Behold the beauty of crony capitalism


In the Times, Julie Creswell’s A Digital Shift on Health Data Swells Profits in an Industry is about as good a case study in contemporary public/corporate sausage-making as you’re likely to find. Her story paints a vivid, if highly dispiriting, picture of the interplay between policy, lobbying and corporate profits (or profiteering).

I am always amazed at how cheaply our elected officials sell for. I am tempted to use a euphemism for prostitution here, but really that would be demeaning a profession where people actually work for their money. Typically these days, campaign contributions in the six-figure range can return profit boosts to lucky (generous) corporate donors on the order of half a billion dollars (or more) in increased sales.

Briefly, one thread of Creswell’s excellent article. Glenn Tullman, CEO of Allscripts, a leader in electronic records technology for hospitals, gets a gig as health technology adviser to the Obama campaign. He visits the White House at least seven times after Obama takes office. Between 2008 and 2012, he personally makes hundreds of thousands of dollars in contributions to Obama, as well as to Max Baucus, Senate Finance Committee chair, and Jay Rockefeller, head of the Commerce Committee.

Coincidentally (or not), in 2009, “legislation to promote the use of electronic records was signed into law as part of President Obama’s economic stimulus bill.” Coincidentally (or not) Allscripts’ “annual sales have more than doubled from $548 million in 2009 to an estimated $1.44 billion last year, partly reflecting daring acquisitions made on the bet that the legislation would be a boon for the industry.”

Although much of Creswell’s focus is on the current administration, the electronic records Gold Rush got its start when President Bush called for digitizing national health records in his 2004 State of the Union address.

“After that, every technology C.E.O. wanting a piece of health care would have visited me every day if I had let them,” said David Brailer, whom President Bush appointed as the nation’s first health information czar.

Would it surprise you to learn this has been something of a jackpot for execs of electronic records firms? Cerner co-founder Neal L. Patterson has pulled down more than $21 million in total compensation and now has a billion-dollar stake in the company.

Creswell doesn’t report Tullman’s payday. In fact, she writes that he was forced out in what she describes as a “power struggle”–and that he has moved on to greener pastures.

He is now at a company he co-founded that focuses on solar energy — another area that, after Obama administration and Congress expanded government incentives in the 2009 stimulus bill, has been swept by a gold-rush mentality, too.  

Get it? Greener pastures?

Behold the beauty of crony capitalism

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