Sunday, August 27, 2006

Funtwo Canon


August 27, 2006
Web Guitar Wizard Revealed at Last

EIGHT months ago a mysterious image showed up on YouTube, the video-sharing site that now shows more than 100 million videos a day. A sinewy figure in a swimming-pool-blue T-shirt, his eyes obscured by a beige baseball cap, was playing electric guitar. Sun poured through the window behind him; he played in a yellow haze. The video was called simply “guitar.” A black-and-white title card gave the performer’s name as funtwo.

The piece that funtwo played with mounting dexterity was an exceedingly difficult rock arrangement of Pachelbel’s Canon, the composition from the turn of the 18th century known for its solemn chord progressions and its overexposure at weddings. But this arrangement, attributed on another title card to JerryC, was anything but plodding: it required high-level mastery of a singularly demanding maneuver called sweep-picking.

Over and over the guitarist’s left hand articulated strings with barely perceptible movements, sounding and muting notes almost simultaneously, and playing complete arpeggios through a single stroke with his right hand. Funtwo’s accuracy and velocity seemed record-breaking, but his mouth and jawline — to the extent that they were visible — looked impassive, with none of the exaggerated grimaces of heavy metal guitar heroes. The contrast between the soaring bravado of the undertaking and the reticence of the guitarist gave the 5-minute, 20-second video a gorgeous solemnity.

Like a celebrity sex tape or a Virgin Mary sighting, the video drew hordes of seekers with diverse interests and attitudes. Guitar sites, MySpace pages and a Polish video site called Smog linked to it, and viewers thundered to YouTube to watch it. If individual viewings were shipped records, “guitar” would have gone gold almost instantly. Now, with nearly 7.35 million views — and a spot in the site’s 10 most-viewed videos of all time — funtwo’s performance would be platinum many times over. From the perch it’s occupied for months on YouTube’s “most discussed” list, it generates a seemingly endless stream of praise (riveting, sick, better than Hendrix), exegesis, criticism, footnotes, skepticism, anger and awe.

The most basic comment is a question: Who is this guy?

If you follow the leads, this Everest of electric-guitar virtuosity, like so many other online artifacts, turns out to be a portal into a worldwide microculture, this one involving hundreds of highly stylized solo guitar videos, of which funtwo’s is but the most famous. And though they seem esoteric, they have surprising implications: for YouTube, the dissemination of culture, online masquerade and even the future of classical music.

JOHANN PACHELBEL, the great one-hit wonder of the baroque period, originally composed his Canon in D Major for three violins, at least one chord-playing instrument (like a harpsichord or lute) and at least one bass instrument (like a cello or bassoon). With its steady walking rhythm, the piece is well suited to processionals, and the bass line is extremely easy to play, a primer on simple chords: D, A, B minor, F-sharp minor, G. A sequence of eight chords repeats about 30 times.

The exacting part is the canon itself: a counterpoint played over the bass, originally by the three violins. The first violin plays variation A, then moves on to B, while the second violin comes in with A. By the time the first violin gets to C, the second starts in with B, and the third violin comes in with A: like three people singing “Row, Row, Row Your Boat.”

With 28 variations, the piece becomes supercharged with complexity only to revert to a simpler structure as it ends. If you hadn’t heard it a thousand times before — in the movie “Ordinary People,” in commercials, at all those weddings — it might blow you away.

Last year Jerry Chang, a Taiwanese guitarist who turns 25 on Thursday, set out to create a rock version of the song, which he had been listening to since childhood. It took him two weeks. Others, like Brian Eno, had done so before him, and some listeners say his arrangement is derivative of one composed for the video game “Pump It Up.” But one way or another, his version, “Canon Rock,” rocked.

Once he had his arrangement on paper — and in his fingers, since sweeping is above all a function of motor memory — Mr. Chang decided to publish his work. In the arena of high-speed guitar heroics, though, an audio recording is not enough; the manual virtuosity is almost like a magic trick, and people have to see it to believe it. So he sat on his bed in front of a video camera, fired up his recorded backing track and played his grand, devilish rendition of “Canon Rock.” He then uploaded the video to a Web site he had already set up for his band and waited for a response.

Before long he was inundated with praise, as well as requests for what are called the “tabs,” or written music, and the backing track, or digital bass line, which fans of his work downloaded and ran on their own computers. They then hoisted up their Fenders and Les Pauls to test their skills against JerryC’s. One of these guys was funtwo.

