Is This Hedge-Fund Titan Greasing the Levers for Privatizing the Veterans Health Administration?

Is This Hedge-Fund Titan Greasing the Levers for Privatizing the Veterans Health Administration?

Is This Hedge-Fund Titan Greasing the Levers for Privatizing the Veterans Health Administration?

Billionaire Steven A. Cohen funds an expanding network of private clinics for veterans—and he’s personally hired five lobbyists in Washington.


On March 28, via Twitter, President Donald Trump publicly dismissed David Shulkin, the embattled veterans-affairs secretary. Almost immediately, Shulkin fired back with an op-ed in The New York Times, charging that conservatives had pushed him out because of his resistance to outsourcing health care at the Department of Veterans Affairs. “They saw me as an obstacle to privatization who had to be removed,” Shulkin wrote. “That is because I am convinced that privatization is a political issue aimed at rewarding select people and companies with profits, even if it undermines care for veterans.” Though Shulkin did not mention specific names, the group of privatization advocates he alluded to includes hospital CEOs, business leaders, and the Koch brothers.

Among the most significant of these players is a hedge-fund titan named Steven A. Cohen. Cohen rose to prominence as the founder of SAC Capital Advisors, amassing a personal fortune estimated at roughly $14 billion. But from 2013 to 2016, eight of SAC’s leaders pleaded guilty or were convicted of organizing what was the largest insider-trading scheme in US history, and the firm received a $1.8 billion fine. In 2016, to settle charges that Cohen “fail[ed] to supervise a former portfolio manager who engaged in insider trading,” the Securities and Exchange Commission banned Cohen from managing other people’s money for two years. (Reportedly, Cohen inspired the character Bobby Axelrod on Showtime’s popular series Billions.)

That same year, with an initial investment of $275 million, Cohen founded the Cohen Veterans Network, a private nonprofit mental-health-care network. Cohen’s son served in the US Marine Corps, and Cohen took a special interest in Post-Traumatic Stress Disorder and other mental-health challenges for those returning home from war. During his two years in exile from Wall Street, Cohen worked to build CVN into an extensive private mental-care system. There are now 12 CVN clinics across the United States, several in large metropolitan areas, including Los Angeles and Philadelphia, offering short-term therapy for veterans with mental-health conditions like PTSD, anxiety, and depression. The organization estimates that it has treated 5,000 veterans, including those with other-than-honorable discharges, and their family members, free of charge. Cohen has laid out a grand vision for more than a dozen additional facilities across the nation.

While the venture sounds altruistic, some lawmakers and veterans advocates worry that Cohen’s long-term goal is to replace much of the Veterans Health Administration’s exceptional mental-health-care services with what could be a more expensive, untested, and less accountable treatment network. Recently, CVN announced a partnership with the VA to “increase veterans’ access to mental health resources.” The network is also developing plans to accept VA patients, and government dollars, through the agency’s controversial Choice program, which allows veterans to seek care from private doctors and hospitals. While CVN is billed chiefly as a charitable organization, its long-term business plan incorporates various funding streams to cover the majority of its revenue, including money from the VA, Medicare, Medicaid, and TRICARE.

As Cohen promotes the network, he’s also greasing political levers in Washington. Cohen has personally employed a handful of lobbyists, made generous political donations, and forged important alliances, most notably with Shulkin—who, despite his comments after his dismissal, did support some outsourcing of services during his tenure, in part by making the Choice program permanent. Meanwhile, Cohen is mounting a comeback on Wall Street, running a new hedge fund called Point72 Asset Management, which has a curiously close relationship to CVN and is currently embroiled in a sexual-discrimination scandal.

“You have to wonder where [Cohen’s] sudden burst of eleemosynary instincts came from,” said Rick Weidman, the executive director for policy and government affairs at Vietnam Veterans of America. “This guy was in hot water, he was… swindling people through his hedge fund and he made billions. And suddenly he thinks, ‘Okay let me figure out what to do to up my image,’ and he starts the Cohen Veterans Network.” (Through a spokesperson, Cohen declined an interview request.)

The VHA’s mental-health-care services are consistently rated as good or better than the private market’s. However, its network of over 1,200 hospitals and clinics are too often underfunded and understaffed—problems that have exacerbated wait times as a new generation of veterans returns home from the wars in Afghanistan and Iraq. While many veterans advocate argue that Congress should infuse the VHA with money to increase capacity, there’s bipartisan agreement in Washington that the private sector should provide supplementary care. The worry is that if and when VA funds are used to pay private providers like CVN, efforts to “supplement” care will instead siphon off money from VA budgets, leading to reductions in the agency’s mental-health staff and services.

Cohen, described in a 2017 New Yorker profile as “short and thick,” with “a fierce mind and a quick temper,” formally launched CVN in April 2016. The first four CVN clinics opened soon thereafter. The network’s board is chaired by retired admiral Michael Mullen and the network employs a significant number of veterans and former VA officials, including Caitlin Thompson, who previously ran the VA’s office of suicide prevention.

