Two people played outsized roles in today's absurdly complex healthcare delivery system, both former Medicare Chiefs. Tom Scully brought us Medicare Part D and Medicare Advantage while Nancy Ann DeParle designed what is known as Obamacare (Patient Protection and Affordable Care Act).
The American Prospect calls Scully "Patient Zero", but that is inaccurate. Scully is "For-Profiteer Zero" and profits come first, the patient is second at best.
"the (healthcare) system has become maddeningly complex, with armies of functionaries working every angle, straddling every ethical line, to unlock a big safe full of money.
Ironically Tom Scully visited the White House on October 10, 2009 to lobby on healthcare reform. It's not clear if Nancy Ann DeParle visited Scully while he crafted Part D and Medicare Advantage for healthcare for-profiteers. She served on the boards of Cerner Corporation and DaVita beginning in May 2001.
A recent Wall Street on Parade piece on DaVita noted:
... rabid capitalism run amok, effectively turning what should be a life-saving branch of medicine into a criminal enterprise.
Prior to becoming Medicare Chief Scully lead the for-profit hospital lobby, the Federation of American Hospitals (FAH). The American Hospital Association lobbied on behalf of nonprofit community hospitals.
The FAH helped change "nonprofit community hospitals" to "private tax-exempt facilities" on Capital Hill. That meant "for profit hospitals" were "private tax-paying facilities."
Scully took Medicare's reigns near the height of Columbia/HCA's financial fudging under Rick Scott.
Under CMS rules, Medicare reserved 5.1 percent of its budget to compensate hospitals that treated “outlier” high-cost patients. Scully, a youthful-looking man with a pile of slightly graying hair who talked a mile a minute, explained that Tenet and several other hospital systems, without the regulators knowing, had for years randomly jacked up prices on individual patients to access the set-aside. This deprived other hospitals that actually had sick patients from getting a higher share of the funds; the dishonest actors were costing the honest ones money. Scully didn’t blame hospital deception, but the policy framework he was hired to manage.
The effort was anything but random. It was engineered, systematic and driven from the top..
Instead of "jacking up prices" the fraud centered around clinical coding. It was mostly done by large for-profit hospital chains, the people Scully served as chief lobbyist.
Medicare Chief Scully blamed the system his folks defrauded, covering for them until he resigned in December 2003. Tom then began his private equity career with Welsh, Carson, Anderson and Stowe (WCAS).
WCAS had a Medicare Advantage affiliate, Universal America and Scully sat on the board of directors. Scully once said "health investing is as safe as it comes."
Later in The American Prospect piece the author notes Scully suggesting rules need to be put in place to prevent bad actors in Medicare Advantage using NaviHealth (a former WCAS affiliate):
He said the business still helped diminish overutilization, and he didn’t believe his friends there would intentionally hurt patients. Ultimately, he said, government had to step in to set boundaries on misconduct.
Scully consistently falls on the side of his for-profit healthcare "friends," whether in government or out. He is:
...a special breed of “Washington guy,” the gregarious types who use their charm and ability to flourish in a relationship-driven town.
These people participate in the giant money funnel where one can hold multiple full time jobs, serve as a PEU advisor and have a number of paid corporate board positions. "Down home" Scully helped design that very practice.
Tom Scully can take the heart out of anything in his pursuit of profit. He and his PEU brethren did just that to our healthcare system.
(PEU Report has done a number of posts on Tom Scully since inception in 2007)
Update 8-5-23: Tom Scully would be very proud of Big Pharma and their efforts to avoid paying taxes. It's PEU worthy.
Update 8-28-23: Scully's legacy is obscene pharmaceutical price increases.
Update 9-23-23: Big's Matt Stoller wrote about WCAS cornering the anesthesiology market in Texas and raising prices. Scully created the playbook for "Ka-Ching." WCAS is doing the same thing with Orthopedics.