Med School Grads Go to Work for Hedge Funds

Matthew Alkaitis, a third-year student at Harvard Medical School, is calm, friendly, and a good listener—the kind of qualities you’d want in a doctor. But though he spends 14 hours a day studying for his board exams, the 29-year-old isn’t sure how long he’ll be wearing a white coat. In September, Alkaitis, who also has a Ph.D. in biomedical sciences, will be starting a two-year fellowship at McKinsey & Co., where he’ll be advising clients in the health-care field. “I really hope that my career involves a period of dedicated time taking care of patients,” he says. “But I also have this competing goal to one day start or help build out a company that really adds something new and interesting and innovative to the medical system.” 

Like Alkaitis, more people are coming out of medical school and choosing not to practice medicine. Instead, they’re going into business—starting biotech and medical device companies, working at private equity firms, or doing consulting. In a 2016 survey of more than 17,000 med school grads by the Physicians Foundation and health-care recruitment firm Merritt Hawkins, 13.5 percent said they planned to seek a nonclinical job within three years. That’s up from 9.9 percent in 2012. A separate Merritt Hawkins survey asks final-year residents: “If you were to begin your education again, would you study medicine or would you select another field?” In 2015, 25 percent answered “another field,” up from 8 percent in 2006. Among the reasons they cited: a lack of free time, educational debt, and the hassle of dealing with insurance companies and other third-party payers.

The trend is worrying, as the U.S. already suffers a shortage of doctors, especially in rural areas. “If you have a large number of people out training to see patients and taking care of people in our communities, then all of a sudden deciding not to, that’s a concern,” says Atul Grover, executive vice president of the Association of American Medical Colleges. The AAMC projects a nationwide deficit of as many as 100,000 doctors by 2030. 

“I think that we are at a crossroads,” says Dr. Kevin Campbell, a cardiologist in Raleigh, N.C. “I trained in the early ’90s, and back then you definitely were thought of as a sellout or a second-class citizen if you weren’t going into clinical medicine.” 

Medical students have more options nowadays. Medical and business schools are teaming up to offer joint degrees. There were 148 students enrolled in M.D.-MBA programs in 2016, up from 61 in 2003, according to the AAMC. At Harvard Medical School, in a class of about 160 students, about 14 will pursue the joint degree, and an additional 25 or 30 will do master’s in other areas, such as law and public policy. “We have some students who want to go back to the Midwest and practice in a community setting,” says Dr. Anthony D’Amico, a professor of radiation oncology at Harvard Medical School and an advisory dean. And then there are those “who want to implement skill sets they’ve been blessed with and apply them on a broader scale.”

Dr. Rodney Altman of San Francisco says the time he spends treating patients in the emergency room informs his work as a managing director at Spindletop Capital, a private equity firm that invests in health-care companies. “I really wanted to practice health care on a macro level,” says Altman. “For me the one-on-one interaction with patients, while important and rewarding, wouldn’t have been as rewarding as being able to impact a larger number of patients.”

Altman says his mentors and colleagues had mixed feelings when, after a decade of practicing full time, he decided to dial back his hours in the emergency room. “Most people were supportive, a lot were envious, and some appropriately cautioned me about the risks I would be taking,” he says. “Out in the business world, you’re subject to the whims of the capital markets and to a lot more that is out of one’s control. I think medicine is quite safe and secure in that way.”

Some consulting companies are also stepping up hiring of doctors. Steffi Langner, a spokeswoman for McKinsey, says her firm is actively recruiting doctors because the analytical skills necessary to be an M.D. are similar to the problem-solving skills a consultant needs.

Dr. Jon Bloom trained as an anesthesiologist and practiced for three months, then enrolled at Massachusetts Institute of Technology’s Sloan School of Management. He says he was inspired by other doctors he knew who were inventors and entrepreneurs. One reason more are choosing that path is that investors are willing to fund them. Figures compiled by the National Venture Capital Association show that investment in medical-related startups climbed from $9.4 billion in 2007 to $11.9 billion in 2016.

Bloom is co-founder and chief executive officer of Podimetrics, a startup in Somerville, Mass., that has developed a mat device that predicts and prevents diabetic foot ulcers. He says that even though his invention is now on the market after receiving approval from the U.S. Food and Drug Administration in 2015, he’s still living the startup life. “I definitely don’t make nearly as much as what a doctor makes. That wasn’t really important to me,” he says. “My friends who graduated residency many years ago, they have multiple cars, fabulous houses. They did OK. I still occasionally eat ramen noodles,” he chuckles.

    BOTTOM LINE – A U.S. deficit of doctors may worsen as a growing minority of medical school grads are choosing other professions.

