Friday, November 18, 2005

Paragons...and parasites.

Where the Money Is

Nathan Vardi
1,659 words
28 November 2005
Volume 176 Issue 11
(c) 2005 Forbes Inc.

A sampling of how much medical types can earn in a good year.

$149 million

R. Blane Walter


Being the son of Robert Walter, longtime chief of drug wholesaler giant Cardinal Health, probably didn't hurt. But Walter, 34, also has a great sense of timing: He got into the pharmaceutical advertising business just as the Food & Drug Administration relaxed direct marketing rules in 1997, unleashing a flood of ad dollars that turned drugs into famous brands. The pill industry spent $4.4 billion last year on ads, says TNS Media. InChord Communications, Walter's Westerville, Ohio firm, got in early, using basketball legend Earvin (Magic) Johnson to promote GlaxoSmithkline's HIV drug Combivir and landing Eli Lily's Prozac account in the late 1990s. Last month InChord sold out to Ventiv Health, which provides consulting and marketing to pharmas. The income is Walter's cash share of the capital gain.

$4.7 million

Dan S. Wilford

Nonprofit Hospital chief

Perhaps the most richly compensated head of a medical nonprof, Wilford retired in 2002 after building Houston's Memorial Hermann from a three-community outfit into a 12-hospital system that earned $117 million on revenues of $1.8 billion in 2003, the latest year it reported. The hospital says his compensation that year "was not typical, as it included reporting of accrued benefits from Mr. Wilford's 18 years of service as well as retirement benefits." (Herbert Pardes, chief of New York-Presbyterian Hospital, cleared $3.4 million in 2003.) If all this strikes you as unusual for a tax-exempt organization, you're not alone. Last year the Internal Revenue Service started looking into the pay packages of nonprof executives. In April IRS Commissioner Mark Everson told the Senate that "excess compensation by an exempt organization is not permissible." But what is excessive?

$124.8 million

William McGuire

Health Insurance

As the nation's highest-paid health care executive, McGuire, chief of UnitedHealth Group, has built the nation's second- biggest such insurer and returned an average 33% a year to shareholders since he took over in 1991. Part of that success is helping companies keep costs down. Meantime, McGuire has built himself quite a stash, collecting lots of stock options. Last fiscal year he pocketed $115 million on them--and at year-end had an unexercised hoard worth $1 billion.


Doctors Within Borders
Some medics make a decent but hardly outrageous living.
Pediatrician $161,188
Occupational therapist $44,244
Urologist $335,731
Pharmacist $90,854
Optometrist $107,413
Neurologist $211,094
Psychologist $79,306
Obstetrician $247,348
Median 2004 salary. Source: Medical Group Management Association.



Mary Ann Carr

Nurse Practitioner

Carr, 53, is the first line of care for 1,800 or so patients annually in rural Alsea, Ore. Her one-woman, nonprofit clinic is open to patients 221/2 hours per week. She works 45 hours a week, doing exams, writing prescriptions, ordering lab tests, X rays, MRIs and so on. Medicaid covers one-fourth of her patients, another third have Medicare or supplementary insurance, and the rest are underinsured or without coverage. Nobody gets turned away. Says she: "My husband keeps warning me that when I retire no one's going to want to work this job for this salary."

$18.6 million

Nicholas Perricone


Perricone uses his medical credentials to flog his three-step program--special diet, cosmeceuticals and nutritional supplements--in his bestselling books and on public TV fundraisers. You can find most of his products, which are largely unregulated by the feds, on his Web site and in his Manhattan store. Perricone continues to argue that his stuff can help "take off 10 years in 28 days" and that his program provides "long-term age-defying benefits."

Perricone enjoys his income. Divorce filings say he spends $245,000 a month, including $4,117 on apparel and $24,000 on business travel and entertainment. Documents show he owns two homes, one a $2.6 million pad in Ormand, Fla. Perricone is also generous, pledging $5 million to his medical school, Michigan State University.

$5 million

Phu (Peter) Luong

Alleged Medicare Fraudster

As the founder of United Medical Supply in Huntington Beach, Calif., Luong was doing very well for himself until last March. That's when he was indicted for submitting $24 million in fraudulent billings to Medicare. The U.S. Attorney in Los Angeles says the government paid UMS $14 million for motorized wheelchairs and nutrition products that were medically unnecessary--and charges that Luong's employees solicited and drove Medicare beneficiaries to doctors who wrote bogus prescriptions for them. Luong has pleaded not guilty. Nevertheless, he has had to do without some of his toys. The feds have seized an estimated $3 million in assets, including a $185,000 yacht and a $118,000 Rolls-Royce.

