DealBook: Switzerland to Require Banks to Hold More Capital to Offset Mortgages

LONDON – Switzerland said on Wednesday that Swiss banks would be required to hold additional capital for residential mortgages amid concerns that the country’s booming property market was overheating.

The country, which already has more stringent capital rules for its banks than other European nations, said lenders would be required to hold an additional 1 percent of risk-weighted assets to make the financial system more stable in light of an “excessive rise in prices in the real estate market and exorbitant mortgage debt.” Banks have until Sept. 30 to comply.

Property values in Switzerland have been rising as investors spooked by the uncertainties of the economic crisis in the euro zone sought a more stable places for their money.

Greater demand for Swiss homes has pushed up prices at a time of low interest rates and led many buyers to take on larger mortgages. The Swiss central bank has been unable to cool the market by increasing borrowing rates because of an overvalued Swiss currency.

An index created by the Swiss bank UBS measuring the likelihood of a Swiss property bubble was “clearly in the risk zone,” the bank wrote in a note to investors this month.

In the final three months of 2012, house prices soared to six times the annual average Swiss household income compared with about four times in 2000, according to the bank. It called the ever-rising demand for properties not intended for personal use “remarkable.”

The government said it was following a recommendation by the Swiss National Bank to increase the capital buffers. “The sustained growth in mortgage debt and rise in real estate prices of residential properties has led to imbalances which pose a significant risk to the stability of the banking sector and to that of the economy,” the government said in a statement.

Mortgage debt has been growing faster than the economy, and mortgage volume in relation to income has reached “risky” levels, the government said, adding that residential property prices had risen more than what was justified by fundamental factors.

UBS and Credit Suisse, Switzerland’s biggest banks, both said this month that they were working on increasing their capital buffers and that the suggested increase would not change their plans.

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India Ink: Image of the Day: Feb. 12

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DealBook Column: Relationship Science Plans Database of Names and Connections

It sounds like a Rolodex for the 1 percent: two million deal makers, power brokers and business executives — not only their names, but in many cases the names of their spouses and children and associates, their political donations, their charity work and more — all at a banker’s fingertips.

Such is the promise of a new company called Relationship Science.

Never heard of it? Until recently, neither had I. But a few months ago, whispers began that this young company was assembling a vast trove of information about big names in corporate America. What really piqued my interest was that bankrolling this start-up were some Wall Street heavyweights, including Henry R. Kravis, Ronald O. Perelman, Kenneth G. Langone, Joseph R. Perella, Stanley F. Druckenmiller and Andrew Tisch.

It turns out that over the last two years, with a staff of more than 800 people, mostly in India, Relationship Science has been quietly building what it hopes will be the ultimate business Who’s Who. If it succeeds, it could radically change the way Wall Street does business.

That’s a big if, of course. There are plenty of other databases out there. And there’s always Google. Normally I wouldn’t write about a technology company, but I kept hearing chatter about it from people on Wall Street.

Then I got a glimpse of this new system. Forget six degrees of Kevin Bacon. This is six degrees of Henry Kravis.

Here’s how it works: Let’s say a banker wants to get in touch with Mr. Kravis, the private equity deal maker, but doesn’t know him personally. The banker can type Mr. Kravis’s name into a Relationship Science search bar, and the system will scan personal contacts for people the banker knows who also know Mr. Kravis, or perhaps secondary or tertiary connections.

The system shows how the searcher is connected — perhaps a friend, or a friend of a friend, is on a charitable board — and also grades the quality of those connections by identifying them as “strong,” “average” or “weak.” You will be surprised at the many ways the database finds connections.

The major innovation is that, unlike Facebook or LinkedIn, it doesn’t matter if people have signed up for the service. Many business leaders aren’t on Facebook or LinkedIn, but Relationship Science doesn’t rely on user-generated content. It just scrapes the Web.

Relationship Science is the brainchild of Neal Goldman, a co-founder of CapitalIQ, a financial database service that is used by many Wall Street firms. Mr. Goldman sold CapitalIQ, which has 4,200 clients worldwide, to McGraw-Hill in 2004 for more than $200 million. That may explain why he was able to easily round up about $60 million in funds for Relationship Science from many boldface names in finance. He raised the first $6 million in three days.