Shulkin, who was then the VA’s under secretary of health for President Obama, attended a CVN summit later in 2016 and made remarks on the “necessity for collaboration and innovation,” according to a recap of the event. The summit came at a tumultuous time for the VA, which was still recovering from a 2014 wait-time scandal at a Phoenix facility. The scandal spurred passage of the Choice Act, which made it much easier for veterans to seek care in the private sector.

Shulkin and Cohen came into contact at a number of other events, including a brunch salon on veterans’ health at Cohen’s East Hampton home last August. The salon was part of a weekend retreat hosted by the Milken Institute, a conservative California think tank founded by Michael Milken, another infamous financier, who pushed high-yield junk bonds and was later convicted of violating US securities laws. Also at the retreat was David Koch who, with his brother Charles, finances Concerned Veterans for America, a political organization whose alumni have moved on to senior VA roles under Trump.

In September, Shulkin returned as a guest to Cohen’s annual health-care retreat in Washington. Shortly after, in October 2017, the VA entered into a formal agreement with CVN, which greatly legitimized Cohen’s fledgling operation. The memorandum of agreement between the two entities specifically stipulates that it should not be “construed to create a partnership, joint venture, agency, employment, or any other relationship between VA and CVN.” It also stipulated that CVN not use the MOA to “sell or promote any products or services, except that CVN may promote educational and outreach activities.” Yet, after the deal was sealed, CVN and the VA published matching press releases announced that the two had entered a “partnership.” Dr. Anthony Hassan, president and CEO of CVN, said in a statement, “We are excited about partnering with VA and advancing the field through innovative clinician training initiatives and public messaging.”

Details of the deal remain somewhat murky, but the VA has said it will help guide the establishment of Cohen Clinics in “regions believed to have underserved Veterans in need of mental health care services.” So far, CVN has set up shop in major metropolitan areas, including Orlando and Los Angeles. New clinics are slated for San Diego, Tacoma, and Honolulu—all in areas already served by the VHA. CVN has no plans to establish clinics in rural areas, which have the greatest gaps and need for services. While the most current VA data available, from 2014, shows the highest rate of veterans suicide in Montana, Utah, Nevada, and New Mexico, no CVN clinics exist or are planned in any of those states.

CVN has also been criticized for prioritizing post 9/11 veterans over older generations; veterans advocates point to recent statistics showing that the majority of veterans who die by suicide are over 50. A CVN mental-health worker, who requested anonymity as they were not authorized to speak to the press, said CVN offered free care to veterans of all eras in its early months because it had a hard time identifying Iraq and Afghanistan veterans. But as it solved that problem, the employee said, CVN issued “a national mandate to all of its clinics” that no more than 10 percent of patients can be from pre-9/11 conflicts. “I almost walked off the job one day because we got a call from a VA social worker who needed help [with a vet],” the employee said. “I said, ‘Well, let’s do it,’ and my supervisor said, ‘We can’t because our policy has changed.’” (In an e-mail, a spokesperson for CVN confirmed that the network’s priority is post-9/11 veterans and their families, but added that the clinics “will not turn away a veteran in distress from any era.”)

As Cohen was establishing CVN clinics across America, he was also using his fortune to advocate for privatization measures in Washington. Cohen has historically donated to Democrats, but he gave $1 million to President Donald Trump’s inaugural committee. (In January, Trump signed an executive order requesting detailed plans to provide more mental-health-care options and suicide-prevention services to veterans. The omnibus bill Trump signed in March included more mental-health resources for veterans with other-than-honorable discharges.) According to Fox Business, Cohen sunk a total of $3 million into the Republican Party’s Senate and House reelection funds in 2017, making him the top contributor to each PAC.

Cohen has also underwritten direct lobbying on veterans’ policy, personally spending some $300,000 on five personal lobbyists in Washington, according to federal lobbying disclosures. (CVN is a nonprofit and cannot legally lobby Congress.) Two of Cohen’s lobbyists are former House members: Republican Jeff Miller and Democrat Jim Moran. Miller, the former chairman of the House Veterans Affairs Committee, was a chief architect of the Choice Act, which facilitated private-care appointments for 149,000 veterans in its first year. He was an early contender to be Trump’s veterans-affairs secretary, though he was later passed over for Shulkin. According to federal lobbying disclosures, Miller has lobbied the White House directly on veterans’ issues on behalf of Cohen.

According to lobbying disclosures, Miller’s work on behalf of Cohen included “efforts to increase access to mental health care for veterans.” Specifically, according to sources at veterans-service organizations, Miller promoted a bill that would allow veterans to bypass the VHA and seek treatment at CVN clinics and other private providers. The VHA would be on the hook to pay for up to eight visits to a private clinic per episode without any referral or preauthorization from the VHA, potentially straining the agency’s resources. VSOs and other veterans advocates were deeply concerned that the bill’s prescription of uncoordinated care could be dangerous—for instance, it did not require providers to use only evidence-based treatment. Titled “Furnishing Mental Health Care to Veterans by Choice Program Providers,” the draft legislation was presented by Representative Mike Gallagher (R-WI) at a hearing in October 2017, but withdrawn a few weeks later after groups representing VA psychologists, social workers, and nurses, and others submitted written testimony opposing the bill, and after a group of VSOs met with Miller to express their discontent. (Gallagher’s office did not respond to questions.)

