executives of the companies with most rapidly rising stock prices make out like bandits. The higher compensation levels then create a 'new normal' for executive pay that, via the compensation consultants and compliant directors, ratchets up the pay of all the top dogs. And, when the stock market is less speculative, these corporate executives do massive stock buybacks to push stock prices up.

What we have here is not 'market forces' at work but an exclusive club that promotes the interests of the 0.1%. All too often executives allocate corporate resources to benefit themselves rather than to invest in innovation and job creation.

We have discussed similar mechanisms at work in health care, for example, here.

In other words,

almost unanimously, corporate executives proclaim that they run their companies for the sake of shareholders. In fact, their personal coffers pumped up with stock-based compensation, our business 'leaders' have increasingly run the corporations for themselves.

Were contemporary management of health care be only based on maximizing shareholder value or short-term revenue, that would be bad enough. However, it appears that it is really based simply on maximizing executive compensation. Health care, and our society as a whole has been turned into something like a feudal state, in which hired managers have become the new aristocracy.

The Rise of the Generic Manager

The likelihood that "maximizing [supposed] shareholder value" would lead to bad ends is increased by the decreasing likelihood that the managers who set out in this direction would know anything about the specific context in which they were working or other goals they ought to attempt. As Prof Lazonick pointed out, even before the rise of the "maximizing shareholder value" mantra,(1)

The beginnings of financialization date back to the 1960s when conglomerate titans built empires by gobbling up scores and even hundreds of companies. Business schools justified this concentration of corporate power by teaching that a good manager could manage any type of business — the bigger the better.

This was the notion of the generic manager. In health care, generic managers who have little specific health care knowledge or experience, and little understanding of or sympathy for the values of health care professionals might be particularly ruthless about putting short-term financial goals ahead of everything else.

Summary

On Health Care Renewal, we have focused on problems with health care leadership and governance. We have discussed the rise of generic managers, a focus on short-term revenue sometimes leading to mission-hostile management, the perverse incentives generated by executive compensation that is unrelated to achievement of the health care mission's goals, lack of executive accountability, and sometimes executives' complete impunity. It now appears that health care's leadership and governance problems simply reflect larger problems in the society as a whole.

Maybe it should be a relief that we in health care are not uniquely cursed. However, the immensity of the problems faced by our society as a whole will not make it easier to solve the problem of health care dysfunction.

I do feel better that our focus has been correct. Furthermore, I feel more confident asserting once again that true health care reform would put in place leadership that understands the health care context, upholds health care professionals' values, and puts patients' and the public's health ahead of extraneous, particularly short-term financial concerns. We need health care governance that holds health care leaders accountable, and ensures their transparency, integrity and honesty.

Maybe realizing that health care's problems are a part of society's problems will lead to more support for their solutions.

References
1.  Lazonick W. How American corporations transformed from producers to predators.  Naked Capitalism, April 2, 2012.  Link here.
2. Lazonick W. How high CEO pay hurts the 99 percent. Naked Capitalism, April 3, 2012. Link here.
3. Lazonick W. Three corporate myths that threaten the wealth of the nation. Naked Capitalism, April 6, 2012. Link here.
4. Parramore L. Capitalism's dirty secret: corporations don't create jobs, they destroy them.  Naked Capitalism, April 5, 2012.  Link here.

Using a "Professionalism" Initiative as a Speech Code to Punish Students' Criticisms of Administrative Authority?

The original impetus to set up Health Care Renewal was increasing evidence of external threats to physicians' professional values.  So it seemed to me that renewed interest in addressing professionalism in academic medicine might lead to more attention to these threats, and perhaps even real challenges to them. 

Instead, most academic professionalism initiatives seem to have steered away from this contentious area.  Worse, at times the academic medical concept of professionalism has been turned on its head. 

A Dispute Among Students at University of California - Davis

A recent post in the Torch blog from our friends at FIRE (the Foundation for Individual Rights in Education) provided a graphic example.  The case involved an apparently trivial dispute among two medical students:

[University of California - Davis medical student Curtis] Allumbaugh's ordeal began after he emailed the 'med2014' mailing list (or 'listserv') on July 19, 2010, regarding a party he was organizing. The listserv was widely used for a variety of non-academic purposes. Allumbaugh's email provided the address of the party, detailed the available space, and listed the variety of alcohol that would be available at the party. The email noted that others had signed up to bring snacks and mentioned that some things were still lacking for the party, such as music, fruit juice, and beer. Prior to Allumbaugh's message, others had sent similar emails using the same listserv about their own parties, such as a 'kegger' one student called 'CAMP MED.'