By following a series of clues on JerryC’s message board and various “Canon Rock” videos, I was able to trace funtwo’s video to Jeong-Hyun Lim, a 23-year-old Korean who taught himself guitar over the course of the last six years. Now living in Seoul, he listens avidly to Bach and Vivaldi, and in 2000 he took a month of guitar lessons. He plays an ESP, an Alfee Custon SEC-28OTC with gold-colored detailing.

A close analysis of his playing style and a comparison of his appearance in person with that of the figure in the video, left little doubt that Mr. Lim is the elusive funtwo.

Recently he e-mailed me an account of how he came to make his YouTube video. His English is excellent, from years spent at Auckland University in New Zealand, where he plans to return in March.

“First time when I saw JerryC’s ‘Canon’ video, it was so amazing, I thought I might play it,” he wrote. “So I practiced it by myself using tab and backing track from Jerry’s homepage.” On Oct. 23, 2005, he uploaded his video to a Korean music site called Mule. From there an unknown fan calling himself guitar90 copied it and posted it on YouTube with the elegant intro: “this guy iz great!!!”

Repeatedly newcomers to the comments section on YouTube suggest that the desktop computer visible on the right side of the video is doing all the playing, and that funtwo is a fraud. They point out that there is a small gap in timing between the finger work and the sound of the video. These complaints invite derision from those in the know. (Funtwo’s use of a backing track is no secret, and as for the gap, he says he recorded the audio and video independently and then matched them inexactly.)

Guitar fanatics are perplexed: “How the hell does he gets his harmonics to sound like that?” Some praise specific components of the performance, including the distortion, the power chords or the “sweet outro.” Overall a consensus emerges: This guy iz great.

“I’m shocked at how much you rock,” one fan said. “Funtwo just pure ownz the world,” said another. “Somebody just beat JerryC at his own song,” tinFold44 said. Carrie34 gushed, “funtwo’s version makes me want to hold up my lighter and *hug* my inner child! :)”

PACHELBEL’S CANON, at its essence, dramatizes the pleasure of repetition and imitation. It should come as no surprise, then, that JerryC and funtwo have both attracted impersonators. Over the past year, as JerryC’s and funtwo’s videos have been broadly distributed on every major video-sharing site, hundreds of other guitarists have tried their hands at JerryC’s “Canon Rock.” Many copy the original mise-en-scène: they sit on beds in what look like the bedrooms of guys who still live with their parents. They make little effort to disguise their computers. And they look down, half-hiding behind hats or locks of hair.

Some imitators have gone further than that. A Malaysian guitarist claiming erroneously to be funtwo briefly set up a MySpace page, then shut it down. And this month, in Washington, a 12-year-old classical pianist named Alfonso Candra played “Canon Rock” for a small crowd at the Indonesian Embassy. He too claimed he was the guitarist in the “guitar” video. That was untrue, but Alfonso played his heart out.

This process of influence, imitation and inspiration may bedevil the those who despair at the future of copyright but is heartening to connoisseurs of classical music. Peter Robles, a composer who also manages classical musicians, points out that the process of online dissemination — players watching one another’s videos, recording their own — multiplies the channels by which musical innovation has always circulated. Baroque music, after all, was meant to be performed and enjoyed in private rooms, at close range, where others could observe the musicians’ technique. “That’s how people learned how to play Bach,” Mr. Robles said. “The music wasn’t written down. You just picked it up from other musicians.”

In this spirit, JerryC told fans on his Web site, “I don’t plan to make tabs anymore. The major reason is that it takes lots of time, and I think the best way to learn music is to cover it by ear.”

That educational imperative is a big part of the “Canon Rock” phenomenon. When guitarists upload their renditions, they often ask that viewers be blunt: What are they doing wrong? How can they improve? When I asked Mr. Lim the reason he didn’t show his face on his video, he wrote, “Main purpose of my recording is to hear the other’s suggestions about my playing.” He added, “I think play is more significant than appearance. Therefore I want the others to focus on my fingering and sound. Furthermore I know I’m not that handsome.”

Online guitar performances seem to carry a modesty clause, in the same way that hip-hop comes with a boast. Many of the guitarists, like Mr. Chang and Mr. Lim, exhibit a kind of anti-showmanship that seems distinctly Asian. They often praise other musicians, denigrate their own skills and talk about how much more they have to practice. Sometimes an element of flat-out abjection even enters into this act, as though the chief reason to play guitar is to be excoriated by others. As Mr. Lim said, “I am always thinking that I’m not that good player and must improve more than now.”