“I knew there had to be a better way,” Mr. Goldman said about the way people search out others. Most people use Google to learn about people and ask friends and colleagues if they or someone they know can provide an introduction.

Relationship Science essentially does this automatically. It will even show you every connection you have to a specific company or organization.

“We live in a service economy,” Mr. Goldman said. “Building relationships is the most important part for selling and growing.”

Kenneth Langone, a financier and co-founder in Home Depot, said that when he saw a demonstration of the system he nearly fell off his chair. He used an unprintable four-letter word.

“My life is all about networking,” said Mr. Langone, who was so enthusiastic he became an investor and recently joined the board of Relationship Science. “How many times do I say, ‘How do I get to this guy?’ It is scary how much it helps.”

Mr. Goldman’s version of networking isn’t for everyone. His company charges $3,000 a year for a person to have access to the site. (That might sound expensive, but by Wall Street standards, it’s not.)

Price aside, the possibility that this system could lead to a deal or to a new wealth management client means it just might pay for itself.

“If you get one extra deal, the price is irrelevant,” Mr. Goldman said.

Apparently, his sales pitch is working. Already, some big financial firms have signed up for the service, which is still in a test phase. Investment bankers, wealth managers, private equity and venture capital investors have been trying to arrange meetings to see it, egged on, no doubt, by many of Mr. Goldman’s well-heeled investors. Even some development offices of charities have taken an interest.

The system I had a peek at was still a bit buggy. In some cases, it was missing information; in other cases the information was outdated. In still other instances, the program missed connections. For example, it didn’t seem to notice that Lloyd C. Blankfein, the chief executive of Goldman Sachs, should obviously know a certain senior partner at Goldman.

But the promise is there, if the initial kinks are worked out. I discovered I had paths I never knew existed to certain people or companies. (Mr. Goldman should market his product to reporters, too.)

One of the most vexing and perhaps unusual choices Mr. Goldman seems to have made with Relationship Science is to omit what would be truly valuable information: phone numbers and e-mail addresses.

Mr. Goldman explained the decision. “This isn’t about spamming people.” He said supplying phone numbers wouldn’t offer any value because people don’t like being cold-called, which he said was the antithesis of the purpose of his database.

Ultimately, he said, as valuable as the technology can be in discovering the path to a relationship, an artful introduction is what really counts.

“We bring the science,” he said. “You bring the art.”


This post has been revised to reflect the following correction:

Correction: February 12, 2013

An earlier version of this column misspelled the surname of one of the backers of Relationship Science. He is Ron O. Perelman, not Pearlman.

A version of this article appeared in print on 02/12/2013, on page B1 of the NewYork edition with the headline: A Database Of Names, And How They Connect.
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Well: Straining to Hear and Fend Off Dementia

At a party the other night, a fund-raiser for a literary magazine, I found myself in conversation with a well-known author whose work I greatly admire. I use the term “conversation” loosely. I couldn’t hear a word he said. But worse, the effort I was making to hear was using up so much brain power that I completely forgot the titles of his books.

A senior moment? Maybe. (I’m 65.) But for me, it’s complicated by the fact that I have severe hearing loss, only somewhat eased by a hearing aid and cochlear implant.

Dr. Frank Lin, an otolaryngologist and epidemiologist at Johns Hopkins School of Medicine, describes this phenomenon as “cognitive load.” Cognitive overload is the way it feels. Essentially, the brain is so preoccupied with translating the sounds into words that it seems to have no processing power left to search through the storerooms of memory for a response.


Katherine Bouton speaks about her own experience with hearing loss.


A transcript of this interview can be found here.


Over the past few years, Dr. Lin has delivered unwelcome news to those of us with hearing loss. His work looks “at the interface of hearing loss, gerontology and public health,” as he writes on his Web site. The most significant issue is the relation between hearing loss and dementia.

In a 2011 paper in The Archives of Neurology, Dr. Lin and colleagues found a strong association between the two. The researchers looked at 639 subjects, ranging in age at the beginning of the study from 36 to 90 (with the majority between 60 and 80). The subjects were part of the Baltimore Longitudinal Study of Aging. None had cognitive impairment at the beginning of the study, which followed subjects for 18 years; some had hearing loss.

