Report Alleges Improper Relationship Between Hospital and Health Startup

An investigation by The New York Times and ProPublica has revealed extensive financial ties between Memorial Sloan Kettering Cancer Center (MSKCC) and health-care startup Paige.AI. Six investors in the company have board or leadership positions with MSKCC, which also owns a 9 percent stake in Paige.AI.

Paige.AI is one of several companies, including technology giants Google, Microsoft, and IBM, that are developing health-care products using artificial intelligence and big data. MSKCC granted the company exclusive access to its medical archives, including doctors’ notes and tissue slides, to design a pathology program that will one day assist physicians in the accurate diagnosis of cancer.

This arrangement has led legal experts to question whether the hospital complied with state and federal laws governing nonprofits. Because members of its board have financial ties to Paige.AI, MSKCC is required to take steps to ensure the data-sharing plan is in line with fair-market value. The hospital relied on a law firm to review the proposed investment in Paige.AI, but it is not clear what standard the hospital or the firm used to assess the value of the arrangement. “They could be throwing a dart at the wall to figure out what the valuation is,” Nell Minow, an expert on corporate governance and the vice chair of ValueEdge Advisors, told The New York Times.

The relationship between the hospital and the startup also raises larger questions about the ownership and usage of health data. MSKCC staff members expressed anger that the hospital allowed Paige.AI to profit from their work, and some patients have voiced concern that their health data may be used by a private company without express consent.

The controversy comes on the heels of a New York Times and ProPublica investigation into José Baselga, MD, who allegedly failed to disclose his financial ties to pharmaceutical companies in dozens of research articles since 2013. Dr. Baselga had been listed as the chairman of Paige.AI’s scientific advisory board on the company’s website, though the reference disappeared following his resignation as chief medical officer at MSKCC on September 13.

In response to the report on the hospital’s investment deal, David S. Klimstra, MD, chairman of the pathology department at MSKCC and one of the founders of Paige.AI, has indicated that he will divest his ownership stake.

Sources: The New York Times, September 13, 2018; The New York Times, September 20, 2018.