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    Monsanto Was Its Own Ghostwriter for Some Safety Reviews

    Monsanto Co. started an agricultural revolution with its “Roundup Ready” seeds, genetically modified to resist the effects of its blockbuster herbicide called Roundup. That ability to kill weeds while leaving desirable crops intact helped the company turn Roundup’s active ingredient, the chemical glyphosate, into one of the world’s most-used crop chemicals. When that heavy use raised health concerns, Monsanto noted that the herbicide’s safety had repeatedly been vetted by outsiders. But now there’s new evidence that Monsanto’s claims of rigorous scientific review are suspect.

    Dozens of internal Monsanto emails, released on Aug. 1 by plaintiffs’ lawyers who are suing the company, reveal how Monsanto worked with an outside consulting firm to induce the scientific journal to publish a purported “independent” review of Roundup’s health effects that appears to be anything but. The review, published along with four subpapers in a September 2016 special supplement, was aimed at rebutting the 2015 assessment by the International Agency for Research on Cancer (IARC) that glyphosate is a probable human carcinogen. That finding by the cancer-research arm of the World Health Organization led California last month to list glyphosate as a known human carcinogen. It has also spurred more than 1,000 lawsuits in state and federal courts by plaintiffs who claim they contracted non-Hodgkin lymphoma from Roundup exposure.

    Monsanto disclosed that it paid Intertek Group Plc’s consulting unit to develop the review supplement, entitled “An Independent Review of the Carcinogenic Potential of Glyphosate.” But that was the extent of Monsanto’s involvement, the main article said. “The Expert Panelists were engaged by, and acted as consultants to, Intertek, and were not directly contacted by the Monsanto Company,” according to the review’s Declaration of Interest statement. “Neither any Monsanto company employees nor any attorneys reviewed any of the Expert Panel’s manuscripts prior to submission to the journal.”

    Monsanto’s internal emails tell a different story. The correspondence shows the company’s chief of regulatory science, William Heydens, and other Monsanto scientists were heavily involved in organizing, reviewing, and editing drafts submitted by the outside experts. At one point, Heydens even vetoed explicit requests by some of the panelists to tone down what one of them wrote was the review’s “inflammatory” criticisms of IARC.

    “An extensive revision of the summary article is necessary,” wrote that panelist, John Acquavella, an epidemiologist at Aarhus University in Denmark, in a February 2016 email attached to his suggested edits of the draft. Alarmed, Ashley Roberts, the coordinator of the glyphosate papers for Intertek, forwarded Acquavella’s note and edits to Heydens at Monsanto, with the warning: “Please take a look at the latest from the epi(demiology) group!!!!”

    Heydens reedited Acquavella’s edits, arguing in six different notes in the draft’s margin that statements Acquavella had found inflammatory were not and should not be changed, despite the author’s requests. In the published article, Heydens’s edits prevailed. In an interview, Acquavella says that he was satisfied with the review’s final tone. According to an invoice he sent Monsanto, he billed the company $20,700 for a single month’s work on the review, which took nearly a year to complete.

    Monsanto defends the review’s independence. Monsanto did only “cosmetic editing” of the Intertek papers and nothing “substantive” to alter panelists’ conclusions, says Scott Partridge, Monsanto’s vice president for global strategy. While the “choice of words” in the Declaration of Interest “was not ideal,” he says, “it didn’t change the science.”

    In July 2016, the journal’s editor, Roger McClellan, emailed his final instructions to Roberts at Intertek on what the paper’s Acknowledgment and Declaration of Interest statements should include. “I want them to be as clear and transparent as possible,” he wrote. “At the end of the day I want the most aggressive critics of Monsanto, your organization and each of the authors to read them and say—Damn, they covered all the points we intended to raise.”

    Specifically, McClellan told Roberts to make clear how the panelists were hired—“ie by Intertek,” McClellan wrote. “If you can say without consultation with Monsanto, that would be great. If there was any review of the reports by Monsanto or their legal representatives, that needs to be disclosed.”

    Roberts forwarded McClellan’s emails, along with a more technical question, to Heydens, who responded, “Good grief.” The Declaration of Interest statement was rewritten per McClellan’s instructions, despite being untrue. There was no mention of the company’s participation in the editing.

    Monsanto’s editorial involvement appears “in direct opposition to their disclosure,” says Genna Reed, a science and policy analyst at the Union of Concerned Scientists’ Center for Science and Democracy. “It does seem pretty suspicious.”