“Compared to individuals with normal hearing, those individuals with a mild, moderate, and severe hearing loss, respectively, had a 2-, 3- and 5-fold increased risk of developing dementia over the course of the study,” Dr. Lin wrote in an e-mail summarizing the results. The worse the hearing loss, the greater the risk of developing dementia. The correlation remained true even when age, diabetes and hypertension — other conditions associated with dementia — were ruled out.

In an interview, Dr. Lin discussed some possible explanations for the association. The first is social isolation, which may come with hearing loss, a known risk factor for dementia. Another possibility is cognitive load, and a third is some pathological process that causes both hearing loss and dementia.

In a study last month, Dr. Lin and colleagues looked at 1,984 older adults beginning in 1997-8, again using a well-established database. Their findings reinforced those of the 2011 study, but also found that those with hearing loss had a “30 to 40 percent faster rate of loss of thinking and memory abilities” over a six-year period compared with people with normal hearing. Again, the worse the hearing loss, the worse the rate of cognitive decline.

Both studies also found, somewhat surprisingly, that hearing aids were “not significantly associated with lower risk” for cognitive impairment. But self-reporting of hearing-aid use is unreliable, and Dr. Lin’s next study will focus specifically on the way hearing aids are used: for how long, how frequently, how well they have been fitted, what kind of counseling the user received, what other technologies they used to supplement hearing-aid use.

What about the notion of a common pathological process? In a recent paper in the journal Neurology, John Gallacher and colleagues at Cardiff University suggested the possibility of a genetic or environmental factor that could be causing both hearing loss and dementia — and perhaps not in that order. In a phenomenon called reverse causation, a degenerative pathology that leads to early dementia might prove to be a cause of hearing loss.

The work of John T. Cacioppo, director of the Social Neuroscience Laboratory at the University of Chicago, also offers a clue to a pathological link. His multidisciplinary studies on isolation have shown that perceived isolation, or loneliness, is “a more important predictor of a variety of adverse health outcomes than is objective social isolation.” Those with hearing loss, who may sit through a dinner party and not hear a word, frequently experience perceived isolation.

Other research, including the Framingham Heart Study, has found an association between hearing loss and another unexpected condition: cardiovascular disease. Again, the evidence suggests a common pathological cause. Dr. David R. Friedland, a professor of otolaryngology at the Medical College of Wisconsin in Milwaukee, hypothesized in a 2009 paper delivered at a conference that low-frequency loss could be an early indication that a patient has vascular problems: the inner ear is “so sensitive to blood flow” that any vascular abnormalities “could be noted earlier here than in other parts of the body.”

A common pathological cause might help explain why hearing aids do not seem to reduce the risk of dementia. But those of us with hearing loss hope that is not the case; common sense suggests that if you don’t have to work so hard to hear, you have greater cognitive power to listen and understand — and remember. And the sense of perceived isolation, another risk for dementia, is reduced.

A critical factor may be the way hearing aids are used. A user must practice to maximize their effectiveness and they may need reprogramming by an audiologist. Additional assistive technologies like looping and FM systems may also be required. And people with progressive hearing loss may need new aids every few years.

Increasingly, people buy hearing aids online or from big-box stores like Costco, making it hard for the user to follow up. In the first year I had hearing aids, I saw my audiologist initially every two weeks for reprocessing and then every three months.

In one study, Dr. Lin and his colleague Wade Chien found that only one in seven adults who could benefit from hearing aids used them. One deterrent is cost ($2,000 to $6,000 per ear), seldom covered by insurance. Another is the stigma of old age.

Hearing loss is a natural part of aging. But for most people with hearing loss, according to the National Institute on Deafness and Other Communication Disorders, the condition begins long before they get old. Almost two-thirds of men with hearing loss began to lose their hearing before age 44. My hearing loss began when I was 30.

Forty-eight million Americans suffer from some degree of hearing loss. If it can be proved in a clinical trial that hearing aids help delay or offset dementia, the benefits would be immeasurable.

