Mr. Lucibella worked for me for a couple of years after he graduated from Johns Hopkins School of Public Health, and decided then that he wanted to leave Government and go back to school. And he left Government and went to the Wharton School in Philadelphia for 2 years, and then went to work for IMC. Mr. Bill Landress, who worked for me also, when he retired from Government went to work for another HMO and worked there for over a year, and only when that company sold its HMO to another company did he decide to leave that company, and I asked him to come to work then at IMC from this other company. So, those two people on that list did not leave Government and go directly to work for IMC. Mr. LIGHTFOOT. With the information that was given to the committee this morning, so everybody knows where we are coming from here, Mr. Landress left the Government on June 30, 1985, according to our information. He was a GS-14 level, which pays $57,759. He went to work as vice president of government operations for IMC on the 4th month, the 28th day of 1986 at a salary of $80,000 plus a $7,000 car allowance, which really, probably for the job he was doing, fits. Richard Lucibella was a GS-11 at $23,566. He left the Government the 5th month, 14th day, of 1982, and went to IMC the 7th month, the 1st day, of 1983, as assistant to the president at $40,000 a year, which is an increase but it is not that big, I guess, in my perception of looking at it anyway. You know, we get headlines all across the country when they want to give us a 4-percent cost-of-living increase around this place. When you see somebody's salary triple, why, it catches your attention. Thank you, Mr. Fowler. We appreciate it. Thank you, Mr. Chairman. Mr. WEISS. Thank you, Mr. Lightfoot. I have just one final question, Mr. Fowler. The offer that came to you by letter dated December 5, 1985, from Mr. Recarey outlining the proposal of employment, that was not the first that you heard from Mr. Recarey, was it? Had you had prior discussions or communication? Mr. FOWLER. That letter followed an interview that week here in Baltimore. He came up to Baltimore and interviewed me for a job and said he would send me a written offer. And that was the result of that. That was the next day or maybe 2 days later. Mr. WEISS. How was that contact first made? He reached out to you? Mr. FOWLER. He had called me and asked if he could talk to me about employment. Mr. WEISS. Well, again, I thank you very much for your testimony. It is important and gives us some inside view as to what happened, certainly during the last 17 months of IMC's existence. And I very much appreciate the cooperation that you have given to the staff of the subcommittee as well as your standing by all day to give your testimony. Thank you so much. Our next and, I think, final witness for today is Mr. Arthur W. Goulet. Mr. Goulet, before you sit down, if you will, raise your right hand. [Whereupon, Mr. Arthur W. Goulet was duly sworn by the chairman of the subcommittee.] Mr. WEISS. Thank you very much. We have a letter that you have submitted to us, and we will enter that into the record in its entirety, and you may proceed in any way that you think most appropriate. STATEMENT OF ARTHUR W. GOULET, FORMER QUALIFICATIONS Mr. GOULET. Thank you very much, Mr. Chairman. Mr. WEISS. Fine. Mr. GOULET. I am very glad that this subcommittee has become concerned about the IMC affair. Since at least the mid-1970's notoriety has accompanied IMC and its head, Mr. Miguel Recarey. But not until recently did Government entities intervene effectively. In the IMC affair, the procedures of due process that are supposed to protect citizens became some of the chief obstacles to their protection. For years, severe problems at IMC have been obvious. But more than 100,000 south Floridians have continued to be subject to grossly substandard patient and personal care. In 1980, when I was a qualifications officer with the Federal Office of Health Maintenance Organizations, my review team felt that IMC was a substandard provider of health care, but we were unable to discover any basis under law that could lead to a denial of IMC's application for Federal qualification. For example, we tried repeatedly and unsuccessfully to get the office of the DHHS inspector general-that may be the Office of General Counsel, I am not sure to advise us regarding its investigations of IMC, only to learn on the day that our decision was due that the investigation had been suddenly dropped. Several months afterward, I went to work for IMC in a genuine effort to improve its health care delivery system from within. As time passed, it gradually became clear that Mr. Recarey did not hire me for whatever I could do to improve patient care operations. Although I had arrived with the title of associate executive director, someone who should have been able to fix things, I was afforded little visibility or authority, and I was furnished no budget and no staff. I was soon told that I would have no access to the company's financial and decisionmaking information. Although I encountered continual horror stories in patient care-back in 1981, by the way-I had virtually no resources available to correct that situation. Even back in 1981, IMC was a company that had great trouble delivering a coherent product or service. The company's expansion into new business was always of paramount interest to Mr. Recarey. But daily operations were not. Mr. Recarey seemed to know little about his organization, his managers' duties, or about the de livery of health care in general. Organization charts, titles and committees were always short lived, part of a fast-moving shell game for Government inspectors. Health care providers and staff were paid either very high or very low wages, and they were frequently incompetent. It was always difficult to be sure of what was going