Neoclassical guitar technique has fallen largely out of favor in American popular music. It’s so demanding that many listeners conclude it has no heart and lacks the primitive charm of gut-driven punk and post-punk, which introduced minimalist sounds in a partial corrective to the bloated stylings of American heavy metal.

In the YouTube guitar videos, however, technical accomplishment itself carries a strong emotional component. Many of the new online guitarists began playing classical music — violin, piano, even clarinet — as children; they are accustomed to a highly uneven ratio of practice to praise. Mr. Lim’s fans said they watch his “Canon Rock” video daily, as it inspires them to work hard. When I watch, I feel moved by Mr. Lim’s virtuosity to do as he does: find beauty in the speed and accuracy that the new Internet world demands.

Even as they burst onto the scene as fully-formed guitar gods, they hang back from heavy self-promotion. Neither JerryC nor funtwo has a big recording contract.

At a moment in pop history when it seems to take a phalanx of staff — producers, stylists, promoters, handlers, agents — to make a music star, I asked Mr. Lim about the huge response to the video he had made in his bedroom. What did he make of the tens of thousands of YouTube commenters, most of whom treat him as though he’s the second coming of Jimi Hendrix?

Mr. Lim wrote back quickly. “Some said my vibrato is quite sloppy,” he replied. “And I agree that so these days I’m doing my best to improve my vibrato skill.”

Friday, August 25, 2006

Nightclubs a tough business

18 clubs of the moment

Nightclub business: More ego trip than profit?
Fickle market, intense competition, license laws adversely affect business
By Lacey Rose

Updated: 8:41 p.m. ET Aug 24, 2006

What price vanity? For aspiring Manhattan nightclub owners and their investors, the answer is anywhere between $2 million and $5 million.

Owning a club might yield a mention in the gossip columns and a date with a gorgeous girl or two. Profits, though, are quite another story.

"It's probably one of the most difficult businesses around, particularly now, when the competition is so great and the market is so fickle," admits nightlife veteran Jamie Mulholland, co-owner of safari-themed Cain.

Though no hard numbers exist, the typical lifespan of one of the 129 legally operating nightclubs in Manhattan seems to be about 18 months. We cobbled that figure from many conversations with nightclub owners, lawyers and consultants — though all declined to offer specifics on any particular club's demise, lest the bad luck rub off on their next venture.

"If you get the right lease and you're not putting in a tremendous amount of money to build the club, it can be a profitable and fun business," says Frank Ferraro, who co-owned former clubs Nocturne and Pangaea. "But so many of them are predicated on outrageous leases, [renovations] and promoter fees that it's very difficult."

If the initial down stroke for equipment, furniture, fixtures, licenses, alcohol and marketing doesn't kill you, check out the insurance bill: $25,000 to $300,000 in annual premiums, depending on the size and scope of the club, according to HGR Group, which sells insurance to nightclubs nationwide. And don't forget rent. "Two years ago, rents could be found [in Manhattan] for $35 to $45 per square foot," says Steven M. Kamali, a New York-based nightlife and entertainment broker. "Today, if you find space for $65 to $70, it's a bargain."

Next up: permission slips. You'll need both liquor and cabaret licenses if you wish your patrons to dance within the letter of the law — that's right, a slight hip wiggle is technically subject to fines in your favorite corner Irish bar. The licenses may only cost a combined maximum of $15,000, but you may spend up to 18 months applying for them. Some owners can cut through the red tape by paying a "key fee" to take over a previous owner's lease that has the licenses baked right in.

Then there are the disgruntled community groups. One local group's resistance was so fierce back in 2004, says Ferraro, that he had to shut down his club Nocturne less than a year after it opened. And with two recent nightclub-related deaths in Manhattan, chances are that push-back on new venues may only get worse — and licenses harder to secure.

Of course, just because you build it doesn't mean A-list customers will come. Enter a squad of canny promoters wielding Rolodexes filled with celebrity contacts. Quality buzz — the kind that attracts a Simpson or a Hilton (and the freewheeling fans that love them) — will cost you perhaps 15 percent to 30 percent of the night's take.

And just to make things still more difficult, throw in some clashes between testosterone-choked shareholders. Noel Ashman, former owner of NA in Manhattan, says that disagreements among his investors led to the club's demise in 2005 within a year of opening. (Ashman now co-owns The Plumm, at a venue that has housed three clubs, including NA, in a two-year span.)

