After the 2008 economic collapse, the U.S Senate Permanent Subcommittee on Investigations launched a series of inquiries aimed at exposing the rot underlying the financial services industry. During one memorable hearing, Sen. Carl Levin grilled Goldman Sachs executives on their sale of investment products they knew to be dubious in order to increase yet further their already eye-popping compensation. One exchange, in which Levin used internal emails to show how Goldman Sachs officials sold products they knew to be “(expletive) deals,” went viral.
Congress has a long history of conducting investigations to shed light on sharp or shoddy practices and the handsome compensation packages granted to the executives responsible for them. In 1933, a Senate committee investigating the roots of the Great Depression called banker J.P. Morgan to testify about his own salary and the dishonest practices that made that salary possible, generating public support for remedial legislation enacted during the New Deal.
The pandemic has exposed with new clarity the comparable rot that underlies the American health care system. Americans pay an estimated 4 trillion dollars annually for health care, and the pandemic has unmasked a system that proved ill-equipped to cope with a major public health crisis while other countries could and did. The mind-boggling monies pouring into health care providers’ coffers somehow leaves tens of millions of Americans unable to afford the health care they need and one serious illness away from ruin.
Meantime, one lucky group of individuals are healthcare CEOs, whose compensation packages often bear little relationship to the delivery of affordable health care, and frequently are the product of incentives to overcharge and under-treat. For example, Boston is not only a hub for health care but for executives’ compensation arrangements, even as health care costs explode. A recent survey of non-profit hospitals showed that as of 2018, the last year when their IRS filings are available, the CEOs of the city’s 10 largest health care companies were paid salaries ranging from $1.7 million to $4.7 million. Dozens of other health care executives in Boston were paid similar amounts.
This does not include the appointments to the boards of health care companies that these CEOs are able to leverage for themselves by dint of their positions. These appointments pay them handsomely, with stock grants and annual board fees over and above their hospital compensation. They are hardly charitable in nature: The companies handing out the board seats seek hospital business, and they get it, in the form of participation in programs paid for by patients, research and clinical arrangements and other lucrative benefits. On their face, these relationships either are blatant conflicts of interest or provide the compelling appearance of them. “It smells,” observes Alan Sager, professor at Boston University’s School of Public Health about this mutual back-scratching. “We don’t know whether it is a mild stench or a revolting stench. The potential for conflicts of interest is there. It should be prohibited.”
But the conflicts of interest are not even the only problem. “High health care CEO salaries,” Sager says, “are like the froth on a toxic waste dump. It is visible on the surface but it obscures what is even worse underneath.” Hospitals executives are often given free rein to run enterprises whose mandate is to increase the bottom line. “They are going to do things that are profitable,” he says, and that tends to encourage procedures, billing and other conduct whose target is that bottom line. “What they frequently do,” says Sager, “is put their financial self-interest first.”
Whether it is examining potential conflicts of interest by health care executives or strengthening whistleblower protections for health care personnel who report practices that are either dishonest or jeopardize patient safety, Congress has a crucial role to play, and it is crucial that it play it. The new Congress that takes office in January should use its investigative powers to shine a much-needed spotlight on America’s health care corporations, and on how they can better serve the patients who pay their executives’ remarkable salaries.
Jeff Robbins is a Boston lawyer and former U.S. delegate to the United Nations Human Rights Commission.