How the University HealthSystems Consortium uses Big Data and subtle blackmail to add a hidden, secretive layer of complexity to an already bloated industry

Consorting with the Consortium and its Big Data devilry

INTRO: The jargon used to sell the Consortium’s products sounds like a satire of “The Office,” which itself is a satire. The Consortium promises to provide “interoperable workflow solutions“ in its “robust array of resources and tools.” Everything, it seems, is part of a “suite” that is comprehensive, exclusive, benchmarked, trademarked, high-impact and integrated. It promises a sheen of order, ease and rationality to institutions that are “at the crest of the wave,” facing “The Threat of Incrementalism.”

On February 24, 2011, the University of Utah Health Care system was named best academic medical center in the nation by the University HealthSystem Consortium (UHC), an organization I'd never heard of. For three months, area media were inundated with ads proclaiming the rousing news that the U. had “catapulted” over 49 previously higher-ranked institutions and was now superior “even to the prestigious Mayo Clinic and Johns Hopkins Medical Center.” Although both Salt Lake newspapers lauded the achievement unquestioningly, I was skeptical from the start, and so were many people who proudly work or volunteer at the medical center and who believe that their departments and the institution as a whole are improving in quality. We regarded it as some sort of marketing gimmick, but I knew a bit of sleuthing would be required to figure it out

"A bit" turned out to be all it took, when I inadvertently discovered -- via some carefully worded interview questions -- that the U. essentially reverse-engineered the super-secret Consortium algorithm, so it could focus on those criteria that were going to be measured. It was a brilliant strategy, but ethically dubious.

As a result of the publicity that ensued after my article appeared, UHC discontinued its ranking program and began using established ranking systems, such as U.S. News and World Report and the Thompson-Reuters survey.

(UPDATE July 2014: The University of Utah Health Care System is ranked 35th in primary care and 52nd in research by U.S. News and World Report. It did not appear in the lists of top 10 medical school programs in primary care, internal medicine or pediatrics. As one might expect, the school did not publicize these data, unlike its exuberant advertising in 2011. )


The entity that crowned Utah Number One was established in 1984. The Consortium is an “alliance” of 112 academic medical centers (AMCs) and 256 of their affiliated hospitals, representing approximately 90 percent of the nation's nonprofit AMCs. The Consortium is incorporated as a nonprofit, but it is a very dynamic, thriving money-making machine nevertheless, which uses a sort of "soft power" to attract members and then makes them feel they have no choice but to purchase its slick, Big Data products. Everyone else is.

Don’t Ask, Because They Won’t Tell
The University of Utah declined to disclose how much it costs annually to be a member of the Consortium; how much the U. has spent on the Consortium’s products; and to what extent the purchase of these products is essential in the ranking process. It also declined to disclose how much it spent to advertise its Number One ranking and what monetary value it places on having achieved this distinction. It declined to discuss its reaction to all of the investigations -- by federal law enforcement, Congress and regulatory agencies -- of the Consortium’s group-purchasing endeavors, which the U. cites as a major advantage of Consortium membership. It declined to respond to questions about its responsibilities under the Freedom of Information Act to provide answers to such questions.
The Consortium declined to disclose specifically how and under whose leadership it was created, and in what ways it was intended to differ from existing organizations that represent academic medical centers, such as the Association of American Medical Colleges (the Association’s Senior Media Relations Specialist, Lesley Ward, was so paranoid when I asked if her group regards the Consortium as an ally or a competitor, that she would answer me only with questions, such as “Why do you need to know? What is the purpose of this article?”)

The Consortium declined to disclose who owns it and on what basis it claims nonprofit status. It declined to describe what its 250 employees do, and whether they are still enticing foreign IT workers with promises of $90,000 salaries. It declined to disclose how much it costs annually to be a Consortium member and what rights and restrictions are included in its contract with members.

