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But talking about a corporate compliance policy steeped in purchasing law and ethical conduct can be as scintillating as listening to a pre-showbiz-polished Oscar- hopeful former presidential candidate Al Gore drone on about some environmental policy initiative.

When something goes horribly wrong, however, we’re craning our necks to absorb as many of the salacious details we can.

Hence, when we don’t discuss the contents of a code of ethical conduct, understand the need for it or even follow its rules we can face serious consequences. We’ve seen countless headlines and media reports over the years highlighting numerous episodes ranging from malfeasance to gross negligence to simply poor judgment.

• Hospitals submit treatment records to payers that overcharge by using "upcodes" to receive higher reimbursement rates.

• They file false claims for treatments never provided to patients.

• Materials managers submit invoices for more products than needed, skimming off the excess to sell them online or on the black market.

• Hospitals buy medical supplies under contract only to resell a portion to physician practices at a slightly higher price than they received but considerably lower than the physicians would receive on their own and retain the profits.

•Hospital CEOs allow themselves to get cozy with vendors under the guise of intelligence sharing for industry improvement only to be influenced to change their contractual dealings. Or CEOs invest in the companies with which their organizations do business.

•Doctors develop new medical devices for manufacturers only to bring those products into the facilities where they practice despite lower-cost alternatives on the formulary and under hospital contract. Or they bill patients for free sample medications.

•Hospital executives conduct business with vendors in commercial venues that might be perceived or viewed as inappropriate. Or it leaves them at such a competitive disadvantage that they effectively do not represent their organizations.

While corporate compliance policies may define a finite number of rules to follow, crossing the line is limited to the capacity of our imaginations, the extent of our greed and the desire for the adrenaline rush.

Federal authorities have had enough and are starting to crack down on illicit professional behavior that results in abuse, fraud and waste. Although the federal False Claims Act has inspired hundreds of career-risking whistleblowers over the years, new requirements that are part of the Deficit Reduction Act, which President Bush signed into law and became effective in January, up the ante.

Trade associations representing pharmaceutical and medical device manufacturers, distributors and group purchasing organizations all have instituted professional codes of conduct for their members to voluntarily follow and self-enforce. Such codes identify and warn against anticompetitive practices spanning the serious to the trivial. But few offer much beyond the basics and the obvious.

In the case of the vendor community codes of conduct address a variety of selling strategies and tactics but they season the text with a variety of legalistic terms that cloud the spirit of the rules. For example, they spotlight gifts, gratuities and trinkets typically used for brand awareness and buying influence but justify those items with words like "bona fide" and "legitimate" when they involve educational purposes and "fair market value," "modest" and "reasonable" when they refer to worth. They limit their attempts at specificity by setting a $100 ceiling for such gifts but don’t explore, for example, whether companies should claim $100 and write off the excess as a charitable contribution for tax purposes. And they exclude samples and "product evaluation opportunities."

Meanwhile, a growing number of hospitals and healthcare systems are fighting back on their own terms, trying to stem the tide of anticompetitive business practices, including fraud, conflicts of interest and abuse with more stringent corporate compliance policies and appointing corporate compliance officers and ombudsmen. Academic medical centers and investor-owned hospitals, where some of the high-profile cases have emerged, seem to be leading the way with stiffening (and some say stifling) business codes of conduct and tightening conflicts of interest standards.

While healthcare supply chain managers may have little sway over areas outside of contracting, purchasing and vendor performance and relations, they are moving toward a harder line with vendors. Beating up sales reps for a five-cent discount off a contract price is becoming less fashionable than beating them up for leaving behind a five-cent monogrammed ballpoint pen.

Historically, sales rep access policies and procedures were fairly straightforward but formally vacuous. If you wanted to see a clinician – typically a doctor – you signed a form in the materials management office, exchanged your business card and/or driver’s license for a badge and then could traverse the halls of the operating room and nursing floors. Access to surgical suites during actual procedures for "education and training" purposes may have required a few extra hoops through which to jump.

Such efforts may have reduced incidents of unscrupulous tactics and back-door selling but didn’t completely eliminate them. And the additional red tape did little, if anything to plug the flow of free product samples, buttons, pens and other plastic trinkets, as well as the steady stream of food.

Until now.