$3 million

Ansbert Gadicke

Venture Capitalist

The odds of backing a win-ner aren't great in this business, and cashing in on one usually takes three to five years. But Gadicke, an M.D. and general partner of MPM Capital, which has invested $2 billion in biotech and drug outfits, scored big time in no time. In April Pfizer bought Idun Pharmaceuticals, a portfolio company in phase II-B clinical trials for a hepatitis C treatment, giving MPM a 442% return on a $22 million investment in nine months. "We are making very significant amounts of money for our investors," says Gadicke.

$5 million

Garth Fisher

Plastic Surgeon

Plastic surgeons don't have insurance companies policing their rates because insurance almost never covers their services. Fisher charges $10,000 to straighten noses and as much as $50,000 for a face-lift. Still interested? You've got up to a two-year wait to get into his Beverly Hills office, thanks to his appearances on ABC's Extreme Makeover. He also shows up on Oprah, Good Morning America and Larry King Live whenever he can. And he manages to perform 8 to 15 procedures--from neck- lifts and cheek implants to breast enhancements--each week, supplementing his income with sales of $30 DVDs touting the virtues of scalpel sculpting and by hitting the speaking circuit.

$3 million

Setty Viralam


This west Palm Beach, Fla. specialist did well when he sold out his practice in 1998, but today he's fighting the taxman in court. An IRS audit denied him $264,000 of deductions he took that year --supposedly into a foundation that his lawyer claims made loans to students who intended to go into charitable activities or paid them for volunteer work.


Robert Levin

Foreign Aid Doctor

The income figure is a little misleading. For six months during 2003, Levin, a family physician from Minneapolis, earned $7,200 working for Doctors Without Borders in war-torn northern Uganda. Working ten hours a day, seven days a week in sweltering conditions, he nursed severely malnourished kids and worked in camps in the line of fire. Back home, to make ends meet, Levin worked two part-time jobs, teaching family medicine at a community program of the University of Minnesota and working an emergency room in a rural part of the state. Says Levin, 40: "I felt like I needed to go practice medicine where people were really in desperate need."

$77.9 million

Edwin Mac Crawford

Pharmacy Benefit Manager

Crawford runs Caremark, the nation's largest (by market cap) pharmacy benefit manager, which helped fill 484 million prescriptions for health care plan members last year. By building a network of 60,000 retail pharmacies and using Caremark's purchasing power, Crawford has kept drug prices in check. But like other PBMs, Caremark is spending as much time in the courtroom as in the nation's medicine cabinets these days. In September the company paid $137.5 million, settling a six- year federal investigation into kickback allegations, among others, made against a unit Caremark acquired last year. The feds and four states are expected to join a whistleblower fraud claim.

$2 million

W.J. (Billy) Tauzin


The former Louisiana Congressman became chief of the Pharmaceutical Research & Manufacturers of America, the drug industry's lobbying group, at the start of the year. As onetime head of a House committee, Tauzin helped create the new $720 billion Medicare prescription benefit. Now he is trying to persuade his former colleagues that what's good for his new constituents is good for America. Example: an intense effort on Capitol Hill to keep generic-drug makers from getting licenses to produce patented flu vaccines.

$6 million

Mark Bogart


While completing a Ph.D. in biology at UC, San Diego, Bogart filed patent 4,874,693 in 1986. Since the mid-1990s this 55-year-old, a Hawaii resident, has been collecting licensing fees on the common procedure for testing the blood of pregnant women for certain indications of Down syndrome in a fetus. Bogart never did any testing himself, and Michael Watson, executive director of the American College of Medical Genetics, says his innovation was already largely known when he filed the patent. True or not, big outfits like Quest Diagnostics pay him a royalty each time they test, approximately $6 a pop. Bogart's patent runs out in October 2006. --N.V. with the business reporting class at UC, Berkeley's Graduate School of Journalism.


Ultrahealthy Returns

Most of these medical fortunes come not from saved-up paychecks but from capital appreciation.

$2.8 billion Peter Nicholas
cofounder of medical-device maker Boston Scientific
$2.2 billion Patrick Soon-Shiong
founder of generic-drug maker American Pharmaceutical Partners
$1.7 billion Thomas Frist Jr.
cofounder of hospital operator HCA Healthcare
$1.5 billion Michael Jaharis
founder of drugmaker Kos Pharmaceuticals
$1.3 billion Gary Karlin Michelson
developer of spinal surgery medical patents
$1.2 billion Phillip Frost
founder of generic-drug maker Ivax


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