The irony in all of this: Owners and investors, many of whom work on Wall Street, keep coming back for more punishment.That's because they don't expect a financial return on their investment, says Kamali. When it comes to Manhattan nightclubs, the dividends are more intangible: allure, power and top-shelf arm candy.

In other words, he says, "They're writing an ego check."

Thursday, August 24, 2006

Marrying Career Women
Forbes reader responses
Reader response

Don't Marry Career Women
by Michael Noer
How do women, careers and marriage mix? Not well, say social scientists.
August 21, 2006

Guys: A word of advice. Marry pretty women or ugly ones. Short ones or tall ones. Blondes or brunettes. Just, whatever you do, don't marry a woman with a career.

Why? Because if many social scientists are to be believed, you run a higher risk of having a rocky marriage. While everyone knows that marriage can be stressful, recent studies have found professional women are more likely to get divorced, more likely to cheat, less likely to have children, and, if they do have kids, they are more likely to be unhappy about it. A recent study in Social Forces, a research journal, found that women--even those with a "feminist" outlook--are happier when their husband is the primary breadwinner.

Not a happy conclusion, especially given that many men, particularly successful men, are attracted to women with similar goals and aspirations. And why not? After all, your typical career girl is well-educated, ambitious, informed and engaged. All seemingly good things, right? Sure…at least until you get married. Then, to put it bluntly, the more successful she is the more likely she is to grow dissatisfied with you. Sound familiar?

In Pictures: Nine Reasons To Steer Clear Of Career Women
Many factors contribute to a stable marriage, including the marital status of your spouse's parents (folks with divorced parents are significantly more likely to get divorced themselves), age at first marriage, race, religious beliefs and socio-economic status. And, of course, many working women are indeed happily and fruitfully married--it's just that they are less likely to be so than non-working women. And that, statistically speaking, is the rub.

To be clear, we're not talking about a high-school dropout minding a cash register. For our purposes, a "career girl" has a university-level (or higher) education, works more than 35 hours a week outside the home and makes more than $30,000 a year.
If a host of studies are to be believed, marrying these women is asking for trouble. If they quit their jobs and stay home with the kids, they will be unhappy ( Journal of Marriage and Family, 2003). They will be unhappy if they make more money than you do ( Social Forces, 2006). You will be unhappy if they make more money than you do ( Journal of Marriage and Family, 2001). You will be more likely to fall ill ( American Journal of Sociology). Even your house will be dirtier ( Institute for Social Research).

Why? Well, despite the fact that the link between work, women and divorce rates is complex and controversial, much of the reasoning is based on a lot of economic theory and a bit of common sense. In classic economics, a marriage is, at least in part, an exercise in labor specialization. Traditionally men have tended to do "market" or paid work outside the home and women have tended to do "non-market" or household work, including raising children. All of the work must get done by somebody, and this pairing, regardless of who is in the home and who is outside the home, accomplishes that goal. Nobel laureate Gary S. Becker argued that when the labor specialization in a marriage decreases--if, for example, both spouses have careers--the overall value of the marriage is lower for both partners because less of the total needed work is getting done, making life harder for both partners and divorce more likely. And, indeed, empirical studies have concluded just that.

In 2004, John H. Johnson examined data from the Survey of Income and Program Participation and concluded that gender has a significant influence on the relationship between work hours and increases in the probability of divorce. Women's work hours consistently increase divorce, whereas increases in men's work hours often have no statistical effect. "I also find that the incidence in divorce is far higher in couples where both spouses are working than in couples where only one spouse is employed," Johnson says. A few other studies, which have focused on employment (as opposed to working hours) have concluded that working outside the home actually increases marital stability, at least when the marriage is a happy one. But even in these studies, wives' employment does correlate positively to divorce rates, when the marriage is of "low marital quality."

The other reason a career can hurt a marriage will be obvious to anyone who has seen their mate run off with a co-worker: When your spouse works outside the home, chances increase they'll meet someone they like more than you. "The work environment provides a host of potential partners," researcher Adrian J. Blow reported in the Journal of Marital and Family Therapy, "and individuals frequently find themselves spending a great deal of time with these individuals."

There's more: According to a wide-ranging review of the published literature, highly educated people are more likely to have had extra-marital sex (those with graduate degrees are 1.75 more likely to have cheated than those with high school diplomas.) Additionally, individuals who earn more than $30,000 a year are more likely to cheat.

