Dive Brief:
- A “revolving door” between government employees at the HHS and private companies raises concerns about conflicts of interest and public trust in the nation’s healthcare regulators, according to a new study.
- Fifteen percent of people appointed to the HHS between 2004 and 2020 were employed in the private sector immediately before joining the department. After their tenure, 32% exited to industry positions, according to the research published in Health Affairs.
- The greatest net exits to the private sector were from the Centers for Disease Control and Prevention and the CMS, researchers found. More than half of appointees at the CMS, the CDC and the Office of the Deputy Secretary during the study period went to work in private industry after their government employment.
Dive Insight:
Researchers said their study is the first comprehensive analysis of the “revolving door” in healthcare regulation, a trend that raises ethical concerns about objectivity, influence and favoritism as powerful government appointees come and go from private sector jobs.
High numbers of exits to and entrance from the private sector increase the risk of regulatory capture, where agencies are more beholden to industry interests, the new study warns.
“The risks posed to the functioning of and public trust in HHS warrants study into how these government-industry flows are affecting agency decision making, especially in offices with the highest net exit rates,” researchers from Harvard and the University of Southern California wrote.
One such office is the CMS, which oversees the Medicare and Medicaid programs. A number of recent CMS administrators have bookended their tenure at the agency with private sector jobs.
Seema Verma, who served as CMS administrator under President Donald Trump, took a position at Oracle earlier this year as the software vendor expands its presence in the healthcare sector.
Marilyn Tavenner, who ran the CMS from 2013 to 2015, worked for for-profit hospital giant HCA for 25 years before joining the government. Thomas Scully was the CEO of hospital lobby Federation of American Hospitals before joining CMS as administrator in 2001, and became a partner at private equity firm Welsch, Carson, Anderson and Stowe following his departure in 2003.
It’s not surprising that workers would move between the public and private sector considering the difference in pay between these jobs and the desire to experience different types of work environments, the study’s authors noted.
For the analysis, researchers found two-year pre- and post-appointment employment histories for 95% of government workers appointed between 2004 and 2020.
Nearly half of the appointees came from another government position before working at the HHS, while 20% came from the nonprofit sector and 15% came from private industry.
But after they completed their tenure, 32% of appointees left to the private sector, a 17 percentage-point net increase.
In comparison, exits to government work dropped 29 percentage points.
Though 18% of people appointed by a Republican president came from the private sector compared with 11% under a Democratic president, net rates of exit to industry were similar.
Staffers who left for private industry work went to biopharmaceutical and device manufacturers, insurers, information and communication technology companies, real estate firms with medical property portfolios and consulting firms.
Fixing the “revolving door” may not be an easy task, researchers warned. There are laws and regulations meant to deal with conflict of interest issues among government employees, but they tend to be narrow in scope.
Other aspects of regulatory jobs could also influence decision-making, like frequent interactions with the same people in the private sector that create a sense of group identification. But it’s difficult to regulate those relationships, researchers said.
Rebecca Pifer contributed reporting.