“Could we do something to reduce cognitive decline and delay the onset of dementia?” he asked. “It’s hugely important, because by 2050, 1 in 30 Americans will have dementia.

“If we could delay the onset by even one year, the prevalence of dementia drops by 15 percent down the road. You’re talking about billions of dollars in health care savings.”

Should studies establish definitively that correcting hearing loss decreases the potential for early-onset dementia, we might finally overcome the stigma of hearing loss. Get your hearing tested, get it corrected, and enjoy a longer cognitively active life. Establishing the dangers of uncorrected hearing might even convince private insurers and Medicare that covering the cost of hearing aids is a small price to pay to offset the cost of dementia.


Katherine Bouton is the author of the new book, “Shouting Won’t Help: Why I — and 50 Million Other Americans — Can’t Hear You,” from which this essay is adapted.


This post has been revised to reflect the following correction:

Correction: February 12, 2013

An earlier version of this article misstated the location of the Medical College of Wisconsin. It is in Milwaukee, not Madison.

Read More..

Well: Straining to Hear and Fend Off Dementia

At a party the other night, a fund-raiser for a literary magazine, I found myself in conversation with a well-known author whose work I greatly admire. I use the term “conversation” loosely. I couldn’t hear a word he said. But worse, the effort I was making to hear was using up so much brain power that I completely forgot the titles of his books.

A senior moment? Maybe. (I’m 65.) But for me, it’s complicated by the fact that I have severe hearing loss, only somewhat eased by a hearing aid and cochlear implant.

Dr. Frank Lin, an otolaryngologist and epidemiologist at Johns Hopkins School of Medicine, describes this phenomenon as “cognitive load.” Cognitive overload is the way it feels. Essentially, the brain is so preoccupied with translating the sounds into words that it seems to have no processing power left to search through the storerooms of memory for a response.


Katherine Bouton speaks about her own experience with hearing loss.


A transcript of this interview can be found here.


Over the past few years, Dr. Lin has delivered unwelcome news to those of us with hearing loss. His work looks “at the interface of hearing loss, gerontology and public health,” as he writes on his Web site. The most significant issue is the relation between hearing loss and dementia.

In a 2011 paper in The Archives of Neurology, Dr. Lin and colleagues found a strong association between the two. The researchers looked at 639 subjects, ranging in age at the beginning of the study from 36 to 90 (with the majority between 60 and 80). The subjects were part of the Baltimore Longitudinal Study of Aging. None had cognitive impairment at the beginning of the study, which followed subjects for 18 years; some had hearing loss.

“Compared to individuals with normal hearing, those individuals with a mild, moderate, and severe hearing loss, respectively, had a 2-, 3- and 5-fold increased risk of developing dementia over the course of the study,” Dr. Lin wrote in an e-mail summarizing the results. The worse the hearing loss, the greater the risk of developing dementia. The correlation remained true even when age, diabetes and hypertension — other conditions associated with dementia — were ruled out.

In an interview, Dr. Lin discussed some possible explanations for the association. The first is social isolation, which may come with hearing loss, a known risk factor for dementia. Another possibility is cognitive load, and a third is some pathological process that causes both hearing loss and dementia.

In a study last month, Dr. Lin and colleagues looked at 1,984 older adults beginning in 1997-8, again using a well-established database. Their findings reinforced those of the 2011 study, but also found that those with hearing loss had a “30 to 40 percent faster rate of loss of thinking and memory abilities” over a six-year period compared with people with normal hearing. Again, the worse the hearing loss, the worse the rate of cognitive decline.

Both studies also found, somewhat surprisingly, that hearing aids were “not significantly associated with lower risk” for cognitive impairment. But self-reporting of hearing-aid use is unreliable, and Dr. Lin’s next study will focus specifically on the way hearing aids are used: for how long, how frequently, how well they have been fitted, what kind of counseling the user received, what other technologies they used to supplement hearing-aid use.

What about the notion of a common pathological process? In a recent paper in the journal Neurology, John Gallacher and colleagues at Cardiff University suggested the possibility of a genetic or environmental factor that could be causing both hearing loss and dementia — and perhaps not in that order. In a phenomenon called reverse causation, a degenerative pathology that leads to early dementia might prove to be a cause of hearing loss.

