Innovation Ecosystem

The high cost of consulting firms making policy

McKinsey & Co. settles lawsuit for $573 million for “turbocharging” the opioid epidemic

Image courtesy of McKinsey & Company website

The landing page for MicKinsey & Company, a global consulting firm, which recently settled a lawsuit brought by 47 state attorneys general, including Rhode Island, for $573 million, involving McKinsey's role in helping Purdue Pharma “turbocharge” the opioid epidemic.

Image taken from email sent out by Gov. Raimondo on the night of her speech

Gov. Gina Raimondo gave her farewell State of the State address on Wednesday, Feb. 3, the same night that news broke that McKinsey & Company settled a major lawsuit brought by 47 state attorneys general, including Rhode Island, for its role in turbocharging the opioid epidemic.

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By Richard Asinof
Posted 2/8/21
The legacy of the Raimondo administration and its unhealthy co-dependent relationships with corporate consulting firms in designing and implementing government policy has yet to be written.
Will the R.I. General Assembly be willing to conduct an audit of corporate consulting firms doing business with the state as part of its increased appetite for greater oversight and accountability functions? If current CommerceRI Secretary Stefan Pryor follows Gov. Raimondo to Washington, D.C., what are the goalposts and metrics for hiring a successor? As the state moves ahead with a vote on Question 3, a $65 million affordable housing bond, on March 2, what is the current status of the Fane Tower luxury apartment complex development? With the $8 million investment by Blue Meridian Partners in the Central Providence Health Equity Zone, what are the bottom-up innovation projects – such as the Sheridan Small Homes program and the wire mesh Wi-Fi system providing connectivity to two-thirds of the residents of Olneyville, as projects to be scaled up statewide?
The tension between top-down corporate consulting as the source of government policy and the bottom-up community solutions as a driving force of innovation is a recurring theme, dating back to the philosophical war between Robert Moses and Jane Jacobs in the 1960s. The plans being led by the R.I. Department of Transportation to rebuild Kennedy Plaza without input from community and transit groups is the of “tilt” in policy driven by corporate desires rather than community needs. The workplace as we once envisioned it – as an office space in a central city location – may not survive the pandemic. In the same way, the typical office visit as defined by the health care delivery system may go the way of Blockbuster video stores.
One successful innovation is the work being done by Clinica Esperanza, which recently received $316,000 from the TD Bank’s Ready Challenge Initiative to expand its work with its ER Diversion Clinic and its Continuity of Care Clinic to serve the growing number of newly uninsured patients as a result of COVID-19. Many of the patients are essential workers who work in sanitation departments, food packing centers, and restaurants, with 80 percent of the population earning less than $20,000 a year.
The new funding, said Dr. Annie S. De Groot, the clinic’s volunteer medical director, will provide the community with “high quality, culturally attuned and linguistically appropriate care when it is most needed.”

PROVIDENCE – Some things are hard to swallow, such as big horse pills and big piles of horse manure served up on Twitter.

Take, for instance, the glowing reaction by R.I. Education Commissioner Angélica Infante-Green on Twitter, in response to the farewell State-of-the-State address delivered by Gov. Gina Raimondo on Wednesday, Feb. 3, in which Infante-Green compared Raimondo favorably to Angela Davis, the Black activist, celebrating the power of the Governor’s advocacy on behalf of women – one of the central themes of Raimondo’s speech.

Infante-Green’s tweet was deleted a day later, apparently in response to the fierce blowback. [I wish I had taken a screen shot.]

The non-apology apology offered by Infante-Green on Twitter read: “To clarify my last post – not comparing the 2 but celebrating them as women I have met & who I respect for their work towards real change. During #BHM [Black History Month] I feel it’s important to honor our personal Black heroes & the inspiration they bring to us every day of the year. Highlighting them as women! Clearly did not communicate it well.”

To quote WPRO’s Steve Klamkin, “Really?”

