Why U.S. Healthcare Regulators Need To Address Revolving Door Phenomenon?

Highlights

• Approximately 33% of staff members employed at U.S. government regulatory agencies transition to private sector roles

• The CDC, CMS, and Office of the Deputy Secretary experienced higher rates of staff turnover compared to other government agencies.

• Former government staff members commonly transition to industries such as biopharmaceuticals, device manufacturing, and health insurance.

A study published in the journal Health Affairs found that about one-third of staff at the U.S. Department of Health and Human Services (HHS) quit for often more lucrative roles in the private industry. Conversely, about 15% of employees worked in the private sector before being appointed to the HHS.

A pro-industy bias?

Experts such as Daniel Carpenter, Chair of the Department of Government at Harvard University, have expressed concern over the turnover from the public sector and even more importantly its impact on public healthcare policies.

The revolution between government regulatory agencies and the private industry could lead to a pro-industry bias at the expense of fair implementation of regulatory rules, the experts added.

Government employees looking out for private sector openings could influence decisions in favor of private companies. Likewise, newcomers from the industry may prioritise its interests, fostering closer ties with private sector executives.

Genevieve Kanter, a senior fellow at the University of Southern California Schaeffer Center, said that laws passed by the Congress often come under the limelight while the more important step at the regulatory level is overlooked. Regulatory agencies bear the responsibility of enforcing laws and play a pivotal role in shaping a company’s fate.

The Centers for Disease Control and Prevention (CDC) is among the HHS offices that witnessed the most departures for the private sector. More than half of appointees (54%) quit the CDC to take up new roles within the healthcare industry while the reverse trend indicated only 8% of staff from the private sector. Another vital department with similar statistics is the Centers for Medicare and Medicaid Services (CMS).

The Office of the Deputy Secretary saw 53% of its staff leave for the private sector. The department is especially vital as its scope includes managing daily operations at the HHS.

Trends driving the revolving door phenomenon

What concerns experts even more is the rate at which high-level officials leave their positions to join top companies in similar high-profile roles.

The industry verticals most favored by exiting government employees include biopharmaceuticals, medical equipment manufacturers, insurers, health-related information and communication technology companies, medical real estate operators and consulting firms.

The pattern shows that employees within the HHS generally establish industry-wide connections as part of the job, the experts said. These industry connections are often highly valued by private companies.

Contrary to expectations the researchers did not find a higher exit rate for regulatory agencies overseeing emerging technologies. Surprisingly, the Food and Drug Administration was not among the regulatory agencies experiencing the highest turnover.

According to the findings, top companies prioritise specific policy expertise influenced by market dynamics over technological and generic regulatory expertise.

The study emphasised that a revolving door between government agencies and the private industry can potentially make the supervising entities more susceptible to phenomenon such as regulatory capture.