    In response to questions, McClellan wrote in an email on Aug. 7 that he’d been unaware of the Monsanto documents and has forwarded the matter to the journal’s publisher, Taylor & Francis, in Abingdon, England. “These are serious accusations relative to scientific publishing canons and deserve very careful investigation,” he wrote. “I can assure you that Taylor and Francis, as the publisher, and I, as the Scientific Editor of , will carefully investigate the matter and take appropriate action.” A Taylor & Francis spokeswoman says it has begun an investigation.

    The Monsanto documents, more than 70 in all, were obtained through pretrial discovery and posted online by some of the plaintiffs’ lawyers, who claim Monsanto missed a 30-day window to object to their release. Monsanto says it was blindsided by the disclosures and has asked U.S. District Judge Vince Chhabria in San Francisco to order the documents pulled from the web and to punish the attorneys for violating confidentiality orders. Says Monsanto’s Partridge: “It’s unfortunate these lawyers are grandstanding at the expense of their clients’ interests.”

    Other emails show that Monsanto’s lead toxicologist, Donna Farmer, was removed as a co-author of a 2011 study on glyphosate’s reproductive effects, but not before she made substantial changes and additions to the paper behind the scenes. The study, published in Taylor & Francis’s , served to counter findings that glyphosate hampers human reproduction and development. Partridge says Farmer’s contributions didn’t warrant authorship credit. While almost all of her revisions made it into the published paper, her name doesn’t even show up in the acknowledgments.

      BOTTOM LINE – Monsanto has long noted that independent scientists have vouched for the safety of its Roundup herbicide. Court data show its employees edited some of those reviews.

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      This Is Chinas Real Economic Problem

      China bulls could be forgiven for some self-­congratulatory back-patting these days. The country’s gross domestic product expanded 6.9 percent in the first three months of the year, the fastest rate since the third quarter of 2015. China is showing “marked improvement in economic performance, and major economic indicators have continued to move in a positive direction,” Premier Li Keqiang told global business leaders at a World Economic Forum meeting in Dalian on June 27.

      But one key indicator—total factor productivity—gives a more worrisome picture of China’s economic health. Total factor productivity is the extra output that the economy produces without additional labor or capital—it’s what creates prosperity. While productivity in the manufacturing industry grew an average of 2.6 percent a year from 1998 to 2007, growth has been almost zero since, according to Loren Brandt, a China specialist at the University of Toronto. In the U.S., by contrast, productivity growth fell from 1 percent to about 0.5 percent over the same period, he says.

      It isn’t unusual for productivity to slow once the easy gains that come from industrialization, the development of supply chains, and the embrace of technologies such as computers are used up. “You would expect productivity to come down, but not as sharply as we’re seeing” in China, Brandt says.

      So what explains the dramatic drop? There’s a pretty obvious culprit. To combat the effects of the global financial crisis, China unleashed a 4 ­trillion-yuan ($586 billion) stimulus program in 2008, much of it directed at state-owned enterprises (SOEs), to prop up growth and avoid mass layoffs. While the spending helped China avoid a deep slump, the focus on SOEs hurt the private sector. Today, state companies get almost 30 percent of all loans but contribute less than a tenth of GDP, according to Gavekal Dragonomics, a Beijing-based economic consulting firm. “The government’s repeated use of state-owned enterprises to stimulate short-term activity has weakened the private sector and lowered productivity growth,” Andrew Batson, research director at Dragonomics, wrote in a May report. As a result, China is “increasingly locked into a slower-growth future.”

      In most economies, market competition helps drive productivity gains. But China’s long love affair with industrial policy has only intensified under President Xi Jinping, as demonstrated by the launch two years ago of Made in China 2025, a blueprint for a comprehensive industrial upgrade that complements the 13th Five-Year Plan. The goal is to foster national champions in fields such as aerospace, robotics, and new energy vehicles through a combination of easy credit, subsidies, tax breaks, and other perks. In the process, Beijing and local governments are extending the life of some corporate zombies, which prevents healthier businesses from taking their place. “In dynamic economies, we expect that the really good firms are going to be more productive, be more profitable, and so they will capture more and more market share,” Brandt says. “When bad firms are forced to exit, that is an important driver of productivity. In China, that is almost not happening at all.”

      China offers tax breaks to companies that invest in research and development, while some local governments, including Guangdong’s, also provide subsidies for each robot a company purchases. SOEs are better positioned to take advantage of such largesse because of their ties to Communist Party cadres: So while 75 percent of SOEs spend money on R&D and 14 percent have robots, the comparable figures for private companies are 42 percent and 6 percent, according to a survey of 1,200 businesses by Wuhan University, Stanford, the Chinese Academy of Social Sciences, and the Hong Kong University of Science and Technology.

