Archive for the ‘Wealth and Power’ Category

There are a few things we take for granted in social interactions with people. We presume that we see the world in roughly the same way, that we all know certain basic facts, that words mean the same things to you as they do to me. And we assume that we have pretty similar ideas of right and wrong.

But for a small – but not that small – subset of the population, things are very different. These people lack remorse and empathy and feel emotion only shallowly. In extreme cases, they might not care whether you live or die. These people are called psychopaths. Some of them are violent criminals, murderers. But by no means all.

Professor Robert Hare is a criminal psychologist, and the creator of the PCL-R, a psychological assessment used to determine whether someone is a psychopath. For decades, he has studied people with psychopathy, and worked with them, in prisons and elsewhere. “It stuns me, as much as it did when I started 40 years ago, that it is possible to have people who are so emotionally disconnected that they can function as if other people are objects to be manipulated and destroyed without any concern,” he says.

Our understanding of the brain is still in its infancy, and it’s not so many decades since psychological disorders were seen as character failings. Slowly we are learning to think of mental illnesses as illnesses, like kidney disease or liver failure, and developmental disorders, such as autism, in a similar way. Psychopathy challenges this view. “A high-scoring psychopath views the world in a very different way,” says Hare. “It’s like colour-blind people trying to understand the colour red, but in this case ‘red’ is other people’s emotions.”

At heart, Hare’s test is simple: a list of 20 criteria, each given a score of 0 (if it doesn’t apply to the person), 1 (if it partially applies) or 2 (if it fully applies). The list in full is: glibness and superficial charm, grandiose sense of self-worth, pathological lying, cunning/manipulative, lack of remorse, emotional shallowness, callousness and lack of empathy, unwillingness to accept responsibility for actions, a tendency to boredom, a parasitic lifestyle, a lack of realistic long-term goals, impulsivity, irresponsibility, lack of behavioural control, behavioural problems in early life, juvenile delinquency, criminal versatility, a history of “revocation of conditional release” (ie broken parole), multiple marriages, and promiscuous sexual behaviour. A pure, prototypical psychopath would score 40. A score of 30 or more qualifies for a diagnosis of psychopathy. Hare says: “A friend of mine, a psychiatrist, once said: ‘Bob, when I meet someone who scores 35 or 36, I know these people really are different.’ The ones we consider to be alien are the ones at the upper end.”

But is psychopathy a disorder – or a different way of being? Anyone reading the list above will spot a few criteria familiar from people they know. On average, someone with no criminal convictions scores 5. “It’s dimensional,” says Hare. “There are people who are part-way up the scale, high enough to warrant an assessment for psychopathy, but not high enough up to cause problems. Often they’re our friends, they’re fun to be around. They might take advantage of us now and then, but usually it’s subtle and they’re able to talk their way around it.” Like autism, a condition which we think of as a spectrum, “psycho­pathy”, the diagnosis, bleeds into normalcy.

We think of psychopaths as killers, criminals, outside society. People such as Joanna Dennehy, a 31-year-old British woman who killed three men in 2013 and who the year before had been diagnosed with a psychopathic personality disorder, or Ted Bundy, the American serial killer who is believed to have murdered at least 30 people and who said of himself: “I’m the most cold-blooded son of a bitch you’ll ever meet. I just liked to kill.” But many psychopathic traits aren’t necessarily disadvantages – and might, in certain circumstances, be an advantage. For their co-authored book, “Snakes in suits: When Psychopaths go to work”, Hare and another researcher, Paul Babiak, looked at 203 corporate professionals and found about four per cent scored sufficiently highly on the PCL-R to be evaluated for psychopathy. Hare says that this wasn’t a proper random sample (claims that “10 per cent of financial executives” are psychopaths are certainly false) but it’s easy to see how a lack of moral scruples and indifference to other people’s suffering could be beneficial if you want to get ahead in business.

“There are two kinds of empathy,” says James Fallon, a neuroscientist at the University of California and author of The Psychopath Inside: A Neuroscientist’s Personal Journey into the Dark Side of the Brain. “Cognitive empathy is the ability to know what other people are feeling, and emotional empathy is the kind where you feel what they’re feeling.” Autistic people can be very empathetic – they feel other people’s pain – but are less able to recognise the cues we read easily, the smiles and frowns that tell us what someone is thinking. Psychopaths are often the opposite: they know what you’re feeling, but don’t feel it themselves. “This all gives certain psychopaths a great advantage, because they can understand what you’re thinking, it’s just that they don’t care, so they can use you against yourself.” (Chillingly, psychopaths are particularly adept at detecting vulnerability. A 2008 study that asked participants to remember virtual characters found that those who scored highly for psychopathy had a near perfect recognition for sad, unsuccessful females, but impaired memory for other characters.)

Fallon himself is a case in point. In 2005, he was looking at brain scans of psychopathic murderers, while on another study, of Alzheimer’s, he was using scans of his own family’s brains as controls. In the latter pile, he found something strange. “You can’t tell just from a brain scan whether someone’s a psychopath,” he says, “but you can make a good guess at the personality traits they’ll have.” He describes a great loop that starts in the front of the brain including the parahippocampal gyrus and the amygdala and other regions tied to emotion and impulse control and empathy. Under certain circumstances they would light up dramatically on a normal person’s MRI scan, but would be darker on a psychopath’s.

“I saw one that was extremely abnormal, and I thought this is someone who’s way off. It looked like the murderers I’d been looking at,” he says. He broke the anonymisation code in case it had been put into the wrong pile. When he did, he discovered it was his own brain. “I kind of blew it off,” he says. “But later, some psychiatrist friends of mine went through my behaviours, and they said, actually, you’re probably a borderline psychopath.”

Speaking to him is a strange experience; he barely draws breath in an hour, in which I ask perhaps three questions. He explains how he has frequently put his family in danger, exposing his brother to the deadly Marburg virus and taking his son trout-fishing in the African countryside knowing there were lions around. And in his youth, “if I was confronted by authority – if I stole a car, made pipe bombs, started fires – when we got caught by the police I showed no emotion, no anxiety”. Yet he is highly successful, driven to win. He tells me things most people would be uncomfortable saying: that his wife says she’s married to a “fun-loving, happy-go-lucky nice guy” on the one hand, and a “very dark character who she does not like” on the other. He’s pleasant, and funny, if self-absorbed, but I can’t help but think about the criteria in Hare’s PCL-R: superficial charm, lack of emotional depth, grandiose sense of self-worth. “I look like hell now, Tom,” he says – he’s 66 – “but growing up I was good-looking, six foot, 180lb, athletic, smart, funny, popular.” (Hare warns against non-professionals trying to diagnose people using his test, by the way.)

“Psychopaths do think they’re more rational than other people, that this isn’t a deficit,” says Hare. “I met one offender who was certainly a psychopath who said ‘My problem is that according to psychiatrists I think more with my head than my heart. What am I supposed to do about that? Am I supposed to get all teary-eyed?’ ” Another, asked if he had any regrets about stabbing a robbery victim, replied: “Get real! He spends a few months in hospital and I rot here. If I wanted to kill him I would have slit his throat. That’s the kind of guy I am; I gave him a break.”