When asked about CVN’s long-term goals, CEO and president Hassan said, “We have no ambition to take over all mental health care from the VA, we just want to fill a gap.” Cohen has argued that financing CVN in perpetuity is impossible, and that it will have to be self-sustaining in the coming years. In an interview, Hassan reiterated that Cohen’s investment would not be enough to sustain the network forever, and that a combination of state and federal money would soon help support the clinics. “This is not some money-making moment,” he said. “Federal reimbursements will soon make up some of our costs. They will help to extend Mr. Cohen’s gift.”

CVN’s new arrangement with the VA, as well as the network’s relationship to Cohen’s new hedge fund, are both under scrutiny by lawmakers. On March 5, Senator Jon Tester and Congressman Tim Walz, ranking members of the Senate and House Committees on Veterans Affairs, wrote to Shulkin raising a series of “concerns and questions” about the partnership between CVN and the VA. “We wish to know,” the legislators wrote, “why CVN was selected for a partnership versus other provider organizations and veterans’ charities.” They also requested details about the “VA’s legal authority to enter into a sole-source contract or agreement with CVN” and how much the CVN partnership would cost over 10 years, as it was not detailed in the VA’s 2019 budget request.

The letter also raised concerns about an alleged sexual-discrimination scandal at Point72. The New York Times reported in early February that Lauren Bonner, an associate director at Point72, was suing the company for paying women less than men and creating a hostile work environment for women. In late March Point72’s president, Douglas Haynes, resigned; he still serves on the board of CVN, and both Cohen and Haynes are named as defendants in Bonner’s suit. In their letter, Tester and Waltz raised the concern that the suit could “lead to the conclusion that discrimination in CVN’s organization and against veterans and family members may also be tolerated.” (Point72 declined to answer questions on the record.)

Hassan claimed there is no connection between CVN and Cohen’s hedge-fund work. But four of members of CVN’s board of directors and its scientific advisory board, including Cohen, have ties to Point72 Asset Management. (A fifth CVN board member, Gary Goldring, is a retired Goldman Sachs executive who served on Point72’s inaugural advisory board.) The hedge fund’s headquarters in Stamford, Connecticut, shares the same address as CVN. At a closed meeting on the future of health care held in Washington last October with lawmakers and VA officials, Point72 Managing Director Michael Sullivan attended as a representative of CVN, according to two of the meeting’s attendees.

To some veterans advocates, the controversy surrounding Cohen’s Wall Street work is less concerning than the concrete steps he is taking to outsource veterans’ mental-health care. One representative of a prominent veterans organization described Cohen as “very aggressive, a ‘get in and take over’ kind of guy.”

“We would oppose [CVN] even if Steven Cohen were a saint,” the representative told The Nation. “We are opposed to creating programs that divert money out of the VA when you can build VA capacity to deliver these services.”

But Craig Bryan, an Iraq War veteran and executive director of National Center for Veterans Studies at the University of Utah, said CVN clinics “provide a much needed compliment to the VA.” His attributed his confidence in the organization to his personal relationship with some CVN employees whom he served with. He also pointed out that CVN’s leadership includes a number of former federal bureaucrats, many of whom are veterans. “All of them that I know personally have dedicated their lives to promulgating effective mental-health treatment for service members and veterans,” Bryan said.

Veterans advocates are now worried that Shulkin’s intended replacement, White House physician Ronny Jackson, will be more open to privatizing the agency’s health-care services. Jackson has no administrative experience, and likes to please Trump, as exemplified by a bizarre press conference in January where he praised Trump as being blessed by “incredibly good genes.” There’s also newfound concern over a section of the Caring for Our Veterans Act, a proposal co-sponsored by Senators Tester and Johnny Isakson (R-GA), who is the chairman of the Senate Veterans’ Affairs Committee. The legislation, if passed, would allow veterans to seek walk-in mental care at CVN clinics and others without a VA referral.

A few days after Shulkin’s ouster, CVN held a webinar with veterans-service organizations, military-service organizations, and research foundations. According to Weidman and his Vietnam Veterans of America colleagues who participated, the group announced efforts to create a repository of data on Traumatic Brain Injury and PTSD, so that the organization can conduct research on biomarkers that could be used to diagnose TBI and PTSD. Weidman is concerned about the privacy of those who contribute private health information to CVN—and he pointed out that what the network is proposing is largely a duplication of current VA activities.

“They talked about doing research on genetics. The VA is already doing that,” Weidman said. “They talked about creating a national repository of data on these conditions—the VA has done that. They talk about researching risk factors. The VA is doing that. They talk about creating coalitions, which is what the VA is doing.”

Editor’s note: Due to an editing error, an earlier version of this piece incorrectly stated that Representatives Mike Gallagher and Seth Moulton introduced legislation titled “Furnishing Mental Health Care to Veterans by Choice Program Providers.” While a draft of the legislation was presented at a hearing by Gallagher, it was never formally introduced; Moulton ultimately declined to support it. The text has been updated.

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