Penalty: backfield in motion
In more than six years of reporting on Gov. Raimondo, ConvergenceRI has become familiar with the coordinated communications strategy of orchestrated Twitter comments used to amplify the Governor’s messaging – in the most recent case, for her “fare-thee-well” speech, the importance of Raimondo’s legacy as the first woman Governor in Rhode Island, including an emotional appeal saying that women have borne the brunt of the coronavirus pandemic, and how the women in Raimondo’s life – her mother, her sister and her daughter – all encouraged her to overcome her alleged “nervousness” and take on the challenge of going to Washington, D.C.

Was the problem with Infante-Green’s tweet that she failed to curb her enthusiasm? Perhaps. Was it possible that Infante-Green’s linking of Gov. Gina Raimondo and Black activist Angela Davis as two apparent soul sisters might have been, in retrospect, filled with an unconscious bit of snark? Maybe. There is no such thing as coincidence, as Sigmund Freud [or was it Carl Jung] believed.

Still, the news media often finds it difficult to resist the temptation of piling on to reinforce such coordinated messaging. In advance of the farewell address, even WPRI’s anchor Kim Kalunian got into the swing of things in advancing Raimondo’s chosen narrative, lining up an interview with Joy Fox, the Governor’s original communications director, on the steps of the State House, reinforcing the heartfelt messaging of women in leadership: “If you can see it, you can be it.”

What got left out of the story?
It is not that the outgoing Governor doesn’t deserve some credit for elevating women’s roles in government, in the judiciary, and in her administration. To which I will gladly add: Bravo!

In her broadcast email sent out on the night of the speech, given to a mostly empty State House because of COVID-19 restrictions, Gov. Raimondo framed her talk as a review of “all we have accomplished together these past six years to build a stronger, more equitable and more resilient Rhode Island.”

But the unwritten – and mostly under-reported – legacy of the Raimondo administration has been the increasingly unhealthy co-dependent relationship the state has built with corporate consulting firms to design and to implement government policy – often accompanied by a hefty price tag, with little or no accountability. Can you spell Deloitte and UHIP?

[Editor’s Note: The news about Deloitte’s reverse Midas touch when it comes to designing unworkable software systems keeps getting worse. Deloitte received a no-bid, $4.4 million contract from the Trump administration to develop a software package to help patients register for vaccines, called VAMS, or a vaccine administration management system, which has been spurned by most states and become an object of scorn, according to a story published Feb. 6 in The New York Times. Worse, an immunization expert has now accused Deloitte and the Centers for Disease Control and Prevention of stealing her intellectual property, according to Times reporter Sheryl Gay Stolberg.]

As ConvergenceRI reported seven months ago in July of 2020, covering the hiring of yet another corporate consultant to develop a statewide strategic plan around health information technology [HIT] by the R.I. Executive Office of Health and Human Services: “One constant truth that has resonated with ConvergenceRI during the last decade of reporting on the convergence of health, science, innovation, technology, education, and research: there is an ever-increasing dependency on highly-paid private contractors as “expert” consultants to design and implement health policies, often tied to health information technology.”

The story continued: “Corporate consultants such as McKinsey, Boston Consulting Group, Deloitte, Hewlett Packard and even Amazon have seemingly become well-paid appendages of state government in Rhode Island, particularly when confronting how to manage the seemingly unmanageable – delivering health and human services to customers and patients alike, calculating the costs, risks and dividends of population health through a lens of “innovative” regulation of federal health insurance programs such as Medicaid and Medicare. As if these federal insurance programs would easily conform to the performance metrics of [private] equity investments in the stock market – if we only followed a path of economic innovation. Yes, we have an algorithm for that.”

Further, the ConvergenceRI story detailed the background on Briljent, the corporate consulting firm hired to develop Rhode Island’s HIT strategic roadmap: “Briljent is the latest in a series of corporate consultants who are thriving on doing business with the state government in Rhode Island.”