      That private-sector businesses skimp on such productivity enhancements is a particular concern given the country’s rising wages. Over the past decade, the average monthly manufacturing wage has more than doubled, to 4,126 yuan ($607), higher than in Mexico and Malaysia, according to the joint study, which was published last month. Productivity is failing to keep pace with rising wages, which is “putting great pressure on the profits of countless Chinese firms,” says the report.

      So what’s to be done? Brandt says the impressive productivity gains China realized before 2008 resulted from a series of market-opening reforms, including the shuttering of tens of thousands of state enterprises starting in the late 1990s and the lowering of import tariffs and other barriers to ­competition—a condition for the country’s entry into the World Trade Organization in 2001. The problem is that the ­market-liberalization push has pretty much stalled, he says. Xi should open protected sectors of the economy, such as telecommunications and freight hauling, to competition and allow more zombie companies to die. “There is a lot of misallocation of resources and inefficiency in the Chinese economy,” Brandt says. “If they eliminate that, there’s still the potential for huge productivity gains.”

        BOTTOM LINE – Productivity in Chinas manufacturing industry grew, on average, 2.6 percent a year from 1998 to 2007 but has since flatlined.

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        Googles Health Moonshot Comes Back to Earth

        The first of 10,000 volunteers will soon walk into labs at Stanford and Duke to subject themselves to a two-day battery of tests. They’ll provide a blood sample for DNA sequencing and a stool sample for a gut bacteria scan; receive a chest X-ray and electrocardiogram; and take a psychological assessment. Participants will be asked if they’re willing to share electronic health records and insurance claims, and later, may be asked to share records of phone, text, and social media activity. All will go home with a sleep sensor and a special wristwatch meant to measure their heart rate, sweat, and steps for the next four years.

        Opening on April 19, the study is called Baseline, as in a starting point for what healthy biometric data should look like. It’s the first serious public test for Verily Life Sciences, formerly Google Life Sciences. While Verily has separated from Google’s internet business within the Alphabet Inc. holding company, it’s taking a page from the playbook of its former parent, which aims to collect and organize information online. Verily wants to collect data from our bodies, using it to guide better health decisions.

        While that sounds ambitious, it’s much more modest than the missions Verily promoted when it was officially part of Google. Years ago, the biotech division promised projects such as glucose-monitoring contact lenses and all-in-one medical scanners; those remain in the lab. Former employees say the internal code name for the life sciences division was Panacea—cure-all. That’s over.

        “We grew up,” says Verily Chief Executive Officer Andy Conrad. The middle-aged geneticist has adopted the Silicon Valley T-shirt-and-flip-flops wardrobe of eternal youth, but he’s given up on a lot of the jargon, including Google’s onetime favorite word. Like some other Alphabet holdings, Verily has stopped talking about everything in terms of industry-changing “moonshots.” What next-generation technology requires in practical terms is “setting the goal and then getting down to the day-to-day practical drudgery,” Conrad says. “If you examine the real moonshot closely, you’ll see a dude whose job is to rivet and a lady whose job is to do some wiring.”

        It’s an opportune time for Verily, which has toned down its promises—as recently as 2015, Conrad was talking about ways to “defeat Mother Nature”—and is displaying maturity. Scandals at blood-testing startup Theranos Inc. and online insurance broker Zenefits have made investors and regulators much more suspicious of audacious claims in the health-care business. At the same time, Apple, Microsoft, and Samsung are all experimenting with artificial intelligence, data analysis, and wearable gadgets in the field, and venture capitalists continue to pour cash into companies that pass their seriousness tests.

        Verily is on that list. Temasek Holdings Ltd., the Singapore investment firm, has contributed $800 million in funding, and Verily no longer needs its corporate parent to pay its bills. Other sources of income include contracts with Big Pharma companies GlaxoSmithKline, Novartis, Johnson & Johnson, Biogen, and Dexcom. This partnership model has eased Verily’s acceptance in the industry compared with other Silicon Valley companies, and may help it hasten products to market, too.

        Most of those efforts remain a ways off. Robert Califf, a former U.S. Food and Drug Administration commissioner who helped design the Baseline study, says he admires Verily’s focus on preventative medicine, but success is far from guaranteed. “At times, Silicon Valley people are very naive about the complexity of health care,” Califf says. “It’s going to be a lot harder than they think.”
        Verily’s string of false starts speaks to the field’s challenges, and to Conrad’s. Google Life Sciences’ first project, begun in 2012, was called Iris. Brian Otis and Babak Parviz, then engineering directors at the secretive Google X research lab, built a sensor small enough to fit onto a contact lens that could measure glucose levels in a wearer’s tears, a relatively noninvasive way to continually monitor diabetics. Conrad joined the division in early 2013, when Google was hiring dozens of top scientists from biotech firms, universities, and federal agencies. Back then, Life Sciences was interviewing five times as many job candidates as other divisions, says a former Google recruiter.

