Sunny Balwani, the former president and chief operating officer of bankrupt blood-testing company Theranos, on Thursday was found guilty of 12 counts of conspiracy and fraud against certain investors and patients.
It’s a similar verdict to one handed down in January to Theranos founder and ex-CEO Elizabeth Holmes, who once dated Balwani.
Why it matters: Balwani isn’t a household name like Holmes, but he was instrumental in building a billion-dollar house of cards that duped both investors and patients.
Courtroom drama: Balwani’s attorneys tried to pin the blame for Theranos’ failures on Holmes, much as her attorneys had tried to blame Balwani.
As we wrote when the trial began: Holmes tried to thread an incredibly narrow rhetorical needle, denying the existence of fraud while also redirecting blame. Balwani seems to be attempting something similar; claiming he was a savvy executive with lots of past success, but also a naif who was bamboozled by Holmes.
But prosecutors, who originally wanted to try the pair together, often used Balwani’s own words against him. For example, they presented a text message from Balwani to Holmes that read: “I am responsible for everything at Theranos.”
One big difference between the trials, however, was that Balwani didn’t testify in his own defense.
Details: Balwani was convicted on all 12 counts brought against him, after nearly five days of jury deliberations. This includes a wire fraud charge related to a $100 million investment in Theranos from the family of former U.S. Education Sec. Betsy DeVos.
Holmes had been convicted on four of seven counts, each one related to investors and carrying a maximum sentence of 20 years in prison.
Look ahead: Expect Balwani to appeal the verdict, as has Holmes already has done.
Job openings fell slightly in May as demand for workers remained near record highs, according to data released Wednesday by the Labor Department, even amid growing concerns of a potential recession.
The number of open jobs listed in the U.S. on the final business day of May totaled 11.3 million, dropping from 11.7 million in April after seasonal adjustments. Though job openings fell in May, hires, layoffs and quits stayed roughly even with their April numbers, according to the May Job Openings and Labor Turnover Survey (JOLTS) report.
The JOLTS report showed a labor market still stacked strongly for workers in May, a month when the U.S. added 390,000 jobs and saw the jobless rate hold strong at 3.6 percent. Despite the decline in job openings, there were still almost two open gigs for each unemployed American.
That mismatch can give workers many opportunities to find new jobs with better compensation and career opportunities than their current ones.
“This is not what a recession looks like. The May 2022 JOLTS data obviously lags what’s happening in the labor market presently, but all signs are that it remains strong,” wrote Nick Bunker, research director at Indeed.com, in a Wednesday analysis.
“If the labor market were quickly and suddenly taking a downturn, we would see employers’ demand for new hires drop and their willingness to let workers go increase. For now, we aren’t seeing a sudden move in either direction.”
Businesses hired roughly 6.5 million workers and lost 6 million in May, both in line with April totals. The percentage of the workers who quit their jobs in May fell to 2.8 percent, just 0.1 percentage points from a record high of 2.9 percent set earlier this year.
With ample jobs available and people still eager to leave in search of better work, businesses have avoided laying off employees over fears they could be hard to replace. Roughly 1.4 million workers were laid off in May, slightly higher than April’s total of 1.3 million. But the percentage of the workforce laid off by their employers held even at 0.9 percent, which is below pre-pandemic levels.
“Despite continued headlines about layoffs, particularly in the tech sector, the layoff rate remains low,” Bunker explained. “This is the 15th straight month that the layoff rate has been below its pre-pandemic bottom.”
The steady strength of the U.S. job market helped propel a rapid recovery from the depths of the COVID-19 recession through much of 2020 and 2021. The U.S. is fewer than 1 million new jobs away from replacing the 21 million jobs lost to the onset of the pandemic, and the speed of the pandemic recovery has helped fuel rapid wage growth, particularly for low-earning workers.
Even so, many economists — including Federal Reserve officials — fear the strength of the job market could add further fuel to inflation already at four-decade highs. While steady job gains are good for the economy, the intense competition for workers has made it difficult for many firms to stay adequately staffed and keep up with both higher wage demands and rising prices.
Fed Chairman Jerome Powelland many economists are hopeful that higher interest rates and the fading effects of fiscal stimulus can help reduce job openings — and the pressure they put on wages — without wiping out job gains.
The Fed has boosted its baseline interest rate range by 1.5 percentage points from near-zero levels in January and is expected to hike by another 2 percentage points by the end of the year. Higher interest rates are meant to reduce inflation by slowing the economy enough to force businesses to stop raising prices and wages.
Even so, he has acknowledged it will be difficult for the Fed to avoid slowing down the labor market into a standstill as the central bank boosts interest rates to fight inflation.
“The labor market conditions [Powell] has described as ‘extremely, historically’ tight and ‘unsustainably hot’ persisted in May,” wrote Julia Pollak, chief economist at ZipRecruiter, in a Wednesday analysis.
“Employers are hanging onto the workers they have in a tight labor market where replacing them is unusually costly.”
The June jobs report, set to be released Friday, will give a most recent view into how well the labor market has held up amid Fed rate hikes. Economists expect the U.S. to have added roughly 268,000 jobs last month, according to consensus estimates.
“There will be a time when the US labor market takes a downturn, jobs are shed at a higher rate, and workers stop quitting their jobs. But that time has yet to come. The labor market remains very tight and very hot. That may change, but it hasn’t yet,” Bunker wrote.
U.S.-based employers announced 32,517 cuts in June 2022, a 58.8 percent increase from 20,476 cuts announced in the same month last year, according to a new job report from Challenger, Gray & Christmas.
June marks the highest month since February 2021, when 34,531 cuts were announced. It is the second time this year that cuts were higher in 2022 than the corresponding month a year earlier.
