Dallas, TX
June 23, 2009, 08:00 EST
Dr. Joe Duarte's Market I.Q.


The Internet's Intelligence Digest
Intelligence, Market Timing, And Trading Strategy For Traders and Investors


A Tale of Alleged Malpractice At A Veteran's Administration Hospital
What's Hot Today:
Wall Street looked ready for an early bounce as U.S. stock futures were slightly higher. Asian stocks closed lower. European stocks were also bouncing slightly. Oil was trading below $68 and gold prices were flat. U.S. Treasury Bond yields were steady.

Today's Economic Calendar:
  • 7:45 a.m. ICSC Chain Store Sales Index For June 20: Previous: -0.6%.

  • 8:55 a.m. Redbook Retail Sales Index For June 20: Previous: -4.5%.

  • 10:00 a.m. May Existing Home Sales: Expected: +2.6%. Previous: +2.9%.

  • 10:00 a.m. June Richmond Fed Manufacturing Index: Previous: 4.

  • 4:30 p.m. June 1 API Oil Industry Report

  • 5:00 p.m. ABC/Wash Post Consumer Conf For June 20: Previous: -49.
News For Thought

Mortgage weakness predicted. "The Mortgage Bankers Association cut its forecast of home-mortgage lending this year by 27% amid deflating hopes for a boom in refinancing. The trade group said Monday that it now expects $2.034 trillion of originations of mortgages for one- to four-family homes in 2009, down from a forecast of $2.780 trillion in March, when falling interest rates spurred expectations for huge volumes of refinancing," The Wall Street Journal reported.

Small banks who got TARP money are in trouble. While the large banks paid back their TARP loans, some small banks aren't faring that well. According to The Wall Street Journal, at least three small banks, who received over $300 million in TARP funds, have stopped paying the government the required dividends. Pacific Capital Bancorp. (Santa Barbara, CA), Seacoast Banking Corp. of Florida, of Stuart, Fla., and Midwest Banc Holdings Inc., of Melrose Park, Ill., have stopped paying the dividends, "citing the banking industry's turmoil and a desire to fortify their balance sheets."

According to the Journal, based on a Treasury Department statement, the TARP program allows for the ceasing of dividend payments to the government, if the banks see the tactic as being more beneficial based on the current operating climate. The Journal added: "Under a provision in the TARP contracts between banks and the U.S. government, a bank usually can defer dividend payments for as long as six quarters, though it eventually will have to cover the entire amount. In a smaller number of contracts in which the Treasury got so-called noncumulative preferred stock, the bank can skip dividend payments without penalty. But if the bank misses six quarterly payments in a row, the Treasury Department can appoint two directors to the bank's board."

Welfare is on the rise. The number of welfare recipients is rising, due to the tough economy. "Twenty-three of the 30 largest states, which account for more than 88% of the nation's total population, see welfare caseloads above year-ago levels, according to a survey conducted by The Wall Street Journal and the National Conference of State Legislatures. As more people run out of unemployment compensation, many are turning to welfare as a stopgap."

A Tale of Alleged Malpractice At A Veteran's Administration Hospital
Is Publicly Funded Health Care The Best Option?

President Obama wants to change the U.S. health care system, with the government taking the lead role. Some have used the Veteran's Administration (V.A.) as an example of a successfully run government health care operation. Yet, there are signs that the V.A. may not be the best model for public health, especially where highly specialized treatments, and supervision are indicated.

According to The New York Times, a V.A. cancer unit allegedly committed malpractice on a regular basis when dealing with prostate cancer patients. The government was aware of the problem, yet the physician committing the errors continued to practice and the evidence of his negligence was ignored. At the center of the controversy was the fact that the doctor "changed" his surgical plan after the complication occurred, a practice that in the eyes of the V.A. made the complication not existent.

It is this kind of loophole that makes the phrase "close enough for government work" frightening.

At the Philadelphia V.A. Hospital, one physician, Dr. Gary Kao incorrectly implanted radiation seeds aimed at treating cancer in 92 of 116 cases over several years, according to The Times. Patients often suffered life altering side effects, such as loss of bladder and bowel control as a consequence. Yet, even after he was investigated "Dr. Kao, with (the government's) consent, made his mistake all but disappear."

According to The Times: "Had the government responded more aggressively, it might have uncovered a rogue cancer unit at the hospital, one that operated with virtually no outside scrutiny and botched 92 of 116 cancer treatments over a span of more than six years — and then kept quiet about it, according to interviews with investigators, government officials and public records." In fact "The team continued implants for a year even though the equipment that measured whether patients received the proper radiation dose was broken. The radiation safety committee at the Veterans Affairs hospital knew of this problem but took no action, records show."

Indeed, as the Times succinctly reports: "The 92 implant errors resulted from a systemwide failure in which none of the safeguards that were supposed to protect veterans from poor medical care worked." The Times further notes that "a staple of every good hospital, in which colleagues examine one another’s work, did not exist in the unit. The V.A.’s radiation safety program; the Nuclear Regulatory Commission, which regulates the use of all nuclear materials; and the Joint Commission, a group that accredited the hospital, all failed to intervene; either their inspections had been limited or they had not acted decisively upon finding problems."