On July 20, 2010, a second-year student emailed Allumbaugh, notifying him that she had 'been placed on the class of 2014's listserve' and had monitored the class email. She criticized Allumbaugh's email for placing 'a heavy emphasis on alcohol.' In response, Allumbaugh emailed her directly on July 21, calling her a 'busy body' and telling her, 'You should really just mind your own business and let our class be.'

Note that the second-year student's email (available here) carried a suggestion that she had some sort of authority to monitor the extra-curricular actions of first year students as manifested on the list server, and perhaps even punish them for perceived misconduct:

I can tell you that as MS2s, we work and play hard, but we do it responsibly and always in the forefront of our minds we remember what image we are portraying in public and through the messages we send. I'd hate to see any one of you 2014ers get into any trouble right before you start an amazing period of your life.

Note that the exchange between the two students did not occur in an academic or clinical setting, and it was never clear why the second year student was "placed on" the list server, or why she should have any authority over the Allumbaugh. .

The School Administration Invokes "Professionalism"

The medical school saw fit to cast Allumbaugh's actions as violations of the school's standards of professionalism:

As a result of this email exchange, Associate Dean of Student Affairs and Graduate Medical Education James Nuovo sent Allumbaugh a letter on September 14, 2010, citing him for 'failing to demonstrate the highest standards of civility and decency to all' and 'failing to demonstrate courtesy, sensitivity and respect.' On November 3, 2010, Allumbaugh received a letter from the SOM Committee on Student Progress, punishing him with academic probation for the rest of his time in medical school and requiring him to undergo a psychological assessment to determine whether he was 'fit' to continue in medical school.

Finally, on November 19, 2010, SOM changed its rules to force all medical students to abide by the Principles of Community or else face academic probation.

The result was a series of interventions by FIRE:

In response, FIRE wrote UC Davis Chancellor Linda P.B. Katehi on August 3, 2011, noting that enforcing professional standards in truly professional settings differs greatly from enforcing workplace standards in other settings such as private conversations. FIRE also noted that it is blatantly unconstitutional to police student speech under the UC Davis Principles of Community because such a 'civility' policy violates the First Amendment right to freedom of speech when it is given disciplinary force.

When that letter had no effect, it took threats of litigation for the medical school to suspend Allumbaugh's punishment more than one year after it began:

SOM Associate Dean of Curriculum and Competency Development Mark Servis replied to FIRE on August 10, 2011, defending the policy. FIRE responded on November 23, 2011, reminding Katehi that 'violating well-established law regarding the First Amendment rights of students at public universities leaves you at risk of losing qualified immunity, thereby opening you and other administrators to personal liability' for the deprivation of students' First Amendment rights. Servis again defended the policy in a reply on December 5, 2011.

Finally, on February 16, 2012, the Committee on Student Progress notified Allumbaugh that his probation had been dropped, but persisted in requiring him to adhere to the Principles of Community.

Note that Associate Dean Servis' letter stated that the email sent to Allumbaugh by the second year student was "a genuine suggestion of concern and an offer of albeit unsolicited friendly advice."  Thus, Servis seemed unaware that it could have been interpreted as an assertion of authority and a threat of punishment ("I'd hate to see any one of you 2014ers get into any trouble.")

Dean Servis also defended the use of probation to punish a student for failing to "work effectively with classmates." Yet the dispute that had nothing to do with (academic or clinical) work, and only involved a single student from another class.  Why that student was not equally to blame was not clear, unless it was because she had been granted special authority by the administration to monitor the actions of less senior students.  The implication appears to be that the punishment was in defense of a student who had been granted special authority by the administration, and hence was ultimately in defense of the administration's power. 

Summary

In this case, the medical school's professionalism policy seemed to be used by the administration primarily to control students' speech outside of the academic and clinical setting. Furthermore, the student's main offense seemed to be failure to kowtow sufficiently to another student who by implication had been given some sort of authority by the administration.  What the two students' dispute had to with professionalism is not  apparent.

On one hand, this seems like a case in which a speech code was mainly used to defend administrators from criticism and challenge.

On the other hand, this speech code was cloaked in the mantle of professionalism.  So this case seems to be an example of a professionalism initiative used as an excuse for the leadership to maintain its power.

It is beyond ironic that while this was going on, the University of California - Davis, and its Chancellor Linda Katehi were becoming briefly infamous for another effort, a more violent one, by the administration to prevent criticism and challenge. Chancellor Katehi had authorized university police to "clear" student demonstrators from an "occupation" of the campus which was protesting, among other things, rising tuition and economic inequality, and in doing so, the police used pepper spray on unarmed students (see this post.)