It refused to say whether it pledges to release nothing but positive data about its members and to suppress the flaws it discovers during the ranking process. It declined to disclose who in its organization conducts the annual rankings, and how they are performed. It wouldn’t say whether the evaluations are conducted on site or by someone sitting at a computer screen in Illinois. It refused to disclose whether there is a fee for being evaluated. It refused to disclose whether the ranking criteria are based on Consortium tools that members are required to purchase. It refused to disclose the average monetary value of a top ranking in attracting more patients. It refused to disclose its gross and net annual revenues, including those from highly profitable ancillary firms in which it holds major ownership.
It refused to disclose how much each of its performance-improvement products and services costs or whether it conducts the equivalent of “clinical trials” to assess their efficacy. It declined to disclose what sort of products are currently under development and to what extent its members obliged to buy and use them. It refused to disclose the salaries and bonuses of its top management. It refused to discuss why it regards health-care reform as posing “embedded threats” to its members, and it denies lobbying against reform, despite evidence to the contrary. It refused to acknowledge that one of the Consortium’s founding concepts was to become, albeit indirectly, a highly profitable group-purchasing organization, and it would not address persistent issues of corruption within that organization. It declined to refute data which indicate that in many cases, hospitals would pay substantially less if they bought directly from the supplier rather than going through the Consortium’s group-purchasing conglomerate.
Is your mind boggled yet?
“It’s a complex (Consortium) algorithm,” that determined the rankings, an official told me.
Complex indeed. And it changes from year to year. And it is a tightly guarded secret, so that institutions can’t tweak their data to improve their rankings.

The Big-Picture fact is that those of us who thought we knew how dauntingly complex and ethically compromised the health-care system is were mere babes in the woods. The hidden sector that is exemplified by the Consortium -- with all its products, “collegial” conferences and experts for hire -- and by its many money-hungry affiliates and collaborators and competitors, and by Novation, with its inscrutable multibillion-dollar web of intrigue -- all of this adds a whole new, exhausting and rather disturbing layer of complexity and cost to the world that we as medical consumers must navigate. It is a massive edifice that over the past 25 years has crept around and atop health care, making big promises in its own fancy language, while it furtively refines its stranglehold.

Consortium Products: “Suites” for the Suite
According to its attractive, upbeat web site, the Consortium is currently marketing nearly 40 self-improvement products to its members. The seduction of these systems is that they promise to provide an almost effortless means of transforming the very messy and multilayered health-care business into something that can readily be “streamlined and simplified,” quantified, mapped, charted and then reduced to clear and manageable formulae.
The Consortium offers 14 separate packages of tools and resources to measure performance (“databases, related reports and services, plus an expanded set of comparative data and analytic tools, in addition to snapshots of organizational performance on critical clinical, operational, and financial metrics”). The Consortium also offers four “pioneering benchmarking programs to achieve superior quality and performance”; 11 “comprehensive suites” and “data-driven solutions to reduce total supply costs and increase efficiency"; and eight products “to help navigate the sea of challenges that are commonly faced as you strive to maximize patient care revenue.”

The jargon used to sell the Consortium’s products sounds like a satire of “The Office,” which itself is a satire. The Consortium promises to provide “interoperable workflow solutions“ in its “robust array of resources and tools.” Everything, it seems, is part of a “suite” that is comprehensive, exclusive, benchmarked, trademarked, high-impact and integrated. It promises a sheen of order, ease and rationality to institutions that are “at the crest of the wave,” facing “The Threat of Incrementalism.” (One has to wonder at what point the weight of all these “solutions” becomes a problem in itself.)
As if all of the Consortium’s radiantly omniscient offerings weren’t enough to dazzle any administrator into either a frenzy of reform or a nervous breakdown, the organization has cultivated an expansive web of 18 allied organizations and numerous corporate affiliates and subsidiaries, “collaborators” and "partners" -- many of which are marketing their own "suites" of "data-driven solutions." These products often seem to duplicate, overlap or simply beat to death issues that the Consortium’s “interactive tools” already address.
For example, Carefx -- a Consortium “collaborator” that reported a 200 percent revenue increase in 2009 -- offers a “solution suite which parallels aggregate data from multiple sources and presents it to clinicians in a way that fits their role, workflow and location.” Its Fusionfx comprises “interoperable workflow and analytics solutions.” Last year, it also began “powering” Physician Insight Plus, which is a “business intelligence dashboard” that enables the “leveraging” of the Consortium’s Clinical Data Base/Resource Manager™ through a “user-friendly graphical interface and the ability to drill down into service line and clinical service performance.” (Eight prominent investment groups are behind Carefx, including the notorious Carlyle Group, which is one of the world’s largest private equity firms -- with more than $75.6 billion under management -- and which proudly, yet surreptitiously, helped lead the nation into the Iraq War.)
In the context of all these assessment tools, Intermountain Health Care’s Brent James -- whom the U.S. News and World Report‘s rankings editor calls “one of the genuine national leaders in the health-quality movement,” states, “We need to have a debate around how well external bodies such as the Consortium represent true patient care quality. I constantly tried to push them to focus on actual patient care, rather than on the demands of external health care overseers. I think that is where the future of clinical quality truly lies.”