And if the cheating leads to divorce, you're really in trouble. Divorce has been positively correlated with higher rates of alcoholism, clinical depression and suicide. Other studies have associated divorce with increased rates of cancer, stroke, and sexually-transmitted disease. Plus divorce is financially devastating. According to one recent study on "Marriage and Divorce's Impact on Wealth," published in The Journal of Sociology, divorced people see their overall net worth drop an average of 77%.

So why not just stay single? Because, academically speaking, a solid marriage has a host of benefits beyond just individual "happiness." There are broader social and health implications as well. According to a 2004 paper entitled "What Do Social Scientists Know About the Benefits of Marriage?" marriage is positively associated with "better outcomes for children under most circumstances," higher earnings for adult men, and "being married and being in a satisfying marriage are positively associated with health and negatively associated with mortality." In other words, a good marriage is associated with a higher income, a longer, healthier life and better-adjusted kids.

A word of caution, though: As with any social scientific study, it's important not to confuse correlation with causation. In other words, just because married folks are healthier than single people, it doesn't mean that marriage is causing the health gains. It could just be that healthier people are more likely to be married.

Counterpoint: Don't Marry A Lazy Man
By Elizabeth Corcoran
Studies aside, modern marriage is a two way street. Men should own up to their responsibilities, too.

Girlfriends: A word of advice. Ask your man the following question: When was the last time you learned something useful, either at home or work?

If the last new skill your guy learned was how to tie his shoes in the second grade, dump him. If he can pick up new ideas faster than your puppy, you've got a winner.

I'm not usually a fan of dipstick tests, particularly when it comes to marriage and relationships. But a downright frightening story written by my colleague, Michael Noer, on our Web site today drove me to it. According to the experts cited by Michael, marrying a "career girl" seems to lead to a fate worse than tangling with a hungry cougar.

OK, call me a cougar. I've been working since the day I graduated from college 20-odd years ago. I have two grade-school-aged children. Work definitely takes up more than 35 hours a week for me. Thankfully, I do seem to make more than $30,000. All of which, according to Michael, should make me a wretched wife.

In spite of those dangerous statistics, my husband and I are about to celebrate our 18th wedding anniversary. You'll see us snuggling at a mountain-winery concert this month, enjoying the occasion. I don't think I'm all that unusual--so it seemed like a good time to test Michael's grim assertions.

The experts cited in his story think that professional women are more likely to get divorced, to cheat and to be grumpy about either having kids or not having them. But rather than rush to blame the woman, let's not overlook the other key variable: What is the guy doing?

Take, for instance, the claim that professional women are more likely to get divorced, because they're more likely to meet someone in the workforce who will be "more attractive" than that old squashed-couch hubby at home.

Women have faced this kind of competition squarely for years. Say you marry your college heartthrob. Ten years later, he's working with some good-looking gals--nymphets just out of college, or the more sophisticated types who spent two years building houses in Africa before they went to Stanford Business School. What do you do? A: Stay home, whine and eat chocolate B: Take up rock climbing, read interesting books and continue to develop that interesting personality he fell in love with in the first place.

Note to guys: Start by going to the gym. Then try some new music. Or a book. Or a movie. Keep connected to the rest of the world. You'll win--and so will your marriage.

There is, of course, the continual dilemma of who does the work around the house. But if both spouses are working, guess what? They've got enough income to hire someone else to fold laundry, mop floors, etc.

Money is a problem? Honestly, the times money has been the biggest problem for us have been when we were short of it--not when one of us is earning more than the other. When we have enough to pay the bills, have some fun and save a bit, seems like the rules of pre-school should take over: Play nice, be fair and take turns.

In two-career couples, Michael frets, there's less specialization in the marriage, so supposedly the union becomes less useful to either party. Look more closely, Mike! Any long-running marriage is packed full of carefully developed--and charmingly offsetting--areas of expertise.

For us, the list starts with taxes, vacation planning and investment management. My husband likes that stuff, and it leaves me yawning. Bless him for doing it. Give me the wireless Internet system, the garden or just about any routine home repairs and I'm suddenly the savant. Tear us apart, and we'd both be pitiful idiots trying to learn unfamiliar routines.

Michael is right that longer work hours force two-career couples to try harder to clear out blocks of family time. When we do, though, we get to enjoy a lot more. We understand each other's career jokes and frustrations. We're better sounding boards on what to do next. And at dinner parties, we actually like to be seated at the same table.

