Is it medically professional for a non-profit organization to use physician testing fees to “choose wisely” a $2.3 million luxury condominium complete with a chauffeur-driven BMW 7-series town car? In my view, obviously not. To most people, such an action would conjure up images of hypocrisy, waste, and corruption.
After a review of public and tax records, it appears to me this is exactly what has happened.
Background
In 1999 for reasons that are unclear, the American Board of Internal Medicine (ABIM), itself a tax-exempt 501(c)(3) independent non-profit physician evaluation organization domiciled in Iowa, created a second non-profit tax-exempt 501(c)(3) organization, the ABIM Foundation (“the Foundation”), to first define and later promote the term “medical professionalism.” Both the ABIM and the Foundation share a common address in Pennsylvania and common officers:
The American Board of Internal Medicine (ABIM) is related to the ABIM Foundation (Foundation) in that The Foundation is the sole voting member of the ABIM. As such, the two organizations share a common president, a common CFO, and a common senior vice president whose base salaries are allocated between ABIM and The Foundation based on the time spent by each executive.
To define medical professionalism, the new Foundation enlisted other members of the non-profit world including the ABIM, the paid directors of the Foundation, the Robert Wood Johnson Foundation, the American College of Physicians-American Society of Internal Medicine and the European Federation of Internal Medicine. The group was chaired by Troy Brennan, MD, JD, a paid director of the Foundation, who was also president and CEO of Brigham and Women’s Physician Organization at the time. (He later became the chief medical officer of Aetna in 2006, and now serves as the executive vice president and chief medical officer of CVS Caremark.)
In 2002, this group published a white paper entitled “Medical Professionalism in the New Millennium: A Physician Charter” without peer review in the Annals of Internal Medicine and the Lancet. At least the Annals editor, Harold C. Sox, MD mustered the courage to express concerns about the manuscript in his introductory remarks to his readers:
The introduction contains the following premise: Changes in the health care delivery systems in countries throughout the industrialized world threaten the values of professionalism. The document conveys this message with chilling brevity. The authors apparently feel no need to defend this premise, perhaps because they believe that it is a universally held truth. The authors go further, stating that the conditions of medical practice are tempting physicians to abandon their commitment to the primacy of patient welfare. These are very strong words. Whether they are strictly true for the profession as a whole is almost beside the point. Each physician must decide if the circumstances of practice are threatening his or her adherence to the values that the medical profession has held dear for many millennia.
The paper centered on three fundamental principles that the authors claimed defined medical professionalism: 1) the primacy of patient welfare, 2) patient autonomy, and a new concept, 3) the principle of social justice — that is, “the medical profession must promote justice in the health care system, including the fair distribution of health care resources.” With this definition, physicians could no longer just be unwavering patient advocates concerned with the “primacy of their patient’s welfare,” they had also had to serve the financial needs of the system of medicine lest they be labeled medically unprofessional.
Ten years later after accumulating some $76 million in assets, the Foundation began their hard-to-disagree-with Choosing Wisely campaign to encourage physicians and providers to question the value of medical testing in an effort to eliminate unnecessary tests and procedures. The campaign has grown to include 70 societies and some non-physician organizations, including Consumer Reports, AARP, SEIU, and Univision among others. As part of the campaign, monetary grants from the Robert Wood Johnson Foundation are awarded to institutions willing to “educate practicing physicians about the recommendations from specialty societies, and building physician communication skills to facilitate conversations with their patients about the care they need.”
The money trail
So how did the ABIM Foundation accumulate all that money? Reviewing public tax records of the ABIM and its Foundation reveals a significant portion of the Foundation’s revenues came directly from the ABIM. Recall that ABIM receives 97 percent of its annual revenues from physician certification (62 percent) and recertification fees (35 percent), with only 14 percent of these fees going toward physician examination development. In 2007 and 2008 alone, cash grants from the ABIM to its Foundation of $7 million and $6 million respectively were issued. The public records disclosed that $17,360,000 from the ABIM were made to its Foundation in the 7 years ending 6/30/2008. As a three-time participant in the ABIM certification process (candidate #127308), I can attest that to the best of my knowledge physicians were never made aware of this use of the testing fees they paid the ABIM.
The luxury condominium
So why did the ABIM Foundation need all this cash from physicians? We can’t be certain, but the Foundation disclosed in their 2008 Form 990 that a portion of the money they received from the ABIM via physicians fees was used to purchase a 2,579 square foot 3-bedroom luxury condominium (Unit #11NW, in the “Ayer” Building, 210 W. Washington Square, Philadelphia) in December 2007 for $2.3 million. The luxury property borders Washington Square Park of the most historic areas of Philadelphia, across the street from the Tomb of the Unknown Revolutionary War Soldier and the Eternal Flame. The condominium building previously advertised a chauffeur driven Mercedes Benz S-series town car (more pictures here).
