Misty Copeland made history by becoming the first black female principal dancer at American Ballet Theatre. She talks to The Economist about the lack of diversity in ballet. 00:00 – Misty Copeland: superstar ballerina 00:24 – The power of the
Misty Copeland made history by becoming the first black female principal dancer at American Ballet Theatre. She talks to The Economist about the lack of diversity in ballet. 00:00 – Misty Copeland: superstar ballerina 00:24 – The power of the
The Louisiana Legislative Black Caucus has called for an investigation into the practice of sending infected coronavirus patients into hospice facilities or back home to their families to die.
The legislators’ demands follow reporting by ProPublica that found that while many hospitals around the country decided not to use home hospice care for coronavirus patients — due to the infectious nature of the disease and the unpredictable and sometimes difficult-to-control symptoms — Ochsner Health, the largest hospital network in Louisiana, sent COVID-19 patients in New Orleans home with hospice care. Several families said that Ochsner staff pressured them into discontinuing treatment, even as they pushed back.
In the dozens of cases ProPublica examined, every patient who died after the hospital sent them home was Black.
“We have to make sure that we have a third party look at these things,” Louisiana state Sen. Troy Carter of New Orleans, a member of the caucus, told ProPublica. “We take this example and this opportunity to shine light on something that’s happening in real time, and we put in systems to make sure it never happens again — particularly when you have hospitals that receive state dollars.”
Last Tuesday, Gov. John Bel Edwards met with members of the caucus, which includes 37 legislators, to discuss the findings of the article. Carter, who attended the meeting, said the governor and his staff were receptive to the caucus’s concerns. “They were very open and as eager to get to the bottom of this as we are,” Carter said. The governor’s office did not immediately respond to ProPublica’s questions about the inquiry.
On Wednesday, the caucus sent a joint letter to the governor calling for a “full investigation” into the practices laid out in ProPublica’s reporting and citing “myriad of phone calls into [their] office.”
In response to questions about the caucus’s letter, a spokesperson for Ochsner Health told ProPublica that it follows the guidance of the Centers for Medicare and Medicaid Services when discussing end-of-life options. “Like other health systems in pandemic hot spots, we had patients who chose hospice care when leaving our facilities,” the spokesperson said. “Patients and their families make the choice that is best for them regarding hospice, including home hospice.”
ProPublica analyzed data from the Centers for Disease Control and Prevention and the local coroner’s office and found that an abnormal number of elderly patients died at home in New Orleans. Nationally, coronavirus patients ages 85 and older died at home only 4% of the time. In New Orleans, it was 17%.
ProPublica attempted to contact the families of everyone who died at home in the city through early May. These interviews revealed that before they died, about two dozen Black patients first sought care at a hospital, which then discharged them, in many cases sending them home to die with hospice care. The vast majority were sent by facilities owned by Ochsner Health.
The families of eight patients told ProPublica that Ochsner staff pressured them into accepting hospice care for their loved ones who had COVID-19, even as some questioned or pushed back against the suggestion. Three families said they were told that there wasn’t enough space to continue treating the patient in the hospital, or that the hospital needed the bed for another patient.
Once patients came home, family members said they did not receive protective gear from hospice companies, and several told ProPublica that hospice workers were absent during crisis moments when they felt unable to manage their loved one’s pain. At least two relatives got sick after being denied the proper protective gear.
As capacity shrunk, several nurses told ProPublica, Ochsner employees adopted an unusual method to withhold life-sustaining care from patients with poor prognoses. In some cases, doctors gave patients do-not-resuscitate orders without family or patient consent, sometimes overruling families that wanted everything done for their loved one, three nurses said. Ochsner denies that this ever happened.
While Ochsner Health did not respond to ProPublica’s questions about families feeling pressured into hospice, hospital officials later told a local newspaper, The Times Picayune and The Advocate, that in some cases, sending hospitalized patients home “had a positive effect,” according to the article’s summary of Ochsner’s comments. “Several patients who were sent home for palliative care rebounded and lived, thanks to the presence and support of their friends and family who couldn’t be with them inside of the hospital, the officials said.”
Hospice involves halting curative treatment, and Medicare only permits it for terminally ill patients who have six months or less to live.
State Sen. Gregory W. Tarver Sr., another member of the caucus, told ProPublica that Ochsner should be investigated in order to ensure that the issues are taken seriously. “You can’t just smooth it over, sweep it under the rug, when someone loses their life,” he said.
In the letter to the governor, the caucus requested that the state scrutinize what was done to ensure that people who died at home “were properly attended to” and verify how many families received proper protective equipment when caring for home hospice patients.
The letter also asked “who made the final call” on patients’ care when hospice was “not in line with what the family desired,” and it said that infectious patients should not be sent home for hospice. The legislators urged the state to determine if providers had any connection to the hospice companies they were referring to — whether Ochsner had any ownership stake in them or any hospital physicians were simultaneously affiliated with hospice companies.
“This information is very disturbing for us as leaders of our state to read,” wrote state Sen. James Harris III and state Rep. Barbara West Carpenter, the chairman and vice chairwoman of the caucus. “Many people normally do not question medical practitioners because they feel they are right with their prognosis, diagnosis and decisions they share with the patients.”
Ochsner did not answer ProPublica’s questions about doctor affiliations with hospice companies. The organization also did not respond when asked if it had investigated or planned to investigate potential racial disparities in discharge practices.
Following the publication of ProPublica’s investigation, Dr. Robert Hart, Ochsner’s chief medical officer, told The Times Picayune and The Advocate that he was “disappointed at the tenor of the article trying to make it about race.”
But Tarver said that racial disparities in medicine are well-established and must be addressed head on. “History has proven that there’s just as much racism per square inch in the hospital [as anywhere else],” he said. “You have to ask yourself, would they have done this if these people were white? I’m telling you they wouldn’t have. They would not have discharged them if they were white.”
As an editor, I’ve long had mixed feelings about the journalistic tradition of marking particular chronological or numerical milestones. No one wanted to avoid the “Sept. 11: One Year Later” package — and I was eager to do it given the six previous years I’d spent directing global coverage of al-Qaida — but the annual stories seemed far more forced by Sept. 11, 2005.
More recently, we’ve seen stories like “World War I: A Century Later” or “The 75th Anniversary of the End of World War II.” They’re often illuminating, but they don’t have deeper meaning than stories that might have been published on the 99th or 74th anniversary of those events.
And yet, there are milestones worth stopping to consider. At ProPublica, it was Andrea Wise, a story producer working for us on contract, who in early May asked: What are we planning for the 100,000th confirmed COVID-19 death? The result was a story we published on May 27 by Caroline Chen that looked back at how we got here and forward to how we might avoid reaching another grim milestone. As we wrote at the time: “The full tragedy of the pandemic hinges on one question: How do we stop the next 100,000?”
The sad, infuriating answer for the country that spends more per capita on health care than any other in the world: We couldn’t.
That makes this a moment worthy of some reflection. The United States will record the 200,000th COVID-19 death in days, just four months after the toll hit 100,000. Caroline pointed out in May that the best way to slow the spread of the virus would be to deploy “the oldest mitigation tactics in the public health arsenal.” That would have meant widespread testing to identify those who had caught the virus, quarantining and tracing the contacts of both symptomatic and asymptomatic carriers who could spread the disease to the most vulnerable.