The essence of a good marriage, it seems to me, is that both people have to learn to change and keep on adapting. Children bring tons of change. Mothers encounter it first during the nine months of pregnancy, starting with changing body dimensions. But fathers have to learn to adapt, too, by learning to help care for children, to take charge of new aspects of a household, to adapt as the mothers change.

So guys, if you're game for an exciting life, go ahead and marry a professional gal.

I'll make my response to this completely irresponsible piece of journalism easy to understand with a simple point-by-point rebuttal.

1. You are less likely to get married to her.
A career woman isn't likely to marry you because she'll be smart enough to realize that you are looking to spend the rest of your life with a subservient woman who's only hope in life is to stay home all day tending to your house and children. This woman may even want a house and children herself someday, but being that she is hoping for an equal partner and not a master, she'll choose her self-respect over you.

2. If you do marry, you're more likely to get divorced.
If, as a result of some prolonged excess of blinding charm on your part or her own temporary stupidity, she does actually marry you, after years of thinly-veiled servitude and sacrificing her own self-worth, education and professional prowess to make you feel more comfortable about your own, perhaps only average successes and income - she'll realize SHE CAN DO BETTER. Then she'll promptly put her shoes back on and and walk right out of your kitchen and then your life.

3. She is more likely to cheat on you.
They actually teach that to all women who dare attend college, don't they. Of course, it's recommended that you complete the core requirements first to make sure you're serious about having a career of your own...but after they determine your intelligence and ambition fit the profile, they straight-track you from Accounting 101 and the Theory of Organizational Behavior into the sections on how to have secret affairs under the guise of professional sounding things such as "business conferences" and "late night brainstorming sessions".

4. You are much less likely to have kids.
Why would this successful woman want to procreate with you, exactly? Some women are just smart enough to realize that certain genes simply shouldn't be passed on. In your case, it would be most unfortunate to tarnish a beautiful innocent baby with your archaic views of a woman's role in the workplace and family and heaven forbid, your talent for writing such egregious drivel.

5. If you do have kids, your wife is more likely to be unhappy.
Again, I hate to point out the obvious, but as much as the little wifey will love her children more than life itself, they will also be your children. If you have a boy he stands a chance of adopting your chauvinistic view of women in the home, and what mother is really happy with her son smacking her bottom and commanding, "Go grab me a bottle, woman!"? If you have a girl, it's probable you'll view her as the "bonus" slave. Her roles in the house will be undoubtedly different, but I imagine you could train her on how to sort the laundry as soon as she learns her colors.

6. Your house will be dirtier.
You state that "in 2005, two University of Michigan scientists concluded that if your wife has a job earning more than $15 an hour (roughly $30,000 a year), she will do 1.9 hours less housework a week." You know what? I'm actually going to let you have this one. And while you're busy figuring out how to operate such challenging household tools as 'the broom' and 'the sponge', I'm going to take a minute and use that equation to figure out just how many less hours of work I have to do based on my current income...I'm looking forward to spending the free time on all of my extra-marital affairs!

7. You'll be unhappy if she makes more than you.
But...but...if she makes more money than you, what will you use as leverage when you want her to cater to you?

8. She will be unhappy if she makes more than you.
It depends, of course, on how big of an allowance you let her have every week and how much of her own income she is able to spend fueling her shoe-shopping addiction. Haha. Get it? Shopping! Because she's a woman! And if you're really the thick-headed **bleep** you're so easily selling yourself to be, that's all you think we do with our hard earned money.

9. You are more likely to fall ill.
"Wives working longer hours not do not have adequate time to monitor their husband's health and healthy behavior, to manage their husband's emotional well-being or buffer his workplace stress." I think I read somewhere that wives who work more than 40 hours per week spend a lot less time wiping their husband's butts too. Those poor helpless husbands having to take such basic care of themselves. Frankly, it's downright appalling.

Wednesday, August 23, 2006

St. Barnabas Medicare fraud


August 20, 2006
Hospitals Grew With Medicare Paying the Way

LIVINGSTON, N.J. — The St. Barnabas hospital system spent much of the last decade in a sprint to expand through aggressive mergers, political connections and celebrity patrons like the actor Joe Pesci, growing into New Jersey’s largest health care provider and the state’s second biggest private employer.

But the rapid rise in the prominence of St. Barnabas — which at one time had 3,200 beds in nine hospitals throughout the state — was also fueled by what federal prosecutors called one of the most lucrative Medicare fraud schemes in the nation’s history.