The work of John T. Cacioppo, director of the Social Neuroscience Laboratory at the University of Chicago, also offers a clue to a pathological link. His multidisciplinary studies on isolation have shown that perceived isolation, or loneliness, is “a more important predictor of a variety of adverse health outcomes than is objective social isolation.” Those with hearing loss, who may sit through a dinner party and not hear a word, frequently experience perceived isolation.

Other research, including the Framingham Heart Study, has found an association between hearing loss and another unexpected condition: cardiovascular disease. Again, the evidence suggests a common pathological cause. Dr. David R. Friedland, a professor of otolaryngology at the Medical College of Wisconsin in Milwaukee, hypothesized in a 2009 paper delivered at a conference that low-frequency loss could be an early indication that a patient has vascular problems: the inner ear is “so sensitive to blood flow” that any vascular abnormalities “could be noted earlier here than in other parts of the body.”

A common pathological cause might help explain why hearing aids do not seem to reduce the risk of dementia. But those of us with hearing loss hope that is not the case; common sense suggests that if you don’t have to work so hard to hear, you have greater cognitive power to listen and understand — and remember. And the sense of perceived isolation, another risk for dementia, is reduced.

A critical factor may be the way hearing aids are used. A user must practice to maximize their effectiveness and they may need reprogramming by an audiologist. Additional assistive technologies like looping and FM systems may also be required. And people with progressive hearing loss may need new aids every few years.

Increasingly, people buy hearing aids online or from big-box stores like Costco, making it hard for the user to follow up. In the first year I had hearing aids, I saw my audiologist initially every two weeks for reprocessing and then every three months.

In one study, Dr. Lin and his colleague Wade Chien found that only one in seven adults who could benefit from hearing aids used them. One deterrent is cost ($2,000 to $6,000 per ear), seldom covered by insurance. Another is the stigma of old age.

Hearing loss is a natural part of aging. But for most people with hearing loss, according to the National Institute on Deafness and Other Communication Disorders, the condition begins long before they get old. Almost two-thirds of men with hearing loss began to lose their hearing before age 44. My hearing loss began when I was 30.

Forty-eight million Americans suffer from some degree of hearing loss. If it can be proved in a clinical trial that hearing aids help delay or offset dementia, the benefits would be immeasurable.

“Could we do something to reduce cognitive decline and delay the onset of dementia?” he asked. “It’s hugely important, because by 2050, 1 in 30 Americans will have dementia.

“If we could delay the onset by even one year, the prevalence of dementia drops by 15 percent down the road. You’re talking about billions of dollars in health care savings.”

Should studies establish definitively that correcting hearing loss decreases the potential for early-onset dementia, we might finally overcome the stigma of hearing loss. Get your hearing tested, get it corrected, and enjoy a longer cognitively active life. Establishing the dangers of uncorrected hearing might even convince private insurers and Medicare that covering the cost of hearing aids is a small price to pay to offset the cost of dementia.


Katherine Bouton is the author of the new book, “Shouting Won’t Help: Why I — and 50 Million Other Americans — Can’t Hear You,” from which this essay is adapted.


This post has been revised to reflect the following correction:

Correction: February 12, 2013

An earlier version of this article misstated the location of the Medical College of Wisconsin. It is in Milwaukee, not Madison.

Read More..

DealBook: Barclays to Cut 3,700 Jobs in Overhaul

8:13 a.m. | Updated

LONDON – Barclays announced a major restructuring that will eliminate 3,700 jobs and close several business units, as the bank reported a big loss in the fourth quarter of 2012.

The overhaul of its operations comes after a series of scandals at the bank, including the manipulation of benchmark interest rates, which led to the resignation of the firm’s former chief executive, Robert E. Diamond Jr.

In a bid to reduce its exposure to risky trading activity, Barclays plans to close a number of operations in Europe and Asia, including a tax-planning unit that has been criticized for tarnishing the firm’s reputation.

