Tom Daschle with Barack Obama during his presidential campaign.
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In the government’s campaign to bring medical care into the digital age, former Senate Majority Leader Tom Daschle has served as a key advisor to President Obama and a consultant to the health-care industry — doing both within the space of a few months.

Daschle, as Obama’s first choice to head the Department of Health and Human Services last year, was a forceful advocate for using billions of dollars in economic stimulus money to help doctors and hospitals buy electronic medical records systems.

Tax problems led him to withdraw his name from consideration for the cabinet post. Then, a few weeks after Obama signed off on a stimulus plan that provided some $45 billion for digitizing the health system, Daschle began assisting private clients seeking to profit from the new law.

Daschle helped set up a new health information technology group at Alston & Bird — the Washington law firm that employed him until last month. The group was formed to help clients “maximize their benefit from business opportunities” arising from the stimulus spending, according to the firm.

He also has served on the advisory board of a General Electric subsidiary that is offering interest-free loans to doctors and hospitals in rural areas that agree to buy GE digital medical records software. No payments are due on the loans until the government hands out stimulus checks to the buyers.

Daschle, a Democrat from South Dakota, has not held a government post since he lost a re-election bid in 2004 and he is not a registered lobbyist, so no ethics rules restrict his business contacts. But his activities as an advisor to public and private interests in health care have drawn criticism, including from Republicans and some government watchdog groups. That scrutiny intensified after Daschle turned up at a private meeting on Nov. 30 in the office of Senate Majority Leader, Harry Reid (D-Nev.), where top Senate and White House officials had huddled to hash out details of health reform legislation.

When informed of Daschle’s association with the Alston & Bird task force by the Huffington Post Investigative Fund, some public interest groups said they believed it presented new ethical concerns. “He was in a position to drive public policy and develop connections within HHS that could provide his clients with an unfair competitive advantage in receiving taxpayer dollars, at the same time he and his firm benefits from his previous activities,” said Scott Amey, a lawyer with the Project on Government Oversight.

Steve Ellis, vice-president of the non-partisan Taxpayers for Common Sense, said of Daschle: “Everyone in Washington knows he has the ear of the president.”

Daschle did not respond to requests for comment. The White House, which also declined to comment, has said previously that Daschle is an expert on health care who understands Congress and that the president values his advice and friendship.

Like many health policy analysts, Daschle has long favored switching from paper to electronic medical records. On Dec. 11, 2008, the same day Obama announced his nomination to head Health and Human Services, Daschle made a presentation to the president-elect and his team that outlined the benefits of using economic stimulus funds to give doctors and hospitals an incentive to make the conversion, according to a report by The Washington Post.

While awaiting confirmation, Daschle resigned from several corporate boards, including that of the renowned Mayo Clinic. At the time, Daschle was listed as a senior policy advisor with Alston & Bird, which paid him $2.1 million in 2008, according to his financial disclosure filings. He earned about $2 million more as a consultant for a private equity firm.

Daschle withdrew his name from consideration for a cabinet post on Feb. 3. Two weeks later, Obama signed the $787 billion stimulus bill, which included the incentives for computerized medical record storage systems. Administration officials consider the conversion vital to health reform, arguing it will slash health care costs and improve the quality of medical practice.

In the weeks after the stimulus bill passed, Alston & Bird lawyer Jacqueline Baratian pitched the idea of creating the new health information technology group “in light of all the monies that were floating out there,” she said in an interview. Baratian said she spoke with Daschle about heading up the effort together and they “decided it would be a great partnership.”

“When we put together the task force we were thrilled to have Senator Daschle here because of his wealth of knowledge on these issues,” Baratian said. “That was really a driving force.”

By early April, Alston & Bird had the task force up and running with the goal to provide “bipartisan legislative, regulatory and policy expertise, as well as transactional advice, on a wide range of health, technology and privacy matters,” according to the firm. Though Baratian declined to identify its clients, the firm’s Web site states that they include hospitals, health care practitioners and health plans as well as “manufacturers and vendors” of digital records systems.

In addition to keeping clients updated on government panels working out details of the stimulus, Alston & Bird employees have met with David Blumenthal, the government’s top health information technology official, Baratian said.

The meetings centered on what standards the government will require for doctors and hospitals to qualify for stimulus reimbursements, she said. The so-called “meaningful use” criteria, which are expected to be made public later this month, are being closely watched both by buyers and sellers of digital systems. Many in the industry worry that if the standards are too strict it will discourage doctors and hospitals from buying the systems.

“We’ve had face to face meetings with David Blumenthal in trying to position our clients for meaningful use,” Baratian said. She said she did not attend the meetings and declined to provide further details about what was discussed or who attended. Neither would a spokesman for Blumenthal.

Amey, of the Project on Government Oversight, said Daschle’s case illustrates that the Obama administration’s promises to limit the influence of lobbyists may not go far enough.

“This is the perfect example of someone who is not a registered lobbyist but still has a lot of connections and influence in Washington, D.C.,” he said.

The public has no way to find out if politically connected people who are neither officials nor registered lobbyists are influencing policy decisions, said Janine Wedel, a professor in the School of Public Policy at George Mason University and author of the book, “Shadow Elite, How The World’s New Power Brokers Undermine Democracy, Government, and the Free Market.”

“This is the way many top influencers operate. They play mutually influencing roles that are not fully disclosed or transparent,” Wedel said.

Daschle has taken the position that he does not have to register as a lobbyist. He told the New York Times last month: “I’m very proud of the fact that I’ve drawn a very hard line with regard to advocacy on the Hill… I’ve not made a call nor made a visit since I left the Senate on behalf of a client. And I don’t have any expectation that I’ll do that in the future.” Last month, Daschle left Alston & Bird to join the Washington law firm DLA Piper, which said in a statement that Daschle will “counsel clients on a wide range of regulatory and government affairs issues.”

Daschle also joined the advisory board of GE Healthcare’s “healthymagination” project in May, alongside former Tennessee Republican Sen. Bill Frist, former GOP House Speaker Newt Gingrich and former chiefs of Medicare and the Food and Drug Administration.

GE’s finance arm, GE Capital, announced in May that it would set aside $2 billion for financing digital records systems, including the program that is making interest-free loans to doctors and hospitals. The company also is guaranteeing that its equipment will meet the “meaningful use” standards to qualify for stimulus funding. [Editor’s note: Updated 12/15/09 to correct details of GE’s financing plan.]

“We can only find real solutions in health care when business, government and their partners work together,” Daschle said in a GE statement announcing his appointment to the advisory board in May. “The commitments GE made today on access, cost and quality are a great start toward demonstrating their leadership in this debate. I look forward to working with them.”

GE spokeswoman Deirdre Latour said the company brought together a range of experts to advise it on the campaign, which is intended to foster innovation in health care as well as reduce costs and improve access to medical services.

Members of the board are paid a small stipend, she said.

Andrew von Eschenbach, who serves on the GE panel with Daschle, said the initiative “could have a very substantive impact in how we develop health care in the future.”

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