In a high-profile study, concerns have been raised regarding potential conflicts of interest and public trust in healthcare regulators due to a so called ‘revolving door’ phenomenon between government employees at the U.S. Department of Health and Human Services (HHS) and private companies.
The findings reveal that approximately 15 percent of individuals appointed to the HHS between the years 2004 and 2020 had previously been employed in the private sector before joining the department. And after they completed their tenure with HHS, 32 percent of appointees departed the government to join the private sector, a 17 percentage-point net increase.
Researchers from the University of Southern California and Harvard University published their findings in Health Affairs.
‘Regulatory capture’ concerns
Highlighting the potential risks associated with this connection, the study warns that an increase in the number of exits to and entrance from the private sector within regulatory agencies heightens the risk of “regulatory capture.” Regulatory capture occurs when agencies become more influenced by industry interests, potentially compromising their ability to prioritize the public’s best interests.
Of particular concern, said the authors of the study, is the Centers for Medicare and Medicaid Services (CMS), responsible for overseeing crucial healthcare programs. The study found that CMS has experienced the highest net exit rates to the private sector compared to other agencies. This trend underscores the movement of influential government appointees into the private sector, potentially raising questions about their allegiances and the subsequent impacts on policymaking decisions.
Recent administrators of CMS, including prominent names like Seema Verma and Marilyn Tavenner, have taken up positions in the private sector following their tenures at the agency. This growing trend of high-ranking government officials transitioning into influential roles within private companies underlines the complexities associated with maintaining impartiality and trust between the government and private sectors.
From government to lobbying
Further analysis reveals that nearly half of the government workers appointed to the HHS between 2004 and 2020 were drawn from previous government positions. Approximately 32 percent of these appointees then transitioned to the private sector after completing their tenure, further amplifying concerns regarding the prevalence of government-industry flows and potential conflicts of interest.
The researchers also explored the roles that individuals from the HHS went on to assume after leaving the department. They found that a considerable number of former HHS employees took up positions in lobbying firms, consulting companies, and other industry-related roles, raising concerns about post-government employment and its implications for regulatory decision-making.
The findings suggest that the movement of personnel between the HHS and the private sector may have had a noticeable impact on policy decisions related to drug pricing, health insurance regulations, and other key healthcare issues.
Private sector healthcare industry employers would be wise to recognize that this study may prompt policymakers and influencers to place them under increased scrutiny regarding their hiring practices.
The professionals at Sol Schwarz & Associates continuously monitor important developments in our clients’ industries, including healthcare, to help them prepare for the future. We have been providing compliance and advsory services to physicians, medical executives and practice management professionals since 1980. Let us know if you need our help.
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