“There will be no going back to the old way of doing things,” the chief executive, Antony P. Jenkins, told reporters at a news conference in London on Tuesday. “We will never be in a position again of rewarding people for activities inconsistent with our values.”

Despite the revamp of its operations and a new emphasis on values, the bank plans to retain the majority of its investment banking unit, particularly its operations in Britain and the United States. The division generated roughly 60 percent of the bank’s adjusted pretax profit in 2012.

Barclays will close four business divisions, while another 17 units will either be closed, sold or pared back in response to subdued market activity, Mr. Jenkins said. In total, the expected layoffs across the bank’s operations represent around 3 percent of the firm’s global work force.

The investment banking division is to be among the hardest hit, where about 1,800 employees are expected to be laid off. The job cuts will primarily fall on the bank’s Asian and European equities divisions, as well as its agricultural commodities trading operations. Almost 90 percent of the reductions already have been made, according to Christopher G. Lucas, the bank’s departing chief financial officer.

Mr. Jenkins refused to comment specifically on the position of Rich Ricci, the head of Barclays investment banking, whose name has surfaced in the inquiry into the bank’s role in the rate-rigging scandal.

“No one can predict the future, but I am confident in the team around me,” Mr. Jenkins said. “Who knows what could happen in a year’s time.”

The restructuring plan includes an additional 1,900 job cuts in the bank’s European retail and business banking unit, where Barclays plans to close roughly 30 percent of its Continental branch network.

The reductions have been focused in areas where Barclays does not compete globally with other international banks or where the firm could experience reputational damage like the recent rate-rigging scandal and the inappropriate sales of loan insurance to customers.

“Not much of this is surprising,” said Ian Gordon, a banking analyst at Investec in London. “They are not removing any of the material activities from the investment bank.”

The recent scandals that have engulfed the bank weighed down the firm’s fourth-quarter earnings.

Barclays posted a net loss of £835 million ($1.3 billion) in the last three months of 2012, compared with a profit of £356 million in the period a year earlier.
The results were hampered by the need to set aside additional capital to compensate costumers who were inappropriately sold loan insurance and for small businesses that were improperly sold complex interest-rate hedging products. Barclays also took a charge against the value of its own debt.

Excluding the adjustments, the bank’s pretax profit for the fourth quarter would have been £1.1 billion, almost double the amount in the period a year earlier.
For 2012, the bank reported an annual net loss of £1 billion, compared with a £3 billion profit for 2011. The annual loss resulted from provisions to cover legal costs related to the rate-rigging scandal and other improper activities.

The bank added that it would reduce annual costs by around 10 percent, to £16.8 billion, by 2015. Its share price rose almost 6 percent in afternoon trading in London on Tuesday.

Barclays said it had reduced bonuses across its operations by 16 percent for 2012, compared with the previous year. In its investment banking division, total bonuses fell 20 percent, with the average bonus in the unit standing at £54,100, a 17 percent reduction, according to a company statement.

The bank added that it had cut compensation awards because of risks facing several business units, including the rate-rigging scandal.

In a settlement with American and British authorities in June, Barclays agreed to pay fines totaling $450 million after some of its traders manipulated the London interbank offered rate, or Libor, for financial gain. Some of the firm’s managers also altered the rate to portray the bank in a healthier financial position than it actually was.

The investment banking division reported a pretax profit of £858 million in the fourth quarter, compared with a pretax profit of £267 million in the fourth quarter of 2011. Pretax profit at the bank’s retail and business banking unit rose 17 percent, to £732 million, while pretax profit in its corporate banking division almost tripled, to £107 million.

Mr. Jenkins acknowledged that some of the firm’s past actions had fallen short. He added that the investment banking division would remain at the heart of the firm’s future operations, though wrongdoing would not be tolerated.

“The old ways weren’t the right way to behave nor did they deliver the right results,” Mr. Jenkins said. “Individuals must take responsibility for their own behavior.”

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The Lede: Latest Updates on the Pope’s Resignation

The Lede is providing updates on Pope Benedict XVI’s announcement on Monday that he intends to resign on Feb. 28, less than eight years after he took office, the first pope to do so in six centuries. (Turn off auto-refresh to watch videos.)
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DealBook: British Regulators to Investigate Accounting at Autonomy

LONDON – British accounting regulators said on Monday that they would investigate the financial reporting at the British software maker Autonomy before its $11.1 billion acquisition by Hewlett-Packard in 2011.

