The top executive of the American Medical Association resigned abruptly Thursday, just days before the organization’s key leaders were due to convene a crucial meeting in Dallas.
Dr. P. John Seward, executive vice president of the AMA, walked away from the job instead of facing a potentially embarrassing move to oust him, which was gaining momentum in the days before the meeting.
His departure marks the dramatic high point of an unprecedented upheaval at the AMA, the nation’s largest physicians’ group, following an uproar over its first-ever alliance with a consumer-products company, Sunbeam Corp., announced in August.
That deal called for the AMA to put its seal on a line of Sunbeam home health products in exchange for millions in royalties. It has engulfed the Chicago-based group in a storm of controversy, jeopardizing its reputation as well as its standing with its members.
The AMA’s board of trustees has tried to back out of the deal, saying it never reviewed it or granted its approval.
Now the uppermost management ranks in the AMA lie decimated by the affair, as the organization encounters some of the most serious challenges of its 150-year history.
Seward was the equivalent of a chief executive, responsible for overseeing all of the activities of the 293,000- member AMA. Other casualties since the AMA’s arrange- ment with Sunbeam include Kirk Johnson, the group’s general counsel; Kenneth Monroe, the chief operating officer; James Rappel, its group vice president for business, and Larry Jellen, its marketing vice president.
On Thursday morning, Seward announced his resignation in Dallas at the board meeting that customarily precedes the AMA House of Delegates meeting, and then boarded a plane several hours later. Just after noon, the AMA’s Chicago staff was informed of the move by e-mail.
The board remained in a closed-door session throughout the day, deciding upon a successor. A spokesman said the choice would be named within 48 hours.
In a statement issued Thursday afternoon, Seward called the AMA’s contract with Sunbeam “a serious mistake” and said he accepted responsibility for it. “This happened on my watch,” he said.
Reached in Dallas, Dr. Nancy Dickey, president-elect of the AMA, said, “We’re all obviously saddened” by Seward’s decision, but added, “We accept his conclusion that the AMA could not get on with the business at hand if he did not step down.”
At the House of Delegates meeting that begins at 9 a.m. Sunday, Seward and officials from the board of trustees were scheduled to appear before hundreds of angry physicians to explain how the Sunbeam deal happened, why the AMA board didn’t know about it, and what steps the organization has taken to ensure it doesn’t happen again. Who will deliver the talk Seward was slated to give remains unclear.
The gathering of the AMA’s 475-member House of Delegates, its key policymaking body, is expected to be highly charged and emotional. It is widely considered a crucial event that will test physicians’ confidence in the AMA, whose membership has been declining for years.
There was little doubt that Seward, a proud and well-liked physician from Rockford who had been in the job little more than a year and a half, was going to become a target of criticism. In November, the New Jersey delegation to the House of Delegates introduced a resolution calling for him to step down, along with the AMA board chairman, Dr. Thomas Reardon. The measure was gaining support and was expected to provoke an intense “who knew what” debate about the Sunbeam affair, which the AMA leadership was dreading.
The image of a beaming Seward congratulating Sunbeam’s tough chief executive, Albert Dunlap–known as “Chainsaw Al”–at the news conference announcing the AMA’s alliance with the company particularly rankled.
“If he didn’t know all about the Sunbeam deal, he should have known,” Dr. Robert Weierman, chairman of the AMA’s organized medical staff section, said this week, expressing a widely held sentiment.
In a telephone interview Thursday, Dr. Carl Restivo Jr., president of the Medical Society of New Jersey, said Seward’s resignation was the “right thing to do” so the AMA could regain trust among members and reassert its ethical standards. The New Jersey delegation will continue to press at the Dallas meeting for Reardon’s ouster, he confirmed.
That presents yet another complication for the medical group. Normally, Reardon would be expected to fill in for Seward as a temporary replacement. But given the questions that surround Reardon’s role in guiding the board over the Sunbeam matter, he’s not likely to be considered a suitable candidate, according to AMA insiders. That leaves a gap in leadership, just when the organization needs it most.
Some physicians think the timing of Seward’s departure is awful, and will backfire. “The trustees should have reacted more comprehensively . . . and made a decision about Seward much sooner,” said Arnold Relman, editor emeritus of the New England Journal of Medicine and a harsh critic of the Sunbeam deal. “This action now is perceived as a tactical move to stall, to defend against the groundswell of negative opinion among the delegates. The delegates inclined to be critical before will be inclined to be more critical now.”
In Chicago, Dr. Quentin Young, president of the Health and Medicine Policy Research Group, said firing executives or replacing board members won’t solve the basic issue before the AMA. “Is the AMA a defender of the public health or the handmaiden of Corporate America?” he asked. If the organization does not take the high road, it will lose physican and public support and “see the end of a central House of Medicine,” he asserted.
