You may never have heard the name of Dr. Charles R. Denham until the Justice Department alleged he took nearly $12 million in kickbacks from CareFusion Corp. to influence a national guideline for a product hospitals buy to prevent infections during surgery.
But you surely know the names the radiation-oncologist-turned-activist-and-entrepreneur rattles off as those with whom he has worked. They include organizations such as the Centers for Disease Control and Prevention, the Cleveland Clinic, the Clinton Global Health Initiative, the Discovery Channel, General Electric Co., Harvard Medical School and the Mayo Clinic. Prominent individuals include actor Dennis Quaid (whose newborn twins were nearly killed by a medication mistake) and Capt. Sully Sullenberger, famous for safely landing a crippled US Airways jetliner.
In a field dominated by academics, Denham boasts his own Wikipedia page and a contract with Celebrity Talent International. The speaker’s bureau lists Denham’s minimum fee for U.S. engagements as an average of $50,000 to $75,000, or roughly 50 percent higher than fellow celebrity and former Chicago Bears coach Mike Ditka. Denham and his family live in a waterfront home in Laguna Beach, California, whose value Zillow estimates at$10.5 million.
I first met Chuck Denham in 2000, and I’ve admired his drive and good works while simultaneously being troubled by persistent vagueness about his business operations. While those who run a private company are entitled to privacy, the kickback allegations, which Denham flatly denies, make basic financial transparency more important. What follows is some of the publicly available information I discovered.
Denham’s main business, Austin-based Health Care Concepts, Inc., was founded in 1984, according to its LinkedIn entry. Three decades later, the company – also referred to as HCC Corp. — has annual revenues of $2.5 million to $5 million, according to Manta, a web hub for small businesses. (Data may be self-reported.) That seems modest for a company Denham describes as a “technology incubator” where he “has led, developed or supported over 400 medical product development initiatives,” according to his speaker’s bureau profile.
The government’s allegations involve CareFusion, a publicly held company with products in the patient safety and quality improvement area. What’s not in dispute is that CareFusion signed two contracts that paid Denham’s companies $11.6 million over three years to research and develop specialized software. If the HCC revenues from Manta are accurate, CareFusion was a very important client. The government says the payment was inflated so Denham would influence a standard that affected sales of CareFusion’s ChloraPrep antiseptic skin wipes. At the time, Denham served as co-chair of the Safe Practices Committee of the Washington-based National Quality Forum (NQF), a national standards setting group.
According to an investigation by ProPublica, ChloraPrep was cited as a recommended product in 2010 after what some of Denham’s NQF colleagues perceived as inappropriate involvement in the process. He also failed to disclose his CareFusion contract. (A separate ProPublica investigation recently raised conflict-of-interest questions about NQF’s current president, who took over in 2013.)
Denham termed allegations of impropriety “blatantly false” in a statement responding to the government’s charges, noting that the contracts were signed well before before a positive clinical study of ChloraPrep was published or the NQF deliberated on a standard and before CareFusion was spun off from Cardinal Health. Nor has Denham been charged with any crime.
A few weeks after the government allegations became public, the HCC website was no longer available. Still, one can trace a part of HCC’s work through patent and trademark filings. For example, Denham was granted a patent in 1991 for an electronic medication record, and there are filings for software apparently related to the CareFusion contracts. HCC has also applied for a steady stream of trademarks, including phrases like Event Harm Index and the slogan “No outcome, no income,” which Denham uses in speeches and articles.
As an entrepreneur, Denham has formed and folded numerous for-profit and non-profit companies. Those listed by the Texas Secretary of State’s office include TD Enterprises Management; Spectrum Holdings International (also known as Austin Liberty, Inc.); Tetelestai, Inc. (Greek for “It is finished,” a New Testament reference); Aircare International, Inc. (Denham at one time worked in the aviation industry); CRD Health Ventures, Inc.; and Assisted Better Living Everywhere, Inc.
However, it is the non-profit Texas Medical Institute of Technology (TMIT) that’s been at the heart of Denham’s activism. It is in his role as TMIT chairman that Denham has hobnobbed with the medical and corporate elite, produced documentaries and co-founded the Global Patient Safety Forum in Switzerland. CareFusion sponsored one of those documentaries, and blogger and former hospital exec Paul Levy has raised pointed questions about product placement favoring CareFusion in that film.