And yet, as Hare points out, when you’re talking about people who aren’t criminals, who might be successful in life, it’s difficult to categorise it as a disorder. “It’d be pretty hard for me to go into high-level political or economic or academic context and pick out all the most successful people and say, ‘Look, I think you’ve got some brain deficit.’ One of my inmates said that his problem was that he’s a cat in a world of mice. If you compare the brainwave activity of a cat and a mouse, you’d find they were quite different.”

It would, says Hare, probably have been an evolutionarily successful strategy for many of our ancestors, and can be successful today; adept at manipulating people, a psychopath can enter a community, “like a church or a cultural organisation, saying, ‘I believe the same things you do’, but of course what we have is really a cat pretending to be a mouse, and suddenly all the money’s gone”. At this point he floats the name Bernie Madoff.

This brings up the issue of treatment. “Psychopathy is probably the most pleasant-feeling of all the mental disorders,” says the journalist Jon Ronson, whose book, The Psychopath Test, explored the concept of psychopathy and the mental health industry in general. “All of the things that keep you good, morally good, are painful things: guilt, remorse, empathy.” Fallon agrees: “Psychopaths can work very quickly, and can have an apparent IQ higher than it really is, because they’re not inhibited by moral concerns.”

So psychopaths often welcome their condition, and “treating” them becomes complicated. “How many psychopaths go to a psychiatrist for mental distress, unless they’re in prison? It doesn’t happen,” says Hare. The ones in prison, of course, are often required to go to “talk therapy, empathy training, or talk to the family of the victims” – but since psychopaths don’t have any empathy, it doesn’t work. “What you want to do is say, ‘Look, it’s in your own self-interest to change your behaviour, otherwise you’ll stay in prison for quite a while.’ ”

It seems Hare’s message has got through to the UK Department of Justice: in its guidelines for working with personality-disordered inmates, it advises that while “highly psychopathic individuals” are likely to be “highly treatment resistant”, the “interventions most likely to be effective are those which focus on ‘self-interest’ – what the offender wants out of life – and work with them to develop the skills to get those things in a pro-social rather than anti-social way.”

If someone’s brain lacks the moral niceties the rest of us take for granted, they obviously can’t do anything about that, any more than a colour-blind person can start seeing colour. So where does this leave the concept of moral responsibility? “The legal system traditionally asserts that all people standing in front of the judge’s bench are equal. That’s demonstrably false,” says the neuroscientist David Eagleman, author of Incognito: The Secret Lives of the Brain. He suggests that instead of thinking in terms of blameworthiness, the law should deal with the likelihood that someone will reoffend, and issue sentences accordingly, with rehabilitation for those likely to benefit and long sentences for those likely to be long-term dangers. The PCL-R is already used as part of algorithms which categorise people in terms of their recidivism risk. “Life insurance companies do exactly this sort of thing, in actuarial tables, where they ask: ‘What age do we think he’s going to die?’ No one’s pretending they know exactly when we’re going to die. But they can make rough guesses which make for an enormously more efficient system.”

What this doesn’t mean, he says, is a situation like the sci-fi film Minority Report, in which people who are likely to commit crimes are locked up before they actually do. “Here’s why,” he says. “It’s because many people in the population have high levels of psychopathy – about 1 per cent. But not all of them become criminals. In fact many of them, because of their glibness and charm and willingness to ride roughshod over the people in their way, become quite successful. They become CEOs, professional athletes, soldiers. These people are revered for their courage and their straight talk and their willingness to crush obstacles in their way. Merely having psychopathy doesn’t tell us that a person will go off and commit a crime.” It is central to the justice system, both in Britain and America, that you can’t pre-emptively punish someone. And that won’t ever change, says Eagleman, not just for moral, philosophical reasons, but for practical ones. The Minority Report scenario is a fantasy, because “it’s impossible to predict what somebody will do, even given their personality type and everything, because life is complicated and crime is conceptual. Once someone has committed a crime, once someone has stepped over a societal boundary, then there’s a lot more statistical power about what they’re likely to do in future. But until that’s happened, you can’t ever know.”

Speaking to all these experts, I notice they all talk about psychopaths as “them”, almost as a different species, although they make conscious efforts not to. There’s something uniquely troubling about a person who lacks emotion and empathy; it’s the stuff of changeling stories, the Midwich Cuckoos, Hannibal Lecter. “You know kids who use a magnifying glass to burn ants, thinking, this is interesting,” says Hare. “Translate that to an adult psychopath who treats a person that way. It is chilling.” At one stage Ronson suggests I speak to another well-known self-described psychopath, a woman, but I can’t bring myself to. I find the idea unsettling, as if he’d suggested I commune with the dead.

http://www.telegraph.co.uk/culture/books/10737827/Psychopaths-how-can-you-spot-one.html

Thanks to Steven Weihing for bringing this to the attention of the It’s Interesting community.

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R-wordredskins

It’s one of the NFL’s bigger rivalries, the Cowboys vs. the Redskins. And intentional or not, Sunday’s game occurs during Columbus Day weekend, deepening the meaning of a fresh conflict about whether “Redskins” slurs Indians, their leaders say.

More than 500 years after Christopher Columbus’ encounter with the natives of the Americas, any enduring uneasiness between Indians and mainstream society is exemplified by the controversy over the Washington Redskins name, which took a new turn last week when President Obama spoke of “legitimate concerns” that the mascot is racist, some Indian leaders say.

Team owners strongly dispute any racism behind the mascot and won’t change it, saying the Redskins name honors “where we came from, who we are.”

But many Native Americans contend it’s incredulous that a major sports team in the nation’s capital fails to see the word’s offensiveness, especially in a game Sunday whose rival mascots conjure up the bygone real bloodshed between cowboys and Indians. Some news outlets and sports writers agree and aren’t printing “Redskin” in their stories about the NFL team.

“After 500 years, it’s pretty unbelievable that this issue is at the forefront right now,” said Jason Begay, a Navajo who’s an assistant professor and director of the Native American Journalism Project at the University of Montana. “Even in the last 50 years (of the civil rights movement), we learned so much. It’s just ridiculous that this is an issue.”

The NFL team disagrees. In response, the Oneida Indian Nation of New York began airing this weekend a radio ad protesting the Redskins mascot in the Dallas Cowboys’ hometown. The ad, entitled “Bipartisan,” quotes how Obama, a Democrat, and Rep. Tom Cole, a Republican leader in the House, disapprove of the Redskins name.

Washington team owner Dan Snyder stepped up his defense of the moniker this month. Last spring, he told USA Today he will “never” change the name.

“Our fans sing ‘Hail to the Redskins’ in celebration at every Redskins game. They speak proudly of ‘Redskins Nation’ in honor of a sports team they love,” Snyder wrote in a letter to fans.

“After 81 years, the team name ‘Redskins’ continues to hold the memories and meaning of where we came from, who we are, and who we want to be in the years to come,” he continued.

“I respect the feelings of those who are offended by the team name. But I hope such individuals also try to respect what the name means, not only for all of us in the extended Washington Redskins family, but among Native Americans too,” Snyder said, citing several polls conducted in recent years that show that a majority of people do not want the name changed.

But American Indians like Begay worry about the normalization of an epithet. He’s also vice president of the Native American Journalists Association, which launched last month a media resource page on its website about offensive Native American mascots in U.S. sports.

“We’re on the verge of laying back and letting this name run rampant when we can actually make a difference, which is what we all should be striving for,” Begay said. “I’m glad to see there are so many organizations like NAJA and the (U.S.) President who are standing against it.”

