City Hospital System Board Member Fined for Conflict of Interest Involving Proprietary, Off-Shore Medical School

Sometimes I think I have now seen every type of conflict of interest that could afflict health care, but then some amazing new variation on the theme comes along...

Last year, the New York Times reported on an unusual deal between the New York City Health and Hospitals Corporation and a proprietary (for-profit) Caribbean medical school that attracts US citizens who were not admitted to US medical schools:

New York City’s Health and Hospitals Corporation has signed a 10-year, $100 million contract with a profit-making medical school in the Caribbean to provide clinical training for hundreds of students at the city’s 11 public hospitals.

The unusual deal, proposed by a member of the corporation’s board who has long worked for the Caribbean school, has been met by an outcry from New York medical schools fearing that clerkship slots will grow scarcer and that they might have to increase tuitions to compete.

Critics worry that the hospital corporation, whose mission is to serve the city’s poor, is conferring prestige on a foreign school whose curriculum, they say, is more vocational than research-based and often caters to affluent students who could not get into schools in the United States.

They say that the contract, with St. George’s University School of Medicine on the island of Grenada, has turned a meritocracy into a bounty system in which struggling city hospitals collect more for every St. George’s student they take, and could squeeze out local students.

'This changes the whole dynamic from an academic relationship to a dollar-based relationship,' said Dr. Michael J. Reichgott, associate dean for clinical affairs and graduate medical education at Albert Einstein College of Medicine in the Bronx.

Traditionally, medical schools have sent third- and fourth-year students into city hospitals to work — and learn — alongside doctors without being charged.

Under the contract, which was signed last year but never publicly announced, St. George’s pays the hospitals $400 to $425 per student per week — St. George’s charges students about $1,000 a week in tuition — on top of an annual fee of $50,000 for hospitals that take 24 or more St. George’s students.

The contract also bans the hospitals from providing clerkships to other Caribbean medical schools — a critical provision to St. George’s, which has faced heightened competition in recent years, particularly from Ross University on the island of Dominica, part of DeVry Inc., a publicly traded educational company, since 2003.

Note that the contract was unusual in several ways.  Not only did it permit a for-profit, proprietary medical school which is not accredited in the US pay hospitals to provide clerkships which they traditionally had provided without a fee to not-for-profit, US medical schools, but also it included a clause that apparently prevented other for-profit, proprietary medical schools from competing for these training physicians by also paying fees, and was signed in secret, only becoming public because of the Times' reporting. 

Furthermore, not only was the contract unusual, but the processes that lead to its approval were also unusual:

The board member who first proposed the exclusive contract, Dr. Daniel D. Ricciardi — a 1981 graduate of St. George’s and a rheumatologist affiliated with Long Island College Hospital in Brooklyn — said he had recused himself from deliberations involving St. George’s. Dr. Ricciardi, who has been on the 16-member corporation board since 2000 and on the St. George’s faculty for about 15 years, said he did not benefit financially from the deal. He was promoted to St. George’s dean of clinical studies and put in charge of United States clerkships shortly before the contract was signed.

'I don’t have to go to confession on this one, I really don’t,' he said. 'Everybody’s saying there’s a conflict here, and it comes back to me. They’re disgruntled, jealous. A report was written on the school, and the judgment was made based on merit, not on political push.'

Dr Ricciardi may or may not have felt obligated to discuss this issue during confession, but three days later, the NY Times again reported:

A board member of New York City’s Health and Hospitals Corporation resigned on Thursday, after the agency began an inquiry into his role in securing a 10-year, $100 million contract for a Caribbean medical school where he has long had a paid position.

The board member, Dr. Daniel D. Ricciardi, submitted a brief letter of resignation to the president of the corporation, Alan D. Aviles.

Dr. Ricciardi did not give any reasons for his resignation in his letter, saying only that he had been proud, 'as a first-generation New Yorker,' to support efforts to provide affordable quality health care to city residents. He had been a board member since 2000. But in a brief telephone interview on Thursday, he expressed bitterness, saying: 'You know what? The elite of the 0.1 percent that you represent have won once again. God bless.'

And just to provide the icing on the cake, despite Dr Ricciardi's denial that his job at St George's constituted a conflict of interest, two weeks ago, the NY Times further reported:

A former board member of New York City’s public hospital system has been fined $13,500 for his role in soliciting coveted training spots in city hospitals for students from a Caribbean medical school, the city’s Conflicts of Interest Board said Tuesday.

The former board member, Dr. Daniel D. Ricciardi, agreed to the fine in a settlement in which he admitted that he had held high-ranking paid positions at St. George’s University School of Medicine in Grenada while soliciting clinical clerkships — a critical part of medical education — from personnel in the city hospital system, which he also helped to lead.

Dr. Ricciardi, a rheumatologist and 1981 graduate of St. George’s, acknowledged that from January 2000, when he was appointed to the board of the Health and Hospitals Corporation, to August 2008, when he resigned after The New York Times disclosed the potential conflict, he had served in positions at St. George’s including dean of clinical studies, chairman of medicine and director of medical education.

During the same period, he said, he had contacted personnel at Kings County Hospital Center, Metropolitan Hospital Center, Woodhull Medical and Mental Health Center, Lincoln Medical and Mental Health Center, and Elmhurst Hospital Center to try to get them to increase the number of placements available to St. George’s students, a violation of prohibitions against representing a private interest before his public agency.

'I now acknowledge that my dual capacities created at least the appearance that the actions I took as an H.H.C. board member were done in part to benefit the school,' Dr. Ricciardi said in the settlement, dated Feb. 24.

Ana Marengo, a spokeswoman for the Health and Hospitals Corporation, said Tuesday that the contract was granted through competitive bidding, and that Dr. Ricciardi had recused himself from the board’s deliberations.

But Dr. Ricciardi admitted that he had violated city law prohibiting a public servant from having a position in a company that he knows is doing business with his city agency. Dr. Ricciardi said in the settlement that he had disclosed his affiliation with St. George’s to the hospitals corporation, and that he had not intended to violate any laws.

We constantly hear from its advocates that commercialized health care will lead to wonderful innovation.  At least, it certainly seems to lead to innovation in the creation of new variants of conflicts of interest.  Here, we see a board member of a municipal, not-for-profit hospital system also working for a for-profit off-shore medical school, and apparently using his board position to provide competitive benefits to that medical school, by means of a contract that was meant to be secret.  Each time we think we have begun to understand the extent that conflicts of interest pervade health care, we find new examples suggesting we have underestimated.

As we have now said ad infinitum, an important reason for rising costs, declining access, stagnant quality, and disgruntled professionals are health care leaders who undermine the missions of their own institutions in pursuit of self-interest, often driven by their own conflicts of interest.  We have now seen an amazing set of variations on this theme.  If we truly want to reform health care, we need to ensure that its leaders put their organizations' missions, and the fundamental values of health care, ahead of their own self interest.