Healthcare/products manufacturers and providers announced the most job cuts this year with 19,390, which is up 54 percent from the 12,620 announced through June 2021. The automotive industry posted the second-highest cuts with 15,578, a number that is up from the 6,111 cuts in the previous year.
Andrew Challenger, senior vice president of executive search firm Challenger, Gray & Christmas, said the numbers demonstrate increasing economic strain.
“Employers are beginning to respond to financial pressures and slowing demand by cutting costs. While the labor market is still tight, that tightness may begin to ease in the next few months,” Mr. Challenger said.
Locations suffering the highest losses include California with 28,692, New York at 15,952, and Pennsylvania at 9,310.
The pressure is on for boards to hold onto chief financial officers as firms face the prospect of an economic slowdown and intense competition for talent.
Demand for finance chiefs continues to be high in U.S. businesses, according to a July 4 report from The Wall Street Journal. Data from Russell Reynolds Associates indicates that CFO turnover at companies in the S&P 500 rose to 18 percent in 2021, compared to 15 percent in 2020 and 14 percent in 2019.
Some new strategies call for broadening CFO responsibilities or elevating their positions altogether to retain top executives, according to Joel von Ranson, head of recruitment firm Spencer Stuart’s global functional practices.
“Companies create these broader roles and titles to engage and recognize and motivate the very best of the best,” Mr. von Ranson said.
CFOs at companies in the S&P 500 and Fortune 500 average about five years in their job, according to executive search firm Crist Kolder Associates. Expanding the CFO role allows organizations to create opportunities to retain key talent past the five-year mark.
In 2021, just under 8 percent of chief executive officers at companies in the S&P 500 and Fortune 500 came from the CFO seat.
IBM Watson Health, in partnership with Fortune, has released its top 15 health systems, which they find set an example for health systems and hospitals across the nation. With its data, the report will continue to stand as a resource for these groups to improve their quality of care and efficiency.
In its 14th year of publishing this study, IBM Watson Health found that the top 15 health systems had better survival rates, fewer patient complications, fewer healthcare-associated infections, better long-term outcomes, better 30-day mortality/revisitation rates and more. The study also found that patients revered the top 15 hospitals more than peer system hospitals.
Fortune/IBM Watson Health divides its top 100 hospitals into three main categories listed below. It is noted that each system in the table is featured in alphabetical order and does not reflect performance rating. The full report, which includes further details on the methodology of rankings, can be found here.
Top 5 large health systems
Allina Health (Minneapolis)
Baylor Scott & White Health (Dallas)
Mayo Clinic (Rochester, Minn.)
Penn Medicine (Philadelphia)
Rush University System for Health (Chicago)
Top 5 medium health systems
Cone Health (Greensboro, N.C.)
Edward-Elmhurst Health (Naperville, Ill.)
PIH Health (Whittier, Calif.)
Scripps Health (San Diego)
St. Luke’s Health System (Boise, Idaho)
Top 5 small health systems
Asante (Medford, Ore.)
CHI Memorial (Chattanooga, Tenn.)
CHI St. Vincent (Little Rock, Ark.)
Franciscan Sisters of Christian Charity Sponsored Ministries (Manitowoc, Wis.)
Several hospitals are trimming their workforces due to financial and operational challenges, and some are offering affected workers new positions.
1. Santa Cruz Valley Hospital in Green Valley, Ariz., closed June 30. The closure resulted in 315 workers losing their jobs. CEO Steve Harris said the decision to close Santa Cruz Valley Regional Hospital was made after it was unable to secure emergency department staffing for the Fourth of July weekend. The hospital issued a Worker Adjustment and Retraining Notification Act notice June 20, which gave the hospital’s 315 workers notice of the mass layoff.
2. Claxton-Hepburn Medical Center in Ogdensburg, N.Y., is cutting approximately 5 percent of its 800-person workforce as it makes changes aimed at improving revenue cycle functions. The hospital said in late June that it is planning to outsource revenue cycle functions and lay off revenue cycle staff.
3. Sturgis (Mich.) Hospital said it is planning to lay off 194 employees in July as it scales back services or closes. The hospital subsequently secured a loan to keep it open through July, according to WTVB.
4. Bristol (Conn.) Health on June 16 eliminated 31 positions, including 10 that were filled and 21 that were vacant. The majority of those laid off were in management.
5. Citing skyrocketing expenses and flat revenue, St. Charles Health System in Bend, Ore., will cut 181 positions, according to a May 18 announcement. The workforce reduction includes laying off 105 caregivers and eliminating 76 vacant positions. The layoffs affect mainly nonclinical workers, including many leadership positions. The four-hospital health system said it took steps to address its financial challenges, but it ended the month of April with a $21.8 million loss.
6. Toledo, Ohio-based ProMedica’s health plan, Paramount, is laying off about 200 employees in July after losing a Medicaid contract. Anthem acquired Paramount’s Medicaid contract, and ProMedica and Anthem have been working to identify open roles for employees affected by the layoffs.
7. Greenwood (Miss.) Leflore Hospital announced in May that it will lay off 30 employees to help offset losses. The layoffs, which include an undisclosed number of physicians, affect less than 4 percent of the hospital’s workforce. Many of the affected employees were notified May 17.
8. Mercy Medical Center in Springfield, Mass., part of Trinity Health of New England, is trimming jobs. The hospital laid off 12 of its 380 unionized nurses, the Massachusetts Nurses Association told Western Mass News in May. Translators and ancillary staff were also affected by the cuts. Trinity Health of New England, which declined to provide the number of workers affected by the layoffs, attributed the cuts to national disruption in the healthcare industry. In addition to the layoffs, Trinity Health of New England is also eliminating some positions that are currently vacant.
HENRY KOTULA 