Since then, the Foundation has reported condominium expenses totaling $850,340 from December 2007 through June 30, 2013 (FY 2008: $42,522, FY 2009: $164,460, FY 2010: 161,957, FY 2011: $165,982, FY 2012: $161,980, FY 2013: $153,439 (most of these reported as “program service expenses”)). In my view, these expenses were accrued while the ABIM appears to have been on an inherently unsustainable financial course from 2001 to 2012 with its net asset or fund balances on 6/30/2002 beginning with a negative balance of $10,762,954 and growing to a negative balance of $43,150,390 ending 6/30/2013. Meanwhile, over the same period its shadow organization, the ABIM Foundation fund balance was $73,841,719 on 6/30/2013.
It should be noted that in the year of the condominium purchase the president and CEO of the ABIM, Christine Cassel, MD, earned $484,883 from the ABIM and $161,627 from the Foundation. Dr. Cassel continues to serve as president and CEO of the National Quality Forum despite a history of other seemingly conflicted financial dealings. Other executives of ABIM that year included F. Daniel Duffy, MD who served as executive vice president of the ABIM earning $379,915 from the ABIM, and Cary Sennett, MD, PhD who served as senior vice president earning $185,122 from the ABIM and $185,122 from the Foundation and now serves as a vice president of Anthem, Inc., formerly Wellpoint. That year Dr. Richard Baron, the current President and CEO of the ABIM and Foundation, served as the secretary/treasurer of the ABIM Board earning $59,729 until 7/1/2008 when he became an unpaid director of the board. By comparison, according to one reliable source, the median general internal medicine physician salary in the U.S. was $205,441 in 2009.
More questions
Reviewing the public record on when and where the ABIM Foundation was created discloses another discrepancy. We observe that the Foundation has recorded on their tax returns as being founded in 1999 with its “legal domicile” in Iowa, like the ABIM. However, a search for the organization in Iowa comes up empty, while a search in Pennsylvania Department of State (screen shot here) shows the Foundation was created in Pennsylvania in 1989. Which is correct?
We should note that non-profits are not required to file financial statements with the state of Iowa while Pennsylvania requires them. This raises uncomfortable questions. Is the Foundation’s Iowa domicile sheltering the sources and uses of its funds? Why does a non-profit promoting medical professionalism need to accumulate this much revenue? Is this how the Foundation demonstrates their medical professionalism to the public? To who is the ABIM and Foundation accountable? Anyone?
My call to the ABIM
On December 4, 2014 I contacted the ABIM and requested an explanation regarding the condominium, the ongoing condominium expenses, and the discrepancy of the ABIM Foundation domicile and founding date. Richard Baron, MD, the current President and CEO of the ABIM returned my call and explained the following:
1. Dr. Baron stated that the condominium was purchased as an investment property and part of the investment portfolio of the Foundation. He mentioned that real estate holdings were not uncommon with other similar non-profits. The condominium was used for several purposes, including housing ABIM personnel who resided out of state and returned to Philadelphia for meetings, by contractors (for instance, to house an IT team from India), and for off-site retreats and meetings with the communications group of the ABIM, for instance. He noted that when ABIM members use the Foundation’s condominium, the Foundation is paid $150/night from the ABIM (compared to the usual Philadelphia hotel rate of about $190/night) and there was cash flow to the Foundation from the ABIM for the use of their facility.
2. After revelations of the luxury condominium were disclosed at a December 2, 2014 Pennsylvania Medical Society town hall meeting, Dr. Baron mentioned in passing that the ABIM was putting the condominium up for sale. I asked Dr. Baron the name of the listing agent and the price. He stated he could not comment because “the paperwork was not in order” and those details had not been finalized because they were advised that the real estate market would be better in the Spring.
3. When asked about the high ongoing condominium expenses and the discrepancy about the ABIM Foundation’s creation date and domicile, Dr. Baron could not immediately respond but sent this follow-up e-mail 4 Dec 2014 at 2:39PM (CST):
Hi Dr. Fischer (sic)-
Attached please find the breakdown of the condo expenses. As I explained the depreciation $$ are a required reporting artifact for the condo as a business investment. The other costs are covered by the condo usage fees.