The announcement comes after accusations from H.P. that Autonomy inflated its sales and carried out improper accounting practices that misled the American technology giant ahead of the multibillion-dollar takeover.

In November, H.P. took a charge of $8.8 billion after it wrote down the acquisition of Autonomy. The figure included around $5 billion related to what H.P. called accounting and disclosure abuses at Autonomy.

Investigations by American authorities, including the Justice Department, are under way. The Financial Reporting Council, the British accounting watchdog, said on Wednesday that it would also examine Autonomy’s financial accounts from the beginning of 2009 to the middle of 2011.

The investigation may take around a year to reach disciplinary proceedings if wrongdoing is discovered, according to a spokeswoman for the council.

Mike Lynch, the founder of Autonomy who has denied the charges of accounting misconduct leveled by H.P., said he welcomed the investigation by British regulators.

“We are fully confident in the financial reporting of the company and look forward to the opportunity to demonstrate this to the F.R.C.,” he said in a statement on behalf of the former management team of Autonomy.

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Well: Price for a New Hip? Many Hospitals Are Stumped

Jaime Rosenthal, a senior at Washington University in St. Louis, called more than 100 hospitals in every state last summer, seeking prices for a hip replacement for a 62-year-old grandmother who was uninsured but had the means to pay herself.

The quotes she received might surprise even hardened health care economists: only about half of the hospitals, including top-ranked orthopedic centers and community hospitals, could provide any sort of price estimate, despite repeated calls. Those that could gave quotes that varied by a factor of more than 10, from $11,100 to $125,798.

Ms. Rosenthal’s grandmother was fictitious, created for a summer research project on health care costs. But the findings, which form the basis of a paper released on Monday by JAMA Internal Medicine, are likely to fan the debate on the unsustainable growth of American health care costs and an opaque medical system in which prices are often hidden from consumers.

“Transparency is all the rage these days in government and business, but there has been little push for pricing transparency in health care, and there’s virtually no information,” said Dr. Peter Cram, an associate professor of internal medicine at the University of Iowa, who wrote the paper with Ms. Rosenthal. He added: “I can get the price for a car, for a can of oil, for a gallon of milk. But health care? That’s not so easy.”

President Obama’s Affordable Care Act focused primarily on providing insurance to Americans who did not have it. But the high price of care remains an elephant in the room. Although many experts have said that Americans must become more discerning consumers to help rein in costs, the study illustrates how hard that can be.

“We’ve been trying to help patients get good value, but it is really hard to get price commitments from hospitals — we see this all the time,” said Jeff Rice, the chief executive of Healthcare Blue Book, a company that collects data on medical procedures, doctors visits and tests. “And even if they say $20,000, it often turns out $40,000 or 60,000.”

There are many caveats to the study. Most patients — or insurers — never pay the full sticker price of surgery, because insurance companies bargain with hospitals and doctors for discounted rates. When Ms. Rosenthal balked at initial high estimates, some hospitals produced lower rates for a person without insurance.

But in other ways the telephone quotations underestimated prices, because they did not include the fees for outpatient rehabilitation, for example.

In an accompanying commentary, Andrew Steinmetz and Ezekiel J. Emanuel of the University of Pennsylvania acknowledged that there was “no justification” for the inability to provide estimates or for the wide range of prices. But they said that more rigorous data on quality — like infection rates and unexpected deaths — were required to know when high prices were worth it.

“Without quality data to accompany price data, physicians, consumers and other health care decision makers have no idea if a lower price represents shoddy quality of if it constitutes good value,” they wrote.

But, broadly, researchers emphasized that studies had found little consistent correlation between higher prices and better quality in American health care. Dr. Cram said there was no data that “Mercedes” hip implants were better than cheaper options, for example.

Jamie Court, the president of the California-based Consumer Watchdog, said: “If one hospital can put in a hip for $12,000, then every hospital should be able to do it. When there’s 100 percent variation in sticker price, then there is no real price. It’s about profit.”