“Being slow to act comes with a terrible cost,” she wrote.
Caroline and I had pulled together a list of many of the steps to slow down the virus in a road map we addressed to the nation’s governors back in April. Our advice was drawn from interviews with health authorities and experts in countries that were successfully battling the pandemic.
Hardly any states followed the practices that had worked well elsewhere. Instead, we saw President Donald Trump convene an indoor political rally in Tulsa, Oklahoma, attended by thousands of people, some of whom have since died of COVID-19. In Sturgis, South Dakota, motorcycle enthusiasts proudly refused to wear masks or socially distance; that gathering has recorded its first fatality from the virus. Inexorably, the novel coronavirus marched across the United States, spreading from New York City and Seattle into the smaller cities and then the suburbs and rural communities. It displayed no real preference for blue or red states, though it has disproportionately harmed Black, Latino and poorer communities.
Our reaction? As a nation, we became inured to a national death toll that has only recently dropped below a thousand people a day. Think about that. Every week, we lose far more of our fellow citizens than died 19 years ago in the most devastating terrorist strike in American history.
As the summer months turn to fall, and the science about the virus grows more definitive, the national conversation has drifted further and further from the basic science. The wearing of masks has somehow turned into just another symbol of partisan warfare, with Trump accepting the Republican nomination on the White House lawn before a tightly packed crowd in which few wore face coverings. As the numbers of cases slowly drift down toward a plateau well above most industrialized countries, senior officials have begun speaking of the virus in the past tense.
Then there’s Trump’s expectation that there will be a vaccine approved “some time during the month of October.” The signs are encouraging. Multiple companies are reporting positive results from their phase 1 trials. But more than one promising pharmaceutical discovery has failed in phase 3. Just this week, AstraZeneca halted its trial after one of the volunteers who took the company’s experimental coronavirus vaccine developed neurological problems. (The company is now reviewing whether the symptoms are in any way related to the drug.)
Americans were skeptical about vaccine safety before this week’s disclosure that Trump had privately acknowledged the dangers of the coronavirus to journalist Bob Woodward while publicly proclaiming COVID-19 a “hoax” that would soon disappear. Release of a drug before all the data is gathered risks undermining the foundational principle of vaccination, which depends on inoculating very large numbers of people. With pharmaceutical companies publicly pledging not to release a vaccine that has not been fully tested, the odds of a game-changing medicine before 2021 are slim.
All of that brings us back to the things that are proven to work: the old-fashioned methods of social distancing, washing hands, wearing masks, tracing contacts and quarantining the sick. Many countries around the world, from Germany to South Korea to Singapore to Vietnam, have used these techniques to contain the virus. Yes, there are explanations for some of those successes. Islands, with the glaring exception of the United Kingdom, may have some advantages over countries with land borders (though plenty of African nations have very low death rates). Authoritarian governments have more options to coerce citizen cooperation. Asian countries lived through the SARS and MERS outbreaks.
But one need only consider Germany, an industrialized nation of 83 million people, to see how much better the U.S. could have done. So far, only 9,336 Germans have died from COVID-19, a rate of 11.26 per 100,000 citizens. By contrast, our death rate is roughly 58 per 100,000 Americans, more than five times Germany’s per capita toll. And while the number of daily deaths is slowly falling here, it’s still far higher than most countries with comparable investments in health care.
More than two decades ago, I wrote a book with my New York Times colleagues Judith Miller and Bill Broad called “Germs” that looked at the modern history of biological warfare. As a result, I was invited in the early aughts to play a Times reporter in a “tabletop” exercise organized by New York City. The health commissioner at the time, Dr. Tom Frieden, played the part of the health commissioner as we went through a dystopian scenario involving a mass anthrax attack on the subways. As the plot unfolded, various players were pushed into ethically uncomfortable questions. At one point, it was suggested that reporters like me had learned that the city lacked sufficient antibiotics to treat everyone who was dying. Would the Times agree to a request from Frieden to withhold that story from its readers? (I said I would not, but I wasn’t the boss.) The scenario turned darker. As word got out about the shortages, mobs began breaking into pharmacies to secure medicine. Health care workers refused to go to hospitals. The city fell into chaos.
That exercise assumed that the city’s public health system continued to function reasonably well and that individual hospitals or doctors would not be left on their own to figure out what to do. It now seems clear that the U.S. approach, which was to let every state governor and many mayors set their own policies, was far from optimal.
As we head into the fall, a number of the models are projecting an easing of the death toll, which was well over 1,000 Americans a day at its height. One of the most accurate models, by independent data scientist Youyang Gu, projects that the death rate will fall to 400 per day by Nov. 1, with a projected death toll of 218,000.
We will continue to report on every aspect of this horror, from its disparate racial impact to the failures of corporations as well as city, state and federal governments. All we can ask of you, the readers, is that you not become accustomed to this grim routine. We were willing to put up with massive disruptions to our lives after the 9/11 attacks left 3,000 Americans dead. One of Gu’s most fascinating models shows that the deaths from COVID-19 in the United States would have been halved if just 1 in 5 people with active symptoms had self-quarantined.
Here’s hoping that a trustworthy vaccine becomes widely available in the coming months or that more people find ways to self-isolate if they become ill. It is my dream that we will never have to write the story about 300,000th COVID-19 death.
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On a recent Thursday evening in downtown Chagrin Falls, a Cleveland suburb named for a picturesque cascade in a nearby river, little was amiss: Diners in loafers and sundresses dropped off their BMWs and Alfa Romeos with valets before positioning themselves on patios at prudently spaced tables. Teens ranged around manicured parks taking selfies, while well-groomed women dipped in and out of The Artful Yarn, A Bit of Skirt, and other boho boutiques, cryo spas and vintage home goods stores.
Main Street leads north up a steep hill, past wooded estates, a polo field, and a baroque music venue, until it arrives at a turnoff with a sign on a stone gatehouse with a slate roof: “Marcourt Farm Private Property.”
Down the drive is the 25-acre, nine-bathroom, private lake-fronting, indoor pool-equipped residence of Nicholas Howley, the chairman of an aerospace company called the TransDigm Group, which he founded in 1993 as a merger of several small airline parts manufacturers. In 2017, his last year as CEO, Howley became the third highest-paid head of a U.S. public company, with compensation worth $61 million.
The company had 18,300 employees worldwide at the end of September 2019 and is headquartered in downtown Cleveland, a fact the company does not advertise. TransDigm’s corporate offices are on the 30th floor of a towering black monolith, built in 1964 as a landmark addition to the skyline at the height of Cleveland’s prosperity, just before the collapse of the steel industry and the outsourcing of automotive supply chains gutted the region’s industrial base. There’s no company logo at the top of the Erieview Tower. Someone passing through the lobby wouldn’t notice its presence. Unlike local titans Progressive Insurance and Sherwin Williams, TransDigm hasn’t sponsored any of the city’s sports arenas. It doesn’t donate to the city’s vaunted orchestra, and isn’t a member of the region’s chamber of commerce.
Girish Patel knows TransDigm is there, though. Its employees used to stop into his convenience store in the Galleria, a glass-roofed mall attached to the black tower. When it was completed in 1987, the Galleria became the first major new retail development downtown since the 1920s. Occupancy declined in the 2000s, however, and events fell off as the now-dated building struggled to compete with new convention and hotel facilities on the other side of downtown.