        Today, Verily has settled in the biotech hub of South San Francisco. At the former headquarters of drugmaker Onyx Pharmaceuticals, 500 staffers have filled an open, glassy workspace of lab benches and standing desks, where the conference rooms are named for obscure anatomical parts.

        Conrad took the CEO title when Google spun off the business under the Alphabet umbrella in 2015; the Verily name came shortly thereafter. By that time, Novartis’s Alcon unit had licensed Iris’s smart contact lens technology for further development, and Conrad had announced that his team was working on a -style tricorder, a handheld device that could analyze a person’s health by scanning microscopic “nanoparticles” injected into the bloodstream.

        Problems with each project mounted pretty fast. A commercial model of the smart contact lens has stalled because glucose readings from tears don’t consistently correlate with conventional readings from blood, say two people familiar with the matter. The tricorder, which Conrad called “a few years away” in 2014, is waiting on nanoparticles that can prove consistently effective outside a petri dish. The nanoparticles Verily’s researchers bought from third-party manufacturers aren’t reliable in live animals, so now they’re making their own.

        “Mother Nature defeated us wildly,” Conrad says of the tricorder project, though he’s quick to add that the research continues. Alcon says it’s pleased with the progress on its contact lenses but declined to provide a timetable for clinical trials. In the meantime, Verily and Alcon are working together on lenses that automatically adjust focus depending on where a person is looking and what she’s looking at. (Again, no timetable.)

        Another problem, several former employees say, has been Conrad’s impulsive management style. Verily bled top staff in its first year under Alphabet as the embellishment-prone CEO launched major projects and reassigned staff seemingly based on whims that struck him in meetings, these people say. Last August, when Verily announced plans to work in the nascent field of immuno-oncology, seeking ways to help the immune system fight cancer, the news surprised some on the staff, says one of the former employees. Spokeswoman Carolyn Wang says the company had hired multiple experts in the field before August and is moving carefully in the “complicated area.”

        “Andy’s a hard-driving guy who likes to win,” says Bill Maris, the venture capitalist who worked closely with Conrad at Google. “He’s not afraid to make changes when changes need to be made.” Verily’s Wang says the company was “fairly intentional about the changes that were happening around that time to its management team.”

        In the short term, Verily is focused on getting a separate version of its glucose monitor to market next year. This one doesn’t involve a contact lens: It’s basically a smaller, lighter version of the thumb-drive-size monitor sold to Type 1 diabetics by Verily partner Dexcom, which can cost patients thousands of dollars if not covered by insurance. A second, even smaller version is planned for 2020, and geared toward the Type 2 diabetes market. That could be a hard sell, as Type 2 diabetes isn’t immediately life-threatening; but Otis, now Verily’s chief technology officer, says the company is working to make its gear an order of magnitude cheaper. Dexcom CEO Kevin Sayer declined to comment on price.
        If Verily and its partners can get their products to market, the next step will be to get customers to share the essential fuel: all that information from their bodies. Even if Verily doesn’t keep the data, or even look at it, that may take a lot of persuasion. The Baseline study’s tests alone likely cost at least $300 million even without administrative costs, says Sam Gambhir, the professor running Stanford’s part of it. Verily declined to comment.

        A central question behind the study, and Verily’s various gadgets, is how much the company can track without creeping people out. At a March meeting about refinements to the Baseline wristwatch, Otis asked staffers to pitch ways the watch could anticipate, for example, when a patient was about to take pills without needing to tap buttons or swipe screens. “It could continuously listen for key words,” said David He, the technical lead. “Say, ‘I’m going to eat now.’ ”

        “I hear that and it screams privacy,” said product manager Tushar Parlikar, shaking his head. “I can’t take that to our product counsel.” The compromise: “We can give them feedback to keep encouraging them,” He suggested. The watch could vibrate at pill time, or award gamelike badges when a user reports taking pills.

        Neuroscientist Tom Insel, who joined Verily after 13 years running the mental health division at the U.S. National Institutes of Health, says his group is especially interested in trying to track phone behavior to detect the onset of depression. Many companies already use some of that information, he says, to sell ads aimed at consumers, who might as well use it to take care of themselves, as long as his team makes it easy to control who sees the data. “We must put trust front and center,” Insel says. “Because, yeah, it is creepy.”

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