Obama said last week that if he were the team’s owner, he would “think about changing it,” referring to the mascot.

Obama added that “I don’t know whether our attachment to a particular name should override the real, legitimate concerns that people have about these things.” The ad also airs a quote by Cole saying “the name is just simply inappropriate. It is offensive to a lot of people.”

The political leaders’ remarks are repeated in the radio ad advanced by the Oneida Indian Nation and its leader Ray Halbritter, who’s also CEO of Oneida Nation Enterprises, which operates a casino and other businesses.

Halbritter acknowledged his tribe’s “Change the Mascot” campaign faces an uphill struggle. He refers to the mascot as “the R-word,” without explicitly stating it.

“Well, history is littered with people who have vowed never to change something — slavery, immigration, women’s rights — so we think one thing that’s really great about this country is when many people speak out, change can happen,” Halbritter said.

When asked about other team mascots such as the Atlanta Braves, Cleveland Indians, Kansas City Chiefs and Chicago Blackhawks, Halbritter cited how “redskin” is defined in the Merriam-Webster Unabridged online dictionary as “usually offensive.”

“Let’s be clear. The name, the R word, is defined in the dictionary as an offensive term. It’s a racial epithet. It’s a racial slur. I think there is a broader discussion to be had about using mascots generally and the damage it does to people and their self-identity. But certainly there’s no gray area on this issue,” he said.

Halbritter asserted the word was born out of hatred — and referred to the long, ugly history between the native people of the Americas and the colonizers from Europe who followed Columbus.

“Its origin is hated, use is hated, it was the name our people — that was used against our people when we were forced off our lands at gunpoint. It was a name that was used when our children were forced out of our homes and into boarding schools,” he said. “So, it has a sordid history. And it’s time for a change, and we hope that — and what’s great is when enough people do recognize that, change will come.”

Fans are sharply divided about the issue.

A non-scientific online poll by the Washington Post shows 43% saying the team should change its name. But 57% say no, keep it. One respondent said the term is “a racist holdover from another day, a time when Indians were depicted as violent, ignorant, savages (by) whites (who largely were equally violent, ignorant and savage).”

But another respondent referred to political correctness and said: “The liberal PC society has gotten out of control, if you don’t like the teams name THEN DON’T WATCH THEM…!”

Redskins attorney Lanny Davis said the mascot is “not about race, not about disrespect.”

At games, he joins fans in singing “Hail to the Redskins” because “it’s a song of honor, it’s a song of tribute.”

http://www.cnn.com/2013/10/12/us/redskins-controversy/index.html?hpt=hp_c2

breast feeding

Rich adults in south China’s Shenzhen city hiring wet nurses to drink breast milk has provoked disgust and outrage over the Chinese internet with thousands of micro blog users lashing out at this “latest game” of people who came to wealth overnight. The wet nurses are provided by an agency, which scouts for poor women who have recently given birth and would be happy with some financial support. The new mothers offer their services for a few days to weeks in a month with prices varying from $2,000 to $4,000.

“Adults (clients) can drink it directly through breastfeeding, or they can always drink it from a breast pump if they feel embarrassed,” Lin Jun, owner of a wet nurse supplying agency, Xinxinyu, was quoted in the local media as saying.

Some Chinese believe that human breast milk has some special nutritional qualities that are good for health, particularly for those who have undergone surgeries. Many Chinese web users are saying it is not just unethical but also shows the arrogance and neglect of women by the country’s wealthy.

“This adds to China’s problem of treating women as consumer goods and the moral degradation of China’s rich,” wrote Cao Baoyin, a writer and regular commentator in Chinese media, on his blog.

Reports in the media had pushed the local government in Shenzhen to suspend the business license of Xinxinyu. But this is no solution as there may be many agencies operating in the field but have not been exposed in the media, web users said.

http://articles.timesofindia.indiatimes.com/2013-07-07/china/40420509_1_wet-nurses-chinese-media-breast

julie-deane-cambridge-satchel-image1

Julie Deane founded Cambridge Satchel Company in her kitchen in 2008, with her mom at her side. “It’s one of those business that was started out of necessity because I needed to make school fees for my daughter, who was being bullied at school,” says Deane. “I made a promise to her that I would move her to a place that she could be really safe and happy. Once you make a promise to your children, there’s no going back.”

So she developed a few ideas for companies she could start with a budget of £600, one of which was a satchel company. Now, people scoff at the idea of starting a company on such a shoestring budget, but Deane maintains, to this day, that “it seems a perfectly reasonable amount to give something a go with,” and that you can get a sense of whether something has legs or not without getting in too deep.

Once she decided on satchels, Deane sat down at her kitchen table and started Googling handbag manufacturers, leather goods manufacturers, leather suppliers, saddle makers and anyone who would cut leather and make things from scratch for her. She “hammered” the Internet to make sure nobody else was doing it — a process she now knows is actually called competitor analysis. When she determined that her venture was unique, she’d drive to the tanneries and manufacturers to get them on board.

She found a leather supplier and got to work on a prototype. With a product in the works, she then set out to build a website. “I didn’t know very much about websites at all,” says Deane. “I thought, ‘It can’t be that hard, there must be a course on the Internet.'” She found one, and she spent two nights taking a course and then made the website on the third night.

“At this point, most people have access to the Internet, and it’s all there,” says Deane, who now speaks to students about entrepreneurship and bootstrapping. “I tell them, ‘You don’t need to pay someone else to do your web design and SEO and AdWords campaign’ … it’s lazy.”

Deane put herself on every free online listing she could — from the Yellow Pages and mom blogs to Etsy and eBay. “I read this book called Guerilla Marketing, and it says you need to try multiple avenues of marketing, and if people see your name enough times, then they’ll get curious enough to look you up,” she says.

As she started selling chestnut, dark brown and black satchels online, Deane engaged her customers. She’d ask them to send a photo of them with their satchel and to write a testimonial for the site if they really loved the bag (and to send it back if they didn’t), thinking a solid review could lend her fledgling business credibility and encourage other people to buy. A few of Deane’s early customers mentioned their love for fashion blogs, which opened a world of opportunity to Deane.

“I couldn’t believe how frequently people would be checking these fashion blogs!” Deane says. Whenever a customer mentioned a go-to fashion blog, Deane sent the blogger an email, telling them about Cambridge Satchels and sending a photo, in hopes of a shout-out. She would tell them, “I can’t send you free samples — maybe in a year’s time if it goes well, you can have one, but in the meantime, here’s a photograph!”

When the leather supplier worked on a project with red and navy, Deane had some colored satchels made. She had refrained from bespoke colors before, since she minimum order would be six month’s worth of sales — “If I’d picked a dud of a color, that would not have been good news for the school fees!” Deane says the red and navy brought about a “lightbulb moment” for her. “The minute I had red and navy, those really took off, and it became very, very clear that the way forward would be through different colors.”

Over the years, Deane aggressively worked with fashion bloggers and prominent fashionistas, sponsoring giveaways and gifting satchels, which yielded organic buzz. Over the years, Cambridge Satchel built strong relationships with these bloggers — even asking them what color satchels the company should make next — and these relationships enabled the brand to skirt traditional advertising. Fully embraced as a fashion obsession, Cambridge Satchels grew thanks to social media and word of mouth, especially via blogs.