Patel, who goes by “Gary,” immigrated from India to California as a young man and came to Cleveland in 1995 to run a Dunkin’ Donuts franchise. He opened the Erieview Newsstand five years later. For twenty years, it was a good location, with reliable foot traffic, and few of the responsibilities associated with a street-facing storefront. People would buy sodas to go with lunches they got from the food court, or energy drinks before a Browns or Cavaliers game. A few years ago, he even sold a $1 million winning lottery ticket.
All that slammed to a halt in mid-March, as COVID-19 raced through Ohio and Gov. Mike DeWine declared a stay-at-home order to arrest its spread. TransDigm workers, along with other occupants of the black tower, retreated to their home offices. The federal government leaped into action, sending the $2 trillion Coronavirus Aid, Relief and Economic Security Act to President Trump’s desk for signature on March 27. The sprawling measure included hundreds of billions of dollars in aid to companies, and individuals in the form of a $600 weekly boost to unemployment insurance.
The legislation offered limited help to tenants of the Galleria. The few remaining restaurants in the food court — all completely dependent on nine-to-five office workers — vaporized.
Patel shut down his shop for a few months, reopening as soon as enough office workers returned to make it worthwhile. He got about $3,000 from the Paycheck Protection Program, a plan created by the CARES Act to help small businesses. It took a month for Patel to receive the money, which ran out almost immediately, eaten up by his small payroll and rent.
Now, Patel’s sales are just $200 a day, down from $700 on average pre-pandemic — which means he’s losing as much as $1,000 per month on the operation, with foot traffic still a fraction of what it used to be. He keeps a nervous eye on the boxes of candy and gum, knowing that he’ll have to throw them out if they expire before someone buys them. Even though the YMCA in the mall is open, it doesn’t drive business like the office workers did.
“People go in, get their exercise and get out,” said Patel, who speaks softly and wears a short-sleeved striped button-down to work with bright white Nike sneakers.
Unless things change in the fall, Patel figures he might have to close by December. His options are grim. He figures he could only get about $50,000 if he sold the business, moving it somewhere else seems just as risky as staying put, and the job market seems even scarier.
“How are we going to tell what’s a better location when the whole economy is struggling?” Patel wondered aloud, before trailing off. He had a brain aneurysm four years ago, and sometimes loses his train of thought. “I’m 54. Who’s going to hire me now?”
Upstairs in the black tower, TransDigm had much better options.
When the novel coronavirus swept through the travel industry in March, grounding flights and stalling airplane orders, TransDigm didn’t wait for a congressional bailout in order to keep itself solvent. It didn’t have to. On March 23, with a green light from Treasury Secretary Steven Mnuchin, the Fed announced that it would buy as much corporate debt as necessary — in the form of bonds — to reassure companies that they could raise money they needed to ride out the pandemic. Within a few weeks, the bond market had nearly regained the ground it lost, spurring a debt boom. U.S. companies issued a record $873 billion in bonds in the second quarter. Even highly leveraged companies seen as risky after years of aggressive borrowing, like TransDigm, got in on the action.
In April, the $27 billion aerospace manufacturer borrowed $1.5 billion in two bond offerings. The money “is an insurance policy,” Howley told investors, noting that it could come in handy if TransDigm wanted to pick up any more companies.
The Fed’s safety blanket wasn’t the only help for TransDigm. A few days later, Congress enacted tax cuts as part of the CARES Act that will bring tens of millions in direct aid to the company this year.
Unlike government loan programs set up to cushion companies affected by the pandemic, TransDigm’s support didn’t come with strings. The company wasn’t required to keep workers on the payroll or stop returning money to shareholders. Indeed, TransDigm said in April it would lay off up to 15% of its workforce, or nearly 3,000 workers. The next quarter, although revenues were down, those cuts allowed TransDigm to maintain its eye-popping 40% profit margin. Its share price has recovered most of the ground it lost in March.
In response to detailed questions, a TransDigm spokeswoman called its bond issuance a “prudent measure to ensure the company maintained liquidity in the face of the unprecedented and unpredictable commercial aerospace market conditions caused by COVID-19.” She also reiterated information released in April that laid-off employees received $4,000 payments to defray the cost of job searching and health care.
TransDigm and the Erieview Newsstand — a business similar to thousands of small enterprises lining Cleveland’s commercial corridors, now gasping for air — are emblematic of the diverging fates of very large businesses and the cities that host them. That dynamic has been supercharged by the economic effects of COVID-19, which have fallen hardest on the service industries that require face-to-face contact.
Congress and the Federal Reserve have created an array of pandemic rescue programs that are unprecedented in their speed, scale — more than $3 trillion compared to the roughly $1.5 trillion in post-crisis financial relief packages passed by Congress in 2008 and 2009 — and the nature of the aid offered. But the effects of the federal help have been unevenly felt.
By bolstering a bond market that had been in freefall, the federal government offered its largest, most rapid and least encumbered relief to large businesses that already had robust cash reserves. This intervention required no application process. Nothing protected rank-and-file employees from simply being laid off, and the prime beneficiaries have been shareholders and bondholders as the stock market has soared to new heights.
For small businesses, however, the programs were patchy, poorly administered and ultimately insufficient. The largest component of that aid, the $660 billion Paycheck Protection Program, kept thousands of small businesses afloat. But it was also maddeningly complex, and did not reach the companies that needed it most. By one estimate it saved only 2.3 million jobs, at the cost of $224,000 each.
Even though Cleveland wasn’t as badly hit by the virus as other Midwestern cities like Detroit, the city suffered economically about as much as the rest of the country on average due to a weekslong precautionary lockdown that devastated local retailers. One out of five small businesses open in Cleveland in January 2020 were still closed by mid-August, according to the ecommerce platform Womply. Mirroring the country’s experience, the unemployment rate in Cuyahoga County, which contains the city, shot up to 22.9% in April, and remained at 12.9% in July. That left 78,000 people looking for work at a time when federal unemployment benefits were running out.
To be sure, starting in April, plenty of money flowed into greater Cleveland, mainly through the CARES Act — about $6 billion when the stimulus checks, extra unemployment insurance, small business loans and grants, aid to schools, local government subsidies and hospital grants are all combined, according to ProPublica’s calculations. (All that spending together amounts to about $5,000 for every resident of Cuyahoga County, or 6% of the county’s annual GDP.) For some, it kept the economy in a state of suspended animation, allowing families without income and businesses without profits to continue to pay rent and stay afloat.
But as Congress dithers on a new spending package, and Cleveland looks forward to hosting the first presidential debate at the end of September, uncertainty is suffocating thousands of small businesses like Patel’s. Paycheck Protection Program funds are gone, and for most businesses, revenue hasn’t nearly recovered — but they have neither access to unlimited credit nor the means to pay it back. All of that exacerbates existing inequities that had only just begun to heal after the deep blow of the 2008 recession.
“The idea is that it would be a bridge until recovery,” said Anthony Brancatelli, a Cleveland City Council member. “We need another bridge.”
If you were to gaze south from TransDigm’s lofty office, you might see the spires of St. Stanislaus Church in the neighborhood of Slavic Village.