The advertised advantages of being a Consortium member are not insubstantial. In its most recent annual report, it revealed that it had “returned” to members $110 million in 2010 on $7.2 billion in purchases. It added that it has negotiated 103 contracts with optimal volume savings for members. The Consortium report also identified and vowed to fight “threats to the academic medical center business model that are imbedded in health-care reform” and to have “contingency plans” in place. Conveniently enough, the Consortium for 10 years has been the “principal strategic partner” of the National Association of Public Hospitals and Health Systems, which has cultivated a strong lobbying presence on Capitol Hill.
Although it seems that few people, including health-care workers, have even heard of the Consortium, its tentacles are so vast and sometimes murky, and with so many divergent loyalties, that it almost appears to have been modeled after the military-industrial complex.

The Jewel in the Crown: Group Purchasing
Novation was established Jan. 1, 1998, when the Consortium and Volunteer Hospital Association (VHA) -- a network representing 28 percent of America’s community hospitals -- consolidated their supply-contracting functions.
The Consortium’s decision to insulate itself from the ethically challenged swamp of group purchasing seems prudent, albeit disingenuous. Novation does the dirty work; the Consortium takes the credit.
Novation is the most wealthy, powerful and notorious group purchasing organization (GPO) in the country. The Consortium and VHA also own supply-chain firms GHX and Provista, and have a stake in HealthCare Purchasing Partners International (HPPI) as well . These entities are components of the GPO power elite, which help the Consortium to “pool purchasing volumes” with “best of breed” firms and to provide the “new way” to manage supply-chain data “that goes beyond data cleansing and item master maintenance.” It is these highly profitable firms that enable the “nonprofit” Consortium to purportedly “return” millions of dollars to its academic medical centers and attach “value added” benefits to contracts with suppliers.
Being part of a group-purchasing enterprise is among the most -- if not the most -- attractive aspects of being a Consortium member. Because University of Utah Health Care is the only academic medical center in the Intermountain West -- competing locally with hospitals that are members of larger systems which have greater purchasing power -- the Consortium “is a critical partner in helping us provide low-cost, high-quality health care,” the U.'s Christopher Nelson says.
While much of what the Consortium does might be categorized as interesting ideas combined with slick marketing, its GPO is regarded as downright sinister -- and even as borderline criminal -- by many suppliers and government investigators. A 2002 series of articles in The New York Times painted a picture of an industry “rife with conflicts of interest and intent on locking out small manufacturers in favor of large ones.”
GPOs have been under almost constant scrutiny by the federal government for years. In 2004, the Justice Department opened a broad criminal investigation of the medical-supply industry that focused on the Consortium’s Novation, despite Novation‘s continued insistence that it is “committed to safeguarding its reputation as an ethically responsible and transparent company.” This is a very amusing claim to make for a firm that has been under investigation almost nonstop for nearly 10 years.
The U.S. Senate Subcommittee on Antitrust, Competition Policy and Consumer Rights has conducted four public hearings on the matter -- at which no representative of any GPO was willing to testify -- and the Federal Trade Commission (FTC), Department of Justice (DOJ) the Government Accountability Office (GAO) and Office of Inspector General (OIG) have launched probes as well. Other government investigators are examining the machinations of both suppliers and buyers to document patterns of de facto corruption.

Mariah Blake, author of an indispensable article in the July/August 2010 issue of the Washington Monthly, described a flood of revelations about self-dealing, kickbacks and conflicts of interest among GPOs and their executives. “Congress was given a slew of documents showing that GPOs were collecting upfront payments of up to $3 million from suppliers… return for awarding them sales contracts,” she reported.
"While the extent of this bias is contested, the potential for conflict of interest is indisputable,” according to Michael E. Porter and Elizabeth Olmsted Teisberg, in their book “Redefining Health Care: Creating Value-Based Competition on Results.”
Despite public pronouncements of transparency, Novation has a reputation for secrecy and a loathing of regulation, according to a Fort Worth Weekly investigation. A deposition filed in a discrimination lawsuit included testimony that the legal department at Novation ordered an employee to destroy 10 boxes of documents in January 2004, in between rounds of Senate hearings. “There were so many documents to shred,” the complaint reads, “that even with the new, large shredder, it took Plaintiff several hours to shred all the documents.”
In 2009, the New York Times characterized the world of GPOs as “a largely unseen $60 billion-a-year realm….where group purchasing organizations select ‘preferred‘ manufacturers and negotiate the prices of medical products, which are a closely held secret. They then use a variety of carrots and sticks to make sure their hospitals buy those brands at the contracted price,” it reported. Manufacturers achieve “preferred” status by paying vendor fees -- which many regulators regard essentially as bribes -- to GPOs, which are accused of bestowing massive amounts of institutional business on the vendors willing to offer them the sweetest deal, according to the Times.
These practices appear to persist, despite the “enhanced code of conduct principles” that the GPO industry adopted in 2007. It is “unlikely either to resolve the issues or enhance public trust,” wrote. S. Prakash Sethi, author of a 2009 book, “Group Purchasing Organizations: an undisclosed scandal in the U.S healthcare industry.”

