Corporate news

Sen. Tom Harkin (D-Iowa) this week called for quick installation of new rules designed to rein the exploding career college industry, which feeds a large portion of the nation's growing need for healthcare professionals.

"There is evidence that too many of these institutions are driven more by the profit motive than their commitment to educating students," Harkin said in a Washington Post op-ed published Friday. "We must guard against for-profit schools that load up students with tens of thousands of dollars of debt in exchange for largely worthless degrees."

Stricter rules, added Harkin, who chairs the Senate Health, Education, Labor and Pensions Committee, "are urgently needed to take advantage of the strengths of for-profit institutions while avoiding their pitfalls."

The exploding growth of career colleges has raised eyebrows in Washington, not least because those schools got roughly $24 billion in federal tuition subsidies last year — a figure representing 23 percent of the $105 billion in Title IV education funding allocated in the 2008-2009 school year. 

Those subsidies have helped to fuel the enormous growth of career colleges, which have seen enrollment soar roughly 500 percent — from 365,000 students to 1.8 million students — in just the past few years, according to the Government Accountability Office (GAO).

Harkin said that, at certain schools, those subsidies represent as much as 90 percent of all revenues. "In some cases," he adds, "close to 30 percent of that federal investment is being spent on marketing and advertising to persuade students to enroll."

Such concerns have been agitated by recent reports revealing that shady marketing and recruitment practices — even fraud — are not uncommon in the industry. Some recruiters, the GAO found recently, were overpromising the salaries available after graduation, raising concerns that those students would be at risk of defaulting on federal loans at the taxpayers' expense.

In response, the Obama administration has proposed a series of rules designed to ensure that the schools are pumping out graduates employable enough to pay off the debts they incur. 

The industry has pushed back hard, arguing that a number of those proposals would hobble their recruitment and retention of students, leading to glut of workers in the fields being fed by for-profits.

Harkin, though, is backing those proposed rules. 

"New steps can ensure that these students get accurate information about the costs and likely outcomes of educational programs, while weeding out the programs that would leave them with debts they are unlikely to be able to repay," he wrote Friday. "The government should not be in the business of subsidizing for-profit institutions that leave students saddled with onerous debts they cannot repay and degrees or credentials that are of little value."

The issue is of particular importance to the growing health services sector, because career colleges train more than 40 percent of students receiving health degrees and certificates requiring two years of schooling or less, according to the latest survey from the National Center for Education Statistics.

The average worker is now paying roughly $4,000 toward employer-sponsored family healthcare coverage — a jump of $482 over 2009.

Healthcare lobbyist Jill Dowell has left her job as the vice president of federal affairs at America’s Health Insurance Plans, an AHIP spokeswoman confirmed to The Hill.

Dowell joined the organization in 2001, and she played an influential role in last year's healthcare negotiations.

"Now that healthcare reform has passed, the landscape has shifted to focus more on the regulatory functions and the role of the administration," Dowell told The Hill. "I thought that this would be the right time for me to shift directions, too."

"We will miss her and wish her all the best," said Susan Pisano, AHIP's vice president of communications.

Dowell is undecided as to what her next professional move will be. "It's been a great ride, and I'm proud to have been a part of this chapter in American healthcare."

Prior to joining AHIP, Dowell represented Motorola and Diageo on Capitol Hill. From 1993-96 she served on the legislative staff of former Ways and Means Committee Chairman Bill Archer (R-Texas).

Some hospitals in a recent survey have reported having more than a 50 percent operating margin.

The trade group Advanced Medical Technology Association (AdvaMed) has filed an amicus brief in a Supreme Court case regarding the disclosure of adverse medical events. AdvaMed says medical device-makers should not be liable for failing to publicly disclose all adverse event reports regardless of whether the event and the product are connected. 

The Food and Drug Administration "has long recognized that individual adverse event reports do not constitute reliable information upon which patients or health care providers should base actual medical decisions, because there is no certainty that the reported event was linked to the product cited," AdvaMed said in a statement. "The adverse event could have been caused by an underlying disease, another treatment or simply chance." 

The Supreme Court will review a decision by the Ninth Circuit that held that life science companies could be sued under the Securities Exchange Act. The case is Matrixx Initiatives Inc. vs. James Siracusano.

Alston & Bird, the prominent Washington-based lobby shop, has plucked two high-profile health policy experts from the government, the firm announced Monday.

Kimberly Brandt, former director of the Medicare Program Integrity Group at the Centers for Medicare and Medicaid Services, and Michael Park, a top health policy advisor to the Senate Finance Committee, have both joined Alston & Bird's healthcare team.

An expert on Medicare fraud, Brandt advised Congress on fraud and abuse provisions as lawmakers drafted their healthcare reform bill. She also serves as a guest lecturer on health policy at George Washington University. 

Park, who served a stint at the Health and Human Services Department before moving to Capitol Hill, is an expert on Medicare hospital payments. He spent the last four years with the Finance Committee, where he helped to write the new reform law. 

Tom Scully, former head of Medicare and now special counsel to Alston & Bird, called Brandt and Park "two of the smartest and best liked policy people in healthcare today." 

