January 26, 2021

Square Feet: Providence Makes Itself a Home for Knowledge

PROVIDENCE, R.I. — When Brown University opened its new $45 million medical school in August about a mile from its campus here, it was the institution’s first academic department to be located away from its home on College Hill overlooking downtown Providence.

Brown’s reasons were twofold: there was little room on its campus for a building large enough for an Ivy League medical school, and it would bolster a 360-acre so-called Knowledge District that would draw high-tech, high-wage jobs to Rhode Island, which was among the hardest-hit states in the recession.

The Warren Alpert Medical School is in a converted, four-story, 134,000-square-foot factory building that dates to 1928 and was once used to make watchbands. At a ribbon-cutting ceremony in August, Senator Jack Reed, Democrat of Rhode Island, said that the Speidel Twist O Flex watchband was a Rhode Island innovation, and likened it to plans for the state’s biotech industry.

“The future is the double helix,” Mr. Reed said, “and that’s what this building is going to allow.”

The Knowledge District is three years in the making, and involves a combination of financial incentives, rezoning and coordinated planning among Providence’s major hospitals, colleges and universities.

In addition to the medical school, the toy maker Hasbro, which has its headquarters in nearby Pawtucket, and 38 Studios, a video game company started by the former Boston Red Sox pitcher Curt Schilling, are moving into existing buildings in the Knowledge District.

The state, through its Economic Development Corporation, agreed to a $1.6 million sales tax exemption for Hasbro, which said it would create 284 new full-time jobs, and a $75 million loan guarantee for 38 Studios, which has promised to bring 450 jobs to Providence.

Several years ago, in what Laurie White, the president of the area Chamber of Commerce, called a “grass-roots effort,” prominent figures in the public and private sectors came together to create a strategy for Providence’s economic future. The city’s manufacturing base was waning, and the luster of the city’s so-called Renaissance in the 1990s, which focused on the arts as a means of revitalizing, was losing steam.

The resulting blueprint called for an economy based on “meds and eds,” as the hospitals and colleges are sometimes called, in a district with a lot of underutilized factory and office space, as well as vacant land. The state’s governor, Lincoln D. Chafee, an independent, has embraced this vision and called Brown’s new medical school a “terrific catalyst” for the new district.

“Good things are happening here,” Mr. Chafee said.

After he was elected in 2010, Mr. Chafee traveled to Baltimore, Houston and Pittsburgh to tour the University of Maryland Medical Center BioPark, the Texas Medical Center and the University of Pittsburgh Medical Center, all of which were attracting high-tech and research companies. He said he came away from those trips impressed that growth was occurring there despite the sluggish economy, and was persuaded that Providence had the assets needed to make the concept work in Rhode Island.

In addition to Brown, other major institutions in Providence include the Rhode Island School of Design, Providence College, Johnson Wales University, Rhode Island Hospital and Women Infants Hospital.

“It’s just a good fit,” Mr. Chafee said.

Hasbro chose to expand in Providence because the young talent it needed to attract to its gaming division preferred an attractive, urban environment, said Dolph Johnson, Hasbro’s senior vice president for global human resources. The toy maker, which employs approximately 6,000 worldwide and 1,700 in Rhode Island, also wanted to invest in the city’s future, he said.

For Brown, the decision to move its medical school into another part of the city came in 2007 after an internal planning process revealed that it essentially had no choice if the university wanted to grow, said Richard Spies, Brown’s executive vice president for planning. New science buildings, in particular, require a sizable footprint and significant infrastructure, two requirements not readily available in historic College Hill, he said.

“Our capacity to grow was not zero,” he said, “but it was clearly limited.”

Article source: http://feeds.nytimes.com/click.phdo?i=0f3595561637295e54cda559607ba159

Lawsuit Says Drugs Were Wasted to Buoy Profit

The lawsuit says that the company, DaVita, used larger than necessary vials of medicine knowing that Medicare would pay for the unused portion of each vial if it were deemed unavoidable waste. DaVita, which treats nearly a third of the nation’s dialysis patients, denies the accusations.

The accusations are the latest related to how financial incentives may have driven overuse of pharmaceuticals in the dialysis business. In January, Medicare began a payment system that pays for the overall treatment and does not pay separately for the drugs accompanying it. Many practices, including the size of some vials used, suddenly changed, providing an instant case study of how financial incentives can influence treatment choices.

The lawsuit says that until January, for example, DaVita required nurses to use one 10-microgram vial of Zemplar, a vitamin D drug, instead of a six-microgram dose in three two-microgram vials,. It then billed Medicare for all 10 micrograms even though four went unused.

Instead of giving an entire 100-milligram vial of Venofer, an iron drug, once or twice a month, the clinics gave 25-milligram doses more frequently, the suit says. But since the drug came only in a 100-milligram vial, Medicare was billed for 100 milligrams for each dose, even though 75 milligrams were wasted, the lawsuit says.

