Author Archives: Tom

Making good on Baylor Med’s bad bet

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27937 The Chronicleís Todd Ackerman and Loren Steffy did a good job in this weekend article of chronicling the series of bad bets that Baylor College of Medicineís Board of Trusteeís made in the wake of the schoolís unfortunate 2004 divorce from The Methodist Hospital. Baylor Medís travails have been a regular topic on this blog, most recently here.

The elephant in the parlor of Baylor’ Medís financial problems is the $600 million in bond debt that Baylor Med incurred in connection with its currently mothballed hospital project. Indeed, the difference between the total bond debt and the value of the underlying collateral would gobble up a large chunk of Baylorís endowment, which is currently a tad under a billion dollars. That was enough to scare off Rice University, although I question whether that was the right long-term decision for Rice.

So, the future is bit cloudy for Baylor. But what Iím wondering is whether there is a local partnership that could bail Baylor out of most of current problems while providing an essential benefit for the Houston community?

The last time I look into the issue, estimates in the Houston metro area has one of the largest percentages of uninsured residents in the U.S. (over 30% versus a national average of about 16%). The Harris County Hospital District ultimately ends up with the issues involved with financing indigent care as well as ensuring that adequate medical facilities exist for local citizens.

Given the HCHDís projected need for facilities to keep up with the growth of the Houston area, it makes sense for the HCHD to engage Baylor in discussions over a partnership in which HCHD would make an investment in the hospital in return for Baylorís agreement to staff the institution as its primary teaching facility.

Baylor and the HCHD already work closely in connection with the staffing of the Ben Taub Hospital trauma unit in the Texas Medical Center. A pure teaching hospital for Baylor would provide a quasi-public, low-cost alternative to the Med Centerís impressive but expensive array of private hospitals.

Sure, the details would have to be worked out, such as management of the facility. But doesnít such an investment by the county make sense, particularly when compared to ones such as this?

The Last Four Minutes of Air France Flight 447

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Airbus_3 I’ve been meaning to pass along for awhile  this superb Gearld Traufette/Spiegel Online article on the continuing investigation into last summer’s horrific crash of Air France 447 into the Atlantic Ocean (earlier post here).

Although the black box still has not been recovered (and quite likely won’t be), investigators are becoming more confident that they understand what happened, including the following interesting theory:

According to this scenario, the pilots would have been forced to watch helplessly as their plane lost its lift. That theory is supported by the fact that the airplane remained intact to the very end. Given all the turbulence, it is therefore possible that the passengers remained oblivious to what was happening. After all, the oxygen masks that have been recovered had not dropped down from the ceiling because of a loss of pressure. What’s more, the stewardesses weren’t sitting on their emergency seats, and the lifejackets remained untouched. "There is no evidence whatsoever that the passengers in the cabin had been prepared for an emergency landing," says BEA boss Jean-Paul Troadec.

Read the entire article, including this informative graphic.

Colbert’s interview of Shaun White at the Olympics

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“How much of your hair is Red Bull?”

The NBA Bubble

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A_ToyotaCenter Looking for the next bubble to burst?

How about the National Basketball Association, where the local Houston Rockets play in what has been nicknamed ìThe Library on LaBranchî because of the lack of fan interest at their home games.

ESPNís Bill Simmons dissects and then sums up the leagueís dilemma well:

.  .  . The current system doesn’t fly. The salary cap and luxury threshold ebb and flow with yearly revenue — so if revenue drops, teams have less to spend — only there’s no ebb and flow with the salaries. When the revenue dips like it did these past two seasons, the owners are screwed.

They arrived at this specific point after salaries ballooned over the past 15 years — not for superstars, but for complementary players who don’t sell tickets, can’t carry a franchise, and, in a worst-case scenario, operate as a sunk cost. These players get overpaid for one reason: Most teams throw money around like drunken sailors at a strip joint. When David Stern says, "We’re losing $400 million this season," he really means, "We stupidly kept overpaying guys who weren’t worth it, and then the economy turned, and now we’re screwed."

This isn’t about improving the revenue split between players and owners. It’s about Andre Iguodala, Emeka Okafor, Elton Brand, Andrei Kirilenko, Tyson Chandler, Larry Hughes, Michael Redd, Corey Maggette and Luol Deng making eight figures a year but being unable to sell tickets, create local buzz or lead a team to anything better than 35 wins.

It’s about Jermaine O’Neal making more money this season than Kevin Durant, Russell Westbrook, James Harden, Serge Ibaka, Eric Maynor, Thabo Sefolosha and Jeff Green combined.

It’s about Rasheed Wallace — a guy who quit on his team last season, then showed up for this one with 34Cs and love handles — roping the Celtics into a $20 million, three-year deal that will cost Boston twice that money in luxury tax penalties.

With at least a dozen or so NBA teams facing serious financial problems, my sense is that the league is facing a radical restructuring whether the players like it or not. Of course, a substantial component of those teamsí financial problems is attributable to the transfer of capital that many teams made to players as a result of not needing to rat-hole capital for arenas that local governments naively financed instead.