According to his canonization, St. Stanislaus, an 11th-century prelate who expanded Catholicism in Poland, resurrected a dead witness to win a dispute over money with the king. Today, Slavic Village, which historically was a destination for Polish and Czech immigrants but now is majority Black, could use another fiscal miracle. The neighborhood housed workers in the nearby steel furnaces and garment mills, reaching a population of 60,000 by the end of World War II. But starting in the ’60s, residents decamped for farther-flung suburbs. The grand historic buildings along its retail corridors fell into disrepair.
By the 2000s, the neighborhood had lost nearly two thirds of its population, and was racially diverse but desperately poor. Things were about to get worse: Slavic Village became a target for subprime loan scams, trapping residents in mortgages they couldn’t afford when the market collapsed in 2007. For one quarter that year, the neighborhood saw the highest number of foreclosed homes in one ZIP code in the country before the housing crisis migrated to the Sun Belt — a fact that Sen. Sherrod Brown, who moved to the neighborhood in 2013, often mentions. Residents worked to get more than 1,000 vacant homes torn down, leaving the area pockmarked with grassy lots. The long expansion after 2008 led to a retail, restaurant and housing boom in neighborhoods closer to downtown, but largely bypassed Slavic Village, despite some successful efforts to stabilize homeownership.
Then this year, COVID-19 coursed through the neighborhood, causing another round of devastation. Slavic Village’s ZIP code is in the highest range for COVID-19 infection in Cleveland, with at least 413 cases, according to the city’s public dashboard. Like many low-income neighborhoods, where residents disproportionately work in restaurants and retail jobs, Slavic Village had borne the economic brunt of the public health measures imposed in late March. An analysis of census tract-level unemployment published by The New York Times estimates that Slavic Village saw between 20% and 30% unemployment in June. Local social service agencies say that demand for assistance, from rent subsidies to pet food, has spiked.
In late July, a group of residents transformed a remnant of the earlier crisis into a commemoration of the current devastation. They made a vacant lot into a memorial garden for the virus’s victims, painting salvaged tires in bright colors and turning them into flower pots full of black-eyed Susans. The day of the opening ceremony for the little park, neighbors gathered despite a slow drizzle to make kits with masks and flyers with infection-control advice, folded into Ziploc bags and safety-pinned onto clotheslines strung between newly planted saplings. They wrote the names of deceased loved ones onto crosses fashioned of popsicle sticks, planting them in one of the small plots of soil.
Tamika Compton took the mic to inaugurate the space, which they had called the Garden of Life.
“We started this journey in remembrance, and also for the survivors,” she said, before stopping, tearing up. “Don’t cry, girl,” said someone in the audience. Compton, whose cousin died of the virus, pulled it together. The ’90s cover band behind her struck up a song and a ribbon was cut with five pairs of oversize scissors.
Before the pandemic, Cleveland had been decades along in the process of rebalancing its economy away from producing goods and toward services. As smokestacks shut down and heavy machinery moved out in the 1980s and 1990s, hospitals, universities and entertainment firms rose in their place. The Republican National Convention in 2016 spurred a surge of hotel construction. The Cleveland Clinic is now the city’s largest employer, according to a ranking by the municipal economic development agency. The first for-profit corporation in the ranking — KeyBank, with 4,800 employees — is No. 8.
Manufacturing jobs now account for only 11.2% of the workforce, down from 17.3% in 2000 and 26.3% in 1980. And President Donald Trump’s attempt to bolster domestic manufacturing through tariffs has had little impact. A heavily subsidized expansion at Charter Steel — which Trump touted in a 2018 speech as “one of the biggest comebacks that anybody has ever seen for any industry” — ultimately yielded only 25 new jobs.
So the move toward a public sector-heavy service economy seemed like a good direction. But COVID-19 eviscerated the city’s burgeoning convention and sporting events business and threw its hospitals into financial turmoil as elective procedures were canceled. And it hasn’t been good for Cleveland’s remaining manufacturers, either, many of which are clustered on Slavic Village’s southern border. The global steel company ArcelorMittal announced 454 layoffs in the plant just up the road in late July.
That has further stressed the neighborhood’s main commercial thoroughfare, Fleet Avenue, which was slowly rebounding after the heavy blow of the housing bust and then a yearslong streetscape renovation that made it difficult for customers to reach local businesses. Even after the stay-at-home order lifted, retail activity remained depressed while government grants ran out. And unlike TransDigm, most local businesses don’t have access to abundant credit to see them through the crisis.
Daisy’s Ice Cream, right in front of the Garden of Life, is generally a recession-resistant business. Still, Walter Hyde hasn’t been able to raise his staff’s pay to $10 an hour this year like he planned, with all the extra expenses of masks and gloves. Sophie Tyl has run a Polish bakery called Siedem Roz for 16 years and is thinking of closing because so few of her customers are coming in for cookies and breads anymore. Pete Skantzos spends a lot of time looking out the windows of his diner, the Red Chimney, waiting for customers; business is still down 75% because people are afraid to come eat in a sit-down joint even if they have money to pay for it. Shelle Jackson can only have a couple people waiting at a time in her barber shop, dramatically cutting down on the number of clients she can serve in a day. She had to draw down her small savings account to tide her over and retrofit the space to be COVID-compliant.
Several blocks south of the Garden of Life, on the commercial corridor that marks the southern end of Slavic Village, JB Grill has its entire menu displayed on the strip mall storefront’s windows: Pork chop dinners for $9.00, Philly cheese steak combo for $8.00. A banner sign advertises catering for a long list of events that don’t happen in the same way anymore: banquets, weddings, birthday parties, graduations.
Inside, the small shop has only a bench for people waiting on food, with paraphernalia from local sports teams plastered all over the walls. Barbara Bradford emerges from a hot kitchen with fans going full blast. She has coiffed hair and long fake eyelashes, but still puts in the same work everybody else does, taking orders and doing deliveries. She walked a few doors down to a formerly empty storefront that she’s turned into a place where kids out of school can come get donated books and bags of snacks, desperately needed in a neighborhood where 100% of the elementary schoolers are eligible for free or reduced price lunch.
Bradford took over the grill five years ago and survived a few seasons of not making much money. But by the beginning of this year, she had scraped together about $25,000 in the bank — and that has kept her afloat so far. Even though she never had to shut down completely, the pandemic killed her catering business. She took her staff of seven down to 15 hours a week each, so they could get partial unemployment insurance while still attached to their jobs, but her landlord did not offer her a break on the rent.
Bradford hustled, advertising her specials on Facebook and calling around to nonprofits and municipal agencies, asking if anyone needed food delivered. She got a few contracts to deliver boxed lunches, to a school and an organization that delivers meals to seniors. But she’s not back up to the business she was doing before, and she’s worried that the jobs don’t seem to be coming back around her — the extra $600 in federal unemployment benefits expired that day.
“I think the majority of residents were receiving it, so it was kind of a boost around here,” Bradford said. “I’m quite sure they’re going to use that for rent, and after that there’s no more.”
Like the unemployed and TransDigm, Bradford got help from the federal government. But her aid, which came through the Small Business Administration, seemed too slow and too small. Like Gary Patel, she applied for a Paycheck Protection Program loan, which provided cash in the amount of 2½ months worth of a business’s typical payroll costs. It can be forgiven if it’s mostly spent to pay workers.