Dr. Cram said the study did contain some good news: some of the country’s top-ranked hospitals came up with “bargain basement prices” in response to repeated calls. “If you’re a good consumer and shop around, you can get a good price — you don’t have to pay $120,000 for a Honda,” he said.

But that shopping can be arduous in a market not set up to respond to consumers. To get a total price, Ms. Rosenthal often had to call the hospital to get its estimate for on-site care, and a separate quote from doctors. And many were simply perplexed when she asked for a price upfront, Ms. Rosenthal said, adding, “The people who answered didn’t know what to do with the question.”

Read More..

Well: Price for a New Hip? Many Hospitals Are Stumped

Jaime Rosenthal, a senior at Washington University in St. Louis, called more than 100 hospitals in every state last summer, seeking prices for a hip replacement for a 62-year-old grandmother who was uninsured but had the means to pay herself.

The quotes she received might surprise even hardened health care economists: only about half of the hospitals, including top-ranked orthopedic centers and community hospitals, could provide any sort of price estimate, despite repeated calls. Those that could gave quotes that varied by a factor of more than 10, from $11,100 to $125,798.

Ms. Rosenthal’s grandmother was fictitious, created for a summer research project on health care costs. But the findings, which form the basis of a paper released on Monday by JAMA Internal Medicine, are likely to fan the debate on the unsustainable growth of American health care costs and an opaque medical system in which prices are often hidden from consumers.

“Transparency is all the rage these days in government and business, but there has been little push for pricing transparency in health care, and there’s virtually no information,” said Dr. Peter Cram, an associate professor of internal medicine at the University of Iowa, who wrote the paper with Ms. Rosenthal. He added: “I can get the price for a car, for a can of oil, for a gallon of milk. But health care? That’s not so easy.”

President Obama’s Affordable Care Act focused primarily on providing insurance to Americans who did not have it. But the high price of care remains an elephant in the room. Although many experts have said that Americans must become more discerning consumers to help rein in costs, the study illustrates how hard that can be.

“We’ve been trying to help patients get good value, but it is really hard to get price commitments from hospitals — we see this all the time,” said Jeff Rice, the chief executive of Healthcare Blue Book, a company that collects data on medical procedures, doctors visits and tests. “And even if they say $20,000, it often turns out $40,000 or 60,000.”

There are many caveats to the study. Most patients — or insurers — never pay the full sticker price of surgery, because insurance companies bargain with hospitals and doctors for discounted rates. When Ms. Rosenthal balked at initial high estimates, some hospitals produced lower rates for a person without insurance.

But in other ways the telephone quotations underestimated prices, because they did not include the fees for outpatient rehabilitation, for example.

In an accompanying commentary, Andrew Steinmetz and Ezekiel J. Emanuel of the University of Pennsylvania acknowledged that there was “no justification” for the inability to provide estimates or for the wide range of prices. But they said that more rigorous data on quality — like infection rates and unexpected deaths — were required to know when high prices were worth it.

“Without quality data to accompany price data, physicians, consumers and other health care decision makers have no idea if a lower price represents shoddy quality of if it constitutes good value,” they wrote.

But, broadly, researchers emphasized that studies had found little consistent correlation between higher prices and better quality in American health care. Dr. Cram said there was no data that “Mercedes” hip implants were better than cheaper options, for example.

Jamie Court, the president of the California-based Consumer Watchdog, said: “If one hospital can put in a hip for $12,000, then every hospital should be able to do it. When there’s 100 percent variation in sticker price, then there is no real price. It’s about profit.”

Dr. Cram said the study did contain some good news: some of the country’s top-ranked hospitals came up with “bargain basement prices” in response to repeated calls. “If you’re a good consumer and shop around, you can get a good price — you don’t have to pay $120,000 for a Honda,” he said.

But that shopping can be arduous in a market not set up to respond to consumers. To get a total price, Ms. Rosenthal often had to call the hospital to get its estimate for on-site care, and a separate quote from doctors. And many were simply perplexed when she asked for a price upfront, Ms. Rosenthal said, adding, “The people who answered didn’t know what to do with the question.”

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