Saturday, June 17, 2006

The Real Reason They Want Rep. Jefferson Gone from Ways & Means Committee: Turn Off that Spotlight!

(AP) In a transparent attempt to save their corrupt leaders’ hides, the House jettisoned Rep. William Jefferson from the House Ways & Means Committee. Are they hoping a quick toss overboard will turn the spotlight away from the money for legislation pattern evident the last few years? Will it enable powerful chair Bill Thomas to slink into retirement without a Tom Delay like investigation?

Just last summer Chairman Bill held a hearing on the unfair advantage non profit community hospitals have as they are “tax-exempt”. This happens to be the long standing position of the Federation of American Hospitals, the for profit hospital trade group. Also, the chair happened to receive $30,000 in for profit hospital donations in 2005. It was most gentlemanly of Rep. Thomas to pay them back with a hearing on their pet issue.

Earlier this year the House passed a bill improving government payment for kidney dialysis services. The Senate introduced a similar measure in March. A group of patient leaders and family members gathered in early May to encourage members of Congress to support the measure. In doing so they celebrated the inventor of the kidney dialysis machine and Rep. William Jefferson, a sponsor of the bill in the House. Nearly two weeks after their joyful gathering, the FBI raided Rep. Jefferson’s office, executing a search warrant.

Kidney dialysis has grown into big business with numerous corporate deals occurring this past year. A large European company, Gambro Health Care sold all their U.S. clinics to Davita Inc, a large domestic kidney dialysis corporation. As part of the deal, a number of clinics had to be sold. A Welsh, Cason, Anderson, & Stowe affiliate, Renal Advantage stepped up and purchased the 70 clinics in question.

WCAS is an investment house with a strong healthcare niche and insider political connections. Tom Scully, the ex. Medicare Chief is Senior Advisor for the firm as well as a lobbyist for Alston & Bird, sharing offices with Senators Bob Dole and Tom Daschle. Another investment house is known for its incredibly strong insider political connections to the White House, The Carlyle Group with its corporate offices just down Pennsylvania Avenue. Carlyle announced last year their intent to beef up healthcare acquisitions and recently hired William Johnston as a Senior Advisor to their Health Care Team. Mr. Johnston’s executive background is in kidney dialysis, having negotiated the sale of Renal Care Group to a European company, Fresenius Medical Care in March 2006.

The amount of kidney dialysis corporate deal activity is interesting in light of the likely Congressional legislation. What might the companies desire from the federal government, especially those needing to generate returns for their shareholders? Aspects of the bill include an analysis of in home vs. in center dialysis. One company, Davita has already weighed in on the impracticality of home dialysis given current reimbursement rates. Their answer would be to increase reimbursement for home rates or to keep people coming to Davita’s centers for treatment.

Another issue is automatic payment increases for dialysis care based on some inflationary gauge. This would be most attractive to the for profit companies as Medicare and Medicaid price increases would be automatic, not subject to political processes. The Kidney Care Quality & Improvement Act is co-sponsored by Senators Rick Santorum-R and Kent Conrad-D in the Senate and by Representatives William Jefferson-D and Dave Camp-R in the House.

What weight might Davita have as it approaches influential members of Congress? It gave Rep. William Jefferson $4,500 for his current re-election campaign. That influence dissipated with the invasion of Congressman Jefferson’s office and the stripping of his key committee appointment. So who is left? And what contributions have other major dialysis companies made to influence legislation favorably?

We can begin by examining donations from the 4 companies’ mentioned thus far, Davita, Gambro Healthcare, Fresenius Medical Care, and Renal Care Group. How much did their company political action committee give to the 4 sponsors of the visionary dialysis legislation? Donations from the 2004 and 2006 campaigns are included in this analysis. In every campaign all four companies supported Dave Camp. His contributions totaled $14,500. Rep. Jefferson raised the smallest total of $9,000 with $6,500 of that from Davita alone.

Senators Conrad and Santorum were consistently supported by all four companies, although the foreign companies got heavier into the game in the 2006 campaign. Supported 7 out of 8 opportunities, Kent Conrad raised $28,000 from dialysis companies. While getting support 1 less opportunity, Rick Santorum took home the fundraising title, netting $31,200 from kidney dialysis for profit ventures.

For those who don’t believe money influences legislation, why would kidney dialysis companies donate so regularly, in such large amounts and to specific legislators on key committees that can advance their positions? In 2004 the four companies donated almost $174,000 to members of Congress. This increased over 18% in the current campaign to $205,000 and this election cycle still has 6 months to go.

Should the automatic payment increase pass, the Carlyle Groups and Welsh, Carson, Anderson, & Stowes of the world will be most happy. The question is how fast will they sell their rising stars and at what return? Remember who is behind the gorging at the campaign money trough. While Republicans dine more conspicuously, there are plenty of Democrats with dirty bibs.

Senator Max Baucus-D regularly feeds at the for profit healthcare trough, getting $31,400 from Davita between 2001 & 2006. To date in his 2006 campaign Sen. Baucus received over $65,000 while Kent Conrad posted over $57,000 from for profit healthcare companies. These represent two influential votes on the Senate Finance Committee.

The Chair of that committee, Senator Chuck Grassley-R just wrote the IRS asking the Commissioner to treat non profit community hospitals like the recently taken to task credit counseling agencies. Sen. Grassley ordered the IRS to closely scrutinize “tax exempt” hospitals for their unfair advantage relative to their for profit counterparts. Chuck’s underling Sen. Bill Frist likely was very pleased by this development given his family’s long history of running HCA, the largest for profit hospital chain.

If anyone believes a fair investigation could come from this, one only need consider the ongoing study of Senator Frist's sale of HCA stock while working on health care legislation. To date there has been no report, no conclusions, no results, and if necessary no penalties. Thus there is no justice, but we do have the best democracy money can buy.

P.S. The AP at the beginning of the post represents the author's initials


Unknown said...

Alot of this isn't news to me, but you put a great arguement out there for why they need to investigate this crap. My lovely and esteemed congressman Billy Thomas has taken over half a mil from the pharmacuetical industy alone..not counting the money you mention.
Would you mind if I link to this article you wrote?

PEU Report/State of the Division said...


Thank you for your thoughts on your congressman Bill Thomas. The dialysis people sent some money his way, $18,000 in the current election cycle. Relative to the sums you mention, this seems paltry. My guess is he is in their camp anyway. Feel free to link to anything I write, anytime. No permissions are needed. Peace,