Bradford went through the online lender Kabbage since she already had a loan with them, and they had all her documentation. But she ended up with $22,000 — far less than she expected.
Bradford used the money to pay her previously full-time workers for their reduced hours, which meant that the loan should turn into a grant. She also applied for an $87,000 Economic Injury Disaster Loan from the SBA, but it took five months to come through. In the meantime, her small pile of cash was wiped out. It’s thrown her dreams of opening a full-service dine-in restaurant or a franchising strategy into doubt.
“Now there’s nothing in the account,” Bradford said. “There’s no capital. If anything has to be fixed, I would have to go back to Kabbage and withdraw another loan.” That could be costly: With the fees that Bradford was paying Kabbage for her 6-month loan, the annual interest comes out to nearly 40%. In comparison, TransDigm will pay either 6.25% or 8% on the bonds it issued in April (which is high for corporate bonds).
Resorting to nontraditional lenders is more common for Black-owned businesses like Bradford’s which are less likely to have relationships with banks than white-owned businesses. Cleveland’s population is about half Black, and many Black business owners have run through savings and face having to take on more expensive bridge credit.
To be sure, there are some businesses doing well in Slavic Village: A dog training studio, an upscale butcher shop, and a record store that specializes in soul, reggae and hip hop. But they all have one thing in common — they mainly serve customers from outside the neighborhood.
Those businesses are the rare bright spots. At University Settlement, a nearly century-old nonprofit that provides services to the needy, many of the people who now show up to the food pantry on Broadway Avenue didn’t even think to apply for federal aid programs, says the executive director, Earl Pike. They did work under the table and wouldn’t be able to qualify, or didn’t trust the government when it came offering help, he explained.
Pike, a tall, weathered man wearing worn jeans and leather boots while folding masks at the Garden of Life’s opening ceremony, had to go out knocking on doors trying to get the word out about all the new federal relief programs before they disappeared.
“What the money did was, it kept the IV going for the comatose patient. But it didn’t solve anything,” Pike said. Even in the ZIP code that contains most of Slavic Village, where the median income is half the Ohio average and 37.5% of residents live in poverty, there’s still an economic race gap. The median income for white households is $31,815; for Black households, it’s $23,596.
“Black families lost almost all their wealth in the housing crisis, because all of their wealth was in their homes,” Pike said. “We’ve just begun clawing our way back to where we were before. And we’re about to lose the gain of the last 10 years. Once again, when all this is said and done, Black families will have nothing.”
Walter Hyde, the stocky owner of Daisy’s Ice Cream, who wears a Jameson’s bandanna for a mask over a triangle-shaped patch of beard, has a clear view of how the government’s economic response to the pandemic unfolded in Cleveland: “The thing money and power had was time.”
That was certainly true for TransDigm.
The company employs a strategy that Wall Street embraces because it generates both profits and lucrative fees. TransDigm buys smaller competitors, cornering the market on delivering parts for out-of-sight corners of the airline business; it currently owns 50 subsidiaries. Ninety percent of its sales are for items in which TransDigm is, in industry lingo, the “sole source” provider.
The TransDigm spokeswoman said that being a sole source provider doesn’t make it a monopolist. “It does not mean that others are incapable or in any way prevented from investing to make, market and verify a similar product,” she wrote in an email.
Sometimes, antitrust regulators notice. Three years ago, realizing TransDigm had purchased its most significant competitor in the commercial airline seatbelt business, the Justice Department made it spin off two companies that made them. But TransDigm continues to absorb rivals, and the company is able to achieve profit margins that investors gleefully call “software-like.”
TransDigm has also been wise in its choice of customers. Often it’s the Pentagon, which can spend immense sums for simple items.
In an extreme example, TransDigm charged the U.S. government $6,986 for a 3½-inch piece of metal called a “quick disconnect coupling half,” which is used in the F-5 jet. The part cost the company just $173 to make, producing a profit margin of nearly 4,000%.
That revelation came from a lengthy report by the Pentagon’s inspector general last year. Of the 47 products examined, the company had gouged the government on 46 of them, the inspector general found.
The former CEO of a Florida manufacturer purchased by TransDigm, who was interviewed by investigators, described a “one-two punch” strategy after acquisitions: raising prices and cutting costs. “They cut costs by firing employees. The metric they used was ‘revenue per head,’” he said.
Following the investigation, Howley, his shaved head giving the appearance of a retired professional wrestler, was summoned from his Chagrin Falls estate to testify before the House Oversight Committee in May 2019. After Rep. Alexandria Ocasio-Cortez, D-N.Y., demanded to know why the U.S. government should “give you another dime,” he responded with a hint of exasperation.
“It seems to me the government always has the choice of what to buy and what not to buy from us,” Howley said. “We believe that we provide the government with well-designed, well-manufactured, high-quality product.”
After the drubbing, TransDigm reimbursed the Department $16.1 million for overcharges. That made headlines, but it was a pittance compared to the company’s $5.2 billion in revenue that year.
The episode didn’t dull Wall Street’s enthusiasm because investors can rely on TransDigm to send its profits back to shareholders through generous dividends and stock buybacks — nearly $600 million over the past five years.
“We expect TransDigm to continue to pursue its long-standing objective of returning considerable capital to shareholders, maintaining an aggressive financial policy of high leverage to do so,” the ratings agency Moody’s wrote in a favorable credit report in October 2019.
Then the pandemic hit and airports became ghost towns. As Boeing’s production slowed down and dragged down the entire aerospace industry, TransDigm began furloughs and nearly 3,000 layoffs around the country. That helped keep profit margins above 40%, even when travel restrictions grounded commercial flights all over the world. In a show of solidarity with laid-off workers, the company said it would cut its executive salaries. But that doesn’t matter much when virtually all compensation is based on stock; CEO Kevin Stein, whose salary was cut by 50%, received only $1 million out of his $13 million pay last year in cash. Howley’s 2019 compensation package was still worth more than $60 million.
Just a few days before the layoffs, the Federal Reserve, acting with the Trump administration’s imprimatur, had announced its unprecedented intervention in the market for corporate debt. That proved a godsend for TransDigm as well as those who held the company’s older debt.
As the magnitude of the pandemic dawned on investors in March, they pulled out of the stock market and sought a safe haven in cash. The appetite for buying existing corporate bonds or lending new money evaporated. This was especially true for companies, including TransDigm, whose debt is seen as riskier and comes with a higher interest rate. A broad index tracking these riskier assets, known as “junk,” or “high-yield,” bonds, plummeted 20 percent in the weeks before the Fed’s intervention.
The two programs the Fed created to buy as many as $750 billion of new or existing bonds reassured investors, and they started buying again. The bond market largely recovered and even riskier companies were able to borrow. That’s when TransDigm secured the $1.5 billion in cash that it plans to use as a rainy day fund and for acquisitions.
Ultimately, it was more the Fed’s talk than the Fed’s actions that made it easier for companies like TransDigm to borrow. The Fed has purchased just $12 billion through its corporate bond programs through the end of August, far short of the $750 billion maximum. The mere existence of the programs boosted markets. The message received by investors was that the central bank was essentially guaranteeing bond prices wouldn’t fall too far.