Hospitals and healthcare systems such as Stanford Hospital & Clinics, the
University of Pittsburgh Medical Center, University of Kentucky Hospital, University of Connecticut Health Center, PinnacleHealth and as of January, Henry Ford Health System have implemented zero-tolerance policies for behavior-
influencing tactics that close the door on any vestiges of hidden "maybes" in "just say no."

Some have taken the traditional sign-in sheets and badges to a whole new level.

At University of Kentucky Hospital at Lexington, for example, materials management developed an Internet-based software program requiring sales reps to pre-register their intent to visit the facility and explain why. Materials management screens the requests for competitors to contracted vendors, who should be approaching the GPO clinical committees anyway. "In many instances, the process stops here," said John Siedlinski, interim assistant hospital director, the facility’s outsourced equivalent to a vice president of supply chain management. Why waste the doctor’s time if he or she already uses a contractually locked and clinically acceptable product or if the vendor wants to bypass the facility’s detailed product evaluation process?

Those sales reps who qualify to proceed beyond pre-registration then must register online at least 24 hours prior to their visit, answering more detailed questions about their specific plans and strategies. At this point, the system automatically sends e-mails to relevant hospital executives inside and outside supply chain management, as well as relevant clinicians, for further questioning and responses.

Ironically, the software program originated in the pharmacy department where a pharmacist who "dabbles in HTML" created it in his spare time to control sales rep tactics in his area. Siedlinski indicated that materials management expanded the "rudimentary" but sufficient software program for medical/surgical purposes and since it’s rollout in late October it’s made a difference. "So far we’ve tracked 1,100 rep visits and we think we’ve captured about 85 percent of the total," he said. "This has opened up a lot of doors and eyes about who’s coming, who’s going where and doing what. And it helps the reps stay well-informed about our facility."

Siedlinski admitted that interfacing or integrating the free-standing program with other information systems within the organization hasn’t been addressed yet. He simply moves the data collected into an Access database and then a Microsoft Excel spreadsheet. Instead, they’re focusing more on expanding the program to include clinical service reps, repair vendors and others in the mix.

In the new "futuristic" hospital that University of Kentucky is constructing and scheduled to open in five years, Siedlinski foresees an even higher-tech tracking system for sales reps. "We want to incorporate RFID tagging to sales rep badges that identifies which floors they have access to for a limited time," he said. "Today, we’re scanning business cards, driver’s licenses and printing out ID badges that limit access to 24 hours. Basically, the timer starts once the paper is ripped from the printer."

At Detroit’s Henry Ford Health System, the process is even more rigorous. Sales reps have to attend a three-hour certification and training course before they’re allowed access to the organization’s facilities and clinicians. The certification program offers a tuberculosis test if reps that plan to be in patient care areas – with the consent of clinicians and patients – cannot produce recent TB test results. Henry Ford charges a $100 fee for each sales rep to become certified.

Jim O’Connor, vice president of supply chain management at Henry Ford, firmly dismissed any notion that the fee might be perceived as unethical or even a kickback. "We charge $100 but that fee doesn’t come close to covering our costs," he told Healthcare Purchasing News. O’Connor hired a full-time staff member to manage this as part of the organization’s central scheduling process. "Eventually, we’ll automate this and make it more self-service," he said. "But we can do online education and registration in an interactive format."

O’Connor also created a group within his department called "Vendor Compliance and Management. One director and two staff members handle vendor certification and performance, product recall and supplier diversity. So far, they’ve registered more than 800 sales reps.

"Most sales reps going into certification process feel it’s punitive," O’Connor said. "It’s not perceived well initially, but once they go through the program they feel they’re being treated fairly. They just want to know that they’re not being disadvantaged in comparison to their competitors.

"Healthcare facilities have a hard time pinning down just how many sales reps visit, let alone identifying who they are and where they’re from," he continued. "We may have 2,000 for drugs and med/surg. One drug company sends 125 different sales reps to us, 40 of them focus on [one popular branded cholesterol-lowering medication]."

Surprisingly, it was a multidisciplinary medical group that really drove this process, according to O’Connor. They were concerned about quality and safety. While O’Connor acknowledges that sales reps "provide value to the organization in terms of education," the process has gotten out of hand and unwieldy.

"We’re being inundated by sales reps that permeate the hospital," he noted. "Sometimes they’re counter-detailing our formulary or the direction we want to go. We recognize that it’s easy to develop an affinity or personal relationship with vendor reps but that it’s also the source of subconscious influence. It’s inevitable. It’s human nature.

