New Health Czar Challenges Obama's Ethics Reforms
By Philip Klein
Nancy-Ann Min DeParle, who President Obama appointed as director of the White House Office of Health Care Reform on Monday, took home at least $2.4 million in 2006 and 2007 from serving on the corporate boards of health-care companies whose businesses she would be in a position to affect in her new position.
Since leaving the Clinton administration in 2001, DeParle has made a fortune by serving on 10 boards in the health-care industry in addition to her lucrative career as a managing director at private equity firm CCMP Capital and a senior adviser at JP Morgan Partners. Her journey from the public sector to the private sector and back again would seem to represent the type of revolving door relationship between Washington and corporate America that President Obama pledged to put an end to during the campaign and in an executive order.
Tom Daschle, who was originally supposed to hold the same "health czar" position in addition to serving as Secretary of Health and Human Services, came under fire after it was revealed that he received $220,000 for giving speeches to health groups over two years. But DeParle's ties to the health-care industry run much deeper.
In just 2006 and 2007 alone, DeParle earned $376,140 in cash and stock from Cerner Corp., according to a TAS analysis of the company's filings with the Securities and Exchange Commission. Cerner is a leader in the field of health information technology, which the Obama administration has made a key part of its health-care agenda. During the same time, she also was awarded $377,319 by DaVita Corp., which specializes in kidney dialysis, and $224,749 from medical device maker Boston Scientific Corp.
In addition, she served on the board of Triad Hospitals from 2001 through its merger with Community Health Systems in 2007. When the $54-per share deal was approved, she was paid $1,059,205 for the stock options she held in Triad and she sold an additional $349,164 in common stock, for a windfall of $1,408,369.
This analysis only scratches the surface on her overall earnings from corporate boards since 2001. The reason is that some corporations did not specify how much each individual board member received in compensation in their filings in a given year.
For instance, at medical device-maker Guidant Corp., where she served from 2001 until its merger with Boston Scientific in 2006, its filings specify that board members would have received a $36,000 annual retainer, plus $3,000 for every meeting attended in person and $1,000 for every telephone meeting. Without knowing which meetings she attended, it's impossible to say precisely how much she would have earned. In addition, at the time of the Boston Scientific merger, she was able to exercise options on 35,000 shares of Guidant stock, allowing her to convert it into shares in the newly formed entity.
This analysis also leaves out any compensation she would have received for her board work in 2008, because that information is not yet available.
Her service also included stints on the board of Specialty Laboratories Inc. from 2001-2004; pharmacy network Accredo Health Group Inc. from 2002-2005; and diagnostic imaging company Medquest Associates Inc. since 2002. In 2008, she also joined the board of Legacy Hospital Partners Inc., which was formed by former Triad executives and mail order pharmacist Medco Health Solutions Inc. (which took over Accredo).
In her new role as the so-called "health czar" DeParle will be tasked with leading the White House efforts on overhauling the system. Asked yesterday whether her extensive board service would present a problem, White House press secretary Robert Gibbs said, "No. I mean, obviously, the White House has confidence in her and her abilities as part of the health care reform effort here." Gibbs said he anticipated she would leave the boards she is currently serving on.
Daschle eventually withdrew his nomination over controversy stemming from his failure to pay taxes in addition to the uproar over his health-care industry income. As a cabinet nominee, he would have faced Senate confirmation, but DeParle will not since the Obama administration split Daschle's dual role, and tapped Kansas Gov. Kathleen Sebelius as Secretary of Health and Human Services.
Shortly after taking office, President Obama issued a widely-touted executive order requiring appointees to take a pledge declaring, "I will not for a period of 2 years from the date of my appointment participate in any particular matter involving specific parties that is directly and substantially related to my former employer or former clients, including regulations and contracts."
As her web of relationships to the medical industry becomes known in greater detail, the administration will be pressed to explain how DeParle could take on overhauling the entire health-care system without violating the spirit, if not the letter, of President Obama's ambitious ethics requirements.
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