In September 2011, Elle UK reached out, inquiring whether Deane could produce a brighter satchel for inclusion in an upcoming fluorescent trend piece. Always one to capitalize on a new opportunity, Deane produced these satchels and sent them to bloggers who were attending New York Fashion Week. “When the lights at the shows went down and the people started taking flash photography, the satchels really popped,” says Deane. “So we got noticed, and the New York Times and the New York Post called us the ‘street style of New York Fashion Week.'” (And of course, the fashion bloggers gave Cambridge Satchel widespread press online, too.)

The success of Fashion Week in 2011 beckoned Bloomingdales and Saks to bring the satchels to Stateside, where they were put in the window and dubbed “The Brit It Bag” during Fashion Week in February 2012. “That was a big moment for us, when we really got noticed,” says Deane.

This new trend didn’t go unnoticed. Just a few months after Fashion Week, ad agency BBH contacted Deane. They asked for facts and figures about the business and the whole story of how she started it, because Cambridge Satchel was being pitched as part of a large media opportunity. “I had no idea what they were talking about, or who they were talking to, so it was making me feel really worried!” recalls Deane. After signing a large NDA, Deane found out the client was Google, and it was looking to do commercials for its “the web is what you make of it” campaign. Cambridge Satchel was a perfect fit, and after Deane went to London with meet with the client, she had herself a high-profile television spot.

“Julie saw the Internet as a key to her success,” says Rich Pleeth, Consumer Marketing Manager at Google. “That’s why we built Chrome — to provide people like her and businesses like this with the richest and best web experience across all devices, combining speed, simplicity and security.”

Deane had built great momentum for her burgeoning business through the web, and more specifically, Google. “Right from the moment of trying to source everything from my first suppliers — thread suppliers and rivet suppliers and property for the factory — up through the AdWords and the analytics and Google Translate (for foreign emails), we do use all of those things, so to be able to be part of something that’s a very honest version of exactly how Cambridge Satchel started, I was very comfortable with it, it wasn’t a stretch at all,” explains Deane.

The ad ran in the UK and Ireland in late September and early October, then again from December 17 through 31.

“I’ve gotten so many fantastic emails about it,” says Deane. But more than that, she’s seen traffic and sales increase exponentially thanks to the ad, which ran on TV but also has surpassed 5.3 million views by YouTube’s global audience.

While it’s hard to pin down exactly how much web traffic and sales are attributable to the Chrome ad, Deane — being a numbers junkie — has tried quantifying the ad’s effect. Total sales from September through December 2012 more than doubled over 2011. But in the UK alone, sales increased a whopping 400%, and the commercial has to be responsible for some of that lift. And if you look at the Google Analytics reports of Cambridge Satchel’s web traffic on an hourly basis, there’s a big spike every time a commercial airs.

As if Google hadn’t been generous enough, the company incorporated Cambridge Satchel into a live experiment during IAB Engage 2012, when Mark Howe, Managing Director of Agency Operations Europe at Google, did a Hangout with Deane, who had Google pros at her office boosting her SEO, improving analytics, setting up a branded YouTube page, optimizing her site for mobile and upping her social media strategy.

“It has been proven that companies which build their business online grow their business at four to eight times faster than those that don’t,” says Pleeth. “The Internet has given them a global reach they would never have otherwise.”

Today, Cambridge Satchels are sold in 190 outposts in 100 countries, and the company does more than £8 million in annual sales. And all Julie Deane set out to do with £600 was make enough money to cover her daughter’s tuition.

During London Fashion Week, Deane opened her first brick-and-mortar location in London’s Covent Garden. It’s a two-story space, and the entire lower level is devoted to the web-savvy cohort who made her famous — fashion bloggers.

“I really feel very strongly that the bloggers are the people who started my business,” says Deane. “They’re a group of people who don’t have offices, and you’ll see them at New York and London Fashion Week sitting in Starbucks writing their pieces.” But now, at least in London, these bloggers will have a home base where they can write stories, make a cup of tea, browse the web, socialize and, of course, charge their phone so they can tweet and Instagram the next big thing. “I’m really excited about the lounge because it feels like a tangible way to thank the community that has helped me so much,” says Deane.

Lessons Learned From the Julie Deane School of Entrepreneurship
•Take risks.

•Be resourceful — DIY as much as possible.

•Know your audience, how they behave and where they spend their time.

•Don’t give your product away or sell it short, but strategic gifting can go a long way.

•Seize opportunities.

•Engage your fans, offer them a stake in your company.

•Find valuable brand partners with whom to run competitions and giveaways.

•Be authentic — Julie tweets about her dog, Rupert, which humanizes the brand.

•Embrace the web and the platforms that live on it.

Thanks to SRW for bringing this to the attention of the It’s Interesting community.

http://mashable.com/2013/03/22/cambridge-satchel-company/

tanks

Built to dominate the enemy in combat, the Army’s hulking Abrams tank is proving equally hard to beat in a budget battle.

Lawmakers from both parties have devoted nearly half a billion dollars in taxpayer money over the past two years to build improved versions of the 70-ton Abrams.

But senior Army officials have said repeatedly, “No thanks.”

It’s the inverse of the federal budget world these days, in which automatic spending cuts are leaving sought-after pet programs struggling or unpaid altogether. Republicans and Democrats for years have fought so bitterly that lawmaking in Washington ground to a near-halt.

Yet in the case of the Abrams tank, there’s a bipartisan push to spend an extra $436 million on a weapon the experts explicitly say is not needed.

“If we had our choice, we would use that money in a different way,” Gen. Ray Odierno, the Army’s chief of staff, told The Associated Press this past week.

Why are the tank dollars still flowing? Politics.

Keeping the Abrams production line rolling protects businesses and good paying jobs in congressional districts where the tank’s many suppliers are located.

If there’s a home of the Abrams, it’s politically important Ohio. The nation’s only tank plant is in Lima. So it’s no coincidence that the champions for more tanks are Rep. Jim Jordan and Sen. Rob Portman, two of Capitol’s Hill most prominent deficit hawks, as well as Democratic Sen. Sherrod Brown.

They said their support is rooted in protecting national security, not in pork-barrel politics.

“The one area where we are supposed to spend taxpayer money is in defense of the country,” said Jordan, whose district in the northwest part of the state includes the tank plant.

The Abrams dilemma underscores the challenge that Defense Secretary Chuck Hagel faces as he seeks to purge programs that the military considers unnecessary or too expensive in order to ensure there’s enough money for essential operations, training and equipment.

Hagel, a former Republican senator from Nebraska, faces a daunting task in persuading members of Congress to eliminate or scale back projects favored by constituents.

Federal budgets are always peppered with money for pet projects. What sets the Abrams example apart is the certainty of the Army’s position.

Sean Kennedy, director of research for the nonpartisan Citizens Against Government Waste, said Congress should listen when one of the military services says no to more equipment.

“When an institution as risk averse as the Defense Department says they have enough tanks, we can probably believe them,” Kennedy said.

Congressional backers of the Abrams upgrades view the vast network of companies, many of them small businesses, that manufacture the tanks’ materials and parts as a critical asset that has to be preserved. The money, they say, is a modest investment that will keep important tooling and manufacturing skills from being lost if the Abrams line were to be shut down.