The Fed has insisted the program was aimed at helping workers keep their jobs. “If companies cannot issue bonds, they may be unable to pay employees or suppliers,” economists at the New York Fed wrote in a blog post in the spring. But unlike the CARES Act’s lending programs for smaller businesses, there are no rules limiting how companies use the money they borrow by issuing bonds. Thus TransDigm was able to pile up cash while laying off thousands of employees.
Having trimmed costs and amassed some dry powder, the company is poised to acquire again, targeting companies that were hit hard by the downturn. As small businesses around the country are shuttered, TransDigm could grow even larger.
In March, TransDigm benefited from another piece of legislation aimed at easing the economic dislocation of the pandemic. A provision of the CARES Act boosted the tax break on interest paid by businesses, meaning Transdigm could shave its tax rate even more. That and other provisions in the bill will lower the company’s taxes by between three and eight percentage points, the company has said, a benefit of at least $30 million and perhaps tens of millions more.
Unsurprisingly, workers at TransDigm’s companies often feel expendable.
“You’re just a cog and we can get a new one,” is how one former employee described working at Kirkhill, a Transdigm company in Orange County, California. Kirkhill, which specializes in seals for doors and various other aircraft parts, laid off 79 employees in early April due to COVID. It was already the second round of layoffs this year: In February, dozens of other employees had been let go due to slower-than-expected growth.
Meanwhile, TransDigm’s shareholders have seen most of their losses from March, when the stock bottomed out at $246, erased. Today, it’s back above $500. For Nicholas Howley alone, that recovery restored hundreds of millions of dollars to his fortune.
The divergence between TransDigm’s fortunes and those of the smaller businesses in the city it calls home may be a consequence of the levers the Federal Reserve can easily pull, which can have dramatic effects on capital markets but do very little to funnel cash toward small business. That’s generally seen as the purview of Congress, which since its initial batch of aid in March and April hasn’t taken significant new steps to help struggling Americans. Meanwhile, the Fed’s policy of keeping interest rates at rock bottom fuels consolidation, since big businesses can pick off competitors, making it harder for the little guys to compete.
And these days, those big businesses don’t help the cities they’re headquartered in as much as they used to back when Cleveland was a hub for industrial titans.
“What we see about big companies is that they’re more global now,” says Joel Ratner, director of the community development financial institution Cleveland Neighborhood Progress.“They’re not invested in Cleveland in a way anything like what they used to be. Often the C-level people don’t live in Cleveland or just moved to Cleveland for the job and aren’t invested in the community. Even the ones who live here are hardly here.”
The money that the CARES Act pumped into Cleveland undeniably helped keep the city afloat through the spring and summer. But it’s running out just as the economic recovery plateaus, setting up a looming disaster in the fall.
The Cuyahoga County government received $215 million through the CARES Act. Three million went toward renting out enough hotel space to shelter about 400 homeless people, mostly absorbing the increase of people who’d lost their housing and preventing the kind of COVID-19 outbreaks in congregant homeless shelters that occurred in dense cities like New York. Along with the city, it put $16 million toward rental assistance, forestalling evictions. A couple million went to micro-grants and zero-interest loans for small businesses that needed aid faster than the federal programs could get it to them. The rest went to support for COVID-19 testing, buying personal protective equipment, retrofits of buildings to comport with social distancing, hazard pay, and other expenses related to fighting COVID-19.
The city’s medical providers — foremost among them hospitals like the Cleveland Clinic, University Hospitals and MetroHealth — received $384 million. The county’s small businesses received about $580 million in Economic Injury Disaster Loans and around $3 billion in Paycheck Protection Program funds, according to ProPublica’s estimates.
But much of the federal assistance either hasn’t materialized or remains unspent.
One example: The Fed set up the Main Street Lending Program, which the Treasury backed with $75 billion in taxpayer dollars, meant to support $600 billion in loans with relatively low interest rates. The program took months to get up and running, and so far has made only about $1.1 billion in loans, with both borrowers and banks saying the process is too complicated and difficult.
The CARES Act can help local governments weather the downturn, but the law covers only costs directly attributable to the pandemic. Nationwide, city and county officials face the greatest threat from an indirect impact: a massive downturn in the money they used to collect on taxes on retail sales, income and entertainment. That’s why Cuyahoga is holding $100 million back, in hopes that Congress will change the law, while staring down the possibility of cutting everything from social workers to prison guards.
The Fed set up a program to lend money to strapped state and county governments. But it’s made only two loans for $1.65 billion, out of a total capacity of $500 billion; Cleveland hasn’t wanted the extra debt. Meanwhile, the Trump administration approved Ohio’s application for an extension of $300 per week in extra unemployment insurance retroactive to August 1, but the checks won’t arrive until late September.
Back at the Galleria, Gary Patel is still watching the slow days go by, hoping that the building’s management will at least open more of the five doors into the mall so that people might come in for snacks. He takes solace in his elder son and daughter, who are studying to become a physician’s assistant and computer engineer, respectively; a 16-year-old son is still in high school. They all live together in a four-bedroom house in a suburb about a half-hour’s drive south of the Galleria, and the kids work on the weekends to chip in with family expenses.
Eventually they’ll be able to help support the family with good salaries. But right now the Patels have only a little bit in savings, and health insurance costs $500 a month. Even hiring an accountant to pull together the paperwork to apply for a break on his $1,200 rent from the building’s management costs several hundred dollars that he doesn’t have.
In the meantime, he waits for customers to come back. If they don’t, there’s no way to keep going. “We’ll have to close our doors, because I don’t just want to keep paying the bills,” he says.
Correction, Sept. 13, 2020: The introduction to a chart with this story originally misstated a figure. If all the money borrowed by TransDigm were divided up among its employees, they would have gotten over 16 times as much as if all of the other CARES Act spending were divided up among Cuyahoga County residents, not over 13 times as much.
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Two years ago, officials from the Illinois Department of Children and Family Services vowed to rescue the children they called “stuck kids” — those in state care who had languished in psychiatric hospitals for weeks and sometimes months after doctors had cleared them for release because the agency could not find them proper homes.
But children continue to be held at psychiatric hospitals long after they are ready for discharge, a practice our reporting showed leaves them feeling isolated and alone, falling behind in school and at risk of being sexually and physically abused during prolonged hospitalization.
Cook County Public Guardian Charles Golbert, who filed a federal lawsuit against the department and key current and former directors and employees in December 2018 following the ProPublica Illinois investigation, said it was distressing that DCFS had not remedied the problem, even if the pandemic has complicated the agency’s work.
The number of psychiatric admissions that went beyond medical necessity first spiked in 2015, going from 88 the year before to 246. It continued to climb, reaching 301 in 2017, according to DCFS data obtained by ProPublica Illinois through a Freedom of Information Act request.
For the most recent complete fiscal year, from July 2019 to June 2020, 314 children remained hospitalized after doctors had cleared them for release, according to data Golbert said he received from DCFS. The youngest, he said, was a 3-year-old girl.
During that year, those children spent an average of at least 50 days unnecessarily hospitalized at a cost of $6.3 million to taxpayers, he said. DCFS could not immediately provide the data to ProPublica Illinois.
“There’s not a whole lot that tells a kid you don’t matter [more] than keeping a kid locked up in a psychiatric ward for no reason whatsoever other than there’s nowhere to place them for months on end,” Golbert said.
