In a significant apparent breach of NYT ethics rules, Princeton professor Uwe Reinhardt -- who writes regularly for the NYT website on health-care issues -- earns more than $500,000 a year from posts with various private health-care companies, and holds stock worth more than $5 million.
That income is in clear apparent violation of the NYT rules, which specifically ban both staffers and freelancers from owning stock or having any financial interest "in a company, enterprise or industry that figures or is likely to figure in coverage that he or she provides, edits, packages or supervises regularly."
For Reinhardt, that would be the obvious conflict between his high-paying part-time gigs in the health-care industry, and his health-care blogging since November of 2009 for the NYT -- which, by the way, identifies him in its online bio only as a Princeton professor, and as a "leading health policy expert" with ties to various nonprofit groups and government agencies.
The three-paragraph NYT bio makes no mention of Reinhardt's financial ties to the health-care industry.
The matter of NYT contributors' conflict of interest has been raised recently by the NYT's Public Editor, Clark Hoyt. He wrote a column in January, "The Sources' Stake In The News," that cited several examples of NYT contributors and sources who'd been allowed (improperly, in his view) to write for -- or be quoted in -- the NYT despite an undisclosed financial interest.
The examples included an MIT health economist, Prof. Jonathan Gruber, who'd written an op-ed piece on health care without disclosing he had a contract with the Department of Health and Human Services, to study health care issues. At $400,000, Gruber's contract pales in contrast with Reinhardt's seven-figure health-care industry stock portfolio.
"Readers are entitled to disclosure," Hoyt wrote in the NYT, "so they can decide if there is a conflict that would effect the credibility of the information."
The NYT's ethics policy specifically addresses health writers, perhaps because the potential for conflicts is more significant.
"A book editor, for example, may not invest in a publishing house, a health writer in a pharmaceutical company or a Pentagon reporter in a mutual fund specializing in defense stocks," the policy says. "For this purpose an industry is defined broadly; for example, a reporter responsible for any segment of media coverage may not own any media stock. “Stock” should be read to include futures, options, rights, and speculative debt, as well as “sector” mutual funds (those focused on one industry)."
The NYT has been vigilant in policing breaches of its ethics rules in this area by freelance contributors. The paper has issued several editors' notes in recent months, disclosing conflicts of interest discovered after the fact. Honestly, we're a little shocked that Reinhardt slipped through the cracks, given his multitude of industry deals.
Here's a basic rundown of Reinhardt's conflicts of interests. We may have missed one or two.
As of this moment, Reinhardt is a trustee, or on the board of directors, of at least five different private health-care companies and funds -- and either now earns an income from, and/or is being paid in stock options by those for-profit businesses.
Reinhardt has sat on the board of Amerigroup Corporation, a managed health care company, since 2005. SEC documents filed in 2009 show Reinhardt holding 144,558 shares in the company, and earning $226,531 in cash-and-stock compensation. Amerigroup was trading at $33.89 a share when the markets closed on Friday, giving Reinhardt's shares a value of approximately $4.8 million.
Not bad for a Princeton prof! Or a NYT blogger. Or anybody.
As of March 2010, Reinhardt also held 75,625 shares of Boston Scientific, where he has also served on the board since 2005. At $7.23 a share, the company's current market price, his holdings are worth more than $500,000. In 2009, including stock options, Reinhardt also reported income of $213,132, according to an SEC filing.
Oh, and Boston Scientific? They make medical devices. That's health-care, too.
But wait, there's more: In 2008, the proxy statement for H&Q Healthcare Investors and H&Q Life Sciences Investors -- two funds that invest in the health care industry -- identified Reinhardt as a trustee for "HQH" since 1988, and HQL in 1992. His 2008 income from both companies totaled $43,000, and also included "between $1 and $10,000" worth of securities.
These are exactly the sort of "sector" funds that the NYT ethics policies mean when it tells its staff to steer clear.
In January of 2008, Reinhardt joined the board of directors of Legacy Hospital Partners, a private company that buys hospitals and links up the deals with not-for-profit businesses. It has no disclosure requirements that would reveal Reinhardt's pay from Legacy, but any association with a company like this -- even unpaid -- would demand disclosure.
There's a trail of Reinhardt's industry income past strewn across the Internet in SEC filings and corporate biographies. One SEC document shows Reinhardt earning $2.3 million from the sale of Triad Hospitals to Community Health Systems in 2007 for $5.1 billion. For the previous four years, Reinhardt had been on Triad's board of directors.
Does the NYT really want its health-care analysts to be folks who make millions off of hospital-chain sales deals?
By the way, all of this comes on top of Reinhardt's presumably healthy salary from Princeton, where he serves as the James Madison Professor of Political Economy. Whoops, think we forgot to mention that he's also on the board at Duke.
There has been a lot of talk lately about the NYT's strict rules on freelancers, and the fact that they've resulted in an exclusion of outside talent from the paper. Some of that we agree with. For example, we'll never understand why the NYT fired its talented Critical Shopper, Mike Albo -- a freelance writer with no apparent stock portfolio or corporate directorships -- for taking a Jet Blue junket that had nothing to do with his work.
Meanwhile, the rich Professor Reinhardt writes essays on the latest health-care debate as though he doesn't have a horse in the race. But it turns out his financial interests are tied directly to those of the companies whose stock he holds -- companies whose fortunes will change in the wake of the Obama health-care program.
People like Reinhardt are the reason these rules were written. It will be interested to see if the NYT enforces them, or ignores the problem. After firing freelancers for far less, to ignore Reinhardt's apparent rule violations would risk seeming to have a double standard.
On Saturday, we emailed Reinhardt, NYT spokesman Robert Christie and Catherine Rampell, the editor of the Economix blog, for comment on this. We'll update if/when we get a response.