In 2010, the year the NQF standard involving ChloraPrep was issued, TMIT listed contributions, grants and gifts of $1.9 million. By 2012, total revenues had plunged to about $33,000, with contributions, gifts and grants totaling a bit over $21,000. Expenses were a little under $860,000, resulting in TMIT’s net assets shrinking to $230,503. “Financial derivatives” and “closely-held equity interests” are mentioned as investments, but sections of the tax form related to their cost and current value are blank.
Apart from Denham, none of TMIT’s five directors are well-known figures in patient safety. The only “key employee” listed is Franck Guilloteau, TMIT executive director and HCC’s long-time chief technology officer. All directors work without compensation. TMIT’s LinkedIn entry refers to “11-50 employees,” but the TMIT tax return says it paid out salaries and wages of less than $104,000 in 2012 and non-employee management fees of about $28,000.
One TMIT initiative that might be expected to be prominently featured in the group’s description of its own activities is a worldwide campaign announced by Denham at last fall’s meeting of the Clinton Global Health Initiative. As Denham described “Saving Babies, Families and Caregivers” in a two-minute video by conference organizers, he is leading a partnership that includes Google, Sesame Street, the World Health Organization, the Cleveland Clinic and the Conrad Foundation. One portion involves “a million kids competing with new innovations that can save lives.” There are also, he says, pilot programs underway in the United States and Gabon in Africa to teach care coordination skills to the underprivileged.
However, a quick Google search of partner websites and a general description of the project turned up no hits, nor could any mention of it be found on TMIT’s website or in the lengthy description of the non-profit’s activities in the 2012 tax return. I may have missed it, or the project may be more embryonic than Denham’s enthusiasm suggested.
So is Denham the “Bernie Madoff” of health care, as one blog commenter suggested? It’s a catchy line, but I don’t think so. Madoff was consumed with making money; Denham, I believe, is genuinely consumed with improving patient safety, and he has real accomplishments to prove it.
At the same time, Denham’s descriptions of HCC and TMIT activities contain a lot of fuzzy edges that don’t get any clear when you try to examine them closely. For example, assertion that his products “are in more than half the hospitals in America” aroused skepticism from patient safety veterans such as Dr. Bob Wachter and others. There are questions about the source of his philanthropic wealth (he’s made references to his wife and his father) and questions about at least the appearance of using money to buy influence in the safety movement; for example, becoming editor of the Journal of Patient Safety. (There’s now a new acting editor-in-chief.)
Recently, an accomplished patient safety advocate described how she and a colleague walked away from their first meeting with Denham convinced they’d been with one of the most brilliant individuals they’d ever met. My suspicion is that Chuck wouldn’t disagree, which may be part of the problem. It’s not unknown for very smart and successful individuals to blur even in their own minds the boundaries between what they’ve done, what they’re doing and what they only hope to do.
In that same vein, CareFusion executives could have been convinced they were overpaying for software in return for Denham pushing their product, while Chuck felt equally certain every penny paid was tribute to the brilliance of his work.
Or perhaps the federal prosecutor got it right.
As for the failure to disclose the conflict of interest posed by the CareFusion contract, the only partially benign explanation I can think of also draws on Chuck’s deep well of self-confidence. Denham wears his religious devotion on his sleeve by, for example, urging colleagues to pray with him. An individual convinced of his moral probity and accustomed to privacy might decide he had no conflicts. That line of thinking doesn’t justify Denham’s silence, though, particularly when TMIT itself has a written policy requiring directors to annually disclose their possible conflicts.
What this scandal makes abundantly clear is that the patient safety movement needs to demand more transparency from those who speak, write and act in its name. With hundreds of millions of dollars possibly at stake, even non-profits can have an enormous financial stake in particular outcomes.
Finally, since this is a blog post that invites comments, I invite Chuck to submit his. By all means, omit anything that happened before you did business with Cardinal Health, CareFusion’s former parent. Chop off anything else that sends your lawyers searching for antacids. But talk to us. Fill in the blanks, add the context.
TMIT describes its mission this way: “Our core values drive our behaviors and, in turn, our culture.” For the moment, at least for outsiders, both those core values and behaviors remain very much in doubt.