He called the hospitalizations “illegal” and “inhumane.” The lawsuit is pending. DCFS has argued in court that the children in the lawsuit are covered by a federal consent decree.
Since July, DCFS said it has moved 61 children who were hospitalized after they were medically cleared for release into placements; 34 children are still waiting.
A DCFS spokesman placed blame for the problem on a variety of factors, including the loss of hundreds of residential treatment beds and more than 2,000 foster homes in recent years. But as those placements were cut, officials did not replace them with therapeutic or specialized foster homes as they had promised. Such homes offer support beyond traditional foster homes for families caring for children with intense mental health needs.
In addition, some children become the state’s responsibility after their families, often desperate to get them the mental health services they cannot afford or provide, leave them at a psychiatric hospital instead of bringing them home when they are ready for release. Some children have complicated medical and mental health issues, making it more difficult for DCFS to find a placement for them.
“These longstanding challenges will not be overcome overnight, but we will continue to rebuild and expand this network to ensure our first priority, which is serving every child in this state who needs our help,” the spokesman, Bill McCaffrey, said in a statement.
Meanwhile, DCFS leadership has experienced frequent change. Current DCFS acting director Marc Smith, a former vice president at the nonprofit Aunt Martha’s Health & Wellness, is the agency’s 13th leader in a decade. He was appointed by Gov. J.B. Pritzker in April 2019.
Smith wants to “establish a system of care to rebuild the network of living environments for young people ready to leave psychiatric hospitals,” McCaffrey said. He added that “DCFS is committed to aggressively addressing the decades-long challenge of a lack of community resources and facilities for children with complex behavioral health needs.”
To help alleviate the problem, DCFS has contracted with a number of local nonprofits to provide various services for these children. Those efforts, however, so far have reached only a relatively small number and the overall number of children held beyond medical necessity continues to rise.
In 2017, Chicago-based Kaleidoscope began a small pilot project to provide at-home support services for families of children hospitalized after they were medically cleared to leave. That program has served 86 children, according to the organization.
There are currently about 40 children in the program, but plans to expand have faltered because of DCFS turnover, trouble recruiting and retaining staff, as well as the coronavirus pandemic, said Kathy Grzelak, Kaleidoscope’s executive director. She said she wasn’t surprised the number of children hospitalized beyond medical necessity hadn’t gone down in the last two years.
“It’s been a fragmented system with lots of changes in DCFS leadership, lots of changes that steer the ship in different directions,” she said. “Even though people want to do the right thing, their hands get tied sometimes, and it just slows the process down.”
Lawrence Hall, a residential center on Chicago’s North Side, also started a small program last year to address the hospitalization issue. It has served nine children, who have stayed an average of three to six months, though some have stayed much longer, said Kara Teeple, Lawrence Hall CEO.
She said the stubbornly high number of children who remain at psychiatric hospitals is both a reflection of their mental health needs and the lack of services that could prevent hospitalization.
Aunt Martha’s Integrated Care Center, which opened last year in the Bronzeville neighborhood on Chicago’s South Side, is providing placements designed to bridge the gap between a child coming out of a hospital and going into a home, said Aunt Martha’s president and CEO, Raul Garza. Of the 340 children who have gone through the center since it opened, about 40% came from a psychiatric hospital, with 10% or so of those children held beyond their release dates, Garza said. Many come in from residential treatment centers or had run away from their placements, he said.
“They have to have somewhere to go coming out of the hospital,” Garza said. “What’s the alternative? The alternative is that they would sit in a hospital beyond medical necessity.”
But Golbert, the public guardian, said DCFS needs to focus its efforts on creating long-term solutions to the issue by investing in specialized and therapeutic foster homes. While the agency has spent the last six months months dealing with COVID-19, he said the problem long precedes the pandemic.
“They had a year and a half before COVID. They need to start diving back into the reform efforts that have been put on hold,” he said. “These are real children we’re talking about.”
When Dr. Zachary Sussman went to Physicians Premier ER in Austin for a COVID-19 antibody test, he assumed he would get a freebie because he was a doctor for the chain. Instead, the free-standing emergency room charged his insurance company an astonishing $10,984 for the visit — and got paid every penny, with no pushback.
The bill left him so dismayed he quit his job. And now, after ProPublica’s questions, the parent company of his insurer said the case is being investigated and could lead to repayment or a referral to law enforcement.
The case is the latest to show how providers have sometimes charged exorbitant prices for visits for simple and inexpensive COVID-19 tests. ProPublica recently reported how a $175 COVID-19 test resulted in charges of $2,479 at a different free-standing ER in Texas. In that situation, the health plan said the payment for the visit would be reduced and the facility said the family would not receive a bill. In Sussman’s case, the insurer paid it all. But those dollars come from people who pay insurance premiums, and health experts say high prices are a major reason why Americans pay so much for health care.
Sussman, a 44-year-old pathologist, was working under contract as a part-time medical director at four of Physicians Premier’s other locations. He said he made $4,000 a month to oversee the antibody tests, which can detect signs of a previous COVID-19 infection. It was a temporary position holding him over between hospital gigs in Austin and New Mexico, where he now lives and works.
In May, before visiting his family in Scottsdale, Arizona, Sussman wanted the test because he had recently had a headache, which can be a symptom of COVID-19. He decided to go to one of his own company’s locations because he was curious to see how the process played out from a patient’s point of view. He knew the materials for each antibody test only amounted to about $8, and it gets read on the spot — similar to an at-home pregnancy test.
He could even do the reading himself. So he assumed Physicians Premier would comp him and administer it on the house. But the staff went ahead and took down his insurance details, while promising him he would not be responsible for any portion of the bill. He had a short-term plan through Golden Rule Insurance Company, which is owned by UnitedHealthcare, the largest insurer in the country. (The insurance was not provided through his work.)
During the brief visit, Sussman said he chatted with the emergency room doctor, whom he didn’t know. He said there was no physical examination. “Never laid a hand on me,” he said. His vitals were checked and his blood was drawn. He tested negative. He said the whole encounter took about 30 minutes.
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About a month later, Golden Rule sent Sussman his explanation of benefits for the physician portion of the bill. The charges came to $2,100. Sussman was surprised by the expense but he said he was familiar with the Physicians Premier high-dollar business model, in which the convenience of a free-standing ER with no wait comes at a cost.
“It may as well say Gucci on the outside,” he said of the facility. Physicians Premier says on its website that it bills private insurance plans, but that it is out-of-network with them, meaning it does not have agreed-upon prices. That often leads to higher charges, which then get negotiated down by the insurers, or result in medical bills getting passed on to patients.
Sussman felt more puzzled to see the insurance document say, “Payable at: 100%.” So apparently Golden Rule hadn’t fought for a better deal and had paid more than two grand for a quick, walk-in visit for a test. He was happy not to get hit with a bill, but it also didn’t feel right.
He said he let the issue slide until a few weeks later when a second explanation of benefits arrived from Golden Rule, for the Physicians Premier facility charges. This time, an entity listed as USA Emergency sought $8,884.16. Again, the insurer said, “Payable at: 100%.”
USA Emergency Centers says on its website that it licenses the Physicians Premier ER name for some of its locations.
Sussman’s insurer, Golden Rule, agreed to pay 100% of Physicians Premier’s $8,884.16 facility charges for a COVID-19 antibody test. According to Sussman, the materials to make each test cost about $8.