By systematically inflating the bills for their sickest elderly patients, the prosecutors said, the executives of the St. Barnabas Health Care System bilked the federal government of at least $630 million from 1995 to 2003. The hospital system, which is a nonprofit institution, eventually stopped the overcharging when it was publicly questioned, and in June the hospital system and its executives, who had been threatened with criminal prosecution, agreed to repay the federal government $265 million.

St. Barnabas has rejected allegations that it defrauded Medicare. In the settlement, it did not acknowledge any deliberate wrongdoing, and last week, Ellen Greene, a spokeswoman for St. Barnabas, described the situation as the result of a misinterpretation of Medicare’s complex rules. She said the company was glad to have gotten past the problem and was focusing on its health care mission.

What happened at this health care system, based largely in suburbs throughout New Jersey, is representative of how hundreds of hospitals around the country, facing pressures from cuts in reimbursements by private insurers, improperly charged the taxpayer-financed Medicare program billions of dollars.

The episode at St. Barnabas, whose legal problems are not over, is part of a wave of Medicare fraud investigations that, according to a federal report, have reached more than 450 hospitals nationwide. Experts said the money involved could exceed $6 billion.

“The way the system has operated, it’s almost irresponsible corporate governance for hospitals not to cheat Medicare,” said Patrick Burns, an analyst at Taxpayers Against Fraud, a leading watchdog organization.

The problems began a decade ago, when hospital administrators around the country —facing cuts in reimbursements from managed care companies — turned to a handful of accounting firms that promised to help them maximize their financing from Medicare, the nation’s health insurance program for the elderly.

By exploiting loopholes in the complex formula that Medicare uses to reimburse providers for their most expensive cases, known as outliers, many hospitals’ federal aid doubled, quadrupled or increased 10 times.

St. Barnabas received more federal Medicare money from the pool of outlier money than some national chains 10 times its size. In 2001, the aid accounted for more than 15 percent of St. Barnabas’s total revenue, at least five times a typical percentage, and, according to depositions from former employees, the hospital system’s bookkeepers were ordered to hide the money elsewhere in the budget to avoid arousing the suspicions of auditors.

Ms. Greene declined to comment on that allegation.

Fearing that a harsher fine might run the St. Barnabas health care system out of business, federal prosecutors said St. Barnabas had been required to pay back less than half of the amount it overbilled.

A few weeks after the government case against St. Barnabas was settled, Tenet Healthcare, one of the nation’s largest hospital chains, agreed to repay $788 million of the $1.9 billion it had been accused of overcharging. No one involved in either case faced criminal charges.

After their Medicare subsidies shrank, both St. Barnabas and Tenet closed hospitals, costing hundreds of employees their jobs and disrupting medical care for the communities they had served. Still, in New Jersey, where state officials are impaneling a commission to close a dozen or more hospitals, St. Barnabas finds itself in a far stronger financial position than many hospitals that were not suspected of skirting the law.

As recently as the early 1990’s, St. Barnabas — which was named after a martyr who sold his possessions to help the poor, but is not run by the Roman Catholic Church — operated with a low-key business approach usually found at institutions that are licensed as nonprofit.

Faced with pressure from managed care insurance plans and the prospect of federal health care reform, the system’s chief executive, Ronald J. Del Mauro, voiced determination to firm up St. Barnabas’s financial stability. He preached a strict devotion to the bottom line and engineered a bold set of mergers and acquisitions.

By 1996, St. Barnabas ran seven hospitals in northern and central New Jersey, with 4,000 affiliated doctors, more than 20,000 employees and a million patients. According to depositions by a St. Barnabas consultant and two former employees, which were filed in the settlement, the drive for profits soon affected the Medicare billing, and hospital administrators found a way to capitalize on a loophole in the formula Medicare used to determine reimbursements in outlier cases.

One part of the equation was based on a hospital’s retail charges: the amount paid by the small percentage of patients who do not have insurance. By rapidly increasing retail charges for procedures often covered by Medicare, St. Barnabas got a steep increase in federal aid. As a result, its Medicare payments for outlier cases jumped to $287 million in 2002 from $85 million in 1998.

A consultant hired to work with St. Barnabas said in a sworn deposition that the hospital’s top executives held meetings to plan a “corporate directive” to increase federal aid by raising the prices charged to Medicare patients. The consultant, James T. Monahan, said that St. Barnabas had routinely added hidden charges to the room-and-board fees of Medicare patients and tried to conceal the windfall profits it was receiving from Medicare, in part by overstating its debt.