The story laid out the corporate philosophy behind Briljent’s approach to consulting: On its website, the Fort Wayne, Ind., private consulting firm, in a recent blog post, seemed to be an expert in talking in the consultant’s jargon, revealing a fluency in its approach toward innovation: “In yoga, we have a concept called Beginner’s Mind,” the blog post began. “It is the practice of coming to a pose as though you’ve never done it before, even if you’ve done it 1,000 times. The idea is to let each experience of a pose teach you something new; something you didn’t notice before, a more effective alignment, a calmer space, a balance between effort and ease, or how you ‘talk’ to yourself.” [See link below to ConvergenceRI story, “On the road to find out.”]

Is McKinsey in the house?
On that very night of Gov. Raimondo’s big farewell speech, there was major breaking news, a story mostly uncovered and under-reported in Rhode Island, that disrupted the prevailing corporate consulting narrative: McKinsey & Company, one of the world’s largest consulting firms, agreed to settle a lawsuit brought by 47 state attorneys general, including Rhode Island, for $573 million, that had laid out McKinsey’s insidious [my added word choice] role in helping companies such as Purdue Pharma “turbocharge” the opioid epidemic.

Thanks to the vigilance of R.I. Attorney General Peter Neronha, Rhode Island will receive $2.59 million in its share of the settlement. The money will be used solely to “address the impact of the opioid epidemic on Rhode Islanders through treatment, rescue, recovery, and prevention programs,” according to the news release issued by the Attorney General the next morning. [The lawsuit is still being pursued against other “bad” corporate actors in the opioid travesty.]

The complaint filed in the case by the R.I. Attorney General’s office laid out in remarkable detail the sordid relationship between McKinsey and Purdue Pharma.

It is not the kind of story that gets told by RI PBS in its special coverage on the opioid crisis; it is not the story that gets included in WPRI’s Nesi Notes; nor is it the kind of story that gets shared across the extensive email list of stakeholders by the Governor’s Task Force on Drug Overdose and Prevention and Intervention, but it is worthy of reading [if people still read]. Here are some of the nasty details:

• McKinsey sold its ideas to OxyContin maker Purdue Pharma, L.P. [“Purdue”] for more than 15 years, from 2004 to 2019, including before and after Purdue’s 2007 guilty plea for felony misbranding.

• McKinsey advised Purdue and other manufacturers to target prescribers who write the most prescriptions, for the most patients, and thereby make the most money for McKinsey’s clients.

• Early in their relationship, McKinsey advised Purdue that it could increase OxyContin sales through physician targeting and specific messaging to prescribers. These McKinsey strategies formed the pillars of Purdue’s sales tactics for the next 15 years.

• In 2008, McKinsey worked with Purdue to develop its FDA mandated Risk Evaluation and Mitigation Strategy [REMS]. McKinsey advised Purdue to “band together” with other opioid manufacturers toward a class REMS to “formulate arguments to defend against strict treatment by the FDA.” Ultimately, the FDA adopted a class-wide REMS that resulted in high-dose OxyContin remaining subject to the same oversight as lower-dose opioids.

But wait, as Emeril might say in pushing his new kitchen device, there’s more:

• In 2009, Purdue hired McKinsey to increase “brand loyalty” to OxyContin. McKinsey recommended the best ways to ensure loyalty to the brand by targeting specific patients, including patients new to opioids, and developing targeted messaging for specific prescribers.

Purdue thereafter adopted McKinsey’s proposed prescriber messaging and patient targeting advice and incorporated them into Purdue’s marketing and sales strategies.

• In 2013, McKinsey conducted another analysis of Oxycontin growth opportunities for Purdue, and laid out new plans to increase sales of OxyContin. Among the key components of McKinsey’s plan adopted by Purdue were to: a) focus sales calls on high-volume opioid prescribers, including those who wrote as many as 25 times as many OxyContin scripts as their lower volume counterparts; b) remove sales representative discretion in target prescribers; c) focus Purdue’s marketing messaging to titrate to higher, more lucrative dosages; d) significantly increase the number of sales visits to high-volume prescribers; and e) create an “alternative model for how patients receive OxyContin,” including direct distribution to patients and pharmacies, to help address the “product access” problem.