“The GPO industry has been unable to address the issues emanating from the oligopolistic structure of the industry and the inherent conflict of interest” between its bottom line and its clients’ welfare, he concluded.
In fact, in the same year that the code of conduct was promulgated, a sensational, vividly detailed whistleblower lawsuit was filed against Novation, charging that it was bilking the public of millions of dollars annually. The imperative to obtain kickbacks from suppliers in return for giving them access to members, is “implicit,” the plaintiff alleged.
According to the Washington Monthly article, the chief concern of investigators is that hospitals -- which began using GPOs to save money by pooling their purchasing power -- are actually paying more, which adds hundreds of millions of dollars to health care, much of it borne by Medicare. The “vendor fees” charged by GPOs are sometimes (and sometimes not) shared with the hospitals in the form of “rebates,” “discounts,” or “refunds.” But the hospitals bill patients and insurers for the items at the inflated prices. Ms. Blake cites two studies to prove her point: One indicated markups as high as 39 percent. Another -- which looked at tens of thousands of bids -- found hospitals paying an average of 22 percent more by going through their GPO than if they had dealt directly with a supplier. In 2009, Congress and the GAO tried yet again to get to the bottom of the GPO problem. As usual, nothing was accomplished except for another heated airing of an ongoing pattern of abuses.

Secrecy is regarded as imperative in the realm of GPOs. According to the Washington Monthly article, most suppliers are wary of speaking out. “Several talked to me off the record,” Ms. Blake wrote. “At least a half dozen more agreed to speak, only to back out at the last minute or retract their statements after we had spoken. ‘Most people who know this world wouldn’t speak to you under threat of subpoena,’ one former GPO executive told me. ‘They are terrified.’”
Studies by the Government Accounting Office, Professor Prakash Sethi, president of the International Center for Corporate Accountability at Baruch College in New York, and Harvard Law School Professor Einer R. Elhague, have called into question the benefits to hospitals of using Novation’s services and the legitimacy of the five billion dollars in fees that Novation collects annually, according to a 2009 dispatch by the Democratic Underground. A public interest group,, has been formed by patients, physicians, healthcare workers, device manufacturers, distributors, and concerned citizens committed to returning bona fide competition to the hospital supply marketplace.
In 2009, Consortium, VHA and Provista members used Novation contracts to purchase nearly $37.8 billion in products. “By applying data-driven contracting decisions in daily operations, Novation is able to “define, monitor and enforce pricing” on members’ behalf, according to its web site.

Mobster Medicine
The “enforcer” facet of the Consortium’s personality is part of what gives it and its GPO the vague aura of organized crime (Gotti style: well-dressed and finessed). The other facet is its reputation for paranoia and a rigidly enforced lack of transparency. The Consortium’s press releases are virtually ignored by mainstream media in part, one editor surmised, because it refuses to provide good-faith answers to questions that the releases raise. When the Dallas Morning News Investigative Unit did an exhaustive series of articles about scandalous deficiencies in care at Parkland Hospital, which is a Consortium member, the Consortium refused to provide any data except those that indicated improvement. Every statement was “entwined in (Parkland’s) public relations efforts,” the newspaper’s managing editor, George Rodrigue, wrote in December 2010.
Hospital rankings are notoriously subject to manipulation and variability, but the public hunger for them is very high nevertheless, according to HealthGrades. In a recent online survey, 93.8 percent of respondents reported being willing to go out of their way to seek care at a more highly rated hospital, and 83 percent were very or somewhat concerned about hospital quality in their communities. Some 64.9 percent stated that they would be willing to pay more out of pocket to seek care at a top-rated hospital. Nearly 70 percent want access to more quality information.

In this context, it is vital that standardized, reliable ranking methods be developed, according to a 2010 New England Journal of Medicine article. As health-care reformers look for ways to achieve the best possible care with dwindling resources, “state and national mandates for developing and reporting hospital-quality metrics” will intensify, the authors predict.
The takeaway from all of this is that the ranking process -- imperfect, contradictory and sometimes dishonest as it may be -- does have value in helping hospitals focus on improving quality and aiding consumers in making choices, although no one ranking system is definitive. It seems that it would be wise to combine the best of these systems into a uniform, comprehensive ranking apparatus, and to remove the profit motive from the process.