Healthy Skepticism Library item: 5808

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Publication type: news

Armstrong D.
Cleveland Clinic Defends Gift From a Vendor
The Wall Street Journal 2006 Aug 8
http://online.wsj.com/article_email/SB115500076363829447-lMyQjAxMDE2NTA1OTAwMDkwWj.html

Full text:

Cleveland Clinic Defends Gift From a Vendor
By DAVID ARMSTRONG
August 8, 2006; Page B1

Two years ago, the Cleveland Clinic hospital in Weston, Fla., received a $500,000 gift for a research chair. Unlike many chairs, the money didn’t come from a grateful patient or philanthropic foundation. Instead, the donor was a company that provides radiation therapy to the hospital’s cancer patients.

In a blending of corporate philanthropy and lucrative referral work, 21st Century Oncology Inc. provided the research gift to the hospital to support the work of Steven Wexner, who now holds the 21st Century Oncology Chair in Colorectal Surgery. The Florida hospital sends a majority of its patients who need radiation therapy to 21st Century treatment centers as part of a contract between the two entities. Both sides say they make money from the referral arrangement.

The corporate gift to the Cleveland Clinic, which is being made in annual installments of $100,000 until 2009, is the latest example of interlocking financial relationships between the nation’s top-ranked heart hospital and providers of medical services and products. Besides the 21st Century arrangement, the hospital system has been a financial backer of companies whose drugs and devices are used on patients at the clinic. In some cases, patients were never told of those financial links. Medical ethicists say that such arrangements may be problematic, particularly if they aren’t disclosed, because they may give a hospital a financial incentive to use inferior equipment or unproven techniques.

In May, the Cleveland Clinic said it would start providing more information to patients when the clinic or its doctors have financial relationships with medical companies whose products are being used at clinic facilities. But both the clinic and 21st Century say the funding of Dr. Wexner’s research chair isn’t tied to referrals or the contract to provide radiation services, and thus doesn’t need to be routinely disclosed to patients.

Eileen Sheil, a spokeswoman for the clinic, says the business relationship between the hospital and the company began in 1997, seven years before the research chair was first funded. “We’ve tried to build in as many controls as possible to ensure there is no tie between the gift agreement and the business relationship,” she says. She and 21st Century both say that the clinic initiated negotiations about the chair.

When asked if the research grant was related to the referral arrangement with the clinic, 21st Century Chief Financial Officer David Koeninger said, “Of course not.” He said the business relationship did make it “easier for our ear to be available” when it came to the clinic making a pitch for the funding of the research chair. He also said the research grant was reviewed by company lawyers to ensure it was appropriate.

The Cleveland Clinic isn’t alone in looking to industry as a source of funding for research chairs. Sleep-medicine and device makers fund three research chairs at Harvard Medical School, and earlier this year Janssen LP, a maker of mental-health drugs, said it would endow a chair at Atlanta’s Emory University School of Medicine. But the Florida research chair poses a more direct potential for conflict of interest. Federal and state laws generally make it illegal for companies to offer inducements for doctors or hospitals to refer patients.

“On its face, it could be an inducement,” says Anne Haule, a health-care lawyer at Ungaretti & Harris in Chicago, of the research grant from 21st Century. (The company is a subsidiary of Radiation Therapy Services Inc. of Fort Myers, Fla., which operates 70 radiation therapy centers in 14 states, mostly under the 21st Century name.)

Ms. Haule, who has no connection with the Cleveland Clinic or 21st Century, says federal authorities automatically consider “as suspect” any donation from a company to a referral source. She also says case law related to the federal antikickback statute, which covers payments made under the government Medicaid and Medicare programs, states “that even if a donation has 99 good purposes if just one purpose is for inducing referrals that would violate the law.”

Another disinterested party, Los Angeles health-care attorney Jeremy Miller, says the research grant raises an important concern: “Is the grant a payment for referrals? There is a potential risk there.”

As part of its contract with the Cleveland Clinic, 21st Century sends a radiation oncologist to the clinic on a part-time basis. The clinic pays a flat, monthly fee for the services of that physician, who often sends patients to 21st Century radiation centers after they are referred to him by clinic doctors. When a clinic patient receives radiation therapy at 21st Century, both the hospital and the radiation center collect fees from the health insurer. The hospital bills the insurer for a “professional” fee, or the services provided by the radiation oncologist. The radiation center separately bills the insurer for the “technical” fee for using its radiation machine.

Both the clinic and 21st Century say physicians at the clinic are free to refer patients to other radiation-therapy centers. Nonetheless, the clinic says about 60% of the patients needing radiation therapy are sent to 21st Century facilities. Many of those who don’t go to 21st Century facilities live in other areas of Florida, or other states, where 21st Century doesn’t have centers.

One competing provider of radiation therapy says the research-chair donation gives 21st Century an unfair advantage. Srinath Sundararaman, medical director of radiation oncology at Memorial Regional Hospital in Hollywood, Fla., says his facility has tried unsuccessfully to get business from Cleveland Clinic Florida. His facility is closer to the clinic’s Weston hospital than any of the 21st Century facilities. He says only a handful of Cleveland Clinic patients have been treated at his center in the last few years. Of the half-million-dollar research grant from 21st Century to the clinic, Dr. Sundararaman says, “It perpetuates their lock on services.”

Around the same time that 21st Century funded the chair, Dr. Sundararaman says Cleveland Clinic Florida contacted his facility about the possibility of providing radiation-therapy services. He says he suspects the contact was a ploy to strengthen the clinic’s negotiating position with 21st Century.

Ms. Sheil confirms that the clinic, at the urging of one of its doctors, explored the possibility of using other radiation-therapy centers in 2004 — the same year 21st Century agreed to fund the research chair at the hospital. In the end, she says, the clinic decided the 21st Century facilities were superior to the others. She also says the clinic employee reviewing other centers was unaware of the research grant from 21st Century.

The gift to the Cleveland Clinic is just one of several 21st Century says it has made to advance cancer research. The other donations, including one to Massachusetts General Hospital, went to institutions that don’t have a business relationship with 21st Century.

James Rubenstein, chief medical director for 21st Century’s parent, Radiation Therapy Services, says Dr. Wexner is a pioneer in colorectal surgery and if he were to leave the clinic, the company would consider redirecting its donation. “What he does is important,” Dr. Rubenstein says.

Dr. Wexner holds teaching positions at Ohio State University, the University of South Florida and Florida Atlantic University. He is listed as an author on 419 research manuscripts and serves on the editorial boards of several medical journals.

The funding of a research chair from a hospital vendor appears to be unusual. The Cleveland Clinic says it doesn’t have any other vendors funding chairs. The Mayo Clinic in Rochester, Minn., which has a similar operating structure as the Cleveland Clinic, says it doesn’t have any research chairs funded by companies it does business with.

Write to David Armstrong at david.armstrong@wsj.com