The federal government investigated the claims for more than two years and decided in April not to join the lawsuit. The lawsuit, filed in October 2007, was then unsealed. The nurse and the doctor filed an amended complaint, with more data and evidence, on Monday in United States District Court in Atlanta.

Bill Myers, a spokesman for DaVita, said that the federal government’s decision not to pursue a case against his company suggested the accusations were weak. He also said that Medicare had approved the dosing plans but that he could not provide proof of that until it was presented in court.

Medicare, which pays for most dialysis treatments, used to reimburse clinics separately for the drugs they used. Clinics could make a profit because Medicare would pay slightly more than the clinics paid to buy the drugs.

In January, to deter overuse of drugs, Medicare instituted a new system in which it pays a fixed amount per treatment, including most of the drugs used. If the clinic can treat the patient for less than the amount paid by Medicare, it makes money; if not, it loses money.

This so-called bundled payment system has instantly turned drugs from a source of profit to a cost to be avoided. And dialysis clinics have responded.

Take Amgen’s Epogen, an anemia drug that is Medicare’s largest drug expenditure for dialysis. American clinics in the past have used far more of the drug than clinics in most other countries.

That high use possibly endangered patients because studies have shown that aggressive use of the drug can increase the risks of heart attacks and blood clots. But with the new payment system in place, clinics are using much less of the drug. Amgen’s sales of Epogen, all of which are for use in dialysis in the United States, decreased 14 percent in the first quarter of this year to $535 million. Analysts expect further declines.

In another example, new treatment guidelines now allow clinics to use less vitamin D than they once did.

Mr. Myers, the spokesman for DaVita, said the larger but fewer vials for Zemplar helped minimize needle sticks and protect patients and nurses from possible infection.

But giving Venofer, the iron drug, in smaller and more frequent doses would increase needle use, violating that policy. In the case of Venofer, Mr. Myers said, the small doses were thought to be better for the patient.

Article source: http://feeds.nytimes.com/click.phdo?i=bd45c758c70a1b8133aecb1c7f03d943

Economix: Producing More Primary-Care Doctors

Today's Economist

Uwe E. Reinhardt is an economics professor at Princeton. He has some financial interests in the health care field.

In “Why Medical School Should Be Free,” a recent commentary in The New York Times, Peter B. Bach, M.D., and Robert Kocher, M.D., proposed that medical school be tuition-free for all students.

Dr. Bach, director of the Center for Health Policy and Outcomes at Memorial Sloan-Kettering Cancer Center, was a senior adviser at the Centers for Medicare and Medicaid Services in 2005-6; Dr. Kocher is a guest scholar at the Brookings Institution and was a special assistant to President Obama on health care and economic policy in 2009-10.

The two estimate that the annual tuition for medical students would be roughly $2.5 billion, given current tuition levels that average about $38,000 a year — although these vary among medical schools and are lower at public universities than at private universities.

The authors would not, however, burden taxpayers with that $2.5 billion, trivial though that sum may be at 0.017 percent of our gross domestic product of $15 trillion.

Instead, they would raise the $2.5 billion by forcing medical-school graduates who choose residency training in specialties other than primary care to forgo much or all of their annual salary – currently about $50,000 – during their residency training, which may span four years or more. Residents in primary-care specialties would continue to receive their salaries.

The goal of this proposal is to alleviate the much-lamented shortage of primary-care physicians in many parts of the nation. It would do so by relieving all medical graduates of their heavy, accumulated debt burden after medical school –- estimated at about $200,000 a graduate –-and by providing powerful financial incentives to steer them to primary care rather than other specialties.

Would hard-working residents in the non-primary specialties hold still for this forfeiture of their salaries? They might.

First, the forfeiture would be offset to some extent, although not wholly, by the waiver of medical-school tuition. More importantly, any medical-school graduate bent upon becoming a specialist would have little choice — because any resident is, in effect, an indentured laborer, a circumstance that society has long exploited to its advantage.

By the time someone graduates from medical school and enters residency training, he or she already has made a huge investment of time, effort and money. From the perspective of many medical students, tuition tends to be the smaller part of the total monetary cost of attending medical school.

The much larger part, often double or triple the level of tuition, is the forgone income that medical students might have earned had they taken a job right after graduating from college.

It is reasonable to assume, for example, that given their intelligence and drive, college graduates able to gain acceptance to an American medical school could find a lucrative job elsewhere, perhaps in finance – maybe even in what millions of undergraduates now seem to view as the apex of human existence, trading derivatives at Goldman Sachs.

Fortunately for humanity – and especially for the sick — monetary reward is not the only factor, or the main one, that drives occupational choice among young people. If it were, few bright college graduates today would choose a medical career.

Given the huge investment of time and money that medical students have sunk into their chosen careers by the time they complete medical school, the only way they can reap the financial and non-pecuniary rewards from that huge investment is to undergo the arduous apprenticeship called “graduate medical education” or “residency.”

In this boot camp through which all doctors must pass, residents can be made to work long hours at very low pay, making them among the cheapest forms of labor in any teaching hospital.