"I once stood in our hospital lobby and spotted more sales reps seated in chairs than I saw clinicians, staff members and patients – most of whom were standing or milling around," he added. "They need to follow appropriate policies and procedures. We’re simply asking them to do what our own people are doing."

O’Connor admitted that he’s sympathetic to voiced concerns that the new process is time-consuming – particularly if sales reps have to follow different rules at each of their customer sites, but that doesn’t dissuade him. "The healthcare industry may need to come up with standards that everyone can adopt to make it more efficient," he added.

You’d be hard-pressed not to espy the sales reps mingling among the clinicians at either University of Kentucky or Henry Ford. They’re the ones clad in different colors and may be lugging around cases of trinkets and boxes of food they can’t leave behind.

At University of Kentucky they’re the ones sporting the bright red bouffant caps; at Henry Ford, they’re the ones clad in black scrubs amid the sea of blues, pinks, purples and patterns.

  "A lot of doctors don’t like it because they feel it singles out the reps," Siedlinski said. "Some sales reps don’t like wearing them either or they refuse. We don’t penalize them on the back end for non-compliance. But we think it will become a standard. With HIPAA rules and corporate compliance we’re well past the Marcus Welby era and the 1980s. Today, we have to be more strict and controlled."

Both facilities just say no to the giveaways, too.

"We’ve banned everything," O’Connor said. "No pens, pins or even food."

Echoed Siedlinski: "We will not accept any samples or gratuities or gifts. None. Absolutely no pens or anything else. Not even a glass of water from a sales rep."

O’Connor was surprised to learn what was the most contentious item banned. "[Clinicians] didn’t object so much to the trinkets," he said. "The biggest issue, believe it or not, was the food. Clinicians have grown accustomed to having bagels and donuts and lunches available. It’s a habit. And these are people who can afford to buy their own food."

Fundamentally, it’s about intelligence. "You need to find out who’s in your hospital, what they’re doing and who they’re talking to," O’Connor said. "Over time as we tighten this up a bit I think you’ll see downstream quality and safety benefits and a corresponding reduction in expenses.

"We’re looking to empower the whole organization to participate," he continued. "We can’t be at every door all the time." He also advocated a progressive disciplinary process that starts with verbal warnings and written letters to superiors and ends with expulsion. However, he admitted it can get complicated when you have a long-term relationship with a vendor or it’s a GPO contract.

"We’ve already kicked out two sales reps for violating our policies," Siedlinski said. "And we’ve also started a Wall of Shame where we put the rep’s photo, name and company name on display. We want to show we’re serious here about what we’re trying to do."

But O’Connor foresees improvement. "I think you’re seeing an emerging ethic within healthcare, as well as other industries," O’Connor noted. "Congress is concentrating on it. CEOs are distancing themselves from questionable relationships. They recognize that their actions have a trickle-down effect that sets the tone for the entire organization. We’re becoming much more controlled."

In fact, O’Connor recently instituted an "Influence-Free Day" where employees were encouraged to exchange monogrammed trinkets for Henry Ford-branded merchandise. "We donated the trinkets to local public schools," O’Connor said, laughing. "It’s been very revealing. Sensitivity is way up. But it’s important to emphasize that this is not just all about saying no. We need to be good stewards of our resources."

Managing vendor access successfully inside a facility may be a hard-earned victory for materials management but it may not be as pervasive a prevention of fraud and abuse.

Unless the physicians are employees of the organization, materials management can’t influence events within physician offices or the extra-curricular business relationships they may have with vendors. The only recourse is to deny them practicing privileges. But the government may have the last word because if those physicians accept reimbursement from Medicare and Medicaid then they’re going to have to behave and tow the line. Full disclosure is needed, O’Connor urged.

When fraud and abuse involves buyers who are filing false purchase orders or invoices or stealing product it’s a bit more cut-and-dry. Just as it is with false claims and overbilling for reimbursement, you simply must have policies and procedures in place and follow the numbers.

Matching POs to invoices and looking for variances may ferret out nefarious deeds. Or it may be timing and a stroke of luck. Siedlinski recalled how his facility uncovered a surgical technologist stealing products and selling them on the open market. A nurse who didn’t work in the OR met him at a garage sale. During the conversation he referred her to his Web site where he was selling medical products on eBay. The nurse and the vice president of nursing both visited the site where they found photos of medical products displayed on hospital-monogrammed sheets and towels.