Dr. Kao was contracted from the University of Pennsylvania and "had a medical degree from Johns Hopkins and a Ph.D. from Penn. He is also on a team from Penn that won a contract this year from a NASA-financed consortium to study radiation in space." Dr. Kao was trained in radiation oncology, but had little experience in brachytherapy, the implantation of small metal seeds into the prostate to deliver the treatment. Yet, as the Times points out, "the unit had no peer review," which means that no one was supervising Dr. Kao, or reviewing his results, good or bad. According to The Times, the V.A.'s view was that because Dr. Kao came from Penn, it qualified him as an "expert," thus not requiring stringent review and observation of his techniques or his results.

And the problems started early. According to The Times: "On Feb. 3, Dr. Kao mistakenly implanted more than half the seeds in a patient’s bladder. With the patient still under anesthesia, a urologist had to thread a small tube through the man’s penis to retrieve the 40 errant seeds. Because they were bloody and contaminated with urine, the seeds could not be reused, and no more were available."

The problems were discovered after a clerical error, where the wrong strength of seeds were ordered led to an audit of the program. As the auditors reviewed records, they found more and more evidence suggesting that the program was flawed.

Dr. Kao's lawyer called the report "false." Dr. Kao continues to do research at Penn, but "voluntarily" gave up his clinical privileges. The V.A. brachytherapy program in Philadelphia is no longer operating. Other similar programs have also been stopped, although no evidence of wrongdoing has been linked them, according to The Times.

Conclusion

Dr. Kao's tale is of concern on many levels. To be sure, he is innocent until proven guilty. And one New York Times article is not a conviction or proof of negligence.

Yet, the article points to yet another potential set of bad outcomes from lax controls at government run facilities, where lack of attention to detail, and a general lack of supervision can lead to bad outcomes.

And yest, there are plenty of people in government who do an honest day's work. A perfect example are those who finally audited the program and took the proper actions to shut it down.

Yet, waste, fraud, and a general disdain for public safety are clear in this situation, if it is proven to be true in a court of law or malpractice. You have to wonder what caused the difference in outcomes from Dr. Kao's work at Penn, and his allegedly dismal record at the V.A. Was it faulty equipment at the V.A.? Was it that Dr. Kao had more supervision at Penn?

Was it patient selection? Or was it just bad luck?

It really doesn't matter, though, if you're one of the patients who had a bad outcome.

What's our point? Health care is not something for bureaucrats to run. It's a Chaotic entity which is full of risk and which cannot be pigeon holed into artificially constructed classifications and categories created just for bean counting. It requires a thorough review process at multiple levels, which is evident in most private hospitals, where the fear of being sued, along with professional pride guides most physicians to do the right thing.

Health care is about constant vigilance, regardless of the "expert" status of practitioners. It's about performing procedures only when they are clearly indicated, and when the equipment and drugs needed are both available, in the correct dosages, calibrations, and in their full operating capacity.

And it requires the ethical commitment of all involved, which seems to have been sorely lacking in this case.

Much remains to be discovered about this alleged case of malpractice. But it does offer a window into what goes wrong when the system loses the ability to police itself because of the "expert" status of its practitioners.

Get Dr. Duarte's All NEW Books "Market Timing For Dummies." and "Trading Futures For Dummies." The Trading Manuals for All Seasons. Also Available As Kindle Books.

 



Market Moves - Stock Of The Day
S & P 500 SPDR ETF (NYSE: SPY) Under Pressure
The bears are trying to deliver a knockout punch to the S & P 500 SPDR ETF (NYSE: SPY) ETF, and in the process take out the recent rally.



Chart Courtesy of StockCharts.com


The S & P 500 failed to hold above its 20-day moving average on Monday. And in the process also closed below its 50-day moving average. That means that sellers are now exerting enough pressure on the market to slice through support levels on a regular and fairly easy manner.

Bulls are hoping for something to come out of somewhere to save them, such as some kind of benign rhetoric from the Federal Reserve on Wednesday. But the fact is that the Fed has little wiggle room. Interest rates are at rock bottom levels, and the central bank has been printing dollars at a steady clip in order to keep the economy from imploding.

The honeymoon is just about over for President Obama, as his poll numbers are starting to slide. And the talk of budget deficits, and currency alternatives to the dollar are running rampant.

That means that the Fed is going to have to come off as a very responsible body when it makes its statement. And that means that they will very likely say very little that comforts anyone.

From a chart standpoint, the 900 area on the S & P 500 seems to be the battle point. Where things end in relationship to that chart point by the end of this week, will likely define the rest of the trading for the summer.

 


Other Subscriber Reports are located on the website (log in required). These
reports are updated on a weekly basis (or as conditions require) and are not emailed:

S&P Timing & Large Cap Growth /  Bond Timing /  Dollar Timing /  Energy Timing
Gold Timing /  Fallen Angels Portfolio /  Tech Timing Models /  Health & Biotech


© Copyright 1996-2009, Market Timing Strategies, Inc., All Rights Reserved.
  • Market IQ reports may not be redistributed without permission.
  • Disclaimer: The financial markets are risky. Investing is risky. Past performance does not guarantee future performance. The foregoing has been prepared solely for informational purposes and is not a solicitation, or an offer to buy or sell any security. Opinions are based on historical research and data believed reliable, but there is no guarantee that future results will be profitable.