Redactions and highlights by ProPublica
Now Sussman said he felt spooked. He knew Physicians Premier provided top-notch care and testing on the medical side of things. But somehow his employer had charged his health plan $10,984.16 for a quick visit for a COVID-19 test. And even more troubling to Sussman: Golden Rule paid the whole thing.
Sussman was so shaken he resigned. “I have decided I can no longer ethically provide Medical directorship services to the company,” he wrote in his July 13 resignation email. “If not outright fraudulent, these charges are at least exorbitant and seek to take advantage of payers in the midst of the COVID19 pandemic.”
Sussman agreed to waive his patient privacy so officials from the company could speak to ProPublica. USA Emergency Centers declined interview requests and provided a statement, saying “the allegations are false,” though it did not say which ones.
The statement also said the company “takes all complaints seriously and will continue to work directly with patients to resolve issues pertaining to their emergency room care or bill. …The allegations received pertain to a former contracted employee, and we cannot provide details or further comment at this time.”
Physicians Premier advertises itself as a COVID-19 testing facility on its website, with “results in an hour.” According to the claims submitted by Physicians Premier to Golden Rule, obtained by Sussman, the physician fee and facility fees were coded as emergency room visits of moderate complexity. That would mean his visit included an expanded, problem-focused history and examination. But Sussman said the staff only took down a cursory medical history that took a few minutes related to his possible exposure to COVID-19. And he said no one examined him.
The claims also included codes for a nasal swab coronavirus test. But that test was not performed, Sussman said. The physician’s orders documented in the facility’s medical record also do not mention the nasal swab test. Those charges came to $4,989.
The claims show two charges totaling $1,600 for the antibody test Sussman received. In a spreadsheet available on its website on Friday, Physicians Premier lists a price of $75 for the antibody test.
For comparison, Medicare lists its payment at $42.13 for COVID-19 antibody tests. That’s because Medicare, the government’s insurance plan for the disabled and people over 65, sets prices.
Complicating matters, Texas is the nation’s epicenter for free-standing emergency rooms that are not connected to hospitals. Vivian Ho, an economist at Rice University who studies the facilities, said their business model is based on “trying to mislead the consumer.” They set up in locations where a high proportion of people have health insurance, but they don’t have contracted rates with the insurers, Ho said. They are designed to look like lower-priced urgent care centers or walk-in clinics, Ho said, but charge much higher emergency room rates. (The centers have defended their practices, saying that they clearly identify as emergency rooms and are equipped to handle serious emergencies, and that patients value the convenience.)
The day after he resigned, Sussman texted an acquaintance who works as a doctor at Physicians Premier. The acquaintance said the facility typically only collects a small percentage of what gets billed. “I just don’t want to be part of the game,” Sussman texted to him.
Shelley Safian, a Florida health care coding expert who has written four books on medical coding, reviewed Sussman’s medical records and claims at ProPublica’s request. The records do not document a case of a complex patient that would justify the bills used to code the patient visit, she said. For example, the chief complaint is listed as: “A generic problem (COVID TESTING).” Under “final acuity,” the medical record says, “less urgent.” Under the medical history it says, “NO SYMPTOMS.”
Safian described the charges as “obscene” and said she was shocked the insurer paid them in full. “This is the exact opposite of an employee discount,” she said. “Obviously nobody is minding the store.”
Physicians Premier in Austin, Texas.
Amna Ijaz/The Texas Tribune
Congress opened the door to profiteering during the pandemic when it passed the CARES Act. The legislation, signed into law in March, says health insurers must pay for out-of-network testing at the cash price a facility posts on its website, or less. But there may be other charges associated with the tests, and insurers generally have tried to avoid making patients pay any portion of costs related to COVID-19 testing or treatment.
The charges for Sussman’s COVID-19 test visit are “ridiculous,” said Niall Brennan, president and CEO of the Health Care Cost Institute, a nonprofit organization that studies health care prices. Brennan wondered whether the CARES Act has made insurers feel legally obligated to cover COVID-19 costs. He called it “well intentioned” public policy that allows for “unscrupulous behavior” by some providers. “Insurance companies and patients are reliant on the good will and honesty of providers,” Brennan said. “But this whole pandemic, combined with the CARES Act provision, seems designed for unscrupulous medical providers to exploit.”
It’s illegal for medical providers to charge for services they did not provide. But ProPublica has previously reported how little insurers, including UnitedHealthcare, do to prevent fraud in their commercial health plans, even though experts estimate it consumes about 10% of all health care costs. For-profit insurance companies don’t want to spend the time and money it takes to hold fraudulent medical providers accountable, former fraud investigators have told ProPublica. Also, the insurance companies want to keep providers in their networks, so they easily cave.
In mid-July, Sussman used the messenger system on Golden Rule’s website to report his concerns about the case. Short-term health plans are typically less expensive because they offer less comprehensive coverage. Sussman said he appreciated that his plan covered the charges, and felt compelled to tell the company what had happened.
That led to a phone conversation with a fraud investigator. They went line by line through the charges and Sussman told him many of the services had not been provided. “His attitude was kind of passive,” Sussman said of the fraud investigator. “There was no indignation. He took in stride, like, ‘Yep, that’s what happens.’” The investigator said he would escalate the case and see if the facility had submitted any other suspect claims. But Sussman never heard back.
Maria Gordon-Shydlo, a spokeswoman for UnitedHealthcare, which owns Golden Rule, would not provide anyone to be interviewed. She said in an emailed statement that the company’s first priority during the pandemic “has been to ensure our members get the care they need and are not billed for COVID testing and treatment. Unfortunately, there are some providers who are trying to take advantage of this and are inappropriately or even fraudulently billing.”
“Golden Rule has put processes in place to address excessive COVID-related billing,” the statement said. “We are currently investigating this matter and, if appropriate, will seek to recoup any overpayment and potentially refer this case to law enforcement.”
Golden Rule’s 100% payment of the charges may simply come down to “incompetence,” said Dr. Eric Bricker, a Texas internist who spent years running a company that advised employers who self-fund their insurance. Insurance companies auto-adjudicate millions of claims on software that may be decades old, said Bricker, who produces videos to help consumers and employers understand health care. If bills are under a certain threshold, like $15,000, they may sail through and get paid without a second look, he said.
UnitedHealth Group reported net earnings of $6.6 billion in the second quarter of 2020. Bricker said the company may be paying bills without questioning them because it doesn’t “want to create any noise” by saying no at a time its own earnings are so high, Bricker said.
Texas has a consumer protection law that’s designed to prevent businesses from exploiting the public during a disaster. The attorney general’s office has received and processed 52 complaints about health care businesses and billing or price gouging related to the pandemic, a spokeswoman from the office said in an email. The agency does not comment on the existence of any investigations, but has not filed any cases related to overpriced COVID-19 tests.
Sussman said he got one voicemail from a billing person at Physicians Premier, saying she wanted to explain the charges, but he did not call back. He said he spoke out about it to ProPublica because he opposes Medicare-for-all health care reform proposals. Bad actors in the profession could cause doctors to lose their privilege to bill and be reimbursed independently, he said. Most physicians are fair with their billing, or even conservative, he said. “If instances like these go unchecked it will provide more ammo for advocates of a single-payer system.”
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