There are a lot bigger threats to physicians' and other health care professionals' professionalism than medical students' sarcasm or even rudeness in disputes about alcohol served at off-hours parties. Since many of these threats also generate personal benefits to academic leadership, it may not be much of a surprise that they have received little attention.  (See the list of threats appended below.  Note that we have discussed two of these threats in the specific context of the University of California - Davis.  Here we noted that Chancellor Katehi seemed to be re-imagining her medical school as a biotechnology company.  Here we noted that Chancellor Katehi was also on the board of a company with a medical education and communication company subsidiary.)

However, while they remain unaddressed, I submit that using "professionalism" to cloak increased social control of students to prevent them from looking too closely at what academic administrators are doing will eventually backfire. 

===
ADDENDUM: List of Threats to Professionalism


Instead, to really uphold professionalism, we need to defend it from its real threats, as listed in my 2010 post:

• Abandonment of traditional prohibitions of the commercial practice of medicine - In the US, a Supreme Court decision was interpreted to mean that medical societies could no longer regulate the ethics of their members.  Until 1980, the US American Medical Association had  ruled that the practice of medicine should not be "commercialized, nor treated as a commodity in trade."  After then, it ceased trying to maintain this prohibition.  The result was increasing, now rampant commercialization.  See posts  here and here.
• Making money takes precedence over education -  A recent survey showing that more than half the faculty at multiple US medical schools felt they were valued more for how much money they brought in than their teaching or patient care abilities (here), confirming previous anecdotal reports (see here). 
• The medical school re-imagined as a biotechnology company -  In 2000, a Vice President of the American Association of Medical Colleges(1) wrote that research universities must respond to "societal demands that they become engines of economic development…."  Many universities now defend lax conflict of interest policies with similar arguments.  For more details, go here.
• Faculty become employees of industry - For numerous examples of this and other kinds of conflicts of interest, go here.  A survey by Campbell et al suggested that approximately two-thirds of medical academics get significant payments from industry.(2)
• Academics become "key opinion leaders" paid to market drugs and devices - Marketers regard "key opinion leaders" as salespeople who appear more credible because of their professional guise.  See anecdotal evidence here.  
• Control of clinical research given to commercial sponsors - A study by Mello et al showed how universities' grant administrators are willing to sign contracts giving commercial sponsors control over key aspects of human research studies.(3)  See post here. 
• Conflicts of interest allow manipulation and suppression of clinical research - Commercially sponsored research design, implementation, and dissemination are often manipulated to favor the sponsor's interests.  When such manipulation fails to produce favorable results, the results may simply be suppressed.
• Academics take credit for articles written by commercially paid ghost-writers - Such ghost-writing is often part of organized stealth marketing campaigns. 
• Whistle blowers are discouraged, or worse, and academic freedom is damaged.  Discussion of some examples of what may happen to whistle blowers is here.  The survey mentioned earlier (here) showed that about one-third of faculty fear they may be punished for speaking  out. 
• Leadership of academic medical centers by businesspeople - Ill-informed management may result from leaders who have no background or training in actual health care. 
• Leaders of teaching hospitals and universities become millionaires -  A recent example is here, and more may be found here.  Leaders of academic medical centers and the parent universities of medical schools often make more than $1 million a year in the US.  When such amounts are in play, executives may focus more on short-term measures that lead to even more pay than on upholding the mission. 
• Medical school leaders become stewards (as members of boards of directors) of for-profit health care corporations - A recent example is here, and a summary of how we discovered this phenomenon in 2006 is here.   The conflict of interest is severe because directors of for-profit corporations are supposed to have unyielding loyalty to the interests of the corporation and its stockholders, although they are frequently accused of acting mainly as cronies of the top hired executives (see here and here).
• Leaders of failed finance firms become stewards of academic medicine - We have found numerous examples, recently here, here, and here, of top executives and/or board members of the finance firms who helped bring on the global financial collapse also being trustees of medical schools, academic medical centers, or their parent universities.  Such "stewards" may bring to the academic environment the "greed is good" culture now pervasive in finance. 

References


1. Korn D. Conflicts of interest in biomedical research. JAMA 2000; 284: 2234-2237. Link here.
2. Campbell EG, Gruen RL, Mountford J et al. A national survey of physician–industry relationships. N Engl J Med 2007; 356:1742-1750. Llink here.
3. Mello MM, Clarridge BR, Studdert DM. Academic medical centers' standards for clinical-trial agreements with industry. N Engl J Med 2005; 352: 21.  Link here.