For years, medical educators have tried to rationalize these long hours on pedagogic grounds. I am not persuaded. Teaching hospitals have also argued for years that residency programs cost them money. Congress seems persuaded by that argument, currently bestowing on teaching hospitals $10 billion a year in subsidies toward graduate medical education.

But at least some economists, including me, are not persuaded by that argument, either.

A more plausible theory is that residents themselves amply reimburse teaching hospitals for the cost of training by the long hours they work at wages far below what these residents add to the hospitals’ revenue. With proper managerial accounting, I maintain, residency programs would be found to produce net profits at teaching hospitals — as the hospitals would quickly learn if they had to replace the labor of residents with regular, similarly skilled employees.

To be sure, teaching hospitals probably use the profits from residency programs to subsidize the charity care they routinely render the low-income uninsured. So I see the indentured-labor story as one in which society exploits residents to finance health care for the poor that society does not wish to pay for up front. The teaching hospitals merely function as a vehicle for that exploitation. (There must come in the life of every resident the moment when, exhausted, she or he exclaims: “Where is Karl Marx when we need him?”)

If, by law, teaching hospitals were prohibited from paying residents in some specialties any stipends, these residents might view the need to borrow $50,000 or so annually for living expenses as a sound investment, at least in theory.

Drs. Bach and Kocher appear to believe that an adequate number of medical-school graduates would see it that way — but also that some now choosing specialty training would opt for primary-care training instead.

But such forfeiture of their salaries for several years might alter the attitudes these specialists would subsequently bring to medical practice — and the fees they might charge for services and care. In medical parlance, the Bach-Kocher treatment might have unintended and untoward side effects. It behooves policy makers to think of them.

In the meantime, we may all ponder whether simpler solutions are available to address the shortage of primary-care physicians. I am eager to hear the ideas of others, and I will return to this issue in a while.

Article source: http://feeds.nytimes.com/click.phdo?i=5b5c0e6d5ed4f3fd2288699fc27fecf8

U.S. Sues Deutsche Bank Over Mortgage Practices

In a complaint filed in Federal District Court in New York, the government accused a Deutsche Bank unit, known as MortgageIT, of “knowingly, wantonly and recklessly” failing to adequately scrutinize borrowers, and then lying to federal officials who pointed out shortcomings.

As a result, the federal government has made insurance payments of $386 million on bad loans, and expects to make payments of hundreds of millions more, the lawsuit said. The government is seeking triple damages as well as punitive damages.

The suit involves Deutsche Bank’s involvement with the Federal Housing Administration, an arm of the government that guarantees mortgages made to borrowers who are less qualified than those who have loans backed by the mortgage finance giants Fannie Mae or Freddie Mac.

MortgageIT was qualified to issue F.H.A.-backed loans, and from 1999 to 2009 the bank sponsored more than 39,000 F.H.A. loans, worth more than $5 billion, according to the complaint. The bank knowingly used the government guarantee on unqualified, risky loans, the complaint says, because it was able to then quickly sell the loans to investors.

The bank had “powerful financial incentives to invest resources into generating as many F.H.A.-insured mortgages as quickly as possible,” the complaint says.

Deutsche Bank acquired MortgageIT, a real estate investment trust, in the summer of 2006, as the bank sought to expand its presence in the American mortgage market. The complaint involves actions at MortgageIT before and after the Deutsche acquisition.

The F.H.A. was long a sleepy arm of the government, backing only a small portion of home loans made. But as trouble hit the mortgage market, the F.H.A. began guaranteeing far more loans. By 2009, officials had grown concerned that the agency had backed many loans that would fail, possibly costing taxpayers billions of dollars.

One way the F.H.A. tried to make sure the loans remained sound was to require banks to qualify as so-called “direct endorsement lenders.” The housing agency, which is part of the Department of Housing and Urban Development, made such lenders report their standards on a regular basis.

The complaint says that Deutsche “regularly lied to HUD to obtain and maintain MortgageIT’s Direct Endorsement Lender status.” In particular, the complaint said Deutsche did not monitor how often homeowners were defaulting on their mortgages immediately after receiving the loans.

In one case, for example, MortgageIT endorsed an application by a Colorado borrower who had no credit history, a violation of federal rules. Six months later the mortgage went into default, costing the federal government $191,000 in insurance claims.

As of this year, HUD has paid more than $386 million to cover losses on Deutsche’s F.H.A.-backed loans. Many of the losses, the complaint says, were caused by false statements the bank made to HUD to obtain the government guarantee.

The government has filed relatively few cases against big banks related to the financial crisis.

The Justice Department’s case on Tuesday was a civil case, not a criminal case, and it did not name any individual executives or workers. Deutsche Bank was one of the largest players in the American mortgage market, bundling up billions of dollars of mortgages into bonds it sold to investors.

The United States attorney for the Southern District of New York, Preet Bharara, will hold a news conference to discuss the case on Tuesday afternoon.

Jack Ewing reported from Frankfurt and Louise Story from New York.

Article source: http://www.nytimes.com/2011/05/04/business/04mortgage.html?partner=rss&emc=rss