Sort of makes one re-think this boondoggle, eh?

An interesting health care finance contrast

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health_insurance This Sean P. Murphy/Boston Globe article details how local government-subsidized health insulation ìinsuranceî plans are crippling municipal budgets throughout Massachusetts.

On the other hand, this WSJ op-ed by Indiana Governor Mitch Daniels explains how the state is saving $20 million of health care expenses in 2010 through the introduction of a highly-popular state employee health finance plan based upon Heath Savings Accounts.

This is not surprising. The most efficient way to spend less on health care is to consume less of it. As a result, someone ñ be it the consumer, an insurer or the government ñ at some point has to say no to the consumption of more health care. As Steve Lansburg recently pointed out, that eating more cake diet just doesnít work. The WSJ’s Holman Jenkins agrees.

Unfortunately, the present U.S. employer and government-based, third-party payor health care finance system provides powerful incentives to consume more health care. And, as Milton Friedman was fond of saying, consumers will consume as much health care as they can so long as someone else is paying for it.

Until we change the reliance on such consumer insulation from health care decisions, the dynamic of rising costs is unlikely to cease.

Jeff Skilling Day at SCOTUS

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Got to love the response of Sri Srinivasan — who handled yesterday’s oral argument for Jeff Skilling in his appeal to the U.S. Supreme Court — to the government’s contention that a five-hour voir dire of the jury was sufficient in Skilling’s trial to rebut the presumption of community prejudice against Skilling.

According to Lyle Denniston, whose account of the argument is the most comprehensive that I’ve seen, Srinivasan pointed out that the far less complicated criminal trial of Martha Stewart involved six days of juror selection in a case where there was no evidence of “deep-seated passion and prejudice” among jurors.

As Denniston notes, the SCOTUS Justices are usually hard to read during oral argument and the Skilling argument was no different. Jeffrey Toobin observes in his recent book on the Supreme Court, Supreme Court decisions are often more the product of coalition-building between the Justices than the legal theories.

From reading Denniston’s account and from talking with a couple of friends who attended the argument, I’m guessing that the Justices have already decided either to invalidate or dramatically limit the honest-services wire fraud statute (18 U.S.C. 1346), and that much or all of Skilling’s conviction will be overturned on that basis.

If I’m right on that, then the Justices are now only deciding whether to knock out Skilling’s conviction entirely on the District Court’s refusal to change venue from Houston or to conduct a thorough voir dire of jurors and leave the honest services issues for the other two pending cases involving the same issue.

But ignored among all the media reports on the Skilling SCOTUS argument is that the Skilling case is far from over even if SCOTUS were to uphold Skilling’s conviction. Put on hold pending the outcome of the SCOTUS appeal is the Fifth Circuit’s order to U.S. District Judge Sim Lake to re-sentence Skilling because of errors in the calculation of the length of the sentence.

But even more importantly, the Skilling team is awaiting the outcome of the Supreme Court appeal before filing what will certainly be a scalding motion for new trial in the District Court based on pervasive prosecutorial misconduct involved in the Enron Task Force’s prosecution of Skilling.

And that could well be more revealing than any Supreme Court argument.

The Code

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Yanks Orioles fight If this Larry Getlen/NY Post review of Jason Turbow and Michael Duca’s new book The Baseball Codes: Beanballs, Sign Stealing, and Bench-Clearing Brawls: The Unwritten Rules of America’s Pastime (Pantheon March 9, 2010) doesnít get you in the mood for Major League Spring Training and the upcoming MLB season, then nothing will:

Unbeknownst to most outsiders, all aspects of baseball ó from hitting, pitching, and baserunning to dealing with management and the media ó are governed by the Code, a complex series of unwritten rules that have evolved since baseball’s earliest days.

This Code, which the authors describe as "less strategic than moral," includes behavioral rules for common baseball situations; the punishment for flouting those rules; and the "omerta" that ballplayers must never, ever, discuss the rules of the Code outside the clubhouse. [.   .   .]

* Cardinal great Bob Gibson believed that the Code entitled him to knock down any batter who bested him with a grand slam. So when the Chicago Cubs Pete LaCock did just that, Gibson felt he owed him one ó unfortunately, the homer came during Gibson’s final game. Gibson finally took his revenge 15 years later, plugging LaCock in the back during an Old Timers Game.

* When the Yankees took on the Angels in 1987, the announcers discussed how Angels pitcher Don Sutton was scuffing the ball. Yankee owner George Steinbrenner, hearing this on TV, called Yankee manager Lou Piniella in a rage, demanding that the umpires inspect Sutton’s glove. Piniella had to explain to the Boss, "The guy who taught Don everything he knows about cheating is pitching for us tonight. Want me to get Tommy John thrown out too?"

Cutting up at the Mayo Clinic

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I never knew that the lobby of the Mayo Clinic could be such an entertaining place.