"Both are known for being excellent lawyers that work closely on a bipartisan basis with everyone in the healthcare community," Scully said. "These are the biggest Washington signings since Stephen Strasburg and Bryce Harper," referring to the two young baseball prodigies recently signed by the Washington Nationals.

Europe's largest vending company has launched a campaign to offer pregnancy tests in its Swiss machines.

Zug-based Selecta hopes the concept will catch on among young women leery of buying the tests in more-public retail stores, AOL News reported this week. 

"We have seen that acceptance for such a product is high enough for us to proceed with equipping the 3,000 machines we have all over the country," [Selecta Director Thomas] Nussbaumer told AOL News. 

He added that, since condoms are selling well at the vending machines and demand is growing, it suggests there might be room for a "connected" product. 

The U.S. Chamber of Commerce this week is slamming a new White House proposal designed to ensure that career college students are trained for jobs lucrative enough to pay back their federal loans — an issue for the healthcare industry, because a huge percentage of medical professionals are trained at for-profit institutions.

"This ill-conceived regulation will work against job creation, only resulting in jobs lost and fewer Americans getting the post-secondary education and training they need to secure work in today’s economy," Thomas Donohue, the Chamber's president and CEO, wrote in a letter to the Department of Education (DOE) Wednesday.

Issued last month, the DOE proposal — dubbed the "gainful employment" rule — is a response to allegations that some for-profit colleges have exaggerated the earning potential of their programs, leaving graduates struggling to pay bills when they enter the work force.

"Some of them are saddling students with debt they cannot afford in exchange for degrees and certificates they cannot use," Secretary of Education Arne Duncan said when the proposal was released.

Loan defaults don't just harm students' credit ratings, they also affect taxpayers, who provided $24 billion in federal tuition subsidies to for-profit colleges in the 2008-2009 school year.

The administration is proposing to gauge whether a program offers gainful employment based on two separate measures: the debt-to-income ratio of the program, and the rate at which program enrollees repay their loans on time — regardless of whether they graduate or not. 

Programs showing high debt-to-earning ratios would be required to inform students and applicants of that trend. Programs could also lose their eligibility for federal student aid programs.

The administration estimates that, if the thresholds remain unchanged, 5 percent of career college programs could no longer offer their students federal aid, while 55 percent would be forced to inform students of high debt-to-income ratios.

In its letter to the DOE, the U.S. Chamber said the proposal sets "arbitrary" benchmarks that would have a "lethal" effect on programs that cater disproportionately to low-income students.

"This rule would implement sweeping change with dramatic consequences to students without an adequate and informed assessment of its full impact," Donohue wrote.

The change is one of 14 new rules proposed by the Department of Education since June. Taken together, the changes are designed to rein in the for-profit education sector amid reports that aggressive recruiting, shady marketing practices — even fraud — are common within the industry.

The changes would likely have an effect on the healthcare sector. Indeed, 42 percent of the health professionals receiving health degrees and certificates requiring two years of schooling or less came out of for-profits institutions, according to the latest survey from the National Center for Education Statistics.

The DOE is accepting public comments on the proposal through Sept. 9, with the final rule scheduled for release by Nov. 1.

As Congress and the White House eye ways to rein in the exploding for-profit education business, some industry leaders are warning policymakers: Don't overstep.

Recently proposed Department of Education (DOE) rules could hobble for-profit medical colleges at a time when those schools are feeding more and more of the nation's ever-rising demand for health professionals, cautioned Randy Proto, CEO of the American Institute, a New York-based company that runs schools in Florida, New Jersey and Connecticut.

The rules would slow the growth of career colleges, Proto said in a recent phone interview, and "thwart our ability to meet that need."

Broadly, Proto wondered why the administration has singled out for-profit schools, while largely excluding traditional nonprofit institutions. That discrepancy, he warned, puts the for-profits at a distinct disadvantage — something that could harm the lower-income students who tend to enroll disproportionately in career schools.

The administration "is trying to define thresholds for certain types of programs and not others," he said. "The rules are being applied unequally."

The comments are timely. Career colleges have been under fire after a series of reports suggested that aggressive recruiting, shady marketing practices — even fraud — are common within the industry.

The chief executives of the nation's 10 largest for-profit health insurance companies earned $228.1 million in 2009, the liberal grassroots group Health Care for America Now (HCAN) says in a new report. That represents a 167 percent increase over their compensation in 2008.

During the past decade, HCAN says, the CEOs have made almost $1 billion.

The 2009 breakdown (excluding stock-option exercises), according to an HCAN examination of Securities and Exchange Commission filings:

Aetna: $18.2 million

Amerigroup: $5.2 million

Centene: $6.1 million

CIGNA: $136.3 million (includes $111 million in retirement pay for Edward Hanway)

Coventry Health Care: $25.7 million

Health Net: $3.6 million

Humana: $6.5 million

UnitedHealth Group: $8.9 million

Universal American Group: $4.5 million

WellPoint: $13.1 million

Read the report here:

The report comes as recently departed Anthem Blue Cross CEO Leslie Margolin alleges she "needed to leave" after criticizing corporate parent WellPoint's decision to raise rates as high as 39 percent, among other disagreements. Read the Los Angeles Times story here.