The effects of the unfolding economic crisis on the finances of American academic institutions I have monitored in my post dated Dec. 9, 2008, indicate that a number of non-profit private research universities overextended themselves financially in the past ten years. For example, Vanderbilt University spent roughly the equivalent of its current endowment on the expansion of its infrastructure. The sudden economic crisis has produced unforeseen, painful shortfalls of funds the institutions had relied upon to cover their daily expenses. Now, these universities are vigorously seeking new avenues to finance operations and contractual obligations.
One solution that research universities seem to embrace entails identifying ventures that show earning potential, insulating them financially from the mother institution, and converting them into university-owned independent enterprises. The mother university is transformed into a holding in private equity. Particularly, ventures in drug development and individualized health care using genomics and proteomics as well as management of electronic medical records lend themselves to this process. The strategy resonates in an interview entitled "Balser looks ahead to role as Medical Center leader" that the incoming Vice-Chancellor of Health Affairs gave to the Vanderbilt University Medical Center Reporter on Apr. 17, 2009.
There is precedence for such strategy. Large enterprises have pursued corporate disintegration for the sake of profitability in the recent past. The German chemical conglomerate Hoechst AG that once employed 150,000 people worldwide, was unwound into profitable spinoffs twenty years ago. Profitable businesses within the conglomerate were identified with the help of a world-renowned consulting firm whose representatives wore distinct dress code including bowler hats and umbrellas. Subsequently, the profitable businesses were pared from the conglomerate, reincorporated as independent companies, releasing them from any existing union contracts, and sold. In this country, General Motors and Chrysler have been in a similar process. At not-for-profit academic institutions, the strategy may erode the support for teaching and services to the underinsured and uninsured.
- Today, the President nominated the geneticist Francis Collins for the post of Director of the National Institutes of Health (NIH). At the end of Gardiner Harris' report entitled "Pick to Lead Health Agency Draws Praise and some Concern" on the nomination published in The New York Times today, Dr. Alan I. Leshner, now chief executive of the American Association for the Advancement of Science, formerly of the NIH, is quoted saying that it was “an excellent idea to have a very credible geneticist heading N.I.H. at a time when we are pursuing so vigorously the promise of personalized medicine based on genomics." Vanderbilt University's health sciences appear well attuned to the future goals of the federal agency that funds most of biomedical research in this country (07/09/09).
- Today, Janell Ross describes in her front page article for The Tennessean entitled "Medical debts compound pain" the lives of Tennesseans who cannot afford to pay their medical bills (new title in web site archive: "Imagine getting sick, getting bills you can't pay, then being sent to jail"). On page 4A, she notes that in fiscal year 2009 Vanderbilt University was owed 274.3 million dollars in unpaid bills for medical services, of which the institution absorbed 197.9 million dollars. One may wonder who covers the loss (09/27/09). According to Blake Farmer's report entitled "Uncompensated Care Heads to VUMC, Rise Smaller than Predicted" on National Public Radio's WPLN yesterday, Vanderbilt's unrecoverable loss from unpaid medical bills has risen to 228 million dollars (11/12/09).
- The idea of personalized medicine entails the sequencing of our individual genomes to uncover differences that may potentially lead to future illness. The results could be used to take preemptive measures. To date, sequencing the human genome has been prohibitively expensive, costing between 5,000.- and 50,000.- dollars. However, John Markoff reported in his post entitled "I.B.M. Joins Pursuit of $1,000 Personal Genome" for The New York Times yesterday that technological advances in genetic sequencing may possibly bring down the cost to a thousand dollars in the near future. Even a mere 100.- dollars seem feasible. In specific cases, e.g. when diseases run in families, personalized genomic sequencing may certainly benefit the concerned. However, whether ubiquitous screening will improve health care remains an open question (10/06/09).