Mr. Monahan, who later filed a whistle-blower complaint under which he stands to gain millions of dollars from the legal settlement, declined to be interviewed for this article.

St. Barnabas was hardly alone in that practice. Hundreds of other hospitals were using similar tactics to artificially boost their Medicare payments, and many were clients of two accounting firms that specialized in helping clients do that.

The fraud was so extensive, Medicare officials said in 2003, that to restrict the number of outlier claims, they had to raise the threshold for qualified cases in each of the previous five years: from under $10,000 in 1998, to more than $33,000 in 2003.

Despite the years-long surge in questionable Medicare payments across the country, federal auditors did not undertake a widespread investigation until October 2002, when Kenneth R. Weakley, an analyst for UBS Warburg, wrote a report warning investors that Tenet was receiving an “extraordinary” and unsustainable amount of outlier financing.

As they announced the settlements with Tenet and St. Barnabas in June, Justice Department officials said they were satisfied that they had collected a substantial sum of money without risking an uncertain outcome at trial and without endangering the viability of the two hospital systems. David Knowlton, executive director of the New Jersey Health Care Quality Institute, an advocacy group, said that even though the settlements did not recover all the fraudulently obtained funds, they would provide a strong deterrent.

Officials of St. Barnabas pointed out that they had not admitted any wrongdoing and said they were relieved to be able to focus their attention on health care without the distraction of an investigation.

“This agreement,” Michael Slusarz, a vice president and spokesman for St. Barnabas, said in a statement in June, “will allow us to focus our energy and resources on our mission of providing the highest quality of care to our patients.”

As the state begins deciding how many, and which, hospitals to close, St. Barnabas is in an enviable position by virtue of its size, its reputation for providing quality health care and its political contacts in Trenton. For instance, the state’s health commissioner, Fred Jacobs, was senior vice president of medical affairs at St. Barnabas before being appointed to his current post, and Gov. Jon S. Corzine’s deputy chief of staff, Jeaninne LaRue, was a senior vice president and lobbyist for St. Barnabas. The company has also had a long relationship with Senate President Richard J. Codey, whose district in Essex County has some St. Barnabas facilities. During Mr. Codey’s 14 months as acting governor, his administration approved St. Barnabas’s application to perform highly profitable angioplasty procedures without having a cardiac surgical backup, an arrangement that some health care advocates criticized as favoritism. Mr. Codey insists that the decision was made based on the recommendations of a committee of health care experts, and that he was not personally involved.

“I certainly try to support the hospital, because it’s important for the community and a large employer, but there’s nothing more to it than that, ” he said.

St. Barnabas continues to face legal scrutiny, however.

A class-action suit filed by two hospitals, one from Colorado and one from Maine, claims $514 million in damages because the overbilling by St. Barnabas deprived “all of the legitimate hospitals of aid they were entitled to,” said Hal Hirsch, a lawyer for the plaintiffs. Wall Street rating agencies downgraded St. Barnabas bonds after the government settlement was signed and the hospitals’ lawsuit was filed.

Hundreds of nonprofit hospitals across the country are being scrutinized by the Internal Revenue Service and examined by Congress to determine whether they are following guidelines that forbid tax-exempt entities to give executives excessive compensation.

The United States attorney’s office in New Jersey declined to comment on whether the executive pay structure at St. Barnabas was part of any inquiry. But two people who had been questioned by Justice Department investigators said they had been asked for documentation on how Mr. Del Mauro and two other top administrators at St. Barnabas are paid.

Mr. Del Mauro gets no compensation from St. Barnabas Hospital Center, according to its public filings, but he and two other senior administrators are paid officers of SBC Management, a profit-making company that does business with the hospital center. That sort of arrangement is common in the hospital industry.

In 1998, Mr. Del Mauro received $613,000 from SBC, according to documents on file with the I.R.S. His compensation was $4.7 million in 2003, the last year St. Barnabas received the huge Medicare overpayments. In 2004, it was $4.2 million.

Speaking on Mr. Del Mauro’s behalf, Ms. Greene, vice president for public relations and marketing at St. Barnabas, said that she was unable to provide details about Mr. Del Mauro’s compensation or the amount and type of business transactions between the hospital and SBC Management, but that the hospital was complying with the law and the federal tax code.