• Purdue approved McKinsey’s plan, and together with McKinsey, moved to implement the plan to “Turbocharg[e] Purdue’s Sales Engine,” under the name Evolve 2 Excellence [E2E]. E2E significantly increased Purdue’s opioid sales, in particular, for OxyContin.

Translated, McKinsey greased the skids to make more profits for Purdue, aiding and abetting in Purdue’s role as the pusherman to get folks hooked on dangerous prescription drugs. To quote Stan Lee, nuf said.

Unanswered questions
One question yet to be fully addressed, as Gov. Raimondo prepares to depart Rhode Island to take on her new job as U.S. Commerce Secretary, is this: Did McKinsey play a “shadow” role in the Raimondo administration? Raimondo’s husband, Andy Moffit, the “first gentleman,” had been working at McKinsey for more than 20 years in the educational and financial sectors; his last position before leaving in the spring of 2020 was “Global Head of Capabilities of McKinsey Accelerate.”

Translated, Moffit worked for McKinsey during the entire time the consulting firm was “turbocharging” Purdue Pharma’s opioid sales.

Perhaps such a question may seem to be unfairly drawn, given the lack of evidence of Moffit’s direct involvement in his firm’s opioid consulting biz. [Is it like asking about the role that Jon Duffy, a principal at Duffy & Shanley, played in the Raimondo administration, as a valued but apparently unpaid advisor? Or, for the incoming McKee administration, asking about the status of “volunteer” Mike Trainor – and his past difficulties in repaying loans from the R.I. Economic Development Corporation, now CommerceRI?]

McKinsey, like the Boston Consulting Group, had apparently become deeply enmeshed in providing advice to the Raimondo administration in how to navigate the COVID-19 pandemic during the spring of 2020. Unlike the large fees paid out to the Boston Consulting Group – a $1.85 million, no-bid contract to embed its employees remotely, at $25,000 per week – that were traceable as part of the state budgeting process, the fees for McKinsey’s work, according to two sources, were allegedly provided in an off-the-books arrangement, in which McKinsey’s work was paid for by a contribution from a philanthropic entity. Hello? Hello? Calling Rep. Patricia Serpa on the House Oversight Committee? Hello?

[Another favorite corporate consulting group, it turns out, has been Alvarez & Marsal, which received a $1.3 million state contract to work with the R.I. Department of Behavioral Health, Developmental Disabilities, and Hospitals to redesign Eleanor Slater Hospital; a $76,000-a-week, no-bid state contract to review the finances at Rhode Island College (which was later withdrawn after harsh criticism from legislators); and a $12.4 million state contract to help with the COVID-19 response.]

If it walks like a duck, if it quacks like a duck…

Private equity financing in health care
In what could be seen as another heroic intervention as the state’s “public health advocate,” as R.I. Attorney General Peter Neronha recently described his role in an interview with WPRI, the R.I. Attorney General’s office is providing the last line of defense in an effort to halt the sale of 60 percent of the stake in Prospect Medical Holdings, extending the review of the sale indefinitely.

The headline for the story written by Peter Elkind and published by ProPublica on Thursday, Feb. 4, the day after Gov. Raimondo’s fare-thee-well address, succinctly captured the gist of the story: “Rich Investors Stripped Millions from a Hospital Chain and Want To Leave It Behind. A Tiny State Stands in Their Way.”

The subhead to the story was even more pointed: “Private equity firm Leonard Green and other investors extracted $645 million from Prospect Medical before announcing a deal to see it and leave it with $1.3 billion in financial obligations. Four states approved it – but Rhode Island is holding out.”

The two hospitals in question in Rhode Island owned by the for-profit, California-based Prospect Medical Holdings are organized in Rhode Island under the name of CharterCARE, and include Roger Williams Medical Center and Our Lady of Fatima.