The Lima plant is a study in how federal dollars affect local communities, which in turn hold tight to the federal dollars. The facility is owned by the federal government but operated by the land systems division of General Dynamics, a major defense contractor that spent close to $11 million last year on lobbying, according to the nonpartisan Center for Responsive Politics.

Jordan, a House conservative leader who has pushed for deep reductions in federal spending, supported the automatic cuts known as the sequester that require $42 billion to be shaved from the Pentagon’s budget by the end of September. The military also has to absorb a $487 billion reduction in defense spending over the next 10 years, as required by the Budget Control Act passed in 2011.

The plant is Lima’s fifth-largest employer with close to 700 employees, down from about 1,100 just a few years ago, according to Mayor David Berger. But the facility is still crucial to the local economy. “All of those jobs and their spending activity in the community and the company’s spending probably have about a $100 million impact annually,” Berger said.

Still, said Jordan, it would be a big mistake to stop producing tanks.

“Look, (the plant) is in the 4th Congressional District and my job is to represent the 4th Congressional District, so I understand that,” he said. “But the fact remains, if it was not in the best interests of the national defense for the United States of America, then you would not see me supporting it like we do.”

The tanks that Congress is requiring the Army to buy aren’t brand new. Earlier models are being outfitted with a sophisticated suite of electronics that gives the vehicles better microprocessors, color flat panel displays, a more capable communications system, and other improvements. The upgraded tanks cost about $7.5 million each, according to the Army.

Out of a fleet of nearly 2,400 tanks, roughly two-thirds are the improved versions, which the Army refers to with a moniker that befits their heft: the M1A2SEPv2, and service officials said they have plenty of them. “The Army is on record saying we do not require any additional M1A2s,” Davis Welch, deputy director of the Army budget office, said this month.

The tank fleet, on average, is less than 3 years old. The Abrams is named after Gen. Creighton Abrams, one of the top tank commanders during World War II and a former Army chief of staff.

The Army’s plan was to stop buying tanks until 2017, when production of a newly designed Abrams would begin. Orders for Abrams tanks from U.S. allies help fill the gap created by the loss of tanks for the Army, according to service officials, but congressional proponents of the program feared there would not be enough international business to keep the Abrams line going.

This pause in tank production for the U.S. would allow the Army to spend its money on research and development work for the new and improved model, said Ashley Givens, a spokeswoman for the Army’s Ground Combat Systems office.

The first editions of the Abrams tank were fielded in the early 1980s. Over the decades, the Abrams supply chain has become embedded in communities across the country.

General Dynamics estimated in 2011 that there were more than 560 subcontractors throughout the country involved in the Abrams program and that they employed as many as 18,000 people. More than 40 of the companies are in Pennsylvania, according to Sen. Robert Casey, D-Pa., also a staunch backer of continued tank production.

A letter signed by 173 Democratic and Republican members of the House last year and sent to then-Defense Secretary Leon Panetta demonstrated the depth of bipartisan support for the Abrams program on Capitol Hill. They chided the Obama administration for neglecting the industrial base and proposing to terminate tank production in the United States for the first time since World War II.

Portman, who served as President George W. Bush’s budget director before being elected to the Senate, said allowing the line to wither and close would create a financial mess.

“People can’t sit around for three years on unemployment insurance and wait for the government to come back,” Portman said. “That supply chain is going to be much more costly and much more inefficient to create if you mothball the plant.”

Pete Keating, a General Dynamics spokesman, said the money from Congress is allowing for a stable base of production for the Army, which receives about four tanks a month. With the line open, Lima also can fill international orders, bringing more work to Lima and preserving American jobs, he said.

Current foreign customers are Saudi Arabia, which is getting about five tanks a month, and Egypt, which is getting four. Each country pays all of their own costs. That’s a “success story during a period of economic pain,” Keating said.

Still, far fewer tanks are coming out of the Lima plant than in years past. The drop-off has affected companies such as Verhoff Machine and Welding in Continental, Ohio, which makes seats and other parts for the Abrams. Ed Verhoff, the company’s president, said his sales have dropped from $20 million to $7 million over the past two years. He’s also had to lay off about 25 skilled employees and he expects to be issuing more pink slips in the future.

“When we start to lose this base of people, what are we going to do? Buy our tanks from China?” Verhoff said.

Steven Grundman, a defense expert at the Atlantic Council in Washington, said the difficulty of reviving defense industrial capabilities tends to be overstated.

“From the fairly insular world in which the defense industry operates, these capabilities seem to be unique and in many cases extraordinarily high art,” said Grundman, a former deputy undersecretary of defense for industrial affairs and installations during the Clinton administration. “But in the greater scope of the economy, they tend not to be.”

http://news.yahoo.com/army-says-no-more-tanks-115434897.html

Lawrence Lessig is the Roy L. Furman Professor of Law and Leadership at Harvard Law School and director of the Edmond J. Safra Foundation Center for Ethics. Lessig spoke at the TED2013 conference in February.

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Cash reserves of more than $1 billion were built up, in part, by skimping on staff and building upkeep.

By REESE DUNKLIN
Staff Writer
Dallas Morning News
rdunklin@dallasnews.com

Parkland Memorial Hospital quietly amassed more than $1 billion in cash reserves even as deteriorating patient-care conditions brought it to the brink of closure, an analysis of financial records shows.

The Dallas County taxpayer-supported hospital built the reserve over the last several years, in part by reducing staff and available beds, neglecting its aging building and moving hundreds of millions from the operating budget to help finance construction of a new hospital.

Federal regulators have since forced Parkland to plow at least $75 million back into operations to remedy lapses that they said threatened patients’ lives. That has prompted questions about whether focus on the new $1.2 billion hospital complex exacerbated Parkland’s patient-safety breakdowns.

Dr. Allan Shulkin, a member of Parkland’s governing board from 2004 to 2009, said a reason he left was because he was “a little troubled by what I thought to be an over-emphasis” on construction. He recalled hospital management assuring the board that patient care was under control and sufficiently funded.
It is clear now neither was the case, he said.

“Did we — the board, my board, the current board — get so focused on the new building that we forgot about operations?” said Shulkin, a pulmonary specialist who trained at Parkland in the mid-1970s. “I worry that that began to happen.”

Parkland officials declined Dallas Morning News interview requests. They referred to annual year-end statements of the Parkland Health & Hospital System for information about hospital finances. The News analyzed 10 years of such statements, obtained under the Texas Public Information Act. The statements don’t clearly explain how much money Parkland has at its disposal, but the hospital eventually said its “reserves” encompass cash, investments and assets limited to use, which is akin to savings.

By the Sept. 30 close of fiscal year 2012, those sources totaled just over $1 billion. Of that, about $315 million was restricted to new construction or bond debt repayment.

“We have plenty of cash on hand,” Ted Shaw, Parkland’s interim chief financial officer, told the Board of Managers during a December public meeting.

Parkland benefits from one of the nation’s biggest local-government hospital subsidies — a property tax that generates more than $400 million annually, about a quarter of Parkland’s total revenue. The tax rate is the second-highest for a Texas public hospital, at 27.1 cents per $100 in assessed property value.

Dr. Dana Forgione, an expert on health-care finance and accounting at UT-San Antonio, said public hospitals often don’t make clear how much they have in reserves so as to avoid questions from taxpayers.

“How can they have $1 billion and they couldn’t improve quality a little bit? Those are the questions they don’t want,” Forgione said after reviewing Parkland’s two most recent annual statements. “I understand there’s got to be a trade-off between current expenditures and long-term investment in new and improved facilities. But $1 billion is a lot of money, right?”