on, whom to contact with questions, or how to resolve problems within the organization. Mr. Recarey was certainly responsible for much of IMC's mess. However, I feel that both the Federal Government's regulatory efforts and the HMO industry itself have contributed to problems such as those surrounding IMC. There has been an overconcern with the business aspects of health care, with insufficient attention paid to the quality of the products and services. Even the HMO Act and regulations that I helped administer at OHMO had few provisions with which to evaluate quality of care. An HMO was entitled to the Federal seal of approval if it were "organized and operated" in the manner prescribed by the law. In practice at OHMO, the issue became almost exclusively the HMO's financial viability. I respectfully encourage the subcommittee to do all in its power to promote the human aspects of care and the quality of health care delivery fully as much as the business aspects. Fortunatelyand I see this has been echoed by a number of other people-IMC was a real aberration among HMO's. My family and I have continuously been members of HMO's since 1973, and we have been very satisfied with the organizations and with their care. That ends the prepared statement I had. I have a couple of supplementary narratives that I prepared which are fairly lengthy, and I would be happy to submit them to the committee or to read excerpts. Mr. WEISS. Well, whatever you desire. We will take them for the record, certainly. If there is any special part of it that you would like to offer at this point, that is all right. It is entirely up to you. Mr. GOULET. Well, I will wait and perhaps your questions will cover it. Mr. WEISS. Fine. Thank you. [The prepared statements of Mr. Goulet follow:] ARTHUR W. GOULET 12114 Gaynor Road Rockville, Maryland 20852-2207 301-468-1412 December 11, 1987 The Honorable Ted Weiss Chairman Human Resources and Intergovernmental Relations Subcommittee Rayburn House Office Building, Room B-372 Dear Congressman Weiss: Thank you for the opportunity to present my testimony in your review of management practices at International Medical Centers (IMC) and in the federal Department of Health and Human Services. I am very glad that this Subcommittee has become concerned about the IMC affair. Since at least the mid-1970's, notoriety has accompanied IMC and its head, Mr. Miguel Recarey; but not until recently did governmental entities intervene effectively. In the IMC affair, the procedures of due process that are supposed to protect citizens became some of the chief obstacles to their protection. For years, severe problems in IMC have been obvious, but more than 100,000 South Floridians have continued to be subject to grossly-substandard patient and personal care. When I was a Qualifications Officer with the federal Office of Health Maintenance Organizations (OHMO), my review team felt that IMC was a substandard provider of health care, but we were unable to discover any basis under law that could lead to denial of IMC's application for federal qualification. For example, we tried repeatedly and unsuccessfully to get the office of the DHHS (then DHEW) Inspector General to advise us regarding its investigations of IMC, only to learn on the day our decision was due that the investigation was suddenly "dropped." Several months afterwards, I went to work for IMC in a genuine effort to improve its health care delivery system from within. As time passed, it gradually became clear that Mr. Recarey did not hire me for whatever I could do to improve patient care operations. Although I had arrived with the title of Associate Executive Director someone who should have been able to fix - things - I was afforded little visibility or authority, and I was furnished no budget and no staff. I was soon told that I would have no access to the company's financial and decisionmaking information. Although I encountered continual horror stories in patient care, I had virtually no resources available to correct the situation. IMC was a company that had great trouble delivering a coherent product or service. The company's expansion into new business was always of paramount interest to Mr. Recarey, but daily operations were not. Mr. Recarey seemed to know little about his organization, his managers' duties, or about the delivery of health care. Organization charts, titles, and committees were always short-lived, part of a fast-moving shell game for government inspectors. Health care providers and staff were paid either very high or very low wages and they were frequently incompetent. It was always difficult to be sure of what was going on, whom to contact with questions, or how to resolve problems. Mr. Recarey was certainly responsible for much of IMC's mess. However, I feel that both the federal government's regulatory efforts and the HMO industry itself have contributed to problems such as those surrounding IMC. There has been an overconcern with the business aspects of health care, with insufficient attention paid to the quality of products or services. Even the HMO Act and Regulations that I helped administer at OHMO had few provisions with which to evaluate quality of care. An HMO was entitled to the federal seal of approval if it were "organized and operated" in the manner prescribed by the law; in practice at OHMO, the issue became almost exclusively the HMO's financial viability. I respectfully encourage the Subcommittee to do all in its power to promote the human aspects of care and the quality of health care delivery fully as much as the business aspects. Fortunately, IMC was an aberration among HMOs. My family and I have continuously been members of HMOs since 1973, and we have been satisfied with the organizations and with their care. Thank you for your kind attention. 87-094 0 - 88 - 7 Very respectfully yours, Arthur W. Goulet |