Elkind’s story is the kind of reporting that has all too often been “missing in action” in Rhode Island. He wrote: Leonard Green [a private equity firm], which owns about 60 percent of the hospital chain, announced plans in October 2019 to sell its stake to Prospect CEO Sam Lee and his longtime business partner for $12 million plus the assumption of $1.3 billion in lease obligations. The $12 million is to be paid by the company, not the two executives. As Prospect previously told ProPublica, “In effect, the company’s money is their money.” At the time the deal was announced, Prospect said it expected the sale to close by the spring of 2020.

The story continued: The transaction breezed past regulators in four states where Prospect owns a total of 15 hospitals. But not so in Rhode Island, where Prospect owns its other two hospitals. The sale of the two Rhode Island hospitals — and thus the entire deal — requires approval from the state’s health department and attorney general, which first must conduct a review process to assure the transaction meets nine statutory criteria.

Further, the story said: The Rhode Island officials have subjected the transaction to a high level of scrutiny. There have been multiple rounds of public hearings and questions to both Prospect and Leonard Green, generating thousands of pages of submissions in response. The state has sought details on topics such as COVID-19’s impact on the company’s finances and has requested interviews with multiple company officials, including the CEO.

As criticism of Prospect grew during 2020, Rhode Island officials first delayed their decision on the sale to November, citing missing documents and unanswered questions, then extended it again to the end of January 2021. On Jan. 18, the health department and attorney general wrote to Prospect confirming that the Jan. 29, 2021 deadline would be “extended,” and advised the company, “as of this date, we do not have a new deadline for completing the review.”

The proposed deal caught the attention of R.I. State Senate President Dominick Ruggerio, according to Elkin’s reporting. Proposed legislation in Rhode Island threatens to further stall the deal. The bill comes from state Senate President Dominick Ruggerio, a Democrat, who previously wrote a letter urging regulators to subject the Prospect sale to “the utmost scrutiny” and warning that approval posed “a probability of serious harm to the health and welfare of all Rhode Islanders.” On Jan. 12, Ruggerio introduced a bill, citing Prospect’s two Rhode Island hospitals, that would impose a one-year moratorium on all hospital ownership transfers “involving a for-profit corporation as acquiree or acquiror.” The bill has nine co-sponsors.

Of course, lost in translation in the proposed sale is the apparent ongoing relationship that Gov. Raimondo developed with CharterCARE, first in 2015 as part of the “Reinvention of Medicaid” initiative that was enacted into law by the R.I. General Assembly. A second visible example of the relationship occurred in December of 2018, when Brown University, working in partnership with Gov. Raimondo, floated the idea of a new merger between Lifespan, Brown and CharterCARE, as a way to counter the proposed merger between Care New England and what was then Partners Healthcare in Boston [now Mass General Brigham].

Now, Lifespan, Care New England and Brown [and apparently Coastal Medical] are part of merger talks to create a consolidated health care delivery system in Rhode Island.

Back to the future
The incoming McKee administration will face numerous challenges moving forward, including how it will rein in and wean state government from the apparent cozy relationship that existed between corporate consulting firms and the outgoing Raimondo administration.

A couple of things to watch, moving forward:

• What will the revolving door look like for former Raimondo administration officials as they jump ship from the incoming McKee administration? How many will find jobs with corporate consulting and public relations firms doing business with the state?

• How will the corporate structure of the health care delivery system in Rhode Island evolve in Rhode Island, given the proposed sale of Prospect Medical and the proposed merger of Lifespan and Care New England are under review by the R.I. Department of Health and the R.I. Attorney General’s office? How will the definition of not-for-profit health systems be tested?

• In regard to future drug overdose prevention and intervention policies, will the incoming McKee administration, building upon McKee’s relationship with the late recovery advocate Jim Gillen, push ahead with a pilot program for harm reduction centers as a strategic approach to cut down on the number of overdose deaths?

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