Starting in fiscal 2005, Parkland took surplus revenue from daily operations and saved the funds for construction of a new state-of-the-art hospital. Officials have touted what became a 17-story facility on Harry Hines Boulevard as “the largest hospital construction project in the United States,” likening it in size to Cowboys Stadium.

By 2011, Parkland had set aside more than $400 million, records show. The surpluses came from cutting spending on staff and charging higher prices for treating its mostly poor, uninsured patients, among other things.

The amount saved was higher than the $350 million in “cash reserves” that hospital officials had promised to contribute as part of a bond deal approved by voters in 2008. That election gave Parkland permission to sell more than $700 million in construction bonds — the biggest chunk of the new hospital’s financing.

Parkland’s total cash supply peaked at nearly $1.5 billion in early 2011 and began to decline as construction got under way.

Kevin Holloran, a health-care analyst from the Standard & Poor’s credit-rating agency, said Parkland’s balance sheet looked a “little rich.” But the cash levels were a “blip right now on the radar screen” because of construction.

“Cash becomes a very contentious topic at a public hospital. ‘Shouldn’t you spend it all down?’” Holloran said. “But if you’re about to build a new hospital, our opinion would be they financially, soundly did a good thing to put away some money.”

As Parkland’s cash supply grew, the hospital’s medical care in 2008 was coming under “near constant surveillance and investigation” because of “scores of patient complaints, injuries and death,” a federal report later showed.

The scrutiny intensified in 2011, when the U.S. Centers for Medicare & Medicaid Services found that Parkland’s patients were in “immediate jeopardy” of injury and death because of poor staffing and hospital conditions. Federal regulators took the unusual step of placing Parkland under independent safety monitoring in lieu of closure, making it the nation’s largest hospital to face such oversight.

In their February 2012 overview report on Parkland, the monitors said some hospital units lacked enough staff to accommodate emergency patients, worsening overcrowding and treatment delays in the ER. Cuts in the women and infants’ specialty hospital led to bed shortages and “unsafe” nurse-to-patient ratios. The building had soiled floors and holes in walls — duct tape covered one in an operating room — that jeopardized infection control.

The monitors quoted Parkland employees as saying that some safety problems were “the result of a budget reduction in a previous fiscal year” and “budgeted staffing constraints imposed last year.” Some concerns, such as the ER backlogs, were flagged by hospital consultants as far back as 2004, The News found.

The state also faulted Parkland for a “failure to adequately staff nurses in certain areas of the facility” — including the psychiatric ER, where a 2011 patient death triggered the CMS crackdown. In August 2012, the Texas Department of State Health Services fined Parkland a record-setting $1 million.

James A. Smith, former chair of the Texas Society of CPAs and managing director of a Dallas accounting firm, said Parkland’s leaders couldn’t blame patient-care problems on a lack of money, based on his analysis of the two most recent annual financial statements.

“Knowing what we know now,” Smith said, “it seems to me like the construction project, which was a grandiose plan, sucked an awful lot of air out of the room financially.”

For at least a decade, Parkland administrators and board members have argued that a new hospital was the cure to old Parkland’s problems.

“Indeed, Parkland’s future is largely being pinned to the public hopes arising from a new billion-dollar hospital that is making its way up from the ground across the street,” federal safety monitors noted last year. “But hospitals are not simply buildings, bricks and mortar.”

The existing hospital, which opened in 1954, had long been overcrowded. Even $140 million in improvements wouldn’t bring the structure into code compliance, consultants said at one point. And if Parkland hoped to compete for new patients, it needed modern facilities like those of other Dallas hospitals, officials said.

But expansion planning stalled in 2003. Parkland suffered a $76 million budget shortfall that year and started cutting about 500 jobs. County commissioners, who approve Parkland’s budget and appoint its board, were angered they weren’t consulted about new construction and hired outside consultants to study Parkland’s operations.

In February 2004, the board chairwoman sought a succession plan for Dr. Ron Anderson, putting his two-decades-long tenure as hospital CEO in doubt. She didn’t succeed and quit two months later, along with three other members who clashed with Anderson. A newly constituted board led by Dr. Lauren McDonald and other Anderson supporters extended his contract, and Anderson announced that his priority was to “get into a new hospital.” He did not respond to requests for an interview.

With political tensions easing, commissioners in 2005 appointed a blue-ribbon panel to explore construction options. In 2007, it proposed replacing Parkland with an 862-bed hospital. The replacement was about one-fourth larger, along with clinics and offices. Construction would be completed in phases, each likely needing voter approval. The first — featuring a medical, surgical and trauma facility — would tentatively open in 2013 at a cost $840 million.

As final plans were drawn up, Parkland administrators recommended a different approach: Building all at once.

The final bill could drop by $100 million to about $1.2 billion by avoiding the price inflation and redundancies of a gradual move-in, according to a 2008 planning briefing The News obtained. Accelerating construction, though, would require another $400 million sooner in the process.

To make that work, $747 million in bonds and a property tax-rate hike as high as 2.5 cents would be necessary. Parkland promised “to reduce the burden on taxpayers” by raising $150 million in private donations and using $350 million in “cash reserves.”

Parkland’s cash supply was nearly $600 million by mid-2008, after doubling in the previous three-year span. One-time windfalls and record-setting budget surpluses had stabilized Parkland’s finances. Commissioners also let Parkland keep its tax rate at 25.4 cents per $100 in valuation to generate extra money from higher property values.

That meant Parkland could immediately put $250 million of the $350 million into the project, according to the 2008 planning briefing. Enough cash would remain that Parkland could operate for at least four months without collecting another dime — above the median “days cash on hand” for hospitals with strong credit ratings, the briefing said.

The cash commitment helped reduce the amount of bonds needing voter approval but was about $130 million more than originally planned. Parkland forecast that its cash and investments would grow once construction began, according to the briefing.

Aiding that growth, hospital officials said, would be “revenue enhancements” and “productivity and expense improvements.” Parkland’s briefing described those as price increases above inflation and “strategic pricing” of patient services, as well as improvements in billing coding, “employee productivity” and “salary and benefit costs.”

Parkland did not define specific terms for achieving those savings but said doing so could gain $150 million between 2009 and 2014 — perhaps even eliminating need for an additional 1-cent tax hike once the new campus opened.

When Parkland’s board voted for the build-at-once plan in summer 2008, it prompted applause. “When the project got derailed almost five years ago,” Anderson said, “I wasn’t sure that this day would ever come.”

Two months later, safety inspectors showed up unannounced.

The inspectors, working on behalf of CMS, found that Parkland patients were undergoing surgery without informed consent, as federal rules require. The American Medical Association’s code of ethics says patients have the right to approve or reject their surgeon in advance.

Yet Parkland’s consent forms and other records reviewed by inspectors in September 2008 were unclear over who was performing the surgery — faculty physicians from UT Southwestern Medical Center, which staffs Parkland, or resident trainees. Consultants as far back as 2004 had found that many UTSW physicians weren’t supervising residents and urged Parkland to make changes, including hiring its own doctors.

In late October, two weeks before the November bond election on the new hospital, Parkland officials presented CMS a new consent form and insisted they saw no evidence of residents operating unsupervised. Six days later, CMS told Parkland it had revised the original inspection report to remove references to “deficiencies.” The incident remained out of public view until The News reported on it in March 2010.