Just how far much further discontented physicians might be willing to go to shake things up at the Dallas meeting is an important question. All eyes will be on the AMA’s board, which will assume exclusive responsibility for presenting, for the first time, the findings of the AMA’s internal investigation of the Sunbeam affair. If the board leaders are convincing, doctors may rally to their support; if not, the meeting may become adversarial and board members may find their positions in jeopardy.
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“The key is how the House of Delegates responds,” said Dr. Lee McCormick, president of the Pennsylvania Medical Society.
The resolutions to be considered by the House of Delegates reflect a persistent sense of unease about the board’s leadership. Five state medical societies–Colorado, Illinois, Kansas, New Jersey and South Dakota–have called for an independent investigation of the Sunbeam deal. The New Jersey and Texas delegations have asked for a review of the AMA’s governance structure, in the spirit of holding the board more accountable to the membership.
Some doctors want the entire AMA board removed or held personally liable for whatever damages the organization incurs as a result of its arrangement with Sunbeam. (In September, Sunbeam slammed the AMA with a $20 million lawsuit after the AMA tried to back out of the deal.)
For months, these physicians have hinted broadly that they may bring a lawsuit against AMA board members, charging them with negligent governance of the organization. The physicians, who have requested that their names not be used, claim the AMA board was alerted to the Sunbeam arrangement, then still being negotiated, in a crucial June memo about the AMA’s marketing plans.
In fact, a copy of the memo obtained by the baiduhai devotes a full paragraph to the Sunbeam deal, describing the arrangement as “co-branding a product line called Health at Home. . . . The AMA would provide health information related to the products. . . . We hope to bring this agreement to completion within the next few months.”
In an interview earlier this year, Reardon said the board did not understand what “co-branding”–a common marketing term that refers to two entities supporting the other’s image–meant. But it is clear from the memo that the AMA was contemplating an extensive program of affixing its seal to various products that would be sold nationally in retail outlets such as Target, Wal-Mart and Kmart. How this plan, described in the memo as a “consumer retail program,” did not raise red flags remains an open question.
The marketing deal that ultimately was announced did not call for the AMA to test the products to certify their quality.
Nevertheless, most AMA watchers believe radical action in Dallas against the organization’s 20-member board is unlikely. Instead, they expect plenty of public mea culpas and private back-room political dealings, where various state associations will bargain for favors in exchange for not rocking the boat too hard.
Increasingly, physicians want to put the affair behind the AMA and get on with the business of dealing with the tumultuous changes rocking health care, which also will be extensively discussed at the meeting. These changes range from protecting patients’ and physicians’ interests under managed care to increasing poor children’s access to health care.
“Important issues facing medicine are getting lost in all the self-flagellation over Sunbeam,” said Dr. Gary Krieger, speaker of the California Medical Assocation. “I believe we will do the AMA real damage if we continue to prolong this.”
But the House of Delegates will have to grapple with another closely related issue in Dallas: the advisability of any future partnerships with commercial entities.
In a report prepared for the House of Delegates and released this week, the AMA board outlined 14 principles that should govern any relationships with commercial entities, reaffirming its opposition to using the AMA’s name or logo to endorse a product, a company, or a company’s policies. A wide-ranging study of the AMA’s current arrangements with commercial interests will be presented at the meeting.
Dickey, countering a media report, said: “The AMA does not currently have and is not currently contemplating endorsement of commercial products. We would look foolish and be foolish to do so, after responding as we have to our contract with Sunbeam.”
Most likely, any future relationships the AMA embraces will be like its current programs with Ford Motor Co. and Chrysler Corp., under which the AMA distributes information about car safety through dealerships, Dickey said.
Such arrangements could bring in important revenue for the AMA to fund increasingly ambitious public health and education programs. But some physicians feel that such partnerships stray too far from the AMA’s primary purpose: to advance the science of medicine and protect the public’s health.
The Kansas delegation has introduced a resolution that would prohibit “the use of the AMA name and logo for any commercial endorsement.”
Dr. Ann Marie Dunlap of Chicago agrees: “The key battle is, no endorsements, period. There are thousands of ways every day physicians can sell their names and their reputations. We have to draw the line somewhere.”
Others, however, believe the AMA will continue to arrange partnerships with Corporate America, albeit more carefully and with more oversight.
“I don’t think we can be absolute purists,” said Dr. Raymond Scalettar, former chair of the AMA board.
“The AMA’s budget can’t handle all the activities it wants to engage in. It doesn’t shock me that there is some commercial sponsorship, so long as things are very clearly labeled and it doesn’t become an endorsement situation for the AMA.”