Regarding the 1989/1999 question – In 1999 ABIM Foundation became a separate operating foundation.
Thanks,
Rich
Richard J. Baron, MD, MACP
President and Chief Executive Officer
American Board of Internal Medicine
4. In closing, Dr. Baron expressed his willingness to be open to further questions.
5. I recently learned that the condominium is now listed with the following description:
Extremely Spacious Three Bedroom, 3.5 Bath Home at the Ayer Condominium. Tremendous Entertaining Space. 11’7’’ ceiling heights. Bulthaup b-3 kitchen system, Miele and Subzero Appliances. Huge windows with northwest views. High floor offering stupendous sunsets. Gorgeous stone bathrooms. Abundant closet space. One garage parking space included. Concierge, doormen, valets, gym, chauffeur driven BMW 7-Series. (More details here.)
I never received a clear answer to my ABIM Foundation domicile discrepancy.
Larger implications
Sadly, the medical profession has become a house divided. On one side are many non-clinical physicians who have become far removed from patient care and are firmly embedded in the non-profit, academic, and public policy circles making handsome salaries while seeing little problem with coercing their colleagues to pay fees to support their various economic, policy, or personal agendas. In the words of my colleague Jordan Grumet, MD: “They talk about ‘accountability’ as if they are the ones in the ICU having the family meetings. They pray at the altar of ‘quality’ yet fail to define the specifics of such a term. They resent ‘overtreatment’ but never have suffered the consequences of not doing enough.”
On the other side are the physicians buried in the work-a-day world of patient care, busy doing the best they can for their patients in our increasingly complicated health care system, working as excellent sheep as they do their difficult job and try not to rock the boat. While such a dichotomy is not unique to medicine (look to education, the public service sector, and politics, for instance), is ignoring this new reality useful to our profession? Might the unintended consequences of these unaccountable non-profit organizations and revolving-door employment practices with government and business interests be causing unimaginable harm to the integrity and credibility of our profession while simultaneously wasting valuable resources?
It is a shame that most physicians, particularly younger doctors saddled with exorbitant training debt and concerns of job acquisition and job security, are not in a position to protest the actions of the ABIM and its sycophants, particularly since their ability to practice medicine is increasingly tied to these ABIM board certification and their new perpetual maintenance of certification payments.
But this is the point, isn’t it? Regulatory capture. As these younger doctors gain experience and awaken to the realities of their new health care arena that is increasingly dominated by unaccountable organizations led by non-clinical members of our own profession, we risk creating cynicism in our ranks and physicians who must be more concerned with passing a test than providing direct patient care. Even worse, we risk promoting ourselves, career or cause over the complicated needs of our patients as the divide grows ever deeper. As a result, the brittle credibility and hard-earned trust with our patients are squandered beyond repair. In my opinion, this is what we risk when we have corruption within.
Is this what our profession and the public wants?
I can only hope that practicing U.S. physicians and the public will demand a full accounting of the ABIM and their Foundation’s entire financial dealings and non-transparent co-mingling of funds. I hope that Congress decides to investigate the ABIM’s role in including their MOC program as a physician quality reporting measure in the Affordable Care Act (see pages 365 and 963) to determine its legitimacy in light of these findings.
Furthermore, an investigation into possible violations of federal policy on the protection of human subjects (in this case practicing physicians involved in direct patient care) regarding the American Board of Medical Specialties’ requirement for practice and patient survey collection for Part IV of their trademarked Maintenance of Certification® program that the ABIM helps conduct should occur, especially in light of lack of informed consent afforded to physicians regarding how the fees and data they collect are used.
It is time we hold the non-clinical members of our profession that lead these organizations accountable to all physicians and the public at large. Until this occurs, physician-members of every ABIM subspecialty organization that profits from educational content provided to the ABIM should divest themselves and work to create their own, more credible, simplified and transparent life-long learning pathways. The American Association of Clinical Endocrinologists has already set a good example. While I understand that refusing to buck the coercion created by the multi-million dollar ABIM and its Foundation will be difficult, our credibility as stewards of our patients’ best interests and the preservation of the integrity of our profession demands nothing less.
I am indebted to Charles P. Kroll, CPA for his invaluable assistance collecting tax records of the ABIM and ABIM Foundation before 2007 and assisting in the understanding of the nuances of not-for-profit accounting methods. Mr. Kroll provided forensic accounting analysis to the Minnesota attorney general’s office during the Medica-Allina scandal and testified at the Minnesota Senate hearing on the matter.
Wes Fisher is a cardiologist who blogs at Dr. Wes.