Another complaint in September 2008 did get noticed. A 58-year-old man named Mike Herrera died after languishing 17 hours untreated in the main emergency room — the type of problem consultants foreshadowed in 2004. A national hospital accrediting agency, the Joint Commission, cited Parkland for about a dozen safety failures.

Parkland enacted new ER procedures and made 10 nursing hires early in the next year, as it promised CMS. Anderson, however, later said Herrera, who had a history of heart disease, was probably going to die even “had our system been working.”

Shortly after Dallas County voters overwhelmingly approved construction of the new hospital, Parkland’s board agreed to reserve the $250 million, as planned, plus another $16 million in cash for the project.

The new building, by that point, was taking more and more of the board’s time, said Shulkin, the former member. Meetings were lasting longer, and new ones were added to the schedule.

“There was a sort of new charge and direction for the board,” he said. “I got the sense that there was a lot of enthusiasm, ‘Oh, man, let’s do the new building.’”

Shulkin said he understood the project’s enormity. But that should not “distract from what we do today” — patient care, he said.

“I thought, hire the people and build it. We’ve still got a hospital to run. We still have patients to take care of,” said Shulkin, who practices at Medical City Dallas Hospital and serves on the Texas Medical Board. “We don’t need to be picking out the drapes.”

Herrera’s ER death had been appalling, he said, and frustrated some board members who had “demanded that the ER’s long waits had to stop.”

In March 2009, Shulkin decided to depart the board months earlier than planned.

“I knew, for me, I didn’t fit in there anymore,” he said. “If so much of the demands on the board are the development and construction of the new building, then let the people who are going to be there at the end be at the beginning as well.”

A month later, Parkland awarded $100 million in contracts to construction managers and designers. At a news conference to announce the firms, administrators talked excitedly about having a first-class, environmentally friendly building that was “patient-centered.” Anderson added that Parkland would no longer be a place of last resort, but rather “a hospital of choice.”

Construction bonds for the new Parkland were sold in August 2009, doubling its cash supply from about $600 million to more than $1.3 billion.

Then in January 2010, Parkland met its election pledge to put $350 million toward the new hospital. The board unanimously approved hospital administrators’ recommendations to transfer a lump sum of $53 million and monthly $2.5 million allotments during the next year from operations.

Before the vote, then-board member Louis Beecherl III cautioned that taking the money from operations at that time left Parkland “with a pretty fine line here of comfort.”

“If we don’t earn a positive bottom line, we’re going to be in real trouble,” Beecherl said, noting Parkland might not be able to build new community clinics if money became tight. “We need to be careful about what we’re doing here.”

Another board member, Alan Walne, said the money could be used for operations if necessary later. But there needed “to be pressure to bear that … we can put these other dollars away and can, in fact, perform in a manner that we told the voters we would,” according to a tape-recording of the meeting.

Parkland’s chief financial officer at the time, John Dragovits, told the board that the hospital would enforce fiscal “discipline so that we’re not in that situation.” Anderson added, “This is first things first.”

In a recent interview, Beecherl said his comment had “nothing to do with patient care.” He simply wanted Parkland to ensure a strong bottom line to maintain investor confidence, he said. Two credit-rating agencies, Fitch and Standard & Poor’s, had given Parkland’s bonds their highest scores, which reduced borrowing costs.

Asked whether Parkland’s large construction project had created financial pressures, Beecherl said the only pressure was finishing it.

“We were functioning in a 60-year-old building, and patient care was not up to current-day standards because of the age of the facility,” said Beecherl, an energy businessman. “The quicker we could build a new facility, the quicker we could get in and improve patient care to modern-day standards.”

Walne added, in an interview, that there was no talk that “we can skimp on patient care so that we can spend on a new hospital.”

“At the end of the day,” he recalled, “when we’d gotten everything taken care of, any dollars that we had … [in surplus,] we would try to set those dollars aside for the new hospital.”

As the hospital broke ground across Harry Hines Boulevard in October 2010, Parkland was also delivering on the “operational improvements” promised before the bond election.

Parkland earned nearly $150 million more in revenue between fiscal years 2009 and 2011 despite the sluggish economy. The hospital did that through price hikes in commercial insurance contracts, rate increases in Parkland’s managed-care plan for Medicaid recipients and “record-breaking reimbursements” through improved medical billing.

Parkland also cut salaries, wages and benefits. From fiscal 2007 to 2009, those expenses had increased by nearly $130 million. But in 2010, they were up only $33 million and, in 2011, they declined $3 million. That was the first reduction since 2003, when state budget cuts prompted layoffs.

A similar trend was apparent in the number of full-time employees, according to a News analysis of data Parkland produced in a public information request.

From fiscal 2007 to 2009, nurses and other classifications of caregivers increased by 9 percent, and Parkland’s total workforce was up by 8 percent. Both exceeded a nearly 7 percent growth in patient volumes.

In 2009 through 2011, however, nurses and caregivers increased by 1 percent, and the total workforce decreased by about 1 percent. Both lagged behind an 8 percent growth in patient volumes.

The cutbacks included about 200 jobs that Parkland eliminated to save $14 million in the fiscal 2010 budget. Officials had cited fears that property values would decline. Parkland said at the time most of the jobs were clerical, and an unspecified number would have been phased out because of a shift to electronic medical records. About half were already vacant, officials said.

For their 2009 and 2010 efforts, top hospital executives and administrators were awarded year-end “incentive” payments. Those bonuses totaled about $6 million for achieving goals such as reducing ER wait times and improving Parkland’s net income.

In recent interviews, former board members Walne and Shulkin said they may have asked administrators to justify staffing expenses, in general. But they recalled no edict to slow hiring or salary spending starting in fiscal year 2009.

“The question of staff was always,” Walne said, “do you have the resources you need to meet the goals you’re trying to achieve in the increase in quality?”

Walne said periodic safety inspections and News coverage of Parkland’s patient care failures had not suggested a “chronic problem” by the time his term ended in early 2011. The Joint Commission, he noted, had also extended Parkland’s accreditation after doing its own inspection in 2010 and was “very complimentary, quite frankly, of the care that was going on.”

“We would have reacted to whatever the recommendations would have been to accommodate patient care,” said Walne, who runs his family’s auto paint and body business. “We would not have known as a board where we needed to be spending money, because no one was giving us an indication that we had deficiencies where stuff needed to be addressed.”

Parkland finished its 2011 fiscal year with a surplus of $105 million — the seventh straight year with a margin of 5 percent or more. It even committed nearly $50 million more to construction. All of that despite having lowered the property-tax rate from 27.4 cents to 27.1 cents per $100 in assessed value.

Some county commissioners had questioned that cut, because of looming state and federal health-care overhauls that might change funding and patient volumes. But Dragovits had assured them during public discussions over the 2011 budget: “We’re not in a position of needing any kind of relief.”

Ongoing patient-safety breakdowns, meanwhile, prompted CMS to launch a massive, top-to-bottom inspection of Parkland.

Regulators found patients were in “immediate jeopardy” of harm or death and faulted the board’s oversight of the hospital. In September 2011, just weeks before the fiscal year ended, the government threatened to cancel more than $400 million in annual Medicare-Medicaid funding.

