Monday, January 25, 2010

Conflicted Health Economists Push Deform

Brandeis' Stuart Altman joins MIT's Jonathan Gruber and Princeton's Uwe Reinhardt as conflicted economic health advisers. Altman, like Reinhardt, is on a number of for-profit health care boards, including health insurer Aveta, which covers 195,000 Medicare beneficiaries. Altman also serves on Lincare's board. Lincare provides respiratory care, infusion therapy and medical equipment to patients in their home.

Lincare's SEC filings state:

Stuart H. Altman, Ph.D. has been a director of the Company since December 2001. Dr. Altman, Professor of National Health Policy at Brandeis University, is a member of the faculty of The Heller School for Social Policy and Management. Dr. Altman is a director of Aveta Inc., a health insurance organization, and several privately-held managed care and disease management companies.

Dr. Altman beneficially owns 215,000 shares of Lincare with 48,000 more options (not exercisable in March 2008). His 2008 board compensation was $572,946. that pales compared to his stock holdings. At $36 a share, 263,000 shares would gross nearly $9.5 million.

Dr. Altman is chairman of the Lincare Board Compensation Committee. Such committees are infected with "pay for performance" thinking. It's sad that CEO's have to be extrinsically motivated to do a good job. Does Dr. Altman want to spread this distorting behavior to doctors and nurses?

Lincare owns $6.7 million in Auction Rate Securities, financial junk purchased from UBS. Did Altman's Compensation Committee award the CEO a bonus for that?

P4P poison is a key element of Obama's health reform. Altman and Reinhardt join Gail Wilensky and Nancy-Ann DeParle as fractals in the mix. Who publicly declared their conflicts of interest? Let the record show no hands.

Update: Altman is on the board of Inspiris, which provides care management services to the elderly, works with more than 400,000 Medicare and Medicaid members in six states. He also serves on the XL Health board, which provides Medicare services for chronically ill beneficiaries.

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