- Perhaps Columbia/HCA represents an apt partner for converting not-for-profit health care into for-profit enterprises. Listen to yesterday's interview of National Public Radio's WPLN with Columbia/HCA's CEO Richard M. Bracken in a segment entitled "HCA Earnings Soar, Acquiring Struggling Non-Profits Emerges as Growth Option". I recall hearing similar pronouncements a dozen years ago, when then CEO Richard L. Scott unleashed a similar wave of acquisitions. After such take overs, teachers and basic scientists may quickly become an endangered species as the fate of Allegheny University of Health Sciences, a merger of Hahnemann University and Medical College of Pennsylvania, illustrates (11/06/09).
- The current revenue shortfall will force states to diminish their spending on Medicaid programs in the near future, diminishing income particularly at not-for-profit hospitals. Tennessee considers cuts in its Medicaid program of up to 7 percent, According to Getahn Ward's article entitled "Nashville hospitals' banner year may not tell full story" in The Tennessean today, Vanderbilt University anticipates a loss of 50 to 70 million dollars because of the anticipated reduction in Medicaid payments in the new year. Inevitably, this will only add to the hundreds of millions of dollars in unpaid services that the institution already must absorb (11/29/09).
- According to Madison Park's post on CNN entitled "Walgreens postpones plans to sell personal genetic tests" today, Walgreens had planned to offer saliva tests for at risk genes for less than $270.-.
Today, Walgreens halted its plans until further notice after the FDA intervened. I quote from her post: "Many of these markers are not understood, even what genes they are affecting right now," said Dr. Kenneth Offit, chief of clinical genetics service at Memorial Sloan-Kettering Cancer Center in New York. "It's a very, very early stage in this level of genomic research." Affordable personalized medicine for everyone seems still way off in the future (05/13/10).
- The Nobel-laureate and scientific adviser to the U.S. president Harold Varmus, who served as Director of the National Institutes of Health and soon will head the National Cancer Institute, appears to have changed his mind on the immediate promises of personalized medicine. In Nicholas Wade's report for The New York Times with the title "A Decade Later, Genetic Map Yields Few New Cures" dated Jun 10, 2010, Varmus is quoted saying: "Genomics is a way to do science, not medicine" (06/14/10).
- Christina E. Sanchez reports in her article entitled "Vanderbilt takes care personally" in today's Tennessean on the university's recent initiative in personalized medicine. She uses targeted therapies in the treatment of cancer to demonstrate the potential of this new avenue of care. The article does not detail therapies, but particularly mentions new treatments for lung cancer that entail the screening of patients' tumor tissue for modified genes. Recent studies uncovered a modification of the gene ALK in people with non-small cell lung cancer. ALK encodes the enzyme anaplastic lymphoma receptor tyrosine kinase. The fusion of this gene with the gene EML4 renders a tyrosine kinase persistently active that prevents programmed cell death from curtailing neoplastic growth. Aaron Saenz describes a potential drug treatment using this important finding in his post entitled "Crizotinib Targets Gene To Stop Lung Cancer Tumors in 90% of Treated Patients" on Singularity Hub dated Jun. 9, 2010. No doubt, the development of drugs specifically targeting such cellular malfunction is highly desirable. However, less than four percent of lung cancer patients carry the EML4-ALK fusion, and the drugs tested to date only slow the progress of the disease. Personalized medicine definitely needs more research, time and money to come to fruition (08/04/10).
- More than a decade of expansion have come to an end: Vanderbilt University is in the process of eliminating more than 1,000 jobs in mass lay-offs at its medical center this fiscal year. Vice Chancellor of Health Affairs, Dean of the Medical School and CEO Jeffrey Balser chose not to mince words. According to The Tennessean's post with the title "Vanderbilt University Medical Center eliminates 275 jobs of 1,000 to be cut" published online Sep. 20, 2013, Balser noted: “Some have been concerned that VUMC has been ‘too transparent’ about the need to reduce staffing,...” At the end of the day for-profit TriStar Centennial Health may stand ready to absorb Vanderbilt's operation at a good price, while the current leadership will be rewarded with golden parachutes(02/21/2013).
- Academic Debt: A Mind-Numbing High-Wire Act
- No Country for Shrinking Violets
- The Financial Crisis & Higher Education
- The Departure of the Cranes
- On the Value of Education