Continued federal funding was made contingent on Parkland hiring outside safety monitors to overhaul hospital operations, under CMS supervision. The board hired the Alvarez & Marsal Healthcare Industry Group, at a cost now exceeding $9 million, and accepted an April 2013 deadline to reform.

Alvarez & Marsal monitors found that Parkland was failing to meet about half of the government’s 100 or so safety standards and continuing to have an “extremely troubling” number of adverse patient events. Senior hospital managers also hadn’t kept board members “as informed as they should have been” and did not initially share “critical information and documents” during the government crackdown, the monitors wrote.

“Parkland faces regulatory, safety and patient care deficiencies in nearly every aspect of its organization and delivery system,” the monitors said in their February 2012 overview analysis. “If the deficiencies catalogued in this report are not addressed and fixed, Parkland could not pass a CMS hospital survey [inspection] and would not continue as a Medicare and Medicaid participating hospital.”

Some problems were attributed to past budget constraints that led to staff reductions and beds taken out of service. Others were the result of a lack of investment in operations and the existing building.

Parkland, for instance, hadn’t implemented rigorous methods to track the quality of care and performance of UTSW physicians and residents. Hospitals were required in 2008 by the Joint Commission and other accrediting groups to collect such data, monitors noted.

Other problems were in plain sight. In medical and surgical units, there wasn’t an “appropriate level of care-staffed inpatient beds” at key times. That translated into about 30 available but unstaffed beds a day.

“We were told that this was due to budgeted staffing constraints imposed last year,” monitors wrote.

In the ER, patients were forced to wait “longer than acceptable” to transfer. The backlog increased workloads for an already understaffed nursing team. It also “creates safety risks and creates delays for other persons presenting to the hospital for evaluation and stabilizing treatment,” monitors said.

Patients chose to leave without treatment at rates twice the national average in 2011, monitors found. The ER was so full Parkland diverted ambulances to other trauma centers during one-third of its hours each month.

In Parkland’s women’s and infants’ specialty hospital, known as WISH, two units were closed in 2011 and staff decreased by about 20 in anticipation of a decline in deliveries. But the number of patients increased in a few months’ time, monitors wrote.

That made beds scarce at peak times and forced women to recover in hallways or classrooms. Nursing-to-patient ratios in some areas became “unsafe.”

“While Parkland’s new hospital facility should be designed to resolve the inadequate size, proximity and model of care,” the monitors wrote, “Parkland must still make investments in the current hospital facility, specifically in WISH, to ensure a safe environment.”

The hospital itself was in such disrepair that some areas required immediate attention. Floors were soiled, paint chipped and furniture torn in WISH. An operating room had a hole covered by duct tape and a door that wouldn’t close completely. In another unit’s break room, large wet stains on ceiling tiles contributed to infection control risks.

“While Parkland’s current facility may show wear and tear due to its age, it does not have to be unclean,” monitors wrote. “Even the oldest facility can maintain an appearance and standard of cleanliness appropriate for patient care.”

Monitors warned that fixing the deficiencies by the April 2013 deadline was a “heroic challenge” that would require the focus of front-line staff, executives, the board and the community.

“The hospital is in the midst of a major construction project with the ongoing construction of a new hospital facility,” they wrote. “However, construction updates and discussions should not overwhelm or overtake the critical time necessary to oversee quality and safety functions and successful performance.”

The challenge also required money. Parkland estimated that it spent about $32 million in CMS-related expenses by fiscal 2012’s end in September. Just over half of that was on staff salaries, retention payments and benefits. Parkland projected adding roughly 250 full-time employees, including nurses, patient-care assistants and social workers.

The additions contributed to an 11 percent increase in nursing and other caregivers from 2011 to 2012, while patient volumes fell by about 1 percent. The growth rate was also the biggest since at least 2005, the earliest year-to-year comparison possible using the employment data Parkland provided The News. Despite the hires, another 400 nursing positions remained unfilled just before fiscal 2012’s end.

Another $45 million in CMS-related spending was estimated for fiscal 2013 year.

Among the specific investments made since the government’s intervention:

•New hires in the hospital’s medical and surgical units to accommodate more patients from the ER. Parkland also will create a 13-bed medical unit by converting space UTSW researchers were using and add 22 beds by remodeling offices that were once patient rooms.

•Renovations totaling up to $4.3 million in the main emergency department and psychiatric ER, and a redesign of the replacement hospital’s ER to meet safety standards. More than 100 caregiver positions were added in those short-staffed areas at nearly $6 million in fiscal 2012 alone. In early February, privately owned Green Oaks Hospital in Dallas was hired for about $1 million annually to manage the psych ER.

•An additional 28 beds in the women’s and infants’ hospital by reopening one of the closed units and filling 26 positions. Monitors also recommended studying how to use the second closed unit.

•At least $3 million on software systems to better manage patient cases, collect data, and measure clinical outcomes and physician performance. The monitors had urged Parkland’s board to “commit to the provision of financial support for the quality program.” They also recommended a patient rights and safety executive post, which is unfilled.

The expenses had Parkland executives worried publicly over their bottom line. Blaming the CMS-related improvements in part, they predicted fiscal 2012 would end in a loss for the first time in a decade.

“This is something we haven’t had to worry about since I got here,” Dragovits, the CFO who arrived in 2006, said during a March 2012 board meeting.

Dragovits retired last summer. He did not respond to requests from The News for an interview.

By the fiscal year’s end in September, Parkland reported making about $30 million more than it spent, according to its financial statement.

“We’re very financially healthy,” Shaw, Parkland’s interim CFO, said during December’s board meeting. “We continue to be well positioned.”

Nonetheless, there was some financial uncertainty.

Parkland forecast that it would close the fiscal year in September 2013 with a $6 million deficit because of the CMS-related spending, increased drug costs, more uninsured patients and Medicaid funding changes. Officials said balancing its budget would require using some of the $1 billion in “reserves.”

Parkland staff also told the board the replacement hospital would either need more funding to finish it as originally designed under the build-at-once plan or would need to be scaled back. And the 1-cent tax-rate increase it thought “operational improvements” could eliminate would be assessed starting in fiscal 2014, at a slightly higher rate of 1.4 cents.

If Parkland requires more money for construction and patient safety, the hospital could have its finances tested unlike in previous years, financial experts said. Dipping excessively into reserves would potentially make investors nervous, and asking for additional tax support is politically risky.

Already Standard & Poor’s has placed a “negative” outlook on Parkland’s bond rating. It did so after monitors released their critical analysis of Parkland’s problems. That meant a 1-in-3 chance Parkland’s rating could be downgraded, increasing future borrowing costs.

“We felt the risk is significant enough,” said Holloran, the S&P analyst, “that we owed it to the public to say they have a potential problem here.”

For former board member Shulkin, Parkland’s failures have left him “stunned and heartbroken.” He said he’s read the inspection reports and analyses and agreed with CMS’ mandates that the hospital spend millions on improvements.

Given the financial resources Parkland had at its disposal, Shulkin said, “It never should have come to this.”

“The problem with Parkland is, they forgot to take care of what they have to deal with every day,” he said. “They were so seemingly focused on what’s going on across the street that they’re forgetting about what’s going on inside these hallways.”

Staff writers Miles Moffeit and Sherry Jacobson contributed to this report.

http://res.dallasnews.com/graphics/2013_02/parkland/#day5main